UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

/x/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended June 30, 1997

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from _________ to _________


                         Commission file number 0-18954

                          ODYSSEY PICTURES CORPORATION
                          ----------------------------
             (Exact name of registrant as specified in its charter)
 

            Nevada                                             95-4269048
--------------------------------                          ----------------------
(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                           Identification Number)


                      1601 Elm Street, Dallas, Texas 75201
                      ------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code:     (214) 720-1622

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.01 par value

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes ____ No __x___

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant as of September 30, 1998 was  approximately  $1,879,832 (based on
the mean  between the closing bid and asked  prices of the Common  Stock on such
date), which value, solely for the purposes of this calculation, excludes shares
held by Registrant's officers and directors. Such exclusion should not be deemed
a determination by Registrant that all such individuals are, in fact, affiliates
of the Registrant.

     As of September 30, 1998 there were outstanding 5,169,285 shares of Odyssey
Pictures  Corporation's  common  stock,  par value $.01 per share  (the  "Common
Stock").

<PAGE>

                          ODYSSEY PICTURES CORPORATION
                      Form 10-K Report for the Fiscal Year
                              Ended June 30, 1997

                                TABLE OF CONTENTS


                                                                            Page


                                     PART I

Item 1. Business ...........................................................   1

Item 2. Properties ........................................................... 8

Item 3. Legal Proceedings ..................................................   8

Item 4. Submission of Matters to a Vote of 
        Security Holders ...................................................  13

                                     PART II

Item 5. Market for Registrant's Common Stock 
        and Related Stockholder Matters ....................................  13

Item 6. Selected Financial Data ............................................  14

Item 7. Management's Discussion and Analysis 
        of Financial Condition and Results of Operations ...................  14

Item 8. Financial Statements and Supplementary Data ........................  17

Item 9. Changes in and Disagreements with Accountants 
        on Accounting and Financial Disclosure .............................  41

                                    PART III

Item 10. Directors and Executive Officers of the Registrant ................  41

Item 11. Executive Compensation ............................................  43

Item 12. Security Ownership of Certain Beneficial Owners and Management ....  47

Item 13. Certain Relationships and Related Transactions ....................  48

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K .... 50


<PAGE>

                                     PART I

Item 1.  Business


(a)  General Development of Business
     -------------------------------

     Odyssey Pictures Corporation  ("Odyssey" or the "Company"),  formerly known
as  Communications  and  Entertainment  Corp.,  was formed in December 1989 as a
holding company.  At such time, the Company had no material assets. In September
1990, Double Helix Films, Inc. ("Double Helix"), a producer of low budget films,
and Odyssey  Entertainment  Ltd.  ("OEL"),  an international  film  distribution
company,  were  merged  with  wholly-owned  subsidiaries  of  the  Company  (the
"Mergers").  Subsequent  to the  Mergers,  each of Double Helix and OEL became a
wholly-owned  subsidiary of the Company.  In June 1991,  the Company sold Double
Helix and thereafter  began to focus on the  distribution  of motion pictures in
overseas markets as its primary business.

     A change in the entire  Board of  Directors  of the Company  (the  "Board")
occurred on April 12,  1995  pursuant  to the terms of a  Settlement  Agreement,
dated as of March 31, 1995 (the  "Settlement  Agreement"),  by and among  Robert
Hesse,  Shane  O'Neil,  Lawrence I.  Schneider,  Henry N.  Schneider,  Robert E.
Miller,  Jr.,  Russell T.  Stern,  Jr.  (collectively,  a group of  shareholders
originally  formed to effect a change in  management  control of the Company and
known  as  the  "CECO  Shareholders   Committee"),   the  Company,  OEL,  Global
Intellicom,  Inc., each of Jerry Silva, Robert Ferraro, N. Norman Muller, Thomas
W. Smith and David A. Mortman  (constituting all the directors of the Company at
the time of the execution of the Settlement  Agreement and hereinafter  referred
to collectively as the "Former Directors"), and others.

     As contemplated by the Settlement Agreement,  on April 11, 1995, the Former
Directors increased the size of the Board from five to six directors and elected
Henry N.  Schneider,  a  designee  of the  CECO  Shareholders  Committee,  a new
director effective upon the closing of the Settlement Agreement.  The closing of
the Settlement  Agreement occurred on April 12, 1995 and, upon the closing,  the
resignations of the Former Directors became effective.  After the closing, Henry
N. Schneider,  as sole remaining  director of the Company,  elected  Lawrence I.
Schneider,  Russell T. Stern, Jr., Patrick J. Haynes,  III and Robert E. Miller,
Jr.  as  new  directors  of the  Company.  In  addition  to  the  change  in the
composition of the Board, the Settlement  Agreement  provided for the settlement
of all  outstanding  litigation  between the  Company and the CECO  Shareholders
Committee.  The CECO  Shareholders  Committee  disbanded upon the closing of the
Settlement Agreement. Effective September 8, 1995, each of Messrs. Haynes, Stern
and Henry N. Schneider resigned as directors of the Company and were replaced by
Stephen R.  Greenwald and Ira N. Smith,  each of whom was appointed to the Board
and, together with Lawrence Schneider, elected to executive management positions
to operate the business and affairs of the Company on a day-to-day basis.

     On March 6, 1996, the Company declared a reverse one-for-six stock split of
its Common Stock (the  "Reverse  Split"),  effective  March 18, 1996.  All share
amounts and per share prices reflected in this Report have been adjusted to give
effect to the Reverse Split.

     Mr. Schneider  resigned his executive  position in September,  1997, and in
March,  1998,  the Board of  Directors  appointed  Mr.  Johan  Schotte  as Chief
Executive  Officer and Chairman of the Board of the  Company.  At the same time,
Mr.  Pierre  Koshakji was appointed to the Board and elected as President of the
Company. Mr. Johan Schotte expanded the Board to include additional  independent
directors  and Messrs.  Greenwald and Smith agreed to terminate  their  existing
employment   agreements  in  exchange  for  revised  employment  and  consulting
agreements.  In connection  with the change in  management,  an affiliate of Mr.
Schotte purchased convertible deferred compensation notes from former management
and  converted  a portion of these  notes into  667,648  shares of he  Company's
common stock in April, 1998.

                                       1
<PAGE>

     During the early 1990s,  the Company  developed an excellent  reputation in
overseas markets for the distribution of quality motion picture entertainment, a
reputation which the Company's management believes it continues to enjoy despite
its recent  difficulties.  However, due to the changes in management control and
disruptions in the continuity of the Company's  business following the change in
control  in 1995,  the  Company  has been  unable  to  sustain  any  substantial
activities in the international distribution of motion pictures.

     Under the leadership of Mr. Schotte,  the Company will seek to re-establish
its  position  as a  significant  distributor  of  quality  motion  pictures  by
establishing  relationships and strategic  alliances with major film studios and
successful  writers,  directors  and  producers.  The  Company  also  intends to
establish a permanent presence in Europe through select joint-venture  partners.
In this  connection,  the Company  purchased  the assets of  Sweden-based  Kimon
Mediabright  KB ("Kimon")  in August,  1998,  consisting  of a film library with
worldwide  and/or  Scandanavian   distribution  rights  and  Scandanavian  video
distribution rights to certain Hallmark Entertainment products.

     While   continuing  to  develop  and   re-establish   the  Company's   film
distribution   business,   new  management's   objective  going  forward  is  to
aggresively build a diverse,  global media company independent in ownership from
the major film and music companies. Management will seek to establish a group of
domestic and international  companies providing both content and distribution in
film, music, publishing, sports, merchandising and other multimedia outlets. See
"Business - Narrative Description of Business - Business Strategy."

(b)  Financial Information About Industry Segments
     ---------------------------------------------

     Since the sale of its Double Helix subsidiary in 1991, the Company has been
engaged in only one  industry  segment and line of business,  the  international
distribution of motion pictures. See "Selected Financial Data."

(c)  Narrative Description of Business
     ---------------------------------

Foreign Sales and Distribution Operations
-----------------------------------------

     General.
     --------

     The foreign  distribution of films involves two principal  activities - the
acquisition  of rights from the licensor or the seller,  usually the producer of
the film, and the licensing of the  distribution  rights to  subdistributors  in
foreign markets. In general, the rights obtained from the producer relate to all
media,  including  theatrical  distribution,  video and all forms of television.
However,  the  licensing  of  rights  to  subdistributors  may  exclude  certain
territories and/or media.

     It is  unlikely  that  subdistributors  would  bypass the  Company and deal
directly with the licensors of film rights. Historically,  independent licensors
of film rights prefer to deal with a single sales agent/distributor  rather than
deal with various  subdistributors in foreign markets.  Consequently,  even if a
particular  subdistributor  attempted to perform the function of the Company, it
is  unlikely  that the  film's  licensor  would be  willing  to deal  with  such
subdistributor.  Furthermore,  with respect to any particular  film, the Company
would typically  enter into an exclusive  distributorship  arrangement,  thereby
precluding  others from  competing  with the Company  with respect to that film.
Moreover,  in certain  circumstances,  the Company may also  provide a financing
function for the production of a film which a subdistributor  would generally be
unable to provide. See "Terms of Distribution Agreements."

                                       2
<PAGE>
     Terms of Distribution Agreements. Foreign distribution is generally handled
by a distributor  such as the Company which  coordinates  worldwide sales in all
territories   and  media.   Overseas   film  sales   companies   rely  on  local
subdistributors  to physically  deliver the motion picture and related marketing
materials  and to  collect  revenues  from  local  exhibitors  and  other  local
distributors  of the film.  Typically,  the  territorial  rights  for a specific
medium such as  television  exhibition  are sold for a "cycle" of  approximately
seven years,  after which the rights become available for license for additional
cycles.

     The film distribution business breaks down into two broad categories:

     o  Sales  Agency  Representation.  As a  sales  agent,  the  Company  would
undertake to represent and license a motion  picture in all markets and media on
a best-efforts  basis, with no guarantees or advances,  for a fee of 15-20%, and
typically for a term ranging from seven to fifteen years.

     o Distribution.  As a distributor,  the Company may provide the producer of
the film a guarantee of a portion of the budget of the project.  This  guarantee
may be in the form of a bank  commitment  to the  producer,  secured  by license
agreements with foreign licensees,  which is used by the producer to finance the
production.  Typically, a distributor would receive a distribution fee of 25-35%
over a term ranging from 15 years to perpetuity.  In addition,  the  distributor
may acquire a profit participation in the film project.

     Once the  rights  to a  picture  are  obtained  either  as  sales  agent or
distributor with minimum  guarantee,  the Company would then seek to license its
rights  to  subdistributors  in  the  territories  for  which  it  has  acquired
distribution  rights.  In  general,  the grant of rights to the  subdistributors
includes all media other than satellite,  although satellite is included in some
subdistributors'  territories.  The  subdistributor in each territory  generally
pays for its distribution rights with a down payment at the time the contract is
executed   with  the   balance   due  upon   delivery  of  the  picture  to  the
subdistributor.  (Delivery  occurs upon the  Company's  acceptance of the master
negative and its obtaining access to the  interpositive  and certain other items
necessary  for  the  distribution  of  the  film).  In  certain  instances,  the
subdistributors'  obligations  for the payment due on delivery  are secured by a
letter of credit.  Sales take place  primarily  at three film  markets - Cannes,
France in May;  MIFED in Milan,  Italy in October;  and the American Film Market
("AFM") in Los Angeles in February.

     In general,  after  financing (if any) is repaid,  the Company  applies the
distribution   receipts  from  its  subdistributors  first  to  the  payment  of
commissions  due to the Company,  then to the  recovery of certain  distribution
expenses advanced by the Company,  and third, to the extent not recouped as part
of the repayment of the financing,  to the  reimbursement of the Company for its
guarantee,  if any, paid to the producer.  Additional  distribution receipts, if
any,  are shared by the Company and the producer  according  to the  percentages
negotiated in the agreement between the Company and the producer.

Independent Film Production and Product Acquisition
---------------------------------------------------

     Overseas  film  distribution   companies  such  as  the  Company  primarily
represent  independent  producers of motion pictures (rather than motion picture
studios) in all overseas markets and all media,  including  theatrical  release,
television  and home  video  distribution,  and  cable or  satellite-distributed
media.

     Producers seek to be independent producers of motion pictures for a variety
of reasons,  including  greater  creative control of a project and potentially a
greater  profit  participation  through the  retention  of the  copyright or the
ability to sell the film  directly in  particular  markets.  Often,  young,  new
directors  and  producers  have no choice  but to  independently  produce  their
projects,  and the motion picture industry has a long history of  "breakthrough"
films  produced at very low cost by first time  producers  and  directors  which
subsequently achieve considerable  revenues.  The Company has generally obtained
its product from among these independently produced films rather than from major
motion  picture  studios which  typically  have their own in-house  distribution
networks.  Nevertheless,  from time to time, the Company has entered into "split
rights" arrangements with studios to represent a film in the overseas market.

                                       3
<PAGE>

     The Company's  management seeks to identify  attractive projects very early
in their development, either through relationships with producers, directors and
agents or through industry  announcements of new productions.  In addition,  the
Company's acquisitions personnel attends festivals and film markets, such as the
Sundance  Film  Festival  and the Cannes Film  Festival,  in order to locate new
product.

Business Strategy
-----------------

     The  Company's  strategy  is  to  capitalize  on  its  reputation  and  the
experience of its management team to build a global media company independent in
ownership  from the major film studios and music  companies.  The  Company's new
Board of Directors and executive management intend to integrate the Company into
today's total  entertainment and media  environment.  "Odyssey Media", or a name
more  appropriate,  will be established as the parent to a diversified  group of
U.S. and  international  companies  providing both content and  distribution  in
film, music, publishing, sports, merchandising and other multimedia outlets.

     The value  and  growth  of  "Odyssey  Media"  is  intended  to be  achieved
primarily through  acquisition of, and joint ventures with,  established private
and public media  companies.  Such  companies  may be attracted by the strategic
relations  and access to business  that the other  Odyssey  media  companies may
provide;  the international  markets that Odyssey may participate in; and access
to the public markets for capital and exposure.

     Such  companies may be  identified  through the  experience  and the strong
international  entertainment,  sport,  banking  and private  investment  network
contacts that the executive management and Board of Directors possess.  Targeted
companies would be acquired  primarily  through  issuance of new equity capital,
stock swaps and other means.

     The  parent  company  will  provide  each  company  with  strong  corporate
governance policies, direction for its management,  strategic planning guidance,
control and reporting systems,  marketing assistance,  cross promotion and other
promotional  support, as well as with assistance with business and joint venture
development, merger and acquisition assistance,  executive and management search
support,  and other  services.  The emphasis will be to optimize each individual
company's success as well as the cross-success of the entire media company.  The
proposed business strategy for each division of "Odyssey Media" is as follows:

Odyssey Pictures: The film production and distribution division will continue to
operate as Odyssey Pictures for the purpose of providing a presence in Hollywood
and New York and  establishing  a permanent  presence in Europe  through  select
joint-venture  partners.  The foreign sales agency business unit of Odyssey will
be  de-emphasized,  since it would only be feasible as part of the Company's own
distribution  network,  which will be expanded as soon as new Odyssey properties
are ready for worldwide distribution.  In order to insure a high quality regular
product flow,  alliances  will be sought with major film studios and  successful
writers, directors and producers.

Odyssey  Music:  The music unit of Odyssey will be initiated from Europe through
exploitation and music publishing of the Techno/Dance music genre due to its low
investment  cost versus high return,  and will serve as a basis to penetrate the
U.S. market.  This base will allow the launch of new acts via movie sound tacks.
A U.S. operation will be set up as soon as practicable.

Odyssey  Publishing:  Publishing  will encompass all print and electronic  media
including  multi-media and Internet services as well as the traditional products
and services  associated  with  magazines and other  publications.  When finally
viable,  Odyssey Publishing will leverage  intellectual  property from the other
media properties, for example, book and multi-media products derived from motion
pictures.

                                       4
<PAGE>

Odyssey Sports: Ownership and management of sport teams and entertainment events
will be pursued  at the minor and major  league  levels as a means of  providing
content and avenues of  advertising,  promotion,  and access to business for the
entire media company and its clients.  It will also be pursued as an opportunity
for ancillary revenues through venue management and  merchandising.  At present,
the  Company  owns a  minority  interest  in the  Albuquerque  Geckos,  a second
division professional soccer team in New Mexico.

Odyssey Merchandising:  Manufacturing, sourcing, and distribution of merchandise
will be pursued  and grown by Odyssey as a natural  business  complement  to all
other media companies as well as a stand-alone business unit.

Strategic Objectives
--------------------

     To  properly  build  Odyssey  Media,  the  Company's  Board  and  executive
management will seek to implement the following strategies:

- Create  and  implement  strong  corporate  governance  policies  and the most
  effective corporate infrastructure;

- Properly capitalize the Company and seek a NASDAQ listing;

- Acquire  profitable  media-related  operations  that will  contribute  to the
  Company's near-term and long term earnings;

- Leverage  connections  between investors and projects in Europe and the United
  States;  identify  talent  and  management  that  will  augment  the Company's
  abilities;

- Limit risk in the manner companies are acquired and investments are financed;

- Maintain a cost  consciousness  in  acquisition,  financing,  production  and
  distribution activities.

Recent Acquisitions
-------------------

     In August,  1998,  the Company  completed the  acquisition of the assets of
Sweden-based Kimon Mediabright KB ("Kimon"),  valued at $4,500,000,  in exchange
for 4,500,000 shares of the Company's subordinated  convertible Preferred Stock,
Series B, having a value for conversion  purposes of $1.00 per share. Kimon will
have the right to convert to Odyssey  common  stock  between  June 30,  2000 and
December  31,  2000 on a  dollar-for-dollar  basis  based  on the  price  of the
Company's common stock at the time of conversion. Kimon assets purchased consist
of a film library with worldwide  and/or  Scandanavian  distribution  rights and
Scandanavian  video  distribution  rights  to  certain  Hallmark   Entertainment
products.

     In  connection  with the  change of  control in March,  1998,  the  Company
acquired an 18% equity interest in each of two corporations  affiliated with Mr.
Schotte,  one of which is the owner of the Albuquerque Geckos, a second division
professional  soccer  team in New  Mexico,  and the  other  of  which is a media
production  company in  Luxembourg.  The Company  issued  one-year  notes in the
aggregate  amount of $450,000  in  consideration  of the  purchase of the equity
interests in these companies.

Sales of Library Films
----------------------

     On January 2, 1996,  the Company  entered  into an  agreement  with Regency
International Pictures,  B.V. ("Regency"),  the Company's joint venture partner,
to sell the Company's  interest in the related joint  ventures  through which it
held  approximately 50% ownership  interests in four theatrical motion pictures,
entitled  "Switch",  "Q & A,"  "Guilty  by  Suspicion"  and "This  Boy's  Life".
Pursuant to the  agreement  with  Regency,  the Company  received  $1,000,000 on
January 23, 1996 and $500,000 on February  14, 1996,  in exchange for all of the
Company's interests in the joint ventures.  In addition,  the Company retained a
contingent  interest  in  certain  receivables,  not to exceed  $212,500,  and a
contingent interest in future revenues from the pictures.

                                       5
<PAGE>

     On August 29, 1996,  the Company  entered into an agreement  with  Kinnevik
Media  Properties,  Ltd.  ("Kinnevik"),  pursuant to which the Company agreed to
grant to  Kinnevik  subdistribution  rights  in, and to sell to  Kinnevik  other
distribution rights to, certain films in the Company's film library. In exchange
for these rights, the Company received a total cash consideration of $1,075,000,
payable  $500,000 on closing,  $275,000 six months after  closing,  and $300,000
eighteen months after closing.  In addition,  the Company  retained a continuing
right to receive  revenues from certain of the films,  valued by management at a
minimum of  approximately  $150,000.  As part of the  transaction,  the  Company
granted 100,000 stock options to Kinnevik,  exercisable over a three year period
at the bid  price of the  Company's  common  stock in  effect  on August 5, 1996
($.625). The transaction with Kinnevik closed on October 7, 1996.

Recent Financings
-----------------

     In August and October of 1995,  the Company  concluded a private  placement
pursuant to which it issued unsecured promissory notes to unaffiliated investors
in the aggregate  amount of $312,500.  The notes had a maturity date of one year
and accrued  interest  at the rate of 12% per annum.  A total of 6.25 units were
sold at a purchase price of $50,000 per unit. In addition,  warrants were issued
to the  purchasers at the rate of 4,167  warrants for each unit sold, or a total
of 26,042  warrants (on a post Reverse  Split basis).  Each warrant  certificate
entitled the holder thereof to purchase one share of common stock at an exercise
price of either  $2.83 per share (the August  warrants)  or $2.37 per share (the
October warrants) over a three year period commencing one year after the closing
of the private placement.  After paying expenses and commissions of $42,500, the
Company received net proceeds of $270,000 from the private placement.  The notes
issued in the private  placement  were due to be paid by the Company  upon their
respective due dates on August 28 and October 3, 1996.

     The Notes and interest were not repaid as scheduled.  The Company  proposed
that  Noteholders  either defer  maturity of their notes and  exchange  existing
warrants  for  shares,  or cancel the notes and  warrants  in their  entirety in
exchange  for a greater  number of shares.  The Company  offered to register any
shares  issued in  exchange  for the  notes.  On August 12,  1997,  the date the
registration  became effective,  a total of $262,500 of notes were exchanged for
595,455 shares of registered  stock.  The remaining notes for $50,000 (held by a
single investor) have not been paid and are in default.

     In  September,  1996,  the  Company  entered  into  an  agreement  with  an
unaffiliated  third party for the purchase of 1,000,000  shares of the Company's
common  stock  (and  an  additional  1,000,000  warrants)  in  consideration  of
$750,000. Following a dispute between the parties concerning the satisfaction of
certain  conditions to closing,  the parties reached a settlement in June, 1997,
pursuant to which the investor  purchased  66,667  shares of common stock of the
Company for $50,000, or $.75 per share.

     In  September,  1996,  the  Company  reached an  agreement  with  Paramount
Pictures,  pursuant to which  Paramount  would cancel the Company's  contractual
guarantee of $2.7 million in full,  in exchange for which the Company  agreed to
(i)  relinquish all further  distribution  rights to "Wuthering  Heights";  (ii)
assign to Paramount all of its rights in any outstanding distribution agreements
for the film, and any  receivables to be generated  therefrom;  (iii)  guarantee
that Paramount  would collect a total of $500,000 in sales revenue from existing
distribution  agreements  no later  than  January  15,  1997.  Existing  license
agreements yielded  approximately  $420,000 in net revenues prior to January 15,
1997 (of which the Company would have been entitled to retain  approximately 20%
thereof in commissions).  The Company paid $250,000 in net revenues to Paramount
and is currently in  negotiations  with  Paramount  regarding  the timing of the
remaining $250,000 payment.

     In  January,  1997,  prior  counsel  to the  Company  agreed to  exchange a
promissory  note in the  face  amount  of  $70,000  for  120,000  shares  of the
Company's common stock.

                                       6
<PAGE>

     In February,  1997,  the Company  completed  the sale of 500,000  shares of
common  stock and  500,000  common  stock  purchase  warrants  to four  offshore
European investors for an aggregate  consideration of $375,000. The warrants are
exercisable over a three year period (expiring February 25, 2000) at an exercise
price of $1.06  per  share.  One of the  investors  was Johan  Schotte,  who was
subsequently elected as CEO of the Company in March, 1998.

     In April,  1997,  Stephen R.  Greenwald,  Lawrence I.  Schneider and Robert
Miller,  Jr., all  directors  of the  Company,  made loans to the company in the
amounts of $50,000, $25,000 and $25,000, respectively.  Each loan was payable on
demand and accrued  interest  at the rate of 2 points over prime per annum.  The
notes were  secured by a collateral  assignment  of the  Company's  300,000 note
receivable  from Kinnevik.  In  consideration  of making the loans,  the lenders
received  five-year  warrants to purchase shares of common stock of the Company,
exercisable  at $1.00 per share.  Messrs.  Schneider  and Miller  each  received
25,000 warrants and Mr. Greenwald  received 50,000 warrants as consideration for
making the loans to the Company. In addition, two independent unaffiliated third
parties made additional $25,000 loans to the Company in June and August, 1997 on
the same terms and conditions as the loans made by Mr. Greenwald,  Schneider and
Miller.  In May,  1998, the loans of Mr.  Schneider and one of the  unaffiliated
parties were paid from the proceeds of the Kinnevik  receivable.  The  remaining
lenders  agreed to a rollover of their loans  (aggregating  $100,000)  against a
second  Kinnevik  receivable and, in  consideration,  will receive an additional
50,000  warrants in the  aggregate,  exercisable at $1.00 per share over a three
year period. In September, 1998, all but $25,000 of these loans were repaid from
the proceeds of the Kinnevik receivable. The remaining lender, Robert E. Miller,
Jr., a director of the  Company,  agreed to a rollover of his $25,000 loan on an
unsecured  basis for an additional six month period with interest at the rate of
10% per annum.

     In  September,  1997,  the  Company and  Kinnevik  Media  Properties,  Ltd.
executed an  agreement  pursuant to which  Kinnevik  agreed to purchase  500,000
shares of  convertible,  redeemable  preferred  stock of the Company,  par value
$1.00 per share, for an aggregate purchase price of $500,000. Kinnevik agreed to
purchase the first  $250,000 of preferred  stock at the closing,  an  additional
$125,000 of preferred  stock 90 days after  closing,  and the final  $125,000 of
preferred stock 270 days (subsequently  extended to 360 days) after closing. The
preferred  stock would bear interest at the rate of 10% per annum which would be
paid in kind  semi-annually  by the issuance of  additional  shares of preferred
stock at a par value of $1.00 per  share.  Kinnevik  would  have the right for a
five-year period to convert the preferred stock into common stock of the Company
on a  share-for-share  basis.  The  Company  would  have the right to redeem the
preferred  stock for $1.25 per  share in the event the  Company's  common  stock
traded  at a price of $2.00  per  share or more for a period  of 20  consecutive
trading days. The Company agreed to help secure television  distribution  rights
for Kinnevik from third parties, and introduce various projects to Kinnevik from
time to time  which  may be of  interest  to  Kinnevik.  In the  event  Kinnevik
acquires any rights as a result of any  introductions  made by the Company,  the
parties  agree to mutually  determine  the value of such  services and to redeem
shares of the preferred stock at $1.00 per share based on the aggregate value of
the services so determined.

     The Company  received  $150,000 in funding from the Augustine Fund, L.P. in
July,  1998. In exchange for the  financing,  the Augustine Fund received a zero
coupon $150,000 convertible note as well as up to 150,000 transferable warrants,
exercisable  at $1.60 per share for a three year period.  Augustine  can convert
into restricted shares of the Company's common stock at a discount to the market
price of Odyssey common stock at the time of conversion  (i.e.,  at the lower of
the  market  price on the  closing  date,  or 80% of the market  price  prior to
conversion). Augustine and certain Augustine associated parties were also issued
a total of 45,000  shares of  restricted  common  stock in  connection  with the
transaction.

                                       7
<PAGE>

Competition
-----------

     The entertainment industry generally,  and the film industry in particular,
are  highly  competitive.   The  Company's   competition  includes  the  smaller
independent  producers  as  well as  major  motion  picture  studios  and  music
companies.  Many of the Company's competitors have financial and other resources
which are significantly greater than those available to the Company.

Operations
----------

     The  Company's  operations  have been  greatly  reduced  as a result of the
restructuring of the Company by new management.  The Company  maintains a single
office in Dallas,  Texas (see  "Properties")  and, as of September 30, 1998, had
three full-time  employees,  consisting of Mr. Schotte,  Mr.  Koshakji,  and Mr.
Greenwald,   the  CEO,   President   and  Managing   Director  of  the  Company,
respectively.

Tax Loss Carryforward
---------------------

     The  Company is entitled to the  benefits  of certain  net  operating  loss
carryforwards  to reduce its tax  liability.  The  utilization by the Company of
such tax loss  carryforwards  is  limited  under  applicable  provisions  of the
Internal  Revenue  Code of 1986,  as  amended,  and the  applicable  regulations
promulgated   thereunder.   As  of  June  30,  1997,  there  were  approximately
$27,000,000 in net operating loss  carryforwards  remaining to be used to reduce
tax liability.  The utilization of approximately $4.9 million of these losses in
future periods will be limited to approximately $350,000 per year.

Item 2.  Properties
         ----------

     The Company  presently  conducts its operations  out of leased  premises at
1601 Elm Street,  Dallas, Texas,  consisting of approximately 2,500 square feet.
The  premises  are  presently   being  made  available  to  the  Company  as  an
accommodation  by a company  affiliated  with Mr. Johan Schotte,  the CEO of the
Company.  Rent expense for each of the fiscal  years ended June 30, 1997,  1996,
and 1995 was $69,002, $38,772, and $297,287, respectively.

Item 3.  Legal Proceedings
         -----------------

     On December 20, 1990, Hibbard Brown & Company, Inc. ("Hibbard Brown") filed
a complaint entitled Hibbard Brown & Company,  Inc. v. Double Helix Films, Inc.,
Odyssey  Entertainment Ltd. and  Communications  and Entertainment  Corp. in the
Supreme Court of the State of New York, County of New York. The Complaint sought
payment of $300,000 under an agreement with the Company,  Odyssey,  Double Helix
and  Hibbard  Brown dated  December  21,  1989 for  certain  investment  banking
services  allegedly  performed  in  introducing  Odyssey  and  Double  Helix and
assisting them in consummation of the Mergers by which they became  wholly-owned
subsidiaries of the Company. A counterclaim  seeking recovery of $50,000 paid to
Hibbard Brown upon execution of the Agreement was asserted.

     Hibbard Brown's motion for summary  judgment was granted in October,  1991.
On January 30, 1992,  the Company  moved,  by order to show cause,  to renew and
thereupon deny,  dismiss or stay Hibbard Brown's  previously  granted motion for
summary  judgment on the ground that Hibbard Brown had  intentionally  concealed
the fact that it was an unauthorized foreign corporation transacting business in
New York. By Order dated March 2, 1992,  the court granted the Company's  motion
in part by renewing  the action and staying  judgment  pending  Hibbard  Brown's
qualification in New York. On October 29, 1992, Hibbard Brown moved for an order
vacating  the stay of  judgment,  a  declaration  that it was now an  authorized
foreign  corporation  and  reinstatement  of the  summary  judgment  granted  in
October, 1991 or, in the alternative,  to rehear its motion for summary judgment
on the original papers and grant judgment in its favor.

                                       8
<PAGE>

     On January 29, 1993, Double Helix,  Odyssey and the Company cross-moved for
an order  granting  reargument  and/or  renewal  of Hibbard  Brown's  motion for
summary  judgment  and  consolidating  the  litigation  with an action  that the
Company had brought  against  Hibbard Brown  (described  below),  or staying the
issuance,  entry and execution of judgment  pending the  resolution and trial of
the Company's action against Hibbard Brown.

     On March 26, 1993,  the court issued a Decision and Order vacating the stay
of entry of the $300,000 judgment against the Company and granting the Company's
cross-motion for a stay of execution  pending the determination of the Company's
action against  Hibbard Brown.  The Company's  cross-motions  for reargument and
renewal and consolidation were denied.

     By Decision and Order dated June 18, 1993,  the court  affirmed the stay of
execution of the  judgment,  but required the Company to obtain a bond to secure
the stay. The Company obtained a non-collateral bond.

     On March 5, 1992, the Company instituted an action entitled  Communications
and  Entertainment  Corp. v. Hibbard Brown & Company in the Supreme  Court,  New
York County,  for the return of 150,000 shares of Common Stock previously issued
on the ground  that  Hibbard  Brown  failed to perform  the  required  services.
Hibbard Brown counterclaimed for breach of contract.

     In July 1993,  after  considerable  pre-trial  discovery,  the  Company and
Hibbard Brown moved for summary judgment. By Decision and Order dated August 11,
1993, the court denied both motions.  Both parties  appealed.  On March 3, 1994,
the appellate court affirmed the denial of summary judgment.

     On or about October 14, 1994,  Hibbard Brown filed a voluntary petition for
relief  under  Chapter  11,  Title 11 of the United  States Code with the United
States  Bankruptcy  Court,  Southern  District  of New York.  Consequently,  the
Company's  action  against  Hibbard  Brown has been  automatically  stayed.  The
Company has filed a Proof of Claim.

     On or about  September 11, 1992,  Joseph  Duignan  brought an action in the
Superior Court of New Jersey,  Mercer County,  entitled Joseph Duignan v. Double
Helix Films Limited  Partnership No. 1, L.P., Double Helix Films,  Inc., Cinecom
International  Films, Film Gallery,  Inc., Stan Wakefield,  Jerry Silva,  Arthur
Altarac and Anthony Tavone (MER-L-4262-92).  Jerry Silva, the only defendant who
was served,  is former Vice  Chairman of the Board of  Directors of the Company.
Mr.  Silva has demanded  that the Company  indemnify  him against any  expenses,
judgments,  and amounts paid in settlement of the action.  The Company  contends
that it is not required to indemnify Mr. Silva because he breached his fiduciary
duties to the Company.

     Mr.  Duignan  claims  that he  invested  $75,000 to  acquire a  partnership
interest in Double  Helix Films  Limited  Partnership  No. 1 and that Mr.  Silva
forged or caused to be forged his signature on a  Subscription  Agreement  dated
July 28, 1986. The Complaint  alleges claims for rescission,  unjust  enrichment
(against  Double  Helix),  conversion,  fraud,  breach  of  contract,  breach of
fiduciary  duty and breach of covenants of good faith and fair dealing  (against
Mr. Silva and Double Helix). Mr. Duignan seeks to recover compensatory  damages,
including but not limited to, his alleged $75,000  investment,  punitive damages
and attorney's fees. Mr. Silva has answered the Complaint.

     On or about  December 30,  1994,  Krishna  Shah,  who  allegedly  served as
President of Double  Helix from about July 1991 until about March 1993,  brought
an action in the Superior  Court of  California,  Los Angeles  County,  entitled
Krishna Shah v. Norman Muller,  Communications and Entertainment  Corp., ATC II,
Carnegie Film Group,  Inc.,  Jerry Minsky,  Perry  Scheer,  Susan Bender,  Larry
Myers,  Robert Hesse,  Double Helix Films, Inc. and Does 1-100,  alleging claims
for breach of an oral  agreement  to pay Mr. Shah  $152,000  (which he allegedly
advanced  for the  benefit of Double  Helix)  and to give him a 19.5%  ownership
interest in its corporate  successors.  The Company has paid Mr. Shah the sum of
$15,000 in full settlement of all claims against the Company.

                                       9
<PAGE>

     In The Private Lessons  Partnership v. Carnegie Film Group, Inc.,  Monogram
Pictures Corp.,  Filmways  Entertainment  Corp., ATC, Inc., Krishna Shah, Lonnie
Romati,  Gerald Muller,  Jerry Minsky and Does 1-100 (California Superior Court,
Los Angeles County, Case No. BC091840), the plaintiff asserted claims for breach
of oral contract,  fraud in the inducement and fraudulent conveyance against Mr.
Shah,  seeking  damages  in the amount of  $315,000,  plus  further  unspecified
compensatory  damages and punitive  damages.  In August  1995,  Mr. Shah filed a
cross-complaint  against the Company,  Double Helix Films and Norman  Muller for
indemnification,  apportionment of fault and declaratory  relief. In addition to
compensatory  damages,  he  seeks  punitive  and  exemplary  damages,  emotional
distress   damages  and   attorney's   fees.   The  Company  has   answered  the
cross-complaint.

     On or about May 15, 1995,  Credit  Lyonnais Bank Nederland N.V. and Cinecom
Entertainment  Group, Inc. filed a Complaint in the Superior Court for the State
of California,  County of Los Angeles,  captioned Credit Lyonnais Bank Nederland
N.V. and Cinecom  Entertainment  Group, Inc. v. Odyssey  Distributors,  Ltd. and
Does 1 through 100 (No. BC 127790). They allege that Odyssey Distributors,  Ltd.
(a  subsidiary  of the Company)  collected  but failed to remit to them assigned
distribution proceeds in the amount of $566,283.33 from the foreign distribution
of "Aunt Julia and the  Scriptwriter"  and "The Handmaid's  Tale." The Complaint
alleges  claims for breach of contract and breach of fiduciary  duty and demands
damages in excess of  $566,283,  attorney's  fees,  an  accounting,  a temporary
restraining order and a preliminary  injunction.  In June 1995, the Court denied
plaintiffs an attachment and stayed the action pending  arbitration in New York.
In September,  1996, the Court dismissed the Complaint.  In December,  1996, the
Company  settled the  outstanding  litigation  with Generale  Bank  ("Generale")
(formerly   known  as  Credit   Lyonnais  Bank   Nederland   N.V.)  and  Cinecom
Entertainment  Group Inc.  Pursuant  to the  settlement  agreement,  the Company
agreed to pay to Generale  the sum of $275,000  in  complete  settlement  of the
claim,  payable $25,000 upon execution of the settlement  agreement,  $25,000 on
each of June 30 and December 31 in the years 1997,  1998 and 1999,  and $100,000
on June 30, 2000. Interest on the installments (at the rate of LIBOR plus 1% per
annum) will be waived provided the Company remains in compliance with the agreed
upon payment schedule.  The Company and Generale later agreed upon a new payment
schedule as follows:  $25,000 on or before  October 15, 1997 (payment was made);
$30,000 on each of April 15, 1998,  June 30, 1998,  December 31, 1998,  June 30,
1999,  and December 31, 1999;  and $100,000 on June 30, 2000.  The Company is in
receipt of a demand  letter  dated May 4,  1998.  The  letter  demands  that the
company  Cure the  non-payment  of a $30,000  installment  due  April 15,  1998.
According to the agreement between the Company and Generale, the Company had ten
days after  receipt of the letter to cure the  default.  The default has not yet
been  cured.  The  consequences  of not  curing  the  default  is the entry of a
confession  of  judgment  already  executed  by the  Company  for the  amount of
$275,000.  This confession of Judgment is against Odyssey Distributors,  Ltd., a
wholly owned but non-operating subsidiary of the Company.

     In August 1995, G.P. Productions,  Inc. ("GP") and Greenwich Subject Films,
Inc.  ("Greenwich")  commenced an action  entitled  G.P.  Productions,  Inc. and
Greenwich  Studios,  Inc.  v.  Double  Helix  Films,  Inc.,  Communications  and
Entertainment, Inc., Krishna Shaw, Gerald Muller and Norman Muller in the United
States  District Court,  Southern  District of Florida (Case No.  95-1188).  Mr.
Muller has  demanded  that the  Company  indemnify  him  against  any  expenses,
judgments  and amounts paid in settlement  of the action.  The Company  contends
that, by virtue of Mr. Muller's  breaches of fiduciary duty and violation of his
obligations to the Company, it is not required to provide indemnification.

     GP and  Greenwich  allege that they are the  exclusive  owners of the films
"The Gallery" and "South Beach". They assert claims for copyright  infringement,
unfair competition,  breach of contract,  accounting,  conversion,  civil theft,
conspiracy  and  fraudulent  conveyance.  The Complaint  demands a recall of the
films,  an  attachment,   preliminary  and  permanent   injunctive   relief,  an
accounting,  and  unspecified  compensatory,  punitive and treble  damages.  The
Company's motion to transfer venue of the action was granted in November,  1995,
and the case  was  transferred  to the  United  States  District  Court  for the
Southern  District of New York.  There has been no activity in this matter since
the transfer of venue in 1995.

                                       10
<PAGE>
     In September,  1995,  the agent for the landlord for the premises  formerly
occupied by the Company at 800 Third Avenue, New York, New York, filed a Summons
and Verified  Complaint against the Company in the Supreme Court of the State of
New  York,  County  of  New  York,  entitled  Joseph  P.  Day  Realty  Corp.  v.
Communications  and  Entertainment  Corp. The plaintiff  alleged that it was due
$66,694 from the Company  (plus  interest)  for rent  allegedly  owed during the
period from April through September,  1995. The Company had vacated the premises
on April 12, 1995. Summary judgment was awarded to the plaintiff on May 22, 1996
and a judgment  was entered  for $74,142 on May 31,  1996.  In July,  1996,  the
landlord  commenced a second action for $121,000 for rent  allegedly owed during
the period from October 1995 through July 1996. The Company reached a settlement
in these  cases,  pursuant to which the Company  delivered  177,5000  registered
shares of the  Company's  common  stock to each of the landlord and its agent in
full settlement of both actions.

     In  October,  1995,  Canon  Financial  Services  filed a  Complaint  in the
Superior  Court  of New  Jersey  entitled  Canon  Financial  Services,  Inc.  v.
Communications and Entertainment  Corp. The plaintiff is claiming that it is due
$47,499.83,  plus damages,  pursuant to a lease agreement. The Company has filed
an Answer in this action and  plaintiff's  motion for summary  judgment has been
denied by the Court. No trial date has yet been set in this matter.

     In December,  1995,  Robert F. Ferraro,  a former  director of the Company,
brought an action  against the Company in the Supreme  Court of the State of New
York, New York County. The action was brought on a promissory note in the amount
of $25,000 and plaintiff  obtained a judgment on a summary judgment motion.  The
plaintiff  has not yet  moved  to  enforce  the  judgment  and  the  Company  is
considering  whether  or not it has a claim for  indemnification  against  prior
management in connection with the issuance of the note.

     In  January,  1996,  an action was filed  against  the Company in which the
plaintiff sought damages in the amount of $33,849 for legal services rendered to
the  Company  and its  subsidiaries.  In  June,  1997,  the  parties  reached  a
settlement in the matter,  pursuant to which the Company agreed to pay $7,000 to
plaintiff, deliver 40,000 freely tradeable shares of the Company's common stock,
and deliver an additional  cash amount to the extent the aggregate  market value
of the  shares on the date of  delivery  was less than  $40,000.  Payment of the
additional cash amount of $13,000 was completed in December, 1997.

     In March,  1996,  an action was filed  against  the  Company in Los Angeles
Municipal  Court by Judy Hart,  in which the  plaintiff  claims  that she is due
$17,920  pursuant to a  promissory  note.  The  Company has filed a  cross-claim
seeking  offsets  against the amount due and other  damages.  On May 21, 1998, a
default  judgment  was entered on behalf of  plaintiff in the amount of $22,261.
Subsequently,  plaintiff  filed a motion to include  attorneys fees and costs in
the  aggregate  amount of  approximately  $17,000.  The Company is attempting to
reach a settlement with plaintiff.

     In March,  1996, a class  action  complaint  was filed  against the Company
entitled Dennis Blewitt v. Norman Muller, Jerry Minsky, Dorian Industries,  Inc.
and  Communications  and  Entertainment  Corp.  The  complaint  seeks damages in
connection  with the  Company's  treatment in its  financial  statements  of the
disposition  of its  subsidiary,  Double Helix Films,  Inc. in June,  1991.  The
complaint  seeks  unspecified  damages on behalf of all  persons  who  purchased
shares of the Company's common stock from and after June, 1992. A second action,
alleging  substantially  similar grounds,  was filed in December 1996 in Federal
Court  in the  United  States  District  Court  for  the  Southern  District  of
California  under the caption  heading  "Diane  Pfannebecker  v. Norman  Muller,
Communications  and Entertainment  Corp., Jay Behling,  Jeffrey S. Konvitz,  Tom
Smith,  Jerry Silva,  David Mortman,  Price  Waterhouse & Co., Todman & Co., and
Tenato  Tomacruz."  Following the filing of the second action,  the first action
was dismissed by  stipulation in May 1997. The Company filed a motion to dismiss
the  complaint  in the second  action and after a hearing on the motion in July,
1997, the Court dismissed the federal securities law claims as being time-barred
by the applicable statute of limitations, and dismissed the state securities law
claims for lack of subject matter  jurisdiction.  The lower court's dismissal of
this action was upheld on appeal by the Ninth Circuit. Messrs. Muller, Smith and
Mortman,   former   directors  of  the  Company,   have   asserted   claims  for
indemnification  against the Company. The Company has advised the claimants that
it will not provide such  indemnification  based upon their wrongful actions and
failure to comply with various obligations to the Company.

                                       11
<PAGE>
     In September, 1996, Film Bridge International, Inc. ("Film Bridge") filed a
complaint  in  Los  Angeles  County   Superior   Court,   entitled  Film  Bridge
International v. Communications and Entertainment  Corp., and Does 1 through 50,
Inclusive,  contending  that the  Company had  breached  the terms of an alleged
joint venture agreement between the parties regarding the distribution rights to
certain  films.  On December 19, 1996,  the Company filed a cross-claim  against
Film Bridge  alleging that,  since the end of June,  1996, Film Bridge failed to
furnish the Company  with a proper  accounting  of its  revenues and expenses in
connection  with the sale of  foreign  licenses  of  various  films in which the
Company had an interest and had failed to make  payment of at least  $450,000 to
the Company for monies due and owing to the  Company  from the foreign  sales of
such films.  An agreement  was reached  between the parties in May,  1997,  as a
result of which the Company  received  $336,000 of the monies being held by Film
Bridge,  with the balance being retained by Film Bridge as sales commissions and
in full settlement of the litigation.

     On November 21, 1996, the law firm of Halperin,  Klein & Halperin  (counsel
to Mr. Silva)  commenced an action against the Company in the Civil Court of the
State of New York on a returned check in the amount of $5,000 for legal services
allegedly rendered to the Company.  The check was originally issued to plaintiff
in April,  1995 in connection  with the change of control of the Company at that
time.  The  Company  has filed an Answer in the action and intends to defend the
matter on the basis of a failure of consideration.

     In December,  1997,  the  Directors  Guild of America  ("DGA")  obtained an
arbitration  award  against  Down  Range  Productions,   Inc.,  a  wholly  owned
subsidiary  of Odyssey,  on behalf of Kahn  Brothers  Pictures fso Michael Kahn,
Charles  Skouras,  and  Scott C.  Harris.  Down  Range was  ordered  to pay Kahn
Brothers Pictures the total sum of $155,041; Charles Skouras the sum of $32,360;
and Scott C. Harris the total sum of $8,868;  plus  interest at 18% per annum on
each of these amounts from April 1, 1997. Down Range was also ordered to pay the
DGA $2,500. Down Range was also ordered to assign to the DGA all of Down Range's
right,  title and interest in the motion  picture  "Down  Range,"  including the
screenplay  for the motion  picture,  and Down Range was enjoined from licensing
the motion picture or the screenplay to any third party other than the DGA. Down
Range was also ordered to pay the arbitrator $2,250.

     Kahn  Brothers  Pictures fso Michael  Kahn also filed a claim  against Down
Range  Productions,  Inc. and the Company with the Writers Guild of America West
(WGA) for unpaid  writing  services on "Down Range." That claim has been settled
for the amount of $15,000.

     The Screen  Actors  Guild  (SAG) has also  asserted  that there are amounts
owing to four actors (Dale Dye, John Philbin, Tegan West, and Kiljoy Productions
fso Kathleen  Wilhoite),  arising out of "Down Range." The company believes that
SAG has never  instigated any arbitration or other  proceeding to try to collect
on these claims.  Additionally,  there were two actors,  Corbin Bernsen and Jeff
Fehey,  who had  pay-or-play  contracts.  The outcome of these contracts and the
actors' claims have not been resolved.

     In April,  1998, the Company  reached a settlement with Mr. Jerry Silva ( a
former  director of the Company),  regarding his actions  against the Company in
the Civil  Court and  Supreme  Court of the  State of New  York.  Mr.  Silva was
seeking money damages  based on his claim that the Company  interfered  with his
right to sell his shares in the Company.  Mr. Silva will discontinue the matters
and the Company will  authorize  the sale of Mr.  Silva's  shares in the Company
under Rule 144, up to a maximum of 25,000 shares per month.

     In April,  1998,  an action was  commenced  against the Company by Siegel &
Gale,  a provider of  brochure  materials  for the  Company.  The lawsuit  seeks
payment of $48,695,  plus  costs,  related to work done by Siegel & Gale for the
Company.  The  Company  has not yet filed an Answer in this action and is in the
process of  consulting  with its  counsel on the best course of  resolving  this
matter.

                                       12
<PAGE>
Item 4.  Submission of Matters to a Vote of Security Holders.
         ----------------------------------------------------

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year covered by this Report.


                                     PART II

Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters.
         ---------------------------------------------------------------------

     The  following  table sets forth the range of high and low bid  information
for the Common Stock of the Company as reported by the Nasdaq Stock Market, Inc.
("Nasdaq") on a quarterly  basis for each of the two preceding  fiscal years. On
May 1, 1996,  Nasdaq  notified  the Company that its shares of Common Stock were
being deleted from Nasdaq's SmallCap Market,  effective May 2, 1996, because the
Company  did not  maintain a combined  capital  and  surplus of  $1,000,000,  as
required  by Section  1(c)(3) of  Schedule D of the NASD  By-Laws.  Since May 2,
1996, the Company's shares have traded in the over-the-counter market on the OTC
Bulletin Board. The Company's Common Stock trades under the symbol OPIX.

     No dividends have been declared or paid with respect to the Common Stock.

     On March 6, 1996, the Company  declared a reverse  one-for-six  stock split
(the  "Reverse  Split") of its Common  Stock,  effective on March 18, 1996.  The
share prices  reflected  below for all periods  prior to the Reverse  Split have
been adjusted  upward (by a multiple of six) to give effect to the Reverse Split
for such prior periods on a pro forma basis.

     The bid quotations represent  inter-dealer prices and do not include retail
mark-ups,  mark-downs or commissions  and may not necessarily  represent  actual
transactions.

                                    Common Stock
                                    ------------

Fiscal 1996                High                        Low
-----------                ----                        ---
First Quarter             $4.00                      $2.12
Second Quarter             2.75                       1.37
Third Quarter              2.37                       1.50
Fourth Quarter             1.81                        .40


Fiscal 1997
First Quarter             $ .87                      $ .50
Second Quarter             1.37                        .43
Third Quarter              1.07                        .62
Fourth Quarter              .81                        .37


     As of September 30, 1998,  there were 4576 record  holders of the Company's
Common Stock.


                                       13
<PAGE>

Item 6.  Selected Financial Data (in thousands, except per share data).
         --------------------------------------------------------------

     The following table sets forth the selected  financial data for the Company
and should be read in conjunction with the Consolidated Financial Statements and
Notes  thereto,  and with  Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations which appear elsewhere in this report.
<TABLE>
<CAPTION>

                                                               For the Years Ended June 30,
<S>                                                 <C>       <C>      <C>       <C>      <C> 
                                                      1997      1996     1995     1994     1993
Income Statement Data

Revenues.......................................      $  141    $1,011   $1,521   $14,797   $31,430
Income (loss) from continuing operations.......          69    (4,960)  (6,852)   (7,607)   (1,450)
Income (loss) from discontinued operations.....           -         -     (458)     (766)      187
Net income (loss)..............................          69    (4,960)  (7,310)   (8,373)   (1,263)

Per Share Data (1)
Income (loss) from continuing operations.......         .02     (2.17)   (2.94)    (3.18)    (.057)
Income (loss) from discontinued operations.....           -         -    (0.20)    (0.32)     0.07
Net income (loss)..............................         .02     (2.17)   (3.14)    (3.50)    (0.50)
Cash Dividends.................................           -         -        -         -         -
Weighted average shares........................       2,294     2,284    2,332     2,392     2,551

Balance Sheet Data

Film costs.....................................         120     1,001   10,656    13,127    10,614
Total assets...................................         740     2,488   15,078    27,949    35,409
Indebtedness...................................         962       562      249       179       366
Shareholders' equity...........................      (2,226)   (2,749)   1,979     9,796    18,786
</TABLE>

(1) Per  share  data and  weighted  average  shares  for all  periods  have been
restated to reflect  the effect of a  one-for-six  reverse  stock split in March
1996.


Item 7.  Management's Discussion and Analysis of Financial Condition and 
         ---------------------------------------------------------------
         Results of Operation.
         ---------------------

Results of Operations

     Years Ended June 30, 1997 and 1996

     Operations for the fiscal year ended June 30, 1997 ("fiscal 1997") resulted
in net income of $68,808,  compared with a net loss of $4,959,716 for the fiscal
year ended June 30,  1996  ("fiscal  1996").  The net income for fiscal  1997 is
primarily  due to a gain of $818,776 from the sale of certain  distribution  and
subdistribution  rights in certain films to a third party and  recognition  of a
$1,245,758  gain from  cancellation of a contractual  obligation  related to the
Company's  distribution rights in a motion picture which was partially offset by
a  write-off  of  festival  costs in the  amount  of  $249,544,  litigation  and
settlement  costs of $148,174  and a write-down  in inventory  costs of $435,102
relating to one motion  picture.  These  write-offs  were partially  offset by a
write-off of $449,163 in participation liabilities related to a library that was
sold. The loss for fiscal 1996 is primarily the result of a $3,262,4798  loss on
the sale of interests in joint ventures  relating to four theatrical  films, and
from the continued decline in film distribution revenue.

     Revenues  declined to $141,202 for fiscal 1997 compared to  $1,010,826  for
fiscal 1996.  There were no new films which became available for delivery to the
Company in either period.

                                       14
<PAGE>

     Costs related to revenues decreased to $565,610 for fiscal 1997 as compared
to  $1,046,299  for fiscal 1996.  The decrease is primarily  related to the fact
that there were lower film revenues in the current year and from the  write-offs
explained above.

     Selling,  general and  administration  expenses increased to $1,678,450 for
fiscal 1997 from  $1,565,307 for fiscal 1996. The increase is primarily  related
to higher salaries and professional fees during fiscal 1997.

     As of  June  30,  1997,  the  Company  had a  federal  net  operating  loss
carryforward,  for tax purposes,  of approximately  $27,000,000 expiring through
2011,  available to be used to reduce future tax  liability.  Due to limitations
imposed by the  Internal  Revenue  Service,  the  utilization  of  approximately
$4,900,000 of these operating losses will be limited to  approximately  $350,000
per year.

     Years Ended June 30, 1996 and 1995

     Operations for the fiscal year ended June 30, 1996 ("fiscal 1996") resulted
in a loss from  continuing  operations  of  $4,959,716,  compared to a loss from
continuing  operations  of  $6,851,458,  for the fiscal year ended June 30, 1995
("fiscal  1995").  The  loss  for  fiscal  1996 is  primarily  the  result  of a
$3,262,478  loss on the sale of  interests  in joint  ventures  relating to four
theatrical films, and from the continued  decline in film distribution  revenue.
The loss  for  fiscal  1995 is due to a  substantial  decline  in  revenues,  as
compared to the previous  fiscal year,  and certain  write-offs,  including film
costs and receivables  resulting from the settlement of litigation with Home Box
Office Inc.  ("HBO"),  costs  associated  with the sale or  abandonment  of film
development projects and unrecoverable distribution costs.

     Revenues  declined 34% to $1,010,826  for fiscal 1996 from  $1,521,434  for
fiscal 1995. Revenues for both periods reflect the continued licensing of rights
in the Company's library of feature films.  There were no new films which became
available  for  delivery  to the Company in either  period,  partly due to prior
management's failure to acquire rights to new film projects.

     Costs  related to  revenues  for fiscal  1996  exceeded  film  distribution
revenues  by  $35,473,   primarily  due  to  the   write-off  of   unrecoverable
distribution costs. For fiscal 1995, costs related to revenues exceeded revenues
by  $3,223,896,   primarily  due  to  write-offs  of  approximately   $2,518,000
associated  with the  settlement of litigation  with HBO, and write-offs of film
development projects, film assets acquired in settlement of loans receivable and
unrecoverable distribution costs.

     As of January 2, 1996, the Company entered into an agreement with its joint
venture  partner  to sell  its  related  joint  ventures  through  which it held
approximately 50% ownership  interests in four theatrical motion pictures.  As a
result of the sale, the assets and obligations of the joint ventures, heretofore
included  in  the  consolidated   financial  statements  of  the  Company,  were
eliminated,  including  approximately  $3,485,000 of funds held in joint venture
accounts, net film costs of approximately $6,051,000,  payables due to producers
and  participants of approximately  $7,244,000,  deferred income of $520,000 and
other net obligations of approximately $272,000.

     Selling,  general and administrative expenses decreased $2,140,156 (58%) to
$1,565,307  for fiscal 1996 from  $3,705,463  for fiscal 1995.  The reduction in
expenses is a direct result of new management's efforts to eliminate unnecessary
overhead.  Expenses for fiscal 1996 reflect  significant  decreases in personnel
and  related  expenses,  rent (due to the closure of the New York office and the
reduction of the Los Angeles office) and professional fees.

     The  decrease in interest  income for fiscal 1996 is due to a reduction  in
the average  available  cash  balances,  including  funds held in joint  venture
accounts.

     Interest  expense  increased  to $97,701 for fiscal  1996 from  $19,498 for
fiscal 1995. The increased  interest expense resulted primarily from the private
placement  sale of an  aggregate  of  $312,500  principal  amount of 12%  Senior
Unsecured Promissory Notes in August and October 1995.

                                       15
<PAGE>

     The Company did not recognize  any tax benefits  related to its losses from
operations for the 1996 and 1995 fiscal years due to its inability to carry-back
such losses to prior years.

     As of  June  30,  1996,  the  Company  had a  federal  net  operating  loss
carryforward,  for tax purposes,  of approximately  $27,000,000 expiring through
2011,  available to be used to reduce future tax  liability.  Due to limitations
imposed by the  Internal  Revenue  Service,  the  utilization  of  approximately
$4,900,000 of these operating losses will be limited to  approximately  $350,000
per year.


Liquidity and Capital Resources

     At June 30, 1997, the Company held approximately $9,000 of cash.

     New management has taken  significant  steps to  recapitalize  and fund the
Company's operations.

     The company signed an agreement with Kimon on July 14, 1998 to purchase the
assets of Kimon, valued at $4,500,000,  in exchange for 4,500,000 Odyssey shares
of subordinated  convertible  preferred stock, Series B, having a value of $1.00
per share for  conversion  purposes.  Kimon  shall be able to convert to Odyssey
common stock between June 30, 2000 and December 31, 2000 on a  dollar-for-dollar
basis  based  on the  price  of the  Company's  common  stock  at  the  time  of
conversion.  Kimon assets  purchased  consist of a film  library with  worldwide
and/or  Scandanavian  distribution  rights and Scandanavian  video  distribution
rights to certain Hallmark Entertainment products.

     In June,  1998, the company  applied for, and was accepted for,  trading on
the Berlin Stock Exchange,  under the symbol "ODY." The German company  Berliner
Freiverkehr  (Atkien)  assisted  the  Company in the  application  and signed an
agreement  with the Company to serve as a market  maker/coordinator  in exchange
for 200,000  warrants  having an exercise price of $1.55 per share,  exercisable
during the two-year period commencing June 23, 1998.

     The Company  received  $150,000 in funding from the Augustine  Fund L.P. in
July 1998. In exchange for the financing, the Augustine Fund received a $150,000
convertible note as well as up to 150,000 transferable warrants,  exercisable at
$1.60 per share for a three year period.  Augustine can convert into  restricted
shares of the  Company's  common  stock at a discount to the market price of the
common  stock at the time of the  conversion  (i.e.,  at the lower of the market
price on the closing  date,  or 80% of the market  price  prior to  conversion).
Augustine and certain Augustine  associated  parties were also issued a total of
45,000 shares of restricted common stock in connection with the transaction.


                                       16
<PAGE>

Item 8.  Financial Statements and Supplementary Data.
         --------------------------------------------
                                   

                          ODYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                     Page

Report of Independent Accountants                                      18

Financial Statements:
    Consolidated Balance Sheets
     as of June 30, 1997 and 1996                                      19

    Consolidated Statements of Operations for the
     Years Ended June 30, 1997, 1996 and 1995                          20

    Consolidated Statements of Changes in Shareholders'
     Equity (Deficit) for the Years Ended June 30,
     1997, 1996 and 1995                                               21


    Consolidated Statements of Cash Flows for the
     Years Ended June 30, 1997, 1996 and 1995                          22-23

    Notes to Consolidated Financial Statements                         24-40



    All schedules  have been omitted  because the requested  information  is not
    required,  or, because the information required is included in the financial
    statements or notes thereto.




                                       17
<PAGE>
 REPORT OF INDEPENDENT ACCOUNTANTS

 VANT&ENDER C.P.A., P.C.

 To the Board of Directors and Shareholders of
 Odyssey Pictures Corporation

     In our opinion,  the  accompanying  consolidated  balance sheet and related
consolidated  statement  of  operations,  shareholders'  equity and of cash flow
present  fairly,  in all material  respects,  the financial  position of odyssey
Pictures  Corporation  and its  subsidiaries at June 30, 1997 and the results of
their  operations  and their  cash flow for the period  ended  June 30,  1997 in
conformity  with  generally  accepted  accounting  principles.  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  audit.  We  conducted  our audit of these  statements  in  accordance  with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of  material  misstatement.  An audit  includes  examining,  on test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audit  provides a reasonable  basis for the opinion  expressed
above.

     As discussed in Note 8 to the financial statement, the Company defaulted on
payments  due August and October  1996  relating to notes  payable.  The Company
proposed  to the  noteholders  to  defer  maturity  of the  notes  and  exchange
exisiting  warrants  for shares,  or cancel the notes and  existing  warrants in
their  entirety in  exchange  for shares.  The Company  offered to register  any
shares  issued in  exchange  for the notes as of  August  12,  1997 the date the
registration become effective,  all but one of the noteholder agreed to exchange
their notes for  registered  stock.  The remaining  notes for $50,000 (held by a
single investor) have not been paid and are default.  Additionally, an unsecured
note of $179,000 is also in default.  At this time, the ultimate outcome of this
matter cannot be determined.

     As discussed in Note 9, the Company is a defendant in various lawsuits. The
Company  has  filed   counteractions  and  preliminary  hearings  and  discovery
proceedings  on several  actions are in progress.  The  ultimate  outcome of the
litigation cannot be determined at present.  Not all liabilities that may result
upon adjudication have been accrued in the accompanying financial statements.

     The accompanying  financial statements have been prepared assuming that the
company  will  continue  as a  going  concern.  As  discussed  in  Note 3 to the
financial statements, the Company has suffered recurring losses from operations,
has a net capital  deficiency and has  insufficient  working capital to meet its
current  obligations and liquidity needs.  These factors raise substantial doubt
about the Company's ability to continue as a going concern.  Management's  plans
in  regard  to  these  matters  are  also  described  in Note 3.  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

/s/Want & Ender C.P.A., P.C.
 Want & Ender C.P.A., P.C.
 New York City, New York

 June 23, 1998

                                       18
<PAGE>

<TABLE>
<CAPTION>

                          OSYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.
                           Consolidated Balance Sheets
                       
<S>                                                      <C>                   <C>   

                                                               JUNE 30,            JUNE 30,
                                                                 1997                1996
                                                            ---------------     ---------------

ASSETS:
     Cash                                                           $8,790            $462,971
     Funds held in joint venture accounts
     Accounts receivable, net of allowances
        of $0 and $53,788                                          292,251             996,574
     Note receivable                                               300,000                   0
     Film costs, net                                               120,472           1,000,968
     Other assets                                                   17,998              27,945
                                                            ---------------     ---------------

                                                                  $739,511          $2,488,458
                                                            ===============     ===============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT):
     Liabilities:
        Accounts payable and accrued expenses                     $874,020            $698,985
        Accrued wages                                              335,996              17,372
        Accrued interest                                            64,601              46,272
        Accrued rent                                               149,000             150,000
        Due to producers and participants                          560,499           3,760,142
        Deferred revenues                                           19,800               3,000
        Notes and loans payable                                    961,500             561,500
                                                            ---------------     ---------------
                                                                 2,965,416           5,237,271
                                                            ---------------     ---------------
     Commitments and contingencies

     Shareholders' Equity (Deficit):
        Preferred stock, par value $.10;
           Authorized - 10,000,000 shares
           Issued - none
        Class A stock, par value $.01;
           Authorized - 10,000,000 shares
           Issued - none
        Common stock, par value $.01;
           Authorized - 40,000,000 shares
           Issued and outstanding -
              3,279,515 and 2,591,242 shares                        32,796              25,913
        Capital in excess of par value                          26,358,583          25,911,366
        Accumulated deficit                                   (28,617,284)        (28,686,092)
                                                            ---------------     ---------------
        Total shareholders' deficit                            (2,225,905)         (2,748,813)
                                                            ---------------     ---------------

                                                                  $739,511          $2,488,458
                                                            ===============     ===============

</TABLE>





        The accompanying notes are an integral part of these statements.

                                      
                                       

                                       19
<PAGE>
 
<TABLE>
<CAPTION>
                          OSYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.
                      Consolidated Statements Of Operations
<S>                                                 <C>              <C>            <C>   
                                                                      For the Years
                                                                      Ended June 30,
                                                        ------------------------------------------
                                                           1997           1996           1995

      REVENUES:                                            $141,202     $1,010,826     $1,521,434
                                                        ------------  -------------  -------------
      EXPENSES:
         Costs related to revenues                          565,610      1,046,299      4,745,330
         Selling, general and
           administrative expenses                        1,678,450      1,565,307      3,705,463
                                                        ------------  -------------  -------------
                                                          2,244,060      2,611,606      8,450,793
                                                        ------------  -------------  -------------

         Operating income (loss)                         (2,102,858)    (1,600,780)    (6,929,359)

      OTHER INCOME (EXPENSES):
         Other income
         Interest income                                                     1,243         97,399
         Interest expense                                   (91,435)       (97,701)       (19,498)
         Loss on sale of joint venture interests                        (3,262,478)
         Other Income                                     2,263,101

                                                        ------------  -------------  -------------
         Income (loss) from continuing operations
           before provision for income taxes                 68,808     (4,959,716)    (6,851,458)
         Benefit for income taxes
                                                        ------------  -------------  -------------

         Income (loss) from continuing operations            68,808     (4,959,716)    (6,851,458)
         Loss from discontinued
           operations                                                                    (458,193)
                                                        ------------  -------------  -------------

         Net income (loss)                                  $68,808    ($4,959,716)   ($7,309,651)
                                                        ============  =============  =============

      Income (loss) per share:
         Income (loss) from continuing operations             $0.02         ($2.17)        ($2.94)
         Loss from discontinued
           operations                                                                       (0.20)

                                                        ------------  -------------  -------------
           Net income (loss)                                  $0.02         ($2.17)        ($3.14)
                                                        ============  =============  =============

         Weighted average common
           shares outstanding*                            2,993,809      2,283,611      2,331,579
                                                        ============  =============  =============

      Fully diluted income (loss) per share:
         Income (loss) from continuing operations             $0.02         ($2.17)        ($2.94)
         Loss from discontinued
           operations                                                                       (0.20)
                                                        ------------  -------------  -------------

           Net income (loss)                                  $0.02         ($2.17)        ($3.14)
                                                        ============  =============  =============

         Weighted average common
           shares outstanding*                            2,993,809      2,283,611      2,331,579
                                                        ============  =============  =============


                    The accompanying notes are an integral part of these statements.

</TABLE>


                                                     20
<PAGE>


<TABLE>
<CAPTION>
                          OSYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.
      Consolidated Statements Of Changes in Shareholders' Equity (Deficit)
<S>                               <C>            <C>          <C>         <C>        <C>    <C>
                                       Class A Stock         Common Stock                                            
                                  ---------------------  --------------------                                             Total
                                                Amount                Amount    Capital in                 Treasury    Shareholders'
                                              ($.01 Par             ($.01 Par   Excess of   Accumulated     Stock         Equity
                                   Shares       Value)     Shares     Value)    Par Value     Deficit      at Cost       (Deficit)

Balances - June 30, 1993          2,554,132    $25,541   2,241,482   $22,414   $28,046,619  ($8,043,239) ($1,264,986)   $18,786,349
   Purchase of 402,200 shares
     of treasury stock                                                                                      (616,815)      (616,815)
   Treasury shares retired
     and cancelled                                        (162,833)   (1,628)   (1,880,173)                1,881,801              0
   Conversion of Class A stock     (213,429)    (2,134)     22,676       227         1,907
   Net loss                                                                                  (8,373,486)                 (8,373,486)
                                  ----------   --------  ----------  --------  ------------  -----------  -------------  -----------

Balances - June 30, 1994          2,340,703     23,407   2,101,325    21,013    26,168,353  (16,416,725)       --         9,796,048
   Conversion of Class A stock     (254,148)    (2,541)     27,002       270         2,271                                        0
   Cancellation of
      unexchanged shares           (520,740)    (5,207)    (10,496)     (105)        5,312                                        0
   Automatic conversion of
      Class A stock to Common    (1,565,815)   (15,659)    166,358     1,664        13,995                                        0
   Dividend of shares of
      subsidiary                                                                  (507,114)                                (507,114)
   Net loss                                                                                  (7,309,651)                 (7,309,651)
                                 -----------   --------  ----------  --------  ------------  -----------  -------------  -----------

Balances - June 30, 1995            --           --      2,284,189    22,842    25,682,817  (23,726,376)       --         1,979,283
   Issuance of shares to officers
      in payment of notes                                  307,053     3,071       228,949                                  232,020
   Cash payments in lieu of
      fractional shares on
      conversion of Class A stock                                                     (400)                                    (400)
   Net loss                                                                                  (4,959,716)                 (4,959,716)
                                 -----------   --------  ----------  --------  ------------  -----------  ------------- ------------

Balances - June 30, 1996            --           --      2,591,242   $25,913   $25,911,366 ($28,686,092)       --       ($2,748,813)
   Issuance of shares to officers
      in payment of notes                                   78,948       789        44,211                                   45,000
   Re-issue of unexchanged shares
      shares previously cancelled                           65,825       659          (659)                                       0
   Issuance of shares in consideration
      for services rendered                                 43,500       435        33,665                                   34,100
   Sale of shares to equity
      investors                                            500,000     5,000       370,000                                  375,000
   Net income                                                                                   68,808                       68,808
                                 ------------  --------  ----------  --------  ------------  -----------  ------------- ------------
Balances - June 30, 1997
                                    --           --      3,279,515   $32,796  $26,358,583 ($28,617,284)        --       ($2,225,905)
                                 ============  ========  ==========  ======== ===========  =============  ============= ============















                                          The accompanying notes are an integral part of these statement.

                                                                       21
                                       
</TABLE>

                                      
<PAGE>



<TABLE>
<CAPTION>
                          OSYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.
                      Consolidated Statements Of Cash Flows
<S>                                                         <C>           <C>              <C>    
                                                                           For the Years
                                                                           Ended June 30,
                                                            -------------------------------------------
                                                                 1997            1996            1995

     Cash Flows from Operating Activities:
       Net loss from continuing operations                     $68,808     ($4,959,716)    ($6,851,458)
         Adjustments to reconcile net income
          to net cash provided by (used in)
          operating activities:
            Loss on sale of joint venture interest                           3,262,478
            Amortization of film costs                       1,660,440         634,179       2,149,723
            Additions to film costs                           (779,944)       (185,401)        (72,259)
            Other depreciation and amortization                 18,963          44,307         187,219
            Provision for loss on investment
            Equity in losses of subsidiary held for sale                                        64,605
            Gain on sale of shares of subsidiary                                                (5,062)
            Issuance of shares of subsidiary stock
              in payment of legal fees                                                         155,905
            Issuance of shares of stock in consideration
              for services rendered                             34,100
            Issuance of shares of stock to officers
              in payment of deferred compensation               45,000         232,020
            Cash payments in lieu of fractional shares                            (400)
            Decrease (increase) in assets net of sale of
                 joint venture interest:
              Funds held in joint venture accounts                             352,723      (1,799,603)
              Accounts receivable, net                         704,323        (406,331)      9,998,736
              Note receivable                                 (300,000)
              Other                                               (536)         (5,500)        258,007
            (Decrease) increase in liabilities net of
                 sale of joint venture interest:
              Accounts payable and accrued expenses            510,988        (199,628)       (576,731)
              Issuance of note in payment of legal fees                                         70,000
              Due to producers and participants             (3,199,643)       (115,701)     (4,616,323)
              Deferred revenues                                 16,800           3,000          38,875
                                                         --------------  --------------  --------------

       Net cash used in continuing operations               (1,220,701)     (1,343,970)       (998,366)
                                                         --------------  --------------  --------------

       Discontinued operations:
         Net loss                                                                             (458,193)
         Amortization                                                                          393,588
                                                         --------------  --------------  --------------
       Total from discontinued operations                     --              --               (64,605)
                                                         --------------  --------------  --------------

       Net cash used in operations                          (1,220,701)     (1,343,970)     (1,062,971)
                                                         --------------  --------------  --------------

     Cash Flows from Investing Activities:
       Collections of loans relating
         to lending activities                                                                 393,588
       Acquisition of fixed assets                              (8,480)         (6,550)        (10,633)
       Investment in Global Intellicom, Inc.                                                (1,049,002)
       Proceeds from the sale of Global Intellicom, Inc. shares                                326,440
       Proceeds on sale of joint venture interest                            1,500,000
       Costs relating to investment
                                                         --------------  --------------  --------------
       Net cash provided by (used in)
            investing activities                                (8,480)      1,493,450        (339,607)
                                                         --------------  --------------  --------------

                         The accompanying notes are an integral part of these statements.

                                                      22
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                          OSYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.
                Consolidated Statements Of Cash Flows (Continued)

<S>                                                          <C>            <C>             <C>    


                                                                          For the Years
                                                                          Ended June 30,
                                                         ----------------------------------------------
     Cash Flows from Financing Activities:                      1997            1996            1995

       Note payable in settlement of Generale Bank
         complaint                                             275,000
       Net proceeds from the sale of
         Senior Notes                                                          270,000
       Net proceeds from private placement
         sale of common stock                                  375,000
       Net proceeds from interim financing                     125,000
                                                         --------------  --------------  --------------

       Net cash provided by (used in) financing activities     775,000         270,000           --

     Net increase (decrease) in cash                          (454,181)        419,480      (1,402,578)
     Cash at beginning of period                               462,971          43,491       1,446,069
                                                         --------------  --------------  --------------

     Cash at end of period                                      $8,790        $462,971         $43,491
                                                         ==============  ==============  ==============


     Supplemental Disclosures of
       Cash Flow Information:
       Cash paid during the year for-
         Interest                                              $48,240         $10,778         $19,498
                                                         ==============  ==============  ==============
         Income taxes                                               $0              $0          $3,200
                                                         ==============  ==============  ==============


     Non Cash Investing and
       Financing Activities:

         Dividend of shares of Global Intellicom,Inc.                                        ($507,114)
                                                                                         ==============

         Receipt of film assets in settlement of
            loans receivable from ATC II, Inc.                                                $393,588
                                                                                         ==============















                                The accompanying notes are an integral part of these statements.



                                                            23
</TABLE>

<PAGE>
                          ODYSSEY PICTURES CORPORATION
                               (FORMERLY KNOWN AS)
                     COMMUNICATIONS AND ENTERTAINMENT CORP.
                   Notes to Consolidated Financial Statements

1.  Summary of Significant Accounting Policies:

         a)       Principles of Consolidation:

                  The consolidated  financial statements include the accounts of
                  the Company, its wholly-owned  subsidiaries and majority owned
                  or controlled  joint ventures.  All  significant  intercompany
                  accounts have been eliminated.

                  In  March  1989,  the  Company  entered  into a joint  venture
                  pursuant  to which the  Company  and a  non-affiliated  entity
                  co-financed  and  co-produced  a  theatrical   motion  picture
                  entitled  "Q&A",  in which the Company had a 50.01%  ownership
                  interest.  In March  1990,  the Company  entered  into two 50%
                  joint  ventures  (in which the Company  exercised  contractual
                  control)   with  the  same   entity  to  acquire  the  foreign
                  distribution  rights of and  distribute  two motion  pictures,
                  "Switch"  and "Guilty By  Suspicion".  In December  1991,  the
                  Company entered into a 50% joint venture (in which the Company
                  exercised control) with the same entity to acquire the foreign
                  distribution  rights of and to distribute  the motion  picture
                  "This Boy's  Life".  The  assets,  liabilities,  revenues  and
                  expenses  of the  joint  ventures  have been  included  in the
                  consolidated  financial  statements  of the Company.  Minority
                  interests  in  operations  and in net  assets  in these  joint
                  ventures have been included in film costs and due to producers
                  and participants in the consolidated  statements of operations
                  and of financial condition, respectively. In January 1996, the
                  Company sold its interests in the joint ventures (See Note 4).

                  Certain reclassifications have been made to prior year amounts
                  to conform to the current year presentation.

         b)       Revenue Recognition:

                  Revenues from foreign theatrical,  home video,  television and
                  pay television  licensing  contracts are  recognized  when the
                  film is  available  for  exhibition  by the  licensee and when
                  certain  other  conditions  are met.  Revenues  from  domestic
                  theatrical  distribution  of films are recognized as the films
                  are exhibited.

                  Virtually  all of the  Company's  revenues for the fiscal year
                  ended  June 30,  1997 and  1996 and  approximately  62% of the
                  revenues  for the fiscal year ended June 30,  1995,  were from
                  foreign  distribution  rights. For fiscal 1996,  approximately
                  50.2% of revenues  were derived from one picture.  One picture
                  accounted  for  approximately  28.3 % of revenues for the year
                  ended June 30, 1995.

         c)       Film Costs:

                  Film costs include (1) cost of  production,  (2) investment in
                  distribution rights, (3) marketing and distribution  expenses,
                  and (4)  development  costs.  Film  costs are  amortized,  and
                  estimated residual and participation  costs are accrued, on an
                  individual  film  basis in the ratio that the  current  year's
                  gross film  revenues  bear to  management's  estimate of total
                  ultimate gross film revenues from all sources.

                                       24
<PAGE>
                  Film  costs are stated at the lower of cost or  estimated  net
                  realizable value on an individual film basis. Ultimate revenue
                  and cost  forecasts  for films are  periodically  reviewed  by
                  management and revised when warranted by changing  conditions.
                  When  estimates of total  revenues and costs  indicate  that a
                  film will result in an ultimate loss, additional  amortization
                  is provided to fully recognize such loss.

         e)       Property and Equipment:

                  Depreciation  of  property  and  equipment  is provided by the
                  straight-line  method over their estimated  useful lives of up
                  to eight years.

                  Maintenance and repairs are expensed as incurred.  The cost of
                  renewals and betterments are capitalized. When assets are sold
                  or  otherwise  disposed  of, the cost and related  accumulated
                  depreciation are removed from the accounts,  and any resultant
                  gain or loss is included in current year operations.

         f)       Earnings (Loss) Per Share:

                  Earnings  (loss)  per share are  computed  using the  weighted
                  average  number  of  common  shares   outstanding  during  the
                  respective periods,  adjusted for the dilutive effect, if any,
                  of outstanding  stock options and warrants.  On March 6, 1996,
                  the Board of Directors  announced a one-for-six  reverse stock
                  split (the "Reverse  Stock  Split") which became  effective on
                  March  18,  1996.  For  comparative  purposes,  the  number of
                  weighted average common shares  outstanding and loss per share
                  reported  in  the  accompanying   consolidated  statements  of
                  operations,  and  share  data  included  in the  notes  to the
                  consolidated  financial  statements,  have  been  adjusted  to
                  reflect the effect of the Reverse  Stock Split for all periods
                  presented.

         g)       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  and  disclosures  in  financial  statements.   Actual
                  results could differ from those estimates.

         h)       Fair Value of Financial Instruments:

                  The carrying  value of cash,  notes  receivable  and notes and
                  loans   payable   approximates   fair  value  because  of  the
                  short-term maturity of these instruments.

         i)       Impact of Recently Issued Accounting Standards:

                  In  March  1995,  the  Financial  Accounting  Standards  Board
                  released Statement of Financial  Accounting  Standards No. 121
                  "Accounting  for the  Impairment of Long-Lived  Assets and for
                  Long-Lived  Assets  to  Be  Disposed  Of"  ("FAS  121").  This
                  Statement establishes  accounting standards for the impairment
                  of long-lived assets,  certain identifiable  intangibles to be
                  disposed of and  goodwill  related to those  assets to be held
                  and used and for  long-lived  assets and certain  identifiable
                  intangibles  to be  disposed  of.  FAS  121 is  effective  for
                  financial statements for fiscal years beginning after December
                  15, 1995. The Company will apply this  Statement  beginning in
                  fiscal 1997. The adoption of FAS 121 is not expected to have a
                  material effect on the financial statements of the Company.

                                       25
<PAGE>

                  In October 1995,  the  Financial  Accounting  Standards  Board
                  released Statement of Financial  Accounting  Standards No. 123
                  "Accounting  for Stock Based  Compensation  ("FAS 123").  This
                  statement  establishes  methods of accounting for  stock-based
                  compensation  plans.  FAS 123 is  effective  for fiscal  years
                  beginning  after  December  15, 1995.  The Company  expects to
                  continue to apply  Accounting  Principles Board Opinion 25 for
                  measurement  of  stock   compensation  and  will  provide  the
                  disclosure  required by FAS 123 beginning in fiscal 1997.  The
                  adoption of FAS 123 is not expected to have a material  effect
                  on the financial statements of the Company.

2.  Change in Management Control:

         In January  1995,  a group of  shareholders  of the Company  (the "CECO
         Shareholders  Committee")  launched  an  effort to  change  the  senior
         management and Board of Directors of the Company.

         Pursuant to a settlement  agreement (the "Settlement  Agreement") dated
         as of March  31,  1995,  among  the  members  of the CECO  Shareholders
         Committee, the Company, the Company's subsidiary, Odyssey Entertainment
         Ltd. ("Odyssey"),  Global Intellicom, Inc. and each of the directors of
         the  Company at the time of  signing,  a change in the entire  Board of
         Directors occurred on April 12, 1995.

         In March,  1998, the Board of Directors  appointed Mr. Johan Schotte as
         Chief Executive  Officer and Chairman of the Board of the Company,  and
         Mr. Pierre  Koshakji as President  and Director of the Company.  Former
         management agreed to terminate their existing  employment  agreement in
         exchange for revised employment and consulting agreements. An affiliate
         of Mr. Schotte purchased  convertible deferred  compensation notes from
         former  management  and converted a portion of those notes into 667,648
         shares of the Company's common stock in April 1998.

         In connection  with the change in management,  the Company  acquired an
         18% equity  interest in two  corporations  affiliated with Mr. Schotte,
         one of which is the owner of a professional  soccer team in New Mexico,
         and the other of which is a media production company in Luxembourg. The
         Company issued  one-year  notes in the aggregate  amount of $450,000 in
         consideration  of  the  purchase  of  the  equity  interests  in  these
         companies.

3. Results of Operations and Management's Plans:

         The  Company's  continued  existence is  dependent  upon its ability to
         resolve its liquidity problems.  The Company must achieve and sustain a
         profitable  level of  operations  with  positive  cash  flows  and must
         continue to obtain  financing  adequate  to meet its ongoing  operation
         requirements.

         Net  income for the year ended  June 30,  1997 was due  primarily  from
         various  transactions  which are  explained  in the  category of "Other
         Income"  below.  Net loss for the year ended June 30, 1996 is primarily
         due to a  loss  of  approximately  $3.3  million  on  the  sale  of the
         Company's interest in joint ventures relating to four theatrical motion
         pictures, and due to insufficient revenues to offset normal expenses.

         Revenues  for the  twelve  months  ended  June 30,  1997  decreased  to
         $141,202  compared to  $1,010,826  for the twelve months ended June 30,
         1996. No new films became available for delivery during either period.

                                       26
<PAGE>

         Costs  related to revenues  decreased to $565,610 for the twelve months
         ended June 30,  1997 as compared to  $1,046,299  for the twelve  months
         ended June 30, 1996. The decrease is primarily related to the fact that
         there  was lower  film  revenues  in the  current  year.  Additionally,
         development  and festival  costs in the amount of $249,544 were written
         off,  litigation  and  settlement  costs  relating  to the Film  Bridge
         settlement  in the amount of $148,174  were  expensed  and  $435,102 in
         inventory costs related to the picture Downrange were written off. This
         was  partially  offset by a  write-off  of  $449,163  in  participation
         liabilities   related  to  the  Kinnevik  Library  which  were  settled
         subsequent to the Kinnevik sale.

         Selling,general and administrative expense increased by $113,143 (7.2%)
         to $1,678,450  for  the  twelve  month period ended June 30,  1997 from
         $1,565,307 for the comparable period ending June 30, 1996. The increase
         is primarily  related to higher  salaries and professional fees.

         Other income for the twelve  months ended June 30, 1997  consisted of a
         $818,776 gain from the sale of certain distribution and subdistribution
         rights in certain films to a third party,  recognition  of a $1,245,758
         gain from the cancellation of a contractual  obligation  related to the
         Company's distribution rights in "Wuthering Heights" and recognition of
         a gain in the amount of $198,567 from the  settlement of an outstanding
         litigation  with Generale Bank (formerly  known as Credit Lyonnais Bank
         Nederland N.V.) and Conecom Entertainment Group Inc. There was no other
         income recognized in the respective twelve months ended June 30, 1996.

         Since the change in management  control in April 1995,  new  management
         has  embarked  on a program  to  reverse  the  unfavorable  results  by
         significantly  reducing  overhead,  taking  steps to  recapitalize  the
         Company,  and  acquiring  rights to  existing  film  libraries  and new
         pictures in development or pre-production.

         In August and  October  1995,  the  Company  received  net  proceeds of
         $219,250 and $50,750,  respectively,  from the private  placement of an
         aggregate  of  $312,500   principal  amount  of  12%  Senior  Unsecured
         Promissory Notes (See Note 10).

         In January  1996,  the Company  entered  into an  agreement to sell its
         interest in joint ventures  relating to four theatrical motion pictures
         pursuant to which it received net proceeds of $1,500,000 (See Note 4).

         In August  1996,  the Company  entered into an  agreement,  pursuant to
         which the  Company  agreed to grant  subdistribution  rights in, and to
         sell other distribution  rights to, certain films in the Company's film
         library. In exchange for these rights, the Company will receive a total
         cash consideration of $1,075,000, payable $500,000 on closing, $275,000
         six months  after  closing,  and  $300,000  eighteen  months  after the
         closing.  In addition,  the Company  will retain a continuing  right to
         receive  revenues from certain of the films,  valued by management at a
         minimum of  approximately  $150,000.  Additionally,  the purchaser will
         provide  the  Company  with a $500,000  revolving  line of credit to be
         secured by accounts receivable and other contractual rights acquired by
         the Company. As part of the transaction, the Company will grant 100,000
         stock options, exercisable over a three year period at the bid price of
         the  Company's  common stock in effect on August 5, 1996  ($.625).  The
         transaction closed on October 7, 1996

         In  September  1996,  the Company  entered  into an  agreement  with an
         unaffiliated  third party for the  purchase of 1 million  shares of the
         Company's common stock in consideration  for $750,000 cash and warrants
         to purchase up to 2 million shares of common stock. Following a dispute
         between the parties  concerning the satisfaction of certain  conditions
         to  closing  and  the  investor's  indication  of an  unwillingness  to
         consummate the  transaction,  the parties  reached a settlement in June
         1997,  pursuant to which the investor would  purchase  66,667 shares of
         Common  Stock of the  Company  for  $50,000,  or $ .75 per  share.  The
         proceeds will be used the pay legal costs related to the transaction.

                                       27
<PAGE>

         In September,  1996, the Company  reached an agreement with  Paramount,
         pursuant to which  Paramount  would  cancel the  Company's  contractual
         guarantee  of $2.7  million in full,  in exchange for which the Company
         agreed to (i) relinquish all further  distribution rights to "Wuthering
         Heights"; (ii) assign to Paramount all of its rights in any outstanding
         distribution  agreements  for  the  film,  and  any  receivables  to be
         generated therefrom;  and (iii) guarantee that Paramount will collect a
         total  of  $500,000  in  sales  revenue  from   existing   distribution
         agreements no later than January 15, 1997.  Existing license agreements
         yielded  approximately  $420,000 in net  revenues  prior to January 15,
         1997  (of  which  the  Company  would  have  been  entitled  to  retain
         approximately  20% thereof in  commissions).  The Company has paid over
         $250,000  in  net  revenues  and  is  currently  in  negotiations  with
         Paramount regarding the timing of the remaining $250,000 payment.

         In December,  1996, the Company settled the outstanding litigation with
         Generale  Bank  ("Generale")  (formerly  known as Credit  Lyonnais Bank
         Nederland N.V.) and Cinecom  Entertainment  Group Inc.  Pursuant to the
         settlement  agreement  with  Generale,  the  Company  agreed  to pay to
         Generale  the sum of $275,000 in  complete  satisfaction  of the claim,
         payable $25,000 upon execution of the settlement agreement,  $25,000 on
         each of June 30, and December 31 in the years 1997,  1998 and 1999, and
         $100,000 on June 30, 2000. Interest on the installments (at the rate of
         LIBOR plus 1% per annum) will be waived provided the Company remains in
         compliance with the agreed upon payment schedule.  The Company has only
         made one payment to Generale Bank in the amount of $25,000. In October,
         1997, the Company entered into a revised payment schedule with Generale
         Bank.  The Company is in receipt of a demand  letter dated May 4, 1998.
         The letter  demands that the Company cure the  non-payment of a $30,000
         installment due April 15, 1998.  According to the agreement between the
         Company and  Generale  Bank,  the Company had ten  business  days after
         receipt of this letter to cure this default.  The  consequences  of not
         clearing this default is the entry of a confession of judgement already
         executed by the Company for an amount of $275,000.  This  confession of
         judgement  is against  Odyssey  Distributors  Limited,  a wholly  owned
         subsidiary of the Company. (see litigation)

         In February,  1997,  the Company  completed a sale of 500,000 shares of
         Common  Stock and 500,000  Common  Stock  Warrants to four (4) offshore
         European  investors  for an aggregate  consideration  of $375,000.  The
         warrants are exercisable  over a three year period  (expiring  February
         25,  2000)  at an  exercise  price  of  $1.06  per  share.  One  of the
         investors,  Johan  Schotte,  was retained by the Company as a financial
         consultant  for a period  of one year from the date of  closing  at the
         rate of $2,500 per month.  The  investors  were also given the right to
         designate one of the investors (or another third party),  to serve as a
         member of the Board of Directors of the Company.

         In April,  1997,  Stephen  Greenwald,  Lawrence I. Schneider and Robert
         Miller, Jr., all directors of the Company, made loans to the Company in
         the amounts of $50,000, $25,000 and $25,000, respectively. Each loan is
         payable on demand and bears interest at the rate of 2 points over prime
         per  annum.  The note is  secured  by a  collateral  assignment  of the
         Company's  $300,000 note receivable from Kinnevik.  In consideration of
         making the loans, the lenders received  five-year  warrants to purchase
         shares of Common Stock of the Company,  exercisable at $1.00 per share.
         Messrs.  Schneider  and Miller each  received  25,000  warrants and Mr.
         Greenwald  received  50,000  warrants as additional  consideration  for
         making  the  loans  to  the  Company.   In  addition,   an  independent
         unaffiliated  third  party made a $25,000  loan to the Company in June,
         1997  on the  same  terms  and  conditions  as the  loans  made  by Mr.
         Greenwald, Schneider and Miller.

         In September,  1997,  the Company and Kinnevik Media  Properties,  Ltd.
         executed a letter agreement pursuant to which Kinnevik agreed,  subject
         to completion of due diligence and the approval of Kinnevik's Board, to
         purchase 500,000 shares of convertible,  redeemable  preferred stock of


                                       28
<PAGE>

         the Company, par value $1.00 per share, for an aggregate purchase price
         of $500,000.  Kinnevik  would  purchase the first $250,000 of preferred
         stock at the closing, an additional $125,000 of preferred stock 90 days
         after closing, and the final $125,000 of preferred stock 270 days after
         closing. The preferred stock would bear interest at the rate of 10% per
         annum  which  would be paid in kind  semi-annually  by the  issuance of
         additional shares of preferred stock at a par value of $1.00 per share.
         Kinnevik  would have the right for a five year  period to  convert  the
         preferred  stock into common stock of the Company on a  share-for-share
         basis.  The Company would have the right to redeem the preferred  stock
         for $1.25 per share in the event the Company's common stock trades at a
         price of $2.00 per share or more for a period of 20 consecutive trading
         days. The Company agreed to help secure television  distribution rights
         for Kinnevik  from third  parties,  and introduce  various  projects to
         Kinnevik from time to time which may be of interest to Kinnevik. In the
         event  Kinnevik  acquires  any rights as a result of any  introductions
         made by the Company,  the parties agree to mutually determine the value
         of such services and to redeem  shares of the preferred  stock at $1.00
         per share based on the aggregate value of the services so determined.

         In January,  1997,  prior  counsel to the Company  agreed to exchange a
         promissory  note in the face amount of $70,000 in exchange  for 120,000
         Shares of the Company's Common Stock.

4.  Sale of Joint Venture Assets:

         As of January 2, 1996,  the  Company  entered  into an  agreement  (the
         "Agreement")  with  Regency  International  Pictures,  B.V.,  its joint
         venture  partner,  to sell its interest in the related  joint  ventures
         through which it held  approximately  50%  ownership  interests in four
         theatrical  motion  pictures,   entitled  "Q&A,"   "Switch,"Guilty   By
         Suspicion"  and "This Boy's Life." The joint  venture is defined as the
         distribution  agreements  related  to the  aforementioned  four  motion
         pictures.  Individual  agreements were created to finance,  produce and
         distribute  each  picture and to share in revenues  generated  from the
         exploitation of them.  Joint venture pictures were accounted for in the
         same manner as any other picture that the Company distributed. Pursuant
         to the Agreement,  the Company received  $1,500,000 in exchange for all
         of  its  interest  in the  net  assets  and  obligations  of the  joint
         ventures.  In addition,  the Company retained a contingent  interest in
         certain receivables,  not to exceed $212,500, and a contingent interest
         in future revenues from the pictures.

5.  Investment in Global Intellicom, Inc.:

         On December 8, 1994, the Company  acquired  3,300,000  shares of Global
         Intellicom, Inc. ("Global") and subsidiaries, a Nevada corporation, for
         $1,000,000,  representing 66% of Global's 5,000,000  outstanding shares
         of common  stock.  Simultaneously  and  pursuant  to a contract of sale
         entered  into  by  Tech  Acquisition  Corp.  ("Tech")  (a  wholly-owned
         subsidiary of Global) on October 28, 1994, Global purchased certain net
         assets  of  AMCOM  Business  Centers   Corp.("AMCOM")  (a  Pennsylvania
         corporation)  subject  to  certain  liabilities  and  obligations.   On
         December 8, 1994 Tech changed its name to AMCOM Business Centers Corp.

         AMCOM is a  wholesale  distributor  of  computer  hardware  and related
         products and serves customers throughout the United States.

         The total  purchase  price of the net  assets of AMCOM was  $5,280,000,
         $2,224,000 of which was paid to the sellers at closing.  The balance of
         the purchase  price of $3,056,000 is payable by Global in  installments
         equal to 1% of gross  sales  effective  January 1, 1994 (as  defined by
         agreement) in quarterly  installments through December 1995 and monthly
         thereafter  until the  obligation  is  satisfied.  In addition,  Global
         agreed to reimburse AMCOM stockholders for all income taxes incurred by
         them with respect to their distributive share of AMCOM's taxable income
         for the period January 1, 1994 through the closing date.

                                       29
<PAGE>

         During the quarter ended March 31, 1995, the then Board of Directors of
         the  Company  declared a dividend  to its  shareholders  consisting  of
         1,700,000  shares of the  common  stock of Global,  and also  delivered
         522,641 shares of Global common stock to its former outside  counsel in
         payment of outstanding  legal fees.  Further,  as of March 31, 1995 the
         then Board of Directors entered into the Settlement  Agreement with the
         CECO Shareholder Committee which, among other things,  provided for the
         sale  of  the  Company's  remaining  interests  in  Global  to  persons
         affiliated with the prior Board. The sale closed on April 12, 1995.

6. Film costs:

         Film costs are comprised of the following:

                                                     June 30,
                                           -----------------------------
                Component                    1997                 1996
                ---------                    ----                 ----
         
         Films released, at cost           $   0              $ 2,750,000
         Less accumulated amortization         0                1,798,290
                                          ----------          ------------
                                               0                  951,710
                                          ----------          ------------
         Projects in development            120,472                49,258
                                          ----------          ------------
         Total film costs                 $ 120,472           $ 1,000,968
                                          =========           ============
      
7.  Income Taxes:

         At June 30, 1997,  the Company had a federal net  operating  loss carry
         forward,  for tax  purposes,  of  approximately  $27,000,000,  expiring
         through 2011.  The  utilization  of  approximately  $4,900,000 of these
         losses in future  periods is  estimated by the Company to be limited to
         approximately $350,000 per year (the "annual earnout limitation").

         Statement of Financial  Accounting  Standards No. 109,  Accounting  for
         Income Taxes, which establishes  accounting and reporting standards for
         the effects of income taxes that result from an enterprise's activities
         during the current and preceding years became effective for the Company
         for its fiscal  year  ended June 30,  1994.  The  cumulative  effect of
         adopting SFAS 109 was  immaterial and was recorded in the first quarter
         of fiscal 1994.

8.  Notes and Loans Payable:

         Notes and loans payable as of June 30, 1997 and 1996  include  $179,000
         principal amount of 6% Convertible Subordinated Debentures, due July, 
         1997.

         In April 1995,  the Company  issued a note in the  principal  amount of
         $70,000 to its outside legal counsel for legal services performed.  The
         note was repayable in October 1995,  together with interest at the rate
         of 7%. In February  1996 the note holder  agreed to extend the due date
         to December 31, 1996. In  connection  with the  extension,  the Company
         granted  warrants to purchase  16,667  shares of the  Company's  common
         stock at an exercise price of $1.88 per share, exercisable over a three
         year period. The amount of the note will be reduced, as of December 31,
         1996,  by one-half of the amount by which the average  closing price of
         the stock,  for the ten most recent trading days,  exceeds the exercise
         price of the warrants. In January, 1997, the Company agreed to exchange
         the  promissory  note in the face  amount of  $70,000 in  exchange  for
         120,000 shares of the Company's Common Stock.

                                       30
<PAGE>
         In August and  October  1995,  the  Company  received  net  proceeds of
         $219,250 and $50,750,  respectively,  from the private  placement of an
         aggregate  of  $312,500   principal  amount  of  12%  Senior  Unsecured
         Promissory  Notes (the "Notes").  The Notes are repayable with interest
         on the earlier of (a) the closing of a public offering of the Company's
         equity  securities from which the Company receives gross proceeds of at
         least $10,000,000,  or (b) one year from the issuance date. The Company
         also  granted to the  purchasers  of the Notes an  aggregate  of 26,042
         warrants (the "Warrants"), 20,833 of which are exercisable at $2.83 per
         share and 5,209 of which are  exercisable  at $2.37 per share.  Each of
         the Warrants is  exercisable  at any time  beginning one year after the
         date of issuance and expiring four years after the date of issuance.

         The Notes  and  interest  were not  repaid as  scheduled.  The  Company
         proposed  that  Noteholders  either  defer  maturity of their notes and
         exchange existing warrants for shares, or cancel the notes and warrants
         in their  entirety  in  exchange  for a greater  number of shares.  The
         Company  offered to  register  any shares  issued in  exchange  for the
         notes.  As of  August  12,  1997,  the  date  the  registration  became
         effective,  a total of  $262,500  of notes were  exchanged  for 595,455
         shares of registered  stock. The remaining notes for $50,000 (held by a
         single investor) have not been paid and are in default.

         On July 17,  1997,  unsecured  long term  notes of the  Company  in the
         aggregate amount of $179,000  matured.  Such notes were not paid on the
         maturity  date. The Company  entered into an  installment  payment plan
         extending  over a 15 month period  through  March,  1999,  and made the
         first  installment  payment of $17,900 in January 1998. The company did
         not make the March 1998  payment of $17,900 and is presently in default
         of the payment schedule.

         In April,  1997,  Stephen  Greenwald,  Lawrence I. Schneider and Robert
         Miller, Jr., all directors of the Company, made loans to the Company in
         the amounts of $50,000, $25,000 and $25,000, respectively. Each loan is
         payable on demand and bears interest at the rate of 2 points over prime
         per  annum.  The note is  secured  by a  collateral  assignment  of the
         Company's  $300,000 note receivable from Kinnevik.  In consideration of
         making the loans, the lenders received  five-year  warrants to purchase
         shares of Common Stock of the Company,  exercisable at $1.00 per share.
         Messrs.  Schneider  and Miller each  received  25,000  warrants and Mr.
         Greenwald  received  50,000  warrants as additional  consideration  for
         making  the  loans  to  the  Company.  In  addition,   two  independent
         unaffiliated third parties made additional $25,000 loans to the Company
         in June and August,  1997 on the same terms and conditions as the loans
         made by Mr. Greenwald, Schneider and Miller. In May, 1998, the loans of
         Mr.  Schneider and one of the  unaffiliated  parties were paid from the
         proceeds of the Kinnevik receivable.  The remaining lenders agreed to a
         rollover  of  their  loans  (aggregating  $100,000)  against  a  second
         Kinnevik  receivable  and, in  consideration,  received  an  additional
         50,000  warrants in the  aggregate,  exercisable  for the  extension at
         $1.00 per share over a three year period.

                                       31
<PAGE>

9.  Commitments and Contingencies:

         Lease Commitments:

         The Company leased office space in Los Angeles pursuant to an operating
         lease which expired in May 1998,  providing for monthly rental payments
         of $5,301.  Minimum  payments  under the lease  aggregated  $63,612 and
         $58,311  for  the  fiscal   years   ending  June  30,  1997  and  1998,
         respectively.

         The Company  was party to a lease at 800 Third  Avenue,  New York,  New
         York 10022,  which  terminated in 1997. The Company vacated such office
         space  during the year  ended  June 30,  1995.  In  September  1995 the
         landlord  filed an action  against the Company.  The Company  reached a
         settlement with the landlord.  (see  Litigation).  Rent expense for the
         years ended June 30, 1997,  1996 and 1995 was $0, $38,772 and $297,287,
         respectively.

         Litigation:

         On December 20, 1990, a suit was filed against the Company  seeking the
         payment of $300,000 for certain  investment  banking services allegedly
         provided. In October 1991, the Court granted a judgment in favor of the
         plaintiff.  The  judgment  is stayed  pending the  determination  of an
         action brought by the Company  against the plaintiff  described  below.
         The Company has posted a non-collateralized bond pending the results of
         an appeal. In a separate action,  the Company filed a complaint against
         the plaintiff  claiming that  services  alleged to have been  performed
         were never  performed and demanding the return of funds and  securities
         paid by the Company.  In October 1994, the plaintiff  filed a voluntary
         bankruptcy  petition  under  Chapter  11 of  the  United  States  Code.
         Consequently,  the Company's action has been automatically  stayed. The
         Company has filed a proof of claim.

         On December 30, 1994, Krisna Shah, who allegedly served as President of
         Double  Helix Films from about July 1991 until about March 1993,  filed
         action against the Company, Norman Muller, a former Chairman and CEO of
         the Company,  and others in which he alleged  among other things breach
         of an oral agreement to pay him $152,000  (which he allegedly  advanced
         for the  benefit  of  Double  Helix)  and to give him  19.5%  ownership
         interest in its corporate successors.  The Company reached a settlement
         with Mr. Shah in which the Company has paid $15,000 and quitclaimed any
         and all rights, title, and interest it has to the film library known as
         the "Double Helix Film Library.

         On or about May 15,  1995,  Credit  Lyonnais  Bank  Nederland  N.V. and
         Cinecom  Entertainment  Group,  Inc.  filed  a  complaint  against  the
         Company's  subsidiary,  Odyssey  Distributors,  Ltd.  They  allege that
         Odyssey  collected  but failed to remit to them  assigned  distribution
         proceeds in the amount of $566,283.33 from the foreign  distribution of
         two pictures.  The complaint  alleges claims for breach of contract and
         breach of  fiduciary  duty and  seeks  damages  in excess of  $566,283,
         attorney's  fees, an accounting,  a temporary  restraining  order and a
         preliminary  injunction.  In June 1995, the Court denied  plaintiffs an
         attachment  and stayed the action  pending  arbitration in New York. In
         September,  1996 the Court dismissed the Complaint. In December,  1996,
         the Company  settled the  outstanding  litigation  with  Generale  Bank
         ("Generale")  (formerly  known as Credit  Lyonnais Bank Nederland N.V.)
         and  Cinecom  Entertainment  Group  Inc.  Pursuant  to  the  settlement
         agreement with Generale,  the Company agreed to pay to Generale the sum
         of $275,000 in complete satisfaction of the claim, payable $25,000 upon
         execution of the settlement agreement,  $25,000 on each of June 30, and
         December 31 in the years 1997,  1998 and 1999, and $100,000 on June 30,
         2000.  Interest on the  installments  (at the rate of LIBOR plus 1% per
         annum) will be waived  provided the Company  remains in compliance with
         the agreed upon  payment  schedule.  The Company and General Bank later
         agreed  upon a new payment  schedule  as follows:  $25,000 on or before
         October 15, 1997 (payment was made); $30,000 on each of April 15, 1998,


                                       32
<PAGE>

         June 30, 1998,  December 31, 1998, June 30, 1999 and December 31, 1999;
         and  $100,000 on June 30,  2000.  The Company is in receipt of a demand
         letter dated May 4, 1998.  The letter demands that the Company cure the
         non-payment of a $30,000  installment due April 15, 1998.  According to
         the agreement  between the Company and Generale  Bank,  the Company had
         ten business  days after  receipt of this letter to cure this  default.
         The  consequences  of not  clearing  this  default  is the  entry  of a
         confession of judgement  already  executed by the Company for an amount
         of  $275,000.   This   confession  of  judgement  is  against   Odyssey
         Distributors Limited, a wholly owned subsidiary of the Company.

         In August 1995, G.P.  Productions,  Inc. ("GP")  and  Greenwich Subject
         Films, Inc.("Greenwich") commenced an action entitled G.P. Productions,
         Inc.,  and  Greenwich   Studios,  Inc. v. Double  Helix  Films,   Inc.,
         Communications  and  Entertainment, Inc., Krishna  Shaw, Gerald  Muller
         and Norman  Muller  in  the  United  States  District  Court,  Southern
         District of Florida (Case No.  95-1188).  Mr. Muller  has demanded that
         the Company indemnify him against any expenses, judgements and  amounts
         paid in settlement of the action.  The Company contends that, by virtue
         of Mr.  Muller's  breaches   of  fiduciary  duty  and violation of  his
         obligations  to  the  Company,  it  is  not    required   to    provide
         indemnification.

         GP and Greenwich allege that they are the exclusive owners of the films
         "The  Gallery"  and "South  Beach".  They assert  claims for  copyright
         infringement,  unfair  competition,  breach  of  contract,  accounting,
         conversion,  civil theft,  conspiracy  and fraudulent  conveyance.  The
         Complaint demands a recall of the films, an attachment, preliminary and
         permanent   injunctive   relief,   an   accounting,   and   unspecified
         compensatory,  punitive and treble  damages.  The  Company's  motion to
         transfer  venue of the action was granted in  November,  1995,  and the
         case  was  transferred  to the  United  States  District  Court  of the
         Southern  District  of New  York.  There has been no  activity  in this
         matter since the transfer of venue in 1995.

         In September  1995,  the agent for the landlord for the premises in New
         York City  previously  occupied  by the  Company  filed a  Summons  and
         Verified  Complaint against the Company.  The plaintiff alleged that it
         was due $66,694 from the Company  (plus  interest)  for rent  allegedly
         owed during the period from April through September,  1995. The Company
         vacated the premises on April 12, 1995. Summary judgment was awarded to
         the plaintiff  and a judgment was entered for $74,142 in May,  1996. In
         July,  1996,  the landlord  commenced a second  action for $121,000 for
         rent  allegedly  owed during the period from  October 1995 through July
         1996. The Company reached a settlement in this case, pursuant which the
         Company  delivered  177,500  registered  shares of the Company's Common
         Stock to each of the landlord and its agent in full  settlement  of the
         actions.

         In October 1995 Canon Financial Services filed a complaint, in which it
         claims that it is due  $47,499.83,  plus  damages,  pursuant to a lease
         agreement.  The  Company  has  filed  an  Answer  in  this  action  and
         plaintiff's  motion for summary judgement has been denied by the Court.
         No trial date has yet been set in this matter.

         In  January  1996,  a former  director  brought an action  against  the
         Company on a promissory  note in the amount of $25,000.  The  plaintiff
         obtained a summary judgment.  The Company is considering whether or not
         it  has a  claim  for  indemnification  against  former  management  in
         connection with the issuance of the note.

         In January  1996,  an action was filed against the Company in which the
         plaintiff sought damages in the amount of $33,849.98 for legal services
         rendered  to the  Company  and its  subsidiaries.  In June,  1997,  the
         parties  reached a  settlement  in the  matter,  pursuant  to which the


                                       33
<PAGE>

         Company  agreed  to pay  $7,000 to  plaintiff,  deliver  40,000  freely
         tradeable  shares  of the  Company's  Common  Stock to  plaintiff,  and
         deliver an  additional  cash  amount to the extent  that the  aggregate
         market  value of the  shares  on the  date of  delivery  was less  than
         $40,000. Payment of the additional cash amount of $13,000 was completed
         in December, 1997.

         In March  1996,  an action was filed  against  the Company in which the
         plaintiff  claims that she is due  $17,920.49  pursuant to a promissory
         note  previously  issued to her.  The Company  has filed a  cross-claim
         seeking  offsets  against the amount due and other damages.  On May 21,
         1998,  a default  judgement  was entered on behalf of  plaintiff in the
         amount of $22,261.23. Subsequently, plaintiff filed a motion to include
         attorney  fees and costs in the amount of  $39,121.95.  The  Company is
         attempting to reach a settlement with plaintiff.

         On or about March 25, 1996, a class action  complaint was filed against
         the Company  entitled  "Dennis Blewitt v. Norman Muller,  Jerry Minsky,
         Dorian Industries, Inc. and Communications and Entertainment Corp." The
         complaint seeks damages in connection  with the Company's  treatment in
         its financial  statements of the disposition of its subsidiary,  Double
         Helix  Films,  Inc.,  in June 1991.  The  complaint  seeks  unspecified
         damages on behalf of all persons who purchased  shares of the Company's
         common  stock  from and after  June  1992.  A second  action,  alleging
         substantially  similar  grounds,  was filed in December 1996 in Federal
         court in the United States District Court for the Southern  District of
         California under the caption heading "Diana  Pfannebecker v. N. Muller,
         Communications  and  Entertainment  Corp.,  Jay  Behling,   Jeffrey  S.
         Konvitz, Tom Smith, Jerry Silva, David Mortman, Price Waterhouse & Co.,
         Todman & Co., and Tenato Tomacruz."  Following the filing of the second
         action,  the first action was dismissed by stipulation in May 1997. The
         Company  filed a motion to dismiss the  complaint in the second  action
         and after a hearing on the motion in July,  1997,  the Court  dismissed
         the  federal   securities  law  claims  as  being  time-barred  by  the
         applicable  statute of limitations,  and dismissed the state securities
         law claims for lack of subject matter  jurisdiction.  The lower court's
         dismissal  of this  action was  upheld on appeal by the Ninth  Circuit.
         Messrs.  Muller,  Smith and Mortman,  former  directors of the Company,
         have  asserted  claims for  indemnification  against the  Company.  The
         Company  has  advised  the  claimants  that it will  not  provide  such
         indemnification,  based on their wrongful actions and failure to comply
         with various obligations to the Company.

         On September 18, 1996, Film Bridge International,  Inc. ("Film Bridge")
         filed a complaint in Los Angeles County Superior Court,  entitled "Film
         Bridge  International v.  Communications  and Entertainment  Corp., and
         Does 1 through 50, Inclusive," contending that the Company had breached
         the terms of an alleged  joint  venture  agreement  between the parties
         regarding the  distribution  rights to certain  films.  On December 19,
         1996, the Company filed a cross-complaint  against Film Bridge alleging
         that,  since the end of June,  1996,  Film Bridge had failed to furnish
         the Company  with a proper  accounting  of its revenues and expenses in
         connection with the sale of foreign licensees of various films in which
         the Company had an interest  and had failed to make payment of at least
         $450,000 to the  Company  for monies due and owing to the Company  from
         the foreign sales of such films.  An agreement was reached  between the
         parties  in May,  1997,  as a result  of  which  the  Company  received
         $336,000  of the monies  being held by Film  Bridge,  with the  balance
         being  retained  by  Film  Bridge  as  sales  commissions  and in  full
         settlement of the litigation.

         On December 2, 1997, the Directors Guild of America ("DGA") obtained an
         arbitration award against Down Range Productions,  Inc., a wholly owned
         subsidiary of Odyssey Pictures Corporation,  on behalf of Kahn Brothers
         Pictures fso Michael Kahn, Charles Skouras,  and Scott C. Harris.  Down
         Range was  ordered  to pay:  Kahn  Brothers  Pictures  the total sum of
         $155,041; Charles Skouras the total sum of $32,360; and Scott C. Harris
         the  total sum of  $8,868;  plus  interest  at 18% per annum on each of
         these  amounts  from April 1, 1997.  Down Range was also ordered to pay


                                       34
<PAGE>

         the DGA $2,500. Down Range was also ordered to assign to the DGA all of
         Down  Range's  right,  title and interest in the motion  picture  "Down
         Range", including the screenplay for the motion picture, and Down Range
         was enjoined from licensing the motion picture or the screenplay to any
         third party other than the DGA.  Down Range was also ordered to pay the
         arbitrator $2,250.

         Kahn Brothers Pictures fso Michael Kahn also filed a claim against Down
         Range  Productions,  Inc. and the   Company   with the Writers Guild of
         America West (WGA) for unpaid  writing  services on "Down  Range". That
         claim has now been settled for the amount of $15,000.

         The Screen  Actors Guild (SAG) has also asserted that there are amounts
         owing to four actors (Dale Dye,  John Philbin,  Tegan West,  and Kiljoy
         Productions fso Kathleen  Wilhoite),  arising out of "Down Range".  The
         Company believes that SAG has never instigated any arbitration or other
         proceeding to try to collect on these claims. Additionally,  there were
         two  actors,   Corbin  Bernsen  and  Jeff  Fehey  who  had  pay-or-play
         contracts.  The outcome of these  contracts  and the actors claims have
         not been resolved.

         In April,  1998,  the  Company  reached  a  settlement  with Mr.  Silva
         regarding  his action  against the Company in the Supreme  Court of the
         State of New York.  Mr.  Silva  will  discontinue  the  matter  and the
         Company will  authorize the sale of Mr.  Silva's  shares in the Company
         under Rule 144, up to a maximum of 25,000 shares per month.

         In April, 1998, an action was commenced against the Company by Siegel &
         Gale,  a provider of brochure  material  for the  Company.  The lawsuit
         seeks payment of $48,695,  plus costs, related to work done by Siegel &
         Gale for the  Company.  The Company has not yet filed an Answer in this
         action and is in the process of consulting with its counsel on the best
         course of resolving this matter.

         On  November  21,  1996,  the law form of  Halperin,  Klein &  Halperin
         (counsel to Mr. Silva)  commenced an action  against the Company in the
         Civil Court of the State of New York on a returned  check in the amount
         of $5,000 for legal  services  allegedly  rendered to the Company.  The
         check was originally  issued to plaintiff in April,  1995 in connection
         with the change of control of the Company at that time. The Company has
         filed an Answer in the action  and  intends to defend the matter on the
         basis of a failure of consideration.

10.      Shareholders' Equity:

         On March 6, 1996 the  Board of  Directors  of the  Company  approved  a
         one-for-six  reverse  stock  split  of the  outstanding  shares  of the
         Company's  Common Stock (the "Common  Stock").  The Reverse Stock Split
         was effective as of March 18, 1996 (the "Record  Date").  On the Record
         Date,  each six shares of the Company's then  outstanding  Common Stock
         (the "Old Common Stock") were automatically converted into one share of
         the new  Common  Stock,  par  value  $.01 per share  (the  "New  Common
         Stock").

         No fractional shares of New Common Stock were issued.  Rather,  holders
         of Old Common  Stock who are entitled to receive  fractional  shares of
         New Common  Stock will be rounded up to the nearest  whole share of New
         Common Stock.

         The Reverse  Stock Split  resulted in a net  reduction of 11,408,973 in
         the  number  on  Common  Shares  outstanding,  including  1,995  shares
         issuable due to the rounding up of fractional shares.

         Except for the number of shares of Common Stock  outstanding  after the
         Reverse Stock Split,  the Old Common Stock and the New Common Stock are
         identical.

                                       35
<PAGE>

         On  February  14,  1995,  the then Board of  Directors  of the  Company
         declared a dividend  payable to holders of record on February  24, 1995
         ("the Dividend Record Date") of the Company's  common stock and Class A
         stock. The dividend consisted of 1,700,000 shares of common stock, $.01
         par value per share, of Global Intellicom,  Inc. that were owned by the
         Company.  Holders  of the  Company's  common  stock  and  Class A stock
         received .1233 and .0786 shares,  respectively,  of Global common stock
         for each share of the Company's  stock.  The dividend was recorded as a
         reduction of capital in excess of par value.

         The shares of Global common stock were  distributed  to an escrow agent
         on the Dividend  Record Date pending  registration  of the shares.  The
         Securities  and  Exchange  Commission  declared  Global's  registration
         statement  effective  as of  September  1, 1995 and,  accordingly,  the
         escrow agent was authorized to distribute the dividend shares.

         Communications  and  Entertainment   Corp.  was  originally  formed  to
         consummate the mergers of Double Helix Films, Inc. ("Double Helix") and
         Odyssey Entertainment Ltd. pursuant to the Agreement and Plan of Merger
         dated September 22, 1989 ("the Merger Agreement"). On September 6, 1990
         the  shareholders  of Double  Helix and  Odyssey  approved  the  Merger
         Agreement. Pursuant to the terms of the Merger Agreement, each share of
         common stock of Odyssey was convertible into one share of Class A stock
         of the  Company  and each  share  of  Double  Helix  common  stock  was
         convertible  into  one  share  of the  Company's  common  stock.  Prior
         management's  instructions  to the  transfer  agent  required  that any
         shares of Odyssey or Double Helix outstanding at the time of the Merger
         not tendered to the Company's  transfer agent for exchange by March 31,
         1995  should be  canceled.  Accordingly,  86,790  shares of the Class A
         stock and 10,496 shares of the common stock  reserved for exchange were
         canceled.  The  par  value  of the  shares  canceled,  of  $5,837,  was
         transferred  to  capital in excess of par.  Upon  further  research  by
         counsel to the  Company,  the  instructions  of prior  management  were
         reversed,  and all cancelled  shares were  reinstated,  with the result
         that $5,837 was transferred back to stated capital.

         Additionally, in accordance with the Company's charter, all outstanding
         shares of the  Company's  Class A stock,  automatically  converted,  on
         March 31, 1995, into shares of the Company's  common stock at a rate of
         .6375 shares of common stock for each share of Class A stock.

11. Stock Options and Warrants:

         The  number  of  options  and  warrants,  and  exercise  prices  in the
         following  paragraphs  have been  restated  to give effect to a 1 for 6
         Reverse Stock Split in March 1996.

         The Company has an Incentive  Stock Option Plan (The "Option Plan") for
         its key  employees  providing  for the  granting  of options to acquire
         common stock.  The maximum  number of shares of common stock subject to
         the Option  Plan is 75,000,  plus 5% of any  increase  in the number of
         issued  shares after the  effective  date of the Merger,  excluding any
         increase  due to stock  awards  to key  employees  or as  result of the
         conversion of Class A stock.  The price for the shares  covered by each
         option will not be less than 100% of the fair market  value at the date
         of grant  (110% for  holders of more than 10% of the  company's  common
         stock).  Options  granted expire ten years from the date of grant (five
         years for holders of more than 10% of the Company's common stock).


                                       36
<PAGE>

               A summary of options under the plan is as follows:

                                           Shares           Exercise Price

         Outstanding, June 30, 1993        63,250           $5.04 - $15.54
         Granted                           19,167           $9.00 - $13.86
         Canceled                         (22,917)          $9.00 - $15.36
                                          --------
 
         Outstanding, June 30, 1994        59,500           $5.04 - $15.54

         Canceled                         (59,500)          $5.04 - $15.54
                                          --------

         Outstanding, June 30, 1995         -0-   

         Outstanding, June 30, 1996         -0-   

         Outstanding, June 30, 1997         -0-   


         The Company  issued an aggregate of 134,854  warrants to the purchasers
         of common stock of the Company sold in private placements during fiscal
         1992. The exercise prices range from $18.00 to $25.50 per share. 21,024
         of such warrants were exercised during 1992 at $18.00 per share. During
         the years ended June 30, 1995,  1994 and 1993,  58,652,  53,500 and 608
         warrants,   exercisable   at  $25.50,   $18.00  and  18.00  per  share,
         respectively,  expired,  unexercised.  The  balance  of  the  warrants,
         exercisable at $18.00 per share, expired unexercised in July 1996.

         An additional  70,833 warrants and options were granted during the year
         ended June 30, 1992 to outside  consultants  for services in connection
         with  private  placements.  The  exercise  prices  range from $12.00 to
         $25.50 per  share.  8,333 of such  options  were  exercised  in 1992 at
         $12.00  per  share.  4,167  options,  exercisable  at $16.50 per share,
         expired,   unexercised,   during  fiscal  1993.  The  balance  expired,
         unexercised, during fiscal 1995.

         In fiscal 1992,  the Board of Directors  approved the grant of options,
         to purchase 6,000 shares to the outside  directors of the Company,  for
         their services as directors,  at an exercise price of $18.96 per share.
         An  additional  6,000  options were granted  during  fiscal 1993 to the
         outside  directors,  at an exercise price of $10.08. The options to the
         directors have not yet been issued.

         During the year ended June 30, 1993, 8,333 options were granted outside
         of the plan, at an exercise price of $9.00, to an officer in connection
         with an employment agreement.  Such options expired during fiscal 1995.
         Additionally,  1,667  options  were  granted,  at an exercise  price of
         $9.00, to a director of the Company for services rendered. Such options
         expired, unexercised, during fiscal 1997.

         During  fiscal  1993,  warrants  to  purchase  12,500  shares were also
         granted to outside consultants,  for services rendered,  at an exercise
         price of $13.14 per share.  Such options expired,  unexercised,  during
         fiscal 1998. Warrants to purchase 70,833 shares were granted to outside
         consultants  for services  rendered  during  fiscal  1994,  at exercise
         prices  ranging  from  $7.50  to  $21.00.   66,667  of  such  warrants,
         exercisable at $9.00 to $21.00 per share,  expired  unexercised  during
         fiscal 1996. The balance of the warrants expired,  unexercised,  during
         fiscal 1997.

         In April 1995, following the change in management control, the Board of
         Directors  authorized the issuance of 8,333 options to each of five new
         Directors and 16,667 options to the president of the Company. The Board
         also  authorized  the  issuance  of a total of  10,000  options  to two
         outside  consultants for services in connection with the proxy contest.
         All such  warrants are  exercisable  for a four year period  commencing
         October 13, 1995 at $3.92 per share.

                                       37
<PAGE>

         In August and October 1995,  the Company  issued an aggregate of 26,041
         warrants to  purchasers of 12% Senior  Unsecured  Notes sold in private
         placement.  The exercises  prices ranged from $2.37 to $2.83 per share.
         With the exception of 4,167  warrants,  which are  exercisable  through
         August  1999  at  $2.83  per  share,  all of  the  warrants  issued  in
         connection  with the private  placement  were  exchanged by the warrant
         holders  for  registered  shares of  common  stock of the  Company.  In
         connection with the private  placement,  the Company also issued 33,333
         warrants to its outside  counsel in  consideration  for legal  services
         performed, exercisable during the three year period commencing one year
         from the date of issuance, at a price per share of $2.83.

         During the year ended June 30,  1996,  769,167  warrants  were  granted
         outside of the Plan to  officers  and  directors,  at  exercise  prices
         ranging from $1.50 to $2.83.  All such warrants were  exercisable as of
         June 30, 1998.

         During fiscal 1996,  the Company also granted  16,667  warrants,  at an
         exercise price of $1.88 per share, to its outside counsel in connection
         with  the  extension  of a note.  Additionally,  warrants  to  purchase
         167,500 shares were granted to consultants for services rendered during
         fiscal 1996, at exercise  prices  ranging from $.76 to $1.88 per share.
         All such warrants were exercisable as of June 30, 1998.

         During  the  fiscal  year ended  June 30,  1997,  a total of  1,153,333
         warrants were issued to officers, directors, employees, consultants and
         third  parties,  exercisable at prices ranging from $ .625 per share to
         $1.06 per share.  The warrants are exercisable for periods ranging from
         three to five years.  None of such warrants was exercised during fiscal
         1997 or fiscal 1998.

         During the fiscal year ended June 30, 1998, a total of 254,260 warrants
         were issued to third parties,  exercisable at prices ranging from $1.00
         per share to $1.65 per share.  The warrants are exercisable for periods
         ranging from two to five years.  None of such  warrants  was  exercised
         during fiscal 1997 and 1998.

         On July 1, 1998, a third party  investor in the Company was granted the
         right to acquire up to 150,000 transferable warrants having an exercise
         price of $1.60 per share.

12.      Related Party Transactions:

         The firm of  Goodkind,  Labaton,  Rudoff & Sucharow,  of which David A.
         Mortman, a former Director of the Company was a member,  received legal
         fees from the  Company of  $195,000  for the fiscal year ended June 30,
         1995.  Additionally,  it received  an  aggregate  of 522,641  shares of
         common stock of Global  Intellicom,  Inc., a subsidiary of the Company,
         valued at $155,905, in consideration of the cancellation of outstanding
         legal fees.

         The firm of David A. Mortman,  P.C. and its predecessor  firm, of which
         David A.  Mortman,  a Director of the  Company  was a member,  received
         legal fees from the Company of $16,585 and  $387,987  during the fiscal
         years ended June 30, 1995 and 1994, respectively.

         Lawrence I. Schneider, a former member of the Board of Directors of the
         Company  and one of  three  former  Co-Chairmen  in the  Office  of the
         Chairman of the Company during the fiscal year ended June 30, 1996, was
         also a principal of Global Capital Resources,  Inc. during that period,
         a New York based financial consulting services firm ("Global Capital").
         During the 11 month period from May, 1995 through March,  1996,  Global
         Capital  rendered  financial  consulting  services  to the  Company  in
         connection with the change of management  control of the Company.  Such
         services  were  rendered  to the  Company  at the  agreed  upon rate of
         $15,000 per month.  However, in order to conserve the cash resources of
         the Company,  Global  Capital  agreed to accept stock  options from the
         Company  in lieu of a cash  payment.  On March 6,  1996,  the  Board of


                                       38
<PAGE>

         Directors  of the  Company  (with  Mr.  Schneider  abstaining  from the
         voting)  authorized  the issuance to Global Capital of stock options to
         purchase 83,333 shares of Common Stock of the Company, exercisable over
         a five-year  period at the  exercise  price of $1.875 per share  (after
         adjustment for the Reverse Split).

         During the fiscal  years ended June 30, 1997 and 1996,  the law firm of
         Herbst & Greenwald,  of which Mr. Greenwald, a director of the Company,
         is a member,  received fees for legal services  rendered to the Company
         in the amount of $21,564 and $9,075.

         On August 1, 1996,  the Board of  Directors  of the Company  offered to
         reimburse  the members of the CECO  Shareholders  Committee in kind for
         all expenses  incurred by such members in connection with the change of
         management  control of the Company  effected in April,  1995. The Board
         offered to  reimburse  such  expenses by issuing  stock  options to the
         committee  members in an amount  equal to one and  one-third  times the
         amount of such  expenses.  Robert  Miller,  a director of the  Company,
         agreed to accept  options to purchase  40,000  shares of the  Company's
         Common Stock,  exercisable over a five-year period at an exercise price
         of $ .75 per share,  representing  the then current market price of the
         Company's  Common Stock on the date of grant.  In exchange,  Mr. Miller
         released  his claim  for  reimbursement  of  approximately  $30,000  of
         expenses  incurred  by Mr.  Miller  in  connection  with the  change of
         control.  Lawrence I.  Schneider,  a former director of the Company and
         also a member of the CECO  Shareholders  Committee,  has not  agreed to
         accept  options in lieu of his claim for  reimbursement  of expenses in
         connection with the change in control.

         The Company  has  entered  into a "first  look"  agreement  with Presto
         Productions,  a production  company in which  Stephen R.  Greenwald,  a
         Director of the Company,  has an interest.  Mr. Greenwald's interest in
         Presto varies on a film-by-film  basis.  The Company  believes that the
         terms of its  arrangement  with Presto are no less favorable than could
         be arranged with other independent third party producers.

         In April, 1997, Stephen R. Greenwald,  Lawrence I. Schneider and Robert
         E.  Miller,  Jr.  made loans to the  Company in the amounts of $50,000,
         $25,000  and  $25,000  respectively.  Each loan was  payable  on demand
         bearing  interest  at the rate of 9.25% per annum and was  secured by a
         collateral  assignment of the Company's  $300,000  receivable  due from
         Kinnevik.  In  consideration of making such loans, the lenders received
         five-year  warrants to purchase  shares of Common Stock of the Company,
         exercisable  at $1.00 per share.  Messrs.  Schneider  and  Miller  each
         received 25,000 warrants in consideration  of their respective  $25,000
         loans to the Company,  and Mr.  Greenwald  (or his  designee)  received
         50,000 warrants in consideration of his $50,000 loan to the Company. In
         March,  1998,  the loan of Mr.  Schneider  was  repaid in full from the
         proceeds of the Kinnevik  receivable.  However,  Messrs.  Greenwald and
         Miller agreed to a roll-over of their loans  against a second  Kinnevik
         receivable due in September,  1998. In  consideration of the roll-over,
         Messrs. Greenwald and Miller will receive an additional 25,000 warrants
         and 12,500 warrants, respectively,  exercisable at $1.00 per share over
         a three year period.

13.      Subsequent Events:

         The Company signed an agreement  with Kimon  Mediaright KB ("Kimon") on
         July 14, 1998 to purchase the assets of Kimon, valued at $4,500,000, in
         exchange  for  4,500,000  Odyssey  shares of  subordinated  convertible
         preferred  stock,  Series  B,  having a value of $1.00  per  share  for
         conversion  purposes.  Kimon shall be able to convert to Odyssey common
         stock   between   June  30,   2000   and   December   31,   2000  on  a
         dollar-for-dollar  basis  based on the  price of the  Company's  common
         stock at the time of conversion.  Kimon assets  purchased  consist of a
         film library with worldwide and/or Scandinavian distribution rights and
         Scandinavian  video  distribution  rights  to  Hallmark   Entertainment
         products.

                                       39
<PAGE>

         In June,  1998, the Company applied for, and was accepted for,  trading
         on the Berlin Stock Exchange under the symbol "ODY". The German company
         Berliner  Freiverkehr  (Aktien) assisted the Company in the application
         and  signed  an  agreement  with  the  Company  to  serve  as a  market
         maker/coordinator  in exchange for 200,000  warrants having an exercise
         price of $1.55  per  share,  exercisable  during  the  two-year  period
         commencing June 23, 1998.

         The Company  received  $150,000 in funding from the Augustine Fund L.P.
         in July,  1998.  In exchange  for the  financing,  the  Augustine  Fund
         received  a  $150,000  convertible  note  as  well  as  up  to  150,000
         transferrable warrants, exercisable at $1.60 per share for a three year
         period.  Augustine can convert into restricted  shares of the Company's
         common  stock at a discount to the market  price of the common stock at
         the time of the conversion  (i.e.,  at the lower of the market price on
         the closing  date,  or 80% of the market  price  prior to  conversion).
         Augustine and certain Augustine  associated  parties were also issued a
         total of 45,000  shares of restricted  common stock in connection  with
         the transaction.

         Mr. Ira Smith, one of Odyssey's  Directors on the Board,  resigned as a
         Director on July 2, 1998 to pursue other business interests.







                                       40
<PAGE>
Item 9.  Changes in and Disagreements with Accountants on Accounting
         -----------------------------------------------------------
         and Financial Disclosure.
         -------------------------

     Reference is made to the Company's Reports on Form 8-K, dated September 24,
1997,  and February 13, 1998,  with respect to a change in  accountants  for the
Company.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.
         ---------------------------------------------------

     The directors and executive officers of the Company are as follows:

Name                          Age              Position
----                          ---              --------

Johan Schotte                  36               Chairman of the Board
                                                & Chief Executive Officer

Pierre Koshakji                36               President & Director

Stephen R. Greenwald           57               Managing Director & Director

Robert E. Miller, Jr.          50               Director

Yves Bayle                     36               Director

     Set forth below is  information  regarding  the business  experience of the
current Directors and executive officers of the Company.

Johan Schotte is co-founder  and chairman of Media Trust S.A. and  Entertainment
Education  Enterprises  Corporation.  Mr. Schotte has an extensive background in
banking and management, and holds an M.B.A. degree from the University of Dallas
in  Irving,  Texas.  Until he joined  Odyssey  in 1998,  he  served as  managing
director of Rocket Pictures,  an international  film production and distribution
company, for whom he produced the satirical comedy "Cannes Man" in 1996.

Pierre  R.  Koshakji  is   co-founder,   and  was  President  and  director  of,
Entertainment   Education   Enterprises   Corporation   (E3   Corporation),   an
international  sports,  entertainment,  and investment group. E3 Corporation has
offices in Dallas, Luxembourg and Los Angeles and has a professional affiliation
with the Lamar Hunt group of companies, Unity Hunt. Prior to E3 Corporation, Mr.
Koshakji served as Director of Business  Development with Unity Hunt/Hunt Sports
Enterprises   where  he  evaluated,   negotiated,   and   implemented   targeted
acquisitions and projects.  He played a development  role in establishing  major
league soccer (MLS) and in establishing the two Hunt MLS teams in Columbus, Ohio
and in Kansas City, Missouri,  and served as Senior  Vice-President of Marketing
on the Las Vegas domed  Stadium  project as well as marketing  consultant to the
San Francisco  Giants new ball park at China Basin.  Other  positions and titles
Mr. Koshakji has held during his  professional  career include Deputy  Executive
Director of the 1994 World Cup, Dallas Venue,  including the  responsibility  of
liaison with the European  Broadcast Union and  International  Broadcast Center,
the position of Director at KMPG Management Consulting in the country of Kuwait,
and electrical engineer at Chrysler  Technologies Airborne Systems. Mr. Koshakji
graduated from  Vanderbilt  University BSEE with honors and received his Masters
of Business Administration at Southern Methodist University.

Stephen R. Greenwald  served as Chief  Executive  officer and Co-Chairman in the
Office of the Chairman of Odyssey from  September,  1995  through  March,  1998.
Since 1990,  Mr.  Greenwald  has been a consultant to banks and other clients in
the media and film  business,  most recently  having  served as chief  executive
officer of Vision  International,  an international  film  distribution  company
based in Los Angeles,  from February,1994  through June,1996.  Mr. Greenwald has
also been involved in financing and distributing  independently  produced motion
pictures  including,  among  others,  "Blue  Velvet,"  "Dune," "King of Comedy,"
"Ragtime,"   "Crimes  of  the  Heart,"  and   "Manhunter."  Mr.  Greenwald  also
co-produced the film "Amityville II: the Possession."

                                       41
<PAGE>

Robert E. Miller,  Jr. is a private  investor and principal  shareholder of Word
Power  Incorporated   d/b/a  Hollywood  North   Productions,   a  privately-held
development company for feature films and movies-of-the-week. Mr. Miller is also
Associate Director of Trade Task Group,  Inc., a strategic  planning  consulting
firm where he has served as manager of client development since 1984. He is also
a board member emeritus of the International Standards Institute and a member of
the board of advisors of the World Film Institute,  sponsors of "The Family Film
Awards."

Yves Bayle is a member of the Executive Committee of Banque Colbert (Luxembourg)
S.A.,  and a  non-executive  director of a number of  investment  companies  and
funds.  Prior  to  joining  the bank in 1989,  he spent a number  of years  with
several international banks located in Luxembourg.  Mr. Bayle specializes in the
development  of  corporate   services  and  in  the  structuring  of  collective
investment vehicles.

Meetings and Committees of the Board of Directors

     For the fiscal  year ended June 30,  1997,  there were 12  meetings  and/or
written  consents in lieu of meetings of the Board of  Directors.  All Directors
attended or consented to each of the meetings (and consents in lieu of meetings)
of the Board of directors  during said fiscal year.  The Board of Directors does
not presently have any standing  nominating,  audit or compensation  committees,
the customary  functions of such committees  being performed by the entire Board
of Directors. The Board of Directors intends to form such committees in the near
future.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the  Company's  officers and  directors,  and persons who own more than 10% of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the  Securities and Exchange  Commission
(the  "Commission").  Officers,  directors and greater than 10% stockholders are
required by the  Commission's  regulations to furnish the Company with copies of
all section 16(a) forms they file. To the Company's knowledge, based solely on a
review of the copies of reports  furnished to the company during the fiscal year
ended June 30, 1997,  the  Company's  officers,  directors  and greater than 10%
stockholders  complied with all filing  requirements  under section 16(a) except
that Mr. Miller and Mr.  Greenwald each failed to timely file a Form 4 in April,
1997 with respect to the acquisition of options for common stock. Messrs. Bayle,
Schotte and  Koshakji  each filed a Form 3 in  October,  1998  reflecting  their
respective appointments to the Board of Directors in September, 1997 (Mr. Bayle)
and March 1998 (Messrs.  Schotte and  Koshakji).  Mr.  Schotte filed a Form 4 in
October, 1998 reflecting the conversion of a note into shares of common stock of
the Company,  and the acquisition of shares and warrants of the Company, in each
case by an affiliate of Mr. Schotte in April, 1998.

                                       42
<PAGE>

Item 11. Executive Compensation.

     The  following  table sets  forth,  for the  fiscal  years  indicated,  all
compensation awarded to, earned by or paid to the chief executive officer of the
Company  and the  four  most  highly  compensated  executive  officers  who were
executive officers as of June 30, 1997.
<TABLE>
<CAPTION>

                           Summary Compensation Table
<S>                    <C>      <C>      <C>      <C>           <C>            <C>

                                Annual Compensation                Long-term
                                                                  Securitites
Name and                Fiscal                    Other Annual    Underlying      All Other
Position                 Year    Salary   Bonus   Compensation     Options       Compensation

Stephen Greenwald        1997    127,500   --          --          100,000(2)    97,500(1)(2)
Chief Executive          1996     60,000   --          --          216,667(2)    75,000(1)(2)
Officer, Co-Chairman     1995       --     --          --             --

Ira N. Smith             1997    130,875   --          --          100,000       94,125(1)
President;               1996     60,000   --          --          216,667       75,000(1)
Co-Chairman              1995       --     --          --             --            --

Lawrence Schneider       1997     89,167   --          --          100,000      135,833(1)
Co-Chairman              1996     60,000   --          --          216,667       75,000(1)
                         1995       --     --          --            8,333          --

Joshua Grode             1997     40,000   --          --             --            --
Executive                1996     24,872   --          --           33,333          --
Vice-President           1995       --     --          --             --            --

Marvin Grossman          1997     87,524   --          --           35,000          --
Chief Financial          1996       --     --          --             --            --
Officer                  1995       --     --          --             --            --

</TABLE>
(1)   Messrs.  Greenwald,  Smith and Schneider  each  deferred  $75,000 of their
      annual compensation during the fiscal year ended June 30, 1996 pursuant to
      the terms of their  respective  compensation  agreements with the Company.
      During the fiscal year ended June 30, 1997, Messrs.  Greenwald,  Smith and
      Schneider deferred $97,500, $94,125, and $135,833,  respectively, of their
      annual compensation pursuant to their compensation agreements. Pursuant to
      such  agreements,  Messrs.  Greenwald,  Smith and  Schneider  were  issued
      convertible promissory notes for the amount of such deferred compensation,
      payable in full within  twelve months from the date of issue with interest
      at 2% over prime. Such notes were converted into shares of common stock of
      the Company on June 10 and June 30, 1996 at the average  closing bid price
      in effect for the common stock for the 10-day trading  period  immediately
      preceding the date of each  respective  election.  On June 10,  $60,000 of
      each note (plus  accrued  interest)  was  converted  into 83,120 shares of
      common stock at a price of $.75 per share, and on June 30, $15,000 of each
      note was  converted  into 19,231 shares of common stock at a price of $.78
      per  share.   On  September  30,  1996,   they  each  converted   deferred
      compensation  notes of $15,000 for the quarter  then ended into a total of
      26,316 shares of common stock at a conversion price of $.57 per share. See
      "Compensation     Arrangements,     Termination    of    Employment    and
      Change-in-Control  Arrangements"  for a more detailed  explanation  of the
      terms of the  compensation  agreements  between  the  Company  and each of
      Messrs.  Greenwald,  Smith and  Schneider.  Such  compensation  agreements
      became effective on October 1, 1995, but were terminated in March, 1998 in
      connection with a change in control of the Company.

(2)   The cash  compensation  and stock  options  reflected  as being paid to or
      received by Mr.  Greenwald in the foregoing table were actually paid to or
      received by G & H Media, Ltd., a consulting firm of which Mr. Greenwald is
      a principal and controlling  party. The compensation to Mr. Greenwald does
      not include  compensation  paid to a law firm of which Mr.  Greenwald is a
      member.
      See "Certain Relationships and Related Transactions."

                                       43
<PAGE>

 (3)  Mr.Grode commenced employment with the Company on April 1, 1996. 
      His employment  with the Company  terminated on February 28, 1997.

 (4)  Although Mr. Grossman was elected to his present position with the Company
      on May 22, 1996, he did not begin to receive compensation from the Company
      until  the   commencement   of  the  1997  fiscal  year  in  July,   1996.
      Mr.Grossman's  employment  with the Company was converted into a part-time
      consulting arrangement as of January 1, 1998.

Options/Stock Appreciation Rights

     The following table provides  information with respect to stock options and
stock  appreciation  rights  ("SARs")  granted to the named  executive  officers
during the fiscal year ended June 30, 1997.
<TABLE>
<S>               <C>           <C>           <C>       <C>          <C>   

                                    Individual Grants
                    -----------------------------------------------
                                  % of Total
                      Number of     Options                           Potential Realized Value at
                    Securitites    Granted to  Exercise                 Assumed Annual Rates of
                     Underlying    Employees     Price                  Stock Price Appreciation
                      Options      In Fiscal      Per    Expiration         For Option Terms
Name                  Granted        Year        Share     Date           5%                10%
----                -----------   -----------  --------  ----------   ---------------------------

Stephen Greenwalk     100,000(1)     28%        $1.00     12/02/01        0              $14,000

Ira N. Smith          100,000        28%        $1.00     12/02/01        0              $14,000

Lawrence Schneider    100,000        28%        $1.00     12/02/01        0              $14,000

Joshua Grode             --          --          --          --           -                 --

Marvin Grossman        35,000        9.8%       $ .75     12/02/99      $2,100           $ 6,650

</TABLE>

(1)The stock  options  reflected as being issued to Stephen R.  Greenwald in the
foregoing table were actually issued to G & H Media,  Ltd., a consulting firm of
which Mr. Greenwald is a principal and controlling party.


Aggregated Option/SAR Exercises and Fiscal Year-End Options/SAR Value Table
<TABLE>
<CAPTION>
                                          Number of Securities
                                         Underlying Unexercised      Value of Unexercised
                                           Options at Year End         In-the-Money-Options
<S>                  <C>          <C>        <C>          <C>            <C>           <C>
                        Shares
                       Acquired     Value
Name                  On Exercise  Realized   Exercisable  Unexercisable   Exercisable   Unexercisable
------------------------------------------------------------------------------------------------------
Stephen Greenwald(1)      --          --        366,667         --              0              --

Ira N. Smith              --          --        316,667         --              0              --

Lawrence Schneider(1)     --          --        350,000         --              0              --

Joshua Grode              --          --         33,333         --              0              --

Marvin Grossman           --          --         35,000         --              0              --

</TABLE>
 
(1)   The chart  includes  50,000 stock  options for Mr.  Greenwald,  and 25,000
      stock options for  Mr.Schneider,  in each case issued in  connection  with
      short term loans  made to the  Company.  See  "Certain  Relationships  and
      Related Transactions."

                                       44
<PAGE>

Repricing of Options

     On December 2, 1996,  the Board of  Directors  voted to lower the  exercise
price of the following  warrants to $1.00 per share to create further incentives
for management of the Company and to bring the warrant  exercise price into line
with warrants granted to other parties performing services for the Company: With
respect to  Lawrence  Schneider,  8,333  warrants  granted in April,  1995 at an
exercise price of $3.91 per share;  16,667 warrants granted in October,  1995 at
an exercise  price of $2.83 per share;  and 200,000  warrants  granted in March,
1996 at an exercise  price of $1.87 per share;  with  respect to Robert  Miller,
8,333 warrants  granted in April,  1995 at an exercise price of $3.91 per share;
33,333  warrants  granted in  October,  1995 at an  exercise  price of $2.83 per
share; and 25,000 warrants granted in March,  1996 at an exercise price of $1.87
per  share;  with  respect  to each of Ira  Smith  and G & H  Media.,  Ltd.  (an
affiliate of Stephen R. Greenwald),  16,667 warrants granted in October, 1995 at
an exercise  price of $2.83 per share;  and 200,000  warrants  granted in March,
1996 at an  exercise  price of $1.87 per  share.  The  closing  bid price of the
Company's common stock on December 2, 1996 was $.69 per share.

Director Compensation

     The  Company  does not have any  standard  arrangements  pursuant  to which
directors of the Company are  compensated  for services  provided as a director.
All directors are entitled to reimbursement for expenses  reasonably incurred in
attending Board of Directors' meetings.

Compensation Agreements, Termination of Employment and 
Change-in-Control Arrangements

     On  October  1,  1995,  Messrs.  Greenwald,  Smith and  Schneider  executed
compensation  agreements with the Company (the "Agreements"),  pursuant to which
the named  parties  agreed to render  management  services  to the company for a
three year period ending October 1, 1998. Pursuant to these Agreements,  each of
the parties  agreed to serve as a  Co-Chairman  in the Office of the Chairman of
the Company and, in addition,  Mr.Greenwald  agreed to serve as Chief  Executive
Officer.  (In March,  1996,  Mr.  Smith also agreed to serve as President of the
Company).  The  Agreements  were  superseded by agreements  executed on March 6,
1996.  The  subsequent  agreements  (also  defined  as  the  "Agreements")  were
substantially identical to the original Agreements in all material respects with
respect to cash compensation but modified the provisions  regarding the issuance
of stock options.  (In the subsequent  Agreement with Mr.  Greenwald,  the named
party is G & H Media, Ltd., rather than Mr. Greenwald individually; G & H Media,
Ltd. is a consulting firm of which Mr.  Greenwald is a principal and controlling
party).

     The Agreements  provided for  compensation a the rate of $15,000 per month,
$20,000 per month and $25,000 per month during the first, second and third years
of the respective terms of the Agreements. In September,  1997, the terms of the
Agreements were extended for an additional two-year period.

     Each of Messrs. Greenwald,  Smith and Schneider agreed that with respect to
each calendar quarter during the term of his respective Agreement, the following
percentage  of his  compensation  would be paid:  (i) no payment if the  current
assets of the Company as of the end of the  previous  calendar  quarter are less
than $500,000; (ii) one-third if the current assets of the Company as of the end
of  the  previous  calendar  quarter  are  more  than  $500,000  but  less  than
$1,000,000; (iii) two-thirds if the current assets as of the end of the previous
calendar  quarter are more than  $1,000,000 but less than  $1,500,000;  and (iv)
full  payment  if the  current  assets  as of the end of the  previous  calendar
quarter are more than $1,500,000. Any portion of the compensation not paid would
be  deferred  and would be paid in twelve  months  with  interest  pursuant to a
promissory note issued by the Company, provided that the note could be converted
into  common  stock of the  Company  at any time prior to payment in full at the
average  closing bid price in effect for the common stock for the 10-day trading
period immediately preceding the date of the conversion election.

                                       45
<PAGE>

     During the quarter  ended  December  31, 1995,  each of Messrs.  Greenwald,
Smith and Schneider  deferred  100% of their  compensation  for the quarter,  or
$45,000 each. During each of the next two quarters,  they deferred  one-third of
their  compensation,  or a total of $30,000  each. On June 10 and June 30, 1996,
each  of  Messrs.  Greenwald,  Smith  and  Schneider  converted  their  deferred
compensation  notes of $75,000 (plus accrued  interest)  into a total of 102,351
shares of common stock at prices of $.75 and $.789 per share,  respectively.  On
September 30, 1996, they each converted  deferred  compensation notes of $15,000
for the quarter  then ended into a total of 26,316  shares of common  stock at a
conversion price of $.57 per share.

     The  Agreements  also provided for the issuance of 200,000 stock options to
each of Messrs. Greenwald, Smith and Schneider, exercisable during the five-year
period  commencing  March  6,  1996 at an  exercise  price of  $1.87  per  share
(subsequently  lowered to $1.00 per share by action of the Board of Directors in
December 1996). See "Options/Stock Appreciation Rights."

     On December 2, 1996,  the Board of directors  granted  100,000 common stock
purchase  warrants  to each of  Stephen  R.  Greenwald,  Ira Smith and  Lawrence
Schneider in  consideration  of services  rendered to the Company.  The warrants
were granted for a five-year  period and are  exercisable at a purchase price of
$1.00 per share.

     In April,  1997,  the Company  granted  additional  common  stock  purchase
warrants to Stephen R.  Greenwald  (or his  designee),  Lawrence  Schneider  and
Robert Miller,  Jr. in consideration of providing  certain interim  financing to
the Company. See "Certain Relationships and Related Transactions."

     Lawrence  Schneider  resigned his executive  position in September 1997. In
March,  1998,  Messrs.  Greenwald and Smith stepped down as CEO and President of
the Company,  and Messrs.  Johan Schotte and Pierre Koshakji were elected as CEO
and President in their stead.

     In  connection  with the  change  of  management  in March,  1998,  Messrs.
Greenwald and Smith terminated their existing employment  agreements and entered
into new  compensation  arrangements  with the Company.  Mr. Greenwald agreed to
serve as managing  director of the Company  through  December 31,  1999,  and is
entitled to receive the sum of  $130,000  during such period in varying  monthly
payments.  In addition,  in consideration of terminating his existing employment
agreement,  Mr.  Greenwald is entitled to receive an additional  $130,000,  also
payable in varying  monthly  amounts during the two-year  period ending December
31, 1999. The Company is currently in default under Mr.  Greenwald's  agreement,
entitling Mr. Greenwald to re-instate his former employment agreement.

     Mr. Smith (through S.F.H. Associates, Inc.) agreed to serve in a consulting
capacity to the Company  through  December 31, 1999,  and is entitled to receive
the sum of $160,000 during such period, payable at the rate of $8,000 per month,
commencing May, 1998. In adition,  in  consideration of terminating his existing
employment  agreement,  Mr. Smith is entitled to receive an additional $100,000,
payable in varying  monthly  amounts during the two-year  period ending December
31, 1999. The Company is in default under the agreements with S.F.H  Associates,
Inc.  and Mr.  Smith,  as a result of which such parties  have  exercised  their
contractual rights to double the payments due to them under such agreements.

     Johan  Schotte  entered  into a  two-year  employment  agreement  with  the
Company,  commencing as of January 1, 1998 and continuing  through  December 31,
1999. Mr. Schotte's compensation is set at $150,000 per year during such period.
Mr. Koshakji also entered into a two-year employment  agreement with the Company
at the rate of $150,000  per annum.  As of September  30,  1998,  a  substantial
portion  of the  compensation  due to Messrs.  Smith and  Koshakji  under  their
respective agreements is past due.

     In connection  with the change of  management,  an affiliate of Mr. Schotte
purchased  a total of  $230,000  of  deferred  compensation  notes from  Messrs.
Greenwald and Smith, and converted approximately 75% of these notes into 667,648
shares of the Company's common stock in April, 1998.

Compensation Committee Report and Compensation Committee 
Interlocks and Insider Participation

                                       46
<PAGE>

     Executive  officer  compensation  is  determined  by the  entire  Board  of
Directors.  The Board has not  appointed or  designated a separate  compensation
committee to  determine or set  executive  compensation.  The Board's  executive
compensation policy is intended to attract and retain key executives, compensate
them at appropriate levels and provide them with both cash and equity incentives
to enhance the Company's value for all of its stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
         ---------------------------------------------------------------

     The following table sets forth information  concerning  ownership of common
stock,  as of September  30, 1998, by each person known by the Company to be the
beneficial  owner  of more  than  5% of the  common  stock,  each  director  and
executive officer, and by all directors and executive officers of the Company as
a group.



Name & Address of                        Shares                   Percentage of
Beneficial Owner           Status        Beneficially Owned            Class
----------------------------------------------------------------------------
Lawrence Schneider           __           480,101(1)                  8.6%
116 E. 30th Street 
New York, NY 

Robert Miller, Jr.         Director       202,333(2)                  3.8%
900 4th Avenue
Seattle, WA

S.F.H. Associates Inc.      __            445,231(3)                  8.1%
49 Woodland Drive
Oyster Bay, NY

Stephen R. Greenwald       Managing       495,231(4)                  8.9%
380 Lexington Avenue       Director;
New York, NY               Director

Johan Schotte              CEO and        250,000(5)                  4.7%
1601 Elm Street            Chairman
Dallas, TX

Pierre Koshakji            President &       ___                      ___
1601 Elm Street            Director    
Dallas, TX

Yves Bayle                 Director          ___                      ___
1601 Elm Street
Dallas, TX

All Executive
Officers &
Directors As
A Group (5 Persons)(6)      ___           947,564(7)                 16.3%



(1)   Includes presently exercisable options to purchase 350,000 shares 
      of common stock.
(2)   Includes  presently  exercisable  options to  purchase  131,666  shares of
      common stock;  also includes  61,167 shares held jointly with Mr. Miller's
      wife,  and 9,500 shares held in an individual  retirement  account for Mr.
      Miller's wife, as to which latter shares Mr. Miller  disclaims  beneficial
      ownership.
(3)   Includes presently exercisable options to purchase 316,667 shares of
      common stock.
(4)   Includes presently exercisable options to purchase 366,667 shares of
      common stock.

                                       47
<PAGE>
(5)   Includes  presently  exercisable  options to  purchase  125,000  shares of
      common stock;  does not include  $57,501  principal  amount of convertible
      notes held by an affiliate of Mr. Schotte, which are convertible at market
      value at time of conversion  (i.e.,  based on the closing price of $.45 on
      September  30,  1998,  the notes could have been  converted  into  127,780
      shares of common stock at that time); also does not include 125,000 shares
      of common stock and 125,000 presently exercisable warrants held by each of
      Gold Leaf Pictures Belgium bvba and A Hero from Zero N.V., both affiliates
      of Mr.  Schotte;  also does not include 792,648 shares of common stock and
      151,600 common stock purchase warrants held by another corporate affiliate
      of Mr. Schotte,  Lecoutere Finance S.A. (Mr. Schotte disclaims  beneficial
      ownership of all shares and warrants held by affiliated entities, although
      based on Mr.Schotte's close business relationship with the other principal
      shareholders  of these entities,  there exists the possibility  that these
      shareholders  may act in  concert  with Mr.  Schotte  with  respect to the
      voting of these shares in the Company.
(6)   The table does not include Dominique  Verhaegen who resigned as a Director
      of the Company in October, 1998 - Mr. Verhaegen is not the beneficial 
      owner of any shares of common stock of the Company.
(7)   Includes presently exercisable options to purchase 623,333 shares of
      common  stock.

Item 13. Certain Relationships and Related Transactions.
         -----------------------------------------------

     On August 1,  1996,  the  Board of  Directors  of the  Company  offered  to
reimburse  members of the CECO  Shareholders  Committee in kind for all expenses
incurred by such members in connection with the change of management  control of
the Company  effected  in April,  1995.  (See  "Change of  Control").  The Board
offered to reimburse  such  expenses by issuing  stock  options to the committee
members  in an  amount  equal to one and  one-third  times  the  amount  of such
expenses.  Robert Miller, a director of the Company, agreed to accept options to
purchase  40,000  shares  of the  Company's  common  stock,  exercisable  over a
five-year  period at an exercise price of $.75 per share,  representing the then
current  market price of the  Company's  common  stock on the date of grant.  In
exchange,   Mr.  Miller  agreed  to  release  his  claim  for  reimbursement  of
approximately  $30,000 of expenses incurred by Mr. Miller in connection with the
change of control. Lawrence Schneider, then a director of the Company and also a
member of the CECO  Shareholders  Committee,  did not agree to accept options in
lieu of his claim for reimbursement of expenses in connection with the change of
control.

     During  the fiscal  years  ended  June 30,  1997 and 1998,  the law firm of
Herbst & Greenwald,  of which Mr.  Greenwald,  a director of the  Company,  is a
member,  received fees for legal services rendered to the Company in the amounts
of $21,563 and $5,000, respectively.

     In April, 1997,  Stephen R. Greenwald,  Lawrence Schneider (then a director
of the  Company),  and Robert E.  Miller,  Jr.  made loans to the Company in the
amounts of $50,000, $25,000 and $25,000, respectively.  Each loan was payable on
demand,  accrued  interest at the rate of 9.25% per annum,  and was secured by a
collateral  assignment of the Company's  $300,000  receivable due from Kinnevik.
See  "Business-Sales  of Distribution  Rights." In  consideration of making such
loans,  the lenders  received  five-year  warrants to purchase  shares of common
stock of the Company,  exercisable  at $1.00 per share.  Messrs.  Schneider  and
Miller each  received  25,000  warrants  in  consideration  of their  respective
$25,000  loans to the Company,  and Mr.  Greenwald  (or his  designee)  received
50,000  warrants  in  consideration  of his  $50,000  loan to the  Company.  Mr.
Schneider's  loan was  repaid  in  April,  1998  from the  Kinnevik  receivable.
However,  Messrs. Greenwald and Miller agreed to a rollover of their loans to be
paid from the proceeds of a second Kinnevik  receivable due in September,  1998.
In consideration of the rollover, Mr. Greenwald will receive 25,000 warrants and
Mr.  Miller  will  receive  12,500  warrants,  in each case  exercisable  over a
five-year  period  at $1.00  per  share.  Mr.  Greenwald's  loan was  repaid  in
September,  1998; Mr. Miller's loan was rolled over for a six month period on an
unsecured basis with interest at the rate of 10% per annum.

                                       48
<PAGE>
     In March, 1998, Ira Smith and Stephen Greenwald stepped down as Co-Chairmen
in the Office of the Chairman of the Company, and Johan Schotte was appointed as
Chairman and CEO of the Company. In connection with the change in management, an
affiliate of Mr. Schotte purchased $230,000 face value of deferred  compensation
notes  from  Messrs.  Smith  and  Greenwald,   and  in  April,  1998,  converted
approximately  75% of those notes into 667,648  shares of the  Company's  common
stock.  In  addition,  at the time of the  change  in  management,  the  Company
purchased an 18% equity interest in each of two corporations affiliated with Mr.
Schotte, one of which is the owner of a second division professional soccer team
in New  Mexico,  and the  other  of  which  is a  media  production  company  in
Luxembourg.  The  Company  issued  one-year  notes in the  aggregate  amount  of
$450,000  in  consideration  of the  purchase of the equity  interests  in these
companies.

     In  connection  with  Mr.Schotte's  appointment  as CEO and Chairman of the
Board, Mr. Greenwald agreed to terminate his existing employment  agreement with
the Company and to enter into a new, two-year employment agreement, effective as
of January 1, 1998.  Mr. Smith also agreed to terminate his existing  employment
agreement.  The Company entered into a new, two-year  consulting  agreement with
S.F.H.  Associates,  Inc.,  pursuant to which the  consultant  would provide the
consulting  services  of Mr.  Smith  for the two year  period  commencing  as of
January 1, 1998. The Company also entered into a two-year  contract with each of
Mr.  Schotte and Mr.  Koshakji,  effective as of January 1, 1998, at the rate of
$150,000 per annum. (See "Executive Compensation").

                                       49
<PAGE>
                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
         ----------------------------------------------------------------

(a)(1)  The response to this portion of Item 14 is submitted under Item 8, 
        page 17.


(a)(2)  See (a)(1) above.


(a)(3)  Exhibits

3.1     Articles of Incorporation, as amended through June 30, 1995(1)

3.2     Amendments to Articles of Incorporation filed in March and June, 1996(8)

3.3     Amendment to Articles of Incorporation filed in January, 1997 (9)

3.4     By-laws(1)

4.1     Indenture  between  Odyssey and  Continental  Stock Transfer and Trust
        Company  ("Continental")  dated as of July 15, 1987(1)

4.2     Form of Supplemental Indenture between Continental and the Company(1)

4.3     Form of Common Stock Certificate(1)

4.4     Form of options granted of officers, directors and 5% stockholders(2)

4.5     Form of Warrant issued to purchasers parties to the 1995 Private 
        Placement completed September 30, 1995(5)

4.6     Form of 12% Unsecured  Promissory Note issued to purchasers parties to
        the 1995 Private Placement completed September 30, 1995(5)

4.7     Form of Stock Option Agreement by and between the Company and officers
        and directors of the Company, for stock options issued in April 1995(5)

4.8     Form of Common Stock Purchase Warrant by and between the Company and
        officers, directors, employees and consultants of the Company for 
        warrants issued during the fiscal year ended June 30, 1996(8)

4.9     Common Stock Purchase Warrant, dated March 6, 1996, between the Company
        and G & H Media, Ltd.  (assignee of Stephen R. Greenwald)(7)

4.10    Common Stock Purchase Warrant, dated March 6, 1996, between the 
        Company and Lawrence I. Schneider(7)

4.11    Common Stock Purchase Warrant, dated March 6, 1996, between the 
        Company and Ira N. Smith(7)

4.12    Form of Common Stock Purchase Warrant by and between the Company and 
        officers,  directors,  employees and consultants of the Company for
        warrants issued during the fiscal year ended June 30, 1997 (9)

4.13    Preferred Stock Certificate, Series A, issued to Kinnevik Media 
        Properties, Ltd. in September, 1997 (10)

4.14    Convertible Note issued to Augustine Fund L.P. in July, 1998 (11)

4.15    Preferred Stock Certificate, Series B, issued to Kimon, Inc. in 
        September, 1998 (10)

10.1    1989 Long Term Incentive Plan(1)

10.2    Agreement of Settlement and Release, dated October 2, 1995, 
        by and between Home Box Office, Inc. and Odyssey(5)

                                       50
<PAGE>
10.3    Private Placement Memorandum used in connection with 1995 Private
        Placement (the "1995 Private Placement Memorandum")(5)

10.4    Supplement to the 1995 Private Placement Memorandum(5)

10.5    Supplement No. 2 to the 1995 Private Placement Memorandum(5)

10.6    Supplement No. 3 to the 1995 Private Placement Memorandum(5)

10.7    Settlement  Agreement,  dated as of  March  31,  1995,  by and
        between the Company,  Odyssey,  Global  Intellicom,  Inc.,  N.
        Norman Muller, Thomas W. Smith, David Mortman, Robert Ferraro,
        the CECO Shareholders Committee, Lawrence Schneider, Robert E.
        Miller, Henry Schneider,  Robert Hesse, Shane O'Neil,  Patrick
        Haynes,  Russell T. Stern,  Jr.,  Thurston  Group,  Inc.,  The
        Insight Fund, L.P. and Lois Muller(3)

10.8    Memorandum of Agreement, dated as of August 24, 1995 between the
        Company and Multipix Communications, Inc.(4)

10.9    Termination  Agreement,  dated as of January 2, 1996,  between  
        Regency International Pictures,  B.V. and Odyssey Distributors B.V.(6)

10.10   Employment Agreement dated October 1, 1995, between the Company and
        Stephen R. Greenwald(6)

10.11   Employment Agreement dated October 1, 1995, between the Company 
        and Lawrence I. Schneider(6)

10.12   Employment Agreement dated October 1, 1995, between the Company
        and Ira N. Smith (6)

10.13   Agreement, dated March 6, 1996, between Communications and
        Entertainment Corp. and its wholly-owned  subsidiary, Odyssey
        Distributors, Ltd.(7)

10.14   Severance and Consulting Agreement, dated March 26, 1996,
        between the Company and Shane O'Neil,  and related
        modifying agreement dated March 28, 1996(7)

10.15   Management  Agreement between the Company and Stephen R. Greenwald,
        dated March 6, 1996,  superseding the Employment Agreement dated
        October 1, 1995(8)

10.16   Management Agreement between the Company and Lawrence I. Schneider,
        dated March 6, 1996,  superseding the Employment
        Agreement dated October 1, 1995(8)

10.17   Management Agreement between the Company and Ira N. Smith, dated 
        March 6, 1996, superseding the  Employment Agreement dated 
        October 1, 1995(8)

10.18   Addendum to Management Agreements of Messrs. Schneider,
        Greenwald and Smith(8)

10.19   Joint Venture Letter between the Company and Film Bridge 
        International, Inc., dated March 11, 1996(8)

10.20   Lease for office premises at 1875 Century Park East, Suite 2130,
        Los Angeles, California, dated May 9, 1996(8)

10.21   Agreement dated August 29, 1996, between the Company and Kinnevik
        Media Properties, Ltd.(8)

10.22   Agreement dated September 6, 1996 between the Company and 
        Mr. David Somerstein(8)

                                       51
<PAGE>
10.23   Settlement  Agreement and Release between Paramount  Pictures
        Corporation and Odyssey  Distributors , Ltd. (a wholly owned subsidiary
        of the Company), and Guarantee agreement of the Company, each dated as
        of September 26, 1996 (9)

10.24   Form of Settlement Agreement with Generale bank Nederland, N.V., dated
        as of December 18, 1996 (9)

10.25   Stock Purchase Agreement between the Company and Kinnevik Media 
        Properties, Ltd., dated September 1997 (10)

10.26   Stock Purchase  Agreement  between the Company and Flanders Film S.A. 
        relating to purchase of minority stock interest in E3 Sports 
        New Mexico,  Inc. and Media Trust S.A., and related  promissory  
        notes for $135,000 and $315,000,  dated March 2, 1998 (10)

10.27   Termination /Employment Agreement with Stephen R. Greenwald, dated
        March 2, 1998 (10)

10.28   Termination Agreement with Ira Smith dated March 2, 1998 (10)

10.29   Consulting Agreement with S.F.H. Associates, Inc. for the services 
        of Ira Smith, dated March 2, 1998 (10)

10.30   Employment Agreement with Johan Schotte, dated March 2, 1998 (10)

10.31   Convertible Note issued to Augustine Fund, L.P. in 
        July, 1998 (see Item 4.14)

10.32   Asset Purchase Agreement between the Company and Kimon Mediabright 
        KB, a Swedish limited partnership,  dated July 14, 1998 (10)

21.1    Subsidiaries of the Registrant(3)

(1) Incorporated herein by reference to the Company's Registration Statement on
    Form S-4, File No. 33-34627.

(2) Incorporated herein by reference to the Company's  Registration Statement on
    Form S-1, File No. 33-43371.

(3) Incorporated herein by reference to the Company's Current Report on Form 8-K
    filed April 12, 1995, File No. 0-18954.

(4) Incorporated herein by reference to the Company's Current Report on Form 8-K
    filed August 30, 1995, File No. 0-18954.

(5) Incorporated herein by reference to the Company's Annual Report on Form 10-K
    for the fiscal year ended June 30, 1995, File No. 0-18954.

(6) Incorporated  herein by reference to the  Company's  Quarterly  Report on 
    Form 10-Q for the quarter  ended  December 31, 1995, File No. 0-18954.

(7) Incorporated  herein by reference to the Company's  Quarterly  Report on 
    Form 10-Q for the quarter ended March 31, 1996,  File No. 0-18954.

(8) Incorporated  herein by reference to the Company's  Annual  Report on Form
    10-K for the Fiscal Year Ended June 30, 1996,  File No. 0-18954.

(9) Incorporated herein by reference to the Company's  Registration Statement on
    Form S-1, File No. 333-20701.

(10)Filed herewith.

(11)To be filed by amendment.

(b) Reports on Form 8-K

    No Reports on Form 8-K  were filed by the Company during the last quarter of
    the period covered by this Report.

(c) See (a)(3) above.

(d) None.

                                       52
<PAGE>




                                   SIGNATURES

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



                                    ODYSSEY PICTURES CORPORATION


Dated: October 20, 1998      By:  /s/ Stephen R. Greenwald   
                                --------------------------
                                      Stephen R. Greenwald,
                                      Managing Director



     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.




Signature                   Title                                      Date


/s/ Johan Schotte           CEO and Chairman                         10/20/98
------------------          (Principal Executive &
    Johan Schotte           Financial Officer)


/s/ Pierre Koshakji         President; Director                      10/20/98
-------------------
    Pierre Koshakji


/s/ Stephen R. Greenwald    Managing Director;                       10/20/98
------------------------    Director
    Stephen R. Greenwald   


/s/ Robert E. Miller, Jr.   Director                                 10/20/98
------------------------
    Robert E. Miller, Jr.


                            Director                             
--------------
    Yves Bayle

                                       53
<PAGE>