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

                                   Form 10-KSB

|X|   Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 For the Fiscal Year ended December 31, 2003 OR

|_|   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period from ________to________

                        Commission File Number 333-104620

                                BILLY DEAD, INC.
             (Exact name of Registrant as specified in its Charter)

             Delaware                                         55-0799176
  (State or Other Jurisdiction of                          (I.R.S. Employer
  Incorporation or Organization                           Identification No.)

                 2312 Lorenzo Dr., Los Angeles, California 90068
              (Address of Principal Executive Offices and Zip Code)

                                 (323) 962-9873
              (Registrant's Telephone Number, Including Area Code)

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

          Securities registered pursuant to Section 12 (g) of the Act:
                                (Title of Class)
                   Series A Preferred Stock, $0.0001 par value

Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

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

Issuer did not have any revenue for the fiscal year ended December 31, 2003.

The issuer's stock is not trading; therefore there is no aggregate market value
of the common stock.

As of April 13, 2004, there was no voting common equity held by non-affiliates
of the Registrant.

As of April 13, 2004, the Registrant had 900,000 shares of common stock issued
and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Our post-effective registration statement #2 (file #333-104620) for the sale of
900,000 shares of Series A preferred stock declared effective by the Securities
and Exchange Commission on February 12, 2004 is incorporated by reference in
Part III, Item 13 of this Form 10K-SB.

Transitional Small Business Disclosure Format: Yes |_| No |X|

<PAGE>

                                BILLY DEAD, INC.
                          (A Development Stage Company)
                          Annual Report on Form 10-KSB
                          Year Ended December 31, 2003

<TABLE>
<S>                                                                                       <C>
PART I
     Item 1.  Description of business                                                      3
     Item 2.  Description of property                                                     20
     Item 3.  Legal proceedings                                                           20
     Item 4.  Submission of matters to a vote of security holders                         20

PART II
     Item 5.  Market for common equity and related stockholder matters                    21
     Item 6.  Management's discussion and analysis or plan of operation                   22
     Item 7.  Financial statements                                                        28
     Item 8.  Changes in and disagreements with accountants on accounting and financial
              disclosure                                                                  45
     Item 8a. Controls and Procedures                                                     45

PART III
     Item 9.  Directors, executive officers, promoters and control persons; compliance
              with section 16(a) of exchange act                                          46
     Item 10. Executive Compensation                                                      50
     Item 11. Security ownership of certain beneficial owners and management and
              related stockholder matters                                                 55
     Item 12. Certain relationships and related transactions                              56
     Item 13. Exhibits and reports on form 8-K                                            59
     Item 14. Principal accountant fees and services                                      61

Signatures                                                                                63
</TABLE>


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                                     PART I

This Form 10-KSB contains forward-looking statements. For this purpose, any
statements contained in this Form 10-KSB that are not statements of historical
fact may be deemed to be forward-looking statements. You can identify
forward-looking statements by those that are not historical in nature,
particularly those that use terminology such as "may," "will," "should,"
"expects," "anticipates," "contemplates," "estimates," "believes," "plans,"
"projected," "predicts," "potential," or "continue" or the negative of these
similar terms. In evaluating these forward-looking statements, you should
consider various factors, including those listed below under the heading "Item
1. Risk factors related to our business". The Company's actual results may
differ significantly from the results projected in the forward-looking
statements. The Company assumes no obligation to update forward-looking
statements.

As used in this Form 10-KSB, references to the "Company," the "Registrant,"
"we," or "us" refer to Billy Dead, Inc. unless the context otherwise indicates.

ITEM 1. DESCRIPTION OF BUSINESS

Billy Dead, Inc. is a development stage company formed on September 24, 2002 for
the purpose of producing and commercializing a feature film tentatively titled
"Billy Dead" (the "Film"). The sole asset of Billy Dead, Inc. will be the
copyright of the Film. We plan to utilize the funds from a public offering of
900,000 shares of Series A preferred stock (the "Offering"), which registration
statement (the "Registration Statement") was declared effective on February 12,
2004, to produce the Film, to pay for expenses associated with the
commercialization of the Film, and to finance our general corporate expenses.
The offering is being underwritten by Civilian Capital, Inc. on a "best efforts,
all or none" basis to raise an aggregate of $7,875,000 in gross proceeds to
Billy Dead, Inc. Civilian Capital has up to six months (August 10, 2004) to
complete the offering.

Billy Dead, Inc. has assembled a creative team that we believe is qualified to
produce a high-quality motion picture. We also believe we have strong corporate
management that will operate the business in the interest of its shareholders.
Two important members of the creative team are Keith Gordon, an experienced film
director who has agreed to direct the Film, and Julie Lynn, who is contracted to
serve as Producer for the Film. Once the Film is completed, we intend to license
the worldwide distribution rights to one or more established distribution
companies for exhibition including theatrical, pay television, DVD and video
rentals and cable or network television. Once we have licensed, sold or assigned
the distribution rights and any other remaining residual rights, including
copyrights and trademarks, we intend to dissolve Billy Dead, Inc. and distribute
the proceeds to our stockholders.

Our strategy is to assemble a creative team, screenplay and cast that we believe
has the potential for commercial success. Predicting the success of a motion
picture is difficult and highly subjective, as it is not possible to accurately
predict audience acceptance of a particular motion picture.

Independently Financing and Producing the Film

By financing and producing the Film outside the studio system, our strategy
seeks to:

o     Eliminate unnecessary costs associated with accepting advance production
      funding from a studio. Studios typically charge high rates of interest,
      overhead fees and other miscellaneous expenses to film productions. By
      eliminating these costs and only seeking to use the studios for
      distribution, we can significantly reduce the overall costs of the Film
      and thereby increase the likelihood of achieving revenue in excess of the
      Film's costs.

o     Negotiate a lower distribution fee. By financing the Film independently,
      we are reducing the risk that would otherwise be taken by a distributor or
      studio. As a result, we expect that we will be able to negotiate lower
      distribution fees than would be the case had we used any advance funding
      from a


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      distributor. For instance, in theatrical exhibition the distribution fee
      is typically 30% to 40% of the total amount a distributor collects from
      the exhibitor. To the extent that we are successful in negotiating lower
      distribution fees, we will receive a larger percentage of gross receipts
      from each of the different revenue streams associated with the Film's
      exhibition.

o     Exercise greater control over licensing the distribution rights by
      creating a competitive bidding situation among distributors. Throughout
      the production process, we will be meeting with various distribution
      companies in order to educate them about the Film. Based on our meetings
      and the response that the Film receives, we may seek to negotiate
      distribution agreements at any time before, during or after the completion
      of the Film. Our intention is to create a competitive bidding process
      among distribution companies in order to negotiate more favorable terms in
      our overall distribution deal and increase our potential revenue.

o     Reduce or eliminate the hidden costs associated with
      cross-collateralization by a studio or distributor. Often a distributor
      will charge a producer for costs that are incurred by other films a
      distributor releases. This procedure, called "cross-collateralization",
      often reduces a film's financial return. By producing the Film
      independently and negotiating an arms-length distribution arrangements,
      our strategy is to minimize or eliminate these charges.

o     Maintain greater creative control. We believe that specialty dramatic
      movies, such as our Film, are best able to appeal to a specialty audience
      by maximizing the ability of proven artists to control creative decisions.

While we believe that it is advantageous for us to produce the Film
independently, there are a number of disadvantages associated with producing a
film outside the studio system:

o     We have no guarantee of obtaining revenues. Distribution is critical to
      the movie maximizing the potential revenue associated with exhibition. We
      cannot guarantee that the movie will receive distribution. If we are
      unable to obtain distribution we will have no alternate sources of
      revenue.

o     We will be dependent on the distributor to market the Film to the public.
      Even if we are successful in negotiating a distribution agreement, we will
      have little control over how the distributor releases and markets the
      Film. A distributor may release the Film in a very limited number of
      theaters, spend limited resources marketing and promoting the Film,
      withdraw the Film from theaters too quickly or choose not to release the
      Film at all.

o     Our Film may be insufficiently marketed. We intend to use the proceeds
      from the Offering to finance the Film and therefore we will not depend
      upon funds from a distributor in order to produce the Film. A distributor
      may expend more time and resources marketing a film when its own funds are
      at risk. If a distributor does not sufficiently market our Film, our
      revenues may be reduced.

o     Our revenues will be reduced if a distributor spends more to market the
      Film than will be justified by our ultimate box office success. It is
      impossible to predict the Film's ultimate success at the box office. If a
      distributor anticipates a large return at the box office, it may spend a
      great deal to market the Film in advance of its release. These marketing
      costs are usually deducted from returns the distributor pays to a
      producer, such as Billy Dead, Inc. While this strategy is intended to
      maximize a film's ultimate success, it may decrease our eventual returns
      if the Film is not sufficiently successful.

o     We may lack additional resources should we run over budget. If we are
      unable to produce the Film on schedule or within budget, our funds may be
      insufficient to complete the Film. Unlike the studios, we will have no
      alternate sources of funds and the completion bond company would likely
      take control of completing the Film on behalf of the investors.

o     We may encounter reduced leverage with distributors. We will be marketing
      a single film, compared to certain other independent production companies
      that produce multiple films for sale to distributors.


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      Distribution companies typically offer more favorable financial terms to
      companies that produce multiple films, because the distributor may thereby
      be able to obtain additional films to distribute.

o     We may be unable to get accurate accounting of monies owed us from a
      distributor. While we intend to secure certain audit rights from our
      eventual distributor and these rights are customarily granted,
      distributors are often in a position to account for revenues in a manner
      that makes it difficult for an audit to determine a producer's actual
      share of revenues. There are also certain costs associated with audits
      that are outside of the normal course of our operations. Therefore, there
      is no assurance that we will be able to get an accurate accounting of
      revenues owed to Billy Dead, Inc by a distributor. or that audits will
      reveal gains in revenues to Billy Dead, Inc. that outweigh the costs of
      the audit.

Production of the Film

We will manage the making of the Film through the four phases of production
before its initial release -- development, pre-production, principal photography
and post-production.

Development. The development phase of the Film is nearly complete. We have
acquired an option on both the novel "Billy Dead" and the current draft of the
screenplay by Mr. Gordon. Mr. Stoff and Mr. Hawke initially managed the
development of the project, acquiring various intellectual property rights and
retaining Mr. Gordon to write the screenplay. Ms. Lynn then managed the project
through budgeting, scheduling, negotiating various agreements, and preparing for
the Offering.

Pre-production. The pre-production phase of the Film will begin as soon as is
practical after the successful completion of the Offering and subject to
finalizing the availability of key cast members. We will begin pre-production by
casting our remaining lead performers and will then search for younger
performers resembling our lead actors for certain flashback scenes. Once casting
is final we will obtain any required production related insurance policies which
are customary in the industry. We will then select our filming locations, secure
any necessary facilities or stages, and hire our remaining production personnel.

Principal photography. This is the phase in which each of the scenes of the Film
are photographed. The final shooting location will depend on weather conditions,
budgetary considerations, labor regulations, insurance requirements,
requirements of our completion bond, creative preferences and the availability
of production resources.

Post-production. This is the final production phase, during which the footage
photographed during the principal photography phase is assembled, edited and
integrated with sound, titles and special effects, to prepare the movie for
exhibition.

The relative costs for each of these phases varies widely from project to
project, so a typical film budget breaks down expenses into "above-the-line" and
"below-the-line" costs. Above-the-line costs include most development costs,
intellectual property costs, costs relating to the producer, costs relating to
the director, and talent costs. In our case these above-the-line expenses will
amount to approximately $2.09 million, and include $250,000 which will be paid
to our director, Keith Gordon and $150,000 which will be paid to our producer,
Julie Lynn.

The production and post-production phases account for the majority of the
below-the-line costs. In our case we estimate that production will cost
approximately $2.66 million and post-production will cost approximately $0.55
million.

Our current schedule allows for an estimated eight weeks of pre-production and
seven weeks of location production. We anticipate that post-production may take
4-6 months. Because it is impossible to predict the availability of key talent,
weather conditions, and the timing of the completion of the Offering, it is
impossible to accurately predict the date of the completion of the Film.

Budget Contingencies. We will be required to spend significant funds to produce
the Film before we can generate any revenues. We anticipate that the funds
raised in the Offering will be sufficient to produce the


                                       5
<PAGE>

Film and to pay for any administrative expenses associated with Billy Dead, Inc.
However, the amount budgeted for the Film may be insufficient as a result of:

o     our inability to obtain actors or other independent contractors in
      accordance with the budget;

o     labor difficulties;

o     key personnel becoming unavailable within our schedule; or

o     a decision to self-distribute the Film or otherwise incur a portion of the
      expenses related to the distribution of the Film.

As a result, we have included a contingency in our production budget to cover
unforeseen expenses. This contingency typically ranges from 5% to 10% of a
motion picture's estimated budget, and we have elected to reserve a contingency
of approximately 10%.

If our budget is insufficient to complete the Film and license the distribution
rights, we may be forced to raise additional capital. To raise additional equity
or convertible debt funding, we will need to obtain stockholder approval to
amend our certificate of incorporation and increase the number of authorized
shares of capital stock. If we do not receive such approval, or if we are
otherwise unable to raise additional financing on acceptable terms, we may be
unable to complete the Film and license it for distribution.

The Completion Bond. In order to minimize the risk of budget overruns and to add
an additional level of protection for investors, we have elected to include in
our certificate of incorporation the requirement that we obtain a completion
bond before we produce the Film. A completion bond, or "completion guaranty", is
a form of insurance which provides that, should the producers run into
significant problems completing the Film, the bond company would:

o     advance any sums in excess of the budget required to complete and deliver
      the Film;

o     complete and deliver the Film itself; or

o     shut-down the production and repay the financier (Billy Dead Inc. in our
      case) all monies spent thus far to produce the Film.

In addition to ensuring that the Film is completed within budget, the bond
company will also be responsible for ensuring that the Film is delivered to us
within a pre-determined schedule, follows the script and is technically suitable
for exhibition in theaters. The bond company will place certain restrictions and
limitations on us to ensure that the production is following a pre-determined
schedule. For example, the completion bond agreement will contain a cash flow
schedule that sets forth the timing and amounts of cash advances required to
finance production of the Film. We will be required to deposit funds in a
specific production account in accordance with this cash flow schedule.

The completion bond company will have the right to take over our production if
they determine that the Film is significantly behind schedule or over budget, or
that the production is otherwise not proceeding in a satisfactory manner. This
will include the right to replace any member of our production team, including
Mr. Gordon and Ms. Lynn. The involvement of the completion bond company comes to
an end when the Film is delivered, or production monies are refunded, in
accordance with these parameters.

In order to receive a completion bond from a reputable company, we will be
required to submit our budget, script, shooting schedule and other production
elements for their analysis and approval. Typically, a completion bond cannot be
issued until all material aspects of the production have been determined, such
as final locations, cast and crew. These aspects will be determined throughout
our pre-production and prior to our spending monies for location production.
Once these elements have been determined and we have negotiated the financial
terms of the bond, we intend to commence production.

A completion bond will be subject to a number of important limitations and will
not reimburse us for losses that result from certain occurrences. These include
but are not limited to losses related to:


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<PAGE>

o     distribution expenses;

o     residual payments due to creative guilds, such as the Screen Actors Guild;

o     gross or net profit participations granted as contingent compensation to
      actors or production personnel;

o     elements of the Film that are not included in the approved screenplay,
      budget or production schedule;

o     our insolvency;

o     our committing illegal or fraudulent acts;

o     our violation of any collective bargaining agreements;

o     our failure to obtain any necessary rights to use copyrighted works, such
      as music;

o     our failure to obtain required insurance coverage;

o     our failure to fulfill any conditions required by cast members that causes
      them to abandon their commitment to the Film;

o     currency fluctuations in the event that we produce the Film in another
      country, such as Canada;

o     natural disasters; or

o     acts of war.

Any losses that might result from these events would not be covered by a
completion bond and would harm our operating results. It is also important to
note that the completion bond company does not, in any way, guarantee the
commercial or artistic success of the Film.

The above does not represent a complete description of a typical completion bond
and the final terms of any agreement will be subject to negotiation. We do not
anticipate any difficulty in obtaining a completion bond for the Film. Mr.
Gordon and Ms. Lynn have never had a completion bond company take control of a
film production with which they were associated. In addition, Mr. Gordon and Ms.
Lynn have never failed to obtain a completion bond when required for any films
in which they were involved. However, in the event that we are unable to obtain
a completion bond on acceptable terms, we intend to liquidate Billy Dead, Inc.
and distribute our remaining assets to our stockholders.

Strategy for Licensing the Film's Distribution Rights

We do not plan to distribute the Film ourselves and will therefore seek
distribution with established motion picture distribution companies. As we have
discussed, we believe the Film has the proper elements -- including the key
cast, a bold and controversial story, a reasonable budget and a strong
production team -- to attract an independent distributor, a mini-major studio or
the specialty arm of a major studio distributor.

Successfully licensing the Film's distribution rights is critical to the
commercial success of the Film and therefore Billy Dead, Inc. However, we cannot
guarantee that the Film will receive distribution, or if it does, whether the
terms of the distribution agreement will result in proceeds sufficient to cover
the costs of the Film. For instance, exhibitors typically retain approximately
50% of the gross proceeds collected at the box office and, while it is not
uncommon for independent producers to negotiate lower distribution fees as a
result of producing a film independently, distributors usually attempt to retain
30%-40% of the remaining box office as a distribution fee. In addition, costs
associated with prints and advertising are usually deducted from any returns
that might otherwise go to an independent producer.

Taken collectively, the amount of revenues carved out from the theatrical box
office will likely have a significant impact on our theatrical box office
returns. It is therefore difficult for an independent film, such as ours, to
achieve profitability through licensing theatrical rights alone. This is the
primary reason why the


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terms of a distribution agreement that pertain to ancillary revenue streams,
such as international distribution, home video and DVD sales and rental,
television, are essential.

Every distributor has specific capabilities and demand for certain types of
films. Based on our relationships with these distributors and knowledge of the
distribution landscape, we intend to engage in discussions with selected
distributors, through which we will gauge interest with the intention of
conducting a competitive bidding process for the Film's distribution rights.

During the negotiating process, we will consider a number of issues including:

o     the distributors' historical track record and expertise in marketing
      movies of similar size, cast and genre;

o     whether the distributor is willing to buy worldwide rights or only a
      portion of the rights;

o     the amount and ability of a distributor to provide us a guaranteed minimum
      advance against future revenues from the Film;

o     the percentage of the Film's revenues that the distributor will retain as
      a distribution fee from each of the Film's revenue streams including
      theatrical, pay television, DVD and video rentals and sales and cable or
      network television and whether the fees will be based on the Film's gross
      or net revenues in each category

o     the release strategy the distributor intends to employ, such as a wide
      release (more than 1,500 screens) or a limited release (less than 500
      screens), and the minimum number of screens on which the distributor will
      guarantee the Film is shown;

o     the minimum and maximum amounts the distributor is willing to commit to
      spending on advertising and making copies of the Film (known as prints)
      for release;

o     whether the distributor's rights will be perpetual or lapse after a
      certain period of time;

o     a distributor's willingness to honor agreements Billy Dead, Inc. has
      entered into, including our commitment to give Mr. Gordon approval of the
      final edit of the Film;

o     a distributor's reputation for accurate accounting; and

o     a distributor's ability and reputation for making timely payments to
      producers.

We will attempt to balance these considerations and negotiate a distribution
arrangement that we believe will best maximize the returns to our stockholders.
However, some of these considerations may conflict with each other and we will
not be able to predict which strategy will maximize Billy Dead, Inc.'s revenues.

If we are unable to negotiate terms of a distribution agreement which are
acceptable to us, we may elect to forego theatrical distribution and license the
Film directly to pay cable or home video and DVD sales. Since films that forego
theatrical distribution typically generate significantly less revenue than those
that are released into theaters, this approach would be used as a last resort.

Industry Compensation Arrangements

Most of the creative and production personnel that work on a movie are
short-term employees or "for hire" contractors who are compensated for their
services at a predetermined rate. It is also customary in the motion picture
industry to pay contingent compensation over and above these fees to certain key
employees and contractors. Customary contingent compensation arrangements in the
industry include:

o     fixed deferrals;

o     residual payments; and

o     gross or net profit participations.


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Fixed Deferrals. Key creative personnel, including the director, producer,
writer and actors, often negotiate fixed deferral payments of flat fees tied to
a film's financial returns. We have not granted any fixed deferrals and have no
plans to do so.

Residual Payments. The principal collective bargaining organizations for
personnel within the movie industry are: the Directors Guild of America, or DGA;
the Writer's Guild of America, or WGA; the Screen Actors Guild, or SAG; the
American Federation of Musicians, or AFM; and the International Alliance of
Theatrical Stage Employees, or IATSE. When a movie producer involves members of
these organizations in a film, they are required to comply with certain residual
payment obligations. These obligations are set forth in agreements between these
organizations and the AMPTP (which represents the major studios) and provide
that a percentage of a film's gross revenues in certain markets must be paid to
these organizations for the benefit of their members. As an example, SAG
currently requires payment of between 4.5% and 5.4% of the gross revenue
attributable to videocassette exploitation and 3.6% of television exploitation,
with no residuals due for theatrical exploitation.

We may be required to accrue and pay standard residual payments based on the
collective bargaining agreements associated with our creative team. These
residual payments are based upon gross revenues in certain markets and may
therefore, depending upon our distribution arrangements, reduce our revenues in
various markets and release windows. It is difficult to predict the specific
impact on our overall returns as we have no way of predicting which release
windows and which markets will achieve what relative levels of revenues, nor can
we predict whether our arrangements with distributors might provide for flat
fees or advance payments which would reduce or eliminate the impact of these
residual obligations.

Profit Participations. The last form of contingent compensation is a "profit
participation", which entitles the recipient to additional compensation based on
the financial performance of a particular motion picture. Granting profit
participation to certain key creative personnel is common for both larger studio
films as well as smaller independent films. For independent movies, such as the
Film, this form of contingent compensation is critical to attract quality
creative personnel who work for less upfront compensation than they otherwise
might receive on a larger, more costly movie. By paying this contingent
compensation, producers are able to attract these high quality creative
personnel while simultaneously reducing the upfront costs.

Profit participations are typically "gross" or "net". Gross profit
participation, granted in extremely rare cases where the importance of the actor
or director is critical, is calculated based on gross revenues before any costs
(such as, distribution fees, financing costs and other corporate costs) are
deducted. Net profit participation is far more common, and is the arrangement we
will be using to pay contingent compensation. Net profit participation is
calculated based on net revenues after deducting certain costs of a film,
including distribution fees, financing costs and general corporate expenses.
Thus, a gross profit participation receives a percentage of the first dollar
received by a film before any costs are deducted, while a net profit
participation receives a percentage of revenue remaining after certain costs are
deducted.

We do not intend to grant or pay gross profit participation to anyone. We will,
however, pay net profit participation to our key creative personnel, and this
participation will, after the Series A liquidation preference has been met,
reduce our distributable cash (if any) upon the dissolution of Billy Dead, Inc.
This form of contingent compensation will equal 37.5% of our "adjusted cash
balances", referred to in certain of our agreements as our "adjusted gross
receipts", which will consist of the cash available to Billy Dead, Inc. after
paying all film, general and administrative and other corporate costs, income
taxes, reserving for the Series A liquidation preference on behalf of our Series
A stockholders, and reserving for any additional foreseeable contingent
liabilities.

We have entered into net profit participation agreements with various members of
our creative and management team including, among others, Ms. Lynn, Mr. Gordon
and a member of our board of directors, Charles Ryan. In total, we will grant
net profit participation amounting to 37.5% of our "adjusted cash balances" to
persons who will manage Billy Dead, Inc. and work on (or perform in) the Film.
We have thus


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far granted an aggregate of 8.5% of this 37.5% of contingent compensation to our
founders and management, including Ms. Lynn (3.75%), Mr. Gordon (3.75%) and Mr.
Ryan (1%).

We intend to contract out the entire remaining 29% to creative personnel
involved with the Film, primarily to actors who may perform in the Film, such as
Mr. Hawke. It is the industry standard that the producers retain any remaining
percentages in the net participation pool. However, we expect to contract out
the entire 29% to persons other than the founders and do not foresee any
residual amounts remaining in reserve upon the completion of the film's
production. In the event that any residual amounts remain, the producers
(including Mr. Gordon, Mr. Ryan and Ms. Lynn) may retain the remainder as a
production bonus. Such a determination would have to be approved by a majority
of outside directors. In any event, the final pool of net participation to all
persons will be 37.5% of our adjusted cash balances.

Our contingent compensation arrangements require performance of duties under
applicable contracts and can be forfeited in the event of non-performance or
other circumstances. In the instance of forfeiture, this compensation could be
granted to other persons who make up the production or management team.

In addition to their contingent compensation arrangements, Mr. Gordon and Ms.
Lynn are receiving a flat fee for their services as the director and producer of
the Film and are beneficial owners of shares of our common stock.

Employees

As of April 2004 we had no full-time employees. As is typical in motion picture
production, we intend to use short-term employees and independent contractors to
produce the Film. We plan to retain most of these short-term employees and
independent contractors after we begin production, and most of our agreements
with these employees and contractors will end by the time production is
completed.

Ms. Lynn will negotiate our employment agreements with members of the Film's
production staff. Some members of our production staff will belong to unions or
guilds. When this is the case, the union or guild may negotiate with Ms. Lynn on
that person's behalf.

Most of the unions and guilds within the movie industry are parties to
collective bargaining agreements with the Alliance of Motion Picture and
Television Producers, or AMPTP, which represents the major studios. Although we
are not a member of the AMPTP, and therefore are not a party to any of the
AMPTP's collective bargaining agreements, these agreements will nonetheless
serve as a reference point during our negotiations with unions, guilds and
members of the Film's production staff.

RISK FACTORS RELATED TO OUR BUSINESS

Factors that could cause or contribute to differences in our actual results
include those discussed in the following section, as well as those discussed in
other parts of this Annual Report on Form 10-KSB. You should consider carefully
the following risk factors, together with all of the other information included
in this Annual Report on Form 10-KSB. Each of these risk factors could adversely
affect our business, operating results and financial condition, as well as
adversely affect the value of our Series A preferred stock.

Because we are a newly formed company, there is no corporate operating history
on which to evaluate our potential for success.

Prior to Billy Dead, Inc.'s recent formation we had no corporate history from
which to evaluate our operating performance or potential for success.

Additionally, we face many risks inherent in a start-up business, including
difficulties and delays frequently encountered in connection with the
commencement of operations, operational difficulties and our potential
underestimation of initial and ongoing costs.


                                       10
<PAGE>

Because our founders have contributed an insignificant amount of capital toward
Billy Dead, Inc., investors in our Series A preferred stock will bear
substantially all risk of cash loss if the Film is unsuccessful.

Our founders, who are making the Film and managing the affairs of Billy Dead,
Inc., have spent a nominal amount of cash toward our development. This means
that, if the Film is unsuccessful and we are therefore unable to generate
revenues, investors in our Series A preferred stock will bear the entire
economic risk.

Because we will spend significant funds with no ability to predict whether the
Film will be successful, our Series A preferred stockholders will encounter
substantial financial risk.

Producing the Film requires that we spend significant funds based entirely on
our preliminary evaluation of the Film's commercial potential. It is impossible
to predict the success of any film before its production starts. The ability of
the Film to generate revenues will depend upon a variety of unpredictable
factors, including:

o     public taste, which is always subject to change;

o     the quantity and popularity of other films and leisure activities
      available to audiences upon the Film's release;

o     the competition for exhibition at movie theatres, through video retailers,
      on cable television and through other forms of distribution; and

o     the fact that not all films are distributed in all media.

For any of these reasons, the Film may be commercially unsuccessful and our
business may suffer.

Because certain of our corporate actions do not require approval from a majority
of the Series A preferred stockholders, our management will have effective
control over certain matters requiring stockholder approval.

Our certificate of incorporation provides that some corporate actions (including
amendments to the certificate of incorporation, additional offerings of shares
in Billy Dead, Inc., certain affiliated transactions or our decision to produce
any additional films) require approval from a majority of the Series A preferred
shares. However, certain other matters (such as the election of our directors,
our entering into a distribution agreement for the Film, or the dissolution of
Billy Dead, Inc.) do not require approval of any such majority of the Series A
preferred shares. This means if our management, members of our board and
affiliates, who will exercise effective control over 66.7% of the voting stock
of Billy Dead, Inc., act together they will effectively control these matters.

Because we will only produce a single film, we will have no other way to
generate revenue if the Film is unsuccessful.

Most companies that finance movies, particularly major studios such as the Walt
Disney Studios and Universal Pictures, diversify their risk by producing groups
of films. This diversification reduces the impact of a single movie's commercial
success or failure. Our success, however, will depend entirely upon a single
movie. If the Film is commercially unsuccessful, we will have no alternate
sources of revenue.

Because much of our competition is better capitalized, we may be at a
disadvantage in acquiring personnel, negotiating distribution and attracting the
public's attention.

The movie industry is a highly competitive business. We will compete with both
major production studios and smaller independent producers for personnel,
exhibition outlets and the public's interest. Most of these companies have
greater financial and personnel resources than ours. In particular, theaters are
more likely to exhibit feature films with substantial studio marketing budgets.
Even if we are able to complete the Film and obtain distribution, it is unclear
how much will be spent on marketing to promote the Film by our distributors.


                                       11
<PAGE>

Because our success depends on several key persons, their loss could harm our
ability to complete the Film or attract an audience.

We are highly dependent upon the experience, ability and continued services of
director Keith Gordon and producer Julie Lynn, with whom we have employment
contracts to direct and produce the Film. The loss of the services of either Mr.
Gordon or Ms. Lynn could harm our business. Ethan Hawke, who is an Executive
Producer on the Film, has also provided us with a written expression of interest
in playing the lead role in the Film. If we are unable to reach a final
agreement with Mr. Hawke to perform in the Film, the Film's marketing appeal
could be greatly diminished.

We will require many other highly skilled creative and production personnel,
including cinematographers, editors, costume designers, set designers, sound
technicians, lighting technicians and actors. Although we expect to find high
quality candidates to fill these positions, they may be unwilling to work for us
under acceptable terms. This could delay production or reduce the quality of the
Film, which would impair our revenues. Also, many of these positions could
require us to hire members of unions or guilds. As a result, our ability to
terminate unsatisfactory or non-performing workers could be adversely affected
by existing union or guild contracts and regulations. This could delay
production of the Film and significantly increase costs.

We may elect to forego the purchase of key man life insurance, which would mean
that the loss of any key persons may cause unexpected financial losses.

We intend to obtain insurance policies standard in a motion picture production,
including general liability insurance, a completion bond and other production
related insurance. However, we may elect to forego the purchase of key man life
insurance. Our management will make this decision after their review of other
insurance policies we obtain for Billy Dead, Inc. or the film production. If we
do not obtain key man life insurance, then certain losses relating to any of our
key personnel may not be covered. There is no way to know how comprehensive our
coverage may be or how such a loss might impact the success of Billy Dead, Inc.

Because there may be a substantial delay between the completion of the Offering
and the production of the Film, our expenses may be increased and it may take us
longer to generate revenues.

While we hope to begin production of the Film soon after completing the Series A
Preferred offering, if successful, we have no way to predict exactly when we
will begin production of the Film. Movie producers are often involved in several
projects at the same time and Ms. Lynn is currently seeking financing for
additional projects. Mr. Gordon is an active film director who is often
presented with opportunities to direct movies other than the Film. In addition,
independent contractors needed to produce the Film, such as Mr. Hawke, often
have commitments to more than one movie project.

Mr. Gordon, Ms. Lynn, Mr. Hawke or any other actor playing a leading role will
need to complete, delay or abandon such potential obligations before production
on the Film begins. While we intend to begin production of the Film as soon as
practical after the closing of the Offering, we have no way of predicting when
the closing will occur or if it will occur at all. Therefore we have no way to
predict the scheduling availability of our principal cast and creative staff.

In addition, other considerations such as the location we choose to utilize, the
weather conditions when the offering is completed and the fact that we will need
to cast younger actors resembling our lead actors (which may be time consuming),
mean that the timing of the commencement of our principal photography phase is
difficult to predict.

Prior to entering into production of the Film, we may make temporary investments
in interest-bearing accounts, certificates of deposits, United States Government
obligations or money market accounts. Nevertheless, any delay in the start of
production would also delay the completion of production, and we cannot generate
revenues until the Film has been completed. General overhead and administrative
costs


                                       12
<PAGE>

will be incurred by Billy Dead, Inc. during this period, which means such a
delay would also possibly increase our expenses and reduce potential return.

Because we may decide to replace key members of our production team if they are
unable to perform their duties within our schedule, the marketing appeal of our
Film may be reduced.

As is customary in the movie business, the agreements we enter into during
pre-production, including our current agreements with Mr. Gordon, Ms. Lynn, and
the written expression of interest we have received from Mr. Hawke, are
contingent upon our ability to accommodate their availability. While we do not
anticipate that Mr. Gordon, Ms. Lynn or Mr. Hawke (if we reach a final agreement
with him) will be unavailable to work on the Film, the substantial delay between
the execution of our current agreements and the completion of the Offering
creates a degree of uncertainty. In the event that we are unable to accommodate
the schedules of any of our key participants, we may decide to produce the Film
with replacements who we deem suitable. However, such replacements may reduce
our marketing appeal, impact our Film's performance at the box office and
adversely affect our revenues.

If we are unable to obtain a completion bond we would be unable to produce the
Film but will have incurred expenses, and would therefore be unable to return
the entire amount of your investment.

Our certificate of incorporation requires us to obtain a completion bond from a
completion bond company before we begin production of the Film. A completion
bond is a promise by a third party, which is typically a completion bond
company, that a film will be completed and delivered by a particular date. Under
the terms of a completion bond, if we require additional funds to complete the
Film by the delivery date, the completion bond company will either disburse
these funds or cause us to abandon production and repay our expenditures toward
the production of the Film.

We do not currently have an agreement in place with a completion bond company
but believe that we can obtain a completion bond for an estimated cost of
$140,000. However, if we are unable to obtain a completion bond on acceptable
terms, we cannot begin production. This would force us to dissolve and return
our remaining assets to stockholders. In this event, because we will not have
produced the Film, we will not have generated enough revenues to become
profitable. In addition, because we will incur expenses associated with both the
Offering, general corporate overhead and startup costs and with the attempt to
obtain a completion bond, we would be unable to return to stockholders the
entire amount of their initial investment.

Because the terms of a standard completion bond state that the bond company may
take control of our production if we do not produce the Film on schedule and
within budget, the artistic integrity and commercial viability of the Film may
be reduced.

Our failure to complete the Film on schedule or within budget could result in
the completion bond company taking over production on behalf of the investors.
If a completion bond company takes over production, it has the right to replace
members of our production team, including Mr. Gordon and Ms. Lynn. The loss of
Mr. Gordon or Ms. Lynn may reduce the quality of the finished film, limit our
ability to promote the Film, or force us to make changes in our management, all
of which may harm our business.

If we do not complete the Film on schedule or within budget, our ability to
generate revenue may be diminished or delayed.

Our success depends on our ability to complete the Film on schedule and within
budget. Our production schedule and budget estimates for the Film have been
prepared by an independent third party consultant, and we believe they are
reasonable. In addition, our schedule and budget must be reviewed and approved
by a completion bond company before we can obtain a completion bond.
Nevertheless, our ability to adhere to our schedule and budget face many
uncertainties, including but not limited to:

o     whether we can attract suitable production and creative staff within our
      budget;


                                       13
<PAGE>

o     the timing of the availability of our principal cast members;

o     the continued health of our director, producer, actors and other key
      personnel;

o     our ability to cast younger actors resembling our lead actors for certain
      flashback scenes;

o     delays caused by unpredictable weather;

o     the availability and affordability of desirable locations; and

o     our ability to secure appropriate facilities for post-production work in a
      timely fashion.

Therefore, we cannot be certain that production of the Film will occur on
schedule or within budget. If we are forced to exceed our production budget due
to unforeseen problems, we may be required to raise additional capital in the
form of short-term debt to complete the picture. We would be required to pay
this debt obligation, including any accrued interest, prior to generating
proceeds to Billy Dead, Inc.'s stockholders.

Additionally, if we do not complete the Film on schedule its distribution will
be delayed and it will increase the time before we begin to generate revenues.
During this period Billy Dead, Inc. will continue to incur overhead costs, which
may reduce the ultimate financial return to stockholders.

If our production goes over budget we may be unable to raise additional capital.

If our budget is insufficient to complete the Film and license the distribution
rights, we may be forced to raise additional capital. To raise additional equity
or convertible debt funding, we will need to obtain approval from our Series A
preferred stockholders to amend our certificate of incorporation and increase
the number of authorized shares of capital stock. If we do not receive such
approval, or if we are otherwise unable to raise additional financing on
acceptable terms, we may be unable to complete the Film and license it for
distribution.

If we are unable to find an acceptable offer to purchase our assets upon
dissolution, we may be forced to continue to operate and any additional
operating expenses would reduce returns to our stockholders.

When we determine that we have licensed or otherwise commercialized the majority
of the Film's rights, we intend to sell our remaining assets, distribute the
proceeds to our stockholders and dissolve Billy Dead, Inc. Liquidation of our
assets will consist of selling any residual rights we have retained to license
the Film for exhibition or otherwise assign our copyrights and trademarks.

We cannot be certain of finding a suitable buyer for these assets before we
incur losses. If we are unable to find a suitable buyer in a timely manner, we
will be forced to sell our assets for less than their present value or wait
until we find a more attractive offer. If we choose to wait, we will incur
expenses in the meantime, reducing the amount we can distribute to stockholders.

Because Delaware law provides that dissolving companies retain certain financial
obligations, our stockholders may be liable for future claims.

If we decide to dissolve Billy Dead, Inc. we will notify all current and former
employees, contractors and creditors and give them a reasonable period of time
to alert us of any remaining obligations. We will then pay all of our known
obligations and set aside a contingency for future claims that we believe are
reasonably likely to arise within three years of dissolution. Typically a
dissolving company will set aside what the directors believe is a reasonable
reserve to pay taxes.

By setting aside a reasonable reserve to pay taxes, and by giving potential
claimants reasonable notice of our intention to dissolve (and by paying any
resulting claims) we do not anticipate having any additional obligations,
pending claims, or future claims reasonably likely to arise within three years
of dissolution.


                                       14
<PAGE>

However, there is no guarantee that unanticipated claims will not be brought
against us after we dissolve. Under Delaware law, Billy Dead, Inc. will
"continue" in existence for three years after dissolution, and any claims by
potential creditors must be brought during that time. If the amounts we have set
aside are insufficient to satisfy those claims and if a claimant has properly
asserted a claim in a timely manner during the limited period following
dissolution, then under the Delaware General Corporation Law each of our
stockholders will be liable for the lesser of: his or her proportionate share of
the claims; or up to the total amount of any distributions we have made to the
individual stockholder.

Because it will be difficult to project the Film's future revenues, our results
of operations may vary substantially from quarter to quarter.

In accordance with U.S. generally accepted accounting principles (GAAP) for the
motion picture industry, we intend to amortize our production costs based on
current estimates of the total revenues we expect to receive from the Film. We
are required to regularly review these estimates and revise them when necessary.
As a result, our results of operations may vary from quarter to quarter based on
our revisions in estimates caused by changes in economic conditions affecting
the motion picture industry in general and the viewing audience in particular. A
downward revision in our revenue estimates would potentially require a change in
the amortization rate of film costs resulting in reduced or negative quarterly
earnings.

Because the Film contains mature themes, it may be subject to ratings
restrictions and censorship which would reduce our ability to commercialize the
Film.

Certain agreements we plan to obtain, including agreements with distribution
companies, may be contingent upon the Film ultimately receiving a rating
classification from the Motion Picture Association of America, or MPAA, that is
no more restrictive than R.

We intend to produce the Film in such a manner that it will ultimately receive
an R rating. However, the Film contains mature themes, and it is difficult to
predict how the MPAA will ultimately classify the Film. If the Film is unable to
obtain a rating less restrictive than NC-17 then marketing and advertising
support from a distributor may be reduced, resulting in fewer distribution
venues and thus a smaller audience.

In addition, censors in certain foreign jurisdictions might find elements of the
Film to be objectionable. We may be forced to make revisions before exhibiting
the Film in these jurisdictions, further adding to our expenses. The release of
the Film in certain jurisdictions may be denied regardless of revisions. These
occurrences would reduce our international revenues.

If certain information and statements which appeared in published news reports
or elsewhere were considered to be a "prospectus" for purposes of the Securities
Act of 1933, purchasers in the Offering could have the right to commence an
action for rescission or damages, which, if successful, could result in our
liability to such purchasers.

In certain articles appearing in news reports or on the Internet in November and
December 2003, information regarding our business and this offering was
published. Some of that information was based on statements made by members of
our management, the underwriter or others, or was incorrectly attributed to
them. Some of the statements about us in such articles contain information that
is inconsistent with the disclosures in this prospectus.

In particular, the following statements appeared:

An Associated Press article on November 19, 2003 stated that our shares "will be
traded on the Nasdaq Over the Counter market." These statements, which were
additionally stated in slightly altered forms in other articles and reports, are
erroneous. The shares will be made available to trade on the Over The Counter
Bulletin Board, or OTCBB, which is not owned nor operated by NASDAQ.
Additionally, this and certain other comments implying the offering's potential
liquidity or potential for trading have been repeated in various publications in
various forms. Investors should be aware that, while the shares may trade, there
is no assurance that, should the offering be completed, a liquid trading market
will develop.


                                       15
<PAGE>

In an article in The Economist dated December 2, 2003, Barry Poltermann,
President of Civilian Capital, is quoted as saying that the offering is "on
track to close". Further, in a Bloomberg wire article first published on
November 13, 2003 which was reprinted in various publications, including the
Chicago Tribune, Mr. Poltermann, when asked about his confidence that the
offering will be successful, states that "My confidence is off the charts. I've
been working on this for four years. We wouldn't do it if we weren't extremely
confident." The article also notes that Civilian Capital plans to manage six
other film IPOs to raise as much as $60 million by the end of 2004. Civilian
Capital's representations that they plan to offer additional IPOs in the future
have also appeared in various forms in other publications.

The initial public offering for our Series A Preferred Stock is being conducted
as a best-efforts, all or none offering, and there is no assurance that the
offering will be completed, and if the offering is completed, there is no
assurance that Civilian Capital will manage any other film IPOs or raise any
other capital. When considering the merits of investing in our company, we are
advising potential investors not to rely on any representations of confidence
made by the underwriter in their ability to raise sufficient funds to close the
offering, or plans of the underwriter to pursue similar film offerings in the
future.

The Associated Press article of November 19 also attributed to the "company's
backers" a statement that "efforts have been made to minimize risk." A CBS
Marketwatch article appearing on the Internet on November 19, 2003 attributed
statements to "officials at Billy Dead Inc." that the company can mitigate risk
"via breakup fees that are expected to cover the initial offering." The article
further stated "[Billy Dead, Inc. CEO Peter] Fuhrman said the company can
mitigate some of the risk if a distribution deal cannot be secured once the film
is made. Breakup fees to put a film directly to pay-per-view or video usually
amount to $8 million, roughly the sum the company hopes to raise in the public
offering."

Mr. Fuhrman did in fact discuss, at a conference call held with members of the
financial and business press on November 19, 2003, our attempts to mitigate risk
through various strategies. However, there can be no assurance that the break-up
fee strategy, if pursued, would cover the amount raised by the offering or would
generate any revenues whatsoever. Despite any efforts which we may potentially
pursue in order to mitigate risk via any strategy, including break-up fees, the
risks of the offering, which is speculative in nature, are not ameliorated. Any
representations in any news report or articles that imply that we have any
assurances that will be able to achieve any revenues whatsoever through a
break-up strategy or any other strategy is not correct.

Both the CBS Marketwatch Internet article and the Associated Press article
referred to above reported company officials as stating that in certain
instances low-budget films have a greater chance at profitability than more
costly projects. These statements attributed to Mr. Fuhrman or to
representatives of Billy Dead, Inc. have been repeated, sometimes in slightly
altered forms, in several other press articles. For example, in the Associated
Press story Mr. Fuhrman was quoted as saying "[t]hese types of movies have shown
to achieve a level of profitability beyond even the biggest studio films." In
the CBS Marketwatch story Mr. Fuhrman was quoted as saying, `Monster's Ball' was
more profitable in terms of return on investment than `Monsters Inc.'"

Additionally, Mr. Poltermann was quoted on NPR's "On the Media" program on
November 21, 2003 as saying "I'm not saying that it's still not a very risky
game. The movie business is hit-driven. But it doesn't have to be "Blair Witch
Project" or "My Big, Fat Greek Wedding" to do very well. In fact, actually last
year "Y Tu Mama Tambien" was actually more profitable in a return-on-investment
basis than "My Big, Fat Greek Wedding"."

This information and other information concerning motion picture profitability
also appeared as an element of a series of charts outlining the most profitable
films released over the years 2000, 2001 and 2002 which appeared on the
underwriter's website shortly after the offering was initially declared
effective on November 12, 2003. The chart was a summarized re-publication of
certain return on investment information for motion pictures published by Kagan
World Media and was accompanied by the prospectus for this offering.


                                       16
<PAGE>

Messrs. Fuhrman's and Poltermann's references to particular films (such as
"Monsters Ball") or groups of films (such as "studio films"), as well as the
information which appeared on the underwriter's website concerning film
profitability, are not balanced representations of potential film profitability
because they do not represent the fact that numerous films or groups of films
released at the same time were less profitable than the cited films or groups of
films. Such statements and information should not be construed as ensuring or
predicting profitability for our Film. We are unable to predict the eventual
relative profitability of our film as compared to any other film or group of
films.

A Business Week article on December 15, 2003 outlined a hypothetical scenario
regarding potential returns for the Film. This hypothetical scenario was not
based on any information provided to the author by management or Civilian
Capital. We believe the author analyzed information that appears in the
"Management's Plan of Operation" section of this prospectus and based the
potential returns upon his estimates and assumptions that are inherently subject
to significant uncertainties and contingencies, primarily concerning the timing
and cost of the Film's distribution. Billy Dead, Inc. has never made, and does
not intend to make, any public financial projections about the performance of
the film Billy Dead, Inc. was formed to produce.

In order to reduce the risk of investors' possible reliance on these and other
news reports and articles, or information which appeared on the underwriter's
website in a manner which was insufficiently balanced, we stopped our offering
on December 8, 2003. Our underwriter, Civilian Capital, refunded to investors
all proceeds for shares then subscribed to which were held in escrow. We then
allowed a "cooling off" period of several weeks to pass so that the effect of
these reports, articles and other information would be dissipated.

The appearance of these news reports, articles and other information cited above
or otherwise previously made available may have constituted one or more
prospectuses that did not meet the requirements of the Securities Act of 1933
and may have caused us to violate Section 5 of the Securities Act, which would
allow an investor who purchased shares in the offering to have the right, for
one year from the date of purchase, to bring an action for rescission or for
damages resulting from such purchase. If any such claim were asserted, we would
contest it vigorously, although there can be no assurance that any such contest
would be successful.

Billy Dead, Inc. has received, and may continue to receive, a high degree of
media coverage about its initial public offering, including coverage that is not
directly attributable to statements made by Billy Dead, Inc.'s officers and
employees or the officers or employees of Civilian Capital. To the extent any
such coverage is inconsistent with, or conflicts with, the information contained
in this prospectus, or relates to information not contained in the prospectus
relating to the offering, it has been disclaimed by Billy Dead, Inc. and
Civilian Capital. We have advised prospective investors only to rely on
information included in the prospectus relating to the offering, and to make
their investment decision only after carefully evaluating all such information,
including the risks set forth in that prospectus, as also described herein.

Because our management may face numerous potential conflicts of interest, the
protection of your interests may be compromised.

It is common in the film business to produce motion pictures through single
purpose companies. However, this strategy creates numerous inherent conflicts of
interest. For instance, our officers do not intend to work full time for Billy
Dead, Inc. and will continue to work on other film and television productions.
This means that management will likely encounter certain conflicting demands on
their time. In addition, management's duties with Billy Dead, Inc. will require
that they contract with distributors, cast members and others that they may have
had arrangements with in the past and will likely have arrangements with in the
future. While it is management's duty to represent and uphold the interests of
Billy Dead, Inc., and they have every intention of doing so, management may
nonetheless encounter situations where it would be in their best interest for
future endeavors, not affiliated with Billy Dead, Inc., to provide more
favorable terms to other persons or entities in order to maintain or enhance
future working relationships.


                                       17
<PAGE>

Because Civilian Capital is a new underwriter and the offering of our securities
is its first offering, the market for our securities may be impacted.

Civilian Capital was formed in April 2000 and became a member of the NASD in
October 2000. Although certain principals of Civilian Capital have extensive
experience in the securities industry, the underwriter has not acted as an
underwriter in any other public offering. This lack of operating history may
have an adverse effect on the Offering and the after-market trading of our
securities.

Because Civilian Capital played a role in our formation, the quality of their
"due diligence" may have been reduced.

Civilian Capital has played a larger role in Billy Dead, Inc.'s formation and in
the development of the Offering than an underwriter would traditionally.
Civilian Capital's activities in connection with both our formation and with the
Offering have included helping to locate our officers and board of directors,
our legal counsel for securities and general corporate matters, and our
independent auditors. Despite the fact that the underwriter pursued due
diligence procedures standard in a public offering, the role Civilian Capital
played in setting up Billy Dead, Inc. may have diminished their objectivity and
reduced the quality of this due diligence.

Because our Series A preferred stock has no fixed dividend or redemption rights,
you may never receive your liquidation preference.

Very often, stock known as "preferred stock" is entitled to fixed dividends and
does not have voting rights. Our Series A preferred stock, however, provides for
voting rights but no fixed dividends. Under Delaware corporate law our Series A
stock is deemed to be a `preferred' stock because it is superior in right to
payment of dividends and liquidation proceeds to the common stock. Because there
is no obligation for us to pay fixed dividends or otherwise declare dividends,
purchasers of our Series A preferred stock have no assurance that they will
receive dividends. If we do not achieve revenues sufficient to return capital to
our stockholders you may never receive your preference, either through
liquidation or any dividends our board of directors may elect to declare.

Because it is impossible to predict the value of our assets if we dissolve, we
may have insufficient assets for our stockholders to recover their investment.

Once we have reserved $8.75 per share on behalf of the Series A preferred
stockholders and distributed 37.5% of our remaining "adjusted cash balances" as
contingent compensation, we intend to reserve 80% of any remaining holdings on
behalf of the Class A preferred stockholders and 20% on behalf of the common
stockholders.

If we dissolve, our assets available for distribution will be based primarily
upon the commercial success of the Film. In addition, the assets available for
distribution to stockholders will also be affected by:

o     the price we obtain for the Film's residual rights;

o     any unanticipated liabilities or expenses that arise in connection with
      the production of the Film;

o     any reimbursements we may receive from a completion bond company; and

o     any impact from corporate taxation.

All of these factors involve amounts that are impossible to predict. Therefore,
you cannot be certain that any assets will remain after we dissolve or that our
distribution of these assets will allow you to recover your full investment.

Because we may encounter difficulties or delays in selling the Offering, an
investment may be held in escrow for up to six months.


                                       18
<PAGE>

Civilian Capital currently is conducting the offering of our securities on a
best-efforts, all-or-none basis. This means Civilian Capital has made no
commitment to purchase any of our Series A preferred stock, and unless the
underwriter is able to sell the entire offering amount within six months of its
being declared effective by the SEC (August 10, 2004), the Offering will be
canceled and no shares will be issued nor any underwriting fees or commissions
paid.

We may encounter difficulty selling the offering for a variety of reasons,
including the lack of experience of our underwriter, the fact that our
underwriter does not employ a retail sales force, and the fact that the Offering
will be marketed largely over the Internet, without an extensive traditional
"road show" to meet potential investors.

As we indicated in the prospectus for this offering, investors' funds for the
offering are currently being placed into an escrow account. Investors are unable
to cancel their subscription and their money is being held in escrow until we
either sell the entire offering and issue you stock in Billy Dead, Inc., or we
decide to cancel the offering and return your money, with interest and without
deduction. This period of escrow may be up to six months after the offering
becomes effective.

Because our preferred stock is not listed or quoted at the present time, you
have no way of knowing if an active trading market will develop.

Billy Dead, Inc. does not meet the standards for listing on the Nasdaq National
Market or SmallCap Market exchanges. We will therefore seek to have our Series A
preferred stock quoted on the OTC Bulletin Board, commonly known as the OTCBB.
However, inclusion on the OTCBB, if granted, does not guarantee that an active
and liquid trading market will develop.

If an investor seeks to trade shares of our Series A preferred stock, you may
find that these shares have limited liquidity, meaning that your order may be
only partially executed or may not be executed at all. In addition, because of
the large spreads typical between an OTCBB market maker's bid and ask prices for
a particular security, a holder of our shares of Series A preferred stock may
experience significant losses if he or she needs to sell shares immediately
after the Offering. If the bid price for our Series A preferred shares is much
lower than the ask price, an investor will not be able to sell his or her shares
at a profit unless the market value of the stock rises substantially.

Additionally, our common stockholders control 67% of the combined voting power
of Billy Dead, Inc. and have control over the approval of our liquidation or of
any dividend payments. If the common stockholders do not approve of our
liquidation or dividend payments, our Series A preferred stockholders will be
unable to obtain a financial return unless an active trading market develops.

Even if our Series A preferred stock is able to trade, the market price may be
volatile which could result in litigation.

Market fluctuations and volatility, as well as general economic, market and
political conditions, could reduce our market price. As a result, investors may
be unable to resell their shares for more than the offering price even if our
operating results are positive.

In the past, class action litigation has often been brought against an issuer
following periods of volatility in the market price of its securities. We could
become involved in this type of litigation in the future, which is often costly
and would divert both our resources and our management's attention away from
running our core business.

If our Series A preferred stock ever becomes a "penny stock," broker-dealers
that trade in our stock will be subject to extensive additional regulation.

Our preferred stock will fall within the definition of a "penny stock" unless it
meets at least one of the following criteria:


                                       19
<PAGE>

o     the highest bid displayed for our stock on the OTCBB is $5 or more, and at
      least two market makers are currently displaying bid and ask quotations
      for our stock at specified prices;

o     we have net tangible assets of at least $5 million or, if we have been in
      existence for more than three years, $2 million; or

o     our average revenues during the previous three years are at least $6
      million.

This means, for instance, that if our Series A preferred stock were to drop in
price below $5 per share it would probably be considered a penny stock. Penny
stocks are subject to an extensive series of disclosure obligations and sales
practice requirements on brokers. These rules would restrict the ability of
brokers to find buyers, which would restrict your ability to sell shares in the
secondary market.

Because the offering price of our Series A preferred stock was determined
without considering assets, earnings, book value or any other objective standard
of value, our share price may not be supported by the market.

The offering price of $8.75 per share was determined by us and by our
underwriter, Civilian Capital, and was based upon the amount of capital
projected to make the Film, without considering assets, earnings, book value or
any other objective standard of value. As a result, there may be insufficient
information for buyers in the market to determine a fair trading price and our
investors may be unable to resell their shares for more than the offering price
even if our operating results are eventually positive.

ITEM 2. DESCRIPTION OF PROPERTY

Our corporate offices are at 2312 Lorenzo Dr., Los Angeles, California 90068 and
occupy approximately 250 square feet. We rent this space from Apologetic
Productions, a motion picture development company owned by Ms. Lynn. We pay $100
per year to rent this space and the lease will continue until terminated by
either party in writing by giving 30 days notice.

ITEM 3. LEGAL PROCEEDINGS

We are not subject to any pending litigation, legal proceedings or claims.

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

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


                                       20
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Neither our common stock nor our Series A preferred stock is listed or quoted at
the present time. If the initial public offering of our Series A preferred stock
is successfully completed, we plan to obtain a sponsoring market maker to file
Form 211 with the National Association of Securities Dealers for approval to
have our Series A preferred stock quoted on the OTC Bulletin Board. We plan to
request that our Series A preferred stock trade under the symbol, if available,
"BILLY". There is no assurance that we will be able to obtain a sponsoring
market maker to file Form 211 and there is no assurance that if the Form 211
were filed that approval would be granted so that our securities would be
permitted to trade on the OTC Bulletin Board. Therefore, there can be no
assurance that a public market for our Series A preferred stock will ever
develop.

As of April 13, 2004, we had six beneficial holders of our common stock and no
holders of our Series A preferred stock.

We do not intend to pay dividends for the foreseeable future.

We have no equity compensation plans in effect as of April 13, 2004.

In October 2002, we issued 108 shares of our common stock to our three initial
directors in connection with the formation of our company. We received nominal
consideration of $2.00 per share (an aggregate of $216.00). The issuance of the
securities was exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), under the provisions of Section 4(2) and under
SEC Regulation D, as it was not a transaction involving a public offering.

In December 2002, the directors and stockholders of our Company approved the
Amended and Restated Certificate of Incorporation, pursuant to which the number
of authorized shares of common stock would be increased to 900,000 shares, with
a par value of $0.001 per share, and a new class of 954,000 shares of Series A
Preferred Stock, par value $0.001 per share, was authorized. The directors and
stockholders also approved the automatic conversion of each of the 108
previously issued shares of common stock into 2,000 shares, par value $0.001 per
share (an aggregate of 216,000 shares) upon the filing of the Amended and
Restated Certificate of Incorporation (the "Recapitalization"), which occurred
on February 27, 2003.

In December 2002, the directors and stockholders also approved the issuance of
an additional 684,000 shares of common stock, subject to the filing of the
Amended and Restated Certificate of Incorporation, in connection with the
formation of our Company. The shares were issued following the recapitalization
for nominal consideration equal to par value per share (an aggregate of $684) to
two of the Company's directors who will act as our management team and a third
person who is the director of the Film to be produced by the Company. The
issuance of the shares was exempt from registration under the Securities Act
under the provisions of Section 4(2), as not being a transaction involving a
public offering.

In August 2003, a new board member was added and one of the initial directors
sold, for $0.001 per share, 36,000 shares of common stock (aggregate of $36.00)
to the new member.

In October 2003 a member of our management team resigned from the positions of
CEO and CFO and the Company subsequently filled his position with a new person.
In connection with this restructuring of our management, and in accordance with
certain provisions of our management's employment contracts, the former CEO/CFO
sold 144,000 shares of common stock to the new CEO/CFO for $0.001 per share, (an
aggregate of $144.00). Also in October 2003, the Company added another new board
member. The former CEO/CFO sold 6,000 shares common to the new board member for
$0.001 per share (an aggregate


                                       21
<PAGE>

of $6.00). An initial director additionally sold 30,000 shares of common stock
to the same new board member for $0.001 per share (an aggregate of $30).

The certificates representing the shares transferred in August and October 2003
have restrictive legends, and each of the purchasers of the shares has delivered
to the Company a letter confirming his investment intent with respect to the
shares acquired. In addition, the transferability of these shares, as is the
case of all other shares of common stock issued and outstanding and held by the
founders of the Company and its directors, will be limited for a period of up to
four years following the closing of the Company's public offering of its Series
A preferred stock, in accordance with the terms of the Promotional Shares Escrow
Agreement. Accordingly, the sale and transfer of these shares in August 2003 and
October 2003 were exempt from registration under the Securities Act because they
constituted private resales effected in a manner similar to a private placement
by the Company, and therefore came within what is characterized as the "Section
4 1/2 exemption" under the Securities Act.

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

General

Our company, Billy Dead, Inc. was formed in September as a Delaware corporation.
Billy Dead, Inc. plans to develop, produce, edit and market a feature-length
motion picture tentatively titled "Billy Dead" (the "Film"). Billy Dead, Inc. is
in the development stage as its activities to date have consisted primarily of
organizational activities, such as issuing stock to the directors and founders,
establishing a line of credit and preparing for an initial public offering of
our Series A preferred stock.

Ability to Continue as a Going Concern

Our financial statements, which are a part of this Form 10-KSB, have been
presented assuming that we will continue as a going concern. As more fully
described in Note 2 of our financial statements, our liquidity has been
adversely affected by significant losses from operations. We reported net losses
of $60,811 and $10,418 for the years ended December 31, 2003 and 2002,
respectively. Additionally, there is a stockholders' deficit of $70,329 at
December 31, 2003.

Plan of Operation

Status of Public Offering of Securities. On November 12, 2003, our registration
statement (#333-104620) for the sale of 900,000 shares of Series A preferred
stock was declared effective by the Securities and Exchange Commission. A
significant number of news articles followed, some of which contained
information inconsistent with the public offering prospectus (the "Prospectus").
In order to reduce the risk of investors' possible reliance on these news
articles, we stopped our offering on December 8, 2003 and allowed a "cooling
off" period of several weeks to pass. Our underwriter, Civilian Capital,
refunded to investors all proceeds for shares purchased then held in escrow.

After stopping the offering we did not accept requests from customers to
purchase shares, and only started doing so again after the post-effective
amendment to the Registration Statement was declared effective by the Securities
and Exchange Commission on February 12, 2004. The offering is being underwritten
by Civilian Capital on a best-efforts, all-or-none basis.

Shares of our Series A preferred stock are being offered on a fully paid basis
at $8.75 per share. Our stock will be issued to purchasers only if the proceeds
from the sale of all 900,000 shares are released to us by the


                                       22
<PAGE>

escrow agent. The funds in escrow will be held for the benefit of those
subscribers and will not be subject to our creditors or applied to pay the
expenses of the offering until the offering is closed and the proceeds are
released to us by the escrow agent.

If all of the shares of Series A preferred stock are not sold within 90 days of
February 12, 2004 -- or 180 days if we choose to extend the offering period --
the offering will be canceled and all monies received and held in escrow will be
promptly returned to the subscribers with interest and without deductions.
During the period of escrow subscribers will not be entitled to refunds of their
subscriptions.



We presently do not have enough cash to satisfy future cash requirements. We
will need a minimum of $265,759 for our cash requirements for the next 12
months. We intend to raise capital by the sale of our Series A preferred stock
pursuant to an initial public offering of 900,000 shares at $8.75 per unit. With
the proceeds of that offering, we intend to produce the Film. If we are
unsuccessful in doing so, we may have to cease operations based on our current
business plan.

We were formed for a single purpose: to develop, produce and market the Film.
Our primary asset will be the copyright of the Film, which is based upon a novel
by Lisa Reardon published in 1998. We plan to utilize the funds from this
offering to produce the Film and to finance our general corporate expenses. Our
revenues will be generated through commercial licensing of the Film's
distribution rights. We expect to enter into production as soon as practical
after the completion of our offering of Series A preferred stock.

We have not generated any revenue since our inception. We are a development
stage company, and are dependent upon the raising of capital through placement
of our Series A preferred stock. There can be no assurance that we will be
successful in raising the capital we require through the sale of our Series A
preferred stock.

Source of Revenue. After completing the Film, we intend to license it through
domestic and international distribution channels, beginning with theatrical
exhibition. We plan on making the Film available for home video and pay-per-view
television approximately six months after theatrical release and for pay
television approximately one after theatrical release.

We do not intend to pursue other operations besides commercializing the Film. In
addition, our amended certificate of incorporation and bylaws require that any
decision to change the course of our operations, such as by producing another
movie (other than a sequel or other project based upon the copyright of the
Film), would require a majority vote from the Series A preferred stockholders.

Liquidation of Assets. A typical film project generates the vast majority of its
revenues within two years of its initial release and nearly all of its revenues
within five years of release. We therefore anticipate that at some point within
five years of the Film's initial release the expenses involved in maintaining
our existence as a public company will begin to exceed the revenues then being
generated by the Film. When expenses appear likely to exceed revenues in this
manner, we intend to dissolve Billy Dead, Inc. and distribute our remaining
assets to our stockholders.

The first step in dissolving Billy Dead, Inc. will be to sell our intangible
assets to a company that maintains a film library or is otherwise in the
business of acquiring or managing residual interests in movies. We may sell our
intangible assets for cash, stock in the acquiring company, or some combination
of the two.

We plan to begin negotiating with potential purchasers of our intangible assets
before our expenses exceed our revenues. The more attractive the offer we
receive from a potential purchaser, the earlier we will consider a sale.
Nevertheless, you cannot be certain that we will identify a suitable purchaser
for our intangible assets before our expenses exceed our revenues. As a result,
we may be forced to either sell our intangible assets for less than their true
value, or incur losses as we seek a more attractive offer.


                                       23
<PAGE>

If we are unable to complete production of the Film, no sale of assets will be
required before dissolution. Our assets would consist of any funds we receive
under the terms of a completion bond agreement, and any remaining proceeds from
this offering.

Estimated Startup, Film Development and Offering Expenses

We are a development stage company and lack any historical operating income. As
of the completion of this offering, assuming that this offering is completed
within a reasonable time frame, we estimate that our expenses will be: (1)
initial corporate startup costs of approximately $75,000; (2) film development
costs of approximately $23,000; and (3) expenses associated with this offering
of approximately $150,000, excluding the underwriting commission.

Future Results of Operation

Our future operating results will be subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond our
control.

Revenue Recognition. In accordance with industry practice and generally accepted
accounting principles, we intend to recognize revenues from the theatrical
distribution of the Film on the dates of exhibition. We intend to recognize
revenues from home video distribution during the period the Film is available
for retail sale.

Expense Recognition. In accordance with industry practice and generally accepted
accounting principles, we intend to initially capitalize the production costs of
the Film. We will then amortize these production costs based upon the following
ratio:

o     the revenue earned in a given period; compared to

o     our projections of the total revenues the Film may eventually realize.

We expect that the Film will generate the majority of its revenues within two
years of its initial release, after exhibition in theatrical, home video and
DVD, pay television and pay-per-view markets. Therefore, a majority of its
production costs will have been amortized.

The commercial potential of the Film is impossible to predict. Therefore, it is
impossible to predict Billy Dead, Inc.'s income or losses with any accuracy. We
therefore intend to regularly review and revise our revenue projections, which
may result in a change of either the rate at which we amortize our production
costs, or a write-down of the Film as an asset.

The Film is more likely to report losses, particularly in the year of its
release, by using this method of accounting for production costs. This is
because, if we estimate that our revenues will ultimately fall short of our
projections, we will immediately recognize substantial losses through increased
amortization. However, if the Film is a success, profits will be recognized over
our estimate of the Film's entire revenue stream. This may result in significant
fluctuations in reported income or loss, particularly on a quarterly basis,
depending on our ability to generate revenues throughout the various
distribution channels.

Termination Plans

The following section includes brief discussions of certain U.S. federal tax
issues that may result from a decision to dissolve Billy Dead, Inc. We have not
requested a ruling from the Internal Revenue Service, or IRS, on the tax
consequences of owning our Series A preferred stock upon our dissolution. As a
result, the IRS could disagree with portions of this discussion. You are urged
to consult your own tax advisor with respect to the particular tax consequences
of your ownership and disposition of our Series A preferred stock, including the
effect of any state, local, foreign or other tax laws; or any changes in tax
laws.


                                       24
<PAGE>

A typical film project generates the vast majority of its revenues within two
years of its initial release and nearly all of its revenues within five years of
release. We therefore anticipate that at some point within five years of the
Film's initial release the expenses involved in maintaining our existence as a
public company will begin to exceed the revenues then being generated by the
Film. When expenses appear likely to exceed revenues in this manner, we intend
to dissolve Billy Dead, Inc. and distribute our remaining assets to our
stockholders.

Liquidation of Assets. If we decide to dissolve, we anticipate having both
tangible and intangible assets. Our tangible assets will consist of the Film's
net proceeds, if any. Our intangible assets will consist of:

o     any present or future rights to license the Film for distribution that we
      have retained or that will eventually revert back to us; and

o     any present or future residual rights we have retained to license or
      assign the Film's copyrights and trademarks for use in connection with
      sequels, adaptations, novelizations, merchandising and other ancillary
      projects.

The first step in dissolving Billy Dead, Inc. will be to sell these intangible
assets to a company that maintains a film library or is otherwise in the
business of acquiring or managing residual interests in movies. We may sell our
intangible assets for cash, stock in the acquiring company, or some combination
of the two.

We plan to begin negotiating with potential purchasers of our intangible assets
before our expenses exceed our revenues. The more attractive the offer we
receive from a potential purchaser, the earlier we will consider a sale.
Nevertheless, you cannot be certain that we will identify a suitable purchaser
for our intangible assets before our expenses exceed our revenues. As a result,
we may be forced to either sell our intangible assets for less than their true
value, or incur losses as we seek a more attractive offer.

If we are unable to complete production of the Film, no sale of assets will be
required before dissolution. Our assets would consist of any funds we receive
under the terms of a completion bond agreement, and any remaining proceeds from
this offering.

Distribution to Stockholders. The Delaware General Corporation Law and our
articles of incorporation provide the manner in which our assets must be
distributed on dissolution.

o     First, dissolution must be approved by a vote of 50% of the outstanding
      shares of our capital stock, voting together as one class, where the
      holders of common stock have one vote per share and where the holders of
      Series A preferred stock have one-half vote per share.

o     Second, we will pay any remaining obligations of Billy Dead, Inc.,
      including any remaining contingent compensation, such as residual payments
      to creative guilds or "net participation" payments to creative
      participants.

o     Third, we will be required to set aside an amount we believe is reasonably
      necessary to pay any known, pending or future claims against, or
      obligations of, Billy Dead, Inc. As far as we are aware there are no
      customary additional amounts (or percentages of assets) that movie
      production companies generally set aside upon dissolution. We therefore
      intend to set aside a reserve for taxes and further use our best judgment
      to determine if we should set aside any additional amounts.

o     Fourth, we will make a distribution to the holders of our Series A
      preferred stock of up to $8.75 per share (the price at which we are
      selling shares of Series A preferred stock in this offering) less any cash
      previously distributed to such holders. If our remaining assets are
      insufficient to make this distribution, we will distribute these assets
      proportionately among the preferred holders.


                                       25
<PAGE>

o     Fifth, if we make a full distribution of $8.75 to the Series A preferred
      stockholders and still have assets remaining for distribution, we will
      distribute 80% of these assets to the Class A preferred stockholders and
      20% to the common stockholders.

If the warrants to be issued to Civilian Capital to purchase 54,000 additional
shares of Series A preferred stock have been exercised by Civilian Capital prior
to dissolution, the aggregate amount to be distributed to the holders of Series
A preferred stock, which will equal 80% of the total amount to be distributed to
the holders of all our capital stock, will be allocated among 954,000
outstanding shares of Series A preferred stock, rather than among only the
900,000 shares to be issued in this offering.

Cash flow distribution model. The following chart illustrates the possible cash
flow we anticipate for Billy Dead, Inc. This is a simplified overview of a very
complex process and does not take into account certain intricacies, such as tax
laws, any residual payment obligations we may be required to pay creative
guilds, or any amounts we will be required to set aside to pay any anticipated
claims against Billy Dead, Inc. We cannot be certain that there will be any
assets available for distribution to our Series A preferred stockholders if we
decide to dissolve, or that any such distributions will allow our stockholders
to recover the full amount of their investment.

Nonetheless, we feel it may be useful to potential purchasers of our Series A
preferred stock to present the following flow-chart:


                                       26
<PAGE>

       -----------------------------------------------------------------
                                    Revenues
       -----------------------------------------------------------------
           Theatrical/      DVD/Video      Pay & Order      Other:
            Box Office   Sales & Rental     Television  *Non-Theatrical
                                                          *Ancillary
       -----------------------------------------------------------------
                                      Less
                                       |
                         ------------------------------
                               Distribution Costs
                         ------------------------------
                                        |
                         ------------------------------
                           Proceeds ("Gross Receipts")
                         ------------------------------
                                       |
                         ------------------------------
                                Billy Dead, Inc.
                         ------------------------------
                                       |
                                      Less
                                       |
                         ------------------------------
                             Film Costs, Corporate
                                Expenses & Taxes
                         ------------------------------
                                       |
                                  Reserve for
                                       |
             Distribute upon -------------------------
 -----------    dissolution    Series A Preference
  Series A  ---------------  of up to $8.75 per share
 (Investors)                 -------------------------
------------                              |
                                  Resulting in
                         ------------------------------
                             Adjusted Cash Balance
                          ("Adjusted Gross Receipts")
                         ------------------------------
                    62.5% reserve       37.5% Contingent Compensation
                         |                             |
                         |                      -----------------
                         |                      |                |
                         |                    (29%)            (8.5%)
                --------------------------      |                |
                 Shareholder Distributions  ------------    ---------
                --------------------------  Non-Founders     Founders
                   |                 |      ------------    ---------
                  80%   Distribute  20%
                   |      upon       |
                   |    dissolution  |
              -----------        ----------
                Series A           Common
              (Investors)        (Founders)
              -----------        ----------

Tax Consequences of a Liquidating Distribution. If we dissolve and completely
liquidate Billy Dead, Inc., we intend to organize our liquidating distribution:
(1) as a tax free return of capital to our stockholders; and then (2) as taxable
capital gains paid from our earning and profits.

A return of capital would be, in this case, a return of any portion of your
$8.75 per share investment in our Series A preferred stock, which would
therefore reduce the basis of your investment. In other words, any liquidating
distributions you receive are not taxable until you have recovered the basis of
your stock. After the basis has been reduced to zero, you must report the
liquidating distribution as a capital gain. Whether you report the gain as a
long-term or short-term capital gain depends on how long you have held the
stock.

If the total liquidating distribution you receive is less than the basis of your
stock of $8.75 you may have a capital loss. You can report a capital loss after
receiving a final liquidating distribution that results in the redemption or
cancellation of our Series A preferred stock.

Recent changes in tax laws may impact our decision as to whether we liquidate
Billy Dead, Inc. or distribute our profits to stockholders through alternate
mechanisms, such as dividends. We intend to make this decision based upon our
consideration of then current tax laws. Regardless of our decision, our strategy
will be to return capital to our stockholders while minimizing the tax
consequences of such a return.


                                       27
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS

                                BILLY DEAD, INC.

                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                          Index to Financial Statements

                                                                            Page
                                                                            ----

Independent Auditors' Report .............................................   29
Balance Sheet ............................................................   30
Statements of Operations .................................................   31
Statements of Stockholders' Deficit ......................................   32
Statements of Cash Flows .................................................   33
Notes to Financial Statements ............................................   34


                                       28
<PAGE>

                             RAIMONDO PETTIT GROUP
               A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS

Independent Auditors' Report

To the Board of Directors
Billy Dead, Inc.
Los Angeles, California

We have audited the accompanying balance sheet of Billy Dead, Inc. (a
development stage company) (the "Company") as of December 31, 2003, and the
related statements of operations, changes in stockholders' deficit and cash
flows for the year then ended, and for the periods from inception (September 24,
2002) through December 31, 2002 and 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audits 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 Billy Dead, Inc. as of December
31, 2003, and the results of its operations and its cash flows for the year then
ended and for the periods from inception (September 24, 2002) through December
31, 2002 and 2003, in conformity with accounting principles generally accepted
in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company will not commence operations, and therefore
will not have the opportunity to generate any revenues, unless it raises the
majority of its operating capital through an initial public offering of its
Series A preferred stock. Since there is no certainty that such funds will be
raised, there is substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


/s/  Raimondo Pettit Group

Torrance, California
April 9, 2004


                                       29
<PAGE>

                                Billy Dead, Inc.

                          (A Development Stage Company)

                                  Balance Sheet

                                                                  As of
                                                               December 31,
                                                                   2003
                                                               -------------
     Assets
          Current Assets
              Cash ...........................................   $   2,891
                                                                 ---------
         Total Current Assets ................................   $   2,891
         Other Assets
             Film Costs ......................................   $  19,485
         Deferred Offering Costs .............................   $ 173,054
                                                                 ---------
         Total Other Assets ..................................   $ 192,539
                                                                 ---------
     Total Assets ............................................   $ 195,430
                                                                 =========
     Liabilities
        Current Liabilities
             Line of Credit ..................................   $  50,000
             Accounts Payable and Accrued Expenses ...........   $  76,100
             Accounts Payable - Related Party ................   $ 139,659
                                                                 ---------
        Total Current Liabilities ............................   $ 265,759
     Commitments (Notes 7 & 8)
     Stockholders' Deficit
          Preferred Stock $0.001 par value, 954,000 shares
            authorized, none issued and outstanding ..........
            Liquidation preference: up to $8.75 per share,              --
            then 4:1 preference to common stock
          Common Stock $0.001 par value, 900,000 shares
            authorized, issued and outstanding ...............   $     900
          Deficit Accumulated During Development Stage .......   ($ 71,229)
                                                                 ---------
     Total Stockholders' Deficit .............................   ($ 70,329)
                                                                 ---------
     Total Liabilities & Stockholders' Deficit ...............   $ 195,430
                                                                 =========

   The accompanying notes are an integral part of these financial statements.


                                       30
<PAGE>
                                Billy Dead, Inc.

                          (A Development Stage Company)

                            Statements of Operations

<TABLE>
<CAPTION>
                                                                  Period from      Period from
                                                                    Inception       Inception
                                                                  (September 24,  (September 24,
                                                   Year Ended        2002) to        2002) to
                                                   December 31,    December 31,    December 31,
                                                       2003            2002            2003
                                                   --------------------------------------------
<S>                                                  <C>             <C>             <C>
Revenues ....................................              --              --              --
Operating Expenses:
      General and Administrative ............        $ 58,227        $ 10,418        $ 68,645
                                                     ----------------------------------------
Total Operating Expenses ....................        $ 58,227        $ 10,418        $ 68,645
                                                     ----------------------------------------
Operating Loss ..............................        ($58,227)       ($10,418)       ($68,645)
Other Expenses ..............................        ($ 2,584)             --         ($2,584)
                                                     ----------------------------------------
Net Loss ....................................        ($60,811)       ($10,418)       ($71,229)
                                                     ========================================

Basic and diluted loss per share ............         ($0.068)        ($0.025)        ($0.089)
                                                     ========================================
Weighted average number of shares outstanding         900,000         423,273         798,284
                                                     ========================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       31
<PAGE>

                                Billy Dead, Inc.
                          (A Development Stage Company)

                       Statements of Stockholders' Deficit
  For the periods from inception (September 24, 2002) through December 31, 2003

<TABLE>
<CAPTION>
                                                  Common Stock                          Total
                                                ---------------     Accumulated     Stockholder's
                                               Shares      Amount     Deficit      Equity (Deficit)
                                              -----------------------------------------------------
<S>                                            <C>        <C>         <C>              <C>
Balance at September 24, 2002 ............          --          --          --               --
Common stock issued to directors at $0.001
per share on September 24, 2002 ..........     216,000    $     21          --         $    216

Common stock issued to founders at $0.001
per share on December 1, 2002 ............     684,000    $    684          --         $    684

Net Loss .................................          --          --    ($10,418)        ($10,418)
                                              --------------------------------------------------

Balance at December 31, 2002 .............     900,000    $    900    ($10,418)        ($ 9,518)
                                              ==================================================

Net Loss .................................          --          --    ($60,811)        ($60,811)
                                              --------------------------------------------------

Balance at December,2003 .................     900,000    $    900    ($71,229)        ($70,329)
                                              ==================================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       32
<PAGE>

                                Billy Dead, Inc.

                          (A Development Stage Company)

                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                  Period from     Period from
                                                                                                   Inception       Inception
                                                                                                  (September      (September
                                                                                  Year Ended      24, 2002) to    24, 2002) to
                                                                                   December       December 31,    December 31,
Cash flows from operating activities:                                              31, 2003           2002             2003
                                                                                  -----------     -----------     -----------
<S>                                                                               <C>             <C>             <C>
   Net Loss ..................................................................       ($60,811)       ($10,418)       ($71,229)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Change in Operating Assets and Liabilities:
      Film costs .............................................................       ($15,000)        ($4,485)       ($19,485)
      Accounts payable and accrued expenses ..................................    $    16,986     $     8,815     $    25,801
      Accounts payable - related party .......................................        $39,116          $6,088         $45,204
                                                                                  -----------     -----------     -----------

             Net cash used in operating activities ...........................       ($19,709)             --        ($19,709)
                                                                                  -----------     -----------     -----------

Cash flows from financing activities
Proceeds from sale of common stock ...........................................    $       900              --     $       900
Deferred offering costs ......................................................       ($28,300)             --        ($28,300)
                                                                                  -----------     -----------     -----------
              Net cash used by financing activities ..........................       ($27,400)             --        ($27,400)

Cash flows from financing activities:
Borrowings from Bank Line Of Credit ..........................................    $    25,000     $    25,000     $    50,000
                                                                                  -----------     -----------     -----------

Net cash provided by financing activities ...................................     $    25,000     $    25,000     $    50,000
                                                                                  -----------     -----------     -----------

Net (decrease) increase in cash ..............................................       ($22,109)    $    25,000     $     2,891
Cash at beginning of period ..................................................    $    25,000              --              --
                                                                                  -----------     -----------     -----------

Cash at the end of period ....................................................    $     2,891     $    25,000     $     2,891
                                                                                  -----------     -----------     -----------

Supplementary disclosure information:

 Non-Cash Financing Activities
         Common stock issued to directors ....................................             --     $       216     $       216
         Common stock issued to founders .....................................             --     $       684     $       684
         Amount due from stockholders ........................................             --     $       900     $       900
         Deferred offering costs .............................................    $   130,776     $    13,987     $   144,754

 Cash paid for interest ......................................................    $     2,583              --     $     2,583

 Cash paid for income taxes ..................................................    $       800              --     $       800
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       33
<PAGE>

                                Billy Dead, Inc.

                          (A Development Stage Company)

                         Notes to Financial Statements

1. BUSINESS AND ORGANIZATION

Billy Dead, Inc. was formed in September 2002 as a Delaware Corporation. Billy
Dead, Inc. plans to develop, produce, edit and market a feature-length motion
picture tentatively titled "Billy Dead" (the "Film"). Billy Dead, Inc. is in the
development stage as its activities to date have consisted primarily of
organizational activities, such as issuing stock to the directors and founders,
establishing a line of credit and preparing for an offering of preferred stock
(the "offering").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation - going concern

Billy Dead, Inc.'s financial statements have been presented on a going concern
basis. Billy Dead, Inc.'s ability to continue as a going concern is contingent
upon raising the majority of its operational capital through an initial public
offering of Series A preferred stock (the "Offering"). Certain of Billy Dead,
Inc.'s agreements, such as the underwriting agreement executed by Billy Dead,
Inc. upon the effectiveness of the Registration Statement for the Offering,
contain provisions stating that Billy Dead, Inc.'s obligations concerning
initial operating expenses and fund raising costs will transfer to other parties
if the Offering is not successful (see significant agreements and commitments
Note 7). Additionally, future commitments as described in Note 7 will not be
incurred if the Offering is not successful. As a result, many of Billy Dead,
Inc.'s current and anticipated obligations are contingent upon the successful
completion of the Offering, and if the Offering is not successful minimal
obligations will remain with Billy Dead, Inc. In this event, Billy Dead, Inc.
plans to settle these minimal obligations and dissolve. No adjustments have been
made to the accompanying financial statements to provide for this uncertainty or
a liquidation basis of accounting.

Use of Estimates

Management of Billy Dead, Inc. has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with accounting principles generally accepted in the United States of
America. Actual results could differ from those estimates.

Property and equipment

Property and equipment are recorded at cost and depreciated over the estimated
useful lives of the assets, which range from three to five years, using the
straight-line method. As of December 31, 2003, no property or equipment had been
acquired.


                                       34
<PAGE>

Film Costs

In accordance with the American Institute of Certified Public Accountants
("AICPA") Statement of Position number 00-2 ("SOP 00-2"), Billy Dead, Inc. uses
the individual-film-forecast-computation method for amortizing film costs and
accruing participation costs. This method amortizes or accrues (i.e. expenses)
the costs in the same ratio that current period actual revenue bears to
estimated remaining unrecognized ultimate revenue as of the beginning of the
current fiscal year.

Costs for the Film included certain legal expenses relating to the Film's
copyright and intellectual property issues, totaling $19,485 at December 31,
2003. Civilian Pictures, the parent company of the underwriter, has paid $4,485
of these fees. Billy Dead, Inc. intends to reimburse Civilian Pictures for these
expenses upon the completion of the Offering.

Deferred Offering Costs

Costs associated with Billy Dead, Inc.'s initial public offering of its Series A
Preferred stock, including legal expenses, filing fees, etc., have been
capitalized as the stock has not yet been issued. These costs totaled $173,054
at December 31, 2003, and will be offset against additional paid in capital when
the stock is issued.

Income taxes

Billy Dead, Inc. accounts for income taxes using the liability method whereby
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carry forwards (i.e.
temporary differences). Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Changes in
tax rates are recognized in the period that includes the enactment date. As of
December 31, 2003 and 2002, there were no net temporary differences and
therefore no deferred income taxes recognized.

Revenue Recognition

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 summarizes the SEC's views in applying generally accepted
accounting principles to revenue recognition in financial statements. Billy
Dead, Inc. adopted the SAB 101 from inception in September 2002. As of December
31, 2003 and 2002, there was no revenue to be recognized.

In accordance with industry standard practice and accounting principles
generally accepted in the USA, Billy Dead, Inc. intends to recognize revenues
from the theatrical distribution of the Film on the dates of exhibition. Billy
Dead, Inc. intends to recognize revenues from home video distribution during the
period that the Film is available for retail sale.


                                       35
<PAGE>

Cash and Cash Equivalents

Billy Dead, Inc. considers all highly liquid debt instruments purchased with an
initial maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments

The carrying value of financial instruments included in current assets and
liabilities approximates fair value because of the short maturity of these
items.

Comprehensive Income

Comprehensive income is defined as net income as adjusted for changes to equity
resulting from events other than net income or transactions related to an
entity's capital structure. Comprehensive income equaled net income for the
periods presented.

Profit (Loss) Per Common Share

Basic net profit (loss) per common share is computed by dividing net loss by the
weighted average number of outstanding common shares during the periods
presented. Basic loss per share and diluted loss per share are the same amount
because the impact of additional shares that might have been issued under
warrant or other agreements would be anti-dilutive. This calculation was made as
follows:

<TABLE>
<CAPTION>
                                                                                       Period from
                                                                                         Inception      Period from Inception
                                                                     Year Ended        (September 24,  (September 24, 2002)
                                                                  December 31, 2003  2002) to December  to December 31, 2003
                                                                                         31, 2002
<S>                                                                    <C>                <C>                <C>
Numerator:

      Net loss ..............................................          ($60,811)          ($10,418)          ($68,645)
      Loss available to common stockholders .................          ($60,811)          ($10,418)          ($68,645)
                                                                      =========          =========          =========

Denominator:
      Weighted average shares outstanding ...................           900,000            423,273            798,284
                                                                      =========          =========          =========
      Basic and diluted loss per share ......................          ($ 0.068)           ($0.025)           ($0.089)
                                                                      ---------          ---------          ---------
</TABLE>


                                       36
<PAGE>

3. LINE OF CREDIT

In December 2002, Billy Dead, Inc. established a line of credit with a bank in
the amount of $50,000. A promissory note executed by Billy Dead, Inc. bears a
variable interest rate based on the bank's prime rate plus 1%, but shall not be
less than 6%, which was the rate as of December 31, 2003. Accrued interest is
due monthly and the note matures on June 30, 2004, at which time all outstanding
principal and unpaid accrued interest is due. The note is guaranteed by Peter
McDonnell, the Chief Executive Officer of Civilian Capital, Billy Dead, Inc.'s
underwriter with respect to the Offering (see related party transactions Note
10). Billy Dead, Inc. intends to repay the line of credit from the proceeds of
the public offering of preferred stock or remove Mr. McDonnell as the guarantor
upon completion of the initial public offering. As of December 31, 2003, $50,000
had been drawn from the line of credit

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of December
31, 2003:

                   Accrued  Compensation ....         $25,001
                   Accrued Legal ............         $30,799
                   Accrued Accounting .......         $20,300
                                                      -------
                   Total Accounts Payable and
                      Accrued Expenses:               $76,100
                                                      =======

5. CAPITALIZATION

Billy Dead, Inc. initially sold a total of 108 shares of common stock, no par
value, at an aggregate price of $216 ($2 per share) to its Directors. On
December 1, 2002, Billy Dead, Inc.'s Board of Directors and Stockholders
approved a 2000 to 1 stock split, resulting in the 108 issued shares splitting
into 216,000 shares valued at $0.001. The Board also increased Billy Dead,
Inc.'s authorized common stock to 900,000 shares with a par value $0.001. In
addition, the Board and Stockholders approved the creation of 954,000 shares of
Series A preferred stock, which are the securities to be offered for sale in the
Offering. In February , Billy Dead, Inc. filed a Restated Charter with the
Secretary of State of Delaware, putting into effect the aforementioned Board
resolutions.

The Company's Registration Statement

On November 12, 2003, Billy Dead, Inc.'s registration statement (#333-104620)
for the sale of 900,000 shares of Series A preferred stock was declared
effective by the Securities and Exchange Commission. On December 9, 2003, Billy
Dead, Inc. filed a post-effective amendment whereby the offering of securities
pursuant to this registration statement was stopped. All proceeds for shares
purchased that were held in escrow were returned by the escrow agent to the
investors' accounts.

After a "cooling-off" period of several weeks, the registration statement was
ultimately declared effective by the Securities and Exchange Commission on
February 12, 2004.


                                       37
<PAGE>

6. STOCKHOLDERS EQUITY (DEFICIT)

Common Stock

In connection with various employment agreements entered into by Billy Dead,
Inc. in December 2002, Billy Dead, Inc. agreed to sell to various members of
Billy Dead, Inc.'s management team and the Film's production staff an aggregate
of 684,000 shares of common stock for an aggregate purchase price of $684. These
agreements, together with agreements entered into with each of Billy Dead,
Inc.'s three Directors, effectively provide that all 900,000 shares of Billy
Dead, Inc.'s authorized common stock held by the Directors and founders have
been issued subject to the payment of $0.001 per share and the continued service
of each individual shareholder, whether as a member of Billy Dead, Inc.'s
management team, Board of Directors, or the Film's production staff (see
significant commitments and agreements Note 7). Billy Dead, Inc. has buy-back
agreements included within each of these agreements, stipulating that if a
holder of Billy Dead, Inc.'s common stock resigns or is terminated for cause (in
the case of employment agreements), or ceases to be a Director (other than as a
result of being replaced by a stockholder vote), a portion of their shares are
subject to Billy Dead, Inc.'s right to re-purchase at their then fair market
value, as determined by the board of directors and ratified by a majority of the
outside directors.

Each share of common stock entitles its holder to one vote on all matters to be
voted upon by stockholders. Once a liquidation preference of $8.75 per share has
been paid out to the holders of Series A preferred stock, holders of common
stock as a class will receive one-quarter of the aggregate amount of any
dividends that Billy Dead, Inc.'s Board of Directors may declare on the Series A
preferred stock. In the event of Billy Dead, Inc.'s liquidation, the holders of
its common stock will share ratably with the Series A preferred stock in a ratio
of 1:4, with the entire class of common stock receiving an aggregate of $1 for
every $4 of aggregate value distributed to the entire class of Series A
preferred stock in all assets remaining after payment of liabilities, including
any contingent compensation such as guild residuals or customary "net profit
participations" (see contingent compensation Note 8) and any liquidation
preference of the Series A preferred stock that may be outstanding. The common
stock has no pre-emptive rights, conversion rights or other subscription rights,
or redemption or sinking fund provisions.

Preferred Stock

The Board has authorized but not issued 954,000 shares of Series A preferred
stock. Billy Dead, Inc. is selling 900,000 shares of this Series A preferred
stock in the Offering at a price of $8.75 per share. The additional 54,000
shares of Series A preferred stock are reserved for issuance upon the exercise
of a warrant to be issued to the underwriter upon the successful conclusion of
the Offering.

Each share of Series A preferred stock entitles its holder to one half vote on
all matters to be voted on by stockholders. Series A preferred stock is not
convertible into common stock. The holders of the Series A preferred stock will
have a preference at liquidation equal to the issuance price of $8.75 per share.
Billy Dead, Inc.'s remaining assets, if any, would be distributed ratably to
both


                                       38
<PAGE>

the Series A preferred and the common stockholders in a ratio of 4:1, with each
share of Series A preferred stock receiving $4 (or an aggregate of 80% of these
assets) in value for every $1 (or an aggregate of 20% of these assets) of value
distributed to a share of common stock.

7. SIGNIFICANT AGREEMENTS AND COMMITMENTS

Board of Directors

The original three Directors of Billy Dead, Inc. initially purchased a total of
216,000 total shares (24% of the common stock outstanding), which they purchased
for $0.001 per share for a total of $216. Mr. Ryan initially purchased 114,000
shares for $114. Mr. Young initially purchased 72,000 shares for $72 and owns
36,000 shares as of August 15, 2003 after transferring 36,000 shares to a new
board member. Ms. Lynn initially purchased 30,000 shares for $30. Billy Dead,
Inc. has the right to repurchase all of these shares from each Director at their
then fair market value, as determined by the board of directors and ratified by
a majority of the outside directors, at any time prior to the successful
completion of the Offering if such Director ceases to be a board member during
that period. Of these shares, 75% may be repurchased at any time prior to the
first anniversary of the completion of the Offering if the Director ceases to be
a board member during that period. Of these shares, 50% may be repurchased
between the first and second anniversary of the completion of the Offering if
the Director ceases to be a board member during that period. Billy Dead, Inc.
shall not have any repurchase rights, however, if a Director ceases to remain a
member of the board as a result of a stockholder vote (other than removal for
"cause"). After the second anniversary of the successful completion of the
Offering, Billy Dead, Inc. no longer has any repurchase rights for a Director's
shares.

Billy Dead, Inc. will also reimburse all of the Directors for reasonable
out-of-pocket expenses incurred to attend board or committee meetings. As of
December 31, 2003 and December 31, 2003, no out-of-pocket expenses had been
charged to Billy Dead, Inc.

Chief Executive Officer and Chief Financial Officer

In October 2003, Charles Ryan resigned from his position as CEO/CFO of Billy
Dead, Inc., and sold 144,000 shares initially purchased by him in connection
with his agreement to serve as our CEO/CFO to Peter Fuhrman, the Company's
current CEO/CFO. Mr. Ryan remains on the board of directors and the audit
committee. In October 2003 Peter Fuhrman, who joined the board of directors for
Billy Dead, Inc. in August 2003, entered into an agreement with Billy Dead, Inc.
to serve as the Chief Executive Officer and Chief Financial Officer (CEO/CFO).
In compensation for his duties as CEO/CFO, Billy Dead, Inc. has agreed to pay
Mr. Fuhrman cash compensation of $150,000 ratably over a three year term
commencing with the completion of this offering. If Mr. Fuhrman's three year
term ends prior to its full-length, subject to certain exclusions such as being
terminated for "cause", all remaining cash compensation shall be accelerated and
paid.


                                       39
<PAGE>

In connection with Mr. Ryan's resignation, the Company agreed to pay to him
$25,000 upon the completion of the Company's initial public offering in
recognition of his work during the Company's formative period and in connection
with the initial public offering. Mr. Ryan has also retained his right to
receive 1% of the "adjusted cash balances" as contingent compensation. At the
same time, Mr. Ryan sold 6,000 shares of common stock and Ms. Lynn sold 30,000
shares of common stock to the Company's new director, Peter Read.

Mr. Fuhrman purchased a total of 180,000 shares of the Company's outstanding
common stock, which represents 20% of the stock outstanding and which consists
of the 144,000 shares of Common Stock purchased from Mr. Ryan for $144 and the
36,000 shares Mr. Fuhrman purchased in connection with his agreement to serve as
a Director of Billy Dead, Inc. If Mr. Fuhrman resigns as Billy Dead, Inc.'s
CEO/CFO, or is terminated by Billy Dead, Inc. for "cause", a portion of his
common stock is subject to Billy Dead, Inc.'s repurchase at their then fair
market value, as determined by the board of directors and ratified by a majority
of the outside directors.

Producer

Julie Lynn is serving as Vice President, Secretary and Board Member for Billy
Dead, Inc. Ms. Lynn is receiving no compensation for her duties as the Secretary
or Vice President and Billy Dead, Inc. has no agreement in place with Ms. Lynn
concerning these duties.

On December 1, 2002, Billy Dead, Inc. entered into a Production Services
Agreement with Julie Lynn to act as Producer on the Film (Producer Agreement),
providing that she will produce the Film in exchange for cash consideration of
$150,000 and a contractual contingent compensation arrangement equaling % of the
"adjusted cash balances" of Billy Dead, Inc. (see contingent compensation Note
8). Additionally, Ms. Lynn purchased 270,000 shares of common stock in
connection with this agreement for $270. When combined with the 30,000 shares
Ms. Lynn purchased in connection with her agreement to serve as a Director of
Billy Dead, Inc., she owns 300,000 total shares of common stock (33.3% of the
common stock outstanding).

Ms. Lynn will receive 20% of her cash compensation no later than the completion
of pre-production, 60% no later than the completion of principal photography,
10% no later than the completion of post-production and 10% no later than the
delivery of the final version of the Film. If Ms. Lynn resigns as Producer of
the Film or is terminated by Billy Dead, Inc. for "cause" prior to the
completion of her duties as the Film's producer a portion of her contingent
compensation arrangement will be subject to forfeiture and a portion of her
270,000 shares of common stock will be subject to re-purchase at their then fair
market value, as determined by the board of directors and ratified by a majority
of the outside directors. Ms. Lynn's cash compensation, including her contingent
compensation, will be paid to her film production company, Apologetic
Productions.


                                       40
<PAGE>

Director

On December 1, 2002, Billy Dead, Inc. entered into a Production Services
Agreement with Keith Gordon to act as Director on the Film (Director Agreement),
providing that he will be responsible for directing the Film, revising the
script as needed, performing in the Film as needed, supervising editing in his
capacity as the Film's director, and assisting in the promotion of the Film upon
its release. In consideration for his efforts, he will receive cash
consideration of $250,000 and a contractual contingent compensation arrangement
equaling % of the "adjusted cash balances" of Billy Dead, Inc. (see contingent
compensation Note 8). Additionally, Mr. Gordon purchased 270,000 shares of
common stock in connection with this agreement ( of Billy Dead, Inc.'s
outstanding common stock) for $270.

Mr. Gordon will receive 20% of his cash compensation no later than the
completion of pre-production, 60% no later than the completion of principal
photography, 10% no later than the completion of post-production and 10% no
later than the delivery of the final version of the Film. If Mr. Gordon resigns
as the Film's director, or is terminated by Billy Dead, Inc. for "cause" prior
to the completion of his duties as the Film's director a portion of his cash
compensation will be reduced, a portion of his contingent compensation will be
subject to forfeiture and a portion of his 270,000 shares of common stock will
be subject to re-purchase at their then fair market value, as determined by the
board of directors and ratified by a majority of the outside directors. Mr.
Gordon's cash compensation, including his contingent compensation, will be paid
to his creative services company, Sidetracked Productions.

Underwriting Agreement & Warrants

Billy Dead, Inc. executed an underwriting agreement with Civilian Capital on
November 12, 2003, the original effective date of the Company's registration
statement and prior to its stopping of its sales efforts on December 8, 2003,
providing that Civilian Capital will use its best efforts to sell the securities
included in the Offering on behalf of Billy Dead, Inc. Billy Dead, Inc. amended
this agreement on or near the effective date of the post-effective amendment
permitting the re-starting of the sales efforts for the Billy Dead, Inc. IPO.
Under the terms of this agreement, if all of the shares are sold, the
underwriter shall be entitled to receive as compensation a commission of 7%.

In connection with the Underwriting Agreement, Billy Dead, Inc. has also agreed
to issue to the underwriter, upon the completion of this Offering, warrants to
purchase up to an aggregate 54,000 shares of Series A preferred stock, $0.001
par value. The warrants will become exercisable on the first anniversary of
their issuance and will expire on the fifth anniversary.

Information relating to the warrants which Billy Dead, Inc. will be obligated to
issue (if it enters into the Underwriting Agreement and if the Offering is
completed) is summarized by exercise price as follows:

                              Warrants to be Issued
                         (if the Offering is completed)
                                               Exercise Price
                      Shares                     Per Share
                      ------                     ---------
                      18,000                       $ 9.19
                      18,000                       $ 9.63
                      18,000                       $10.06


                                       41
<PAGE>

The warrant shares to be issued upon exercise of the Underwriter's Warrants will
be identical in all respects to the Series A preferred shares. The warrants
contain anti-dilution provisions providing for the adjustment of the number of
shares issuable upon exercise in certain circumstances, as well as the exercise
price. The warrants grant to the holder and to the holders of the underlying
Series A preferred stock certain rights of registration of the shares of Series
A preferred stock. The underwriter will pay to Billy Dead, Inc. on the Closing
Date of the Offering the purchase price of $0.001 per Underwriter's Warrant (an
aggregate price of $54).

The Underwriting Agreement also provides that Billy Dead, Inc. will reimburse
the underwriter for any and all fees, taxes and expenses incident to the
performance of its obligations under the Underwriting Agreement, including, but
not limited to: (i) expenses and taxes incident to the issuance and delivery to
the underwriter of the shares to be sold in the Offering; (ii) expenses and
filing fees incident the preparation and delivery of the Registration Statement
and exhibits; (iii) fees and expenses of the transfer agent and registrar, (iv)
the fees payable to the Commission and the National Association of Securities
Dealers, Inc. ("NASD").

Civilian Pictures

Civilian Pictures (see related party transactions Note 10), an affiliate of the
underwriter of the Offering, has agreed to pay certain actual, out-of-pocket set
up, operating and offering related expenses on behalf of Billy Dead, Inc., and
Billy Dead, Inc. has agreed to repay Civilian Pictures out of the proceeds of
the Offering. These expenses relate to license fees, legal and accounting
services, entertainment legal matters, blue sky legal matters, postage, and
other fees related to the corporate establishment and initial maintenance of
Billy Dead, Inc., and certain marketing expenses, such as web site development.

Expenses incurred by Civilian Pictures on behalf of Billy Dead, Inc. total
$139,659 at December 31, 2003, of which $119,593 was incurred during 2003 and
$20,066 during 2002. The expenses include offering costs, corporate start-up
expenses, and the payment of certain legal expenses relating to the Film's
copyright and intellectual property issues, totaling $4,485, which Billy Dead,
Inc. has included as a film production cost (see summary of significant
accounting policies Note 2). If the Offering is not successfully completed,
Billy Dead, Inc. has no obligation to reimburse Civilian Pictures for these
expenses.

Lease of Corporate Offices

In January 2003, Billy Dead, Inc. entered into a lease (the "Lease") with
Apologetic Productions, a related party controlled by Julie Lynn, a Director and
officer of the Corporation, providing, among other things, for the Corporation's
rental of 250 square feet of office facilities at 2312 Lorenzo Dr., Los Angeles,
California at a rate of $100 per year. This Lease was entered into in January
2003 and can be terminated by either party upon a 30 day written notice.


                                       42
<PAGE>

Option on the Novel

In April 2003, Billy Dead, Inc. purchased an option to acquire the motion
picture rights to the novel "Billy Dead" from a third party for $10,000. The
agreement states that if Billy Dead, Inc. proceeds with production of the Film,
Billy Dead, Inc. can exercise this option and acquire the motion picture rights
to the novel for an additional fee based upon a percentage of the actual budget
of the Film, and a negotiated portion of the 37.5% of Billy Dead, Inc.'s
"adjusted cash balances" set aside for creative Participants (see contingent
compensation Note 8). The ultimate fee we will be required to exercise this
option and purchase the underlying rights is included in the above the line
portion of our production budget.

Option on the Screenplay

In April 2003, Billy Dead, Inc. purchased an option to acquire the rights to the
screenplay "Billy Dead" from a third party for $1. The agreement states that if
Billy Dead, Inc. proceeds with production of the Film, Billy Dead, Inc. can
exercise this option and acquire the motion picture rights to the screenplay for
an additional flat fee and a negotiated portion of the 37.5% of Billy Dead,
Inc.'s "adjusted cash balances" set aside for creative Participants (see
contingent compensation Note 8). The ultimate fee we will be required to
exercise this option and purchase the underlying rights is included in the above
the line portion of our production budget.

In connection with Billy Dead, Inc.'s acquisition of the underlying rights to
the screenplay, Billy Dead, Inc. also obtained a release agreement from a third
party for $5,000. There are no additional fees or option costs associated with
this release.

8. CONTINGENT COMPENSATION

Billy Dead, Inc. intends to enter into contingent compensation arrangements with
members of the Film's production staff in the form of "net profit
participations" customary in the film industry. These net participations are
typically based upon adjusted cash balances of a company or film production
determined through negotiations between the participants. A percentage of these
"adjusted cash balances" are paid out as contingent compensation for creative
participants in a motion picture production. On December 1, 2002 the board
authorized Billy Dead, Inc. to enter into net participation arrangements with
Charles Ryan, Keith Gordon and Julie Lynn for a total of 8.5% of Billy Dead,
Inc.'s adjusted cash balances, which the board defined as 8.5% of Billy Dead,
Inc.'s net revenues (to be calculated in accordance with industry standards),
and further authorized the producers to enter into net participation
arrangements for an additional 29% of Billy Dead, Inc.'s net revenues (to be
calculated in accordance with industry standards), for an aggregate of 37.5% of
Billy Dead, Inc.'s net revenues, to be further defined, negotiated and issued at
the discretion of the Film's Producers, Julie Lynn and Keith Gordon. As of
December 31, 2003, no net participation agreements had been formalized with any
persons other than Mr. Gordon, Ms. Lynn and Mr. Ryan (see significant
commitments and agreements Note 7).


                                       43
<PAGE>

Calculation of "Adjusted Cash Balances"

The net participation arrangements that Billy Dead, Inc. has entered into are
based upon the defined "producer's net profits" or the defined "adjusted gross
receipts" of Billy Dead, Inc. "Adjusted gross receipts" of Billy Dead, Inc. is
equivalent to Billy Dead, Inc.'s "adjusted cash balances". "Producer's net
profits" is defined as 50% of "adjusted gross receipts". Billy Dead, Inc. will
derive its "adjusted cash balance" based upon these definitions. For the purpose
of clarity, Billy Dead, Inc. has used the phrase "adjusted cash balances"
throughout this document.

Billy Dead, Inc. will calculate net participation obligations as 37.5% of Billy
Dead, Inc.'s "adjusted cash balances", which will equal the after-tax net income
received by Billy Dead, Inc. in connection with the Film, after first taking
into account the liquidation preference of $8.75 per share to the holders of
Billy Dead, Inc.'s Class A preferred stock (who are providing financing for the
Film through the Offering) and also taking into account a reserve for
foreseeable contingent liabilities.

9. INCOME TAXES

At December 31, 2003, Billy Dead, Inc. had a combined federal and state deferred
tax asset of approximately $28,000 relating to approximately $71,000 in
organizational expenses, which are capitalized for tax purposes. This entire
deferred tax asset has been offset by a valuation allowance for the full amount.
There were no other deferred tax assets or liabilities, nor any other provision
for income taxes at December 31, 2003 and 2002.

10. RELATED PARTY TRANSACTIONS

Civilian Pictures, Inc., the parent company of the underwriter of the Offering,
has granted options to purchase shares of its common stock to Keith Gordon, who
is serving as the Director of the Film, and Julie Lynn, who is serving as the
Vice President and Secretary of Billy Dead, Inc. and the Producer of the Film.
The amount of the options granted, if exercised, will amount to less than 0.5%
of the outstanding common stock of Civilian Pictures. Brett Young, who is a
member of Billy Dead, Inc.'s Board of Directors, the Audit Committee and the
Compensation Committee, is a minority stockholder of Civilian Pictures. Mr.
Young is not an employee or Director of Civilian Pictures and holds less than 5%
of its outstanding shares. Civilian Pictures has advanced on behalf of Billy
Dead, Inc. certain expenses related to this offering (see significant agreements
and commitments Note 7).


                                       44
<PAGE>

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

None.

ITEM 8A. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Company's disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as of the end of the period covered by
this report. Based on such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, the
Company's disclosure controls and procedures are effective.

(b) Internal Controls Over Financial Reporting. There have not been any changes
in the Company's internal controls over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most
recent fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial reporting.


                                       45
<PAGE>

                                    PART III

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

Our executive officers and directors as of December 31, 2003, and their ages as
of April 13, 2004, are as follows:

Name                                Age  Position
----                                ---  --------
Peter S. Fuhrman................    45   Chairman, Chief Executive Officer and
                                         Chief Financial Officer
Julie G. Lynn...................    36   Vice President, Secretary and Director
Peter M. Read...................    39   Director
Charles F. Ryan III.............    41   Director
Brett W. Young..................    39   Director

Peter S. Fuhrman became a member of our board of directors in August of 2003 and
became our Chief Executive Officer, Chief Financial Officer and the Chairman of
our board of directors in October 2003. Prior to this, Mr. Fuhrman served as the
Chief Executive Officer of San Vicente Group, a venture capital and merchant
banking corporation based in Los Angeles.In October 2001, Mr. Fuhrman organized
and led a successful effort by the shareholders of San Vicente Group to replace
management and several directors, and was then elected to serve as CEO. In
addition to running all investment and financial operations of the company, Mr.
Fuhrman devised and implemented new corporate governance procedures to increase
board accountability at San Vicente. Mr. Fuhrman also supervised the
distribution of a significant portion of San Vicente's cash assets to its
shareholders. San Vicente sued the former officers and directors for
mismanagement and breaches of fiduciary duty. In connection with the litigation
and to protect the interests of its shareholders and creditors, San Vicente
commenced a Chapter 11 proceeding in bankruptcy in January of 2003. San Vicente
Group emerged from Chapter 11 in December 2003. Previously in his career, Mr.
Fuhrman served as a principal and board member of GVOX Inc, an entertainment
computer hardware and software company with a range of proprietary,
patent-protected products for the music composition and music education markets.
Mr. Fuhrman's responsibilities included strategic alliances, fund-raising,
mergers and acquisitions. Prior to this, between 1986 and 1995, Mr. Fuhrman
worked in the US and Europe as a journalist and executive for Forbes Inc., a
diversified publishing and media company. He ran Forbes Magazine's European
editorial operations for three years, between 1992-1995, from Forbes' European
headquarters in London. Mr. Fuhrman holds a BA degree, Summa Cum Laude, from
Tufts University and a Masters degree from Cambridge University in the UK.

Julie G. Lynn, who has served as our Vice President, Secretary and member of our
board of directors since our inception, has agreed to produce the Film. As the
producer, Ms. Lynn will be primarily responsible for coordinating the logistical
elements of production, such as hiring personnel; securing locations;
contracting for production facilities; and managing the Film's schedule and
budget.

Ms. Lynn's first film as an associate producer was the 1998 film "Still
Breathing". Ms. Lynn then served as an associate producer on both "Kill the Man"
(1999) and "Twin Falls Idaho" (1999).

Ms. Lynn's films as a co-producer are the Emmy Award winning HBO film "Wit"
(2001), directed by Mike Nichols, and the drama "Joe and Max" (2002), produced
for the Starz network. Ms. Lynn then supervised Production of the horse unit for
Gary Ross's "Seabiscuit," which was produced by Universal Pictures, Dreamworks
Entertainment and Spyglass Entertainment and was released in July of 2003. Ms.
Lynn is producing "Fathers And Sons", which wrapped principal photography in the
summer of 2003, and features an ensemble cast including Samantha Mathis, John
Mahoney, Clea DuVall, and Bradley Whitford.


                                       46
<PAGE>

From 2001 until the present, Ms. Lynn has served as the President and Secretary
of Apologetic Productions, Inc., a movie production company where she is the
sole owner and manager. From June of 1999 until the present, Ms. Lynn has served
as a partner in Mockingbird Pictures, a movie production company she co-founded
with Charles Ryan. From March of 1996 until May of 1999, Ms. Lynn worked as the
Vice President of Production for the Fresh Produce Company, a movie production
company. From September of 1994 until March of 1996, Ms. Lynn developed movies
as a Creative Executive at Mark Johnson Productions. Before working in film
production, Ms. Lynn practiced law as the Director of Programming and the Arts
for the non-profit Thomas Jefferson Center. Ms. Lynn received her J.D. from the
University of Virginia's Law School, and a B.A. from its College of Arts and
Sciences.

Peter M. Read became a member of our board of directors in October of 2003.
Since January 2000, Mr. Read has run VoxPop, a venture capital services company
which works with venture funds, corporate venture arms, and their respective
portfolio companies in the "information, communication, and entertainment"
sector, particularly in negotiating and structuring corporate financings and
providing consultation on a number of key corporate strategy issues. During this
same period, Mr. Read has also worked with Hoegh Capital Partners in providing
similar consultative services. Prior to founding VoxPop, From September 1996 to
December 1999, Mr. Read was president of VNU's Entertainment Information Group,
which at the time comprised of National Research Group (NRG), Broadcast Data
Systems, Entertainment Marketing Solutions and SoundScan. VNU is a $4 billion
Dutch information services company which currently owns AC Nielsen and Nielsen
Media Research. While at VNU, Mr. Read led VNU's acquisition of NRG and several
other companies, served on the NRG Board and had direct responsibility for
developing corporate growth strategy and new products.

Mr. Read has been a director at the Hollywood Stock Exchange (HSX) where he was
responsible for the development of the HSX movie information business and has
also served as an advisor to Launch/Yahoo on its music data business. He has
served or is currently serving as an advisor or on the advisory boards of
several entertainment-related companies including LivePlanet, YesterdayLand
(JerseyFilms), KnitMedia/Knitting Factory, LicenseMusic, SimpleDevices, and
Brilliant Digital Entertainment.

Mr. Read received his BA degree in Philosophy, Politics and Economics from
Oxford University in 1985 and an MBA in 1990 (under a Louis Franck Scholarship)
from INSEAD. Mr. Read also holds Institute of Bankers certification in
Accountancy, Economics, Law, and Investment.

Charles F. Ryan III previously served as our Chief Executive Officer, Chief
Financial Officer and the Chairman of our board of directors from our inception
until October 2003, and continues to serve as a director and member of our audit
committee. He resigned as an officer of our Company in October 2003 in order to
pursue other career opportunities that would have conflicted with his ability to
perform the duties of our CEO/CFO, and such resignation was not due to any
disagreement with us, management or our Board of Directors. From June 1999 to
present, Mr. Ryan has served as a partner in Mockingbird Pictures, a movie
production company he co-founded with Julie Lynn. From February 2001 through
March 2002, Mr. Ryan was a senior investment banker at Credit Suisse First
Boston, where he was responsible for mergers and acquisitions across a number of
industry segments including media and telecommunication, healthcare and general
industrial. From July of 1999 through February 2001, Mr. Ryan was the Chief
Financial Officer for IFILM, an Internet company with the largest library of
on-demand film online. From June 1996 through March of 1999, Mr. Ryan was a Vice
President at Goldman Sachs, specializing in corporate finance and mergers and
acquisitions in the healthcare industry. Prior to that Mr. Ryan was in the
mergers and acquisitions group at Morgan Stanley. Mr. Ryan received his MBA from
the Anderson School of Management at UCLA and his B.S. from the McIntire School
of Commerce at the University of Virginia.

Brett W. Young has served as a director since our inception. Mr. Young has been
an independent financial consultant since 1996. In this capacity he has raised
capital for various early-stage companies specifically in the information
technology, healthcare technology and services, and financial services
industries. From 1989 to 1996, Mr. Young was employed with HYY Group, a
broker-dealer and asset management company located


                                       47
<PAGE>

in New York City, as an analyst and portfolio manager. From 1986 to 1989, Mr.
Young was employed as an analyst with Levy Harkins & Co., an asset management
company located in New York City. Mr. Young is also a minority stockholder of
Civilian Pictures, the parent entity of our underwriter. Mr. Young graduated
from Rutgers College with a B.S. in Economics in 1986.

Other Key Personnel

Keith Gordon has agreed to direct the Film. As the director, Mr. Gordon will be
primarily responsible for overseeing the creative elements of the filmmaking
process such as acting, cinematography, set design and post-production.

Mr. Gordon began his professional life as an actor, appearing in leading roles
in John Carpenter's "Christine"; Brian De Palma's "Dressed To Kill" and "Home
Movies"; the hit comedy "Back To School"; as well as supporting roles in
numerous films, including Bob Fosse's "All That Jazz". He simultaneously worked
extensively in New York theater, both on and off Broadway.

Mr. Gordon then starred in, co-wrote and co-produced the independent feature
"Static", which earned him the Best Actor award at the 1987 Madrid Film
Festival.

In 1989, Mr. Gordon wrote and directed "The Chocolate War", adapting Robert
Cormier's classic novel. Mr. Gordon received an IFP/Spirit Award nomination for
best first feature.

Next, Mr. Gordon adapted and directed "A Midnight Clear" from the William
Wharton autobiographical anti-war novel of the same name. The film starred Ethan
Hawke and Gary Sinise and was listed in numerous year-end "10 best" lists. Mr.
Gordon received his second IFP/Spirit Award nomination, this time for Best
Screenplay.

In 1997, Mr. Gordon produced and directed "Mother Night", starring Nick Nolte,
from the classic, blackly comic Kurt Vonnegut novel. It was named one of the 10
best films of the decade by critic David Sterrit of the Christian Science
Monitor.

In 2000, Mr. Gordon's feature adaptation of Scott Spencer's mysterious, romantic
novel "Waking the Dead" was released. It starred Billy Crudup and Jennifer
Connelly, and was executive produced by Jodie Foster. The film received an
IFP/Spirit award nomination for best screenplay, and was praised by the Los
Angeles Times as "impressive and satisfying, a rich and provocative experience"
and by the San Francisco Chronicle as "one of the most powerful romances of
recent years."

In the summer of 2002, Mr. Gordon completed filming "The Singing Detective",
starring Robert Downey Jr., Mel Gibson, Adrien Brody, Katie Holmes and Robin
Wright-Penn. The movie is an update of the classic, surreal BBC series, adapted
by the original writer -- the acclaimed Dennis Potter -- before his death. After
the film debut at the 2003 Sundance Film Festival, Daily Variety Magazine
commented: "Gordon again demonstrates the intelligent craftsmanship that marked
such ambitious prior efforts as 'Mother Night,' 'A Midnight Clear' and 'The
Chocolate War.'" Paramount Classics licensed the distribution rights for "The
Singing Detective" in February 2003, which was released in October 2003.

Mr. Gordon has also directed several television pieces, including two segments
of Oliver Stone's "Wild Palms" mini-series for ABC; an episode of Barry
Levinson's "Homicide"; two episodes of Paul Attanasio's series "Gideon's
Crossing"; an episode of Showtime's award-winning film-noir anthology series
"Fallen Angels"; and two episodes of FOX's "Twilight Zone" style anthology
series "Night Visions".

Mr. Gordon has worked for a variety of companies as a director, writer or
producer, including Baltimore Pictures, Propaganda Films, Showtime Networks, The
American Broadcasting Company, NBC Studios, Fine Line Features, New Line Cinema,
Icon Entertainment, Warner Brothers Television, Touchstone Televisions, Gramercy
Pictures, Egg Pictures and Polygram Pictures.

Ethan Hawke is acting as an executive producer for the Film and has indicated to
us in writing his interest in playing the lead role of "Ray Johnson". As an
executive producer, Mr. Hawke has been instrumental in


                                       48
<PAGE>

developing the project, a role which is essentially over. However, we expect Mr.
Hawke to continue to assist us by attracting additional name talent to the
project and in marketing the Film. Mr. Hawke is co-founder and artistic director
of the non-profit New York City theatre company Malaparte. He has directed the
films "Straight to One" (1994) and "Chelsea Walls" (2001) and has written the
novels "The Hottest State" and "Ash Wednesday".

Mr. Hawke made his film acting debut in 1985's "Explorers", but first gained
audience attention in "Dead Poets Society" in 1989. Mr. Hawke has since acted in
"Dad" (1989), "White Fang" (1991), "Mystery Date" (1991), "A Midnight Clear"
(1991), "Waterland" (1992), "Rich In Love" (1992), "Alive" (1993), "Reality
Bites" (1994), "White Fang 2" (1994), "Quiz Show" (1994), "Floundering" (1994),
"Before Sunrise" (1995), "Search And Destroy" (1995), "Gattaca" (1997), "Great
Expectations" (1998), "The Newton Boys" (1998), "The Velocity Of Gary" (1998),
"Joe The King" (1999), "Snow Falling On Cedars" (1999), "Hamlet" (2000), "Tell
Me" (2000), "Waking Life" (2001), "Tape" (2001), and "Training Day" (2001) for
which he was nominated for an Academy Award for Best Supporting Actor. Mr. Hawke
recently finished filming "Taking Lives" with Angelina Jolie and is currently
working on a sequel to the Richard Linklater film "Before Sunrise".

Erwin Stoff has agreed to work with Mr. Hawke as an executive producer on the
Film. As an executive producer initially developed the material, working with
Mr. Hawke. Further, he will assist us on the casting arrangements for the Film,
consult with us on production issues and help facilitate licensing the Film to
distributors.

Mr. Stoff is a principal partner of 3 Arts Entertainment, a motion picture
development and talent management company. As a manager, Mr. Stoff's clients
include Mathew Broderick, Chris Rock, Ethan Hawke, and Keanu Reeves. He has also
produced or co-produced "Bill & Ted's Bogus Journey" (1991), "Excessive Force"
(1993), "Picture Perfect" (1997), and "Sweet November" (2001).

Mr. Stoff's first motion picture as an executive producer was the 1986 Wes
Craven-directed made-for-TV movie, "Casebusters". He has since executive
produced "Loaded Weapon 1" (1993), "Chain Reaction" (1996), "Feeling Minnesota"
(1996), "The Devil's Advocate" (1997), "The Matrix" (1999), "Austin Powers - The
Spy Who Shagged Me" (1999), "The Replacements" (2000), and "Hardball" (2001).

BOARD OF DIRECTORS COMMITTEES AND OTHER INFORMATION

The Company's directors serve three year terms and hold office until the third
annual meeting of stockholders of the Company following their election to the
Board and until their respective successors have been qualified and elected.
Officers are elected by, and serve at the discretion of, the Board of Directors.

SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE

The Company's executive officers, directors and shareholders beneficially owning
more than 10% of the Company's Common Stock are required under the Exchange Act
to file reports of ownership of Common Stock of the Company with the Securities
and Exchange Commission. Copies of those reports must also be furnished to the
Company. The Company believes that during the preceding year all filing
requirements applicable to executive officers, directors and shareholders
beneficially owning more than 10% of the Company's Common Stock have been
complied with.


                                       49
<PAGE>

COMMITTEES

In September 2002, the Board of Directors appointed Brett Young and Charles Ryan
to the Audit Committee, and in October 2003 the Board further appointed Peter
Read to the Audit Committee. The Audit Committee reviews the scope and results
of the Company's financial statements conducted by the Company's independent
auditors. The Committee also reviews the scope of other services provided by the
Company's independent auditors, proposed changes in the Company's financial and
accounting standards and principles, and the Company's policies and procedures
with respect to its internal accounting, and auditing and financial controls.
The Committee makes recommendations to the Board of Directors on the engagement
of the independent auditors, as well as other matters that may come before it or
as directed by the Board of Directors. Our Board of Directors has determined
that Brett Young is an "audit committee financial expert" within the applicable
definition of the Securities and Exchange Commission. Mr. Young and Mr. Read
qualify as independent directors for purposes of Section 10A(m)(3) of the
Securities Exchange Act of 1934.

In September 2002, the Board of Directors appointed Brett Young to the
Compensation Committee, and in October 2003 the Board further appointed Peter
Read to join Mr. Young on the Compensation Committee. The Compensation Committee
makes decisions concerning matters of executive compensation; administers the
Company's executive incentive plans; reviews compensation plans, programs and
policies; and monitors the performance and compensation of executive officers.
The goal of our Board of Directors executive compensation policy is to ensure
that an appropriate relationship exists between executive compensation and the
creation of stockholder value, while at the same time attracting, motivating and
retaining senior management.

CODE OF ETHICS

Our Board of Directors has not yet adopted a written Code of Business Conduct
and Ethics.

ITEM 10. EXECUTIVE COMPENSATION

Billy Dead, Inc. was recently formed and none of our executive officers has thus
far received any cash compensation for his or her roles as officers and
directors of Billy Dead, Inc.

EMPLOYMENT AGREEMENTS

Peter Fuhrman. As compensation for serving as our Chief Executive Officer and
Chief Financial Officer, Mr. Fuhrman will receive cash compensation of $150,000
to be paid ratably over a three year term commencing with the completion of this
offering (which amounts to $50,000 per year), which is included in "Use of
Proceeds" as a general and administrative expense. In the event that Mr.
Fuhrman's three year term ends prior to its full-length, subject to certain
exclusions such as being terminated for "cause", all remaining cash compensation
shall be accelerated and paid.

Mr. Fuhrman purchased 144,000 shares of our common stock from Charles Ryan, our
former Chief Executive Officer and Chief Financial Officer, for $144 in October
of 2003. Together with the 36,000 shares Mr. Fuhrman purchased from Mr. Young in
connection with his agreement to serve on our board of directors, his 180,000
total shares of common stock represent 20% of the common stock outstanding.


                                       50
<PAGE>

If Mr. Fuhrman resigns as our CEO and Chief Financial Officer, or is terminated
by us for "cause", a portion of his 144,000 shares of common stock are subject
to our re-purchase at their then fair market value, as determined by the board
of directors and ratified by a majority of the outside directors.

The portion of his common stock subject to our repurchase is:

o     100% prior to the completion of this offering;

o     75% prior to the first anniversary of the completion of this offering;

o     50% prior to the second anniversary of the completion of this offering;
      and

o     25% prior the third anniversary of the completion of this offering.

After the third anniversary of the successful completion of this offering, or if
we terminate Mr. Fuhrman's employment at an earlier date without cause, we will
no longer have any repurchase rights for Mr. Fuhrman's shares.

Julie Lynn. In addition to serving as the unpaid Vice President and Secretary of
Billy Dead, Inc., Ms. Lynn has entered into a production services agreement with
us to serve as the Producer of the Film. As the Producer, Ms. Lynn will:

o     continue her various pre-production efforts on behalf of the Film's
      development;

o     produce the Film;

o     supervise post-production in her capacity as the Film's producer; and

o     assist in the promotion of the Film upon its release.

Ms. Lynn will also lease office space to us at the cost of $100 per year through
an arrangement with her production company, Apologetic Productions.

As compensation for her efforts as the Film's producer, Ms. Lynn will be paid:

o     cash compensation of $150,000, which has been included in the
      "above-the-line" section of the Film's production budget;

o     a right to contingent compensation equaling 3.75% of the "adjusted cash
      balances" of Billy Dead, Inc.

Ms. Lynn purchased 270,000 shares of our common stock for $270 in February of
2003, which represents 30% of the common stock outstanding.

Ms. Lynn will receive 20% of her cash compensation upon the completion of
pre-production, 60% upon the completion of principal photography, 10% upon the
completion of post-production and 10% upon the delivery of the final version of
the Film. If Ms. Lynn resigns as Producer of the Film or is terminated by us for
"cause" prior to the completion of her duties a portion of her contingent
compensation interest is subject to forfeiture and a portion of her 270,000
shares of common stock are subject to our re-purchase at their then fair market
value, as determined by the board of directors and ratified by a majority of the
outside directors. The portion of her cash compensation, contingent compensation
and common stock subject to forfeiture are:

o     100% prior to the completion of pre-production;

o     80% prior to the completion of principal photography;

o     20% prior to the completion of post-production; and

o     10% prior to the delivery of the final version of the Film.

Ms. Lynn's cash compensation, including her contingent compensation, will be
paid through her film development company, Apologetic Productions.


                                       51
<PAGE>

Other Employment Agreements

Keith Gordon. In addition to being a founder of Billy Dead, Inc., Keith Gordon
has entered into a production services agreement with us to serve as the
director of the Film. As the director, Mr. Gordon will be responsible for:

o     directing the Film;

o     revising the script as needed;

o     performing in the Film as needed;

o     supervising post-production in his capacity as the Film's director; and

o     assisting in the promotion of the Film upon its release.

As compensation for his efforts as the Film's director, Mr. Gordon will be paid:

o     cash compensation of $250,000, which has been included in the
      "above-the-line" section of the Film's production budget;

o     a right to contingent compensation equaling 3.75% of the "adjusted cash
      balances" of Billy Dead, Inc.

Mr. Gordon purchased 270,000 shares of our common stock for $270 in February of
2003, which represents 30% of the common stock outstanding. Mr. Gordon will
receive 20% of his cash compensation upon the completion of pre-production, 60%
upon the completion of principal photography, 10% upon the completion of
post-production and 10% upon the delivery of the final version of the Film. If
Mr. Gordon resigns as Director of the Film or is terminated by us for "cause"
prior to the completion of his duties a portion of his contingent compensation
is subject to forfeiture and a portion of his 270,000 shares of common stock are
subject to our re-purchase at their then fair market value, as determined by the
board of directors and ratified by a majority of the outside directors. The
portion of his contingent compensation and common stock subject to forfeiture
are:

o     100% prior to the completion of pre-production;

o     80% prior to the completion of principal photography;

o     20% prior to the completion of post-production;

o        10% prior to the delivery of the final version of the Film.

Mr. Gordon's cash compensation, including his contingent compensation, will be
paid to him through his creative services company, Sidetracked Productions,
Inc., which we refer to in this annual report as Sidetracked Productions.

We believe that fees in our budget for Mr. Gordon and Ms. Lynn are consistent
with standard compensation for a director or producer of a movie at this budget
level and were on terms that were as favorable to us as those generally
available from an unaffiliated third party. We also believe that the "net
participations" we have arranged with them as contingent compensation and the
terms relating to their forfeiture are customary for a movie at this budget
level.

We have included forfeiture provisions as part of Mr. Gordon's and Ms. Lynn's
cash and contingent compensation arrangements, as well as re-purchase
arrangements for their common stock purchases, so that we will be able to retain
and provide adequate incentive for a qualified substitute if either of them is
unable to fulfill their obligations on behalf of Billy Dead, Inc.

Charles Ryan. Mr. Ryan entered into an employment agreement with us in December
2002 in connection with his employment as our Chief Executive Officer and Chief
Financial Officer. The terms of that agreement are substantially similar to the
employment agreement entered into by his successor Peter


                                       52
<PAGE>

Fuhrman, except that we had agreed to pay Mr. Ryan in additional to his annual
compensation, an additional fee of $25,000 upon the successful completion of
this offering and a right to contingent compensation equaling 1.0% of the
"adjusted cash balances" of Billy Dead, Inc. as described in "The Company -
Industry Compensation Arrangements." Following his resignation in October 2003
as an officer to pursue other career opportunities which would have conflicted
with his ability to perform the duties of CEO/CFO (Mr. Ryan remains as a member
of our Board of Directors), Mr. Ryan agreed to sell 144,000 shares of our common
stock to Mr. Fuhrman, our new Chief Executive Officer and Chief Financial
Officer, and 6,000 shares to Peter Read, a new director. Mr. Ryan has retained
his right to receive 1% of the "adjusted cash balances" as contingent
compensation. Finally, we agreed to pay him $25,000 upon the successful
completion of this offering in recognition of his work during our formative
period and in connection with this offering. That amount is included in the "Use
of Proceeds" as a startup expense.

Mr. Fuhrman, Ms. Lynn, Mr. Gordon and Mr. Ryan's compensation arrangements and
common stock purchase agreements have been reviewed and approved by our
compensation committee and by our board of directors.

COMPENSATION OF DIRECTORS

Directors do not currently receive any compensation for their service as members
of the board of directors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Our Board of Directors is comprised of: three non-employee directors (Charles
Ryan, Brett Young and Peter Read), along with two members of our executive team
-- Chief Executive Officer and Chief Financial Officer, Peter Fuhrman, who also
serves as Chairman; and our Vice-President, Secretary and the producer of the
Film, Julie Lynn. One of our non-employee directors, Charlie Ryan, was formerly
the Chief Executive Officer of the Corporation. Mr. Young and Mr. Read, the two
non-employee directors who have never been employed by the Company, comprise the
Compensation Committee. It is their responsibility to:

      o     Make decisions concerning matters of executive compensation;

      o     Administer the Company's executive incentive plans;

      o     Review compensation plans, programs and policies; and

      o     Monitor the performance and compensation of executive officers.

The goal of our Board of Directors executive compensation policy is to ensure
that an appropriate relationship exists between executive compensation and the
creation of stockholder value, while at the same time attracting, motivating and
retaining senior management and other personnel necessary to produce the Film.
The Board of Directors informal executive compensation philosophy (which applies
generally to all management as well as to persons who will play key roles in
producing the Film) considers a number of factors, which may include:

      o     Providing levels of compensation for management and highly skilled
            production personnel competitive with companies at a comparable
            stage of development and film productions being produced at a
            similar budget level;

      o     Integrating management's and key personnel's compensation with the
            achievement of performance goals;


                                       53
<PAGE>

o     Maintaining an appropriate balance between base salary or fees paid out
      for contractors and performance-based compensation, with a higher
      proportion of compensation being performance-based.

The compensation structure of our executive officers and for key personnel who
will be employed on the Film is based on competitive, market-based pay practices
and generally includes a combination of base salary or fees combined with the
potential for increasing value in common stock held by participants, or by
virtue of "net participations" in the revenues generated by the Film. In setting
compensation levels, the Board of Directors considers compensation practices
typical in the motion picture industry for independent films produced at a
similar budget level as the Film, and other practices and data that are believed
to be generally comparable to the Company.

Base salary and fees paid to key personnel and contractors are targeted at
customary levels within the motion picture production industry, primarily
reflecting fees paid by single purpose companies formed to produce films at a
similar budget level, or fees paid to key personnel for other films produced by
persons involved with the Company. In the instance of our only paid officer, the
Chief Executive Officer and Chief Financial Officer, his compensation is based
on a subjective assessment of performance and the Company's needs.

Consistent with its belief that equity ownership and participation in our
revenues by senior management and key production personnel is beneficial in
aligning the interests of senior management and the persons producing the Film
with those of the stockholders, we provide potentially significant long-term
incentive opportunities to our senior management and key personnel working on
the Film by holdings of our common stock or participations in our net revenues
("net participations"), thereby emphasizing the potential creation of long-term
stockholder value. The Board of Directors considers the holding of common stock
and grants of net participations to be an effective long-term incentive because
neither have cash value unless the Film is successfully produced and exploited
at a level which will increase the value of our Series A preferred stock. In
permitting these stock purchases and grants for net participations, the Board of
Directors considers its subjective assessment of our past financial performance
and future prospects, a person's current level of ownership of the Common Stock
or net participation grants, the period during which an executive officer or key
participant has been in a key position with us, individual performance and
competitive practices within other companies and films.

In order to further incentive management, our agreements with holders of the
common stock to purchase shares typically include "buy back" clauses, which will
allow the Company to re-purchase these shares at a nominal value if the holder
does not perform their duties.

Net Profit Participations are contingent compensation arrangements with members
of the Film's production staff customary in the film industry. These net
participations are typically based upon adjusted cash balances of a company or
film production determined through negotiations between the participants. A
percentage of these "adjusted cash balances" are paid out as contingent
compensation for creative participants in a motion picture production. On
December 1, 2002 the board authorized Billy Dead, Inc. to enter into net
participation arrangements with Charles Ryan, Keith Gordon and Julie Lynn for a
total of 8.5% of Billy Dead, Inc.'s adjusted cash balances, which the board
defined as 8.5% of Billy Dead, Inc.'s net revenues (to be calculated in
accordance with industry standards), and further authorized the producers to
enter into net participation arrangements for an additional 29% of Billy Dead,
Inc.'s net revenues (to be calculated in accordance with industry standards),
for an aggregate of 37.5% of Billy Dead, Inc.'s net revenues, to be further
defined, negotiated and issued at the discretion of the Film's Producers, Julie
Lynn and Keith Gordon. As of December 31, 2003, no net participation agreements
had been formalized with any persons other than Mr. Gordon, Ms. Lynn and Mr.
Ryan.

The net participation arrangements that Billy Dead, Inc. has entered into are
based upon the defined "producer's net profits" or the defined "adjusted gross
receipts" of Billy Dead, Inc. "Adjusted gross receipts" of Billy Dead, Inc. is
equivalent to Billy Dead, Inc.'s "adjusted cash balances". "Producer's net


                                       54
<PAGE>

profits" is defined as 50% of "adjusted gross receipts". Billy Dead, Inc. will
derive its "adjusted cash balance" based upon these definitions.

Billy Dead, Inc. will calculate net participation obligations as 37.5% of Billy
Dead, Inc.'s "adjusted cash balances", which will equal the after-tax net income
received by Billy Dead, Inc. in connection with the Film, after first taking
into account the liquidation preference of $8.75 per share to the holders of
Billy Dead, Inc.'s Class A preferred stock (who are providing financing for the
Film through the Offering) and also taking into account a reserve for
foreseeable contingent liabilities.

By the Compensation Committee:

Brett Young

Peter Read

STOCK PRICE PERFORMANCE PRESENTATION

Neither our common stock nor our Series A preferred stock is currently quoted on
any exchange or other quotation system.

STOCK OPTION PLANS

The Company has no stock option plan in place and does not intend to establish
one.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of our shares as of April 13, 2004. The information is provided with
respect to:

o     each person who beneficially owns more than 5% of the outstanding shares
      of our common stock, which is the only stock we have outstanding previous
      to this offering;

o     each member of our board of directors;

o     each of the named executive officers; and

o     all members of our board of directors and executive officers as a group (3
      persons).

Subject to community property laws where applicable, the named person has sole
voting and investment power with respect to all of the shares of common stock
shown as beneficially owned. The percentage of beneficial ownership for each
stockholder is based on a total of 900,000 shares of common stock outstanding.
The holdings of the persons listed below all are subject to certain rights Billy
Dead, Inc. has to repurchase shares for nominal consideration in certain
circumstances. We also list below the percentage of votes each person would have
after the completion of this offering, assuming the issuance of 900,000 shares
of Series A preferred stock and taking into account the fact that the Series A
preferred stock possesses only one-half vote per share.


                                       55
<PAGE>

<TABLE>
<CAPTION>
                                                 Common Shares                      % of Votes after
                                                  Beneficially          % of           completion of
Name of  Beneficial Owner                             Owned             Class            offering
-------------------------                             -----             -----            --------
<S>                                                  <C>                <C>                <C>
       Peter S. Fuhrman ...................          180,000             20.0%             13.3%
          11925 Wilshire Boulevard, 3rd Fl
          Los Angeles, CA  90025
       Julie G. Lynn ......................          270,000             30.0%             20.0%
          2312 Lorenzo Dr.
          Los Angeles, CA 90068
     Charles F. Ryan III ..................          108,000             12.0%              8.0%
          220 Upper Terrace
          San Francisco, CA 94117
     Brett W. Young .......................           36,000              4.0%              2.7%
          5 Andrea Way
          Califon, NJ 07830
       Peter M. Read ......................           36,000              4.0%              2.7%
          c/o Seymour Taylor Accountants
          High Wycombe, England
Total Directors and Officers ..............          630,000             70.0%             46.7%
                                                    --------         --------          --------
     Keith G. Gordon ......................          270,000             30.0%             20.0%
          c/o  Dan Aloni
          United Talent Agency
          9560 Wilshire Blvd
          Beverly Hills, CA 90212
                                                    --------         --------          --------
Total .....................................          900,000            100.0%             66.7%
                                                    ========         ========          ========
</TABLE>

Indemnification of Directors and Officers

      Our articles of incorporation and by-laws indemnify our directors and
officers to the fullest extent permitted by Nevada corporation law. Insofar as
indemnification for liability arising under the Securities Act may be permitted
to directors, officers, and controlling persons, we are aware that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act of 1933 and is unenforceable.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than the transactions described below, since we were formed there has not
been, nor is there currently proposed, any transaction or series of similar
transactions to which we were or will be a party in which any director or
executive officer of Billy Dead, Inc., any holder of more than 5% of any class
of our voting stock, any member of the immediate family of any such person or
any persons who might be deemed promoters of this offering has had (or will
have) a direct or indirect material interest.

Past affiliated transactions were entered into on terms that were as favorable
to us as those generally available from unaffiliated third parties and were
ratified by Brett Young, who at that time was our sole outside director and who
had no interest in these transactions. Additionally, our bylaws provide that any
future transactions between us and any officer, director or holder of 5% of any
class of our voting stock, or any member of the immediate family of any such
person, including any loans to us from such persons or from us to such persons,
will be on terms no less favorable than could be obtained by an unaffiliated
third party and must be approved by a majority of the directors including a
majority of the disinterested directors who had access, at our expense, legal
counsel.


                                       56
<PAGE>

In October 2003, we restructured our management and board of directors by (1)
retaining Peter Fuhrman, who had joined our Board of Directors in August 2003 to
serve as an outside independent director, to serve as our Chief Executive
Officer and Chief Financial Officer; and by (2) adding Peter Read as an
additional outside director. Since Mr. Young was a shareholder of greater than
5% of our outstanding stock at the time the past affiliated transactions were
authorized, he may have been considered a promoter at that time in certain
jurisdictions and not truly independent. As a result, all of the past affiliated
transactions were been further reviewed and unanimously ratified by the full
Board of Directors and by the Compensation Committee, which now consists of Mr.
Read, the recently-appointed director who is independent, and Mr. Young, who
currently holds less than 5% of our outstanding stock and therefore does not
fall within the definition of a "promoter" of the company under applicable state
laws and regulations.

Our Amended and Restated Certificate of Incorporation provides that any
transaction relating to a material portion of Billy Dead, Inc.'s assets
involving us and an affiliated person will require a "super-majority" vote of
our stockholders, including a majority of the shares of the Series A preferred
stock then outstanding.

Promoters. Mr. Ryan, Ms. Lynn and Mr. Gordon, each of whom took an active role
in our founding, are considered "promoters" under applicable securities laws. In
addition, as our Chief Executive Officer, Mr. Fuhrman is considered a promoter
under applicable securities laws. Civilian Capital, who has played a larger role
in Billy Dead, Inc.'s formation and in the development of this offering than an
underwriter would traditionally, could also be deemed a promoter, so we have
included them in this discussion.. In addition, because Civilian Pictures, the
parent company of the underwriter, has paid certain expenses on behalf of the
issuer, it could be deemed a promoter and we are thus including it in this
discussion. Other than the transactions or compensation disclosed in this annual
report, nothing of any value (including money, property, contracts, options or
rights of any kind) has been received (or will be received) by any of the
persons that are "promoters", directly or indirectly, from Billy Dead Inc., and
no amount of any assets, services or other considerations has been received (or
will be received) by Billy Dead, Inc. from them; and that no assets have been
acquired (or will be acquired) from them.

Affiliated Transactions

Agreements with Keith Gordon / Sidetracked Productions. Mr. Gordon, a holder of
more than 5% of our stock, is the sole owner and president of Sidetracked
Productions, a creative services company which typically contracts Mr. Gordon's
services as a director, writer or actor. We have entered into a production
services agreement with Sidetracked Productions in order to retain Mr. Gordon to
serve as the director of the Film. Any cash compensation referred to in this
annual report relating to Mr. Gordon, including his contingent compensation
arrangements, will actually be paid to Sidetracked Productions.

Agreements with Julie Lynn / Apologetic Productions. We have entered into a
production services agreement with Apologetic Productions, a related party
controlled by Julie Lynn, in order to retain Ms. Lynn, our Vice President,
Secretary and member of our board of directors, to serve as the producer of the
Film. Any cash compensation referred to in this annual report relating to Ms.
Lynn, including her contingent compensation arrangements, will actually be paid
to Apologetic Productions.

In January 2003, we entered into a lease agreement with Apologetic Productions
providing, among other things, for the Corporation's rental of 250 square feet
of office facilities at 2312 Lorenzo Dr., Los Angeles, California at a rate of
$100 per year. This Lease was entered into in January 2003 and can be terminated
by either party upon a 30-day written notice.

Agreements with Charles Ryan. We previously entered into separate agreements
with Charles Ryan to serve as (1) our Chief Executive Officer and Chief
Financial Officer and (2) the Chairman of our Board of


                                       57
<PAGE>

Directors. In October 2003 Mr. Ryan resigned as our Chief Executive Officer,
Chief Financial Officer and Chairman of the Board, but remains on our board of
directors. His employment agreement was modified to provide that notwithstanding
his resignation, he will still receive $25,000 upon the successful completion of
this offering in recognition for his efforts during our formative stages and in
connection with this offering. Mr. Ryan has also retained his right to
contingent compensation. Mr. Ryan's board of directors agreement has been
amended to reflect that he is no longer the chairman of the Board of Directors,
but remains a member.

Agreements with Peter Fuhrman. In October 2003 we entered into agreements with
Peter Fuhrman to serve as our Chief Executive Officer, Chief Financial Officer
and the Chairman of our Board of Directors.

Other Transactions

Agreements with Civilian Capital. The Chief Executive Officer of Civilian
Capital, Peter McDonnell, has guaranteed a line of credit we established with a
bank in the amount of $50,000. As of December 31, 2003, $50,000 had been drawn
from the line of credit.

The note bears a variable interest rate based on the bank's prime rate plus 1%,
but shall not be less than 6%, which was the initial rate. Accrued interest is
due monthly and the note, which originally matured on December 23, 2003, was
renewed until June 30, 2004, at which time all outstanding principal and unpaid
accrued interest is due.

Mr. McDonnell is receiving no compensation for guaranteeing this note and we
intend to repay the line of credit from the proceeds of this offering or remove
Mr. McDonnell from the note after the offering closes.

Agreements with Civilian Pictures. Civilian Pictures, Inc., the parent company
of the underwriter, has granted options to purchase shares of its common stock
to Keith Gordon, who is serving as the director of the Film, and Julie Lynn, who
is serving as the Vice President and Secretary of Billy Dead, Inc. and the
producer of the Film. The aggregate amount of the options granted to Mr. Gordon
and Ms. Lynn, if exercised, will amount to less than 0.5% of the outstanding
common stock of Civilian Pictures.

Brett Young, who is a member of Billy Dead, Inc.'s Board of Directors, is the
chair of the Audit Committee and a member of the Compensation Committee, is a
minority stockholder of Civilian Pictures. Mr. Young is not an employee or
Director of Civilian Pictures and holds less than 5% of its outstanding shares.

Civilian Pictures has agreed to pay certain of our actual, out-of-pocket set up,
operating and offering related expenses and we have agreed to repay Civilian
Pictures out of the proceeds of the offering. These expenses relate to license
fees, legal and accounting services, entertainment legal matters, blue sky legal
matters, postage, and other fees related to the corporate establishment and
initial maintenance of Billy Dead, Inc., and certain marketing expenses, such as
web site development.

Expenses incurred by Civilian Pictures on behalf of Billy Dead, Inc. total
$139,659 as of December 2003 and $20,066 as of December 31, 2002. If the
offering is not successfully completed, Billy Dead, Inc. has no obligation to
reimburse Civilian Pictures for these expenses.


                                       58
<PAGE>

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   Documents filed as a part of this report.

      1. List of Financial Statements. The following financial statements of
Billy Dead, Inc. and Report of Raimondo Pettit Group, Independent Auditors, are
included in this report:

      o     Report of Raimondo Pettit Group, Independent Auditors.

      o     Balance Sheet at December 31, 2003

      o     Statements of Operations for the year ended December 31, 2003,
            period from inception (September 24, 2002) through 2002, and for the
            period from inception (September 24, 2002) through December 31, 2003

      o     Statements of Stockholders' Equity(Deficit) for the periods from
            inception (September 24, 2002) through December 31, 2003

      o     Statements of Cash Flows for the year ended December 31, 2003,
            period from inception (September 24, 2002) through 2002, and for the
            period from inception (September 24, 2002) through December 31, 2003

      o     Notes to Financial Statements for the year ended December 31, 2003,
            period from inception (September 24, 2002) through 2002, and for the
            period from inception (September 24, 2002) through December 31, 2003

      2. List of all Financial Statement Schedules. All schedules are omitted
because they are not applicable or the required information is shown in the
financial statements or notes thereto.

      3. Exhibits required by Item 601 of Regulation S-K. The following exhibits
are filed as a part of, or incorporated by reference into, this Report:

Exhibit
Number         Description of Document
------         -----------------------

1.1            Form of Underwriting Agreement.*****

3.1            Amended and Restated Certificate of Incorporation.**

3.2            Bylaws.**

3.3            Amendment to Bylaws dated as of June 15, 2003.***

4.1            Form of common stock certificate.**


4.2            Form of Series A preferred stock certificate.**

4.3            Form of Underwriter's Warrant Agreement.**

5.1            Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
               Professional Corporation.*****

10.1           Screenplay Option Agreement and Assignment between Billy Dead,
               Inc. and TAP Entertainment, dated April 7, 2003.**

10.2           Novel Option Agreement and Assignment between Billy Dead, Inc.
               and Lisa Reardon, dated April 15, 2003.**

10.3           Production Services Directors Agreement dated December 1, 2002
               between Billy Dead, Inc. and Keith G. Gordon.**

10.4           Production Services Producers Agreement dated December 1, 2002
               between Billy Dead, Inc. and Julie G. Lynn.**


                                       59
<PAGE>

10.5           Lease Agreement dated January 1, 2003 between Billy Dead, Inc.
               and Apologetic Productions.**

10.6           Loan Repayment Agreement dated December 18, 2002 between Billy
               Dead, Inc. and Peter McDonnell.**

10.7           Employment Agreement dated December 1, 2002 between Billy Dead,
               Inc. and Charles F. Ryan III.**

10.8           Agreement regarding Board Directorship dated December 1, 2002
               between Billy Dead, Inc. and Charles F. Ryan III.**

10.9           Agreement regarding Board Directorship dated December 1, 2002
               between Billy Dead, Inc. and Brett W. Young.**

10.10          [Intentionally Omitted]

10.11          [Intentionally Omitted]

10.12          Agreement regarding Board Directorship dated as of August 15,
               2003 between Billy Dead, Inc. and Peter S. Fuhrman.****

10.13          Agreement dated as of August 15, 2003 between Billy Dead, Inc.,
               Brett Young and Peter S. Fuhrman.****

10.14          Form of Promotional Shares Escrow Agreement between Billy Dead,
               Inc., Charles F. Ryan, III, Julie G. Lynn, Keith Gordon, Brett
               Young, Peter Fuhrman, Peter Read and Joseph Tomkiewicz, Esq., as
               escrow agent.*****

10.15          Employment Termination Agreement dated as of October 15, 2003
               between Billy Dead, Inc. and Charles F. Ryan III.*****

10.16          Agreement dated as of October 15, 2003 between Billy Dead, Inc.,
               Charles F. Ryan III and Peter S. Fuhrman.*****

10.17          Agreement dated as of October 15, 2003 between Billy Dead, Inc.,
               Charles F. Ryan III, Julie Lynn and Peter Read.*****

10.18          Employment Agreement dated as of October 15, 2003 between Billy
               Dead, Inc. and Peter S. Fuhrman.*****

10.19          Agreement regarding Board Directorship dated as of October 15,
               2003 between Billy Dead, Inc. and Peter Read.*****

10.20          Agreement dated as of October 15, 2003 between Billy Dead, Inc.,
               Julie Lynn, Keith Gordon, Sidetracked Productions, Inc., Charles
               F. Ryan III, Brett Young and Peter S. Fuhrman.*****

31.1           Certification of Chief Executive Officer pursuant to Exchange Act
               Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002*

31.2           Certification of Chief Financial Officer pursuant to Exchange Act
               Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002*

32.1           Certification of Chief Executive Officer pursuant to 18 U.S.C.
               Section 1350, adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.*

32.2           Certification of Chief Financial Officer pursuant to 18 U.S.C.
               Section 1350, adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.*

99.1           Escrow Agreement by and between Billy Dead, Inc., Civilian
               Capital, Inc., Computer Clearing Services, Inc. and Bank of the
               West, as escrow agent.****


                                       60
<PAGE>

-------------------

*     Filed herewith

**    Filed with the initial Registration Statement dated April 18, 2003

***   Filed with Amendment No. 1 to Registration Statement dated June 24, 2003

****  Filed with Amendment No. 3 to Registration Statement dated September 3,
      2003

***** Filed with Amendment No. 4 to Registration Statement dated October 28,
      2003

(b)   Reports on Form 8-K

      None

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following is a summary of the fees billed to us by Raimondo Pettit Group for
professional services rendered for the fiscal years ended December 31, 2003 and
2002:

xx                                    Fiscal 2003       Fiscal 2002
Fee Category                          Fees              Fees
                                      -------           -------
Audit Fees                            $32,000           $ 4,000

Audit Related Fees                         --                --

Tax Fees                              $ 4,000                --

All Other Fees                             --                --
                                      -------           -------
Total Fees                            $36,000           $ 4,000
                                      =======           =======

Audit Fees. Consists of fees billed for professional services rendered for the
audit of our financial statements incorporated with our Form SB-2 (and
amendments thereto) and review of interim financial statements included in
quarterly reports and services that are normally provided by Raimondo Pettit
Group in connection with statutory and regulatory filings or engagements.

Audit Related Fees. Consists of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of our
financial statements and are not reported under "Audit Fees".

Tax Fees. Consists of fees billed for professional services for tax compliance,
tax advice and tax planning. These services include preparation of federal and
state income tax returns.

All Other Fees. Consists of fees for product and services other than the
services reported above.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

The Audit Committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These services may
include audit services, audit related services, tax services, and other
services. Pre-approval is generally provided for up to one year, and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent auditors and
management are required to periodically report to the Audit Committee


                                       61
<PAGE>

regarding the extent of services provided by the independent auditors in
accordance with this pre-approval and the fees for the services performed to
date. The Audit Committee may also pre-approve particular services on a
case-by-case basis.


                                       62
<PAGE>

SIGNATURE PAGE

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

                            Billy Dead, Inc.

                            (Registrant)

                  By:       /s/ PETER S. FUHRMAN
                            --------------------

                            Peter S. Fuhrman
                            Chief Executive Officer and Chief Financial
                            Officer (Principal Financial and Accounting
                            Officer)

                  Date:     April 13, 2004

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

April 13, 2004         By:  /s/ PETER S. FUHRMAN
                                ----------------
                                Peter S. Fuhrman
                                Chief Executive Officer, Chief Financial
                                Officer, President & Board of Directors
                                (Principal Executive Officer & Principal
                                Financial & Accounting Officer)


April 13, 2004         By:  /s/ JULIE LYNN
                                ----------
                                Julie Lynn
                                (Vice President, Secretary & Board of Directors)


April 13, 2004         By:  /s/ CHARLES F. RYAN III
                                -------------------
                                Charles F. Ryan III
                                Director


April 13, 2004         By:  /s/ BRETT W. YOUNG
                                --------------
                                Brett W. Young
                                Director


April 13, 2004         By:  /s/ PETER M. READ
                            -------------
                                Peter M. Read
                                Director


                                       63