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
            March 31, 1999
                                       OR
    [__]       TRANSITION REPORT UNDER 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_21322

                                OUT_TAKES, INC.

                 (Name of small business issuer in its charter)

              Delaware                              95_4363944

  (State or other jurisdiction of        (I.R.S.  Employer Identification No.)
  incorporation or organization)

3811 Turtle Creek Blvd., Suite 350                    75219
Dallas, Texas                                         (Zip Code)

(Address of principal executive offices)

                   Issuer's telephone number: (214) 528_8200

             Securities registered under Section 12(b) of the Act:

                                      None
             Securities registered under Section 12(g) of the Act:
                          Common Stock, $.01 par value
                                (Title of Class)


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

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S_B contained in this form, and no disclosure  will be contained,
to the best of issuer'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 issuer's revenues for the most recent fiscal year were $637,450.

The aggregate market value of the voting stock held by non_affiliates as of
March 31, 1999 and as of March 1, 2000 was $456,429.

The number of shares outstanding of the issuer's Common Stock as of March 31,
1999 and as of March 1, 2000 was 20,788,122.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  definitive  Proxy Statement  relating to the
1999 Annual Meeting of Stockholders are incorporated herein by reference into
Part II and Part III.

Transitional Small Business Disclosure Format (Check One):  Yes           No  X



______________________________________________________________________________
                               OUT_TAKES, INC.

         FORM 10_K ANNUAL REPORT FOR FISCAL YEAR ENDING MARCH 31, 1999

                               TABLE OF CONTENTS

                                                                         Page
PART I                                                                    1

  ITEM 1.   DESCRIPTION OF BUSINESS                                       1

  ITEM 2.   DESCRIPTION OF PROPERTY                                       4

  ITEM 3.   LEGAL PROCEEDINGS                                             11

  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS           12

PART II                                                                   12
  ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
            MATTERS                                                       12

  ITEM 6.   SELECTED FINANCIAL DATA                                       13
  ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
            OPERATION                                                     13

  ITEM 8.   FINANCIAL STATEMENTS                                          29

PART IV                                                                   39

  ITEM 14.  EXHIBITS AND REPORTS ON FORM 8_K                              39


                                    PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Except for historical financial information contained herein, the matters
discussed in this annual report may be considered forward_looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended and subject to
the safe harbor created by the Securities Litigation Reform Act of 1995. Such
statements include declarations regarding the intent, belief or current
expectations of the Company and its management. Prospective investors are
cautioned that any such forward_looking statements are not guarantees of future
performance and involve a number of risks and uncertainties; actual results
could differ materially from those indicated by such forward_looking statements.
Among the important factors that could cause actual results to differ materially
from those indicated by such forward_looking statements are: that the
information is of a preliminary nature and may be subject to further adjustment,
the possible unavailability of financing, risks related to the development,
acquisition and operation of power plants, the impact of avoided cost pricing,
energy price fluctuations and gas price increases, the impact of curtailment,
start_up risks, general operating risks, the dependence on third parties, risks
associated with the power marketing business, changes in government regulation,
the availability of natural gas, the effects of competition, the dependence on
senior management, (xvii) volatility in the Company's stock price, fluctuations
in quarterly results and seasonality, and other risks identified from time to
time in the Company's reports and registration statements filed with the
Securities and Exchange Commission.

GENERAL

Out_Takes,  Inc., a corporation incorporated in Delaware on March 18, 1992 ("the
Company"), up until October 26, 1998, was engaged in the sale of photographic
portraits of children, adults  and  family  groups.   Until October 26, 1998,
the  Company   operated  a retail photo studio,  called  Out_ Takes(R), which
opened on May 24,  1993 and is  located  in MCA/  Universal's  CityWalkSM
project in Los Angeles,  California ("the CityWalk  Studio").  The Company had a
second  studio,   which  commenced  operations  on  December  1,  1995,  at  the
Entertainment  Center in the  Bazaar at the Irvine  Spectrum  located in Irvine,
Orange County,  California  ("the Irvine  Studio").  As a result of management's
continuing  review of the poor  performance  of the  Irvine  Studio,  management
decided to close the Irvine Studio. The Irvine Studio ceased operations on April
22,  1998.  The  CityWalk  studio  employs  proprietary  hardware  and  software
developed by, or  specifically  for, the Company which includes  digital imaging
technology and automated motion control  equipment to position the studio camera
and set subject lighting to the proper levels for each scene (collectively,  the
"Proprietary  System").  Using the  Proprietary  System,  the Company is able to
place  pictures it takes of its clients  "into"  still  photographs  prepared in
advance from popular movie scenes and other backgrounds licensed by the Company.
On or about August 31, 1998, the Company acquired all of the issued and
outstanding units of equity of Los Alamos Energy, LLC, which operates a 1 mega
watt  power plant in Los Alamos, California, which produces electricity from
"waste gas," and shifted its business emphasis to that of electrical energy
provider.

On or about October 26, 1998, the Company leased its photo studio assets to
Colorvision International, Inc., completing the shift of its business focus to
the providing of electrical energy.

LOS ALAMOS ENERGY

Los Alamos Energy was formed in June, 1996, for the purpose of becoming a
principal electricity provider in the State of California.  With the acquisition
of Los Alamos Energy, the Company is engaged in a "niche" area of electricity
production from "waste gas," natural gas which is produced in conjunction with
oil production, but for which there is no market.  Normally, waste gas is
flared, or burned.  The procurement of waste gas provides an inexpensive source
of fuel for the Company's generators.  The Company currently provides all of the
electrical energy to the unincorporated town of Los Alamos, California, through
Pacific Gas and Electric Company (PG&E), which is mandated by current law to
purchase all the electrical energy that the Company can produce.

On August 31, 1998, the Company entered  into  a  Share Purchase Agreement (the
"Acquisition Agreement") whereby the  Company  acquired  (the  "Acquisition")
all  of the issued and outstanding equity  interests  in  Los  Alamos  Energy,
LLC, a California limited liability company  ("LAE").  The purchase price to be
paid for the equity interests of LAE is  Four  Million  Dollars ($4,000,000),
which was paid by Promissory Notes (the "Notes")  to  the  holders  of  LAE
equity  (the  "Equity Holders") calling for interest  on  all outstanding
amounts to accrue at the rate of ten percent (10%) per  annum.  Payments of
principal and accrued interest under the Notes shall be made monthly in arrears
up to the maturity date, which is the fifth anniversary of the Notes. The Notes
may be prepaid at any time without premium or penalty.

The Acquisition Agreement provides that, in the event the Equity Holders shall
desire to do so, they may convert their indebtedness to common stock of the
Company representing in the aggregate ninety percent (90%) of the issued and
outstanding shares of such common stock as of the date of such conversion.  The
Acquisition Agreement provides that it is a condition of the conversion that the
Company effect a reverse stock split of one (1) share for every one hundred
(100) shares issued and outstanding as of such date. LAE contemplates that a
significant number of persons currently holding promissory notes and/or working
interests in its electricity production (collectively, "Interest Holders") will
exercise their rights to convert such interests into the equity of LAE, and
subsequently to join in the conversion of the Notes into common stock of the
Company. Presently, management of LAE anticipates that, prior to the conversion
of the Notes and after giving effect to the contemplated reverse stock split,
the Company will issue approximately three million (3,000,000) additional shares
of common stock,  and that subsequent to completing the conversion, the Equity
Holders and  Interest Holders will own, in the aggregate, approximately two
million eight hundred eighty thousand (2,880,000) shares of the Company's common
stock,  representing ninety percent (90%) of the total amount of common stock
estimated to be issued and outstanding as of the date such conversion rights are
exercised.

The indebtedness represented by the Notes is secured by (a) a Security
Agreement, granting a first lien and security interest upon all of the assets of
the Company; and (b) a pledge of the common stock of the Company held by Photo
Corporation Group Pty Limited, an Australian corporation, which  is the
controlling stockholder of the Company. The stock pledge grants the Holders
specific rights under certain circumstances, including the right to receive
distributions made by the Company in respect of its common stock and the right
to vote the pledged shares, for so long as the  Notes are in force.

The purchase  price  to be paid by the Company for all of the issued and
outstanding equity of LAE was negotiated based upon several factors, including,
without limitation, the asset value of LAE and its projected income from
operations based, in part, upon management's estimates of its natural gas
reserves and its current contracts.

The Company is engaged in the sale of photographic portraits of children, adults
and family groups.  Prior to the acquisition, Out Takes derived substantially
all of its revenue from a retail photographic studio, called OUT_TAKES , which
opened on May 24, 1993 and is located in MCA/Universal's City Walk project in
Los Angeles, California. LAE is engaged in the collection and distribution of
natural gas from properties owned or leased by it in the State of California,
and management of LAE intends  to position LAE to become an important
independent power producer, and to benefit as a principal provider of
electricity to consumers in California  and elsewhere as deregulation is
implemented. LAE will be operated as a wholly_owned subsidiary of the Company.

THE MARKET

The power industry represents the third largest industry in the United States,
with an estimated end_user market of over $250 billion of electricity sales in
1998 produced by an aggregate base of power generation facilities with a
capacity of approximately 750,000 megawatts. In response to increasing customer
demand for access to low_cost electricity and enhanced services, new regulatory
initiatives have been and are continuing to be adopted at both the state and
federal level to increase competition in the domestic power generation industry.
Management believes that this increase in competition will benefit rather than
harm the Company, because the Company will be free to sell its power to any
customer, rather than to just PG&E, who is now obligated to buy all the power
the Company can produce. Management expects that with the advent of dergulation,
prices for power will increase over and above what it the Company is being paid
by PG&E.   The power generation industry historically has been largely
characterized by electric utility monopolies producing electricity from old,
inefficient, high_cost generating facilities selling to a captive customer base.
Industry trends and regulatory initiatives have transformed the existing market
into a more competitive market where end users purchase electricity from a
variety of suppliers, including non_utility generators, power marketers, public
utilities and others.   There is a significant need for additional power
generating capacity throughout the United States, both to satisfy increasing
demand, as well as to replace old and inefficient generating facilities. Due to
environmental and economic considerations, managment believes this new capacity
will be provided predominantly by gas_fired facilities. Management believes that
these market trends will create substantial opportunities for efficient,
low_cost power producers that can produce and sell energy to customers at
competitive rates.
In addition, as a result of a variety of factors, including deregulation of the
power generation market, utilities, independent power producers and industrial
companies are disposing of power generation facilities. To date, numerous
utilities have sold or announced their intentions to sell their power generation
facilities and have focused their resources on the transmission and distribution
segments. Many independent producers operating a limited number of power plants
are also seeking to dispose of their plants in response to competitive
pressures, and industrial companies are selling their power plants to redeploy
capital in their core businesses.

STRATEGY

The Company's strategy is to expand its existing power plant to 4 mW, and to
further expand its power producing capacity by exploring acquisition
opportunities in the power market, by exploring opportunities that exist to
merge with other similarly situated small electrical power production companies
which produce electrical energy from waste gas, in order to expand its current
power production capacity, and to capture more of a market share of this growing
industry, which the Company predicts will increase with the advent of
deregulation of the power industry.

DESCRIPTION OF FACILITIES

The Company has purchased all of the natural gas reserves on the Blair Oil and
Gas Field ("the field"), which is located adjacent to the unincorporated town of
Los Alamos, California, on Rancho El Roblar, approximately 60 miles north of
Santa Barbara along US 101, and which is operated by Texaco.  The field has 15
oil wells producing approximately 500 barrels of oil per day, and from which
approximately one million cubic feet (1073 BTU) of natural gas was being flared.
The gas recoverable reserve is estimated to be sufficient to provide electrical
production for the next several years.

During 1986, the Blairs entered into an agreement with American Cogenics of
California ("ACI") to convert the waste gas into electricity, and two gas
driven, CAT G398T generator sets ("Gensets"), each respectively 550 kilowatts
and 600 kilowatts, were installed, from which electricity was generated and
sold to PG&E, pursuant to a power purchase agreement, dated November 28, 1988
(the "PG&E contract"). In early 1995, the Santa Barbara County Air Pollution
Control District ("APCD") shut down the operation due to emissions violations.

During October, 1996, Los Alamos Energy consummated the purchase and sale
agreement with American Cogenics of California ("ACI"), dated August 28, 1996,
and acquired the rights to the gas, the two Gensets, the PG&E contract, the
FERC certification, and power purchase agreement with Texaco, and brought the
equipment into APCD compliance.

When the Gensets were initially installed, there were only a few wells
producing oil and gas on the field.  Since that time, production has increased
from about 150 MCFD to about 1,000 MCFD currently, providing the potential of
adding more generators to increase the Company's current capacity from 1 mega
watt (1 mW) to 4mW, at an estimated cost of $1.2 million to $1.5 million.

GOVERNMENT REGULATION

The Company is subject to complex and stringent energy, environmental and other
governmental laws and regulations at the federal, state and local levels in
connection with the development, ownership and operation of its energy
generation facilities. Federal laws and regulations govern transactions by
electrical and gas utility companies, the types of fuel which may be utilized
by an electric generating plant, the type of energy which may be produced by
such a plant and the ownership of a plant. State utility regulatory commissions
must approve the rates and, in some instances, other terms and conditions under
which public utilities purchase electric power from independent producers and
sell retail electric power. Under certain circumstances where specific
exemptions are otherwise unavailable, state utility regulatory commissions may
have broad jurisdiction over non_utility electric power plants. Energy
producing projects also are subject to federal, state and local laws and
administrative regulations which govern the emissions and other substances
produced, discharged or disposed of by a plant and the geographical location,
zoning, land use and operation of a plant. Applicable federal environmental
laws typically have both state and local enforcement and implementation
provisions. These environmental laws and regulations generally require that a
wide variety of permits and other approvals be obtained before the commencement
of construction or operation of an energy_producing facility and that the
facility then operate in compliance with such permits and approvals.

FEDERAL ENERGY REGULATION

As described below, the exemptions from extensive federal and state regulation
afforded by PURPA to Qualifying Facilities are important to the Company and its
competitors. The project that the Company currently owns meet the requirements
under PURPA to be a Qualifying Facilities and will be maintained on that basis.
Additionally, managment expects regulatory impositions on power marketing
operations to be minimal under existing regulatory standards.

PURPA

The enactment of the Public Utility Regulatory Policies Act of 1978, as amended
("PURPA") and the adoption of regulations thereunder by the Federal Energy
Regulatory Commission ("FERC") provided incentives for the development of small
power facilities (those having a capacity of less than 80 megawatts.)  A
domestic electtricity generating project must be a Qualifying Facility ("QF")
under FERC regulations in order to take advantage of certain rate and
regulatory incentives provided by PURPA>   PURPA exempts QF's from most
provisions of the Federal Power Act ("FPA") and, except under certain limited
cicrcumstances, state laws concerning rate or financial regulation.  In order
to be a Qualifying Facility, a cogeneration facility must (i) produce not only
electricity but also a certain quantity of thermal energy (such as steam) which
is used for a purpose other than power generation, (ii) meet certain energy
operating and efficiency standards when oil or natural gas is used as a fuel
source and (iii) not be controlled or more than 50% owned by an electric
utility or electric utility holding company, or any combination thereof.

PURPA provides two primary benefits to Qualifying Facilities owned and operated
by non_utility generators. First, Qualifying Facilities under PURPA are exempt
from certain provisions of PUHCA, the Federal Power Act (the "FPA") and, except
under certain limited circumstances, state laws respecting rate and financial
regulation. Second, PURPA requires that electric utilities purchase electricity
generated by Qualifying Facilities at a price equal to the purchasing utility's
full "avoided cost" and that the utility sell back_up power to the Qualifying
Facility on a non_discriminatory basis. Avoided costs are defined by PURPA as
the "incremental costs to the electric utility of electric energy or capacity
or both which, but for the purchase from the Qualifying Facility or Qualifying
Facilities, such utility would generate itself or purchase from another
source." The FERC regulations also permit Qualifying Facilities and utilities
to negotiate agreements for utility purchases of power at rates other than the
purchasing utility's avoided cost. Although public utilities are not required
by PURPA to enter into long_term contracts, PURPA helped to create a regulatory
environment in which it has become more common for such contracts to be
negotiated or executed through selective procurement or competitive bidding. If
Congress amends PURPA, the statutory requirement that an electric utility
purchase electricity from a Qualifying Facility at full avoided costs could be
eliminated. Although current legislative proposals specify the honoring of
existing contracts, repeal of the statutory purchase requirements of PURPA
going forward could increase pressure to renegotiate existing contracts. Any
changes which result in lower contract prices could have an adverse effect on
the Company's operations and financial position. See Competition.

PUHCA

Under the Public Utility Holding Company Regulation ("PUHCA"), any person
(defined by PUHCA to include corporations and partnerships and other legal
entities) which owns or controls ten percent or more of the outstanding voting
securities of a "public utility company" or a company which is a "holding
company" of a "public utility company" is subject to registration with the
Securities and Exchange Commission (the "Commission") and regulation under
PUHCA, unless such person is eligible for an exemption, such as is available to
Qualifying Facilities under PURPA, or as established elsewhere under PUHCA. A
registered holding company is required by PUHCA to limit its operation to a
single integrated utility system and to divest any other operations not
functionally related to the operation of that utility system.

THE ENERGY ACT

Congress passed the Energy Act to promote further competition in the
development of new wholesale power generation sources. Through amendments to
PUHCA, the Energy Act encourages the development of independent power projects
which will be certified by the FERC as exempt wholesale generators ("EWGs").
The owners or operators of these facilities are exempt from the provisions of
PUHCA. The Energy Act also provides the FERC with extensive new authority to
order electric utilities to provide other electric utilities, Qualifying
Facilities and independent power projects with access to their transmission
systems. However, the Energy Act does preclude the FERC from ordering
transmission services to retail customers and prohibits sham wholesale energy
transactions which appear to provide wholesale service, but actually are
providing service to retail customers.

A company engaged in the ownership or operation of electric power generation
and transmission facilities faces certain types of regulation for its
international activities. The principal regulatory consideration for
international projects is PUHCA, since it is broadly applicable to the
ownership and operation of power facilities (including generation and
transmission facilities) both inside and outside of the United States. For
international projects, the principal basis for exemption from PUHCA is by
obtaining EWG status from the FERC. EWG status is even more beneficial for
international projects because, although EWGs are not permitted to make retail
sales in the United States, retail sales by EWGs are generally allowed in
international markets. Another way to obtain an exemption from PUHCA for
foreign ownership and operation activities is by filing a foreign utility
company determination ("FUCO") with the Commission. However, FUCO filings are
less frequently used, because unlike EWGs, no formal regulatory order is issued
confirming the status of a FUCO, and more rigorous state commission scrutiny is
entailed.

Structuring the Company's activities to ensure that it is not a "holding
company" of a "public utility company" under PUHCA is also important in
providing financing and financial reporting flexibility to the Company. The
cogeneration facilities owned by the Company, or in which the Company has
investments, are Qualifying Facilities under PURPAthe Company has also pursued
the development of independent power projects which will not qualify for the
benefits provided by PURPA, which could subject these projects to PUHCA
jurisdiction. To avoid such a consequence, the Company will structure its
participation in independent power projects in a manner to qualify for
exemptions under PUHCA provided by the Energy Act. Such structures will permit
the Company to take ownership positions in a number of independent power
project projects.

FPA

The Federal Power Act ("FPA") grants the FERC exclusive rate_making
jurisdiction over wholesale sales of electricity in interstate commerce. The
FPA provides the FERC with ongoing as well as initial jurisdiction, enabling
the FERC to revoke or modify previously approved rates. Such rates may be based
on a cost_of_service approach or on rates that are determined through
competitive bidding or negotiation on a market basis.

Although Qualifying Facilities under PURPA are exempt from rate_making and
certain other provisions of the FPA, independent power projects and certain
power marketing activities are subject to the FPA and to the FERC's rate_making
jurisdiction.

Utilities are not obligated to purchase power from projects subject to
regulation by the FERC under the FPA because they do not meet the requirements
of PURPA. However, because such projects would not be bound by PURPA's thermal
energy use requirement, they may have greater latitude in site selection and
facility size. The project currently owned or operated by the Company as a
Qualifying Facility under PURPA is exempt from the FPA. FERC has significantly
relaxed the rules under which power marketers and independent power producers
can sell or market power. With approval from FERC, such entities, with certain
exceptions, are exempted from cost_based rates and can make all sales at
market_based rates set through negotiations. The independent power project in
which the Company currently participates have been granted market based rate
authority and comply with the FPA requirements governing approval of wholesale
rates and subsequent transfers of ownership interest in such projects.


CHANGES IN FEDERAL REGULATIONS

Historically in the United States, regulated and government_owned utilities
have been the only significant producers of electric power for sale to third
parties. The energy crisis of the 1970s led to the enactment of the federal
Public Utility Regulatory Policies Act of 1978 ("PURPA"), which encouraged
companies other than utilities to enter the electric power business by reducing
regulatory constraints. In addition, PURPA and its implementing regulations
created unique opportunities for the development of cogeneration facilities by
requiring utilities to purchase electric power generated in cogeneration plants
meeting certain requirements (referred to as "Qualifying Facilities"). See
"Regulatory Matters __ Energy Regulation."

As a result of PURPA, a significant market for electric power produced by
independent power producers such as the Company developed in the United States.
In 1992, Congress enacted the Energy Policy Act of 1992 ("Energy Act"), which
amended the Public Utility Holding Company Act of 1935 ("PUHCA") to create new
exemptions from PUHCA for independent power producers selling electric energy
at wholesale, to increase electricity transmission access for independent power
producers and to reduce the burdens of complying with PUHCA's restrictions on
corporate structures for owning or operating generating or transmission
facilities in the United States or abroad. The Energy Act has enhanced the
development of independent power projects and has further accelerated the
changes in the electric utility industry that were initiated by PURPA.
Implementation of federal and state policies resulting in increased
availability of transmission access for wholesale and retail transactions could
create additional markets and competition for electricity power sales.

The Company believes it is possible that changes in PURPA, PUHCA and other
related federal statutes may occur in the next several years. The nature and
impact of such changes on the Company's projects operations and contracts is
unknown at this time. The Company is actively monitoring these developments
directly and through industry trade groups to determine such impacts as well as
to evaluate new business opportunities created by restructuring of the electric
power industry. Depending on the outcome of these legislative matters, changes
in legislation could have an adverse effect on current contract prices.

STATE REGULATION

State public utility commissions, pursuant to state legislative authority, have
jurisdiction over how any new federal initiatives are implemented in each state
and have broad jurisdiction over regulated independent power projects which are
not Qualifying Facilities under PURPA, and which are considered public
utilities in many states. Such jurisdiction would include the issuance of
certificates of public convenience and necessity to construct a facility as
well as regulation of organizational, accounting, financial and other corporate
matters on an ongoing basis. Although the FERC generally has exclusive
jurisdiction over the rates charged by an independent power project to its
wholesale customers, state public utility commissions have the practical
ability to influence the establishment of such rates by asserting jurisdiction
over the purchasing utility's ability to pass through the resulting cost of
purchased power to its retail customers. In addition, states may assert
jurisdiction over the siting and construction of independent power projects
and, among other things, issuance of securities, related party transactions and
sale and transfer of assets. The actual scope of jurisdiction over independent
power projects by state public utility regulatory commissions varies from state
to state.

In the State of California, restructuring legislation was enacted in
September 1996 and was implemented in 1998. This legislation established an
Independent Systems Operator ("ISO") responsible for centralized control and
efficient and reliable operation of the state_wide electric transmission grid,
and a Power Exchange responsible for an efficient competitive electric energy
auction open on a non_discriminatory basis to all electric services providers.
Other provisions include the quantification and qualification of utility
stranded costs to be eligible for recovery through competitive transition
charges ("CTC"), market power mitigation through utility divestiture of fossil
generation plants, the unbundling and establishment of rate structure for
historical utility functions, the continuation of public purpose programs and
issues related to issuance of rate reduction bonds.

The California Energy Commission ("CEC") and Legislature have responsibility
for development of a competitive market mechanism for allocation and
distribution of funds made available by the legislation for enhancement of in_
state renewable resource technologies and public interest research and
development programs. Funds are to be available through the four_year
transition period to a fully competitive electric services industry.

In addition to the significant opportunity provided for power producers such as
the Company through implementation of customer choice (direct access), the
California restructuring legislation both recognizes the sanctity of existing
contracts, provides for mitigation of utility horizontal market power through
divestiture of fossil generation and provides funds for continuation of public
services programs including fuel diversity through enhancement for in_state
renewable technologies (includes geothermal) for the four_year transition
period to a fully competitive electric services industry.


TRANSMISSION AND WHEELING

Energy_producing projects that sell power to customers which are not
geographically located near the project require that the project have the
capability of transmitting its power over utility power transmission grids to
the purchaser ("wheeling"). The FERC and state utility regulatory commissions
have jurisdiction over the wheeling of power to remote users; the prices and
related terms and conditions of wheeling in interstate commerce are regulated
by the FERC.  At the moment, the Company's customers being serviced by Los
Alamos Energy are in the same geographical area as the Company's power plant.

The PUCT has promulgated rules that require affected utilities to provide
wheeling service. These rules are in effect in the Electrical Reliability
Counsel of Texas system and the new transmission access provisions of the
Energy Act do not alter that federal and state jurisdictional balance.

Rules adopted at the FERC and a number of state utility regulatory commissions
require utilities to grant power producers increased access to transmission and
wheeling. The provisions of the Energy Act increase such access. The Energy Act
supports increased transmission access, and in April 1996 the FERC adopted
rules (Order 888) to expand significantly transmission service and access and
provide alternative methods of pricing for transmission services. Upon
promulgation of the final rule by the FERC (and the PUCT for ERCOT), the
interstate transmission grid in the continental United States was opened to all
qualified persons that seek transmission services to wheel wholesale power.
Utilities are required to provide transmission customers non_discriminatory
open access to their transmission grids with rates, terms, and conditions
comparable to that which the utility imposes on itself. This provides the
Company with increased opportunities to sell and market the power produced by
its independent power projects. It also increases competition on a nationwide
basis between traditional and non_traditional power generators, such as the
Company.

ENVIRONMENTAL REGULATION

The construction and operation of domestic and international energy and fuel
producing projects and the exploitation of natural resource properties are
subject to extensive federal, state and local laws and regulations adopted for
the protection of the environment and to regulate land use. The laws and
regulations applicable to the Company and projects in which it participates
primarily involve the discharge of emissions into the water and air, but can
also include wetlands preservation, noise regulation and a comprehensive
Environmental Impact Assessment which includes evaluation of the facility's
impact on air, water, ecology, human health and socioeconomic factors. These
laws and regulations in many cases require a lengthy and complex process of
obtaining licenses, permits and approvals from federal, state and local
agencies. Obtaining necessary approvals regarding the discharge of emissions
into the air is critical to the development of a project and can be time_
consuming and difficult. Each energy_producing project requires technology and
facilities which comply with federal, state and local requirements and
sometimes extensive negotiations with administrative agencies. Meeting the
requirements of each jurisdiction with authority over a project can delay or
sometimes prevent the completion of a proposed project, as well as require
extensive modifications to existing projects.

The Company monitors environmental standards and evaluates its selection of
technology to ensure that applicable standards are being met. Based on current
trends, the Company expects that environmental and land use regulation will
become more stringent. Accordingly, the Company plans to continue to place a
strong emphasis on the development and use of state_of_the_art technology to
minimize potential impacts on the environment. In addition, the Company has
developed expertise and experience in obtaining necessary licenses, permits and
approvals.

In November 1990, comprehensive amendments to the Clean Air Act were enacted
(the "1990 Amendments"). The first major revisions to the Clean Air Act since
1977, the 1990 Amendments vastly expand the scope of federal regulations and
enforcement in several significant respects. In particular, provisions relating
to non_attainment, air toxics, permitting, enforcement and acid deposition may
affect the Company's domestic projects. The Clean Air Act and the 1990
Amendments contain provisions that regulate the amount of sulfur dioxide and
nitrogen oxides that may be emitted by a project. These emissions may be a
cause of "acid rain." The project the Company owns, operates or plan's to
investment in are, or will be fueled by natural gas and are not expected to be
significantly affected by the acid rain provisions of the 1990 Amendments.

One of the key elements of the 1990 Amendments is the inclusion of an operating
permit program in Title V. This program is intended to establish a central
point in tracking all applicable air quality requirements for every source
required to obtain a permit under the Clean Air Act. Final regulations
implementing these provisions were issued by the EPA in 1992. These regulations
created minimum requirements for the operating permit program. Each state was
required to submit a program for its implementation of the regulations for
approval to the EPA. The Company is required to submit complete operating
permit applications to those states in which it has operating projects which
meet the applicability standards under the 1990 Amendments.

PHOTO STUDIO BUSINESS

Prior to the acquisition of Los Alamos Energy, the Company's principal business
was running a digital portrait photo studio in Universal City Walk, Universal
City, California.

Effective  as  of October 26, 1998, Out_Takes, Inc., a Delaware corporation
(the  "Company")  has  entered into an Asset Lease Agreement (the "Lease")
with Colorvision  International,  Inc.,  a  Florida  corporation ("CVI"),
pursuant to which  CVI  will  lease certain assets of the Company described in
the Lease and held  at  the  Company's  photographic  studio  located  on
Universal City Walk, Universal  City,  California  and certain other locations
(the "Leased Assets"). The  Leased  Assets  constitute  substantially  all of
the photographic business assets  owned  by  the  Company.  Along with the
lease of the Leased Assets, the Company  assigned  to  CVI  its  interests  in
the  Business Lease (the "Studio Lease"),  dated as of November 13, 1992,
between the Company and MCA Development Company,  a  division of MCA, Inc. (the
"Landlord"), in which most of the Leased Assets  are  used.    Although  CVI
has agreed to be responsible for all of the Company's  liabilities  under the
Lease, and has indemnified the Company against any  liabilities arising under
the Lease from the date of its assignment to CVI, the  Company  remains
contingently  liable  for its obligations to the Landlord under  the  Studio
Lease  notwithstanding  CVI's  express  assumption  of those liabilities.
The  Studio  Lease  expires  on  May  30,  2005.

Under  the  Lease, CVI paid a deposit to the Company in the amount of Fifty
Thousand Dollars ($50,000), and shall pay a monthly rental amount equal to
seven percent  of  the  gross revenues generated from the use of the Leased
Assets, or the  conduct  of  any  other business, at the photographic studio
covered by the Studio Lease.  CVI has agreed to use its best efforts to operate
its business at the  photographic  studio  profitably,  although  there can be
no assurance that profitable  operations  will  result from CVI's use of the
Leased Assets, and if none  occur, then no monthly rental may be paid under the
Lease.  The Lease also included  a  license  for  CVI  to  use  the  trade
name of the Company at such photographic  studio.

In addition to the assumption of the Company's obligations under the Studio
Lease,  the  Lease  provides for CVI to assume the Company's obligations under
a number of license  agreements  between  the Company and third_party
licensees, primarily motion picture studios  for  the  use of certain film
images in its photographic  business.   These licenses contain certain use_
based royalties, as well  as  minimum  annual  payment  guarantees,  which CVI
has expressly assumed responsibility  for,  including  in respect of certain
past due payments owed by the  Company  to  some  of  these  third_party
licensees.

The  entry by the Company into the Lease with CVI is intended by management of
the  Company  to  provide  for the productive use of its photographic studio
assets,  while  permitting  management  to  focus  on its plans for the
Company, through its wholly_owned subsidiary Los Alamos Energy, LLC ("LAE"), to
become an important  independent power producer, and to benefit as a principal
provider of electricity  to  consumers  in  California  and elsewhere as
deregulation of the electric  utility  markets  is implemented.

Products and Services_Photo Studio

The technological  capabilities of the Proprietary  System and the variety of
backgrounds  that the Company has developed  pursuant to various  merchandise
licenses in effect (see "_ License  Agreements")  represent a distinction in
the consumer  portraiture  business.  Most of the  portraits  taken in the
CityWalk Studio  are  presented  to  the  customer  as  framed  8" x  10",  5"
x 7"  and wallet_sized  photographs within about thirty minutes after the
portrait session is completed.  The remainder (primarily enlargements and
greeting cards based on these photographic  images) are produced and delivered
to clients within several weeks using the Company's order  fulfillment
capabilities as well as processing arranged through independent service
bureaus.

Licensing Agreements_Photo Studio

The Company has merchandise  licensing  agreements with Paramount Pictures
Corporation ("Para mount");  MCA/Universal  Merchandising,  Inc.
("Universal"); Warner Bros.  Consumer  Products  ("Warner") with respect to
several  properties from the  Hanna_Barbera  and MGM  libraries;  Twentieth
Century Fox Licensing & Merchandising  ("Fox");  Jay  P.  Morgan  Photography
("Morgan");   Tony  Stone Worldwide Stock Agency  ("TSW"),  Queen Bee
Productions  ("Queen Bee"),  Curtis Archives ("Curtis A"), Curtis Management
("Curtis M"), King Features  ("King"), MTV Networks ("MTV"),  Saban
Merchandising Inc.  ("Saban"),  Innerspace Visions ("Visions"),   The  Baywatch
 Production   Company   ("Baywatch")  and  others, individually   and
collectively   referred  to  as  the  "License   Agreements" (Paramount,
Universal, Turner, Fox, Morgan, TSW, Queen Bee, Curtis A, Curtis M, King,  MTV,
Saban,  Visions and  Baywatch  are  individually  and  collectively referred to
herein as "Licensors").

The  License   Agreements   generally  grant  the  Company  the  right  to
manufacture,  sell  and  distribute  in  a  defined  geographic  area,
computer generated  photographs  incorporating a customer's image into a still
photograph ("Licensed Products") with the characters, designs and/or visual
representations ("Licensed  Articles")  as they  appear in  television
productions  and  motion pictures.  The  Licensed  Products  may be sold
separately  or affixed to items approved by the Licensor,  including
photographic enlargements,  greeting cards, posters,   books,   t_shirts,
mugs,   buttons  and  other  novelty  items,  in consideration  of payment to
the  Licensor  of a  specified  royalty  based on a percentage  of gross
retail sales  revenue from each of the Licensed  Products. Many of the License
Agreements require a non_refundable  advance payment against future royalties
and stipulate a guaranteed minimum level of royalties that must be paid during
each year of their term. The License Agreements also provide that the Licensor
retains approval rights over the use of the Licensed Articles.

A summary of the License  Agreements and the  Titles/Properties  available
thereunder is presented in the table as follows:

Licensor                 Selected Titles /Properties Territory and Usage
Paramount  Pictures
Corporation             Current titles in use:        Territory:  Worldwide.
                        Star Trek (Original Series)
                        Trek Wrath of Khan
                        Deep Space Nine
                        Cool World
                        Friday the 13th
MCA/Universal           Current titles in use:        Territory: United States

Merchandising, Inc.      Back to the Future, Part I   United Kingdom, Holland,
                         Jaws                         New Zealand and Australia
                         Jurassic Park
                         Harry & Hendersons

Warner Bros. Consumer    Current titles in use:       Territory:  United States
Products _ (For MGM and  Gone with the Wind           and its territories and
Hanna_Barbera film       Tom & Jerry Movie            possessions.
libraries)               Wizard of Oz
                         The Flintstones
                           Cave Kids

Twentieth Century Fox      Current titles in use:      Territory:  "The entire
Licensing & Merchandising  Miracle on 34th St.         world".
                           The Simpsons
                           The Pagemaster

Jay P. Morgan Photography  Multi_property agreement    Territory:  Worldwide.
                           covering 25 original Jay P.
                           Morgan images.  Out_Takes
                           has the right of substitution
                           from time_to_time.

Tony Stone World_wide      International stock and     Territory:  Worldwide.
Stock Agency               assignment photography,
                           including access to a
                           library of photographs
                           contributed by over 1,000
                           photographers worldwide.

Queen B Productions       Current titles in use:       Territory: United States
                                                       and Canada.
                           Elvira in bathtub
                           Elvira at movie theater

Curtis Archives (on       All Norman Rockwell          Territory:  United
States
behalf of Norman          illustrations including
Rockwell's Estate)        artwork and logo art associated
                          with his extensive collection
                          of Saturday Evening Post
                          magazine covers.

Curtis Management         Approved photographs         Territory:  United
States
                          supplied by licensor.
                          Current property in use:
                           Hollywood  Sign

King Features             Current titles in use:       Territory: United
States,
                           Betty Boop                  Canada and Mexico
                           Popeye

Innerspace Visions        Approved photographs         Territory: Worldwide
                          supplied by the photographer.


MTV Networks              Current property in use:     Territory:  United
States
                           Beavis & Butt_head          and its territories and
                                                       possessions, Canada

Saban Merchandising Inc.  Current property in use:     Territory:  United
States
                           Mighty Morphin Power        and its territories and
                            Rangers                    possessions.

The Baywatch Production   Current property in use:     Territory:  United
States
Company                    Baywatch                    and its territories and
                                                       possessions.


As of March 31, 1999, the Company has not received any notice that any Licensor
intends,  by virtue of this matter, to exercise any of the remedies provided
for in its respective License  Agreements.  The Company is current with respect
to all payments and required  reports to all Licensors and believes that its
relationship with all Licensors is satisfactory.

On March 1, 1995,  the Company  entered into a sublicense  agreement  with
Photo  Corporation  of Australia  Pty Limited  ("PCA"),  a  subsidiary  of
Photo Corporation Group Pty. Ltd. ("PCG"),  that, subject to the prior approval
of the Licensors,  grants PCA a non_exclusive  license to utilize the Licensed
Articles on  substantially  the same terms as  provided in the  License
Agreements.  The sublicense  also  provides that PCA will pay the Company an
amount equal to 120% of the royalties the Company pays to Licensors for such
images.  The Company has received  consent  from  Morgan,  Fox and  Paramount
and other  Licensors  have indicated their  willingness to support  utilization
of the licensed Articles in countries where PCA operates. The PCA sublicense
agreement has not yet generated any royalties.



COMPETITION

Los Alamos Energy

The power generation industry is characterized by intense competition, and the
Company encounters competition from utilities, industrial companies and other
power producers. The independent power industry has grown rapidly over the past
twenty years. The demand for power may be met by generation capacity based on
several competing technologies, such as gas_fired or coal_fired cogeneration
and power generating facilities fueled by alternative energy sources including
hydro power, synthetic fuels, solar, wind, wood, geothermal, waste heat, solid
waste and nuclear sources. The Company competes with other non_utility
generators, regulated utilities, unregulated subsidiaries of regulated
utilities and other energy service companies in the development and operation
of energy_producing projects and the marketing of electric power. In recent
years, there has been increasing competition in an effort to obtain power sales
agreements, and this competition has contributed to a reduction in electricity
prices. In addition, many states are implementing or considering regulatory
initiatives designed to increase competition in the domestic power industry. In
California, the CPUC issued decisions which provide for direct access for all
customers as of April 1, 1998.  This competition has put pressure on electric
utilities to lower their costs, including the cost of purchased electricity,
and increasing competition in the future will increase this pressure.  However,
management believes that the deregulation of the electrical power industry in
California will enable it to achieve higher revenues from the sale of power.
Power sales are currently limited to PG&E, who must purchase all of the power
the Company can produce at regulated rates.

At the Federal level, the Energy Act reduces certain restrictions currently
applicable to certain projects which are not Qualifying Facilities (as further
defined below) under PURPA and provides for the removal of certain impediments
to competition in the power generation industry. Although the provisions of the
Energy Act apply only to wholesale transactions, actions by many state
authorities are also increasing competition for industrial, commercial and
other larger scale customers in the provision of services by Qualifying
Facilities ("QF's"), and independent power projects, as well as power marketers
and other unregulated suppliers. The development rights of Qualifying
Facilities, which were facilitated by certain provisions of PURPA, have not
been affected, nor amended, by the Energy Act. However, proposed legislation
has been introduced in Congress to repeal all or part of PURPA. These federal
legislative proposals would not abrogate or amend existing contracts with
electric utilities and would only be effective prospectively for new contracts.

Legislation to repeal PUHCA is also currently pending in Congress. Although
passage of stand alone legislation repealing PUHCA is not expected during the
current session, eventual repeal or modification of PUHCA is being considered.
Congressional repeal or modification of PUHCA will loosen the strictures
currently placed on utilities and others from acquiring generation and
transmission assets outside of their service territories. This will
significantly increase the competition the Company faces.

The industry is presently characterized by rapid change in the regulatory and
commercial aspects of competition. Although the timing and ultimate effect of
these changes cannot be predicted, management of the Company believes that the
overall effect of the current changes will be to increase competition in the
generation, transmission and sale of electric power.

Photo Studios_Competition and Seasonality

Competition  in  the  traditional  portrait  photography   industry,   the
merchandise  licensing  business  and with  respect  to the  development  of
new technology  is  intense.   The  Company  has  enjoyed  limited  protection
from competition  at its CityWalk  Studio  because of a restriction  contained
in its lease which states that during the initial lease term,  which expired on
May 31, 1998,  the  landlord  would not lease to third  parties  nor operate
for its own account a retail store engaged in selling computer_generated
photographs similar to those  produced and sold by the  Company.  The new lease
does not contain the same  restrictive  covenant.  This  restriction  did not
apply to  photographic products  offered  within the theme park  adjacent to
the CityWalk  Studio.  The opening of additional digital photographic
concessions within the theme park in the spring of 1997 increased the number of
photographic  opportunities available to  visitors  to the area and has diluted
the  CityWalk  Studio's  share of the market. As a result of the expiration of
the lease restriction,  the Company may face new competition at the CityWalk
Studio.  The Company has identified  three potential  kinds of  competition _
traditional  photographers  who are likely to compete for retail  customers  as
well as future  locations;  photographers  who employ  digital  technologies
who are likely to compete  for retail  customers, future  locations and
merchandise  licensing  agreements;  and new  technologies which may render the
Proprietary System obsolete or require the Company to incur a  substantial
expense  in  order to  remain  competitive  in terms of  product quality,
selection,  pricing and customer service.  The Company has renewed the lease
for a further seven years.

Many of the firms with which the Company  competes,  or can  reasonably be
anticipated  to compete in the  future,  have far greater  financial
resources, experience  and  industry  relationships  than the Company.  In
addition,  such organizations  have proven  operating  histories,  which may
afford  these firms significant  advantages in negotiating and obtaining future
merchandise licenses and  retail  leases,  arranging  financing,  attracting
skilled  personnel  and developing technology and products.  Many of these
firms offer their products at substantially  lower  prices than the Company
sells its  products.  The Company believes  that its portrait  photography
products are  competitive  in terms of product  quality,  service quality and
the selection and  attractiveness  of the Licensed Products.

The professional photography business is seasonal, with the largest volume of
sales  generally  occurring in the Company's  third fiscal quarter during the
period preceding the Christmas season. The CityWalk location is one of the
major tourist  attractions  in  Southern  California  and  therefore  is  also
highly seasonal,  with its largest number of visits  occurring in the Company's
second and third fiscal quarters, particularly between July 4th and Labor Day.

EMPLOYEES

As of March 31, 1999, the Company employed 2 people. None of the Company's
employees are covered by collective bargaining agreements, and the Company has
never experienced a work stoppage, strike or labor dispute. The Company
considers relations with the Company's employees to be good.

ITEM 2.  PROPERTIES

Photo Studio

The Company  leases 1,699 square feet of retail space (plus  approximately 200
square feet of mezzanine space) from MCA Recreation  Services, a division of
MCA Inc., for the CityWalk  Studio.  (see  "Description  of Business _
General") This lease  provides for a minimum  annual rental  obligation  of
approximately $123,250 plus a percentage  rental  payment equal to ten percent
(10%) of annual store revenues over $881,177. During the year to March 31, 1998
the Company paid additional  rent of  $13,351  as a result  of  revenues  being
in  excess of the $881,177  threshold.  The CityWalk  Studio lease expired on
May 31, 1998 and the Company  has  exercised  its option to renew the lease for
a period of seven (7) years.  The lease may be terminated by the lessor if the
Company does not meet a minimum annual sales requirement of $587,000.  This
lease has been assigned to Colorvision.

The Company maintains computer graphics and image production facilities at the
CityWalk Studio and has its  administrative  offices at 1419 Peerless Place,
Suite 116 in Los Angeles,  California ("the Peerless Premises").  Certain of
the Company's  equipment,  furniture and materials are temporarily  stored at
101 E. Alameda Ave., Burbank,  California ("the Storage  Facility").  The
Company has a month to month rental  obligation for both the Peerless Premises
and the Storage Facility.

All of the Company's leasehold premises are covered by casualty, liability and
business  interruption  insurance with limits and conditions that management
deems customary for the industry.

Los Alamos Energy

The Company rents offices from its President, James C. Harvey, at the rate of
$850 per month, on a month to month basis, and also rents offices from a former
member of LAE at a nominal rental on a month to month basis at 466 Bell Street,
Los Alamos, California.  The Company owns two internal combustion
engine/generator sets located on the Blair Ranch.  The Company owns all right,
title and interest in and to the power purchase agreement between ACI and PG&E,
dated November 28, 1988, and the power purchase agreement with Texaco,
consisting of correspondence between Texaco and ACI.

PATENTS, SERVICE MARKS, COPYRIGHTS AND OTHER PROPRIETARY TECHNOLOGY

Photo Studio

The Company has  registered the marks  Out_Takes(R),  So You Want to be in
Pictures(R),  Photomation(R)  and Create the Moment(R) with the U.S.  Patent
and Trademark Office and has registered the  Out_Takes(R)  service mark in
Japan, in both Japanese and English.  The Company  actively  manages the
protection of its trademarks, know_how, trade secrets and other intellectual
property by requiring all  its  employees  and  those  contractors   where
applicable,   to  execute confidentiality  agreements in relation to the
Company's  intellectual property. The Company is not aware of any  instance
where there has been a breach of such confidentiality obligations.

Los Alamos Energy

The Company has no patents, copyrights or trademarks with respect to its power
plant operations.


ITEM 3.  LEGAL PROCEEDINGS

      None.

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

      None.
                                   PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's  Common Stock began trading on the Nasdaq Small Cap MarketSM
("NASDAQ")  on March 9, 1993 under the symbol OUTT (also OUTTC during the
period from  October 28, 1994  through  December  30,  1994).  On January 3,
1995,  the Company's securities were delisted from NASDAQ as a consequence of
the Company's not fulfilling the minimum bid price requirements set forth in
Paragraph 1(c)(4) of Schedule D of the NASDAQ  By_Laws.  On January 4, 1995,
the Company's  Common Stock began to be quoted on the OTC_Bulletin BoardSM
under the symbol OUTT.

The NASD has recently added an "E" to the symbol, making it "OUTTE," which
indicates that it has been placed on the NASD OTC Bulletin Board's eligibility
list.  In order to remain quoted on the NASD Bulletin Board, the Company must
comply with all of the reporting requirements of the Securities and Exchange
Act of 1933 by the ninth day of March, 2000.  If the Company fails to do this,
it will no longer be quoted on the NASD OTC Bulletin Board.  There can be no
assurance that the Company will continue to be quoted on the NASD OTC Bulletin
Board.

The following table sets forth,  for the periods  indicated,  the high and low
closing prices for the Common Stock as reported by Nasdaq Trading, Market
Services Inc., and Freerealtime.com.


                  Fiscal 1997          Fiscal 1998           Fiscal 1999
                 High      Low          High      Low         High       Low

First Quarter   27/100   22/100       10/100     7/1005/641/32
Second Quarter  25/100   10/100      7.5/100     7/1001/161/32
Third Quarter   6.5/100   6/100        7/100     4/1003/321/32
Fourth Quarter   9/100    4/100    3.125/100   1.5/1009/647/100

There were  approximately  83 holders  of record of the  Company's  Common
Stock as of March 31, 1999 and as of February 23, 2000.

The  Company  has  not  paid  any  dividends  on its  Common  Stock  since
incorporation  in March 1992 and does not  anticipate  paying  dividends  in
the foreseeable future. There are no restrictions on the Company's present
ability to pay dividends on its Common Stock, other than those prescribed by
Delaware law.

ITEM 6. SELECTED FINANCIAL DATA

The following  table sets forth certain data for the years ended March 31, 1995
through  March 31, 1999.  Refer to "Item 7.  Management's  Discussion  and
Analysis or Plan of Operation" for discussion of operations.


1999        1998            1997     1996      1995
Income Statement Data

Revenue from operations 637,450    $1,187,638 $2,014,788 $1,580,712  $1,274,836

Gross Income (Loss)    (541,246)     88,858   (635,416)   (44,276)

Net Loss               (403,774)(1,082,306)   (753,346)(1,576,484)(1,309,459)
Net loss per share      (0.019)    ($0.05)     ($0.05)    ($0.16)    ($0.24)


Balance Sheet Data


Total Assets            312,503 $285,840   $1,011,463 $1,409,752 $1,862,279

Total Liabilities       1,667,7251,020,943      698,710  1,383,653    769,696

Stockholders' Equity
 (Deficit)              (1,355,672) (735,103)     312,753     26,099  1,092,583



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with the historical
financial  statements  of  Out_Takes,  Inc.  ("the  Company")  and notes
thereto included elsewhere in this Form 10_K.

Overview

The Company currently leases to a third party, Colorvision, an operating
photographic  portrait studio,  which was opened on May 24, 1993 at
MCA/Universal's  CityWalkSM  project in Los  Angeles, California  ("the
CityWalk  Studio").  The  Company  opened a second  studio on December  1,  1995
at the  Entertainment  Center  in the  Bazaar  at the  Irvine Spectrum located
in Irvine, Orange County, California ("the Irvine Studio"). The Irvine Studio
closed on April 22, 1998.

The Company currently operates a 1 mW waste gas electricity plant in Los Alamos,
California, which was acquired from Los Alamos Energy, LLC on August 31, 1998.

The following table summarizes the Company's fiscal quarter results:

On or about August 31, 1998, the Company acquired all of the issued and
outstanding units of equity of Los Alamos Energy, LLC, which operates a 1 mega
watt power plant in Los Alamos, California, which produces electricity from
"waste gas," and shifted its business emphasis to that of electrical energy
provider.

On or about October 26, 1998, the Company leased its photo studio assets to
Colorvision International, Inc., completing the shift of its business focus to
the providing of electrical energy.

Results of Operations

Year Ended March 31, 1999 Compared to Year Ended March 31, 1998

The net loss for the year ended March 31, 1998 was $1,082,306 compared with
$403,774 for the year ended March 31, 1999. The primary reasons for the
decrease in the net loss were the elimination of expenses of the photo studio,
and the increase in gross income from the operation of the power plant. Studio.

The Company overall generated  $1,187,638 in revenues in the fiscal year ended
March 31,  1998,  compared to revenues  of  $637,450  in the fiscal year ended
March 31, 1999.  Management  attributes  this  decline to the change in
business focus from a photography studio with negative cash flow to power
production, with positive cash flow.

Year Ended March 31, 1998 Compared to Year Ended March 31, 1997

The net loss for the year ended March 31, 1998 was $1,082,306 compared with
$753,346 for the year ended March 31, 1997. The primary reasons for the
increase in the net loss were a decrease in the gross  income  generated  by
the CityWalk Studio, an increase in the gross loss  incurred  by the Irvine
Studio and the costs  associated  with the  closure of the Irvine  Studio,
partly  offset by a reduction in general and administrative expenses.

The  following  table shows  Revenues,  Cost of Revenues and Gross Income/
(Loss)  during the fiscal years ended March 31, 1998 and March 31, 1997,
by studio.

             Fiscal Year Ended March 31, 1998   Fiscal Year Ended March 31,
1997
             ________________________________   _______________________________
_

                 CityWalk   Irvine    Traveling   CityWalk   Irvine
Traveling
                  Studio     Studio    Studio      Studio    Studio     Studio
                  ______     ______    ______      ______    ______     ______


Revenues         $909,683  $ 277,558  $    397   $1,492,024 $508,192  $ 14,572
                 ________  _________  ________   __________ ________  ________

Cost of Revenues:
  Compensation &
    Related
    Benefits      333,947     188,558    1,771      429,764   277,501    5,674
  Depreciation &
    Amortization  170,155     250,010      152      137,855   220,975      293
  Rent            133,094     101,098    2,000      192,432   100,500    7,925
  Loss on closure
   of studio            _     164,745        _            _         _        _
  Other           243,498     139,053      803      318,536   227,188    7,287
                 _________ __________  _______    _________  ________  _______

  Total            880,694    843,464    4,726    1,078,587   826,164   21,179
                 _________ __________  _______   __________  ________  _______

Gross Income /
 (Loss)          $  28,989 $ (565,906) $(4,329)  $  413,437  $(317,972)$(6,607)
                 ========= ==========  =======   ==========  ========== ======

The Company overall generated  $1,187,638 in revenues in the fiscal year ended
March 31,  1998,  compared to revenues  of  $2,014,788  in the fiscal year
ended March 31, 1997.  CityWalk Studio revenues  decreased by $582,341 to
$909,683,  a decrease of 39.0%.  Management  attributes  this  decline to a
number of factors including the opening of additional digital photographic
concessions within the theme park adjacent to the CityWalk  Studio in the
spring of 1997. The Company's lease  contains a  restriction  that  prevents
the sale of  computer  generated photographs  by any other store within
CityWalk  during the  Company's  initial lease term (the  initial  lease term
expired  May 31,  1998).  The  Company renewed  the lease for a further  seven
years  however  the new lease  did not contain the same restrictive covenant.
This restriction has afforded the Company limited  protection from competition,
however the restriction does not apply to photographic  products  offered
within the theme park. The opening of additional digital photographic
concessions within the theme park has increased the number of photographic
opportunities available to visitors to the area and has diluted the CityWalk
Studio's  share  of the  market.  Management  also  believes  that the Studio's
performance was directly  affected by the level of foot traffic through the
theme park,  resulting  in a flow on effect into the Studio.  In May 1996, a
new "ride"  opened in the theme park,  that  management  believes  attracted
an increased  number  of both  new and  repeat  visitors  to the  area.
Management perceives that the absence of a significant  new  attraction  during
the year to March 31, 1998,  has resulted in a decline in the level of foot
traffic  through the Studio. Also, in the first part of calendar 1996, a travel
show broadcast on national television in Japan,  included an episode on
"Hollywood"  featuring the CityWalk  Studio.  Throughout  the nine  months
ended  December  31,  1996,  an unusually  high  number  of  Japanese
tourists,  who had  seen the  segment  on television in Japan,  visited the
CityWalk Studio. There was no similar national television broadcast in 1997.

Irvine Studio revenues  decreased by $230,634 to $277,558,  a decrease of
45.4%. The  demographics of the area in which the Irvine Studio was located,
indicated that many of the  customers  to the Irvine  Spectrum  Entertainment
Center were local or repeat customers.  While such persons utilize
entertainment  facilities on a  regular  basis,  they  viewed  photography  as
a  service  to be used only occasionally or  infrequently,  hence the Studio
did not benefit from the repeat business experienced by other vendors in the
center. In August 1997, Stage II of The Irvine  Company's  development  plan
for the Irvine  Spectrum  commenced.  A consequence of this was to dramatically
limit parking  facilities in and around the center, which in turn led to a
substantial reduction in foot traffic through the Studio.  Despite
management's  substantial efforts to increase the Studio's revenues,
management  concluded that the only way to stop the negative cash flow effect
generated  by the  Irvine  Studio,  was to close the  Studio.  Following
lengthy  negotiations with the Studio's  landlord,  the landlord agreed to
allow the Company to terminate  its lease at the Irvine  Entertainment  Center
and the Company  closed the Irvine Studio on April 22, 1998. The costs
associated  with the closure of the studio totaled $164,745 and included
approximately  $135,000 non_cash loss on disposal of leasehold  improvements
and write off of equipment identified as only being of use for spare parts for
the CityWalk Studio;  $3,000 in termination payments to staff; $5,000 to remove
equipment from the studio and vacate  the  premises;  $7,000 in  property  tax
obligations;  and  $14,000  in operating losses for the period that the store
remained open from March 31, 1998 to the date of closure.  It is  management's
opinion that as of March 31, 1998, all costs  associated  with the closure of
the Irvine  Studio have been provided for in full.

Revenues from the Traveling  Studio were $397 in the fiscal year ended March
31, 1998 compared with $14,572 in the preceding  year. In December  1997,  for
a one month trial period,  the Company tested an event photography system at a
central meeting  venue  for  inbound   Japanese   tourists.   The  trial
proved  to  be unsuccessful,  generating  only $397 in revenues and as a
result,  the trial was discontinued.
Cost  of  revenues  in  the  year  to  March  31,  1998  were   $1,728,884  or
approximately  145.6% of revenues.  Excluding  the $164,745 of costs
associated with the closure of the Irvine Studio, cost of revenues in the year
to March 31, 1998 were $1,564,139 or  approximately  131.7% of revenues.  Cost
of revenues in the year to March 31, 1997 were $1,925,930 or approximately
95.6% of revenues.

Cost of revenues  for the CityWalk  Studio  decreased by $197,893 to $880,694.
Compensation and related benefits were $95,817 lower than the previous year as
a result of tighter  controls  over the number of staff hours worked at the
studio and as a consequence of the reduction in revenues.  Depreciation was
higher than the  previous  year by  $32,300.  Rent was lower by  $59,338  as a
result of the Company paying rent based on a percentage of revenues, such
revenues being lower than in the  previous  period by $582,341.  Other cost of
revenues  decreased by 23.6%.  The  percentage  decrease  in other cost of
revenues  was less than the decrease in revenues as there are certain  costs
that are not incurred in direct proportion  to the level of revenue,  including
insurance,  taxes,  repairs and maintenance,  utilities and cleaning. The
CityWalk Studio earned gross income of $28,989  during the fiscal year ended
March 31, 1998 compared to gross income of $413,437 for the same period last
year, a decrease in gross income of $384,448.

Cost of  revenues  for the Irvine  Studio  increased  by  $17,300 to  $843,464
compared with $826,164 for the year to March 31, 1997. Excluding the $164,745
of costs  associated  with the  closure  of the  Irvine  Studio,  cost of
revenues decreased by $147,445 to $678,719.  The percentage  decrease in cost
of revenues was less than the  decrease in revenues as there are certain  costs
that are not incurred  in direct  proportion  to the level of revenue,
including  insurance, taxes, repairs and maintenance, utilities and cleaning.
Compensation and related benefits  were  $88,943  lower  than the  previous
year as a result of  tighter controls over the number of staff hours worked at
the studio. Management reduced staffing  levels in the studio to the extent
possible within the constraints of the number of hours the studio was required
to be open, in order to minimize the impact of the reduction in revenue.
Depreciation was higher by $29,035 than the previous  year.  Rent  increased by
$598 from  $100,500 in the year to March 31, 1997 to  $101,098  for the  year
to  March  31,  1998.  Other  cost of  revenues decreased by 38.8%,  in line
with the decrease in  revenues.  The Irvine  Studio incurred a gross loss of
$565,906  during the fiscal  year ended March 31, 1998 compared to a gross loss
of $317,972 for the same period last year, an increase in gross loss of
$247,934.  Excluding  the $164,745 of costs related to the  closure of the
Irvine  Studio,  there was an $83,189  increase in the gross loss.  Cost of
revenues for the  Traveling  Studio were $4,726,  resulting in a gross loss of
$4,329.  In the year ended March 31, 1997, the Traveling Studio incurred a
gross loss of $6,607.

The Company  overall  incurred a gross loss of $541,246 during the fiscal year
ended March 31, 1998,  compared  with gross income for the same period last
year of  $88,858.  The  incremental  gross  loss for the year to  March  31,
1998 of $630,104  consists of a $384,448  reduction  in gross  income
generated  by the CityWalk  Studio,  an increase  of  $247,934  in the gross
loss  incurred by the Irvine Studio,  such increase  including  $164,745 of
costs  associated with the closure of the studio, partly offset by a decrease
in the gross loss incurred by the Traveling  Studio of $2,278.  Excluding the
$164,745 of costs related to the closure of the  Irvine  Studio,  the  Company
overall  incurred a gross loss of $376,501  in the year to March 31,  1998,  a
$465,359  increase  in gross  loss compared with the previous year.

General and  administrative  expenses for the fiscal year ended March 31, 1997
includes  termination  payments  totaling $51,250 paid to former officers of
the Company.  After adjusting for this non_recurring item, the Company's
general and administrative  expenses  decreased from $736,836 in the fiscal
year ended March 31, 1997 to $488,875  in the fiscal  year ended  March 31,
1998,  a decrease of $247,961 or approximately  33.7%.  This decrease is
consistent with management's plan to reduce overhead costs.  Compensation and
related  benefits  decreased by approximately  51.4% to $125,571  (excluding
the $51,250  termination  payments) from $258,380 for the same period last
year. This decrease was the result of the cessation of employment of the Vice
President  Operations and the Vice President Development  on September 1, 1996,
together with the cessation of employment of the  Operations  Manager  during
the  quarter  ended  December  31,  1997 and a reduction in the level of
administrative  and technical support staff during the year to March 31, 1998
compared  with the year to March 31, 1997.  Professional fees decreased by 9.5%
to $91,218, compared to $100,777 for the same period last year.  Management
fees of $31,200  have been  expensed  in  recognition  of the services
provided during the year by PCG. The expense for the year to March 31, 1997 was
$131,000.  The reduction of $99,800 in management fees is a consequence of a
greater number of responsibilities  being managed by the Company internally and
therefore a reduction in the level of services  provided by PCG.  Management
believes  that  $31,200  (1997:  $131,000)  represents  the  reasonable  cost
of services provided by PCG during the year. As PCG agreed not to charge
management fees for a period of two years from December 1, 1996, the Company
has recorded a capital contribution of $31,200. Office and storage rent
expenses decreased from $39,558 in the year to March 31, 1997 to $33,300.
Depreciation and amortization costs were higher by $1,297. Other general and
administrative expenses decreased by $832 to  $114,626  for the fiscal  year
ended  March 31,  1998,  compared  to $115,458 for the same period last year.

The Company earned  interest income of $224 in the fiscal year ended March 31,
1998 as compared to $484 earned during the prior year. Interest charges
totaling $52,409  were  incurred  on the loan from PCG and on the loan  payable
to former executives of the Company, compared with interest expense of $54,602
in the year ended March 31, 1997.

As of March 31, 1998,  the Company has net  operating  loss carry  forwards of
approximately $10,700,000.  The ability to utilize $8,275,000 of these losses
to be offset  against future taxable income is restricted as a result of the
change in control  arising from the PCG  transaction.  The losses will expire
in March, 2011.

Year Ended March 31, 1997 Compared to Year Ended March 31, 1996

The net loss for the year ended  March 31,  1997 was  $753,346  compared  with
$1,576,484  for the year  ended  March 31,  1996.  The  primary  reason  for
the reduction  in the net loss between the two years is that in the year ended
March 31, 1996 there was a loss on impairment of long_lived assets of $762,129.
There was no such loss in the year ended March 31, 1997.

The following table shows Revenues, Cost of Revenues and Gross Income / (Loss)
during the fiscal years ended March 31, 1997 and March 31, 1996, by studio.

               Fiscal Year Ended March 31, 1997 Fiscal Year Ended March 31,
1996
               ________________________________ _______________________________
_
                CityWalk   Irvine    Traveling   CityWalk   Irvine    Traveling
                 Studio    Studio     Studio      Studio    Studio     Studio
                                                           (Opened     (Not
                                                           12/9/95)
Operational)

Revenues       $1,492,024 $  508,192 $14,572   $1,422,845 $157,867    $    _
               __________ __________ _______   __________ ________    ______

Cost of Revenues:
  Compensation  &
    Related
    Benefits      429,764    277,501   5,674      439,350  108,787         _
  Depreciation &
    Amortization  137,855    220,975       293     189,781    59,468        _
  Loss on
   impairment of
   Long_Lived
   Assets               _          _         _     722,000         _   40,129
  Pre_opening
   Costs                _          _         _           _    67,007        _
  Rent            192,432    100,500     7,925     183,421    27,218        _
  Other           318,536    227,188     7,287     309,175    69,792        _
               __________  _________    ______    ________   _______   ______

  Total         1,078,587    826,164    21,179   1,843,727   332,272   40,129
                _________  _________    ______   _________   _______   ______

Gross Income /
 (Loss)        $  413,437  ($317,972) ($6,607)  ($420,882) ($174,405) $40,129
               ==========  =========   ======   =========   ========= =======


The Company  overall  generated  $2,014,788  in revenues in the fiscal year
ended March 31,  1997,  compared to  revenues of  $1,580,712  in the fiscal
year ended March 31,  1996.  The  increase in revenues of  approximately
$434,076 is primarily a result of the Irvine Studio  trading for a full twelve
months in the year to March 31, 1997  compared  with only four months in the
year to March 31, 1996 (the Irvine Studio commenced trading on December 9,
1995).  CityWalk Studio revenues increased by $69,179 to $1,492,024,  an
increase of 4.9%. Revenues from the  Irvine  Studio  and  the   Traveling
Studio  were  $508,192  and  $14,572 respectively.

Cost  of  revenues  in the  year to  March  31,  1997  were  $1,925,930  or
approximately 95.6% of revenues.  Cost of revenues in the year to March 31,
1996 were  $2,216,128  or  approximately  140.0%  of  revenues.  34.4% of the
cost of revenues  in the year to March  31,  1996  represents  a loss on
impairment  of long_lived assets.  Excluding this amount, cost of revenues in
the year to March 31, 1996 were $1,453,999 or approximately 92.0% of revenues.

Cost  of  revenues  for  the  CityWalk  Studio  decreased  by  $765,140  to
$1,078,587  despite the $69,179  increase in revenues.  Compensation and
related benefits  were  $9,586  lower  than the  previous  year as a result  of
tighter controls over the number of staff hours worked at the studio.
Depreciation  was lower by  $51,926  as a result  of the  adoption  in June
1995 of  Statement  of Financial Accounting Standard ("SFAS") No. 121,
Accounting for the Impairment of Long_Lived  Assets  and  for  Long_Lived
Assets  to be  Disposed  Of,  and  the recognition  of a $722,000 loss on
impairment of CityWalk  Studio assets in the quarter ended June 30, 1995,
together with the fact that certain assets have now been  fully  depreciated.
As a result  of the  Company's  continuing  operating losses,  the  information
obtained  during  research and the development of the Irvine Studio and the
revised total projected  future cash flows of the CityWalk Studio,  in  June
1995  management   determined  that  an  impairment  loss  of approximately
$722,000  should be  recognized.  This loss was calculated as the excess of the
net carrying  value of the CityWalk  Studio long lived assets over the total
projected  future  cash flows over the  remaining  useful life of the assets.
Rent was  higher  as a result of the  Company  paying  rent  based on a
percentage of revenues,  such revenues being higher than in the previous
period by $69,179.  Other cost of  revenues  increased  by 3.0%,  in line with
the 4.9% increase in revenue.  The CityWalk Studio earned gross income of
$413,437 during the fiscal year ended March 31,  1997  compared to a gross loss
of $420,882  for the same period last year, an improvement  of $834,319.
Excluding the effect of the impairment loss recognized in the year ended March
31, 1996, this represents an improvement of $112,319.

Costs of revenues for the Irvine Studio were $826,164, resulting in a gross
loss of $317,972.  Included in cost of revenues was $220,975 of depreciation,
a non_cash  expense.  Cost of revenues for the prior year of $322,272
represented the four month period from opening to March 31,  1996,  and
included  $67,007 of non_recurring  pre_opening  costs.  The Irvine Studio is
still  performing below expectation  and the Company is  continuing to develop
the portfolio of products available at the Irvine  Studio in an endeavor to
improve the revenues  from the Irvine Studio.

Cost of revenues  for the  Traveling  Studio were  $21,179,  resulting in a
gross loss of $6,607.  In the year ended March 31, 1996 as a consequence  of
the adoption of SFAS No. 121, the Traveling Studio incurred a gross loss of
$40,129.

Despite the gross loss of $317,972 which was incurred in the Irvine Studio, and
the gross loss of $6,607  incurred  by the  Traveling  Studio,  the  Company
overall  earned a gross income of $88,858 during the fiscal year ended March
31, 1997. The gross loss for the same period last year was $635,416. The
increase in gross  income  for the  year to  March  31,  1997 is  mainly  due
to the loss on impairment of long_lived assets of $762,129 recorded in the year
ended March 31, 1996 (there was no similar charge in the year to March 31,
1997),  offset by the gross loss  incurred in the Irvine  Studio which traded
for a full twelve months in the year to March 31,  1997  compared  with only
four  months  trading in the prior year. Also contributing to the increase in
gross income is the $112,319  (excluding  the $722,00 loss on impairment of
long_lived assets  recorded in the year to March 31, 1996)  improvement in the
gross income generated by the CityWalk Studio.

General  and  administrative  expenses  for the fiscal year ended March 31,
1997 includes  termination  payments totaling $51,250 paid to former officers
of the  Company.   The   corresponding   year  ended  March  31,  1996
includes  a non_recurring  charge of  $110,000  for  professional  fees
relating to the PCG transaction.  After  adjusting  for these  non_recurring
items,  the  Company's general and  administrative  expenses decreased from
$805,824 in the fiscal year ended March 31, 1996 to  $736,836  in the fiscal
year ended March 31,  1997,  a decrease of approximately 9%. This decrease is
consistent with Management's plan to reduce  overhead  costs.  Compensation
and  related  benefits  decreased  by approximately 18% to $258,380 (excluding
the $51,250 termination  payments) from $313,432 for the same period last year,
as a  consequence  of the  cessation of employment on September 1, 1996 of the
Vice  President  Operations  and the Vice President  Development.  Professional
fees,  excluding  the  $110,000  in  kind consideration on the PCG transaction
in the year ended March 31, 1996, increased by 4% to $100,777, compared to
$96,979 for the same period last year. Management fees of $131,000  payable to
PCG were  accrued,  relating to the period April 1, 1996 to November 29, 1996,
pursuant to the Personnel  Consulting Agreement dated June 28,  1995.  The
expense  for the year to March  31,  1997 of  $131,000  is comparable with the
$130,000 accrued in the previous year for the period July 1, 1995 to March 31,
1996.  Management  believes  that  $131,000  (1996:  $130,000) represents  the
reasonable  cost of  services  provided by PCG during the year. Office and
storage rent expenses increased from $29,524 in the year to March 31, 1996 to
$39,558.  Depreciation and amortization costs were lower by $37,244 as a result
of  previously  non_producing  assets being put into  production  and the
consequential   charges  reported  in  cost  of  revenues.   Other  general
and administrative  expenses  increased by $8,476,  or 8% to $115,458 for the
fiscal year ended March 31, 1997, compared to $106,982 for the same period last
year.

The Company earned  interest  income of $484 in the fiscal year ended March 31,
1997 as compared to $3,035  earned during the prior year.  Interest  charges
totaling  $54,602 were  incurred on the loan from PCG and on the loan payable
to former  executives of the Company  compared with interest  expense of
$28,279 in the year ended March 31, 1996.
As of March 31, 1997,  the Company had net operating loss carry forwards of
approximately  $9,650,000.  The ability to utilize $8,275,000 of these losses
to be offset  against future taxable income is restricted as a result of the
change in control  arising from the PCG  transaction.  The losses will expire
in March, 2011.

Liquidity and Capital Resources

At March 31, 1998, the Company had a working capital deficit of $1,505,743 as
compared  to a working  capital  deficit  on March  31,  1999 of $719,567.  The
increase of $482,207**** is primarily  attributable  to operating  losses
incurred
during the year to March 31,  1999.  Funds have been  provided by PCG during
the year to enable  the  Company  to meet the costs  associated  with its day
to day operations  and to fund the payments due to former  officers of the
Company.

Net cash used in  operating  activities  was  $482,207  for the fiscal year
ended on March 31, 1998, compared to the utilization of $346,687 of cash for the
same period March 31, 1999.

The Company does not anticipate  that it will have any problems in meeting its
obligations  for  continuing  fixed  expenses,   materials  procurement  or
operating  labor.

Other Matters

The Company's  securities  are quoted on the  OTC_Bulletin  Board under the
trading symbol OUTTE. The NASD has recently added an "E" to the symbol, making
it "OUTTE," which indicates that it has been placed on the NASD OTC Bulletin
Board's eligibility list.  In order to remain quoted on the NASD Bulletin
Board, the Company must comply with all of the reporting requirements of the
Securities and Exchange Act of 1933 by the first day of March, 2000.  If the
Company fails to do this, it will no longer be quoted on the NASD OTC Bulletin
Board.  There can be no assurance that the Company will continue to be quoted
on the NASD OTC Bulletin Board.

ITEM 8.  FINANCIAL STATEMENTS


                               Report of Independent Auditor

Board of Directors
Out_Takes, Inc.
Dallas, Texas

    We have audited the accompanying consolidated balance sheets of Out_Takes,
Inc., and subsidiary as of March 31, 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.  We did not audit the financial statements of
Out_Takes, Inc. which reflected total assets of $285,840 as of March 31, 1998
and total revenues of $1,187,638 and $2,014,788 for the years ended March 31,
1998 and 1997 respectively.  Other auditors whose report dated May 20, 1998,
expressed an unqualified opinion on those statements.

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

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Out_Takes, Inc. and its subsidiary as of March 31, 1999 and the consolidated
results of its operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 7 to the
financial statements, the Company has suffered recurring losses from operations
and has a net working capital deficiency that raise substantial doubt about its
ability to continue as a going concern.  Management's plans in regard to these
matters are also described in Note 7. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Rogelio G. Castro
Certified Public Accountant
Oxnard, California
March 2, 2000

[CAPTION]

                                   OUT_TAKES INC.
                             Consolidated Balance Sheets

                                       ASSETS                    March 31,
                                                             1999        1998
Current Assets:
  Cash and Cash Equivalents                             $     1,356 $    26,878
  Inventory                                                       _      10,082
  Prepaid Expenses                                                _      11,954
  Advances   Related party                                  217,414      96,560
  Other Current Assets                                            _       9,564
                                                        ___________ ___________
  Total Current Assets                                  $   218,770 $   155,038

Plant & Equipment _ Net                                     248,965     472,848

Other Non_Current Assets:
  Deposits                                                   24,692      50,196
  Goodwill                                                4,279,455
                                                        ___________ ___________
     Total Assets                                       $ 4,771,882 $   678,082
                                                        =========== ===========


                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts Payable                                      $     4,600 $    31,173
  Accrued Expenses                                                _     135,466
  Provision for Studio closure                                           31,878
  Compensation payable _ Related Parties                    202,341     122,801
  Due to Related Party                                      357,506   1,032,733
  Convertible Interests                                     250,278     250,278
  Interest payable                                          93,008      56,452
  Prepaid asset lease                                        30,604           _
                                                        ___________ ___________
  Total Current Liabilities                                 938,337   1,660,781

Long_term Debt                                              951,400     103,556

Commitments (Note 4)

Stockholders' Equity (Deficit):
  Preferred Stock, par value $.01 per share;
   5,000,000 shares authorized, none issued                       _           _

  Common  Stock,  par  value  $.01  per  share;
   35,000,000  shares  authorized; 20,788,122
   shares  issued  of which  292,396  shares
   are in  Treasury                                         207,882     207,882
  Capital in excess of par value                         14,256,014   9,906,430
  Accumulated deficit                                   (11,473,345)(11,092,161)
  Less treasury shares, at cost                         (   108,406)(   108,406)
                                                        ___________ ___________
Total Stockholders' Equity (Deficit)                    ($2,882,145) (1,086,255)
                                                         __________ ___________
     Total Liabilities and Stockholders' Equity         $ 4,771,882 $   678.082
                                                        =========== ===========

     The Accompanying Notes are an Integral Part of These Financial Statements.


[CAPTION]
                                  OUT_TAKES INC.
                      Consolidated Statements Operations

                                                 Years ended March 31,

                                             1 9 9 9       1 9 9 8     1 9 9 7
                                             _______       _______     _______

Revenues                                $     637,450   $ 1,204,238 $ 2,014,788

Cost of Sales                                 192,374     1,728,884   1,929,273
                                        _____________   ___________ ___________
Gross Income (Loss)                           445,076      (524,646)     85,515)
                                        _____________   ___________ ___________

General and Administrative                    734,802       661,955     896,349
                                        _____________   ___________ ___________

     Loss from Operations                  (  289,726)   (1,186,601) (  810,834)

Other Income (Expense)
  Interest income                                  35           224         484
  Interest expense                            (36,559)      (52,409)    (54,602)
  Discontinued operation                      (55,934)
  Startup cost                                              (37,214)    (46,852)
                                        ______________  ____________  __________
     Total Other Income (Expense)             (92,458)      (89,399)   (100,970)
                                        ______________  ____________  __________

Net Loss                                ($    382,184)  ($1,276,000)($  911,804)
                                         ============   =========== ===========

Net Loss Per Share (Basic and
 Diluted)                               ($       0.02)  ($     0.05)($     0.05)
                                        =============   =========== ===========

Weighted Average Common Shares
 Outstanding                               20,495,726    20,495,726  14,824,881
                                          ===========    ==========  ==========


     The Accompanying Notes are an Integral Part of These Financial Statements.

[CAPTION]
<TABLE>
                                     OUT-TAKES INC.
                      Consolidated Statement of Stockholders' Equity



                              Common Stock        Capital
                               ------------
                            Number of           in Excess of Accumulated
Treasury  Deferred
                             Shares     Amount   Par Value     Deficit
Stock Compensation    Total
                             ------     ------   ---------     -------
----- ------------    -----
<S>                           <C>         <C>       <C>          <C>
<C>      <C>           <C>
Balance - March 31, 1996  11,168,122  $111,682 $ 9,071,180  ($ 8,904,357)
($108,406)($144,000)  $   26,099

Cash Proceeds from
 Issuance of Stock           650,000     6,500     123,500             -
-         -      130,000

Stock Issued upon
 Conversion of Debt        8,970,000    89,700     820,300             -
-         -      910,000

Capital Contribution                                 1,000
                   1,000
Net Loss for the year
  ended March 31, 1997              -        -          -       (911,804)
-         -     (911,804)
                          ----------  -------- -----------  ------------
--------  --------   ----------

Balance - March 31, 1997  20,788,122   207,882  10,015,980  (  9,816,161) (
108,406)( 144,000)     155,295

Management fee -
  Related Party                    -         -      31,200             -
-         -       31,200

Adjustment for
 cancellation of escrow
 shares(See note [6A])             -         -    (144,000)            -
-   144,000            -

Options issuance cost              -         -       3,250             -
-         -        3,250

Net Loss for the year
  ended March 31,1998              -         -           -    (1,276,000)
-         -   (1,276,000)
                          ----------  -------- -----------  ------------
--------  --------   ----------
Balance -  March 31, 1998 20,788,122   207,882   9,905,430   (11,092,161)
(108,406)        -   (1,086,255)

Acquisition of
  Subsidiary                                    4,342,784
               4,342,784
Capital adjustment                                  7,800
                   7,800

Net loss for the year
  Ended March 31, 1999                                       (   382,184)
              (  382,184)
                         -----------  --------  ----------   ------------
--------  --------   ----------
Balance, March 31, 1999   20,788,122  $207,882 $14,256,014  $(11,473,345)
$(108,406) $      -  $ 2,882,145
                         ===========  ======== ===========  ============
=========  ========   ==========

</TABLE>

[CAPTION]
<TABLE>

                                OUT_TAKES INC.
                      Consolidated Statements of Cash Flows
<S>                                               <C>          <C>          <C>

                                                      Years ended March 31,
                                                  1999        1998         1997
Operating Activities:


  Net Loss                                      $(382,184) $(1,276,000)
$(911,804)

  Adjustments to Reconcile Net Loss to
   Net Cash Used in Operating Activities:
     Depreciation and Amortization                116,585      540,185
466,369
     Loss on closure of Irvine Studio                          154,157
     Loss on Disposal of Plant and Equipment            _            _
504
     Compensation fee   related party              80,887      110,062
_
     Options issuance cost                                       3,250
_
  Changes in Assets and Liabilities:
   (Increase) Decrease in:
     Due from Related Party                      (120,854)       3,847
     Deposits                                     (25,504)      11,330
(22,814)
     Inventory                                     10,082       12,797
13,719
     Due from Officers                                  _            _
8,565
     Prepaid Expenses                              11,954        6,671
(7,757)
     Other Current Assets                           9,564             _        _
   Increase (Decrease) in:
     Accounts Payable                            (162,039)    (127,413)
(248,769)
     Notes payable                                      _            _
(15,036)
     Interest payable                              36,556       48,581
(22,104)
     Provision for Studio Closure                 (31,878)      31,878         _
     Prepaid asset lease                           30,604            _         _
     Compensation payable_Related Party            79,540     (119,990)  252,337
                                               __________   __________  ________
  Net Cash Used in Operating Activities        (  346,687)  (  604,492)
(448,916)
                                               __________   __________  ________
Investing Activities:
  Purchases of Property, Plant and
    Equipment                                  (   33,522)  (  218,893)
(165,362)
  Proceeds on Disposal of Plant and Equipment                      100     2,242
                                               __________   __________  ________

Net Cash Used in Investing Activities          (   33,522)  (  218,883)
(163,120)
                                               __________   __________
_________

Financing Activities:
  Proceeds from the Issuance of Stock                   _                130,000
  Advances from Related Party                     272,887      703,783   260,000
  Capital                                           7,800                  1,000


  Convertible notes                                74,000       65,834   240,000
                                                 ________   __________  ________

  Net Cash Provided by Financing Activities       354,687      769,617
631,000
                                                _________   __________  ________

Net Increase (Decrease)in Cash and Cash
 Equivalents                                     ( 25,522)    ( 53,758)   18,964
Cash and Cash Equivalents _ Beginning of
  Years                                            26,878       80,636    61,672
                                                _________    _________    ______
___
Cash and Cash Equivalents _ End of Years        $   1,356    $  26,878  $ 80,636
                                                =========    =========
=========
Supplemental Disclosure of Cash Flow Information
  Cash paid for:
   Interest                                                 $    7,650  $ 66,501

Non cash activities:
  Acquisition of subsidiary                    $4,000,000

            The Accompanying Notes are an Integral Part of These Financial
Statements.


<CAPTION>

                                   OUT_TAKES INC.
                       Consolidated Notes to Financial Statements

Note 1 _ Summary of Significant Accounting Policies

Basis of Presentation _ The accompanying consolidated financial statements are
presented on an accrual basis.  Revenues are recognized when merchandise is sold
and expenses are recognized when incurred.

Principals of Consolidation   On August 31, 1998, Out_Takes, Inc. acquired all
of the issued and outstanding equity interests of Los Alamos Energy, LLC, a
California limited liability company (LAE). This acquisition has been accounted
for as an exchange between companies under common control.  The investment has
been recorded at historical cost in a manner similar to a pooling of interest,
and the face value of the note given has been adjusted down to the net equity
value of LAE at the date of the exchange.

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Los Alamos Energy, LLC.  All
significant inter_company transactions and balances have been eliminated in
consolidation.

Plant and Equipment and Depreciation _ Plant and equipment as of March 31, 1999
consists primarily of generators, computers, furniture and fixtures, and they
are stated at cost. Depreciation is provided over the estimated useful asset
lives using the straight_line method over 5_7 years for all equipment and
furniture.

Stock Options _ The difference between the fair market value and the exercise
price, if below fair market value, of a stock option granted under the Company's
Employee Stock Option Plan is charged to expense in the period in which the
option is granted.  All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair market value
of the equity instruments issued, whichever is more reliably measurable

Inventories _ Inventories consisting principally of frames, bags, mattes,
chemicals, paper products and other supplies are priced at cost determined using
the FIFO method.

Cash and cash equivalents _ The Company classifies all highly liquid debt
instruments, readily convertible to cash and purchased with a maturity of three
months or less at date of purchase, as cash equivalents. The Company had no cash
equivalents at March 31, 1999.

Risk concentrations _ Financial instruments, which potentially subject the
Company to concentrations of credit risk, consist principally of cash. At March
31, 1999, the Company had no deposits in financial institutions which exceeded
the $100,000 federally insured limit. The excess of the institution's deposit
liability to the Company over the federally insured limit was therefore zero.

Company's primary customer is Pacific, Gas and Electric Company.

Use of Estimates _ The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts. Accordingly, actual
amounts could differ from those estimates.

Advertising _ Advertising costs are expensed as incurred. Advertising
expenditures for the year ended March 31, 1999 were $4,500.

Amortization of Goodwill

Cost of investments in purchased companies in excess of the underlying fair
value of net assets at dates of acquisition are recorded as goodwill and
amortized over 40 years on a straight_line basis.

Loss per share _ The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standard  ("SFAS") No. 128, "Earnings Per
Share" which is effective for financial statements issued for periods ending
after December 15, 1997.  Accordingly, earnings per share data in the financial
statements for the year ended March 31, 1998 has been calculated in accordance
with SFAS No. 128. Prior periods earnings per share data have been recalculated
as necessary to conform prior years data to SFAS No. 128. SFAS No. 128
supersedes Accounting Principles Board Opinion No. 15, "Earnings per Share" and
replaces its primary earnings per share with a new basic earnings per share
representing the amount of earnings for the period available to each share of
common stock outstanding during the reporting period. SFAS No. 128 also requires
a dual presentation of basic and diluted earnings per share in the face of the
statement of operations for all companies with complex capital structures.
Diluted earnings per share reflects the amount of earnings for the period
available to each share of common stock outstanding during the reporting
period,  while giving effect to all dilutive  potential common shares that were
outstanding during the period, such as common shares that could result from the
potential exercise or conversion of securities into common stock.

The computation of diluted earnings per share does not assume conversion,
exercise or contingent issuance of securities that would have an antidilutive
effect on earnings per share (i.e. increasing earnings per share or reducing
loss per share).  The dilutive effect of outstanding options and warrants and
their equivalents are  reflected in dilutive earnings per share by the
application of the treasury  stock method which recognizes the use of proceeds
that could be  obtained  upon  exercise of options and warrants in computing
diluted earnings  per share.  It assumes that any proceeds would be used to
purchase common stock at the average market price during the period. Options and
warrants will have a dilutive effect only when the average market price of the
common stock during the period exceeds the exercise price of the options or
warrants.

Potential common shares of 125,000 are not currently dilutive, but may be in the
future.

Deferred  Taxes _ There  are no  material  differences  between  the  accounting
methods used for financial and tax purposes. The Company has sustained losses in
recent years and has a large net operating loss carryforward.  No deferred taxes
are reflected in these financial statements.

Note 2 _ Plant and Equipment
                                                March 31, 1999   March 31, 1998
The components of plant and equipment are:

Photographic Equipment                         $           _      $     620,750
Computers and Software                                 1,300            660,348
Equipment and Furniture                              337,912            605,707
Leasehold Improvements                                     _            609,494
Motor Vehicle                                          5,500             26,933
                                               _____________      _____________

Total _ At Cost                                      344,712          2,523,232
Less: Accumulated Depreciation                        95,747          2,050,384
                                               _____________      _____________
Net                                            $     248,965      $     472,848
                                               =============      =============

Depreciation is provided over the estimated useful asset lives using the
straight_line method over five to seven years for all equipment and furniture.
Leasehold improvements are amortized on a straight_line basis over the shorter
of the useful life of the improvement or the term of the lease.  Expenditures
for major renewals and betterments that extend the useful lives of property and
equipment are capitalized. Expenditures for maintenance and repairs are charged
to expense as incurred.

Note 3 _ Related Party Transactions

The amount due to related party is unsecured and payable upon demand.  Interest
expense is charge at a rate of 10% per annum.  As of March 31, 1999, interest of
$93,008 was accrued.

Note 4   Commitments

The Company has an extended 12 month operating lease agreement for an office
facility.

Future minimum lease obligations as of March 31, 1999 are:

         Year ended March 31
         ___________________
              2000                                 $  10,200
                                                    ________
              Total                                $  10,200
                                                   =========

In the year to March 31, 1999, total rent expense was $116,884.

Note 5 _ Income Taxes

As of March 31, 1999, the Company has a net operating loss carry forward of
approximately  $11,411,016.


Note 6 _ New Authoritative Pronouncements

The FASB has issued SFAS No. 130, "Reporting Comprehensive Income".  SFAS No.
130 is effective for fiscal years beginning after December 15, 1997.  Earlier
application is permitted.  Reclassification of financial statements for earlier
periods provided  for  comparative  purposes is  required.  SFAS No. 130 is not
expected to have a material impact on the Company.

The FASB has issued SFAS No. 131,  "Disclosures About Segments of an Enterprise
and  Related  Information".  SFAS No. 131  changes how  operating  segments  are
reported in annual  financial  statements and requires the reporting of selected
information  about  operating  segments in interim  financial  reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997 and comparative  information for earlier years is to be restated.  SFAS No.
131 need not be applied to interim  financial  statements in the initial year of
its  application.  SFAS No. 131 is not expected to have a material impact on the
Company.

Note 7 _ Going Concern

The Company has been unsuccessful in generating net cash from operations. The
net cash used by the Company in operating activities in the year ended March 31,
1998 was $346,687.  The Company incurred a net loss of  $318,555 for the year
ended March 31, 1999 and has a working capital deficit as of March 31, 1999 of
$719,567.

The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business.  The continuation
of the Company as a going concern is dependent upon its ability to generate net
cash from operations.  The Company's recurring operating losses and net working
capital deficiency raises substantial doubt about the entity's ability to
continue as a going concern. Management's plans include the continuing reduction
of expenses and expanding the activities of Los Alamos Energy to include direct
service of consumer electricity

The Company has, subsequent to March 31, 1999, during June, 1999, executed a
letter of intent with Coastal Resources Corporation, which, among other things,
provides for a merger to be effected pursuant to the provisions of a Share
Exchange Agreement to be entered into, and also providing for $300,000 in loans
to be made to Los Alamos Energy, LLC, a subsidiary of the Company.

The Company has also executed a letter of intent with Atlas Engineering, LLC to
the effect that the Company shall acquire Atlas Engineering, LLC pursuant to the
provisions of a Purchase Agreement to be entered into.

Management plans to expand its existing power plant to 4 or 5 Mega Watt, and to
actively pursue other power plant development and acquisitions.

Note 8 _ Impairment of Long_Lived Assets

The Company had adopted Statement of Financial Accounting Standard ("SFAS") No.
121, Accounting for the Impairment of Long_Lived Assets and for Long_Lived
Assets to be Disposed Of.

Long term assets of the Company are reviewed at least annually as to whether
their carrying value has become impaired, pursuant to guidance established in
Statement of Financial Standards ("SFAS") No. 121. Management considers assets
to be impaired if the carrying value exceeds the future projected cash flows
from related operations  (undiscounted and without interest charges). If
impairment is deemed to exist, the assets will be written down to fair value or
projected discounted cash flows from related operations. Management also re_
evaluates the periods of amortization to determine whether subsequent events and
circumstances warrant revised estimates of useful lives. As of March 31, 1999,
management expects these assets to be fully recoverable.

                                   PART IV

ITEM 14.   EXHIBITS AND REPORTS ON FORM 8_K

(a)  The  following  exhibits  are filed as part of this  report as required by
     Item 601 of Regulation S_B:

     3.1   Certificate of Incorporation of the Company. (ii)

     3.2   Certificate of Amendment of Certificate of Incorporation. (ix)

     3.3   Bylaws of the Company. (I)

     4.1   Form of Unit Purchase Option. (I)

     4.2   Form of Warrant Agreement. (I)

     4.3   Form of Escrow Agreement. (iv)

     4.4   Section 203 of the Delaware General Corporation Law. (ix)

     10.1  Form of Registration Rights Agreement. (I)

     10.5  Form of Standard Employment Agreement for hourly wage employee. (vi)

     10.6  Form of  Standard  Employment  Agreement  for hourly  wage  employee
           eligible to earn commissions. (vi)

     10.7  Form of Standard Employment Agreement for salaried employee. (vi)

     10.8  Form of Standard Employment Agreement for salaried employee eligible
           to earn commissions. (vi)
     10.9  Form of Standard Employment Agreement for salaried employee eligible
           for bonus in the form of incentive compensation. (vi)

     10.10 Agreement  dated  March 16,  1992  between  the  Placement  Agent
and        Shelton on behalf of "Founders" specified therein, as amended. (I) +

     10.11 Founders  Agreement  dated  March 25,  1992 among  Robert H.  Shelton
           ("Shelton"), Ellen Korval ("Korval"), Robert A. Small ("Small"), Leah
           R.   Shelton   ("Shelton")and   John  L.  Sigalos   ("Sigalos"),   as
           supplemented  by letter  agreement  dated as of March 25,  1992 among
           Shelton, Shelton, Sigalos, Korval and Small. (I) +

     10.12 Merchandising  License  Agreement  dated  February  25, 1992 between
           MCA/Universal Merchandising, Inc. and the Company. (I)

     10.13 Merchandising  License Agreement dated April 24, 1992 between Turner
           Home Entertainment, Inc. and the Company. (I)

     10.14 Merchandising  License  Agreement dated as of April 16, 1992 between
           Paramount Pictures Corporation and the Company. (I)

     10.15 Letter  Agreement  between the Image Bank West and the Company dated
           as of August 5, 1992. (I)

     10.16 Letter Agreement  between the Company and Tony Stone Worldwide dated
           as of August 31, 1992. (I)

     10.17 1992 Employee Stock Option Plan. (iii) +

     10.18 1992 Non_Employee Directors Stock Option Plan. (iii)

     10.19 Metrum  Imaging  Products VAR  Agreement  dated  September  11, 1992
           between Metrum Information Storage and the Company. (I)

     10.20 Lease  dated   November   13,  1992  between  the  Company  and  MCA
           Development Company. (ii)

     10.21 Lease  dated   October  13,  1992  between  the  Company  and  Midis
           Properties, Ltd. (ii)

     10.22 Lease dated March 28, 1993 between the Company and Midis Properties,
           Ltd. (vi)

     10.23 Letter Agreement  between the Company and Jay P. Morgan  Photography
           dated September 28, 1992. (iii)

     10.24 Settlement  Agreement and Mutual  Release dated as of August 11, 1994
           between the Company,  on the one hand, and Richard T. Eckhouse, B&E
           Financial Express,  Business & Executives Financial Group, Innovative
           Business  Management Inc., and R. T. Eckhouse & Assoc., on the other
           hand. (vii)

     10.25 Promissory  Note in favor  of Photo  Corporation  of  Australia Pty
           Limited, dated March 23, 1995. (viii)

     10.26 Security  Agreement  between the Company  and Photo  Corporation  of
           Australia Pty Limited, dated as of March 23, 1995. (viii)

     10.27 Subscription  Agreement between the Company and Oakrusk Pty Limited,
           dated May 26, 1995. (viii)

     10.28 Stock Option Agreement  between the Company and Oakrusk Pty Limited,
           dated May 26, 1995. (viii)

     10.29 Form of Subscription Agreement. (ix)

     10.30 Settlement  and  Mutual  Release   Agreement  between  the  Company,
           Shelton,  Shelton and Photo  Corporation  Group Pty  Limited,  dated
           August 31, 1996. (x)

    10.31  Purchase and Sale Agreement between the Company and Los Alamos
           Energy, LLC, Dated August 31, 1998

    10.32 Asset Lease Agreement dated October 26, 1998

    14(a)2 Report of Former Independent Accountant
           Financial Statements as of March 31, 1997 and 1996
           Statements of Operations
           Statements of Stockholder's Equity
           Statements of Cash Flows

    16    Letter of Former Independent Accountant

(b)  Reports on Form 8_K

     Current Report on Form 8_K dated April 27, 1998.

     Current Report on Form 8_K dated May 13, 1998

     Current Report on Form 8_K dated October 28, 1998

     (I)  Incorporated by reference to the Company's  Registration  Statement
on Form  S_1   (Registration   No.  33_  52904)  filed  on  October  5,  1992
(the "Registration Statement").

     (ii)  Incorporated  by reference to  Pre_Effective  Amendment  No. 1 to the
Registration Statement filed on December 21, 1992.

     (iii)  Incorporated  by reference to  Pre_Effective  Amendment No. 2 to the
Registration Statement filed on January 15, 1993.

     (iv)  Incorporated  by reference to  Pre_Effective  Amendment  No. 3 to the
Registration Statement filed on February 3, 1993.

     (v)  Incorporated by reference to the Company's  Registration  Statement on
Form 8_A (No. 0_21322) filed on March 5, 1993 and effective on March 19, 1993.

     (vi)  Incorporated  by reference  to the  Company's  Annual  Report on Form
10_KSB for the fiscal year ended March 31, 1993.

     (vii)  Incorporated by reference to the Company's  Quarterly Report on Form
10_QSB for the quarterly period ended June 30, 1994.
     (viii)  Incorporated  by reference to the  Company's  Annual Report on Form
10_KSB for the fiscal year ended March 31, 1995.

     (ix)  Incorporated  by reference  to the  Company's  Annual  Report on Form
10_KSB for the fiscal year ended March 31, 1995.

     (x) Incorporated by reference to the Company's Report on Form 10_QA for the
period ended September 30, 1996.

Management contract or compensatory plan.

                                   SIGNATURES

In  accordance  with  Section  13 or  15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                 Out_Takes, Inc.


Dated: March 1, 2000             By: /s/ James Harvey, President
                                      James Harvey, President


In  accordance  with the Exchange Act, 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/ James Harvey         Chairman of the Board, President,   March 1, 2000
   _________________        Chief Executive Officer, Chief
       James Harvey         Financial Officer and Secretary,
       And Sole Director


[TYPE]EX_27
<SEQUENCE>2
[DESCRIPTION]FDS __
[ARTICLE]                     5
[LEGEND]
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations and is
qualified in its entirety by reference to such information.

</TABLE>
<TABLE>
[PERIOD-TYPE]                   Year
[FISCAL-YEAR-END]                              Mar_31_1999
[PERIOD-END]                                   Mar_31_1999
[CASH]                                         23,044
[SECURITIES]                                   0
[RECEIVABLES]                                  0
[ALLOWANCES]                                   0
[INVENTORY]                                    0
[CURRENT-ASSETS]                               506
[PP&E]                                         291,456
[DEPRECIATION]                                 0
[TOTAL-ASSETS]                                 312,053
[CURRENT-LIABILITIES]                          716,323
[BONDS]                                        0
[PREFERRED-MANDATORY]                          0
[PREFERRED]                                    0
[COMMON]                                       20,788
[OTHER-SE]                                     0
[TOTAL-LIABILITY-AND-EQUITY]                   312,053
[SALES]                                        ****
[TOTAL-REVENUES]                               ****
[CGS]                                          ****
[TOTAL-COSTS]                                  ****
[OTHER-EXPENSES]                               ****
[LOSS-PROVISION]                               0
[INTEREST-EXPENSE]                             ****
[INCOME-PRETAX]                                ****
[INCOME-TAX]                                   0
[INCOME-CONTINUING]                            ****
[DISCONTINUED]                                 0
[EXTRAORDINARY]                                0
[CHANGES]                                      0
[NET-INCOME]                                   ****
[EPS-BASIC]                                  ****
[EPS-DILUTED]                                  ****


EXHIBIT 10.31 PURCHASE AND SALE AGREEMENT BETWEEN COMPANY AND LOS
ALAMOS ENERGY, LLC, DATED AUGUST 31, 1998
PURCHASE  AND  SALE  AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered into as
of  the  31st  day  of  August,  1998,  by  and  between  OUT_TAKES, INC., a
corporation  duly  organized and validly existing under the laws of the state of
Delaware  (the  "Purchaser")  and the several individuals named on the signature
page  of  this  Agreement  (collectively,  the  "Seller").

WHEREAS, the Purchaser is a publicly_traded corporation on the OTC_Bulletin
Board  under  the  symbol  OUTT;  and

WHEREAS, the Seller collectively owns all of the issued and outstanding units of
equity interest (the "Equity") in LOS ALAMOS ENERGY, LLC, a limited liability
company organized and existing under the laws of the State of California (the
"Company"); and

WHEREAS, the Purchaser desires to purchase from the Seller, and the Seller
desires to sell and convey to the Purchaser, all of the Equity in the Company,
subject to and in accordance with the terms and conditions set forth in this
Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and the covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby  agree as follows:

PURCHASE AND SALE OF THE EQUITY.  Upon execution of this Agreement by both
parties, and subject to the fulfillment of all Closing Conditions (as such term
is defined below) contained in Section 7 below, the Purchaser hereby irrevocably
agrees to purchase, and the Seller agrees to sell, transfer and convey to the
Purchaser, all of the Equity in the Company outstanding as of the Closing (as
defined below).  Such units of Equity, once delivered to the Purchaser as set
forth herein, shall be validly issued, fully paid and non_assessable. The Seller
may elect, in its sole discretion at any time prior to the Closing, to convert
its form of organization from a limited  liability company to a corporation, in
which case each reference to the Company shall be deemed to refer to the new
corporation, and each reference to units of Equity in this Agreement shall be
deemed to refer to shares of capital of the new corporation.

CONSIDERATION TO BE PAID FOR THE EQUITY. As consideration for the Equity to be
purchased hereunder, the Purchaser shall deliver to the Seller promissory notes,
substantially in the form of Exhibit A attached hereto, totaling four million
dollars ($4,000,000) in the aggregate (collectively, the "Promissory Note"). The
Promissory Note shall have a maturity of five (5) years, and shall bear interest
at the rate of ten percent (10%) per annum until paid in full. As security for
the Note, at the Closing, the Purchaser shall deliver to the Seller a security
agreement (the "Security Agreement") substantially in the form of Exhibit B
attached hereto, and a stock pledge agreement (the "Stock Pledge") substantially
in the form of Exhibit C attached hereto. The security interests granted in the
Security Agreement and the Stock Pledge shall remain in full force and effect
until the Note has been repaid in its entirety, or converted as set forth in
Section 3 below.

3.    CONVERSION OPTION IN THE NOTE.  The Note shall contain an option (the
"Conversion Option") to convert the indebtedness represented thereby into such
number of shares of voting common stock of the Purchaser as shall represent
ninety percent (90%) of the shares of such voting stock issued and outstanding
as of the date of conversion, on a fully_diluted  basis (the "Conversion
Shares").  In the event that the Seller desires to exercise the Conversion
Option, it shall notify the Purchaser of such fact, and commence such actions
not later than ninety days from the date of the Note. Within thirty (30) days
after the Purchaser determines that the Conversion may be lawfully completed (or
such other time as is mutually agreed between the parties), there shall be a
closing of the Conversion Option (the "Conversion Closing"). At such Conversion
Closing, the Seller shall deliver to the Purchaser the Note marked Paid in Full,
and the Purchaser shall deliver to the Seller, or its nominees, a certificate or
certificates  evidencing the issuance to the Seller of the Conversion Shares,
which  Conversion Shares when so delivered shall be validly issued, fully paid,
and  non_assessable.  The Conversion Closing shall be subject to the condition
that the Purchaser shall have effected a reverse stock split of one (1) share
for every one hundred (100) shares of the Purchaser outstanding as of such date.
The Conversion Closing shall only occur if the foregoing condition has been
fully satisfied or waived prior to or simultaneously with such Conversion
Closing as set forth herein.

4.     REPRESENTATIONS AND WARRANTIES OF THE SELLER. Each Seller hereby
represents and warrants to the Purchaser, as to himself only and not jointly, as
of the date hereof, the following:

(a)    each Seller is an adult individual, and has full power and capacity to
enter into, execute, deliver and perform this Agreement in accordance with its
terms, which Agreement, once so executed and delivered by such Seller, shall be
the valid and binding obligation of such Seller, enforceable against him by any
court of competent jurisdiction in accordance with its  terms;

(b)     no Seller, is bound by or subject to any contract, agreement, court
order, judgment, administrative ruling, law, regulation or any other item which
prohibits or restricts such party from entering into and performing this
Agreement, or which requires the consent of any third party prior to the entry
into or performance of this Agreement, in accordance  with its terms.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.  The Purchaser hereby
represents and warrants to the Seller, as of the date hereof, the following:

the Purchaser is a corporation duly organized and validly existing under the
laws of the State of Delaware, and has full power and authority to enter into
and perform this Agreement in accordance with its terms;

the individuals signing this Agreement on behalf the Purchaser are the duly
elected executive officers of the Purchaser so indicated, and have full power
and authority to execute and deliver this Agreement for and on behalf of the
Purchaser, which Agreement, once so executed and delivered, shall be the valid
and binding obligation of the Purchaser, enforceable against it by any court of
competent jurisdiction in accordance with its terms;

the Purchaser is not bound by or subject to any contract, agreement, court
order, judgment, administrative ruling, law, regulation or any other item which
prohibits or restricts such party from entering into and performing this
Agreement, or which requires the consent of any third party prior to the entry
into or performance of this Agreement, in accordance  with its terms;

(d)     a majority of the Purchaser's voting stock is owned by PCG, which
controls, beneficially and of record, fourteen million four hundred ten thousand
(14,410,000) shares of the Company's common stock and a beneficial interest in
another approximately eight hundred eighty five thousand (885,000) shares of the
Company's common stock (common stock being the only voting securities of the
Company outstanding as of the date hereof), on  a fully_diluted basis,
representing approximately seventy_five percent  (75%) of the total number of
shares of common stock issued and  outstanding as of the date hereof;

(e)   the Purchaser has been given every opportunity to review all documents,
and ask all questions of the Seller and the executive officers of the Company,
as it shall have requested prior to executing and delivering this Agreement to
the Seller; and the Purchaser has been advised to consult with its attorney and
tax advisor regarding the consequences of  purchasing the Equity.

INDEMNIFICATION.  The parties each hereby agree that they shall be responsible
for, and shall hold harmless and indemnify the other party from and against, any
and all obligations, liabilities, losses, costs, charges, damages or expenses
(including, but not limited to, reasonable attorneys  fees and court costs
incurred in defense thereof) of whatever type or nature to the extent that any
such Claim shall result from or arise out of the breach by such party of any
agreement, undertaking, representation or warranty contained in this Agreement
(including, without limitation, all exhibits and other documents entered into
pursuant hereto).

7.     CLOSING.  The transactions contemplated by this Agreement shall be
consummated at such location, at such time and on such date as the parties shall
mutually agree (the "Closing"). At the Closing, each Seller shall deliver to the
Purchaser a certificate evidencing his respective portion of the Equity being
acquired hereunder, and the Purchaser shall deliver to each such Seller an
originally_signed Note, evidencing such Seller's pro rata  portion of the
Purchase Price, together with originally_signed copies of the Security Agreement
and the Stock Pledge, and each party shall further deliver such documents and
instruments as the other party may reasonably   request to further the
transactions to be consummated at the Closing (all of such delivery items being
referred to herein as the "Closing
Conditions").

8.     MISCELLANEOUS PROVISIONS.

(A)   NOTICES. All notices, requests, demands and other communications to be
given hereunder shall be in writing and shall be deemed to have been duly given
on the date of personal service or transmission by fax if such transmission is
received during the normal business hours of the addressee, or on the first
business day after sending the same by overnight courier service or by telegram,
or on the third business day after mailing the same by first class mail, or on
the day of receipt if sent by certified or registered mail, addressed as set
forth below, or at such other address as any party may hereafter indicate by
notice delivered as set forth in  this Section 8(a):

      If to the Seller:   Sellers of Equity in the Company
                   c/o Los Alamos Energy, LLC
                   466 Bell Street
                   Los Alamos, CA  93440
                   Attn: Mr. Hannes Faul
                   Managing Member

      (with a copy) to:   Feldhake, August & Roquemore
                   600 Anton Boulevard, Suite 1730
                   Costa Mesa, CA  92626
                   Attn: Kenneth S. August, Esquire
                   Partner

      If to the Purchaser: Out_Takes, Inc.
                   1419 Peerless Place
                   Suite 116
                   Los Angeles, California  90035
                   Attn: Mr. Peter C. Watt
                   President


      (with a copy) to:   Photo Corporation Group Pty. Limited
                   P.O. Box 415
                   Chester Hill, N.S.W. Australia 2162
                   Attn: Mr. Michael C. Roubicek
                   Group Commercial Manager

(B)     BINDING AGREEMENT; ASSIGNMENT. This Agreement shall constitute the
binding agreement of the parties hereto, enforceable against each of them in
accordance with its terms. This Agreement shall inure to the benefit of each of
the parties hereto, and their respective successors and permitted assigns;
provided, however, that this Agreement may not be assigned (whether by contract
or by operation of law) by either party without the prior written consent of the
other party.

(C)     ENTIRE AGREEMENT. This Agreement constitutes the entire and final
agreement and understanding between the parties with respect to the subject
matter hereof and the transactions contemplated hereby, and supersedes any and
all prior oral or written agreements, statements, representations, warranties or
understandings between the parties, all of  which are merged herein and
superseded hereby.

(D)   WAIVER. No waiver of any provision of this Agreement shall be deemed to be
or shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.

(E)     HEADINGS. The headings provided herein are for convenience only and
shall have no force or effect upon the construction or interpretation of any
provision hereof.

(F)     COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

FURTHER DOCUMENTS AND ACTS. Each party agrees to execute such other and further
documents and to perform such other and further acts as may be reasonably
necessary to carry out the purposes and provisions of this  Agreement.

GOVERNING LAW; VENUE.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California, without giving
effect to the principles of conflicts of laws applied thereby.

(I)    INJUNCTIVE RELIEF. Each party hereby agrees that should either party
materially breach any of its respective obligations under this Agreement,
including without limitation any exhibit or other document entered into between
the parties pursuant hereto, the non_breaching party would have no adequate
remedy at law, since the harm caused by such a breach may not be easily measured
and compensated for in damages. Accordingly, the parties agree that in addition
to such other remedies as may be available to the non_breaching party at law,
such party may also obtain injunctive or other equitable relief including, but
not limited to, specific performance, to compel the breaching party to meet its
obligations under this Agreement. All of such remedies available to any party
hereunder shall be cumulative and  non_exclusive.

(J)     CONFIDENTIALITY.  By their execution hereof, each party hereby
acknowledges to the other that certain information furnished to it by the other
party is proprietary to such disclosing party, and neither the receiving party,
nor any affiliate, employee, officer, director,  shareholder, agent or
representative of such receiving party shall have any rights to distribute or
divulge any of such Confidential Information to any third party without the
disclosing party's prior, written consent,  or to use any such Confidential
Information in any way detrimental to the disclosing party or its affiliates, or
which would otherwise destroy, injure or impair any of the disclosing party's
rights in or in respect of any such Confidential Information including, without
limitation, by using of such Confidential Information to establish or assist any
person or entity which  is, or will be, directly or indirectly in competition
with the disclosing  party.  For purposes of this Agreement, the term
"Confidential  Information" shall mean any and all proprietary information
belonging to  the disclosing party, whether tangible or intangible, written or
oral,  including, without limitation, any non_public intellectual property
rights, trade secrets, designs, books and records, computer software and files,
and lists of (and/or information concerning) such disclosing party's financial
condition, customers, suppliers, vendors, sources, methods, techniques and other
business relationships or information.

(K)   SEVERABLE PROVISIONS. The provisions of this Agreement are severable, and
if any one or more provisions is determined to be illegal, indefinite, invalid
or otherwise unenforceable, in whole or in part, by any court of competent
jurisdiction, then the remaining provisions of this Agreement and any partially
unenforceable provisions to the extent enforceable in the pertinent
jurisdiction, shall continue in full force and effect and shall be binding and
enforceable on the parties.

(L)     EXHIBITS.  All Schedules and Exhibits attached hereto are hereby
incorporated by reference herein as an integral part of this Agreement, with the
same force and effect as if the same had been written herein in their entirety.

SURVIVAL.  The provisions of Sections 4, 5, 6 and 8(j) shall expressly survive
any expiration, termination or revocation of this Agreement by either party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.

THE PURCHASER:

 OUT_TAKES, INC.                    ATTEST:


 By: /s/                        By: /s/
   Peter C. Watt                    Michael C.
Roubicek
   President                       Secretary


 THE SELLER:

 HANNES FAUL                         WITNESS:


 /s/                              /s/


 LANCE HALL                         WITNESS:


 /s/                             /s/



 THE INWOOD 1991 TRUST                  WITNESS:


 By:  /s/                          /s/
    James C. Harvey
    Trustee





                  EXHIBIT A TO
               PURCHASE AND SALE AGREEMENT



THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER THE LAWS OF ANY STATE, AND MAY
NOT BE RESOLD, ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE MAKER THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.

                  OUT_TAKES, INC.

 CONVERTIBLE PROMISSORY NOTE
 _____________________________

  $_________                      August __, 1998


FOR VALUE RECEIVED, OUT_TAKES, INC., a corporation organized and existing under
the laws of the State of Delaware (hereinafter referred to as the "Maker"),
hereby promises to pay to the order of _______________________________, an adult
individual residing in the County of ________, State of California (hereinafter
referred to as the "Payee"), at Payee's principal address located at
________________________, _______ California, 9____, or such other place or
places as the Payee may hereafter direct from time to time, in lawful money of
the United States and in immediately available funds, the principal sum of
_____________________ DOLLARS ($_________).  This Convertible Promissory Note
(hereinafter referred to as the "Note") shall accrue simple interest at the rate
of ten percent (10%) per annum. Amounts of principal and accrued interest due
and payable in respect of this Promissory Note shall be paid out of gross
operating revenues, as available, with payments to be made monthly in arrears up
to ninety_nine percent (99%) of gross revenues from operations, being applied
first to accrued interest and then to principal, with the balance due on August
__, 2003 (the "Maturity Date"), unless this Note is earlier converted in
accordance with the provisions set forth below (the "Conversion Date"). The
principal amount of this Promissory Note shall be due and payable on the
Maturity Date, unless earlier converted in accordance with the provisions set
forth herein.

This Promissory Note may be converted into shares of common stock of the Maker,
having a par value of One Cent ($0.01) per share, (the "Common Stock") in whole
or in part, in the manner set forth below. Each Promissory Note shall be
convertible into such number of shares of Common Stock of the Maker as are
obtained by (a) calculating the total outstanding amount of principal and
accrued interest owed by Maker to all sellers of Los Alamos Energy, LLC
(pursuant to that certain Purchase and Sale Agreement dated as of August 31,
1998, by and between Maker and the several sellers named therein (the "Purchase
Agreement") as of the effective date of such conversion (the "Conversion Date");
(b) determining what percentage of such total amount is represented by the
indebtedness evidenced by this Note; and (c) multiplying such percentage by the
total number of Conversion Shares available (as such term is defined in the
Purchase Agreement).

The indebtedness represented by this Promissory Note constitutes senior secured
indebtedness of the Maker, and shall be senior in right of payment to all other
indebtedness of the Maker. By its execution of this Note, the Maker represents
and warrants that it is not subject to any indebtedness which would be senior
to, or pari passu with, the indebtedness to the Payee evidenced by this Note,
other than in accordance with the Purchase Agreement.

The Maker hereby agrees and covenants with the Payee that, in the event that the
Maker shall hereafter become in default under this Promissory Note, the Maker
shall not make or authorize any dividend or other distribution to shareholders
of the Maker prior to the repayment in full of any amounts outstanding
hereunder.

Upon the occurrence of either of the following specified Events of Default (each
herein called an "Event of Default"):

(i)   Breach of Agreements. The Maker shall be in breach or violation, for a
period of three (3) days, of any material agreement, undertaking, obligation,
representation, warranty or statement contained in this Promissory Note, the
Purchase Agreement, or any other Exhibit or document entered into by the Maker
pursuant thereto; or

(ii)    Insolvency. The Maker shall suspend or discontinue its business, or make
an assignment for the benefit of creditors or a composition with creditors,
shall file a petition in bankruptcy, shall be adjudicated insolvent or bankrupt,
shall petition or apply to any tribunal for the appointment of any custodian,
receiver, liquidator or trustee of or for it or any substantial part of its
property or assets, shall commence any proceedings relating to it under any
applicable bankruptcy, reorganization, arrangement, readjustment of debt,
receivership, dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; or there shall be commenced against the
Maker any such proceeding which shall remain undismissed or unstayed for a
period of forty_five (45) days or more, or any such order, judgment or decree
shall be entered, or the Maker shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any such proceeding or in the
appointment of any such custodian, receiver, liquidator or trustee; or the Maker
shall take any action for the purpose of effecting any of the foregoing;

then, and in any such event, and at any time thereafter if any Event of Default
shall be continuing, the Payee may, by written notice to the Maker, declare the
entire principal of this Promissory Note, and any accrued but unpaid interest in
respect thereof, to be forthwith due and payable. The Maker hereby expressly
waives presentment, demand, protest or other notice of any kind.

This Promissory Note shall inure to the benefit of the Payee, his or her heirs,
executors, successors and permitted assigns. The obligations of the Maker
arising hereunder shall become the obligations of any successor in interest or
permitted assignee thereof, whether by contract or by operation of law.

This Promissory Note shall be governed by and construed in accordance with the
internal laws of the State of California applicable to the enforcement and
operation of such instruments in the State, and without giving effect to the
principles of conflicts of laws which may be applied thereby. Any action brought
under or in respect of this Promissory Note shall be brought only in a court of
competent jurisdiction sitting in the County of Los Angeles, State of
California. If any suit or other proceeding shall be instituted with respect to
this Promissory Note, the prevailing party shall, in addition to such other
relief as the court may award, be entitled to recover reasonable attorneys'
fees, expenses and costs of investigation.

IN WITNESS WHEREOF, the Maker hereby sets its hand and seal in the County of
Los Angeles, State of California, as of the date and year first above written.

THE MAKER:


OUT_TAKES, INC.                    ATTEST:

                                   [SEAL]
By: _________________________             By:
____________________
   Peter C. Watt                 Michael C.Roubicek
   President                        Secretary


           EXHIBIT B TO PURCHASE AND SALE AGREEMENT

                 SECURITY AGREEMENT

THIS SECURITY AGREEMENT (the "Agreement") is made and entered into as of this
___th day of August, 1998 by and between OUT_TAKES, INC., a corporation
organized and existing under the laws of the State of California (the "Grantor")
and the several individuals named on the signature page of this Agreement
(collectively, the "Secured Party").

WHEREAS, the Grantor and the Secured Party have entered into that certain
Purchase and Sale Agreement, dated as of August ___, 1998 (the "Purchase
Agreement"), pursuant to which Grantor has purchased (the "Acquisition") all of
the equity securities issued and outstanding of LOS ALAMOS ENERGY, LLC, a
California limited liability company (the "Subsidiary"); and

WHEREAS, the Grantor has delivered to the Secured Party, as the Purchase Price
for the Acquisition, a Secured Promissory Note in the amount of Four Million
Dollars ($4,000,000) dated as of even date herewith (the "Note"); and

WHEREAS, in order to induce the Secured Party to accept the Note as
consideration for the Acquisition, the Grantor has agreed to provide the Secured
Party with a security interest in and first lien upon all of its assets and the
assets of the Subsidiary, and the parties now desire to enter into this
Agreement to evidence the same;

NOW, THEREFORE, in consideration of the foregoing premises and the promises and
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1.    Grant
of Security Interest. Grantor hereby assigns, conveys and grants to Secured
Party a continuing security interest in and first lien upon all of Grantor's
right, title and interest in and to all of the assets and properties owned or
used by the Grantor in the conduct of its business, or the business of the
Subsidiary, now owned or hereafter acquired at any time during the term
hereof, whether tangible or intangible, fixed, movable or fixtures, of whatever
kind or nature and wherever located, including, without limitation, all cash and
cash equivalents, securities, accounts receivable, plant and equipment,
inventory, rolling stock, materials, supplies, intellectual property rights,
contract rights, choses in action, and any proceeds from the sale, lease,
transfer or other disposition of any of such assets, whether for cash or
property (all of the foregoing being herein referred to collectively as the
"Collateral").  The security interest granted herein is intended to secure the
prompt payment, when due, of all amounts due and payable to Secured Party under
the Note including, without limitation, all principal amounts due thereunder,
all interest accrued thereon, and all applicable late charges or other fees due
under the Note, as well as the performance in full of all of Grantor's
obligations under the Purchase Agreement (collectively, the "Secured
Obligations").

2.    Transfers and Other Liens. Grantor hereby acknowledges to, and agrees
with, Secured Party that for so long as this Agreement shall be in effect,
Grantor, without the prior written consent of the Secured Party, shall not:

(a)     sell, assign or otherwise dispose of, any or all of the Collateral
(except in the ordinary course of business); or

(b)     create or permit to exist or be created any lien, mortgage, security
interest, or other charge or encumbrance upon or with respect to the Collateral,
other than the Secured Obligations; or

(c)   move the Collateral from any location other than the Grantor's principal
place of business located at the address set forth in Section 6(b) below.

Remedies Upon an Event of Default.
_______________________________________
In the event that the Grantor shall fail to perform fully any Secured Obligation
on the date such performance is due, or if the Grantor should breach or be in
default of any other provision of the Note, the Purchase Agreement or this
Agreement (any of such occurrences being hereinafter referred to as an "Event of
Default"), to the extent that such Event of Default is not cured or waived
within ten (10) days after the occurrence of such Event of Default, then the
Secured Party shall be entitled to foreclose upon and take possession of the
Collateral, in satisfaction (full or partial as the case may be) of the
indebtedness owed by Grantor.  Promptly after retaking possession of the
Collateral upon any such foreclosure, the Secured Party shall, after deducting
therefrom any amounts expended by the Secured Party in enforcing the Note, the
Purchase Agreement or this Agreement and/or repossessing the Collateral
(including, without limitation, the cost of reasonable attorneys' fees), remit
to the Grantor the difference between the liquidation value of the Collateral on
the date of repossession thereof and the sum of any amounts paid to the Secured
Party to purchase the Collateral in a liquidating sale. The parties hereby
agree that any such payment to Grantor upon such foreclosure may be made in
stock of the Grantor or a five (5)_year promissory note bearing interest at the
rate of ten percent (10%) per annum, or some combination thereof, as determined
in the sole discretion of the Secured Party.

The Secured Party hereby agrees with the Grantor that, in the event it shall
exercise any or all of its remedies upon an event of default set forth in Clause
3(a) above, it shall look first to satisfy all of the Secured Obligations out of
the assets of the Subsidiary, which it shall exhaust as fully as reasonably
possible prior to looking to the assets of the Grantor to satisfy any remaining
Secured Obligations.


4.     Continuing Security Interest; Termination of Same.
      ______________________________________________________

(a)     This Agreement shall create a continuing security interest in the
Collateral, and shall (i) remain in full force and effect until all of the
Secured Obligations of Grantor shall have been paid or performed in full; (ii)
be binding upon the Grantor, its successors and permitted assigns; and (iii)
inure to the benefit of the Secured Party and their respective successors,
heirs, executors, administrators, transferees and assigns.

(b)   Upon the payment or performance in full of all Secured Obligations, and
any fees, costs and penalties owing thereon, the security interest granted
hereby shall automatically terminate. Upon any such termination, the Secured
Party shall execute and deliver to the Grantor such documents as the Grantor
shall reasonably request to evidence such termination and to effect the release
of the Collateral.

5.   Amendments and Waivers. No amendment or waiver of any provision of this
Agreement, the Purchase Agreement or the Note, and no consent to any departure
by the Grantor herefrom or therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the express
written purpose for which given.

6.    Notices. In the event that any notice or other communication is to be
sent pursuant to this Agreement, such notice shall be in writing, sent by telex
or by certified mail, return receipt requested, or by delivery in person, or by
overnight courier, addressed as follows, or to such other address as either
party may notify the other of in accordance with the provisions hereof:

      if to Secured Party, to: c/o Mr. Hannes Faul
                     466 Bell Street
                     Los Alamos, CA  93440

      (with a copy) to:     Feldhake, August & Roquemore
                     600 Anton Boulevard, Suite 1730
                     Costa Mesa, CA  92626
                     Attn: Kenneth S. August, Esquire
                        Partner


      if to Grantor, to:     OUT_TAKES, INC.
                     1419 Peerless Place
                     Suite 116
                     Los Angeles, CA  90035
                     Attn: Mr. Peter C. Watt
                     President

      (with a copy) to:     Photo Corporation Group
                     Pty. Limited
                     P.O. Box 415
                     Chester Hill, N.S.W.
                     Australia 2162
                     Attn: Mr. Michael C. Roubicek
                     Group Commercial Manager

All notices and other communications hereunder shall be deemed given
when telexed or delivered, or upon receipt if mailed, in accordance
with this paragraph.

7.    Further Assurances. Grantor agrees to execute and deliver immediately
upon request, financing statements on Form UCC_1 for recordation with the
California Secretary of State; and (b) such other documents as may be necessary
to perfect the Secured Parties' security interests in the Collateral.

8.    Entire Agreement. This Agreement, together with the Note, constitutes
the entire agreement between Grantor and Secured Party, with respect to the
subjects contained herein, and supersedes any prior agreements or
understandings, whether written or oral, express or implied.

9.   Governing Law; Venue. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without reference to
principles of conflicts of law. Any action brought by any party to enforce any
of the terms or provisions of this Agreement or the note, or otherwise in
connection with or relating to this Agreement, shall be brought only in the
courts of the State of California in the county of Los Angeles, and the parties
hereby accept the exclusive jurisdiction of such courts for all disputes arising
under this Agreement, the Purchase Agreement or the Note.

10.     Miscellaneous. All other provisions of the Purchase Agreement,
including, without limitation, the specific clauses setting forth the governing
law and venue of this Agreement, the right of further assurances, severability,
specific performance and other injunctive relief, and every other aspect of the
performance, interpretation relationship between the parties and other
miscellaneous provisions, are hereby incorporated herein by reference from the
Purchase Agreement, and are of force and effect as fully as if the same had been
repeated herein in their entirety.

IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed and
delivered as of the date first above written.

THE GRANTOR:

 OUT_TAKES, INC.               ATTEST:


 By: _____________________           By: _____________________
    Peter C. Watt                Michael Roubicek
    President                   Secretary



THE SECURED PARTY:

 LOS ALAMOS ENERGY, LLC           WITNESS:


    By:  ____________________________   By: ________________________
       Hannes Faul
       Managing Member



 THE INDIVIDUALS:                WITNESS:


 _____________________              ___________________

 _____________________              ___________________


EXHIBIT 10.33 ASSET LEASE AGREEMENT BETWEEN COMPANY AND COLORVISION,
INC. DATED OCTOBER 26, 1998
               ASSET LEASE AGREEMENT

This is an Asset Lease Agreement ("Agreement"), effective as of October __,
1998, by and between Colorvision International, Inc., a Florida
corporation, located at 8250 Exchange Drive, Suite 132, Orlando, Florida 32809
(hereinafter referred to as "Lessee") and Out_Takes, Inc., a Delaware
corporation located at 1419 Peerless Place, Suite 116, Los Angeles, California
90035 (hereinafter referred to as "Lessor").

                  BACKGROUND

Lessor owns and operates the Out Takes photo store (the "Business") located at
Universal Studios California City Walk (the "Location"). Lessee seeks to
lease from Lessor, and Lessor seeks to lease to Lessee certain of the assets of
the Business for use at the Location as set forth in this Agreement, subject to
the terms and conditions set forth below. Accordingly, in consideration of the
mutual covenants and agree_ments set forth below, the parties agree as follows:

                   TERMS

1.    LEASE OF ASSETS. The parties hereby agree that, at Closing (as defined
below), Lessor shall lease the assets of the Business set forth on Schedule 1 to
this Agreement (collectively the "Assets") provided, however, that within thirty
(30) days from the date of this Agreement they shall jointly prepare an item by
item list of the Assets being leased hereunder, and the agreed_upon value
thereof, which list will then be attached to this Agreement as a revised
Schedule 1.  Lessor further agrees that the Assets shall be used only at the
Location during the Lease Term, as hereafter defined. Upon the expiration of
the Lease Term, or its earlier termination, all of the Assets shall be returned
to Lessor hereunder in the same condition as they are being delivered to Lessee
at the Closing, normal wear and tear excepted, and free and clear of any lien,
charge, security interest, claim or other encumbrance. The Assets are being
leased to Lessee on an "as is_where is" basis, and Lessor makes no
representation or warranty to Lessee, express or implied, as to the condition of
any Asset or suitability to the Business or the contemplated use thereof by
Lessee.

Throughout the entire Lease Term, Lessee hereby agrees with and covenants to
Lessor that it shall not do any of the following, nor suffer or permit any of
the following to occur to the extent the same shall be within its discretion or
control, without having obtained the prior written consent of Lessor:

   (a)    sell, lease, sublease, exchange, transfer or otherwise dispose of
any of the Assets;

   (b)    subject any of the Assets to any lien, security interest or
encumbrance;

   (c)    take any action which would materially destroy, injure, alter or
modify any Asset, or the right of Lessor to use any Asset, or which would render
defective or otherwise encumber good and marketable title to any such Asset, to
the extent such title exists in respect of such Asset at the Closing.

2.   ASSIGNMENT OF LEASE. At Closing (as defined below), Lessor shall assign
and transfer to Lessee all of its right, title and interest in and to that
certain Business Lease executed as of November 13, 1992 ("Lease") between Lessor
and MCA Development Company, a division of MCA Inc. ("Landlord") pursuant to an
Assignment of Lease substantially in the form attached to this Agreement as
Exhibit "A" ("Assignment"), which Assignment requires the written consent of the
Landlord.

3.    LEASE PRICE. The rental price for the Assets (the "Lease Price") shall
be a monthly amount equal to seven percent (7%) of the gross revenues (less
applicable sales taxes due on goods sold at the Location) ("Gross Revenues")
derived by Lessee from the Business, or any other business conducted or engaged
in by Lessee at the Location during each month, or portion thereof, that Lessee
shall be in possession of the Assets, for the duration of the Lease, as
currently extended through May 30, 2005 (the "Lease Term"). In the event Lessee
ceases to conduct any business at the Location: (i) for reasons of bankruptcy or
insolvency, (ii) acts of God, emergencies, strikes or other causes out of
Lessee's control; (iii) any loss of the right of Lessor to lease the Assets to
Lessee prior to the conclusion of the Lease Term; or (iv) any termination of
Lease by Landlord if through no fault of the Lessee, then no further payments
shall be due Lessor hereunder from the date Lessee ceases to operate at the
Location until Lessee resumes business at the Location, if such a resumption of
business occurs.  Lessee acknowledges to Lessor by its execution of this
Agreement that it intends in good faith to operate at the Location profitably in
accordance with the Lease, and shall use its best efforts throughout the Lease
term to do so, and Lessor acknowledges to Lessee that it understands such
profitable operation cannot be guaranteed.

4.    PAYMENT OF LEASE PRICE. Subject to the terms of this Agreement and in
reliance on the representations and warranties of Lessor set forth below, Lessee
shall lease, at Closing, the Assets and, in full consideration therefor, shall:

   (a)     pay $50,000.00 as a deposit ("Deposit") to Lessor at Closing.
Lessee shall have the option of making the payment by cashier's check or bank
wire.  Lessor shall provide bank wire instructions to Lessee if requested by
Lessee; and

   (b)   pay the entire amount of the Lease Price due and payable to Lessor
(together with the applicable amount of any taxes as may be required in
connection with payments of the Lease Price) on or before the fifteenth day of
the month following each month of the Lease Term; provided, however, that Lessee
may deduct up to $4,166.67 each month from any sum otherwise payable to Lessee
pursuant to this subsection 4(b) until the entire amount of the Deposit has been
repaid to Lessee; further provided that the amount of any security deposits
shown on Schedule 2 to this Agreement which are transferred to, or credited to
the account of, Lessee by the holders of such deposits shall be deemed
repayments of the Deposit to Lessee and shall thereby reduce, by a corresponding
amount, any deductions from the Gross Revenues otherwise payable to Lessor which
Lessee may make pursuant to this Subsection 4(b).

5.    LICENSE TO USE TRADE NAME. In further consideration of the payment
of the Lease Price to Lessor as set forth above, the Lessor hereby grants to
Lessee a license (the "License") to use the trade name "Out_Takes" (the "Trade
Name") only in connection with the Business at the Location and for so long as
Lessee operates the Business at the Location. Lessee shall have no right to
use the Trade Name in connection with any other present or future operations of
Lessee. Lessee recognizes and acknowledges Lessor's ownership of and prior
rights in the Trade Name and shall not take any action inconsistent with
Lessor's ownership of and prior rights in the Trade Name or which would
otherwise destroy or impair Lessor's interest in such rights.

Notwithstanding any other provisions contained in this Agreement concerning the
rights of Lessor to indemnification hereunder, and without limiting or
excluding any of such rights, Lessee hereby expressly agrees with Lessor that in
the event Lessor shall be named in any lawsuit or other proceeding solely by
virtue of Lessee's use of the Trade Name hereunder (and not in connection with
any actual liability or specific claim against Lessor in such lawsuit or
proceeding), then Lessee shall provide to the Lessor directly, and promptly upon
its request therefor, the full amount of any fees or expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by Lessor
in having itself dismissed from any such action.

The license to use the Trade Name granted hereunder shall be co_ terminous
with the Lease Term or such shorter period as Lessee shall actually operate the
Business at the Location. Lessor agrees that, for so long as this Agreement
shall be in effect, it shall not take any action, or omit to take any action
which would have the effect of impairing any of Lessor's rights in the Trade
Name, or the value thereof to Lessor. Lessor covenants that it shall not enter
into any agreement, arrangement or undertaking, the effect of which would be to
result in the transfer, assignment, mortgage, hypothecation, dilution or
extinguishment of the Trade Name or any rights of Lessor therein.

6.    CLOSING. The closing of the transaction contemplated by this Agreement
(the "Closing") shall take place in Los Angeles, California on October ___,
1998, or such other date and/or place as the parties mutually agree in writing
(the "Closing Date").

7.     DELIVERIES BY LESSOR. At Closing, Lessor shall deliver to Lessee:

   (a)     an originally executed copy of this Agreement;

   (b)     the Assignment, duly executed by Lessor;

   (c)     a certificate of actions by Board of Directors of Lessor
authorizing the transaction contemplated by this Agreement to be undertaken by
Lessor.

8.   DELIVERIES BY LESSEE. At Closing, Lessee shall deliver to Lessor (1) an
originally executed copy of this Agreement; (2) the Deposit in accordance with
subsection 4(a) hereof; (3) the Assignment, duly executed by Lessee; and (4) a
certificate of action by the Board of Directors of Lessee authorizing the
transactions contemplated by the Agreement to be undertaken by Lessee.

9.   LIABILITIES OF LESSOR. Except with respect to the Assignment and except
as provided in Schedule 3 to this Agreement, Lessee will not assume any trade
and accounts payable that are, or have become due for payment as of the Closing
date or any other liabilities not incurred by Lessor in the ordinary course of
business through the Closing Date.  Without limiting the generality of the
foregoing, Lessee will not assume intercompany liabilities, payables or
obligations of Lessor, nor will it assume any of Lessor's liabilities or
obligations arising out of employment agreements between Lessor and any of
Lessor's employees or Lessor's liabilities or obligations relating to the
negotiation and/or closing of the transaction contemplated herein including, but
not limited to, any broker commission payable in connection with the
transaction.  Lessee shall be solely and exclusively liable for, and Lessor
expressly does not agree to assume any of the obligations created or liabilities
imposed upon Lessee by virtue of its use of the Assets after the Closing.
Lessee further covenants to and agrees with Lessor that in the use of the Assets
as contemplated herein, it shall not disturb any agreement to which such Assets
are subject nor by which they are bound, nor create, nor suffer or permitted to
be created or imposed, any lien, charge or other liability to, upon or for the
account of, Lessor.

10.     INDEMNIFICATION.

   (a)   Except as otherwise contemplated herein, Lessor shall indemnify and
hold Lessee harmless from, against, and in respect of the following:

     (i)     any and all liabilities, obligations, debts, contracts or
other commitments of Lessor of any kind, known or unknown, whether fixed or
contingent, and whether arising in contract, in tort, or otherwise from the
operation of the Business at the Location prior to Closing including, but not
limited to, any liability of Lessor for sales and use taxes;

     (ii)   any damage or deficiency resulting from any misrepresentation
in or omission from any certificate or other instrument furnished or to be
furnished to Lessee by Lessor pursuant to this Agreement;

     (iii)     any and all losses, liabilities, claims, damages and
expenses, including court costs and reasonable attorney's fees, arising out of
any claim for brokerage or other commissions relative to this Agreement or the
transactions contemplated hereby insofar as any such claim arises by reason of
services alleged to have been rendered to or at the instance of Lessor;

     (iv)     any material breach by Lessor of this Agreement;
and
      (v)     all actions, suits, proceedings, claims, demands, assessments,
judgments, legal fees, costs and expenses incident to any of the foregoing or
arising out of any act or omission of Lessor in the conduct of the Business
before the Closing.
   (b)   Lessee shall indemnify and hold Lessor harmless from, against, and
in respect of the following:

     (i)     any and all liabilities, obligations, debts, contracts or other
commitments of Lessee of any kind, known or unknown, whether fixed or
contingent, and whether arising in contract, in tort, or otherwise from the
operation of the Business (or any other business or activity conducted) at the
Location after the Closing including, but not limited to, any liability of
Lessee for sales and use taxes and any use of the Trade Name at any location by
Lessee in breach of Section 5 hereof; and

     (ii)     any material breach by Lessee of this Agreement.

     (iii)   any liability or obligation arising out of the inclusion in the
list of Assets of the license agreements set forth on Schedule 1 hereto,
including without limitation for the failure of Lessor to obtain the consent of
any licensor thereunder prior to leasing such licenses to Lessee, or any
liability or obligation which may be agreed upon between Lessee and any of such
licensors subsequent to the date of the Closing.

   (c)     Each party agrees to give notice to the other party of the assertion
of any claim or demand or the institution of any action, suit, or proceeding in
respect of which indemnification may be claimed hereunder and the party
receiving such notice shall have the right to undertake the defense or
settlement of such action, suit or proceeding ("Litigation") at it's own
expense.  If the party receiving such notice does not undertake (or, within ten
(10) days thereafter, express its intention to so undertake) the defense or
settlement of the Litigation, the party giving such notice may control the
defense or settlement of the Litigation, provided, that if at any time during
the pendency of such Litigation it shall be deemed in good faith by either
party, or its respective counsel, that the interests of the respective parties
in respect of such Litigation are or may become adverse, or otherwise conflict
in any material way, then each party shall be entitled to separate counsel
thereafter, and, provided, further, that in no event shall either party be
entitled to make any offer or agreement of settlement in respect of any  such
Litigation which is or will or could become binding upon the other party hereto,
without having obtained such other party's prior written consent to be bound
thereby. In the event Lessee is controlling the defense or settlement of
Litigation pursuant to this Subsection 10(c), and provided that Lessor is not
entitled to indemnification in respect of such Litigation pursuant to Section
10(b) above, Lessor hereby authorizes Lessee to deduct the costs of such defense
or settlement from any sums due Lessor pursuant to subsection 4(b) hereof. In
the event such costs exceed any sums due Lessor pursuant to subsection 4(b)
hereof, Lessor shall remit the amount of such costs directly to Lessee.

(d)   Notwithstanding anything else contained in this Section 10, Lessee shall
promptly notify Lessor in the manner set forth in Section 16(d) below in the
event it becomes aware of any threatened or pending litigation involving or
relating to the Business, any other business or activity conducted at the
Location, the Assets (or any part thereof) or the Lease.

11.     REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor represents and warrants
to Lessee as follows:

   (a)   Organization and Standing. Lessor is a corporation organized under the
laws of the State of Delaware and its status is active.

   (b)   Power and Authority. Lessor has the requisite corporate authority to
enter into this Agreement and to incur and perform its obligations under this
Agreement.  Lessor has all necessary corporate power to own, lease, hold, and
operate all of its properties and assets and to carry on the Business as it is
now being conducted. The execution, delivery and performance by Lessor of this
Agreement has been authorized by all necessary corporate action. Upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding agreement of Lessor, enforceable against Lessor in accordance
with its terms, subject only to applicable bankruptcy, moratorium and similar
laws.
   (c)     Title to Assets. Except for any licenses listed on Schedule 7 hereto
with respect to which Lessor makes no representation or warranty as to title,
quality or validity thereof, Lessor has good and marketable title to all of the
Assets, free and clear from all liens, encumbrances, security interests or
claims of any kind or nature, other than liens incurred in the ordinary course
of the Business for trade or in connection with the purchase of assets, or for
services rendered to Lessor by materialmen or other similar persons, or for
taxes not yet due and payable, or which otherwise do not have a material adverse
impact upon the financial condition of the Business. With respect to any
security interests by a third party in the Assets, Lessor shall deliver to
Lessee at closing (or as soon thereafter as Lessor may become aware thereof) a
copy of a duly filed UCC Form 3 terminating the security interest of any third
party in the Assets.

   (d)   Approvals and Consents. The execution, delivery and performance of this
Agreement (and the transactions contemplated by this Agreement) do not and will
not:  (i) contravene any provision of the articles of incorporation or bylaws of
Lessor; (ii) result in a material breach of, constitute a material default
under, result in the modification or cancellation of, or give rise to any right
of termination, modification or acceleration in respect of any indenture, loan
agreement, mortgage, lease or any other contract, or agreement to which Lessor
or any of the Assets are bound (other than in respect of the Lease); (iii) other
than as may apply to Lessee, result in the creation of any security interest,
pledge, lien, charge, claim, option, right to acquire, encumbrance, restriction
on transfer, or adverse claim of any nature whatsoever upon any of the Assets;
(iv) violate any writ, order, injunction or decree of any court or any federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality, which violation or default
in any such case would have a material adverse effect on the Business; (v)
require approval of the shareholders of Lessor; or (vi) require any
authorization, consent or approval of, or filing with or notice to, any
governmental or judicial body or agency, or any other entity or person,
including, without limitation, any filing with the Securities and Exchange
Commission ("SEC") other than any obligation Lessor may have to file a Form 8_ K
as contemplated by Section 15 of this Agreement.

   (d)   Litigation. There are no actions or suits at law or in equity now
__________ pending or, to the actual knowledge of Lessor, threatened which could
have a material adverse effect on the Business or any of the Assets, or the
ability of Lessor to consummate the transactions  contemplated by this
Agreement.

   (e)     Collective Bargaining Agreements. There are no collective
__________________________________ bargaining agreements to  which Lessor is a
party or by which Lessor is bound, and there is no pending or threatened labor
dispute, labor union organizing attempt, strike, or work  stoppage affecting
either Lessor or the Business.

   (f)   Benefit Plans. There are no benefit plans applicable to any of the
         _____________
employees of the Business that are currently in effect or which, with respect to
the Business, Lessor has committed to implement prior to the Closing, except as
shown on Schedule 4 to this Agreement.

   (g)     Contracts.  Schedule 5 to this Agreement lists all material contracts
(including contracts with consultants), leases (where Lessor is lessor or
lessee) except the Lease, licenses, agreements, and undertakings of Lessor to
which it is or at the Closing Date will be a party and bound, or to which any of
its properties or Assets are or will be subject, and, if written, Lessor shall
have supplied Lessee with copies of such documents. Except as shown on Schedule
6 to this Agreement, each such contract, undertaking or other commitment listed
in Schedule 5 is, and upon the Closing will be (except as completed or expired
by its terms), valid and enforce_able in accordance with its terms, and no party
is in default under any material provision thereof.

   (h)     Trade Name.  Lessor has adopted and uses the Trade Name in connection
with the Business. Lessor has not been notified that Lessor's use of the trade
name or logo infringes the rights of a third party. No proceedings have been or
will at the Closing Date have been instituted or threatened which assert
infringement of rights of any third party against Lessor pursuant to its use of
the Trade Name.

   (i)     Compliance with Laws. As of the date of this Agreement, to the actual
knowledge of Lessor, (i) there is no violation of any applicable laws,
regulations or orders relating to the conduct of the Business, and (ii) there is
no use of the Assets by Lessor in the Business which violates any applicable
laws, codes, ordinances and regulations, whether federal, state or local, which,
in either case, would have a material adverse effect on  the Business.

   (j)     Conditions Affecting the Business. Other than as applicable to Gerry
Wersh, who is deemed to be essential to the technical aspects of the Business as
currently being conducted, Lessor is not aware of any extraordinary or unusual
conditions in existence on the date hereof with respect to the markets,
services, facili_ties, personnel, or supplies of Lessor that is not public
information or known generally in Lessor's industry or which has not been
disclosed in writing to Lessee and which Lessor believes will result in a
material and adverse effect on the Business not experienced by others in similar
businesses.

   (k)   No Misrepresentations. None of the representations and warranties of
Lessor set forth in this Agreement or in the attached exhibits and schedules nor
any information or statements contained in the lists or documents provided or to
be provided by Lessor to Lessee, notwithstanding any investigation thereof by
Lessee, contains or will contain any untrue statement of a material fact, or
omits or will omit the statement of any material fact necessary to render the
same not misleading.

   (l)    Conveyance Not Fraudulent. Lessor is not making the transactions
contemplated by this Agreement with the intent to hinder, delay, or defraud
either its present or future creditors.

   (m)   Discontinuance of Business. Upon consummation of the transactions
contemplated hereby, Lessor will discontinue its operation of the Business, but
not of any other business owned or operated by Lessor.

12.     REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and warrants
to Lessor as follows:

   (a)    Organization and Standing. Lessee is a corporation organized and
existing under the laws of the State of Florida and its status is active.

   (b)   Power and Authority. Lessee has the requisite corporate authority to
enter into this Agreement and to incur and perform its obligations under this
Agreement.  Lessee has all necessary corporate power to own, lease, hold, and
operate the Assets and carry on the Business as it is now being conducted. The
execution, delivery, and performance by Lessee of this Agreement has been
authorized by all necessary corporate action. Upon the execution and delivery of
this Agreement, this Agreement shall constitute a valid and binding agreement of
Lessee, enforceable against Lessee in accordance with its terms, subject only to
applicable bankruptcy, moratorium, and similar laws.

   (c)   Approvals and Consents. The execution, delivery and performance of this
Agreement (and the transactions contemplated by this Agreement) do not and will
not: (i) contravene any provision of the articles of incorporation or bylaws of
Lessee; (ii) result in a breach of, constitute a default under, result in the
modification or cancellation of, or give  rise to any right of termination,
modification, or acceleration in respect of any indenture, loan agreement,
mortgage, lease or any other contract, or agreement to which Lessee is bound;
(iii) require any authorization, consent or approval of, or filing with or
notice to, any governmental or judicial body or agency, or any other entity or
person.

   (d)   No Misrepresentations. None of the representations and warranties of
Lessee set forth in this Agreement or in the attached exhibits and schedules,
nor any information or statements included in the lists or documents to be
provided by Lessee to Lessor, notwithstanding any investigation thereof by
Lessor, contains or will contain any untrue statement of a material fact, or
omits or will omit the statement of any material fact necessary to render the
same not misleading.

(e)   Brokers' Fees. Lessee has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.

13. SURVIVAL OF PROVISIONS. All representations, warranties, agreements,
covenants, assignments and licenses made or granted herein by Lessor or  Lessee
in connection with the transactions contemplated by or set forth in this
Agreement or contained in any certificate, schedule, exhibit, or other document
delivered pursuant to this Agreement shall survive the Closing.

14.     DISCLOSURE AND NON_INTERFERENCE. The parties agree not to make any
independent press releases or to disclose the terms of this Agreement except to
their attorneys and other necessary parties.  The parties further agree to
prepare and issue a mutually agreeable press release upon Closing of this
transac_tion, provided that Lessee understands that Lessor may be obligated to
file with the SEC on Form 8_K within five days following the Closing. Further,
the parties agree not to interfere in each other's businesses, nor to make any
statements which would adversely impact the other's business interests.
15.     RELATIONSHIP CREATED; INDEPENDENT CONTRACTOR. No provision of this
Agreement is intended to make Lessee an employee or agent of Lessor for any
purpose whatsoever, nor shall the execution of this Agreement be deemed to
create any partnership, joint venture or other form of business association
between the parties other than that of independent contractors.  Lessor
acknowledges that it shall not have the right to require Lessee to make any
specific amount or number of sales, to attend sales meetings, to conform to any
fixed or minimum number of hours devoted to selling effort, to follow prescribed
itineraries, or do anything else which would jeopardize the relationship being
created between the parties. Notwithstanding the foregoing, Lessor shall have
the right to request Lessee to, and Lessee shall, provide Lessor with such
reports or information regarding the Assets as Lessor may reasonably request
from time to time during the Lease Term.

16.     GENERAL PROVISIONS.

   (a)     Further Assurances. The parties agree that, from time to time
hereafter and upon request, each of them will execute, acknowledge and deliver
such other instruments as may be reasonably required to carry out the terms and
conditions of this Agreement.

   (b)    Benefit and Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.  The rights of Lessee hereunder may not be assigned without the prior
written consent of Lessor which shall not unreasonably be withheld. The rights
of Lessor hereunder may be assigned, provided that any such assignment shall in
no way relieve Lessor of its obligations and responsibilities to Lessee under
this Agreement.

   (c)     Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, excluding
those laws of California relating to conflicts of laws of different
jurisdictions.  The parties hereby expressly submit to the jurisdiction of any
court of competent jurisdiction sitting in and for the County of Los Angeles,
State of California.

(d)     Notices.  All notices, requests, demands and other communications
hereunder shall be in writing, and shall be deemed to have been duly given if
delivered by overnight delivery service or hand delivered, addressed as follows:

     If to Lessor:

        Out_Takes, Inc.
        1419 Peerless Place, Suite 116
        Los Angeles, California  90035

     With a copy (which shall not constitute notice) to:

        Feldhake, August & Roquemore
        600 Anton Boulevard, Suite 1730
        Costa Mesa, California 92626
        Attention:  Kenneth S. August, Esquire

     If to Lessee:

        Colorvision International, Inc.
        8250 Exchange Drive, Suite 132
        Orlando, Florida 32809

     With a copy (which shall not constitute notice) to:

        Holland & Knight LLP
        Post Office Box 1526
        Orlando, Florida  32802
        Attention:  John R. Dierking, Esquire

   (e)    Expenses. Any expenses in connection with this Agreement or the
transactions contemplated herein shall be paid for by the party incurring such
expenses following the Closing.  Lessee shall not assume any obligations of
Lessor, nor Lessor assume any obligations of Lessee, in connection with any such
expenses.

   (f)    Sales and Other Taxes. Any sales and other applicable taxes with
respect to the lease of the Assets hereunder shall be borne by Lessee, and shall
be paid by Lessee as and when such taxes become due consistent with the lease of
the Assets set forth on Schedule 1 attached hereto.

   (g)     Headings.  All paragraph headings herein are inserted for convenience
only and shall not modify or affect the construction or interpretation of any
provision of this Agreement.

   (h)    Counterparts; Faxes. This Agreement may be signed in one or more
counterparts, each of which shall be considered an original copy but all of
which together shall be deemed to be but one and the same instrument.  Wherever
in this Agreement an original signature shall be required, a facsimile of an
original signature shall be deemed an original signature for all purposes.

   (i)     Schedules and Exhibits. The schedules and exhibits attached to this
Agreement are hereby incorporated herein as an integral part hereof as fully as
if they had been written into the body of this Agreement in their entirety.

   (j)     Amendment, Modification and Waiver.  This Agreement may be modified,
amended and supplemented only by the mutual written agreement of both of the
parties hereto. Each party may waive in writing any condition intended to be for
its benefit.

   (k)    Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement which shall remain in full force and
effect, nor shall the invalidity or unenforceability of a portion of any
provision of this Agreement affect the validity or enforceability of the balance
of such provision.

   (l)    Entire Agreement. This Agreement and the Schedules and Exhibits
delivered herewith represent the entire Agreement of the parties and supersede
all prior negotiations and discussions by and among the parties hereto with
respect to the subject matter hereof. No provision or document of any kind shall
be included in or form a part of this Agreement unless in writing and delivered
to the other party by the party to be charged. This agreement supersedes and
replaces the Letter which shall terminate upon the execution of this Agreement
by the parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year set forth above.

LESSOR:

OUT_TAKES, INC.                         ATTEST:

By:                      By:
__________________________
   James C. Harvey                      James C.
Harvey
   President
Secretary

LESSEE:

COLORVISION INTERNATIONAL, INC.          ATTEST:



By:     _____________________________          By:
__________________________
   President
Secretary

   EXHIBIT "A"

     ASSIGNMENT, ASSUMPTION OF LEASE AND LANDLORD CONSENT AGREEMENT

THIS AGREEMENT is made and entered into as of this ___ day of October, 1998 by
and between Out_Takes, Inc. ("Assignor"), Colorvision International, Inc.
("Assignee") and Universal CityWalk Hollywood, a Unit of Universal Studios,
Inc., as successor in interest to MCA Development, a division of MCA Inc.
("Landlord").
                              R E C I T A L S

A. Landlord and Assignor, as Tenant, entered into that certain written Lease
dated as of November 12, 1992 (" 1992 Lease") pursuant to which Landlord leased
to Assignor certain premises located in Universal City, California as described
in such 1992 Lease (the "Premises"), which was subsequently amended by that
certain First Amendment to Lease dated March, 1993. The 1992 Lease and the First
Amendment to Lease are collectively referred to herein as the "Lease".

   B. Simultaneously as of November 13, 1992 Guarantor executed and delivered a
Guarantee of Lease (the "Guarantee") with respect to Assignor's obligations
under the 1992 Lease, which Guarantee remains in full force and effect.

   C. Effective as of the date first written above, Assignor wishes to assign
and Assignee wishes to accept such assignment and assume all of Assignor's
rights and obligations under the Lease.

   NOW, THEREFORE, in consideration of the above and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:

1.  Assignor hereby assigns, conveys and transfers all of its right, title and
interest in the Lease, a copy of which is attached and incorporated herein by
reference.

   2.  Assignee hereby assumes, agrees to be bound by and undertakes to perform
each and every one of the terms, covenants and conditions contained in the
Lease. The Assignee further assumes all obligations and liabilities of the
Assignor under the Lease in all respects as if Assignee were the original party
to the Lease.

3.   Assignee shall be liable for all amounts due under the Lease on or after
the date hereof. In the event of a default under the Lease, Lessor shall have
the right to proceed directly and immediately against the Assignee without first
proceeding against the property and such proceeding is not deemed to be an
irrevocable election of remedies.

4.     Subject to the terms and conditions herein, Lessor consents to the
assignment of the Lease from Assignor to Assignee. Assignor acknowledges that
this consent by Lessor is given without releasing Assignor from its obligations
under the Lease. This consent by Lessor shall not be deemed to be or construed
as a consent to any subsequent assignment of the Lease.

5.  Assignee and Lessor agree that Assignee shall replace Robert Shelton as
Guarantor under said Lease, and shall assume all obligations of Guarantor
consistent with the terms of the Lease.

 6.   Assignee shall deposit with Lessor a Security Deposit of two months
Minimum Rent (as defined in the Lease) in the amount of Twenty Thousand Seven
Hundred Forty Five Dollars and Seventy Cents ($20,745.70). Landlord hereby
agrees that, notwithstanding the foregoing, Assignor shall transfer its Security
Deposit currently held by Landlord in the amount of Eighteen Thousand Seven
Hundred Twenty Two Thousand Dollars Sixty Six Cents ($18,722.66), less any
amounts owed to Landlord prior to the Effective Date, to Assignee's Security
Deposit account, and Assignee shall remit to Landlord on or before the Effective
Date any balance remaining in order to satisfy the Security Deposit requirement
of Assignee.

7.   Assignor represents, warrants and agrees that all furniture, fixtures and
equipment which are the property of Assignor (including but not limited to
property which Assignor leases to Assignee as part of the assignment
transaction) and used in the Premises will be owned by Assignor, free and clear
of any lien or encumbrance, and further that in the event of a default by
Assignee which results in the loss of the right of Assignee to occupy the
Premises and the re_entry by Assignor, all of Assignor's furniture, fixtures and
equipment located in the Premises will be left in the Premises for Assignor's
use without compensation until the obligations of Assignor to Landlord under the
Lease have been satisfied.

8.    Except as modified hereby, all terms and conditions of the Lease shall
remain in full force and effect.

   9.  All of the terms and provisions of this Agreement shall be binding and
shall insure to the benefit of the parties, their respective successors and
assigns.

   IN WITNESS WHEREOF, the parties have caused this instrument to be executed
as of the date first written above.

ASSIGNOR:     OUT_TAKES, INC.


By  ________________________________
Name: ______________________________
Title: _______________________________





ASSIGNEE:  Colorvision International, Inc.


By:  ________________________________
Name: ______________________________
Title: _______________________________



LANDLORD: Universal CityWalk Hollywood,
a Unit of Universal Studios, Inc.



By:___________________________________
   Larry Kurzweil
   Senior Vice President & General Manager



   SCHEDULE 1

   ASSETS OF BUSINESS


1.    All items remaining in the Out Takes store at Universal City Walk as of
October ___ , 1998, excluding the Sticker Machine belonging to paradise
Creations.

2.     All items remaining in the Panorama City storage facility including
equipment previously used by Lessor in operating its Irvine, California
location.

3.     The licenses listed on Schedule 7 hereof.

   [The parties shall prepare a definitive list of the above_referenced Assets
being leased hereunder within thirty (30) days from the date of this Agreement
in accordance with the provisions of Section 1 hereof.]

    SCHEDULE 2

   SECURITY DEPOSITS


     City Walk premises deposit        $18,722.66     Board
of Equalization deposit                $ 1,000.00
     City Walk electricity deposit     $   700.00
   SCHEDULE 3

   LIABILITIES OF LESSOR TO BE ASSUMED BY LESSEE

Lessee assumes all liabilities in connection with royalties on the below
named contracts, as of October ___, 1998. Lessee will assume financial
responsibility and liability for any and all existing or future guarantees or
other commitments in respect of the below named contracts:

 1.     MTV Networks
 2.     King Features
 3.     Stan Gorman
 4.     Young Kwon
 5.     Simon Kornblit
 6.     Gerry Wersh/Watkins
 7.     20th Century Fox
 8.     Curtis Archives
 9.     CMC
10.     Universal Studios
11.     Tony Stone Images
12.     Paramount
13.     JP Morgan
14.     Queen B
15.     Saban
16.     Baywatch
17.     Warner Brothers

   SCHEDULE 4

   BENEFIT PLANS OF LESSOR

1.   Group health insurance plan in effect as of September 30, 1998

   SCHEDULE 5

   SCHEDULE OF CONTRACTS

1.     License Agreements listed on Schedule 3

   SCHEDULE 6

   CONTRACT DEFAULTS

License agreements with:

1.     JP Morgan
2.     20th Century Fox
3.     Curtis Archives
4.     CMC
4.     Universal Studios
6.     Warner Brothers



   SCHEDULE 7

   LICENSE AGREEMENTS

 1.     MTV Networks
 2.     King Features
 3.     Stan Gorman
 4.     Young Kwon
 5.     Simon Kornblit
 6.     Gerry Wersh/Watkins
 7.     20th Century Fox
 8.     Curtis Archives
 9.     CMC
10.     Universal Studios
11.     Tony Stone Images
12.     Paramount
13.     JP Morgan
14.     Queen B
15.     Saban
16.     Baywatch
17.     Warner Brothers


                              OUT TAKES, INC.


                             WRITTEN CONSENT
                                 of the
                              SOLE DIRECTOR


                             October 26, 1998

This Written Consent of the Sole Director of Out Takes, Inc., a Delaware
Corporation (the "Corporation") is made as of the date set forth above in
accordance with the Bylaws of the Corporation. The Sole Director hereby
consents, pursuant to the provisions of Section 141(f) of the Delaware
Corporations Code, to the adoption of the following Resolutions, effective as of
5:00 p.m. on October 26, 1998, which are to be filed with the Minutes of the
Board of Directors:

WHEREAS, it is in the best interests of the Corporation to lease to others
certain of its assets; and

WHEREAS, it is in the best interests of the Corporation to divest itself of
certain of its liabilities:

RESOLVED, that the Corporation enter into an Asset Lease Agreement with
Colorvision International, Inc.

FURTHER RESOLVED, that all of the actions taken by the executive officers of
the Corporation since the last meeting of the Board of Directors are hereby
specifically authorized, ratified and approved by the Sole Director.

APPROVED:



____________________
James C. Harvey
Sole Director

EXHIBIT 14(a)2FORMER INDEPENDENT AUDITOR'S REPORT

             INDEPENDENT AUDITOR'S REPORT

The Stockholders and Board of Directors of
  Out_Takes, Inc.
  Los Angeles, California


We have audited the accompanying balance sheets of Out_Takes, Inc. as of March
31, 1998 and 1997, and the related statements of operations, stockholders'
equity, and cash flows for each of the three fiscal years in the period ended
March 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Out_Takes, Inc. as of March 31,
1998 and 1997 and the results of its operations and its cash flows for each of
the three fiscal years in the period ended March 31, 1998, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 14 to the
financial statements, the Company has suffered recurring losses from operations
and has a net working capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 14. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Moore Stephens, P.C.
Certified Public Accountants
Cranford, New Jersey
May 20, 1998







                                 OUT_TAKES INC.

                                 BALANCE SHEETS

                    ASSETS                   March 31,
                                             1998        1997
Current Assets:
 Cash and Cash Equivalents               $  23,044      $ 70,908
 Inventory                                  10,082        22,879
 Due from Related Party                     _              7,343
 Prepaid Insurance                           8,949        10,796
 Prepaid Taxes                               3,005         7,829
 Other Current Assets                        9,564         8,132
                                          ___________    _________
 Total Current Assets                    $  54,644      $127,887

Plant & Equipment _ Net                     204,148      845,198

Other Non_Current Assets:
 Deposits                                    27,048       38,378
                                         ___________    __________

   Total Assets                          $ 285,840     1,011,463
                                         ===========   ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Accounts Payable                   $   31,173          $113,803
 Accrued Payroll                        22,047            42,868
 Accrued Expenses                      108,819           104,331
 Accrued Interest _ Related Party       56,452             7,871
 Provision for Studio closure           31,878                _
 Compensation payable _ Related Parties  1,347           115,375
 Due to Related Party                  721,227           260,500
                                      ___________     ___________
 Total Current Liabilities          $  972,943        $  644,748

Non_Current Liabilities:
 Notes Payable                      $   48,000        $   48,000
 Compensation payable _ Related Parties     _              5,962
                                      ___________     ___________
 Total Non_Current Liabilities      $   48,000        $  53,962

 Commitments (Note 8)                      _                 _

Stockholders' Equity (Deficit):
 Preferred Stock, par value $.01 per share;
  5,000,000 shares authorized, none issued     $  _   $       _

 Common Stock, par value $.01 per share;
  35,000,000 shares authorized; 20,788,122
  shares issued of which 292,396 shares
  are in Treasury                     207,882           207,882

 Capital in excess of par value     9,905,430        10,014,980

 Accumulated deficit              (10,740,009)       (9,657,703)
                                   ___________       ___________

 Total                             ($ 626,697)       $  565,159

 Less: Treasury Stock, at cost       (108,406)         (108,406)
   Deferred Compensation          _  (144,000)
                                   ___________       ___________

Total Stockholders' Equity (Deficit ($ 735,103)      $  312,753
                                   ___________       ___________

   Total Liabilities and
   Stockholders' Equity             $  285,840       $1,011,463
                                   ===========       ===========

                                 OUT_TAKES INC.

                           STATEMENTS OF OPERATIONS

                           Years ended March 31,
<S>                       <C>       <C>       <C>
                       1 9 9 8    1 9 9 7   1 9 9 6
                       _______    _______   _______

Revenues            $  1,187,638  $ 2,014,788 $ 1,580,712
                    _____________  ___________ ___________

Cost of Revenues:

 Compensation and Related Benefits      524,276    712,939   548,137
 Depreciation and Amortization          420,317    359,123   249,249
 Loss on Impairment of Long_Lived
  Assets                                     _          _      762,129
 Pre_Opening Costs _ Irvine Studio           _          _       67,007
 Rent                                   236,192    300,857     210,639
 Loss on closure of Irvine Studio       164,745         _        _
 Other Cost of Revenues                 383,354    553,011     378,967
                                     ____________ ___________ ___________

 Total Cost of Revenues               1,728,884  1,925,930   2,216,128
                                     ______________________ ___________

   Gross Income (Loss)                 (541,246)    88,858    (635,416)
                                     ____________ ___________ __________

General and Administrative Expenses:

 Compensation and Related Benefits      125,571    309,630     313,432
 Professional Fees                       91,218    100,777     206,979
 Management Fee _ Related Party          31,200    131,000     130,000
 Rent of Offices                         33,300    39,558      29,524
 Depreciation and Amortization           92,960    91,663     128,907
 Other G & A Expenses                   114,626   115,458     106,982
                                    ___________  _________   _________

 Total Expenses               488,875    788,086   915,824
                    _____________  ___________ ___________

   Loss from Operations         (1,030,121)   (699,228) (1,551,240)

Other Income (Expense)
 Interest income                       224          484      3,035
 Interest expense                     (210)      (3,423)        (7)
 Interest expense _ Related Parties(52,199)     (51,179)   (28,272)
                                   ________     ________   _________

   Total Other Income (Expense)    (52,185)     (54,118)   (25,244)
                                   ________    _________   _________

Net Loss                      ($ 1,082,306)  ($ 753,346)($1,576,484)
                               ============  =========== ===========

Net Loss Per Share (Basic and
 Diluted)                       ($    0.05) ($     0.05)($     0.16)
                                ===========  =========== ===========

Weighted Average Common Shares
 Outstanding                     20,495,726  14,824,881   9,567,748
                                 ==========  =========== ===========

<CAPTION>

</TABLE>
<TABLE>

                      Consolidated Statement of Stockholders' Equity


                              Common Stock        Capital
                               ____________
                            Number of           in Excess of Accumulated
Treasury  Deferred
                             Shares     Amount   Par Value     Deficit
Stock Compensation    Total
                             ______     ______   _________     _______
_____ ____________    _____
<S>                           <C>         <C>       <C>          <C>
<C>
Balance _ March 31, 1996  11,168,122  $111,682 $ 9,071,180  ($ 8,904,357)
($108,406)($144,000)  $   26,099

Cash Proceeds from
 Issuance of Stock           650,000     6,500     123,500             _
_         _      130,000

Stock Issued upon
 Conversion of Debt        8,970,000    89,700     820,300             _
_         _      910,000

Capital Contribution                                 1,000
                   1,000
Net Loss for the year
  ended March 31, 1997              _        _          _       (911,804)
_         _     (911,804)
                          __________  ________ ___________  ____________
________  ________   __________

Balance _ March 31, 1997  20,788,122   207,882  10,015,980  (  9,816,161) (
108,406)( 144,000)     155,295

Management fee _
  Related Party                    _         _      31,200             _
_         _       31,200

Adjustment for
 cancellation of escrow
 shares(See note [6A])             _         _    (144,000)            _
_   144,000            _

Options issuance cost              _         _       3,250             _
_         _        3,250

Net Loss for the year
  ended March 31,1998              _         _           _    (1,276,000)
_         _   (1,276,000)
                          __________  ________ ___________  ____________
________  ________   __________
Balance _  March 31, 1998 20,788,122   207,882   9,905,430   (11,092,161)
(108,406)        _   (1,086,255)

Acquisition of
  Subsidiary                                    4,342,784
               4,342,784
Capital adjustment                                  7,800
                   7,800

Net loss for the year
  Ended March 31, 1999                                       (   382,184)
              (  382,184)
                         ___________  ________  __________   ____________
________  ________   __________
Balance, March 31, 1999   20,788,122  $207,882 $14,256,014  $(11,473,345)
$(108,406) $      _  $ 2,882,145
                         ===========  ======== ===========  ============
=========  ========   ==========



                                   OUT_TAKES INC.
                        Consolidated Statements of Cash Flows


                                                         Years ended March 31,
                                                      1999       1998
1997
Operating Activities:


  Net Loss                                      $(382,184) $(1,276,000)
$(911,804)

  Adjustments to Reconcile Net Loss to
   Net Cash Used in Operating Activities:
     Depreciation and Amortization                116,585      540,185
466,369
     Loss on closure of Irvine Studio                          154,157        _
     Loss on Disposal of Plant and Equipment            _            _
504
     Compensation fee   related party              80,887      110,062
_
     Options issuance cost                                       3,250
_
  Changes in Assets and Liabilities:
   (Increase) Decrease in:
     Due from Related Party                      (120,854)
3,847
     Deposits                                     (25,504)      11,330
(22,814)
     Inventory                                     10,082       12,797
13,719
     Due from Officers                                  _            _
8,565
     Prepaid Expenses                              11,954        6,671
(7,757)
     Other Current Assets                           9,564             _
_
   Increase (Decrease) in:
     Accounts Payable                            (162,039)    (127,413)
(248,769)
     Notes payable                                      _            _
(15,036)
     Interest payable                              36,556       48,581
(22,104)
     Provision for Studio Closure                 (31,878)      31,878
_
     Prepaid asset lease                           30,604            _
_
     Compensation payable_Related Party            79,540     (119,990)
252,337
                                               __________   __________
___________
  Net Cash Used in Operating Activities        (  346,687)  (  604,492) (
448,916)
                                               __________   __________
____________
Investing Activities:
  Purchases of Property, Plant and
    Equipment                                  (   33,522)  (  218,893) (
165,362)
  Proceeds on Disposal of Plant and Equipment                      100
2,242
                                               __________   __________
___________
Net Cash Used in Investing Activities          (   33,522)  (  218,883) (
163,120)
                                               __________   __________
____________

Financing Activities:
  Proceeds from the Issuance of Stock                   _
130,000
  Advances from Related Party                     272,887      703,783
260,000
  Capital                                           7,800
1,000

  Convertible notes                                74,000       65,834
240,000
                                                 ________   __________
___________
  Net Cash Provided by Financing Activities       354,687      769,617
631,000
                                                _________   __________
___________
Net Increase (Decrease)in Cash and Cash
 Equivalents                                     ( 25,522)    ( 53,758)
18,964
Cash and Cash Equivalents _ Beginning of
  Years                                            26,878       80,636
61,672
                                                _________    _________
_________
Cash and Cash Equivalents _ End of Years        $   1,356    $  26,878    $
80,636
                                                =========    =========
=========
Supplemental Disclosure of Cash Flow Information
  Cash paid for:
   Interest                                                 $    7,650  $
66,501

Non cash activities:
  Acquisition of subsidiary                  $4,000,000

                     The Accompanying Notes are an Integral Part of These
Financial Statements.


                                                  OUT_TAKES INC.
                        NOTES TO FINANCIAL STATEMENTS

[1] Summary of Significant Accounting Policies

Basis of Presentation _ The accompanying financial statements are presented on
an accrual basis. Revenues are recognized when merchandise is sold and expenses
are recognized when incurred. Where applicable, the figures for the years ended
March 31, 1997 and 1996 have been reclassified in order to facilitate comparison
with the figures for the current year.

Plant and Equipment and Depreciation _ Plant and equipment consists primarily of
computers, photography equipment and leasehold improvements, and are stated at
cost. Depreciation is provided over the estimated useful asset lives using the
straight_line method over 5 years for all equipment and furniture. Leasehold
improvements are amortized on a straight_line basis over the shorter of the
useful life of the improvement or the term of the lease. Maintenance, repairs
and minor purchases are expensed as incurred.

Royalties _ Royalties are calculated as a percentage of sales as specified in
each License Agreement and are expensed over the life of the agreement except
where this amount is less than the minimum guarantee provided by the agreement.
In the latter situation, royalty expense is equal to the minimum guarantee,
amortized on a straight_line basis over the period of the guarantee. Where
royalties have been paid in advance, such amounts are disclosed on the Company's
balance sheet as prepaid royalties, net of amounts expensed.

Stock Options _ The difference between the fair market value and the exercise
price, if below fair market value, of a stock option granted under the Company's
Employee Stock Option Plan is charged to expense in the period in which the
option is granted. All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair market value
of the equity instruments issued, whichever is more reliably measurable
Inventories _ Inventories consisting principally of frames, bags, mattes,
chemicals, paper products and other supplies are priced at cost determined using
the FIFO method.

Cash and Cash Equivalents _ The Company classifies all highly liquid debt
instruments, readily convertible to cash and purchased with a maturity of three
months or less at date of purchase, as cash equivalents. The Company had no cash
equivalents at March 31, 1998.

Risk Concentrations _ Financial instruments, which potentially subject the
Company to concentrations of credit risk, consist principally of cash. At March
31, 1998, the Company had no deposits in financial institutions which exceeded
the $100,000 federally insured limit. The excess of the institution's deposit
liability to the Company over the federally insured limit was therefore zero.

A significant part of the Company's ability to generate revenues is dependent on
the continuation of the License Agreements with the various Licensors. Three of
the License Agreements provide a portfolio of images that each result in
approximately 15% of the revenues of the Company. While the Company has License
Agreements relating to the use of the images there can be no assurance that the
License Agreements will be renewed or renewed on commercially acceptable terms
after their current expiry dates. In such event, unless alternative License
Agreements can be obtained, the loss of the License Agreements would have a
material adverse affect on the Company (see note 3[A]).

Use of Estimates _ The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts. Accordingly, actual
amounts could differ from those estimates.

Advertising  _ Advertising  costs are expensed as incurred. Advertising
expenditure for the years ended March 31, 1998, 1997 and 1996 was $21,069,
$28,552 and $13,140 respectively.

Loss per share _ The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings Per
Share" which is effective for financial statements issued for periods ending
after December 15, 1997. Accordingly, earnings per share data in the financial
statements for the year ended March 31, 1998 has been calculated in accordance
with SFAS No. 128. Prior periods earnings per share data have been recalculated
as necessary to conform prior years data to SFAS No. 128.

SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15, "Earnings
per Share" and replaces its primary earnings per share with a new basic earnings
per share representing the amount of earnings for the period available to each
share of common stock outstanding during the reporting period. SFAS No. 128 also
requires a dual presentation of basic and diluted earnings per share in the face
of the statement of operations for all companies with complex capital
structures. Diluted earnings per share reflects the amount of earnings for the
period available to each share of common stock outstanding during the
reporting period, while giving effect to all dilutive potential common shares
that were outstanding during the period, such as common shares that could result
from the potential exercise or conversion of securities into common stock.

The computation of diluted earnings per share does not assume conversion,
exercise or contingent issuance of securities that would have an antidilutive
effect on earnings per share (i.e. increasing earnings per share or reducing
loss per share). The dilutive effect of outstanding options and warrants and
their  equivalents are reflected in dilutive earnings per share by the
application of the treasury stock method which recognizes the use of proceeds
that could be obtained upon exercise of options and warrants in computing
diluted earnings per share. It assumes that any proceeds would be used to
purchase common stock at the average market price during the period. Options and
warrants will have a dilutive effect only when the average market price of the
common stock during the period exceeds the exercise price of the options or
warrants.

Potential common shares of 125,000 are not currently dilutive, but may be in the
future.

Deferred Taxes _ There are no material differences between the accounting
methods used for financial and tax purposes. The Company has sustained losses in
recent years and has a large net operating loss carryforward. No deferred taxes
are reflected in these financial statements.

[2] Organization and Business

The Company was incorporated on March 18, 1992, under the laws of the State of
Delaware. The Company is engaged in the production and sale of photographic
portraits of children, adults and family groups using proprietary hardware and
digital imaging  software.  The Company  currently  operates and derives
substantially all of its revenues from a retail studio, called Out_
Takes(R), which opened on May 24, 1993 and is located at MCA/Universal's
CityWalkSM project in Los Angeles, California ("the CityWalk Studio"). During
the period December 1, 1995 to April 22, 1998, the Company operated a second
Studio, at the Entertainment Center in the Bazaar at the Irvine Spectrum,
located in Irvine, Orange County, California ("the Irvine Studio").

[3] [A] License Agreements and Royalties

The Company has merchandise licensing agreements ("License Agreements") with
Paramount Pictures Corporation ("Paramount"), MCA/Universal Merchandising, Inc.
("Universal"), Warner Bros. Consumer Products ("Warner"), Twentieth Century Fox
Licensing & Merchandising ("Fox"), Jay P. Morgan Photography ("Morgan"), MTV
Networks ("MTV"), Saban Merchandising Inc. ("Saban"), The Baywatch Production
Company ("Baywatch") and various other agencies and photographers that grant the
Company the right to manufacture, sell and distribute in a defined geographic
area, still photographs which combine a digital photograph taken of the customer
in the studio with a licensed background from one of the Licensors which may be
sold separately or affixed to items approved by these licensors, including
photographic enlargements, greeting cards, posters, books, t_shirts, mugs,
buttons and other novelty items. Royalties expense for the year ending March 31,
1998, 1997 and 1996 was $39,365, $66,816 and $35,622 respectively.

Although the Company has not commenced to market all Licensed Articles on a
timely basis, as of March 31, 1998, the Company has not received any notice that
any Licensor intends, by virtue of this matter, to exercise any of the remedies
provided for in its respective License Agreements. The Company is current with
respect to all payments and required reports to all Licensors.

[B] Sublicense Agreement _ Related Party

On March 1, 1995, the Company entered into a sublicense agreement with Photo
Corporation of Australia Pty Limited ("PCA"), a subsidiary of Photo Corporation
Group Pty. Ltd. ("PCG") (see note 5), that, subject to the prior approval of the
Licensors, grants PCA a non_exclusive license to utilize the Licensed Articles
on substantially the same terms as provided in the License Agreements. The
sublicense also provides that PCA will pay the Company an amount equal to 120%
of the royalties the Company pays to Licensors for such images. The Company
has received consent from Morgan, Fox and Paramount and other Licensors
indicating their willingness to support utilization of the Licensed Articles
in countries where PCA operates. As of March 31, 1998, the PCA
sublicense agreement has not yet generated any royalties.

[4] Plant and Equipment
                               March 31, 1998        March 31, 1997

The components of plant and equipment are:

Photographic Equipment             $   620,750      $  622,192
Computers and Software                 659,048         679,427
Equipment and Furniture                301,316         308,987
Leasehold Improvements                 609,494       1,011,292
Motor Vehicle                           21,433            _
                                 _____________      _____________

Total _ At Cost                      2,212,041       2,621,898
Less: Accumulated Depreciation        2,007,893       1,776,700
                                  _____________   _____________

Net                                 $   204,148     $   845,198
                                  =============   =============


Depreciation is provided over the estimated useful asset lives using the
straight_line method over five years for all equipment and furniture. Leasehold
improvements are amortized on a straight_line basis over the shorter of the
useful life of the improvement or the term of the lease. Maintenance, repairs
and minor purchases are expensed as incurred.

[5] Related Party Transactions

Mr Robert Shelton, Vice President Development and Mrs Leah Peterson_ Shelton,
Vice President Operations, ceased employment with the Company from and effective
September 1, 1996. Mr Shelton also ceased as a Director of the Company from and
effective September 1, 1996.

Deferred salaries owing to Mr Shelton and Mrs Peterson_Shelton, accrued interest
on deferred salaries, accrued vacation pay and amounts payable on termination
totaling $274,373 were consolidated on September 1, 1996, and were repaid over
the period to April 17, 1998. This liability is presented on the balance sheet
as "Compensation payable _ Related Party". The liability is secured by the
assets of the Company pursuant to the Settlement and Mutual Release Agreement as
of September 1, 1996, between the Company, Mr Shelton, Mrs Peterson_Shelton and
Photo Corporation Group Pty Limited ("PCG"), the majority stockholder. Interest
expense is incurred at the prime rate of interest (approximately 8.5%) and in
the period to March 31, 1998 interest expense totaled $3,618. As of March 31,
1998, interest of $67 was accrued and unpaid.

The Settlement and Mutual Release Agreement inter alia provides for Mr Shelton
and Mrs Peterson_Shelton to act as consultants to the Company as requested by
the Company and as agreed to by them. No consulting fees were incurred or paid
during the year ended March 31, 1998.

During the year to March 31, 1997, PCG charged the Company $131,000 in
management fees pursuant to the Personnel Consulting Agreement with the Company
dated June 28, 1995. Effective December 1, 1996, PCG agreed not to charge
management fees for services provided by it or its related parties for a period
of two years. The Company has recorded a capital contribution of $31,200 for
management fees for the year to March 31, 1998. Management believes that this
represents the reasonable cost of doing business, for services provided by PCG
personnel in the year to March 31, 1998.

At March 31, 1998 the $721,227 "Due to Related Party" ($260,500 as of March 31,
1997) was advanced by PCG. This balance consists of $715,500 advanced to the
Company and $5,727 of expenses paid by PCA on behalf of the Company (1997:
$7,343 "Due from Related Party" representing monies advanced by the Company
during fiscal 1997 on behalf of PCA). The funds advanced to the Company have
been used predominantly to fund the day to day operation of the business and to
fund the payments due to former officers of the Company. The amount Due to
Related Party is unsecured and is payable on demand. Interest expense is
incurred at a rate of 10% per annum on the funds advanced to the Company and for
the year ended March 31, 1998 was $48,581. As of March 31, 1998, interest of
$56,452 was accrued.

The weighted average interest rate on short term borrowings as of March 31, 1998
was approximately 10.0%.

[6] Capital Stock Transactions

[A] Escrow Shares

In March, 1992, 1,900,000 shares were issued to the Company's founders
("Founders") and deferred compensation of $364,800 was recorded for the
1,900,000 shares. Included in the 1,900,000 shares were 1,150,000 shares issued
to the Founders for services in connection with the incorporation of the
Company. Accordingly, $220,800 was amortized as compensation expense in 1992.
The remaining 750,000 shares of the Company's Common Stock were placed into
escrow for the benefit of the Founders. As the Company's pre_tax earnings did
not equal or exceed the required threshold level, in May of 1998 the Company
requested that the shares be returned to the Company to be placed in Treasury.
The financial statements reflect the reversal of the deferred compensation
attributable to these shares, however the share data will be adjusted as of the
date the shares are returned.

[B] Stock Option Plan

Under the Company's Amended and Restated 1992 Stock Option Plan, incentive stock
options may be granted to purchase shares of the Company's stock at a price not
less than the fair market value of the Common Stock at the date of the grant.
Non_qualified stock options may be granted at a price not less than 85% of the
fair market value. No option may be exercised after ten years from the date of
the grant. In September of 1997, options for 175,000 shares were issued to
employees and consultants of the Company.

Information is summarized as follows:

                       Shares Under Options and Warrants
                       _________________________________
                 Amended               Weighted
                 And Restated     Price      Average
                 1992 Stock       per        Exercise
                 Option Plan      Share      Price
                 ___________      _____      _____

Outstanding at March 31, 1995   249,245      $0.65 to $4.40   $3.44

  Forfeited during the year
   ended March 31, 1996                                (94,527)
                                                       ________
Outstanding at March 31, 1996   154,898      $0.65 to $4.40   $4.00

  Forfeited during the year
   ended March 31, 1997        (154,898)
                               ________

Outstanding at March 31, 1997      _           _        _

  Granted during the year
   ended March 31, 1998         175,000       $0.06    $0.06

  Forfeited during the year
   ended March 31, 1998         (50,000)
                                 _______

Outstanding at March 31, 1998   125,000           _    $0.06
                               =========

The exercise price for the options outstanding at March 31, 1998 is $0.06 with a
vesting period of three years and a contractual life of ten years. The company
estimates that approximately 100% of such options will eventually vest.

On September 15, 1997, the Board of Directors granted to four individuals,  a
total of 175,000 stock options to purchase company stock at an exercise price of
$0.06 per share for past services performed. The options are to vest over a
three year period, 50% the first year and 25% the remaining two years,  with an
expiration date of September 15, 2007. The company applies APB Opinion 25 in
accounting for its fixed and performance based stock option  compensation plans.
Compensation cost of $3,250, $0 and $0 was charged to operations for the three
years ended March 31, 1998, 1997 and 1996  respectively. Had compensation cost
been determined on the basis of fair value pursuant to FASB Statement No. 123,
net income and earnings per share would have been recorded as follows:

                       1998            1997            1996
                    $                 $               $
Net Income (Loss)
As reported         (1,082,306)      (753,346)      (1,576,484)
Pro forma           (1,089,056)      (753,346)      (1,576,484)

Earnings per Share
As reported            (0.05)     (0.05)     (0.16)
Pro forma              (0.05)     (0.05)     (0.16)

The fair value of each option grant is estimated on the date of grant using the
Black_Scholes  option  pricing model with the following  weighted_ average
assumptions used for grants in 1998: dividend yields of $0 for each year,
expected volatility of approximately 106% for each year, risk free interest
rates of 5.83% and an expected life of five years. The  weighted_average fair
value of options granted was $0.06 for the year ended March 31, 1998.

[7] Closure of Irvine Studio

In the third quarter of the Company's fiscal year, management determined that
despite its substantial efforts to increase the revenues of the Irvine Studio,
it would be in the best interests of the Company to contain the negative cash
flow incurred by the Company, by determining an exit plan for the Irvine Studio.
In the fourth quarter of the fiscal year, the Company finalized its exit plan.
Following lengthy  negotiations with the landlord of the Irvine Studio,
management reached an agreement with the landlord to close the Studio. The
closure was effected without the payment of any additional amounts to the
landlord. The Studio closed on April 22, 1998. Costs associated with the closure
of the studio totaled $164,745 and included approximately $135,000 non_cash loss
on disposal of leasehold improvements and write off of equipment identified as
only being of use for spare parts for the CityWalk Studio; $3,000 in termination
payments to staff; $5,000 to remove equipment from the studio and vacate the
premises; $7,000 in property tax obligations; and estimated additional operating
costs of approximately  $14,000 through to the date of closure. It is
management's opinion that as of March 31, 1998, all costs associated with the
closure of the Irvine Studio have been accrued.

[8] Commitments

Lease Agreements _ The Company leases its CityWalk Studio premises under a five
year lease, with an option to extend the lease for a period of seven years. The
initial lease term expired on May 31, 1998 and the Company has exercised its
option to renew the lease for a further seven years. The lease provides for an
annual rental payment of $123,250 and the payment of 10% of annual store
revenues in excess of $881,177. In addition, pursuant to the lease agreement,
the Company pays annual allocated property taxes for the CityWalk Studio of
approximately $600. Both the base rental amount and the percentage rental cut_
in point are adjusted annually for changes in the consumer price index. The
lease may be terminated by the lessor if the Company does not meet a minimum
annual sales requirement of $587,000.

Future minimum lease payments under non_cancelable operating leases as of
March
31, 1998 are shown in the table below.

     Year ended March 31
     ___________________
       1999                $ 123,250
       2000                  123,250
       2001                  123,250
       2002                  123,250
       2003                  123,250
       Thereafter            267,041
                            _________

       Total               $ 883,291
                           =========


In the year to March 31, 1998 the Company paid $101,098 in rent for the Irvine
Studio. Following closure of the Irvine Studio on April 22, 1998, the lease was
terminated. There is no further obligation on the Company with respect to the
lease.

The Company has a month to month commitment of $2,450 per month for corporate
office space and a month to month commitment of $650 per month for storage
facilities.

Total rental charged to operations for the fiscal years ended March 31, 1998,
1997 and 1996 is broken down as follows:

                               1998     1997        1996

                          $            $          $
       Base rental         256,141      278,128    183,301
       Additional rent      13,351       62,287     56,862
                          ________      _______   ________
                          $269,492     $340,415   $240,163
                          ========     ========   ========

The additional rent is a result of sales being in excess of the $881,177 sales
threshold.

Consulting  Agreement _ the Company has a consulting agreement with an
unaffiliated entity for the maintenance of the image technology at the CityWalk
Studio. Effective October 1, 1997 the agreement provides for the payment of
$50,000 per annum of consulting fees and a discretionary performance bonus of up
to 10% of the fees paid. The agreement may be terminated by either party with a
minimum of one month's notice. For the year ended March 31, 1998 the Company
expensed $49,000 in payments to this unaffiliated entity.

[9] Net Loss Per Share

Net loss per share was calculated based on the weighted average shares
outstanding during the year. Potential common shares have not been included as
their inclusion would be antidilutive.

[10] Trademark Registrations and Patent Applications

The Company has registered the marks Out_Takes(R), So You Want to be in
Pictures(R) , Photomation(R) and Create the Moment(R) with the U.S. Patent and
Trademark Office and has registered the Out_Takes(R) service mark in Japan, in
both Japanese and English.

[11] Income Taxes

As of March 31, 1998, the Company has a net operating loss carry forward of
approximately $10,700,000. The ability to offset $8,275,000 of these losses
against future taxable income has been restricted as a result of the change in
control which occurred on June 28, 1995 when a majority shareholding in the
Company was acquired by PCG. As of March 31, 1998, the Company has deferred tax
assets of approximately $729,000 arising from these operating loss carry
forwards which will expire in March, 2011. However, due to uncertainty as to
whether the Company will generate income in the future sufficient to fully or
partially utilize these loss carry forwards, an allowance of $729,000 has been
established to offset this asset. The Company recorded an increase in its
valuation allowance of $66,000 over the allowance at March 31, 1997.

[12] Notes Payable

The Note Payable of $48,000 is unsecured and is due to a former financial
consultant to the Company pursuant to a settlement agreement dated August
17,1994. The note is non_interest bearing and payment is subject to availability
of future cash flows from the Company's operations.

The note holder has threatened to commence litigation, however management has
advised the note holder that no amount is due at the present time as the Company
has not generated positive cashflow. Counsel has advised the Company that no
litigation has commenced and counsel is unable to assess a possible outcome.

[13] New Authoritative Pronouncements

The FASB has issued SFAS No. 130, "Reporting Comprehensive Income". SFAS No. 130
is effective for fiscal years beginning after December 15, 1997. Earlier
application is permitted. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. SFAS No. 130 is not
expected to have a material impact on the Company.

The FASB has issued SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information". SFAS No. 131 changes how operating segments are
reported in annual financial statements and requires the reporting of selected
information about operating segments in interim financial reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997 and comparative information for earlier years is to be restated. SFAS No.
131 need not be applied to interim financial statements in the initial year of
its application. SFAS No. 131 is not expected to have a material impact on the
Company.

[14] Going Concern

The Company commenced commercial operations on May 24, 1993 and as of May 29,
1998, the Company has been unsuccessful in generating net cash from operations.
The net cash used by the Company in operating activities in the year ended March
31, 1998 was $482,207. The Company incurred a net loss of $1,082,306 for the
year ended March 31, 1998 and has a working capital deficit as of March 31, 1998
of $918,299.

The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. The continuation
of the Company as a going concern is dependent upon its ability to generate net
cash from operations. The Company's recurring operating losses and net working
capital deficiency raises substantial doubt about the entity's ability to
continue as a going concern.

Management's plans include improving the revenues from the CityWalk Studio,
continuing the reduction of expenses throughout the Company and continuing in
its efforts to find suitable locations in which to open additional studios.
There can be no assurance that management will be successful in these endeavors
and if it is not, the Company will be dependent on the willingness and the
ability of the major stockholder, PCG, to continue to provide additional
financing and no assurance can be given that such additional financing will be
provided.

[15] Impairment of Long_Lived Assets

The Company had adopted Statement of Financial Accounting Standard ("SFAS") No.
121, Accounting for the Impairment of Long_Lived Assets and for Long_ Lived
Assets to be Disposed of.

As a result of the Company's continuing operating losses and the information
obtained during research and the development of the Irvine Studio, the Company
reviewed the carrying value of the assets at its CityWalk studio for impairment
in the June 1995 quarter. Management determined that an impairment loss of
approximately $722,000 should be recognized. This loss was determined as the
excess of carrying value over fair value. Fair value was determined by reference
to costs for similar assets for the Irvine Studio. As a result of the
significant operating difficulties associated with the Traveling Studio,  the
Company reviewed the carrying value of the asset for impairment in the March
1996 quarter. Management determined that an impairment loss of $40,129 should be
recognized to reduce the carrying value of the asset to its fair value of zero.
Fair value was determined to be zero as the asset was not able to be placed into
production in its present form. Long term assets of the Company are reviewed at
least annually as to whether their carrying value has become  impaired, pursuant
to guidance established in Statement of Financial Standards ("SFAS") No. 121.
Management considers assets to be impaired if the carrying  value exceeds the
future projected cash flows from related operations  (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value or projected discounted  cash flows from related operations.
Management also re_evaluates the periods of amortization to determine whether
subsequent events and  circumstances warrant revised estimates of useful lives.
As of March 31, 1998, management expects these assets to be fully recoverable.

[16] Financial Instruments

The carrying amount of cash and notes payable approximates fair value. [17]
Subsequent Events

During the period April 1, 1998 to May 29, 1998 PCG provided an additional
$15,000 of cash to assist the Company in funding its day to day operations, to
enable the Company to make the required payments due to the former officers of
the Company and to meet the expenses associated with the closure of the Irvine
Studio. Certain subsidiaries of PCG have purchased, for a total of $20,000 cash,
certain equipment with no book value.

 EXHIBIT 16. LETTER OF FORMER INDEPENDENT ACCOUNTANT

U.S. Securities and Excahnge Commission Washington, D.C. 10549

The undersigned certifying accountants hereby acknowledge that they have
reviewed the "Changes in and Disagreements on Accounting and Financial
Disclosures" as contianed in the form 10_K being filed by Out Takes, Inc., and
that the undersigned concurs with the statements made therein by the Registrant
concerning the change in the Registrant's independent accountant.

/s/MOORE STEPHENS, P.C.
Moore Stephens, P.C.
Certified Public Accountants
Cranford, New Jersey
March 1, 2000


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