UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
20-FR/A





(Amendment
No. 10)





[X]
            REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
      OF 1934




OR




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


For the
fiscal year ended________________________________




OR




[
       ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
transition period from ____________ to __________




OR




[
       ]
            SHELL
      COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934


Date of
event requiring this shell company report ....................................





Seven Arts
PicturesPLC


(Exact
name of Registrant as specified in its charter)





__________England_____________


(Jurisdiction
of incorporation or organization)





38 Hertford
Street,LondonUKW1J 7SG


(Address
of principal executive offices)





Securities to be registered
pursuant to Section 12(b) of the Act:


None





Securities to be registered
pursuant to Section 12(g) of the Act:


Ordinary
Shares, £0.05 par value


(Title of
Class)





Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None





Indicate
the number of outstanding shares of each of the Company’s classes of capital or
ordinary stock as of the close of the period covered by the annual report:


21,684,000
ordinary shares


3,000,000
convertible redeemable preferred shares











Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.   Yes ___No   xxx





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





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.





Large
accelerated filer   Accelerated filer   Non-accelerated
filer  xxx





Indicate
by check mark which financial statement item the registrant has elected to
follow: Item 17 xxx   Item
18 ___





If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).


Yes
   No    N/A  xxx





Indicate
by check mark whether the registrant has filed all document and reports required
to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a
court.





Yes
   No    N/A  xxx




Index to
Exhibits on Page 54





1



















Seven
Arts Pictures PLC


FORM
20-F REGISTRATION STATEMENT


TABLE
OF CONTENTS








Part
      I
            
            PageItem 1.
            Identity of Directors, Senior Management and
      Advisors
            4Item 2.
            Offer Statistics and Expected
      Timetable
            5Item 3.
            Key Information
            6Item 4.
            Information on the
    Company
            15Item 5.
            Operating and Financial Review and
      Prospects
            24Item 6.
            Directors, Senior Management and
      Employees
            29Item 7.
            Major Shareholders and Related Party
      Transactions
            34Item 8.
            Financial Information
            36Item 9.
            The Offer and Listing
            37Item 10.
            Additional Information
            39Item 11.
            Quantitative and Qualitative Disclosures About Market
      Risk
            47Item 12.
            Description of Securities Other Than Equity
      Securities
            47





Part
      IIItem 13.
            Defaults, Dividend Arrearages and
      Delinquencies
            48Item 14.
            Material Modifications to the Rights of
      Security Holders and Use of Proceeds
            48Item 15.
            Controls and Procedures
            48Item 16.
            Reserved
            48Item 16A.
            Audit Committee Financial Expert
            48Item 16B.
            Code of Ethics
            48Item 16C.
            Principal Accountant Fees and
      Services
            48Item 16D.
            Exemptions from the Listing Standards for Audit
      Committee
            48Item 16E.
            Purchases of Equity Securities by Seven
      Arts
            48





Part
      IIIItem 17.
            Financial Statements
            48Item 18.
            Financial Statements
            48Item 19.
            Exhibits
            48








2


INTRODUCTION





Seven
Arts Pictures PLC (“Seven Arts” or the “Company”) was incorporated as Glasgow
Park Investments PLC on 24 August 2001 under the English Companies Act of
1985.  Pursuant to a resolution passed at a meeting of the
shareholders of the Company held on 11 September 2001, the Company changed its
name from Glasgow Park Investments PLC to The Cabouchon Collection
PLC.  Pursuant to a resolution passed at a meeting of the shareholders
of the Company that was held on 6 November 2003, the name of the Company was
changed to Cabouchon PLC.  Pursuant to a resolution passed at a
meeting of the shareholders of the Company that was held on 2 September 2004,
the name of the Company was changed to Seven Arts Pictures PLC, at the time all
motion picture business assets of Seven Arts Pictures Inc. were transferred to a
subsidiary of the Company (Seven Arts Filmed Entertainment Limited) pursuant to
an Asset Transfer Agreement in exchange for ordinary shares of the
Company.  Documents concerning the Company which are referred to
herein may be inspected during regular hours at the Company's Los Angeles
affiliate office located at 6310 San Vicente Blvd., Suite 510, Los Angeles, CA
90048 U.S.A.





BUSINESS
OF SEVEN ARTS PICTURES PLC





Seven
Arts Pictures PLC (“Seven Arts” or the “Company”), an English corporation, is
the successor of Seven Arts Pictures Inc. (“SAP”) as a result of an Asset
Transfer Agreement under which all motion picture business assets of SAP were
transferred to a subsidiary of the Company for ordinary shares of the Company,
SAP was founded in 2002 as an independent motion picture production and
distribution company engaged primarily in the development, financing, production
and licensing of theatrical motion pictures for exhibition in domestic (i.e. the
United States and Canada) and international or foreign (i.e. outside the United
States and Canada) theatrical markets, and for subsequent worldwide release in
other forms of media, including home video and pay and free
television.  SAP continued the motion picture production and
distribution activities of CineVisions incorporated in 1992, which SAP acquired
on SAP's initial capitalization pursuant to an Asset Transfer Agreement in
October, 2002, which was intended to qualify as a Section 351 transaction under
the Internal Revenue Code of 1986, as amended.  The Company currently
owns interests in 31 completed motion pictures listed in Table 8.





FORWARD-LOOKING
STATEMENTS





Certain
statements in this document might constitute “forward-looking statements”. Some,
but not all, forward-looking statements can be identified by the use of words
such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,”
statements that an action or event “may,” “might,” “could,” “should,” or “will”
be taken or occur, or other similar expressions. Although the Company has
attempted to identify important factors that could cause actual results to
differ materially from expected results, such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or other future
events, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.  Such factors include, among others, the following risks:
the need for additional financing; uncertainties and risks related to carrying
on business in foreign countries; risks associated with third party infringement
of copyrights and other intellectual property, especially the unauthorized
duplication of motion picture DVDs and unauthorized distribution of motion
pictures through the world wide web; risks associated with the lack of
enforcement of applicable copyright and intellectual property laws, especially
in foreign countries; risks associated with changing copyright and applicable
intellectual property laws, especially in foreign countries; risks associated
with changing distribution models for motion pictures, especially on the world
wide web; risks associated with restrictions of motion picture content,
especially in foreign countries; reliance on key personnel; the potential for
conflicts of interest among certain officer, directors or promoters of the
Company; the absence of dividends; currency fluctuations; competition; dilution;
the volatility of the Company’s ordinary share price and volume; and tax
consequences to United States Shareholders. The Company is under no obligation
to keep its information current and revise any forward-looking statements
because of new information, future events or otherwise.


3


PART
I





ITEM 1.  IDENTITYOF DIRECTORS, SENIOR MANAGEMENT AND
ADVISORS





1.A.1.
 Directors


Table No.
1 lists the names, ages and business addresses of the Directors of Seven Arts,
as of March 31, 2008.





Table No.
1


Directors





Name
            Age
            Date First Elected or
    AppointedPeter
      Hoffman (2)
            58
            September
      2, 2004Anthony
      Bryan (4) (1)
            84
            March
      30, 2007Rufus
      Pearl (1) (3)
            31
            September
      2, 2004Julia
      Verdin (1) (2)
            44
            January
      3, 2007Anthony
      Hickox (3)
            42
            January
      3, 2007Elaine
      New (3)
            47
            January
      11, 2007Kate
      Hoffman (5)
            31
            February
      26, 2008





(1)           
Member of Audit Committee.





(2)           6310
San Vicente Blvd., Suite 510, Los Angeles, CA 90048 USA





(3)           30
Farringdon Street, London EC4A 4HJ UK





(4)           1801
Century Park East, Suite 1850, Los Angeles, CA 90067 USA








1.A.2.  Senior
Management


Table No.
2 lists the names, ages and business addresses of the senior management of the
Company as of March 31, 2008.  The senior management serves at the pleasure
of the Board of Directors.





Table No.
2


Senior
Management





Name and Position
            Age
            Date of First
AppointmentPeter
      M. Hoffman, CEO (1)
            58
            September
      2, 2004Elaine
      New, Finance Director (2)
            47
            January
      11, 2007Kate
      Hoffman, Chief Operating Officer (2)
            31
            February
      26, 2008


(1) 6310
San Vicente Blvd., Suite 510, Los Angeles, CA 90048, USA


(2) 30
Farringdon Street, London EC4A 4HJ UK




4




Mr.
Hoffman's functions, as President and CEO of the Company, include strategic
planning, business development, operations, financial administration,
accounting, liaison with auditors-accountants-lawyers-regulatory
authorities-financial community/shareholders; and
preparation/payment/organization of the expenses/taxes/activities of the
Company, and reporting to the Board of Directors.





Ms. New
functions as Finance Director include financial administration; accounting and
financial statements; liaison with auditors, accountants, and financial
community/shareholders; and preparation/ payment/organization of the
expenses/taxes/activities of the Company.  She assists in ensuring the
Company’s compliance with all statutory and regulatory
requirements.





Ms.
Hoffman's functions as COO of Seven Arts include licensing and delivery of the
Company's motion pictures to third parties throughout the universe.





1.B.
 Advisors


The
Company’s UK Legal Counsel:


Sprecher
Grier Halberstam LLP


One
America Square


Crosswall


London
EC3N 2SG UK


Contact:
John Bottomley


Telephone:
44 20 7544 5555





The
Company’s Banks are:


Coutts
& Co.


440
Strand


London
WC2R 0QS UK


Sort
Code: 18-00-02


Swift
Code: COUT GB22


IBAN:
GB29 COUT 1800 0207 7273 05


Account:
07727305





City
National Bank


400 N.
Roxbury Drive


Beverly
Hills, CA 90210 USA


Contact:  Charles
Heaphy


Telephone:  310-888-6800





1.CAuditors


The
Company’s auditor is:


Mazars
LLP (formerly Moores Rowland LLP)


3 Sheldon
Square


Paddington


London W2
6PS UK


Contact:
Robin Stevens


Telephone:
44-207 470 0000





Member of
the Institute of Chartered Accountants of England and Wales





ITEM 2.
 OFFER STATISTICS AND EXPECTED TIMETABLE.


NA





5


ITEM 3.
 KEY INFORMATION.





3.A.1.  Selected
Financial Data


The
selected financial data of the Company for Fiscal Years ended 2007, 2006 and
2005 ended March 31st was
derived from the financial statements of the Company that have been audited by
MRI Moores Rowland LLP, now Mazars LLP.   The Company has
announced that it has changed its fiscal year to June 30, commencing June 30,
2008.





Cabouchon
plc acquired all the business assets of Seven Arts Pictures Inc. ("SAP") in an
Asset Transfer Agreement dated September 2, 2004 through a newly formed
subsidiary Seven Arts Filmed Entertainment Limited.  Thereafter,
Cabouchon plc changed its name to Seven Arts Pictures plc and all its jewelry
business assets were transferred to Ms. Julie Wing for assumption of all
indebtedness associated with that business on or about September 4,
2004.  For purposes of US GAAP in the adjustments to US GAAP below,
SAP is treated as the acquiring corporation in a reverse acquisition of
Cabouchon plc.  However, the Company does not have available to it the
financial information of SAP and its subsidiaries for the Fiscal Years ended
3/31/03 and 3/31/04 or for the short period from April 1, 2004 to September 4,
2004 and therefore this information has not been included in this Form 20-F or
the financial statements filed herewith.





The
selected financial data for the Fiscal Year ended March 31, 2005 reflects the
jewelry business of Cabouchon plc for the period of April 1, 2004 to September
30, 2004.  For the balance of that Fiscal Year to March 31, 2005, the
selected financial data for this Fiscal Year reflects the results of SAP's
business assets recorded under the purchase method of accounting.





The
selected financial data should be read in conjunction with the financial
statements and other financial information included elsewhere in this Form
20-F.





The
Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future.  The present
policy of the Company is to retain all available funds for use in its operations
and the expansion of its business.





Table No.
3 is derived from the financial statements of the Company, which have been
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
Generally Accepted Auditing Standards (GAAS) , applicable in the United
Kingdom and have been reconciled to United States GAAP as indicated below and in
the notes to the Company's financial statements filed herewith.  The
restatement of the Company's financial results for the Fiscal Years ended
3/31/06 and 3/31/05 arose from prior period adjustments detailed in Note 10 to
the Company's financial statements filed herewith.  These prior period
adjustments related generally to (1) capitalization as tangible assets of
certain film costs included within goodwill in the financial statements issued
for the Fiscal Year ended 3/31/05 and (2) error in recognition of revenue in
Fiscal Year ended 3/31/06 of £1,424,112 and related costs of sales of £920,811
which should have been recognized and is now recognized in the Fiscal Year ended
3/31/07.





6


Table No.
3A


Selected
Financial Data


(£ in
000, except per share data)





Year
      Ended
              3/31/07
              £’000
            As
      Restated
              Year
      Ended
              3/31/06
              £’000
            As
      Restated
              Year
      Ended
              3/31/05
              £’000RevenueUnder
      UK GAAP
            5,879
            7,591
            2,276Gain
      on the settlement of debt
            913
            -
            -Under
      US GAAP
            4,966
            7,591
            2,276Income/(Loss)
      from OperationsUnder
      UK GAAP
            1,897
            547
            (5,043)Deductions
      of gain on settlement of debt
            (913)Adjustment
      for  US GAAP treatment of amortization
            120
            181
            -Under
      US GAAP
            1,104
            728
            (5,043)Non
      Operating IncomeUnder
      UK GAAP
            -
            -
            -Gain
      on the settlement of debt
            913
            -
            -Under
      US GAAP
            913
            -
            -Income/(Loss)
      From Continuing OperationsUnder
      UK GAAP
            1,897
            547
            (4,982)Deductions
      of gain on settlement of debt
            (913)Adjustment
      for  US GAAP treatment of amortization
            120
            181
            -Under
      US GAAP
            1,104
            728
            (4,982)Net
      Income/(Loss)Under
      UK GAAP
            967
            117
            (7,540)Adjustment
      for reverse takeover accounting
            -
            -
            1,006Adjustment
      for  US GAAP treatment of amortization
            120
            181
            -Under
      US GAAP
            1,087
            298
            (6,534)Net
      Income/(Loss) from Continuing Operations per Share (Pence)1Under
      UK GAAP
            7.18
            0.89
            (84.64)Under
      US GAAP
            8.06
            2.26
            (84.64)Net
      Income/(Loss) Per Share (Pence)1Under
      UK GAAP
            7.18
            0.89
            (84.11)Under
      US GAAP
            8.06
            2.26
            (72.88)1
      Net income per share figures are shown after taxDiluted
      Net Income/(Loss)  per Share (Pence)Under
      UK GAAP
            2.59
            0.31
            (84.11)Long-Term
      DebtUnder
      UK GAAP
            6,306
            7,278
            5,249Adjustment
      for  US GAAP treatment of convertible debt
            1,750
            3,000
            3,000Under
      US GAAP
            8,056
            10,728
            8,249Capital
      StockCalled
      Up Ordinary Share Capital under UK GAAP
            10,017
            9,592
            9,592Share
      Premium under UK GAAP
            1,838
            66
            66Capital
      Stock under US GAAP
            11,855
            9,658
            9,658Total
      AssetsUnder
      UK GAAP
            19,176
            16,397
            9,544Adjustment
      for  US GAAP treatment of amortization
            120
            181
            -Under
      US GAAP
            19,296
            16,578
            9,544Net
      Assets/(liabilities)Under
      UK GAAP
            4,556
            2,841
            2,689Adjustment
      for  US GAAP treatment of convertible debt
            (1,750)
            (3,000)
            (3,000)Adjustment
      for  US GAAP treatment of amortization
            120
            181
            -Under
      US GAAP
            2,926
            22
            (311)








7





Table No.
3B


Selected
Financial Data


(£ in
000, except per share data)


Interims
              9/30/07
              £’000
            Year
      Ended
              3/31/07
              £’000
            Interims
              9/30/06
              £’000RevenueUnder
      UK GAAP
            938
            5,879
            1,887Gain
      on the settlement of debt
            -
            913
            -Under
      US GAAP
            938
            4,966
            1,887Income/(Loss)
      from OperationsUnder
      UK GAAP
            547
            1,897
            922Adjustment
      for  US GAAP treatment of amortization
            210
            120
            120Deductions
      of gain on settlement of debt
            -
            (913)
            -Under
      US GAAP
            757
            1,104
            1,042Non
      Operating IncomeUnder
      UK GAAP
            -
            -
            -Gain
      on the settlement of debt
            -
            913
            -Under
      US GAAP
            -
            913
            -Income/(Loss)
      From Continuing OperationsUnder
      UK GAAP
            547
            1,897
            922Deductions
      of gain on settlement of debt
            -
            (913)
            -Adjustment
      for  US GAAP treatment of amortization
            210
            120
            120Under
      US GAAP
            757
            1,104
            1,042Net
      Income/(Loss)Under
      UK GAAP
            182
            967
            502Adjustment
      for  US GAAP treatment of amortization
            210
            120
            120Under
      US GAAP
            392
            1,087
            622Net
      Income/(Loss) from Continuing Operations per Share
(Pence)1Under
      UK GAAP
            0.81
            7.18
            3.81Under
      US GAAP
            -
            8.06
            -Net
      Income/(Loss) Per Share (Pence)Under
      UK GAAP
            0.81
            7.18
            3.81Under
      US GAAP
            -
            8.06
            -1
      Net income per share figures are shown after taxDiluted
      Net Income/(Loss)  per Share (Pence)Under
      UK GAAP
            0.44
            2.59
            1.35Long-Term
      DebtUnder
      UK GAAP
            11,616
            6,306
            6,459Adjustment
      for  US GAAP treatment of convertible debt
            1,750
            1,750
            3,000Under
      US GAAP
            13,366
            8,056
            9,459Capital
      StockCalled
      Up Ordinary Share Capital under UK GAAP
            10,151
            10,017
            9,592Share
      Premium under UK GAAP
            2,131
            1,838
            66Capital
      Stock under US GAAP
            12,282
            11,855
            9,658Total
      AssetsUnder
      UK GAAP
            24,190
            19,176
            13,396Adjustment
      for  US GAAP treatment of amortization
            210
            120
            120Under
      US GAAP
            24,400
            19,296
            14,056Net
      Assets/(liabilities)Under
      UK GAAP
            5,067
            4,556
            3,711Adjustment
      for  US GAAP treatment of convertible debt
            (1,750)
            (1,750)
            (3,000)Adjustment
      for  US GAAP treatment of amortization
            210
            120
            120Under
      US GAAP
            3,527
            2,926
            831








$6,500,000
of indebtedness to Cheyne Specialty Finance Fund L.P. has been acquired by the
Company from the proceeds of the "Zeus Transaction" described in Item 4 No. A
below.  See Exhibit 16.  The balance of $1,000,000 due to
Arrowhead Consulting Group LLC is subordinated to the indebtedness acquired by
the Company.





3.A.3.  Exchange
Rates


Table No.
4 sets forth the exchange rates for the UK pound sterling at the end of three
most recent Fiscal Years ended March 31st, as
well as the average rates for the periods, and the range of high and low rates
for the periods.  The data for the end of each month during the most recent
twelve months is also provided.





For
purposes of this table, the rate of exchange means the noon buying rate in New
York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York.  The table sets forth the
number of U.S. dollars required under that formula to buy one U.K. pound.
 The average rate means the average of the exchange rates on the last day
of each month during the period.





8


Table No.
4


US Dollar
to UK Pounds Sterling









Period
            Average
            High
            Low
            CloseMarch
      2008
            2.00098
            2.03970
            1.97150
            1.99510February
      2008
            1.96310
            1.99720
            1.93610
            1.98450January
      2008
            1.96963
            2.01020
            1.93360
            1.99000December
      2007
            2.01966
            2.07000
            1.97490
            1.99730November
      2007
            2.07298
            2.11610
            2.03530
            2.07050October
      2007
            2.04365
            2.07030
            2.02450
            2.06360September
      2007
            2.01908
            2.04860
            1.98790
            2.04770August
      2007
            2.01235
            2.04610
            1.96520
            2.01390July
      2007
            2.03194
            2.06530
            2.00570
            2.02430June
      2007
            1.98501
            2.00840
            1.96220
            2.00390May
      2007
            1.98477
            2.00730
            1.96750
            1.97830April
      2007
            1.98606
            2.01310
            1.95910
            1.99830March
      2007
            1.94735
            1.97220
            1.91880
            1.96250February
      2007
            1.95818
            1.97470
            1.94010
            1.96420January
      2007
            1.95815
            1.99150
            1.92580
            1.95870December
      2006
            1.96277
            1.98460
            1.94330
            1.95910November
      2006
            1.90940
            1.95440
            1.88340
            1.95080October
      2006
            1.87490
            1.90420
            1.85160
            1.89930Fiscal
      Year Ended 3/31/2007
            1.89275
            1.99150
            1.72480
            1.96250Fiscal
      Year Ended 3/31/2006
            1.78630
            1.92160
            1.70480
            1.73980Fiscal
      Year Ended 3/31/2005
            1.84648
            1.95500
            1.74790
            1.8790










3.B.  Capitalization
and Indebtedness


Table No.
5 sets forth the capitalization and indebtedness of the Company as of December
31, 2007.





Table No.
5+


Capitalization
and Indebtedness


As of
December 31, 2007





Total
      Shares Issued and Outstanding
            24,354,000Total
      Shares Authorized
            573,184,000Stock
      Options Outstanding
            200,000Preference
      Shares Outstanding
            3,000,000Capital
      Leases:
            NilGuaranteed
      Indebtedness:
            NilIndebtedness:Bank
      and other production loans+ - current
            £3,502,098Bank
      and other production loans+ - long term
            £8,705,696Real
      Property - New Orleans++
            £966,064Shareholder's
      Funds
            £3,734,846





+ After
December 31, 2007, the Company entered into two loan agreements (a) with Blue
Rider Finance Inc. in the amount of approximately $1,350,000 (plus interest),
secured by certain rights in connection with one motion picture owned by the
Company ("Blue Rider Loan") and (b) with Trafalgar Capital Specialized
Investment Fund in the amount of approximately £500,000 plus
interest ("Trafalgar Loan"), attached hereto as Exhibit 15.





+A "hedge
fund" indebtedness of $6,500,000 due in December, 2006 has been acquired by the
Company including all film rights formerly pledged thereto, which are now fully
controlled by the Company.  A remaining sum of $1,000,000 remains
outstanding but is subordinated to the indebtedness acquired by the
Company.  See Exhibit 16 hereto.  Other film rights
controlled by the Company secure $8,300,000 in additional "hedge fund"
indebtedness for which the Company is not liable.  See Exhibit
5.  The Company has entered into a loan agreement with Parallel Media
for $850,000 secured by certain motion picture assets of the Company and has
entered into a loan agreement with 120dB Finance for approximately £1,000,000
secured by the Company's interest in the motion picture Knife Edge currently
in production.





++ The
Company and its affiliate Seven Arts Pictures Louisiana LLC entered into a
Credit Agreement with Advantage Capital Community Development Fund, L.L.C. dated
October 11, 2007 for the acquisition and improvement of a production and post
production facility located at 807 Esplanade Avenue in New Orleans, Louisiana
for aggregate principal advances of up to $3,700,000.  See Exhibit
12.  Approximately $2,000,000 has been drawn under the terms of this
Credit Agreement, as of December 31, 2007.





9


3.C.  Reasons For The
Offer And Use Of Proceeds


NA





3.D.  Risk
Factors





Risks Related Primarily to
the Company and its Operations




Limited
Operating History




The
Company’s predecessor, CineVisions, a California corporation, was formed in
1992, which later transferred its motion picture assets to Seven Arts Pictures
Inc. ("SAP"), a Nevada corporation, in October, 2002 through an Asset Transfer
Agreement intended to qualify under Section 351 of the Internal Revenue Code of
1986 as amended.  SAP acquired control of the Company in September
2004 through an Asset Transfer Agreement with Seven Arts Filmed Entertainment
Limited ("SAFE") a 100% owned subsidiary of Company, under which SAFE
transferred approximately 9,400,000 ordinary shares of Company for SAP's film
assets.  As a result, investors will have only a limited period of
operations to evaluate the performance of the Company




Risks
of Participating in the Exploitation of Motion Pictures







Substantially
all of the Company's revenues are derived from the production and distribution
of its motion pictures.  The motion picture industry is highly
speculative, aggressively competitive and involves numerous inherent risks,
which may adversely impact the Company's success.  The economic
success of an entity, which is involved in the creation, and exploitation of
motion pictures (including the Company) is greatly dependent upon the public
acceptance of each motion picture, compared with the cost of the motion
picture's development, production and distribution. Audience appeal depends upon
factors which cannot be ascertained with certainty in advance and over which the
Company may have no control, including, among other things, release patterns,
current events, positioning in the various markets and changing public
taste.  Many motion pictures fail to generate sufficient revenues to
recover their costs of promotion, production and/or
distribution.  Further, films often have an unexpected poor financial
performance despite well-known talent, high production values and/or a large
promotional and advertising budget.  No assurances can be given that
the Company's motion pictures will be profitable.





The risks
of motion picture exploitation can be accentuated when audience appeal and other
intangible factors must be forecast for multiple territories (domestic and
foreign) and the varying audience tastes and distribution practices associated
with each territory.  This is true of the Company’s operations of
exploiting motion pictures in multiple territories.   Although
the Company attempts to manage such risks in its course of multi-territory
operations, nonetheless the commercial potential of any motion picture cannot be
accurately predicted, and as such there can be no assurances that the
development, production and distribution decisions of the Company as to any film
will results in profits or that the Company will not experience significant
losses.




High
Failure Rate of Similarly Situated Companies




Many
independent motion picture companies involved in one or more of the production
and distribution of motion pictures have failed and ceased
operations.  Recent examples of failed independent motion companies
include Carolco Pictures, Orion Pictures, Weintraub Entertainment, DeLaurentiis
Entertainment Group, Hemdale, IRS Media, IRS Releasing and Prism
Entertainment.  Other independent motion picture companies have
recently substantially curtailed their motion picture production activities due
to poor results, including Savoy Pictures, The Samuel Goldwyn Company and
Cinergi Pictures.  Further, numerous other smaller independent film
production and/or distribution companies with similarities to the Company have
failed to achieve their business objectives.  There can be no
assurances that the Company will not fail to meet its business objectives and be
forced to curtail or cease its operations.




Unspecified
Motion Pictures; Lack of Diversification of Film Projects




Although
the Company has a number of motion picture projects, there can be no assurances
that any particular film will be produced or that the creative elements of any
film will not change.  Further, Management has complete discretion to
select the Company’s motion picture projects.  Owners of ordinary
shares will not have the opportunity to evaluate the merits of any individual
Company film projects selected by the Company.  It is unknown how many
films the Company will, in fact, produce or market.





The
number of films in which the Company markets may be affected by many factors,
including the ability to attract project financing and/or co-ventures on
individual projects or slates.  The less the number of films produced
by the Company, the more the Company’s results will be dependent upon the
individual results of a few films rather than a broad or diversified group of
films.  Such lack of diversification could result in a concentration
of risk in the results of relatively few films.  If such few films do
not perform well, the Company’s results of operations would be adversely
affected, and shareholders could be subjected to the loss of some or all of the
amount of their investment in ordinary shares of the Company.




10


Fluctuation
of Operating Results




The
Company's revenues and results of operations will be significantly dependent
upon the timing of its motion picture releases and the unpredictable commercial
success of its motion pictures.  Additionally, the Company's revenues
and overall operating performance will be dependent on the Company's plan of
operations to produce 2 to 4 motion pictures per year.  The Company
expects that these factors, as well as the uncertainties in the release
schedules of the Company’s motion pictures and audience responses thereto, will
cause the Company's revenues and earnings, if any, to fluctuate significantly
from quarter to quarter.  Accordingly, the Company’s results of
operations for any one period will fluctuate and will not necessarily be
indicative of potential results for any future periods.




Need
for Additional Financing




The
Company expects that results from operation, loans and/or co-venture financing,
will be sufficient for the Company to pursue its current plan of
operations.  However, there can be no assurance that a sufficient
level of revenues will be attained to fund operations or that unanticipated
costs will not be incurred.  Future events, including problems,
delays, expenses and difficulties frequently encountered in motion picture
production by similarly situated companies, as well as changes in economic,
regulatory or competitive conditions, may lead to cost increases that could make
it necessary for the Company to seek additional financing.  There can
be no assurance that the Company will be able to obtain any necessary additional
financing on terms acceptable to the Company, if at all.  In addition,
additional financings may result in further dilution to the Company's current
shareholders.




The
Company obtained financing from "hedge fund" financiers as follows: (A) in
February 2006 (approximately $8,300,000) from Arrowhead Target Fund Ltd.
("Arrowhead") ("Arrowhead Loan") and (B) in December 2006 (approximately
$7,500,000) from Arrowhead Consulting Group LLC and Cheyne Specialty Finance
Fund L.P. ("Cheyne Loan"), both secured by motion picture assets of the
Company.  See Exhibits 6 and 7.  The Arrowhead Loan is
recorded in the Company's audited financial statements at £4,390,359 as of March
31, 2007 and is so reflected in footnotes.  As a result, the Company's
only liability is to repay the Arrowhead Loan from the proceeds of the film
assets pledged to the Arrowhead Loan and the Company is not required to repay
the Arrowhead Loan from any other assets or revenues of the Company if there is
payment default on the Arrowhead Loan, Arrowhead's recourse being limited to the
film assets pledged to it.  The Company has recorded the Cheyne Loan
on its books and in its financial statements even though the Company's liability
is limited as described above, as required by applicable accounting standards in
the US and UK.  Upon the maturity date of the Arrowhead Loan, the
Arrowhead Loan is then due to the extent not paid prior to that date, Arrowhead
may recover the pledged film assets and thereafter the Company would have no
further obligation to Arrowhead.  The Company has made certain
covenants with Arrowhead for which it might have on-going liability beyond the
value of the film assets, such as the obligation to provide audited financial
statements, guarantee of ownership of film rights and other similar matters set
forth on Exhibit "6."






The
Arrowhead Loan matures in approximately February, 2009 (approximately
$8,300,000) and the Cheyne Loan matured in September 30, 2007 (approximately
$7,500,000).  Both financing bear interest between 15% and 18% per
annum.  Seven Arts Pictures Inc. pledged 8,095,000 ordinary shares of
the Company to secure the Cheyne Loan.   The Company expects to
be able to repay or refinance the Cheyne Loan, but if it were unable to do so
such failure would have a material adverse effect on the Company.  The
Arrowhead Loan and the Cheyne Loan are limited to specific film assets therein
described (see Exhibits 6 and 7) and do not include a pledge of all the
Company's film assets.  The Company has acquired the Cheyne Loan from
the proceeds of the Zeus Transaction discussed in Item 4 No. A
below.  See Exhibit 16.






Current
Lack of Credit Facility; Leverage




The
Company does not have any credit facility.  There can be no assurance
that the Company will be able to secure a line of credit or, if secured, the
terms of such a facility.





11


Potential
Armadillo Claim





Armadillo
Investments Limited ("Armadillo") is the holder of 3,000,000 convertible
redeemable preference shares pursuant to the agreement included in Exhibit 5
("Armadillo Shares").  Armadillo may claim that it is entitled to a
redemption of the Armadillo Shares by reason of the loss of the Company's AIM
listing.  Management believes there is no substantial basis for any
such claim by Armadillo.  Any successful claim by Armadillo would have
a material adverse effect on the Company and could be as great as £3,000,000
although management believes that any claim could not exceed £1,200,000 by
reason of the Company's ownership of 1,600,000 shares of Armadillo.





Potential
For Disputes and Litigation





The
motion picture business is more subject to disputes and litigation than
comparable businesses.  There is a risk of disputes and litigation
with financiers, competitors, putative rights owners, unions, producers and
other talent and with distributors.  There is no assurance the Company
will prevail in the event of any disputes or litigation.  The Company
has failed to prevail in an arbitration regarding 9 1⁄2 Weeks II, which
could result in payment by the Company of as much as $600,000.




Reliance
on Distributors




The
Company will, in many instances, license specific distribution rights to
distributors in one or more territories and/or media
channels.  Generally, the distributor of a motion picture will have
the broadest possible latitude in the distribution and exploitation of the
motion picture, and the exercise of its business judgment on all matters
pertaining thereto will be final.  A distributor's decisions in this
regard are anticipated to have a significant impact on the potential return on
investment to the Company.  Typically, the distributor will not be
required to distribute or otherwise exploit the subject motion picture in any
particular media or market, nor will the distributor be required to give
preference to or otherwise favor the subject motion
picture.  Furthermore, if, in the exercise of its business judgment, a
distributor determines to minimize, limit or curtail the distribution or other
exploitation of a motion picture or any expenditure in connection therewith, the
revenues, if any, from the distribution or other exploitation of the motion
picture may be materially and adversely affected.  Moreover, there may
be (and typically there are) disagreements between the Company and a distributor
over distribution accounting statements, which may delay or limit the remittance
of funds to the Company.  The default of a distributor on its
obligation to the Company may have an adverse impact on the ability of the
Company to complete production of a film, exploit a film or otherwise obtain
satisfactory returns.  Litigation over a defaulted distribution
agreement would restrict the ability of the Company to exploit the
film.  Finally, motion pictures compete with each other for exhibition
and therefore there may be conflicts between the Company's motion picture being
distributed by the distributor and other motion pictures (in which the Company
has no financial interest) distributed by the distributor.  To the
extent that the other motion pictures are marketed by larger or dominant
competitors, the exhibitor may have great incentive to favor such other motion
pictures in making distribution decisions.




Reliance
upon Presales, Advances and Guarantees




The
Company attempts to minimize some of the financial risks normally associated
with motion picture production by obtaining, at various stages prior to release
of its motion pictures, advances and guarantees from distributors in exchange
for distribution rights to such pictures in particular
territories.  Advances and guarantees paid by a distributor for
distribution rights to a film generally represent a minimum purchase price for
such rights. While guarantees from distributors reduce some of the financial
risk of the Company's motion pictures by guaranteeing the receipt of certain
revenues upon delivery of these motion pictures for distribution, such advances
and guarantees do not assure the profitability of the Company's motion pictures
or the Company's operations.  While the licensing of distribution
rights in exchange for advances and guarantees reduces the risk to the Company
from unsuccessful films, it may also result in the Company receiving lower
revenues with respect to highly successful films than if such licensing of
distribution rights were made upon different terms that, for example, might have
provided lower advances and guarantees to the Company but also a lower
distribution fee (i.e. a lower percentage of gross revenues) to the
distributor.  Further, if and as the international marketplace for
motion pictures demands increasingly costly motion pictures, there can be no
assurance that the amount of advances and guarantees which the Company
anticipates that it can generate on a given film project will be greater than or
equal to the Company's cost of producing such motion picture.





Further,
in today's rapidly changing and competitive marketplace for motion pictures, it
is possible that the amount of such advances and guarantees alone, after payment
of the Company's operating expenses, even if greater than the Company's direct
cost of producing a specific film, will not be sufficient to provide the Company
with a significant return on its invested capital and, should the Company incur
higher than expected overhead or production expenses, with a return of all or
substantially all of its invested capital.  To the extent that the
Company does not produce one or more films that generate overages for the
Company, there may be a material adverse effect upon the Company and the
potential for returns on, and even the return of, its capital.




Domestic
Theatrical Distribution




Typically,
a motion picture's success in non-theatrical domestic and foreign markets
(including domestic home video and cable/pay television markets, and all markets
in foreign territories) is greatly influenced by its success in its theatrical
release in the United States.  The significant marketing and promotion
of a film for a domestic theatrical release is a major factor in the results
from marketing the film in such ancillary markets and
territories.  While some of the Company’s motion pictures have been
theatrically released in the United States or have domestic theatrical release
commitments from one or more domestic theatrical distributors, there can be no
assurance that the Company will obtain any theatrical release for any of its
films.  Although the Company carefully considers domestic theatrical
release issues in making acquisition, production and distribution decisions, to
the extent the Company produces or acquires motion picture projects or rights
without any guaranteed domestic theatrical release or promotional budget, the
Company is subject to risk that ancillary market revenues from such film (as
distinguished from profit) will generally be significantly less than for a film
that has received or will receive the marketing benefits of a domestic
theatrical release advertising campaign.  Further, the loss of
anticipated domestic theatrical distribution where the company has committed
capital on the assumption of a domestic theatrical promotional campaign may
result in materiel adverse results for the Company for such film.





12


Risks of Motion Picture
Production


The
success or failure of any motion picture cannot be reliably
predicted.  Aside from the uncertainty of public or critical reaction
to a motion picture, there are certain risks involved in the production of any
motion picture, many of which may materially delay completion of a motion
picture or make completion impossible, in which event the consequences to the
Company may be material and adverse.  Such risks include, but are not
limited to, labor disputes, death or disability of a star performer,
unavailability of necessary equipment, destruction of the completed motion
picture negative, unanticipated changes in the weather, destruction or
malfunction of sets or equipment, and the inability of production personnel to
comply with budgetary or schedul­ing requirements.  Significant
difficulties such as these may materially increase the costs of production or
may cause the entire project to be abandoned.  To some extent these
risks can be minimized by insurance, such as negative, cash and general
liability insurance, which the Company has in the past obtained in all its
productions.  However, it is not possible to insure against all risks
and, it is sometimes impossible to continue production, notwithstanding the
receipt of insurance proceeds.  No assurance can be given that such
insurance will continue to be available to the Company or if available,
available at reasonable premiums.




Over-Budget
Films




There can
be no assurance that adverse conditions or factors beyond the control of the
Company will not affect the ultimate cost to the Company of each film the
Company produces.  Although management believes that it is capable of
establishing realistic budgets necessary to complete the films, there can be no
assurance that unforeseen events will not cause the actual cost to be greater
than the anticipated budget.  If a film ultimately costs more than
expected, it may not be possible for the Company to complete the film or the
over-budget costs may result in financial losses on that film.




Labor
Considerations in the Motion Picture Industry




The cost
of producing and distributing motion pictures has increased substantially in
recent years because of, among other factors, the increasing demands of creative
talents, industry-wide collective bargaining agreements and
inflation.  In the last 12 years, the Writers Guild of America went on
strike on two occasions, and during the same period, two work stoppages were
threatened by the Directors Guild of America.  There can be no
assurance that labor difficulties affecting a motion picture will not arise, and
if such labor difficulties should arise, motion picture production, and hence
the Company's financial condition, could be adversely affected.




Risks
of International Operation




The
Company currently exploits its films internationally and will therefore be
subject to substantially all of the economic risks of international business,
including but not limited to fluctuations in exchange rates and international
political problems, as well as the difficulty and economic disadvantage of
enforcing payment obligations of foreign companies.




Competition




Competition
is intense in the motion picture production and distribution
business.  The Company competes with other major and independent film
studios for the acquisition of literary works, rights and properties; the
services of performing artists, directors and other creative and technical
personnel; and favorable distribution arrangements.  Organizations
with which the Company competes have far greater financial resources, larger
staffs, and greater creative resources than the Company.  Such larger
competitors benefit from greater financial strength, larger production slates,
more capital, economies of scale and long-term contractual
arrangements.




New
Technology




Several
major companies have announced that they are developing or have developed other
technologies, including videoserver and compression techniques, which will
provide movies "on demand" to consumers directly over cable lines, telephone
lines or satellite transmission.  Further, the reception of television
programming via satellite disks offers a new form of competition for theatrical
films, as does the growing popularity of entertainment and information product
available on the worldwide web and various on-line services.   If
these new technologies adversely affect demand for theatrical motion pictures,
the Company's revenues and overall business could be significantly impacted and
the Company might be required to develop and implement new operating strategies
and distribution arrangements in order for its business to remain
viable.





The rapid
growth of the prerecorded DVD industry has resulted largely from expanding
consumer demand for prerecorded videocassettes, which derived from increases in
the number of households with DVD players and retail video outlets, as well as
the availability of feature films on videocassettes soon after their theatrical
releases before their exploitation in other media.  However, due to
the maturing of the market, the growth rate of households purchasing VCR's has
moderated.  A significant change in the nature of the home video
industry, including competition from alternative sources of entertainment (e.g.
basic/pay cable, pay-per-view cable, satellite television transmission/reception
and on-line entertainment), could have an adverse affect on the Company's
economic success.








It is not
possible to accurately forecast the effects that recent and future technological
developments, including production processes and alternative distribution
methods, may have on the value of certain markets or media.  Given the
ability of technological developments to cause rapid changes, it is impossible
to predict what effect these changes will have on the overall profitability of
the Company's motion pictures.







13


Absence
of Dividends




The
Company has never paid dividends on its ordinary shares and presently intends to
retain any future earnings to finance the operations of its
business.




Dilution




The
Company has granted and intends to grant stock options, and to reserve a number
of ordinary shares therefore. The issuance of any shares of ordinary share under
this plan would materially dilute the other ordinary shareholders.





The
Company's Board of Directors is authorized to sell additional securities if in
their discretion they determine that such action would be beneficial to the
Company.




Dependence
on Management




Management
currently has broad discretion in the selection, production, acquisition and
distribution of motion pictures.  The Company currently acquires
interests in or produces films which are made available to the Company if they
meet certain criteria, and the Company will rely on the ability of the
management to identify commercially viable properties, estimate the cost of
producing the films, and administer the production and distribution of the
films.





Management
currently employs a variety of structuring techniques, including debt or equity
financing, in an effort to achieve its investment objectives.  No
assurance can be given that management will be able to negotiate structures,
which accomplish the Company's objectives.





The
Company does not have any "keyman" life insurance for any of its officers or
directors.  The loss of the Company’s key officers could have a
material adverse effect on the business and prospects of the
Company.




Limitation
on Remedies; Indemnification




The
Company's governing instruments provide that officers, directors, employees and
other agents and their affiliates shall only be liable to the Company for
losses, judgments, liabilities and expenses that result from the negligence,
misconduct, fraud or other breach of fiduciary obligations.  Thus
certain alleged errors or omissions might not be actionable by the
Company.  The governing instruments also provide that, under the
broadest circumstances allowed under law, the Company must indemnify its
officers, directors, employees and other agents and their affiliates for losses,
judgments, liabilities, expenses and amounts paid in settlement of any claims
sustained by them in connection with the Company, including liabilities under
applicable securities laws.




Control
and Conflicts of Interest




While the
Company has an exclusive full time employment agreement with Mr. Hoffman
regarding all of his services in the motion picture business, it is possible
that there may be conflicts of interest between Mr. Hoffman and the Company. All
such conflicts will be subject to review and approval by the independent members
of the Board of Directors.




14


Fireworks
Litigation




The
Company, SAFE and SAP are plaintiffs in an action against Fireworks
Entertainment and certain of its affiliates ("Fireworks"), as well as
ContentFilm for copyright infringement relating to the following motion
pictures:  Rules of Engagement,
Onegin, The Believer, Who Is Cletis Tout
and American
Rhapsody.    The Company is the assignee of copyright
interests in each of these motion pictures.  Fireworks and ContentFilm
have repudiated any and all agreements with the Company's predecessors regarding
these motion pictures.   This action was stayed by the United
States District Court in Los Angeles, California by reason of a prior action
filed by CineVisions and its successor for breach of contract against Fireworks
in the courts of Ontario, Canada.   CineVisions has sought to
discontinue the Canadian contract action but that request was
denied.  Management believes that whether based on copyright
infringement or contract, Fireworks has substantial liability to the Company or
its predecessors with respect to Fireworks' conversion of the Company’s and its
predecessors' interest in the Fireworks Pictures which were all produced or
acquired by the Company's predecessors.  The Company records no value
in its financial statements for its interests in the Fireworks Pictures, other
than immaterial amounts of legal fees.  Should the Company not
prevail, it may have a liability for its own or Fireworks’ legal fees and would
lose the interest it claims in the Fireworks Pictures.  There can be
no assurance that the Company will prevail in the Fireworks
litigation.  Loss of this litigation where the Company is a plaintiff
will cause no liability to the Company other than possible payment of up to
$200,000 in legal fees to defendants.







As
a "Foreign Private Issuer”, Seven Arts is exempt from the Section 14 proxy rules
and Section 16 of the 1934 Securities Act Results in Shareholders Having Less
Complete and Timely Data




The lack
of submission of proxy and annual meeting of shareholder information on Form 6-K
results in shareholders having less complete and timely data.  The
exemption from Section 16 rules regarding sales of ordinary shares by insiders
results in shareholders having less data in this regard.





ITEM 4.  INFORMATION ON THE
COMPANY





4.A. History and Development
of the Company





Introduction


Seven
Arts’ executive office is located at:





38
Hertford Street


London
W1J 7SG


UK


Telephone:
(44 20) 30068222


Facsimile:  (323)
372-3790


Website:
www.7artspictures.com


Email:
info@7artspictures.com





6310 San
Vicente Blvd., Suite 510


Los
Angeles, CA 90048


USA


Telephone:
(323) 634-0990


Facsimile:
(323) 634-1061


Website:
www.7artspictures.com


Email:
info@7artspictures.com





The
contact person is: Peter M. Hoffman, CEO.





Seven
Arts' fiscal year ends June 30th..







Seven
Arts ordinary shares traded on the Alternative Investment Market ("AIM") in
England under the symbol: "SVA," until February 16, 2007.  The
Company's ordinary shares are now traded on the PLUS Market in England since
May, 2007 under the symbol SAPP.  The Company's ordinary shares were
removed from the AIM by reason of the resignation of the Company's nominated
advisor ("NOMAD").  The NOMAD gave no reasons for the resignation when
requested.  While the Company did secure a new NOMAD, the delays in
doing so resulted in the need to re-list under the AIM which management believed
was substantially more expensive than a listing on the Plus Market with no
attendant benefits in light of the Company's decision to register its ordinary
shares in this Form 20-F for eventually trading on the OTC Bulletin
Board.  The change from AIM to the Plus Market and the OTC Bulletin
Board will in the opinion of management have no material adverse consequences to
the Company or its shareholders.  Management has since decided to
reapply to AIM and may at a future date seek to sell new ordinary shares of the
Company to raise additional capital for the Company's operation.  The
Company has entered into an agreement with Zimmerman Adams International as its
NOMAD for readmission to AIM and has entered into an agreement with Old Park
Lane Capital as its broker for readmission to AIM and expects admission will
occur on or before May 31, 2008.





15


On March
4, 2008, the Company was admitted for trading on the Over The Counter Bulletin
Board (OTCBB) market in the United States under the symbol SAPxf.





The
authorized capital of Seven Arts consists of 573,184,000 ordinary shares par
value of  £0.05 each, 13,184,000 deferred shares of £0.45 each and
6,000,000 convertible redeemable preference shares of £1.00 each.





As of
March 31, 2007 there were 21,684,000 ordinary shares of £0.05 each and 3,000,000
convertible redeemable preference shares of £1.00 each
issued.  According to the Company’s register on September 30, 2007,
there were 24,354,000 ordinary shares of £0.05, 13,184,000 deferred shares of
£0.45 each and 3,000,000 convertible redeemable preference shares of £1.00 each
issued.





Incorporation and Name
Changes


Seven
Arts Pictures PLC. (“Seven Arts or the “Company”) was incorporated as Glasgow
Park Investments PLC on 24 August 2001, under the English Company Act of
1985.  Pursuant to a resolution passed at a meeting of the
shareholders of the Company that was held on 11 September 2001, the Company
changed its name from Glasgow Park Investments PLC to The Cabouchon Collection
PLC.  Pursuant to a resolution passed at a meeting of the shareholders
of the Company that was held on 6 November 2003, the name of the Company was
changed to Cabouchon PLC.  Pursuant to a resolution passed at a
meeting of the shareholders of the Company that was held on 2 September 2004,
the name of the Company was changed to Seven Arts Pictures PLC, at the time all
motion picture business assets of Seven Arts Pictures Inc. were transferred to a
subsidiary of the Company (Seven Arts Filmed Entertainment Limited) pursuant to
an Asset Transfer Agreement in exchange for ordinary shares of the
Company.  Documents concerning the Company which are referred to
herein may be inspected during regular hour at the Company's Los Angeles
affiliate office located at 6310 San Vicente Blvd., Suite 510, Los Angeles, CA
90048 U.S.A.





Financings


The
Company has financed its operations through funds generated by operation, raised
in loans, and by proceeds of investments received from (1) Armadillo Investments
Limited (“Armadillo”) and (2) Langley Park Investment Trust PLC (“Langley”)
resulting in combined approximately £1,200,000 of net proceeds to the Company in
the period from November 2004 to March 2005.  The Company issued £3
million of convertible debentures to Langley as consideration for the Langley
ordinary shares and £3 million of preferred shares to Armadillo as consideration
for the Armadillo ordinary shares. Langley has converted as of March 30, 2007,
1,250,000 of its convertible redeemable debentures into 5,000,000 ordinary
shares, which are included in the ordinary shares outstanding as of March 30,
2007.  Langley’s remaining debentures (£1,750,000) and Armadillo’s
3,000,000 preferred shares are all convertible into ordinary shares on a 2-to-1
basis (i.e. two ordinary shares for each preferred share and two ordinary shares
for each £ of debenture) unless the lowest ten-day trading price prior to
conversion of the ordinary shares is less than £0.50 in which event the
conversion ratio increases proportionally from 2-to-1 to 4-to-1, when such
trading price is £0.25.  The agreements embodying the Langley
debenture and Armadillo preferred shares are included as Exhibits 4 and 5
hereto.   Armadillo has orally claimed that as a result of the
loss of the Company's listing on AIM, it is entitled to a redemption of its
preferred shares in exchange for 1,600,000 shares of Armadillo owned by the
Company ("Armadillo Shares") and cash or possibly ordinary shares of the
Company.  The Company and Armadillo are in discussions to return the
Armadillo shares to Armadillo for conversion of the Armadillo preference shares
plus additional consideration.  Management believes that it will
consummate a satisfactory settlement with Armadillo but a failure to consummate
such a settlement could have a material adverse affect on the
Company.





The
Company is currently in negotiation to sell a total of 5,500,000 ordinary shares
to Unique Fidelity Engineering Limited ("Unique").  The Company has
sold a total of 170,000 ordinary shares to Unique for $100,000 in June, 2007,
and has concluded in September, 2007 an agreement for the sale to Unique of
2,500,000 ordinary shares of the Company.  See Exhibit 11 attached
hereto.  The Company has received approximately $280,000 in cash in
January, 2008 for sale of such 2,500,000 ordinary shares of the Company to
Unique and a promissory note for $500,000.  The Company anticipates
total proceeds of approximately £1,500,000, including completion of the sale of
5,500,000 shares currently in negotiation.





16


The
Company has obtained financing from "hedge fund" financiers in February 2006
(approximately $8,300,000 from Arrowhead Target Fund Ltd.) and in December 2007
(approximately $7,500,000 from Cheyne Specialty Finance Fund L.P. ("Cheyne") and
Arrowhead Consulting Group LLC) ("Arrowhead"), both secured by motion picture
assets of the Company.  The first financing will mature in
approximately two years ($8,300,000).  The Company has acquired
$6,500,000 of the indebtedness due to Cheyne from proceeds of the Zeus
Transaction discussed below.  The remaining $1,000,000 of indebtedness
due to Arrowhead is subordinated to the $6,500,000 acquired by the
Company.  See Exhibits 6, 7 and 16 hereto.





The
Company through an affiliate has obtained financing of approximately $3,700,000
from Advantage Capital Community Development Fund, L.L.C.
("Advantage")  pursuant to a Credit Agreement dated October 11, 2007
(attached as Exhibit 13) ("Credit Agreement") to acquire and improve a
production and post production facility located at 807 Esplanade in New Orleans,
Louisiana ("Seven Arts Post").   Advantage has advanced
approximately $2,000,000 under the Credit Agreement.  The Credit
Agreement is secured by substantial Federal and Louisiana tax credits available
for film, community development and historical renovation as well as the real
property at which Seven Arts Post will be based.  The Company has
received pre-certification by the Louisiana Film Commission of Seven Arts Post
as entitled to the Louisiana 40% "infrastructure" tax credits in April,
2008.





After
December 31, 2007, the Company entered into two loan agreements (a) with Blue
Rider Finance Inc. in the amount of approximately $1,350,000 (plus interest),
secured by certain rights in connection with one motion picture owned by the
Company ("Blue Rider Loan") and (b) with Trafalgar Capital Specialized
Investment Fund in the amount of approximately £500,000 plus
interest ("Trafalgar Loan").  See Exhibit 15.





The
Company and an affiliate entered into three agreements with seventeen UK
corporations formed by Zeus Capital Partners for the sale of interest in
substantially all motion pictures owned or controlled by the Company for
approximately £136,000,000
(approximately $270,000,000) payable in cash on closing and in installments due
on June 30, 2008 and September 30, 2008 ("Zeus Transaction").  The
Company closed the first tranche of the Zeus Transaction on March 18, 2008 and
expects to close the balance of the Zeus Transaction on or before May 15,
2008.  After provision for expenses and commitments required by the
Zeus Transaction, the Company anticipates free cash flow of approximately £8,000,000
($16,000,000) which will be used to repay the Cheyne Loan, other funded debts of
the Company and for working capital.  The anticipated free cash flow
to the Company from the Zeus Transaction will not be accounted for as income but
as a reduction in the Company's investment in film costs, resulting in a
material reduction of costs of sales in the Fiscal Year Ended June 30, 2008, and
in succeeding fiscal years regarding motion picture subject to the Zeus
Transaction.





4.B.  Business
Overview





SAP was
incorporated in Nevada in October 2002 and acquired control of the Company in
September 2004 through an Asset Transfer Agreement under which SAP transferred
all its motion picture assets to a subsidiary of Company for ordinary share of
the Company.  The predecessor company to SAP was CineVisions, a
California corporation founded in 1992, and Seven Arts Pictures Limited
(“SAPL”), a UK corporation, which was founded in 2000 by Chief Executive Officer
and Director Peter Hoffman. Both were created respectively to produce and
distribute independent motion pictures, and to provide consulting and financing
services within the industry.  Upon formation of Seven Arts, motion
picture assets previously held by CineVisions and SAPL, including interests in
18 completed films (including the Fireworks Pictures included below) and
approximately $2.6 million of expenditures on projects in development were
transferred to the Company.




Between
1996 and 1998, CineVisions successfully produced and distributed four motion
pictures, including:




Table 6A: Films Produced and
Distributed  from 1996-1998*


Film Title
              
              Budget
              
              TalentJohnny
      Mnemonic
              
              $
              24.5M
              
              Cast:
      Keanu Reeves, Dolph Lundgren, Ice TDirector:
      Robert LongoWriter:
      William GibsonNever
      Talk To Strangers
              
              11.7M
              
              Cast:
              Rebecca
      De Mornay, Antonio Banderas,Dennis
      MillerDirector:
      Sir Peter Hall9
      1/2 Weeks II
              
              12M
              
              Cast:
      Mickey Rourke, Angie EverhartDirector:
      Anne GoursaudShattered
      Image
              
              7.25M
              
              Cast:
      Anne Parillaud, William BaldwinDirector:
      Raul RuizProducer:
      Barbet Schroeder, Lloyd Silverman
  *Ownership
interests in these films were transferred to SAP on October 1,
2002


On or
about September 1998, SAPL entered into a joint venture agreement for the
production and distribution of motion pictures with Fireworks Pictures, Inc.
("Fireworks") a subsidiary of CanWest Global Entertainment, Inc., a large
diversified Canadian media company with interests in broadcasting and
newspapers.  Pursuant to that joint venture, Fireworks and SAPL have
produced or acquired and distributed 11 motion pictures (the "Fireworks
Pictures"), including certain motion pictures described below.  SAPL's
interest in the Fireworks Pictures (but no liability) and all of the CineVisions
pictures were transferred to the Company in September 2004, pursuant to an Asset
Transfer Agreement with a subsidiary of the Company in exchange for the
Company's ordinary shares.


Through
SAPL, Mr. Hoffman successfully produced and acquired the following films with
Fireworks:





17


Table 6B: Films Produced and
Acquired by SAPL and Fireworks12


Film Title
              
              Budget
              
              TalentOnegin
              
              $
              15.0M
              
              Cast:
      Ralph Fiennes, Liv TylerDirector:
      Martha FiennesWriter:
      Michael Ignatieff, Peter EitedguiThe
      Believer(3)
              
              3.0M
              
              Cast:
      Ryan Gosling, Billy ZaneWriter/Director:
      Henry BeanAmerican
      Rhapsody
              
              3.5M
              
              Cast:
              Nastassja
      Kinski, Tony Goldwyn,Scarlett
      JohanssonWriter/Director:
      Eva GardosCletis
      Tout
              
              15.M
              
              Cast:
              Christian
      Slater, Tim Allen Portia DeRossi,Richard
      DreyfussDirector:
      Chris Ver WeilInterstate
      60
              
              10M
              
              Cast:
              James
      Marsden, Kurt Russell, Amy Smart,Gary
      OldmanDirector:
      Bob GaleWriter:
      Chris Ver Weil




Through
SAPL, Mr. Hoffman co-financed three additional motion pictures in conjunction
with Fireworks and Paramount.  These pictures include:




Table 6C: Films Produced and
Acquired by SAPL4and Fireworks5





Film Title
              
              Budget
              
              TalentRules of
      Engagement
              
              $
              52,000,000
              
              Cast:
              Tommy
      Lee JonesSamuel
      JacksonDirector:
      William FriedkinWriter:
      Stephan Gagan, James WebbRat
      Race
              
              $
              55,000,000
              
              Cast:
              Cuba
      Gooding, Jr.Rowan
      AtkinsonDirector:
      Jerry SuckerHardball
              
              $
              47,000,000
              
              Cast:
      Keanu Reeves,Writer/Director:
      Brian Robbins


1 See
"Risk Factors" on Fireworks litigation.
 2 SAPL
ownership interests in these films were transferred to SAP on October 1, 2002,
and to Seven Arts
in          September
2004.
 3 Winner
of Grand Jury Prize for best film at the 2001 Sundance Film
Festival.
 4 SAPL
ownership interests in these films were transferred to SAP on October 1, 2002,
and to Seven Arts in September 2004.
 5 See
"Risk Factors" on Fireworks litigation
  18


Completed Films. In total the
Company and its predecessors have produced or acquired interest in the 26
feature films to date described below in Table 8, exclusive of the Fireworks
Pictures.  The Company owns (directly or through grants of all rights
in perpetuity) the copyright to each picture designated as "CR" in Table 8 and
for all other pictures in Table 8 own the distribution rights for at least all
territories outside the United States and Canada for no less than 15
years.




Production.The
Company is an independent production company engaged primarily in the
development, financing, production and licensing of theatrical motion pictures
for exhibition in domestic and international theatrical markets, and for
subsequent worldwide release in other forms of media, including home video and
pay and free television.  The number of pictures that the Company has
been able to make will depend upon the funds available to it.  The
pictures are selected according to several key criteria formulated to maximize
the profit potential of the Company’s films.  The Company “pre-sells”
its films to worldwide markets.  In addition, the Company is now
entitled to receive “overages” if a film generates significantly more net
revenue than the advance given to any market.  (See “Distribution”
section for more detailed discussion of overages.)




The
Company is submitted from 50 to 100 film projects or completed films in any
given year, which generally include a "package" of a screenplay and certain
talent elements (e.g. producer, director and cast).  The Company in
certain limited cases will arrange for the creation of a screenplay and the
"packaging" of creative elements (e.g. producer, director and
cast).  The Company commissions independent production budgets of
certain projects to evaluate the project's suitability for production or
distribution.  The Company selects projects for production or
acquisition based on management's belief that it can license the worldwide
distribution rights to the film for an amount greater than the projected
production budget and will be a "quality" or "good" motion picture, as well as
management's belief that the key creative elements (the director and the two
cast members most prominent in the film) are likely to be both responsible and
artistically gifted in creation of motion picture
entertainment.  There are no "rules" or specific strategic limitations
on the Company's choice of motion pictures to produce or distribute, other than
the Company will rarely consider a motion picture with a production cost in
excess of $15,000,000.




The
Company, through an affiliate Seven Arts Pictures Louisiana LLC, has acquired
real property at 807 Esplanade Avenue in New Orleans, Louisiana and intends to
develop this property as a production and post production facility for the
Company's productions in Louisiana.  The Company has to date produced
or acquired four motion pictures produced under the Louisiana Film Incentive Act
which provides substantial transferable tax credits for film production
activities in Louisiana.




Distribution.  The
Company licenses most of the foreign territories prior to and during the
production of each picture.  The Company shares in the commissions
generated by the sales of the pictures.  The Company, under Mr.
Hoffman’s direction, arranges its “pre-sales” and licenses through its existing
staff.  In a typical foreign license agreement currently used by the
Company, the Company licenses a picture before it is produced or completed for
an advance from the licensee against revenues generated through distribution of
the picture in the licensee’s territory.  The advance usually is in
the form of a cash deposit plus a letter of credit or “bank letter” for the
balance payable 10-20% on execution and the balance on delivery.  The
license grants the foreign distribution company the right to release the picture
in all or certain media in their territory for a predetermined time
period.  After this time, the distribution rights revert back to the
Company, which is then free to re-license the picture.  The license
specifies that the foreign distributor is entitled to recoup its advance from
the revenue generated by the release of the picture in all markets in its
territory, as well as its release costs and distribution fees.  After
the foreign distributor has recouped its advance, costs and fees, any remaining
revenue is shared with the Company according to a predetermined
formula.  This is known as an “overage” and can be a significant
source of revenue for the Company from successful films.  However, a
film’s poor reception in one market does not preclude it from achieving success
in another market and generating significant additional revenue for the Company
in the form of an “overage” in that territory.  In all of the
Company's licensing arrangements, the Company retains ownership of its films and
maintains its control of each copyright.  The Company intends to
continue the practice of retaining underlying rights to its film projects in
order to build up a library of films to license or sell in the
future.





Finance.The
Company has created a separate finance plan for each motion picture it has
produced and hence the sources of the funds for production of that motion
picture vary according to each finance plan.  The Company utilizes
"tax-preferred" financing (e.g. tax credits, sale/lease back transactions and
direct subsidies), "mezzanine" or "gap" funds that are senior to Seven Arts
equity and tax preferred funds, and senior secured financings with commercial
bank (e.g. Comerica Bank, Natexis Bank and Mercantile Bank) or private lenders
(e.g. Blue Rider Pictures, A-Mark Entertainment and Parallel Pictures and the
"hedge funds" discussed herein), together in certain cases with a limited
investment from the Company (e.g. less than 10% of the production
budget).  No generalization is possible as to the amount any of these
sources of funds utilized on any particular motion picture.  The
Company always obtains some advances or guarantees prior to commitment to
production of a motion picture project, but those amounts may not be substantial
on smaller budgeted motion picture (e.g. under $10,000,000), and in certain
cases the Company has committed to production with an unsubstantial amount of
advances and guarantees.  The Company will likely not commit to
production of larger budget motion pictures (e.g. over $15,000,000) and has
never in the past committed to such production, without substantial advances or
guarantees from third party distributors or the equivalent in "non-recourse"
financings.





19


Plan Of
Operations


Source of Funds for Fiscal
2006/2007 Ending March 31st


Seven
Arts’ primary source of funds since incorporation has been through operations,
loans secured by the Company's motion pictures, and the proceeds of the sale and
redeemable convertible preferred stock and debentures.  See Exhibits 4
and 5 attached hereto.





Use of Funds for Fiscal
2006/2007


During
Fiscal 2007 and Fiscal 2008, respectively, Seven Arts estimates that it might
expend $1,550,000 and  $1,600,000 on general/administrative expenses.
 During Fiscal 2007 and Fiscal 2008 respectively, Seven Arts estimates that
it might expend $17,500,000 and $50,000,000 on acquisition or production of
motion pictures.





Anticipated Changes to
Facilities/Employees


The
Company's employees and locations are two rented premises in Los Angeles and
London and approximately 10 employees and consultants.  Management
anticipates no changes to either facilities or employees in the near
future.





United Statesvs. Foreign Sales and
Assets


At
3/31/2007 and 3/31/2006, Seven Arts has had the following revenue during the
past two fiscal years, from the following areas of the world:





2007
              
              2006£
              
              £ContinuingOperations:Europe
              
              3,372,197
              
              2,249,769North
      America
              
              1,134,054
              
              1,821,061South
      America
              
              235,106
              
              314,446Africa &
      Middle East
              
              865,667
              
              224,098Asia
              
              118,152
              
              1,597,596Australia
              
              154,112
              
              1,384,397TotalTurnover
              
              5,879,289
              
              7,591,367





Seven
Arts’ intangible motion pictures copyrights and distribution rights have no
physical location.  As of March 31, 2007, physical materials embodying
the Company's motion pictures are held at laboratories in Los Angeles,
California, Toronto, and London, England, as well as at the Company's office in
Los Angeles, California.




20


Regulation of the Motion
Picture Industry




A key
element in the motion picture industry involves intellectual property
law.  In this respect, the Company conducts its business through the
control and exploitation of the copyrights and trademarks that may underlie its
properties; therefore, domestic and international laws affecting intellectual
property have a significant importance to the Company.  Distribution
rights to motion pictures are granted legal protection under the copyright laws
of the United States and most foreign countries, which laws provide substantial
civil and criminal actions for unauthorized duplication and exhibition of motion
pictures.  Motion pictures, musical works, sound recordings, art work,
still photography and motion picture properties are separate works subject to
copyright under most copyright laws, including the United States Copyright Act
of 1976, as amended (the "Copyright Act").  Under the Copyright Act,
motion pictures are allowed a copyright term of 95 years.





The
Company currently takes appropriate and reasonable measures to secure, protect
and maintain certain agreements to secure, protect and maintain copyright
protection for all Company pictures under the laws of applicable jurisdictions;
however, there can be no assurance that such measures will adequately protect
the Company's properties, or that enforcement of its rights will not be
financially prohibitive.  Management is aware of reports of extensive
unauthorized misappropriation of video rights to motion pictures, which may
include the Company's motion pictures.  Further, the Company is aware
of reports of outright "pirating" of video properties, especially outside of the
United States where enforcement of copyright laws is more difficult, if not
impossible.





The Code
and Ratings Administration of the MPAA (Motion Picture Association of America),
an industry trade association, assigns ratings indicating age-group suitability
for theatrical distribution of motion pictures.  The Company will
follow the practice of submitting its motion pictures for such
ratings.  A substantial number of the Company's films may be rated "R"
by the MPAA, which means that children under certain ages may, under rules
enforced by theatrical exhibitors, view the applicable motion picture only if
accompanied by an adult.  The Company's general policy is to produce
or acquire motion pictures that qualify for a rating no more restrictive than
"R."  The NC-17 rating and its acceptance by distributors also
presents an uncertainty in the demand for the feature films with this rating, as
there is a very limited history of films with this rating.  The
Company does not anticipate that any of its films will be rated
NC-17.





United
States television stations and networks, as well as foreign governments, impose
additional restrictions on the content of motion pictures, which may restrict in
whole or in part theatrical or television exhibition in particular,
territories.  Management's practice will be to produce motion pictures
for which there will be no material restrictions on exhibition in any major
territories or media.  This practice often requires the production of
"cover shots" or different photography and recording of certain scenes for
insertion in versions of motion picture exhibited on television or theatrically
in certain territories where governmental restrictions are relatively more
stringent.  No assurance can be given that current and future
restrictions on the content of the Company's motion pictures may not limit or
affect the Company's ability to exhibit certain of its pictures in certain
territories and media.





Seasonality


Dependency upon
Patents/Licenses/Contracts/Processes


Sources/Availability of Raw
Materials


N/A





4.C. Organization
Structure


The
following is the corporate organization chart of Seven Arts and its subsidiaries
as of March 31, 2008 (with share ownership as of March 31, 2008):




21


Table 7














4.D.  Property, Plant
and Equipment


Seven
Arts' executive offices are located in rented premises of approximately 3,500
sq. ft. at 6310 San Vicente Blvd., Suite 510, Los Angeles, California US 90048
(rented by its affiliate Seven Arts Pictures Inc.) and 38 Hertford Street,
London UK W1J 7SG.  Seven Arts and its affiliates began occupying
these facilities on about May 20, 2005 (US) and November 2007
(UK).  Monthly rent is approximately $10,000.





The
motion pictures in which the Company controls all rights or all international
distribution rights are set forth below, exclusive of the
Fireworks Pictures:





22


Table 8





Title
              
              Elements
              
              Approximate Fully
                Absorbed
      Production Cost (CR=copyright ownership or equivalent)
              Delivery
                Date
              1st U.S.
                ReleaseAsylum
      (CR)
              
              W:
              Patrick
      Marber
              $
              20,000,000
              
              05/04
              
              08/05D:
              David
      MacKenzieIan
      McKellanC:
              Natasha
      RichardsonStander
      (CR)
              
              W:
              Bima
      Stagg
              $
              14,000,000
              
              10/03
              
              08/04D:
              Bronwen
      HughesC:
              Thomas
      JaneDeborah
      UngerNo
      Good Deed (CR)
              
              W:
              Christopher
      Canaan
              $
              17,000,000
              
              05/02
              
              09/03&
      Steve BanancikD:
              Bob
      RafelsonC:
              Samuel
      L. JacksonMilla
      JovovichI’ll
      Sleep When
              
              W:
              Trevor
      Preston
              $
              8,000,000
              
              06/04
              
              06/04I’m
      Dead
              
              D:
              Mike
      HodgesC:
              Clive
      OwenMalcolm
      McDowellJonathan
      Rhys MeyersSupercross
              
              W:
              Ken
      Solarz
              $
              5,000,000
              
              08/05
              
              08/05D:
              Steve
      BoyumC:
              Sophia
      BushSteve
      HoweyCameron
      RichardsonA
      Shot At Glory
              
              W:
              Denis
      O’Neill
              $
              12,000,000
              
              01/02
              
              05/02D:
              Michael
      CorrenteC:
              Robert
      DuvallMichael
      KeatonJohnny
      Mnemonic
              
              W:
              William
      Gibson
              $
              24,500,000
              
              12/94
              
              05/95(CR)
              
              D:
              Robert
      LongoC:
              Keanu
      ReevesDolph
      LundgrenNever
      Talk To Strangers
              
              W:
              Lewis
      A. Green
              $
              11,700,000
              
              09/95
              
              10/95(CR)
              
              
              &
      Jordan RushD:
              Peter
      HallC:
              Antonio
      BanderasRebecca
      DeMornayShattered
      Image
              
              W:
              Duane
      Poole
              $
              7,250,000
              
              06/98
              
              12/98(CR)
              
              D:
              Raul
      RuizC:
              William
      BaldwinAnne
      ParillaudThe
      Hustle
              
              W:
              David
      Howard
              $
              5,000,000
              
              10/02
              
              12/02(CR)
              
              
              &
      Michael CapellupoD:
              Stuart
      CooperC:
              Bobbie
      PhillipsRobert
      WagnerPool
      Hall Prophets aka
              
              W/D:
              Keoni
      Waxman
              $
              6,000,000
              
              09/05
              
              12/05Shooting
      Gallery
              
              C:
              Freddie
      Prinze, Jr.(CR)
              
              
              Ving
      RhamesBoo
              
              W/D:
              Anthony
      C. Ferrante
              $
              1,000,000
              
              03/05
              
              10/05C:
              Trish
      CohenHappy
      MahaneyCemetery
      Gates
              
              W:
              Brian
      Patrick O’Tolle
              $
              1,000,000
              
              03/05
              
              05/06D:
              Roy
      KnyrimC:
              Reggie
      BannisterPopstar
              
              W:
              Timothy
      Barton
              $
              5,000,000
              
              03/05
              
              11/05D:
              Richard
      GabaiC:
              Aaron
      CarterAlana
      AustinRed
      Riding Hood
              
              W:
              Timothy
      Dolan
              $
              5,000,000
              
              03/06
              
              06/06D:
              Randall
      KleiserC:
              Lanie
      KazanMorgan
      ThompsonBack
      In The Day
              
              W:
              Michael
      Raffanello
              $
              5,000,000
              
              03/05
              
              05/05D:
              James
      HunterC:
              Ving
      RhamesJa
      RuleCaptivity
              
              W:
              Larry
      Cohen
              $
              17,500,000
              
              03/06
              
              07/07D:
              Roland
      JoffeC:
              Elisha
      CuthbertSilent
      Partner
              
              W:
              James
      Deck
              $
              5,000,000
              
              03/06
              
              09/06&
      Chris LarsenD:
              James
      DeckC:
              Tara
      ReidNick
      MoranMirror
      Wars
              
              W:
              Alex
      Kustanovich
              $
              8,000,000
              
              11/06
              
              07/07&
      Oleg KapanetsD:
              Vasily
      ChiginskyC:
              Armand
      AssanteMalcolm
      McDowellRutger
      HauerGetting’
      It
              
              W/D:
              Nick
      Gaitatjis
              $
              2,500,000
              
              12/06
              
              08/07C:
              Jessica
      CansecoPatrick
      CensoplanoCheryl
      DentSandra
      StaggsThe
      Wedding Chest
              
              W:
              Ekaterina
      Tirdatova
              $
              1,500,000
              
              
              not
      yet deliveredD:
              Nurbek
      EgenC:
              Natasha
      RegnierBolot
      TentimyshovThe
      Mesmerist
              
              W:
              Ron
      Marasco
              $
              1,000,000
              
              06/02
              
              09/02&
      Michael GoorjianD:
              Gil
      Cates, Jr.C:
              Neil
      Patrick HarrisJessica
      CapshawA
      Broken Life
              
              W:
              Neil
      Coombs, Anna Lee
              $
              2,000,000
              
              
              not
      yet delivered&
      Grace KosakaD:
              Neil
      CoombsC:
              Tom
      SizemoreVing
      RhamesGrace
      KosakaSaul
      RubinekDrunkboat
              
              W:
              Bob
      Meyer
              $
              3,500,000
              
              
              not
      yet delivered&
      Randy BuescherD:
              Bob
      MeyerC:
              John
      MalkovichJohn
      GoodmanDana
      DelaneyDeal
      (CR)
              
              W:
              Gil
      Cates, Jr.
              $
              9,000,000
              
              03/07
              
              04/08&
      Marc WeinstockD:
              Gil
      Cates, Jr.C:
              Burt
      ReynoldsBret
      HarrisonShannon
      ElizabethJennifer
      TillyNoise
      aka
              
              W/D:
              Henry
      Bean
              $
              9,000,000
              
              03/07
              
              05/08The
      Rectifier
              
              C:
              Tim
      Robbins(CR)
              
              
              William
      HurtBridget
      MoynahanWilliam
      BaldwinAmerican
      Summer aka
              
              D:
              J.B.
      Rogers
              $
              15,000,000
              
              
              not
      yet deliveredPool
      Boy (CR)
              
              C:
              Matthew
      LillardAutopsy
      (CR)
              
              D:
              Adam
      Gierasch
              $
              9,000,000
              
              
              not
      yet deliveredC:
              Robert
      PatrickKnife
      Edge
              
              D:
              Anthony
      Hickox
              $
              8,000,000
              
              
              not
      yet deliveredC:
              Joan
      PlowrightNatalie
      PressNine
      Miles Down
              
              D:
              Anthony
      Waller
              $
              17,400,000
              
              
              not
      yet deliveredC:
              Adrian
      PaulKate
      NautaHades
      aka
              
              D:
              Gabriel
      Bologna
              $
              2,500,000
              
              
              not
      yet deliveredThe
      Black Waters Echo's Pond
              
              C:
              Robert
      PatrickDanielle
      Harris
 23





ITEM 5.  OPERATING AND FINANCIAL REVIEW AND
PROSPECTS


The
following discussion for the Fiscal Years Ended 3/31/2007, 3/31/2006, and
3/31/2005 should be read in conjunction with the financial statements of the
Company attached hereto and the notes thereof.  The following
discussion regarding the six month periods ended 9/30/06 and 9/30/07 should be
read in conjunction with the Company’s unaudited six month financial statements
filed herewith.





5.A.
Operating Results.  The Company’s results of operation are
reflected in the Company’s financial statements included
herewith.  The Company's income from operation in all periods in issue
(i.e. fiscal years ended 3/31/05, 3/31/06 and 3/31/07) and the six month periods
ended 9/30/06 and 9/30/07 ("Relevant Period") was principally the result of the
sale and distribution of its new and previously produced motion pictures, other
than operations prior to September, 2004 which related to the jewelry business
of Cabouchon which was disposed of on that date, and losses arising from that
disposition.  No one picture had a principal or controlling share of
gross revenues or operating profits in the Relevant Period.  No
changes in the Relevant Period in operating revenues resulted from changes in
prices, or amount of products of services being offered (other than an increase
in the total number of motion pictures controlled by the Company) or to the
introduction of new products or services (other than the delivery and release of
new motion pictures).  Neither inflation nor any unusual or infrequent
events or new developments in the Relevant Period materially affected gross
revenues, operating expenses or operating income.  No governmental,
economic, fiscal, monetary or political policies or facts in the Relevant Period
had any material effect on the Company's gross revenue, operating expenses or
operating profits.  The Company’s revenues are principally earned,
received, and held (in all material respects) in dollars but are converted to UK
pounds for the purpose of the attached financial
statements.  Reductions in the value of the dollar against the UK
pound are shown in Table 4 in Item 3 No.C. above.  Neither inflation
nor governmental policies or regulation have had a material effect on the
Company’s income from operations.





The
principal factor that affected the Company's financial condition in the past
three and one half years has been the availability of capital, the choice of
motion pictures produced or acquired by the Company, and the Company's and
talents' execution of the screenplay and production plan for each picture,
distribution and market reactions to the motion pictures once completed, and
management's ability to obtain financing and to re-negotiate financing on
beneficial terms.  These factors will continue to be, in management's
opinion, the principal factors which will affect future results of operation and
the Company's future financial condition.  No particular factor has
had a primary or principal affect on operations and financial condition of the
Company in the Relevant Period.  Management believe that the Company'
s current financing, completed motion picture projects, distribution and market
reaction to these pictures will not have a negative impact on the Company's
results of operation and financial condition in the Fiscal Year Ended
3/31/08.





Six Month Period Ended
9/30/07 vs. Six Month Period Ended 9/30/06 Results of
Operations*


Gross
revenues decreased from £1,886,560 (9/30/06) to £938,244 (9/30/07) principally
due to the substantial cancellation of indebtedness income related to the motion
pictures Stander and Pool Hall Prophets
realized in the six month period ended 9/30/06, as discussed below in the Fiscal
Year Ended 3/31/07 vs. Fiscal Year Ended 3/31/06.  All revenues in
both periods were from domestic and foreign theatrical, video and television
distribution of the Company’s motion pictures, except the cancellation of
indebtedness income related to Stander and Pool Hall
Prophets.  Gross revenues in the six month period ended 9/30/07
included less than £268,000 of revenues from the motion pictures delivered in
the Fiscal Year Ended 3/31/07 and no revenues from motion pictures delivered in
the six month period ended 9/30/07, compared with no revenues from motion
pictures delivered in the six month period ended 9/30/06.





Cost of
sales decreased from £423,126 (9/30/06) to a positive amount of £406,381
(9/30/07) principally due to the reversal of producer payments due on motion
pictures released in prior years.





Other
operating expenses increased from £541,044 (9/30/06) to £797,801 (9/30/07) due
to the Company’s increased level of production and distribution
activity.  Substantially all these expenses are general overhead and
selling expenses for employees, consultants, sales conventions, professional
fees, marketing materials and office costs.





The
Company realized only an immaterial amount of interest income in both six month
periods ended 9/30/06 and 9/30/07 and all interest expenses in both periods
related to the bank and other production loans set forth in Table
5.





As a
result, retained profit for the period 9/30/07 decreased to £181,961 compared to
retained profit for the period 9/30/06 of £502,355.





24


Fiscal Year Ended 3/31/07
vs. Fiscal Year Ended 3/31/06 Results of Operations *


Gross
revenues decreased from £7,591,367 to £5,879,289 from 3/31/06 to 3/31/07 by
reason of principally (a) a substantial increase in the value of the UK pound
(see Table 4 above) as the Company's revenues are principally realized in US
dollars and (b) delivery in Fiscal Year 2006 of Captivity (with
recognition of approximately $6,000,000 of revenue) and delivery of Noise and Deal in Fiscal Year
ended 3/31/07 (but with recognition of only approximately $3,500,000 in revenue
on those two pictures).  All revenues were from domestic and foreign
theatrical video and television distribution of the Company's motion pictures,
plus (in the Fiscal Year ended 3/31/07) cancellation of indebtedness income
related to the motion picture Stander and Pool Hall Prophets
(£1,282,522).  The Company has issued 3,500,000 shares to Seven Arts
Pictures in connection with the settlement of a claim from Apollo Media GmbH
& Co. Filmproduktion K.G. ("Apollo") discussed in Item 7 No. B below, of
which 1,500,000 will be cancelled or returned to the Company as more
particularly described in Item 7 No. B.  The Apollo settlement
relieved the Company of approximately 2,000,000 in non-recourse indebtedness,
which was reflected as cancellation of indebtedness income and included in
"Revenue" for this Fiscal Year.  Gross revenues in the Fiscal Year
ended 3/31/07 included less than £50,000 of revenues from the three motion
pictures delivered in the Fiscal Year ended 3/31/07.  Approximately
£1,750,000 of gross revenues in the Fiscal Year ended 3/31/07 were derived from
motion pictures delivered in that Fiscal Year compared with approximately
£5,500,000 of revenues realized in the Fiscal Year ended 3/31/06 from motion
pictures first delivered in that Fiscal Year.





Cost of
sales decreased from £ 6,055,411 (3/31/06) to £2,763,720 (3/31/07) since (a) the
turnover in Fiscal Year 2007 was less than in Fiscal Year 2006; and (b) the
Company has realized a higher profit margin on Noise and Deal than on Captivity.  The
Company treats both amortization of intangible assets and costs of sales as
"costs of sales" since both are the result of amortization of film costs against
recognized revenue.  None of these charges resulted from a write-down
of film investment or an impairment of unamortized film costs.  The
two exceptional items realized in the Fiscal Year ended 3/31/07 arose from the
cancellation of indebtedness of equity investments by third parties (not the
Company) related to Stander and Pool Hall Prophets and these cancellations
impacted costs of sales in that there were no costs of sales associated with
these cancellations of indebtedness.





Included
in turnover are exceptional items of £1,282,522 relating to the cancellation of
the movies Stander and Pool Hall Prophets
and £912,715 relating to Seven Arts Pictures Inc. ("SAP") assuming
responsibility for a loan made from Apollo Media to a former subsidiary of SAP
by the pledge of 3,500,000 new ordinary shares issued to SAFE by the Company.
The Company has further guaranteed that any shares issued in excess of 2,000,000
needed by Apollo Media to settle their debt at the point of sale of the shares
will be met by SAP.  The remaining balance of shares will be sold and
the proceeds remitted back to the Company. The amount recorded reflects the
settlement gain on cancellation of the debt.  As reflected on Table 3
in Item 3.A.1 above and in footnote 32 of the attached financial statements, for
purposes of US GAAP this cancellation of indebtedness income has been recorded
as "non-operating income."





Other
operating expenses increased from £989,375 (3/31/06) to £1,218,531 (3/31/07) due
to the Company's increased level of production and distribution
activity.   Substantially all these expenses are general overhead
and selling expenses for employees, consultants, sales conventions, professional
fees, marketing materials (e.g. trailers and posters) and office
costs.





The
Company realized only an immaterial amount of interest income and all interest
expense related to the bank and other production loans set forth in Table
5.





As a
result, retained profit for the year increased from £116,812 to £967,130
(3/31/07).





Fiscal Year Ended 3/31/2006
vs. Fiscal Year Ended 3/31/2005





Turnover
increased from£2,275,870 (3/31/05) to
£7,592,367 (3/31/06) primarily due to the increased level of the Company’s
operations and the delivery of three new motion pictures including Captivity.  Approximately
£5,500,000 of gross revenues realized in the Fiscal Year Ended 3/31/06 were
derived from motion pictures first delivered in that Fiscal Year compared to
approximately £755,000 of gross revenues realized in the Fiscal Years ended
3/31/05 from motion pictures first delivered in that Fiscal Year.





Cost of
sales increased from £5,431,574 (3/31/05) to £6,055,411 (3/31/06) which reflects
the increase in the amortization of the costs of production and participations
payable on the new motion pictures delivered by the Company in the Fiscal Year
ended March 31, 2006.  Within costs of sales, amortization of
intangible assets was reduced from £5,156,547 (3/31/05) to £1,964,647 (3/31/06)
since most of the income in the Fiscal Year 2006 came from motion pictures for
which the group is simply the distributor, rather than for which the group owns
the rights.





Other
operating expenses decreased from £1,887,753 (3/31/05) to £989,375 (3/31/06)
principally because the Company had no expenses related to the acquisition of
the Company by SAP in the Fiscal Year ended 3/31/06.





The
Company realized only an immaterial amount of interest income and all interest
expenses related to the bank and other production loans set forth in Table
5.





The
Company’s retained profit/(loss) or net income/(loss) for the year increased
from (£7,540,000) to £116,812 because of the factors set forth above and the
write down in the Fiscal Year Ended 3/31/05 of goodwill £1,850,072), costs of
acquisition of motion picture rights from SAP (£3,306,475)and the Company’s
investments in Armadillo Investments LLC and Langley Park Investment Trust PLC
(£800,000) which were disposed of in Fiscal Year ended 3/31/05. The write down
of goodwill and the write down of the costs of acquisition of motion picture
rights are both included within costs of sales. The write down of the Company’s
investment in Armadillo Investments LLC is included within other operating
expenses.





* All
results are calculated under UK GAAP.  For adjustment to US GAAP, see
Table 3.





5.B.  Liquidity
and Capital Resources.


During
Fiscal Year 2005, ended March 31st, Seven
Arts issued £3,000,000 of convertible debt to Langley Park Investment Trust PLC
(“Langley”) in return for ordinary shares in Langley valued at £3,000,000, and
£3,000,000 of convertible redeemable preference shares to Armadillo Investments
Limited (“Armadillo”) in return for £3,000,000 ordinary shares from Armadillo.
The Company later raised approximately £1,200,000 in cash through the sale of
convertible preferred shares and debentures to Armadillo Investments Limited
(£700,000) and Langley Park Investment Trust PLC, (£500,000). See Exhibits 4 and
5.  These amounts are below the stated value of the debenture and
preferred shares which are each £3,000,000, by reason of the Company being
unable to achieve the value recognized within its financial statements upon the
sale of the Armadillo and Langley ordinary shares.





During
Fiscal Year 2006, ended March 31st, Seven
Arts raised no capital through the sales of ordinary shares as described
earlier.





During
Fiscal Year 2007, through March 30, 2007, Seven Arts raised no capital through
the sales of ordinary shares, but expects to realize the proceeds in Fiscal Year
2008 from the issuance of 8,000,000 ordinary shares as described in Item 4. No.
A.  During the six month period ended September 30, 2007, the Company
sold 2,500,000 ordinary shares to Unique Fidelity Engineering
Limited.





The
Company obtained certain "hedge fund" financing in Fiscal Year ended 2006 and
2007 as described herein but currently anticipates no "hedge fund" financing in
the Fiscal Year ended 6/30/08.  The "hedge fund" financing is set
forth in Exhibits 6 and 7.  The specific contractual terms of this
indebtedness are described in more detail in Item 3.D. Risk Factors, Need for
Additional Financing, pages 11-12, and Item 4.A. History and
Development of the Company - Financings, page 17.  $6,500,000
of the "hedge fund" financing due September 30, 2007 was acquired by the Company
from the proceeding of the Zeus transaction   See Exhibit
16.  Management believes that the Company's working capital is
sufficient for the Company's present requirements.





There are
no restrictions on the Company’s ability to collect and receive its cash flow
from operations.  The Company has no committed borrowing facilities
and its borrowing is not seasonal, but related to production or acquisition of
motion pictures when each is ready for production or acquisition.





The
Company's cash flow is derived from the license of motion picture rights to
motion pictures controlled by it and varies depending upon distributor and
consumer reactions to each motion picture.





25


5.C.  Research and Development,
Patents and Licenses, etc.


NA





5.D.Trend
Information.The Company is
aware of no trends that could materially affect the Company's
business.





5.E.
Off-Balance
Sheet Arrangements.


The
Company has no Off-Balance Sheet Arrangements.





5.F.
 Tabular
Disclosure of Contractual Obligations (as of 12/31/07)+:





Contractual
      Obligations
              
              
              
              
              Payments
      Due By PeriodLess
      Than
                1
      Year
              
              1-3
                Years
              
              3-5
                Years
              
              More
      Than 5 YearsTotal
              
              
              
              Years
              
              Years
              
              YearsBank
      and Other Production Loans
              
              £
              12,207,785
              
              3,502,088
              
              8,705,696
              
              0
              
              0Real
      Property - New Orleans
              
              £
              966,064
              
              
              
              966,064Langley
      Debenture
              
              £
              1,750,000
              
              0
              
              
              
              
              
              1,750,000Trade
      Creditors and Sums Due To Producers
              
              £
              1,233,265
              
              1,233,265
              
              0
              
              0
              
              0Potential
      Arbitration Award
              
              £
              300,000
              
              300,000
              
              0
              
              0
              
              0Total
              
              £
              14,707,114
              
              5,035,353
              
              9,671,760
              
              0
              
              1,750,000





+See
additional obligations incurred after December 31, 2007 discussed at Item 3. No.
D, Capitalization and
Indebtedness.





Critical
Accounting Policies





Management
is required to make judgments, estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period.  On a regular basis, management evaluates our
estimates and assumptions and bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these estimates under
different assumptions or conditions.











Basis
of accounting





The
financial statements included within item 17 are prepared under the historical
cost convention, in accordance with applicable accounting standards in the
United Kingdom, and on the going concern basis, with reconciliations to
generally accepted accounting policies in the United States and explanations of
the reconciling items included within the notes to those financial
statements.





Due to
the financial position of this company, the validity of using the going concern
basis to prepare the financial statements is conditional upon the continued
support of the company’s majority shareholder at this time. The directors of the
company have received assurances from the majority shareholder that it will
continue to support the company and its subsidiary undertaking to enable them to
meet their liabilities as they fall due for at least the next twelve months from
the date of approval of these accounts. The majority shareholder is however not
bound by these assurances.





Should
the company be unable to continue trading as a result of the withdrawal of
support of the majority shareholder, adjustments would have to be made to reduce
the value of assets to their recoverable amount, to provide for any further
liabilities which might arise, and to reclassify fixed assets and long term
liabilities as current assets and liabilities.





26


Basis
of consolidation





The group
financial statements consolidate the financial statements of Seven Arts Pictures
plc and its subsidiary undertakings. The results of subsidiaries acquired and
sold are included in the profit and loss account from or up to the date control
passes on the acquisition basis. Intra group sales and profits are eliminated on
consolidation.





No
company profit and loss account is presented in accordance with the exemptions
provided by S230 of the Companies Act 1985.  The individual company
profit and loss for "the Company" as shown on the financial statements is
consolidated into the group's consolidated financial statements.





Turnover





Turnover
represents the invoiced value, net of Value Added Tax, of goods sold and
services provided to customers.





License
fee revenue is recognized as and when the film in question is delivered to the
respective territories.





Revenue
that equates to a share of gross receipts of films is recognized as income as
and when the group is notified of the amounts that are due to them.





Goodwill





Purchased
goodwill is capitalized in the year in which it arises.





In the
opinion of the directors, the useful economic life of the purchase goodwill,
which relates to a film library that was purchased, exceeds 20 years and cannot
be specifically defined to be a set length of time.  This is based on
experience of how film revenues are earned and the knowledge that films often
continue to earn revenue for a period of time that far exceeds 20
years.  Therefore, goodwill is not amortized and is, instead, subject
to an annual impairment review.





This
accounting policy represents a departure from the requirements of Companies Act
1985, which requires goodwill to be amortized over a finite period, but the
directors believe this departure is justified as being required for the
over-riding purpose of providing a true and fair view.





Intangible
film assets





Films
produced for exploitation or distribution are stated in the balance sheet at
cost less amortization and impairment to date.  Amortization is
charged to write down the cost of such assets over their useful
lives.





Tangible
fixed assets





Tangible
fixed assets are stated at historical cost.





Depreciation
is provided on all tangible fixed assets at rates calculated to write each asset
down to its estimated residual value evenly over its expected useful life, as
follows:-


Fixtures,
fittings and equipment- straight line over 4 years





Fixed
asset investments





Fixed
asset investments are stated at cost, less provision for diminution in
value.





27


Deferred
taxation





Deferred
tax is provided in respect of the tax effect of all timing differences that have
originated but not reversed at the balance sheet date.





A
deferred tax asset is regarded as recoverable and therefore recognized only
when, on the basis of all available evidence, it can be regarded as more likely
than not that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.





Deferred
tax is measured on a non-discounted basis at the average tax rates that are
expected to apply in the periods in which the timing differences are expected to
reverse, based on tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.





Foreign
currency translation





Monetary
assets and liabilities of the company that are denominated in foreign currencies
are translated into sterling at the rates of exchange ruling at the balance
sheet date. Transactions in foreign currencies are recorded at the rate ruling
at the date of the transaction.  All differences are taken to the
profit and loss account.





The
subsidiary undertaking’s functional currency is primarily the US dollar and
therefore it chooses to maintain all its accounting records in the US dollar.
However, since the reporting currency of the group is sterling, the subsidiary
undertaking’s financial statements have been translated into sterling. The
closing rate method has been used to translate the subsidiary undertaking’s
financial statements.  This results in any non-monetary assets and
liabilities being recorded at their historical cost expressed in sterling,
whilst monetary assets and liabilities are stated at the closing exchange
rate.  All profit and loss items have been translated into sterling
using the weighted average exchange rates.  Differences on translation
are taken directly to reserves.





Where the
subsidiary undertaking has undertaken transactions in a currency other than the
US dollar, these have been recorded in the accounting records at the rate ruling
at the date of the transaction. All such differences on translation are taken to
the profit and loss account.





Interest
capitalized





Directly
attributable interest is capitalized as part of intangible fixed assets and is
based on interest charged as a result of obtaining bank and other borrowings to
finance these assets.








Financial
instruments





When
appropriate, the group uses financial instruments to manage exposure to
fluctuations in interest rates.





Financial
assets are recognized in the balance sheet at the lower of cost and net
realizable value. Provision is made for diminution in value when appropriate.
Interest receivable is accrued and credited to the profit and loss account in
the period to which it relates.





Financial
liabilities that represent bank and other production loans are, upon issue,
recognized in the balance sheet at the amount of net proceeds. The finance costs
of the debt are charged to the profit and loss account at a constant rate on the
carrying amount.





Asset Retirement
Obligations


As of
March 31, 2007, the Company has determined that it does not have material
obligations for asset retirement obligations. Accordingly, adoption of HB 3110
had no impact on the consolidated financial statements.





28


ITEM 6.  DIRECTORS,
SENIOR MANAGEMENT, AND
EMPLOYEES





6.A.  Directors and
Senior Management





Table No.
9


Directors
and Senior Management


March 30,
2007


Table No.
1


Directors





Name                                   Position
            Age
            Date First Elected or
    AppointedPeter
      Hoffman                     CEO
            57
            September
      2, 2004Anthony
      Bryan                    Chairman,
      Director
            84
            March
      30, 2007Rufus
      Pearl                          Director
            31
            September
      2, 2004Julia
      Verdin                         Director
            44
            January
      3, 2007Anthony
      Hickox                  Director
            42
            January
      3, 2007Elaine
      New                          Finance
      Director
            47
            January
      11, 2007Kate
      Hoffman                     Chief
      Operating Officer
            31
            February
      26, 2008





The
experience and qualifications of the directors and senior management are as
follows:





The
Directors have served in their respective capacities since their election and/or
appointment and will serve until the next Annual General Meeting or until a
successor is duly elected, unless the office is vacated in accordance with the
Articles of Association.





The
senior management serves at the pleasure of the Board of Directors.





No
director and/or senior management had been the subject of any order, judgment,
or decree of any governmental agency or administrator or of any court or
competent jurisdiction, revoking or suspending for cause any license, permit or
other authority of such person or of any corporation of which he is a director
and/or senior management, to engage in the securities business or in the sale of
a particular security or temporarily or permanently restraining or enjoining any
such person or any corporation of which he is an officer or director from
engaging in or continuing any conduct/practice/employment in connection with the
purchase or sale of securities, or convicting such person of any felony or
misdemeanor involving a security or any aspect of the securities business or of
theft or of any felony.





Peter Hoffman is the
Chairman and founder of SEVEN ARTS PICTURES, an independent producer and
distributors of motion pictures.   Seven Arts has produced and
distributed four features since its inception: “JOHNNY MNEMONIC”, “NEVER TALK TO
STRANGERS”, “9 1⁄2 WEEKS II” and “SHATTERED IMAGE”.  Other credits
include “ONEGIN”; “DUETS”; the Sundance 2001 Grand Jury Prize Winner, “THE
BELIEVER”; “AN AMERICAN RHAPSODY”; “CLETIS TOUT”; “INTERSTATE 60”; “STANDER” and
the current release “ASYLUM”.  Seven Arts also produced, in
conjunction with Paramount Pictures, “RULES OF ENGAGEMENT.”


Hoffman
was previously President and CEO of Carolco Pictures.  He was directly
involved at Carolco in the production of a large slate of independent motion
pictures, including “TERMINATOR 2”, “BASIC INSTINCT”, “TOTAL RECALL”, “RAMBO
III”,





29


Anthony J.A. Bryan,
Sr.  is currently the Chairman of 360 Global Wine Company,
Chairman of U.S. Dry Cleaning Corporation, and Vice Chairman of Astrata
PLC.  He was formerly Chairman & CEO of Copperworld Corporation
(Pittsburg, PA), President & CEO of Cameron Iron Works (Houston, TX), Vice
President and Member of Board of Directors and General Manager of the
International Division of the Monsanto Company (St. Louis, MO) and Chairman
& CEO of Oceanics PLC (London).  He has served on the Board of
Directors of a number of companies, including Federal Express Co., Chrysler
Corporation, ITT Corporation, PNC Financial, Koppers Corporation, Hamilton Oil
Co., Imental (France), Oceanics PLC (London), as well being a Trustee of a
number of Charitable and Educational Institutions.  He was educated at
Ampleforth College, in England and the Harvard Business School where he received
an MBA.  He served in the Royal Canadian Air Force in UK and in Italy
and was awarded the Distinguished Flying Cross in 1944.





Rufus Pearl is the
Managing Director of Pearl Investment Management Services Ltd, which is
Regulated and Authorized by the Financial Services Authority. Mr. Pearl is a
Registered FSA Securities Representative, holds a Certificate in Corporate
Finance and is an Associate of the Securities Institute.  He is
currently a Director of Birchington Investments Limited which was listed on the
Irish Stock Exchange until recently. He was previously Administrative Director
of both Jubilee Investment Trust Plc which is quoted on the Official List of the
London Stock Exchange and of Prostcare plc (now Mediwatch plc) listed on AIM and
was a Non-Executive Director of Aberdeen Park Investments plc (now New Hibernia
Investments plc) formerly listed on the Bermudan Stock Exchange.





Julia Verdin is an
independent film producer. Ms. Verdin produced STANDER, directed by Bronwen
Hughes, was an Executive Producer on MERCHANT OF VENICE, directed by Michael
Radford and starring Al Pacino, Jeremy Irons and Joseph Fiennes and a
co-producer on RIDING THE BULLET, based on a Steven King story which was
directed by Mick Garris and stars David Arquette, Jonathan Jackson, Erika
Christensen and Barbara Hershey.





Anthony Hickox is a
film director.  Hickox wrote and directed his first film, 'WAXWORKS'
at the age of 21.  Hickox was involved in the production of 'SUNDOWN',
'WARLOCK: ARMAGEDDON'; 'CHILDREN OF THE CORN', 'TURN OF THE SCREW'; 'CARNIVAL OF
SOULS', and  'HELLRAISER 3: HELL ON EARTH'.





Elaine
New.  A Cambridge University educated, Price Waterhouse
(London) qualified Chartered Accountant Elaine has been in the media industry
for the last six years as Finance Director of Metrodome Group plc, a UK film
distributor.  Ms. New was previously engages as Financial Controller
of Harrods International, helping to establish an airport retailing arm and a
Commercial Director of Outfit a new division of Sears Womenswear Ltd that she
helped to create in the latter part of the 1990’s.  Elaine has been on
the Executive Committee of The Quoted Companies Alliance for the almost three
years helping to look after small to mid-cap companies floated both on AIM and
the main list of The London Stock Exchange.





Kate Hoffman, age 31,
(Chief Operating Officer).  Kate began her career at the age of 17 as
an intern for Hollywood casting directors, Mary Vernieu and Risa
Gramon-Garcia.  The following year, she pursued a double major in
psychology and political science at New York University while working part-time
for Miramax Films  She then worked for film agent Mort Viner until his
retirement when she joined the Company's predecessors in 1998.  She
has managed the development, production and delivery of films including "The
Believer," "No Good Deed," "Stander," and "Asylum."





In
addition to her production responsibilities, Kate is responsible for
international distribution, acquisitions and film financing.





30


6.B.
 Compensation





Cash
Compensation


Total
compensation accrued and/or paid (directly and/or indirectly) to all directors
and senior management during the Fiscal Year ended 3/31/2007 was
£316,856.





Table No.
10


Officer
and Director Compensation





Annual
      Compensation
            Long
      Term CompensationAwards
            PayoutsName
      and
              Principal
      Position
            Year
            Salary
              ($)
            Bonus
              ($)
            Other
              Annual
              Compen-
              sation
      ($)
            Securities
      Under
              Option/
              SAR’s
      Granted
              (#)
            Shares/
              Units
              Subject
      to
              Resale
              Restrictions
              ($)
            LTIP
              Pay-
              outs
      ($)
            All
      Other
              Compen-sation
              ($)Peter
      Hoffman
            Fiscal
      2007
            £262,964
            -
            -
            -
            -
            -
            -Elaine
      New
            Fiscal
      2007
            £26,544
            -
            -
            -
            -
            -
            -Chris
      Bialek
            Fiscal
      2007
            £27,348
            -
            -
            -
            -
            -
            -





Stock Options.
 Seven Arts may grant stock options to Directors, Senior Management and
employees and intends upon admission to AIM to adopt a stock option plan under
an Enterprise Management Incentive scheme ("EMI") authorized under United
Kingdom law.  Under the proposed EMI scheme, the Company may grant
options worth up to £120,000 to any
employee at the date of grant and grant up to £3,000,000 for all
employees at the date of grant.   See Table No. 11 for
information about stock options outstanding.





Table No.
11


Stock
Option Grants From Inception to March 31, 2008








Name
            Number
      of Options Granted
            %
      Of Total Options Granted
      on
            Exercise
      Price per Share
            Grant Date
            Expiration
      Date
            Mkt.
      Value of Securities Underlying Options on Date of GrantTony
      Hickox
            50,000
            25%
            £0.305
            1/3/07
            1/3/10
            £0.305Julia
      Verdin
            50,000
            25%
            £0.305
            1/3/07
            1/3/10
            £0.305Elaine
      New
            50,000
            25%
            £0.305
            1/3/07
            1/3/10
            £0.305Chris
      Bialek
            50,000
            25%
            £0.305
            1/3/07
            1/3/10
            £0.305





In addition, the Company has
granted stock options in the following amounts to the following persons in
connection with financing services provided by these
persons:


Names
              
              Number
      of
                Options
      Granted
              Exercise
      Price
                Per
      Share
              Market
      Value of Securities
                on
      Date of Grant
              Grant
                Date
              Expiration
                DateBlue
      Rider Finance/
                Robert
      Oppenheim
              250,000
              £.15
              £.15
              Jan.
      22, 2008
              Jan.
      23, 2011Trafalgar
      Capital
                Specialized
      Investment Fund
              800,000
              £.195
              £.195
              Jan.
      31, 2008
              Jan.
      30, 2013
 31


In addition, upon re-listing
on AIM, the Company has agreed to grant to each of Zimmerman Adams International
and Old Park Lane Capital, its NOMAD, options for share equal to 1% of the issue
share capital of the Company on the date of admission by the Company to AIM
(estimated at approximately 600,000 shares) at an exercise price equal to the
admission price of the Company's stock, exercisable within five years of the
date of issue.





Change of Control
Remuneration.  Seven Arts had no plans or arrangements in respect of
remuneration received or that may be received by executive officers of the
Company in Fiscal Year 2007 to compensate such officers in the event of
termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds US$60,000 per senior
management.





Other Compensation.
 No senior management director received “other compensation” in excess of
the lesser of US$25,000 or 10% of such officer's cash compensation, and all
senior management and Directors as a group did not receive other compensation
which exceeded US$25,000 times the number of persons in the group or 10% of the
compensation.





Bonus/Profit
Sharing/Non-Cash Compensation.  Except for the stock options
discussed above (Table 11), Seven Arts had no material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to Seven
Arts 's Directors or senior management.  Management intends to
recommend that the Board adopt a bonus plan in the following form at the next
regular meeting of the Board of Directors.





1.
            Compensation
      Committee will recommend amount of bonus pool each year, which will be 10%
      of pre-tax profits for the period to 30 June
  2008.





2.
            In
      future years comparisons should be made to peer groups in the motion
      picture industry





3.
            There
      will be two types of annual bonuses


(a)
Management


(b) Project
related





4.
            Managers
      in bonus pool


(a)  Peter
Hoffman (CEO)


(b)  Elaine
New (CFO)


(c)  Kate
Hoffman (COO)





5.
            Management
      bonuses as follows:


CEO
            Management
            Project
      Related


Company
      Results
            40%
            25%
            15%


Individual
      Objectives
            10%
            30%
            50%


Subjective
            20%
            20%
            25%


Share
      Performance
            30%
            25%
            10%





6.
            Individual
      objects for Management will be agreed by
Board




The CEO
to decide recipients of project awards and amounts in conjunction with
Compensation Committee





7.
            Criteria
      shall be individual contributions to overall company
    profits.





Pension/Retirement
Benefits.  No funds were set aside or accrued by Seven
Arts during Fiscal 2007 to provide pension, retirement or similar benefits
for Directors or senior management.





32


6.C.  Board
Practices





6.C.1.
 Terms ofOffice.
 Refer to Item No. 6.A.1.





6.C.2.
 Directors’ Service Contracts.


SAP has
an employment agreement with Peter Hoffman as its CEO for five years ending
December 31, 2008 at a salary of $500,000 per year plus
expenses.  Upon acquisition of control of the Company, SAP entered
into a contract with the Company providing Mr. Hoffman's services solely to the
Company and its subsidiaries as their CEO.  This contract is included
as a material contract in the Appendices hereto.





6.C.3.
 Board of Director Committees.


Seven
Arts has an Audit Committee, which recommends to the Board of Directors the
engagement of the independent auditors of Seven Arts and reviews with the
independent auditors the scope and results of Seven Arts' audits, Seven Arts’
internal accounting controls, and the professional services furnished by the
independent auditors to Seven Arts.  The current members of the Audit
Committee are:  Anthony Bryan, Rufus Pearl and Julia Verdin. The Audit
Committee did not meet separately in Fiscal Year ended 3/31/2006.





6.D.
 Employees


As of
March 31, 2008, Seven Arts had [5] employees and [5] independent contractors,
excluding the senior management, providing full time services.





6.E.  Share
Ownership


Table No.
12 lists, as of March 31, 2008, directors and senior management who beneficially
own Seven Arts' voting securities, consisting solely of ordinary shares, and the
amount of Seven Arts' voting securities owned by the directors and senior
management as a group.





Table No.
12A


Shareholdings
of Directors and Senior Management





Title of Class
            Name of Beneficial Owner
            
            Amount and Nature of Beneficial Ownership
            Percent of Class at
    3/31/2006Ordinary
            Seven
      Arts Pictures Inc.
            
            8,095,000
            37%Total
      Directors/Management 5% Holders
            8,095,000
            37%





Peter
Hoffman controls approximately 70% of the voting stock of Seven Arts Pictures
Inc., and may be deemed a beneficial owner of ordinary shares of the
Company.  None of the sums set forth in Item 6.B. own more than 1% of
the ordinary shares of the Company (other than Mr. Hoffman) and their share
ownership has not otherwise been disclosed.





Does not
include 3,500,000 ordinary shares pledged to Apollo Media as discussed in Item
No. 7B.





The terms
of incentive options grantable by Seven Arts are done in accordance with the
rules and policies of the English law, including the number of ordinary shares
under option, the exercise price and expiry date of such options, and any
amendments thereto.   The only share options granted to date are
set forth in Table 11.





33


ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS





7.A.
 Major Shareholders.





7.A.1.a.  Holdings By
Major Shareholders.


Table No.
12B lists, as of March 31, 2008, all shareholders who beneficially own 5% or
more of Seven Arts' voting securities, consisting solely of ordinary shares, and
the amount of Seven Arts' voting securities owned by the 5% shareholders as a
group.





Table No.
12B


Shareholdings
of 5% Shareholders





Title of Class
            Name of Beneficial Owner
            
            Amount and Nature of Beneficial Ownership
            Percent of Class at
    3/31/2007Ordinary
            Seven
      Arts Pictures Inc.+
            
            8,095,000
            37%ApolloMedia
      GmbH & Co.Filmproduktion
      KG
            
            3,500,000
            16%Langley
      Park Investment Trust plc
            
            5,000,000
            23%Total
      5% Holders
            16,595,000
            76%








+Peter
Hoffman controls approximately 70% of the voting stock of Seven Arts Pictures
Inc., and may be deemed a beneficial owner of ordinary shares of the
Company.








7.A.1.b.  Significant
Changes in Major Shareholders’ Holdings.


SAP sold
1,025,000 ordinary shares owned by it in November 2006, at £0.30 per share and
advanced the proceeds net of commission to the Company.  The Company
has issued in Fiscal Year 2007 ordinary shares to:


(a)
            To
      SAP for pledge to Apollo Media to settle an indebtedness to Apollo Media
      with regard to the motion picture Stander;


(b)
            to
      Langley Park Investments plc in partial conversion of its convertible
      redeemable debenture.  See Exhibit
4.


(c)
            To
      Unique Fidelity Engineering Limited, 2,670,000 shares in the current
      fiscal period.





The
Company is in negotiations to sell 5,500,000 additional ordinary shares to
Unique Fidelity Engineering Trust Limited.





7.A.1.c.Different
Voting Rights.  Seven Arts’ major shareholders do not have
different voting rights.





34


7.A.2.  Share
Ownership.


As of
September 30, 2007, Seven Arts had issued 24,354,000 ordinary shares of £0.05,
13,184,000 deferred shares of £0.45 each; and 3,000,000 convertible redeemable
preference shares of £1.00 each issued, and 530 (as at 31 March 2007) registered
shareholders.  Of these shareholders one is located in the United States
and the balance elsewhere. The U.S. shareholders own 8,095,000 ordinary shares;
and, the other shareholders own 16,259,000 ordinary shares as of September 30,
2007.





7.A.3.Control
of the Company.
 Seven Arts is a publicly owned English corporation, the shares of which
are owned by U.S. residents and foreign residents.  Seven Arts is not
controlled by any foreign government or other person(s).





7.A.4.  Change of
Control of Company Arrangements


There are
no arrangements, known to the Company, which may at a subsequent date result in
a change of control of the Company.





7.B.  Related Party
Transactions


Upon
acquisition of control of the Company by SAP in September, 2004, the Company
entered into an agreement with SAP under which SAP provided the services of
Peter Hoffman for the amount of his contracted salary and the Los Angeles office
and staff of SAP to the Company for the direct costs thereof, which is reflected
in the Company's audited financial statements for the Fiscal Years 2005 and 2005
and no other fee or costs.  Pursuant to an intercompany agreement, SAP
also from time to time will hold ownership of limited liability corporations in
the United States, with all distribution rights and profits thereof for the
account of the Company and provide other services for the account of the Company
at no fee other than Mr. Hoffman’s salary and the direct third party costs of
SAP’s Los Angeles office, all of which are reflected in the Company’s financial
statements.  These other services will be any reasonable requests of
the management of the Company including accounting services, audits of
distribution statements, collection of accounts receivable, supervision of
production of motion pictures and similar day-to-day aspects of the Company's
business.  SAP has from time to time made non-interest bearing
advances to the Company or its subsidiaries, when the Company has not collected
its receivables since the Company does not have a working capital line of
credit, all as judged appropriate by management.  All advances are for
customary working capital purposes.





SAP has
settled a dispute with ApolloMedia GmbH & Co. Filmproduktion KG
(“ApolloMedia”) in a settlement agreement dated September 30, 2006, which the
settlement fully releases the Company and its subsidiaries from any liability to
ApolloMedia including the indebtedness of approximately $2,000,000 related to
the motion picture Stander assumed by a
subsidiary of the Company upon acquisition of control of the Company by SAP in
September, 2004.  The Company has issued 3,500,000 ordinary shares to
SAP immediately pledged to ApolloMedia to secure SAP’s obligations under the
settlement agreement and SAP has agreed that it will (1) return to Company all
ordinary shares in excess of 2,000,000 not necessary to satisfy SAP’s
obligations to ApolloMedia and (2) deliver to Company from SAP’s ordinary
shares, any ordinary shares in excess of 2,000,000 in fact sold by SAP to
satisfy the indebtedness to ApolloMedia under the settlement
agreement.  The dispute with Apollo (now settled) related to the
amounts ultimately to be payable to Apollo from distribution of the motion
picture Stander.  The
shares pledged to ApolloMedia will be sold by it as necessary for ApolloMedia to
derive net proceeds of $1,640,000 and any pledged shares remaining after such
sale (if any) will be retained by the Company.





Shareholder
Loans/Amounts
Owing to Senior Management/Directors


There is
no money owing to members of senior management of members of the Board of
Directors.  SAP has advanced at no interest the sum of approximately
$667,518 to the Company as of March 31, 2007.





There
have been no transactions since March 31, 2007, or proposed transactions, which
have materially affected or will materially affect Seven Arts in which any
director, executive officer, or beneficial holder of more than 5% of the
outstanding ordinary shares, or any of their respective relatives, spouses,
associates or affiliates has had or will have any direct or material indirect
interest.





7.C.  Interests of
Experts and Counsel


---No
Disclosure Necessary---








35





ITEM 8.  FINANCIAL
INFORMATION





The three
year historic financial statements as required under Item No. 17 are attached
hereto and found immediately following the text of this Registration Statement.
 The audit reports of  Mazars LLP (formerly Moore’s Rowland LLP)
for Fiscal Years Ended 2007, 2006 and 2005 are included therein immediately
preceding the financial statements.





The
unaudited and unreviewed interim financial statements for the period ended 30
September 2007, prepared under UK GAAP with explanatory notes detailing and
quantifying the material differences between the UK GAAP and US GAAP
presentation of the unaudited and unreviewed interim financial statements are
included therein immediately preceding the financial statements.





8.A.7.
 Legal/Arbitration Proceedings


The
Directors and the management of Seven Arts do not know of any material, active
or pending, legal proceedings against them nor is Seven Arts involved as a
plaintiff in any material proceeding or pending litigation, except as
follows:





The
Company, its subsidiary Seven Arts Filmed Entertainment Limited ("SAFE") and SAP
were the subject of an arbitration award of approximately $600,000 against them
for legal fees relating to a dispute regarding a participation in the motion
picture entitled 9 1⁄2
Weeks II, even though the arbitration found no additional sums due to the
complaining party, and potential loss of further distribution rights in this
motion picture.  The Federal District Court has enforced this
arbitration award and the Company is appealing that decision.  The
Company believes it has several meritorious defenses to any enforcement of this
award.





The
Company, SAFE and SAP are plaintiffs in an action against Fireworks
Entertainment and certain of its affiliates ("Fireworks"), as well as
ContentFilm for copyright infringement relating to the following motion
pictures: Rules of
Engagement, Onegin, The Believer, Who is Cletis Tout
and American
Rhapsody.  The Company is the assignee of copyright interests
in each of these motion pictures.  Fireworks and ContentFilm have
repudiated any and all agreements with the Company's predecessors regarding
these motion pictures.   This action was stayed by the United
States District Court in Los Angeles, California by reason of a prior action
filed by CineVisions and its successor for breach of contract against Fireworks
in the courts of Ontario, Canada.   CineVisions has sought to
discontinue the Canadian contract action but that request was
denied.  Management believes that whether based on copyright
infringement or contract, Fireworks has substantial liability to the Company or
its predecessors with respect to Fireworks' conversion of the Company’s and its
predecessors' interest in the Fireworks Pictures which were all produced or
acquired by the Company's predecessors.  The Company records no value
in its financial statements for its interests in the Fireworks Pictures, other
than immaterial amounts of legal fees.





Certain
financiers of the motion picture I'llSleep When I'm Dead
have filed suit against the Company, SAP, CineVisions ("CV"), Seven Arts Films
Ltd. ("SAF") and Peter Hoffman claiming the right to payment of a guarantee of
$3,500,000 allegedly due from SAF and CV in a distribution agreement between SAF
and CV and the producers of this motion picture entered into in
2002.  The Company is aware of no basis for any liability against the
Company or its subsidiaries with respect to the distribution
agreement.  The Company has been advised that CV and SAF have a
defense to this alleged guarantee in that the distribution agreement provided
specifically that a specific express condition precedent to all obligations of
CV and SAF was timely delivery of this motion picture, which was not in fact
delivered by the date specified in the distribution agreement.





The
Directors and the management of Seven Arts know of no other active or pending
proceedings against anyone that might materially adversely affect an interest of
Seven Arts.  The Company has executed a settlement of an action filed
by Too Easy Entertainment LLC and the sums due thereunder will be paid on or
before April 30, 2008.








36


ITEM 9.  THE OFFER AND
LISTING





9.A.  Ordinary Share
Trading Information





The
Company's ordinary shares traded on the Alternative Investment Market in
London England under the symbol "SVA" until February 16,
2007.  Seven Arts applied for listing on the AIM and began
trading on the AIM on September 30, 2004.  The Company commenced
trading on the PLUS Market in London, England in May 2007.





Table No.
13 A and B lists the high, low and closing sales prices on the AIM for the last
six months, last ten fiscal quarters, and last two fiscal years, and the high,
low and closing prices on the PLUS Market for the months of May and June
2007.





9.A.4  Price
Information





Table No.
13 A


Alternative
Investment Market


Ordinary
Shares Trading Activity


-Sales-


Period
              High
              Low
              Price
      at
                Period
      EndMonth
      Ended 02/28/07
              29.5p
              28.5p
              29.5pMonth
      Ended 03/21/07
              35p
              28.5p
              28.5pMonth
      Ended 12/31/06
              31.5p
              30.5p
              30.5pMonth
      Ended 11/30/06
              45.5p
              31p
              31pMonth
      Ended 10/31/06
              49.5p
              25.5p
              45.5pMonth
      Ended 9/30/06
              41.5p
              10p
              33.5pFiscal
      Year Ended 3/31/2006
              20p
              12.5p
              12.5pFiscal
      Year Ended 3/31/2005
              35p
              19p
              19pFiscal
      Year Ended 3/31/2004
              67.5p
              17.5p
              3pFiscal
      Year Ended 3/31/2003
              Not
      Applicable
              Not
      Applicable
              Not
      ApplicableFiscal
      Year Ended 3/31/2002
              Not
      Applicable
              Not
      Applicable
              Not
      ApplicableFiscal
      Quarter Ended 12/31/2006
              49.5p
              25.5p
              30.5pFiscal
      Quarter Ended 09/30/2006
              41.5p
              9.5p
              33.5pFiscal
      Quarter Ended 06/30/2006
              12.5p
              10p
              10.5pFiscal
      Quarter Ended 03/31/2006
              14.5p
              12.5p
              12.5pFiscal
      Quarter Ended 12/31/2005
              18.5p
              12.5p
              13pFiscal
      Quarter Ended 09/30/2005
              20p
              18.5p
              18.5pFiscal
      Quarter Ended 06/30/2005
              20p
              16.5p
              20pFiscal
      Quarter Ended 03/31/2005
              19.5p
              19p
              19pFiscal
      Quarter Ended 12/31/2004
              26.5p
              19.5p
              19.5pFiscal
      Quarter Ended 09/30/2004
              30p
              26.5p
              26.5p


37


Table No.
13 B


PLUS
Market


Ordinary
Shares Trading Activity


-Sales-


Period
              High
              Low
              Price
      at
                Period
      EndMonth
      Ended 05/31/07
              29.5
      p.
              27.5
      p
              29.5pMonth
      Ended 06/30/07
              29.5
      p.
              29.5
      p
              29.5pMonth
      Ended 7/31/07
              29.5
      p.
              19.5
      p
              20.5pMonth
      Ended 8/31/07
              22.5
      p.
              20.5
      p
              22.5pMonth
      Ended 9/30/07
              24.5
      p.
              22.5
      p
              24.5pMonth
      Ended 10/31/07
              25.5
      p
              24.5
      p
              25.5pMonth
      Ended 11/30/07
              25.5
      p
              20.5
      p
              20.5pMonth
      Ended 12/31/07
              20.5
      p
              20.5
      p
              20.5pMonth
      Ended 31/01/07
              20.5
      p
              19.5
              19.5pMonth
      Ended 29/02/07
              19.5
      p
              18.5
      p
              18.5pMonth
      Ended 31/03/07
              18.5
      p
              18.5
      p
              18.5pFiscal
      Quarter Ended 6/30/07
              29.5
      p.
              29.5
      p
              29.5pFiscal
      Quarter Ended 9/30/07
              24.5
      p.
              22.5
      p
              24.5pFiscal
      Quarter Ended 12/31/07
              25.5
      p
              20.5
      p
              20.5pFiscal
      Quarter Ended 3/31/08
              19.5
      p
              18.5
      p
              18.5p


9.A.5.  Ordinary and
Preferred Share Description





Registrar/Ordinary Shares
Outstanding/Shareholders




The
authorized capital of Seven Arts consists of 573,184,000 ordinary shares par
value of  £0.05 each, 13,184,000 deferred shares of £0.45 each and
6,000,000 convertible redeemable preference shares of £1.00 each.  The
Company is registering only 24,354,000 ordinary shares of the Company by this
Form 20-F, including the ordinary shares now issued and an additional 5,500,000
ordinary shares which the Company expects to sell to Unique Fidelity
Engineering.





Share
Registers Limited, Craven House, West Street, Farnham Surrey GU9 7EN is the
registrar and transfer agent for the ordinary shares.








Stock Options and
Warrants


Refer to
Item No.6.E and Table No. 11 for additional information.





9.A.6.Rights of
Securities.





No other
class of securities materially qualifies the rights of holders of ordinary
shares.





9.A.7.  Securities
Other Than Common or Ordinary Shares.





The
rights of the redeemable convertible preference shares are solely to convert
into ordinary shares are as follows.  Langley has converted as of
March 30, 2007, 1,250,000 of its convertible redeemable debentures into
5,000,000 ordinary shares, which are included in the ordinary shares outstanding
as of March 30, 2007.  Langley’s remaining debentures (£1,750,000) and
Armadillo’s 3,000,000 preferred shares are all convertible into ordinary shares
on a 2-to-1 basis (i.e. two ordinary shares for each preferred share and two
ordinary shares for each £ of debenture) unless the lowest ten-day trading price
prior to conversion of the ordinary shares is less than £0.50 in which event the
conversion ratio increases proportionally from 2-to-1 to 4-to-1, when such
trading price is £0.25.  The agreements embodying the Langley
debenture and Armadillo preferred shares are included as Exhibits 4 and 5
hereto.  The rights of the holders of the preference shares are set
forth in the agreement included in Exhibit 5, hereto.





9.C.  Stock Exchanges
Identified





The
ordinary shares traded on the Alternative Investment Market in London, England
until February 16, 2007 and are now listed on the PLUS Market in London, England
since May, 2007.  The Company has sought and received approval from
the National Association of Securities Dealers for listing of its ordinary
shares on the OTC Bulletin Board, subject to the receipt of confirmation of the
effectiveness of this Form 20-F by the Securities and Exchange
Commission.





38


ITEM 10.  ADDITIONAL
INFORMATION





10.A.  Share
Capital





10.A.1.
 Authorized/Issued Capital.  As of 9/30/2007, there were
573,184,000 of ordinary shares, 13,184,000 deferred shares of £0.45 each and
6,000,000 convertible redeemable preference shares of £1.00 each authorized.





As of
3/31/2007, there were 21,684,000 ordinary shares £0.05 each issued and 3,000,000
convertible redeemable preference shares of £1.00 each issued.  As of
9/30/07, there were 24,354,000 ordinary shares of £0.05, 13,184,000 deferred
shares of £0.45 each and 3,000,000 convertible redeemable preference shares of
£1.00 each issued.





10.A.2.  Shares Not
Representing Capital.


10.A.3.  Shares Held By
Company.


---No
Disclosure Necessary---





10.A.4.  Stock
Options/Share Purchase Warrants


10.A.5.  Stock
Options/Share Purchase Warrants


---Refer
to Table No. 11





10.A.6.  History of
Share Capital


Since
September 2004, when control of the Company was acquired by Seven Arts Pictures
Inc., the Company issued the following two convertible securities in September,
2004, referred to in Item 4 No. A. August 2004 Issue of 3,000,000 Convertible
Redeemable Preference Shares of £1.00 each to Armadillo Investments PLC
September 2004 Issue of £3,000,000 of Convertible Redeemable Debt to Langley
Park Investment Trust PLC





10.A.7.
 Resolutions/Authorizations/Approvals


---No
Disclosure Necessary---





10.B.   Articles of
Association





Seven
Arts was incorporated as Glasgow Park Investments PLC on 24 August 2001 under
the English Company Act of 1985.  Pursuant to a resolution passed at a
meeting of the shareholders of the Company that was held on 11 September 2001,
the Company changed its name from Glasgow Park Investments PLC to The Cabouchon
Collection PLC.  Pursuant to a resolution passed at a meeting of the
shareholders of the Company that was held on 6 November 2003, the name of the
Company was changed to Cabouchon PLC.  Pursuant to a resolution passed
at a meeting of the shareholders of the Company that was held on 2 September
2004, the name of the Company was changed to Seven Arts Pictures
PLC.





There are
no restrictions on the business the Company may carry on in the Articles of
Association attached hereto as Exhibit "1," as amended at an Extraordinary
General Meeting of shareholders held on 10 March 2008.  Also included
in Exhibit "1" is the Company's Board Memorandum on Financial Reporting
Procedure presented to the Board of Directors on 9 January, 2007.





Under
Article 124 of the Company’s Articles of Association, a director or senior
officer must declare its interest in any existing or proposed contract or
transaction with the Company and such director is not allowed to vote on
any  transaction or contract with the Company in which has a
disclosable interest, unless the interest arises in accordance with certain
circumstances as set our in the Company’s Articles of Association.  A
director may hold any office or place of profit with the Company in conjunction
with the office of director, and no director shall be disqualified by his office
from contracting with the Company. A director or his firm may act in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services. A director may become a director or
other officer or employee of, or otherwise interested in, any corporation or
firm in which the Company may be interested as a shareholder or otherwise. The
director shall not be accountable to the Company for any remuneration or other
benefits received by him.





39


Article
99 of the Company’s Articles addresses the duties of the directors. Directors
must manage or supervise the management of the business and affairs of the
Company and have the authority to exercise all such powers which are not
required to be exercised by the shareholders, or as governed by the Companies
Act of 1985. Article 100 addresses Committees of the Board of Directors.
Directors may, by resolution, create and appoint an executive committee
consisting of the director or directors that they deem
appropriate.  The committees established by the Company are set forth
in the Board Memorandum on Financial Reporting (included in Exhibit
"1").





Directors
may also by resolution appoint one or more committees other than the executive
committee. These committees may be delegated any of the directors’ powers except
the power to fill vacancies on the board of directors, the power to remove a
director, the power to change the membership or fill vacancies on any committee
of the directors, the power to appoint or remove officers appointed by the
directors, and make any delegation subject to the conditions set out in the
resolution or any subsequent directors’ resolution. The quorum necessary for the
transaction of the business of the directors may be fixed by the directors and
if not so fixed shall be two directors.





Under
Article 104, the board may exercise all the powers of the Company to borrow
money, to guarantee, to indemnify, to mortgage or charge its undertaking,
property, assets (present and future) and uncalled capital, and to issue
debentures and other securities whether outright or as collateral security for
any debt, liability or obligation of the Company or any third
party.





A
director need not be a shareholder of the Company, and there are no age limit
requirements pertaining to the retirement or non-retirement of directors. The
directors are entitled to the remuneration for acting as directors, if any as
the directors may from time to time determine. If the directors so decide, the
remuneration of directors, if any, will be determined by the shareholders. That
remuneration may be in addition to any salary or other remuneration paid to any
officer or employee of the Company as such who is also a director. The Company
must reimburse each director for the reasonable expenses that he or she may
incur in and about the business of the Company. If any director performs any
professional or other services for the Company that in the opinion of the
directors are outside the ordinary duties of a director, or if any director is
otherwise specially occupied in or about the Company’s business, he or she may
be paid remuneration fixed by the directors, or, at the option of that director,
fixed by ordinary resolution and such remuneration may be either in addition to,
or in substitution for, any other remuneration that he or she may be entitled to
receive.





Article
161 of the Company’s Articles of Association provides for the mandatory
indemnification of directors, senior officers, former directors, and alternate,
as well as their respective heirs and personal or other legal representatives,
or any other person, to the greatest extent permitted by the New Act. The
indemnification includes the mandatory payment of expenses. The directors may
cause the Company to purchase and maintain insurance for the benefit of eligible
parties.





The
rights, preferences and restrictions attaching to each class of the Company’s
shares are as follows:





The
authorized share structure consists of 573,184,000 ordinary shares par value of
£0.05 each, 13,184,000 deferred shares of £0.45 each and 6,000,000 convertible
redeemable preference shares of £1.00 each.  All the shares of
ordinary stock of the Company are of the same class and, once issued, rank
equally as to dividends, voting powers, and participation in assets.
 Holders of ordinary stock are entitled to one vote for each share held of
record on all matters to be acted upon by the shareholders.  Holders of
ordinary stock are entitled to receive such dividends as may be declared from
time to time by the Board of Directors, in its discretion, out of funds legally
available therefore.





40


Upon
liquidation, dissolution or winding up of the Company, holders of ordinary stock
are entitled to receive pro rata the assets of Company, if any, remaining after
payments of all debts and liabilities and the satisfaction of preferred
shareholders, if any.  No shares have been issued subject to call or
assessment.  There are no pre-emptive or conversion rights and no
provisions for redemption or purchase for cancellation, surrender, or sinking or
purchase funds.





Subject
to the Companies Act of 1985, the Company may alter its authorized share
structure by ordinary and/or special resolution. These ordinary and/or special
resolutions may:





(1)
create one or more classes or series of shares or, if none of the shares of a
series of a class or series of shares are allotted or issued, eliminate that
class or series of shares;





(2)
increase, reduce or eliminate the maximum number of shares that the Company is
authorized to issue out of any class or series of shares or establish a maximum
number of shares that the company is authorized to issue out of any class or
series of shares for which no maximum is established;





(3) grant
authority to the Directors to allot ordinary shares in the capital of the
Company in accordance with Sections 80 and 95 of the Companies Act
1985.  At the General Meeting held on 10 March 2008 the Directors of
the Company were authorities to issue a total of 35,000,000 ordinary shares in
the Company.  The authority granted expires at the conclusion of the
Annual General Meeting to be held in 2009.





(4)
subdivide or consolidate all or any of its unissued, or fully paid issued,
shares;





(5) if
the Company is authorized to issue shares of a class or shares with par
value;


(a) decrease
the par value of those shares; or


(b) if none
of the shares of that class of shares are allotted or issued, increase the par
value of those shares;





(6) alter
the identifying name of any of its shares; or





(7)
otherwise alter its share or authorized share structure when required or
permitted to do so.





The
Company may by special resolution:





(1)
create special rights or restrictions for, and attach those special rights or
restrictions to, the shares of any class or series of shares, whether or not any
or all of those shares have been issued; or





(2)
      vary or delete any special rights or restrictions attached to the shares
      of any class or series of shares, whether or not any or all of those
      shares have been issued.





An Annual
General Meeting shall be held once every calendar year at such time (not being
more than 15 months after holding the last preceding Annual Meeting) and place
as may be determined by the Directors. The Directors may, as they see fit, to
convene an extraordinary general meeting. An extraordinary general meeting, if
requisitioned in accordance with the Companies Act of 1985, shall be convened by
the Directors or, if not convened by the Directors, may be convened by the
requisitionists as provided in the Companies Act of 1985.





There are
no limitations upon the rights to own securities.





There are
no provisions that would have the effect of delaying, deferring, or preventing a
change in control of the Company.





There is
no special ownership threshold above which an ownership position must be
disclosed.





41


10.C.  Material
Contracts


The only
material contracts are the Employment Agreement for the services of Peter
Hoffman described in Item 6 No. 2C above, and the agreements embodying the
redeemable convertible preference shares and debentures referred to in Item 4
No. A above.





10.D.  Exchange
Controls


The
United Kingdom has no system of exchange controls.  There are no United
Kingdom restrictions on the repatriation of capital or earnings of an English
public company to non-resident investors.  There are no laws in the United
Kingdom or exchange restrictions affecting the remittance of dividends, profits,
interest, royalties and other payments to non-resident holders of Seven Arts’
securities.





Restrictions
on Share Ownership by UK citizens:  There are no limitations under the laws
of English or in the organizing documents of Seven Arts on the right of
foreigners to hold or vote securities of Seven Arts.





10.E.
 Taxation


The
following summary of the material United Kingdom income tax consequences are
stated in general terms and are not intended to be advice to any particular
shareholder. Each prospective investor is urged to consult his or her own tax
advisor regarding the tax consequences of his or her purchase, ownership and
disposition of ordinary shares. The tax consequences to any particular holder of
ordinary shares will vary according to the status of that holder as an
individual, trust, corporation or member of a partnership, the jurisdiction in
which that holder is subject to taxation, the place where that holder is
resident and, generally, according to that holder’s particular circumstances.
This summary is applicable only to holders who are resident in the United
States, have never been resident in United Kingdom, deals at arm’s length with
the Company, hold their ordinary shares as capital property and who will not use
or hold the ordinary shares in carrying on business in the United Kingdom.
 Special rules, which are not discussed in this summary, may apply to a
United States holder that is an issuer that carries on business in the united
Kingdom and elsewhere.





Management
urges each holder to consult his own tax advisor with respect to the income tax
consequences applicable to him in his own particular circumstances.





42


UNITED KINGDOMINCOME TAX
CONSEQUENCES


Disposition of Ordinary
Stock.


The
summary below is restricted to the case of a holder (a “Holder”) of one or more
ordinary shares (“Ordinary Shares”) who for the purposes of the United Kingdom
inland revenue acts ("Tax Acts") is a non-resident of the United Kingdom, holds
his Ordinary Shares as capital property and deals at arm’s length with the
Company.





Dividends





The UK
does not require any tax to be withheld from the payment of dividends to holders
of ordinary shares.





Disposition of Ordinary
Shares





The UK
does not impose any tax on investors disposing shares in a UK company, unless
those investors are either UK tax resident or operate through a UK permanent
establishment which holds the shares.





UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES


The
following is a discussion of material United States Federal income tax
consequences, under the law, generally applicable to a U.S. Holder (as defined
below) of ordinary shares of the Company. This discussion does not cover any
state, local or foreign tax consequences.





The
following discussion is based upon the sections of the Internal Revenue Code of
1986, as amended (“the Code”), Treasury Regulations, published Internal Revenue
Service (“IRS”) rulings, published administrative positions of the IRS and court
decisions that are currently applicable, any or all of which could be materially
and adversely changed, possible on a retroactive basis, at any time.  In
addition, the discussion does not consider the potential effects, both adverse
and beneficial, or recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time. The discussion is for
general information only and it is not intended to be, nor should it be
construed to be, legal or tax advice to any holder or prospective holder of
ordinary shares of the Company. Each holder and prospective holder of ordinary
shares of the Company is advised to consult their own tax advisors about the
federal, state, local, and foreign tax consequences of purchasing, owning and
disposing of ordinary shares of the Company applicable to their own particular
circumstances.





43


U.S.Holders





As used
herein, a “U.S. Holder” includes a holder of ordinary shares of the Company who
is a citizen or resident of the United States, a corporation created or
organized in or under the laws of the United States or of any political
subdivision thereof, an estate whose income is taxable in the United States
irrespective of source or a trust subject to the primary supervision of a court
within the United States and control of a United States fiduciary as described
in Section 7701(a)(30) of the Code. This summary does not address the tax
consequences to, and U.S. Holder does not include, persons subject to special
provisions of Federal income tax law, such as tax-exempt organizations,
qualified retirement plans, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a “functional
currency” other than the U.S. dollar, shareholders who hold ordinary shares as
part of a straddle, hedging or conversion transaction, and shareholders who
acquired their ordinary shares through the exercise of employee stock options or
otherwise as compensation for services. This summary is limited to U.S. Holders
who own ordinary shares as capital assets. This summary does not address the
consequences to a person or entity holding an interest in a shareholder or the
consequences to a person of the ownership, exercise or disposition of any
options, warrants or other rights to acquire ordinary shares.





Distribution on Ordinary
Shares of the Company


U.S.
Holders receiving dividend distributions (including constructive dividends) with
respect to ordinary shares of the Company are required to include in gross
income for United States Federal income tax purposes the gross amount of such
distributions equal to the U.S. dollar value of such distributions on the date
of receipt (based on the exchange rate on such date), to the extent that the
Company has current or accumulated earnings and profits, without reduction for
any U.K income tax withheld from such distributions.  Such U.K. tax
withheld may be credited, subject to certain limitations, against the U.S.
Holder’s United States Federal Income tax liability or, alternatively,
individuals may be deducted in computing the U.S. Holder’s United States Federal
taxable income by those individuals who itemize deductions.  (See more
detailed discussion at “Foreign Tax Credit” below).  To the extent that
distributions exceed current or accumulated earnings and profits of the Company,
they will be treated first as a return of capital up to the U.S. Holder’s
adjusted basis in the ordinary shares and thereafter as gain from the sale or
exchange of the ordinary shares. Dividend income will be taxed at marginal tax
rates applicable to ordinary income while preferential tax rates for long-term
capital gains are applicable to a U.S. Holder which is an individual, estate or
trust.  There are currently no preferential tax rates for long-term capital
gains for a U.S. Holder which is a corporation.





In the
case of foreign currency received as a dividend that is not converted by the
recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a
tax basis in the foreign currency equal to its U.S. dollar value on the date of
receipt. Generally any gain or loss recognized upon a subsequent sale of other
disposition of the foreign currency, including the exchange for U.S. dollars,
will be ordinary income or loss.





Dividends
paid on the ordinary shares of the Company will not generally be eligible for
the dividends received deduction provided to corporations receiving dividends
from certain United States corporations.  A U.S. Holder which is a
corporation may, under certain circumstances, be entitled to a 70% deduction of
the United States source portion of dividends received from the Company (unless
the Company qualifies as a “foreign personal holding company” or a “passive
foreign investment company”, as defined below) if such U.S. Holder owns shares
representing at least 10% of the voting power and value of the Company.
 The availability of this deduction is subject to several complex
limitations which are beyond the scope of this discussion.





Under
current Treasury Regulations, dividends paid on the Company’s ordinary shares,
if any, generally will not be subject to information reporting and generally
will not be subject to U.S. backup withholding tax. However, dividends and the
proceeds from a sale of the Company’s ordinary shares paid in the U.S. through a
U.S. or U.S. related paying agent (including a broker) will be subject to U.S.
information reporting requirements and may also be subject to the 31% U.S.
backup withholding tax, unless the paying agent is furnished with a duly
completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a refund or a credit against the U.S.
Holder’s U.S. federal income tax liability, provided the required information is
furnished to the IRS.





44


Foreign Tax
Credit


For
individuals whose entire income from sources outside the United States consists
of qualified passive income, the total amount of creditable foreign taxes paid
or accrued during the taxable year does not exceed $300 ($600 in the case of a
joint return) and an election is made under section 904(j), the limitation on
credit does not apply.





A U.S.
Holder who pays (or has withheld from distributions) U.K. income tax with
respect to the ownership of ordinary shares of the Company may be entitled, at
the option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld.  Generally, it will be more advantageous to
claim a credit because a credit reduces United States Federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income
subject to tax.  This election is made on a year-by-year basis and applies
to all foreign income taxes (or taxes in lieu of income tax) paid by (or
withheld from) the U.S. Holder during the year.  There are significant and
complex limitations which apply to the credit, among which is the general
limitation that the credit cannot exceed the proportionate share of the U.S.
Holder’s United States income tax liability that the U.S. Holder’s foreign
source income bears to his/her or its worldwide taxable income in the
determination of the application of this limitation. The various items of income
and deduction must be classified into foreign and domestic sources. Complex
rules govern this classification process.  In addition, this limitation is
calculated separately with respect to specific classes of income such as
“passive income”, “high withholding tax interest”, “financial services income”,
“shipping income”, and certain other classifications of income. Dividends
distributed by the Company will generally constitute “passive income” or, in the
case of certain U.S. Holders, “financial services income” for these purposes.
 The availability of the foreign tax credit and the application of the
limitations on the credit are fact specific and management urges holders and
prospective holders of ordinary shares of the Company to consult their own tax
advisors regarding their individual circumstances.





Disposition of Ordinary
Shares of the Company





A U.S.
Holder will recognize gain or loss upon the sale of ordinary shares of the
Company equal to the difference, if any, between (I) the amount of cash plus the
fair market value of any property received, and (ii) the shareholder’s tax basis
in the ordinary shares of the Company.  Preferential tax rates apply to
long-term capital gains of U.S. Holders, which are individuals, estates or
trusts. This gain or loss will be capital gain or loss if the ordinary shares
are capital assets in the hands of the U.S. Holder, which will be a short-term
or long-term capital gain or loss depending upon the holding period of the U.S.
Holder.  Gains and losses are netted and combined according to special
rules in arriving at the overall capital gain or loss for a particular tax year.
 Deductions for net capital losses are subject to significant limitations.
 For U.S. Holders, which are not corporations, any unused portion of such
net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted, but individuals may not carry back
capital losses. For U.S. Holders, which are corporations (other than
corporations subject to Subchapter S of the Code), an unused net capital loss
may be carried back three years from the loss year and carried forward five
years from the loss year to be offset against capital gains until such net
capital loss is thereby exhausted.





45


Other
Considerations





In the
following circumstances, the above sections of the discussion may not describe
the United States Federal income tax consequences resulting from the holding and
disposition of ordinary shares of the Company.








Foreign Personal Holding
Company





If at any
time during a taxable year more than 50% of the total combined voting power or
the total value of the Company’s outstanding shares is owned, actually or
constructively, by five or fewer individuals who are citizens or residents of
the United States and 60% (50% after the first tax year) or more of the
Company’s gross income for such year was derived from certain passive sources
(e.g. from interest income received from its subsidiaries), the Company would be
treated as a “foreign personal holding company.”  In that event, U.S.
Holders that hold ordinary shares of the Company would be required to include in
gross income for such year their allocable portions of such passive income to
the extent the Company does not actually distribute such income.





The
Company does not believe that it currently has the status of a “foreign personal
holding company”. However, there can be no assurance that the Company will not
be considered a foreign personal holding company for the current or any future
taxable year.





Foreign Investment
Company





If 50% or
more of the combined voting power or total value of the Company’s outstanding
shares are held, actually or constructively, by citizens or residents of the
United States, United States domestic partnerships or corporations, or estates
or trusts other than foreign estates or trusts (as defined by the Code Section
7701(a)(31), and the Company is found to be engaged primarily in the business of
investing, reinvesting, or trading in securities, commodities, or any interest
therein, it is possible that the Company might be treated as a “foreign
investment company” as defined in Section 1246 of the Code, causing all or part
of any gain realized by a U.S. Holder selling or exchanging ordinary shares of
the Company to be treated as ordinary income rather than capital
gains.





Passive Foreign Investment
Company





As a
foreign corporation with U.S. Holders, the Company could potentially be treated
as a passive foreign investment company (“PFIC”), as defined in Section 1297 of
the Code, depending upon the percentage of the Company’s income which is
passive, or the percentage of the Company’s assets which is held for the purpose
of producing passive income.





Certain
United States income tax legislation contains rules governing PFICs, which can
have significant tax effects on U.S. shareholders of foreign corporations.
 These rules do not apply to non-U.S. shareholders.  Section 1297 (a)
of the Code defines a PFIC as a corporation that is not formed in the United
States and, for any taxable year, either (I) 75% or more of its gross income is
“passive income”, which includes interest, dividends and certain rents and
royalties or (ii) the average percentage, by fair market value (or, if the
company is a controlled foreign corporation or makes an election, by adjusted
tax basis), of its assets that produce or are held for the production of
“passive income” is 50% or more.  The taxation of a US shareholder who owns
stock in a PFIC is extremely complex and is therefore beyond the scope of this
discussion.  Management urges US persons to consult with their own tax
advisors with regards to the impact of these rules.





Controlled Foreign
Corporation





A
Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of
whose stock by vote or value is, on any day in the corporation’s tax year, owned
(directly or indirectly) by U.S. Shareholders. If more than 50% of the voting
power of all classes of stock entitled to vote is owned, actually or
constructively, by citizens or residents of the United States, United States
domestic partnerships and corporations or estates or trusts other than foreign
estates or trusts, each of whom own actually or constructively 10% or more of
the total combined voting power of all classes of stock of the Company could be
treated as a “controlled foreign corporation” under Subpart F of the Code.
 This classification would affect many complex results, one of which is the
inclusion of certain income of a CFC, which is subject to current U.S. tax. The
United States generally taxes United States Shareholders of a CFC currently on
its pro rata shares of the Subpart F income of the CFC. Such United States
Shareholders are generally treated as having received a current distribution out
of the CFC’s Subpart F income and are also subject to current U.S. tax on its
pro rata shares of the CFC’s earnings invested in U.S. property. The foreign tax
credit described above may reduce the U.S. tax on these amounts. In addition,
under Section 1248 of the Code, gain from the sale or exchange of shares by a
U.S. Holder of ordinary shares of the Corporation which is or was a United
States Shareholder at any time during the five-year period ending with the sale
or exchange is treated as ordinary income to the extent of earnings and profits
of the Company (accumulated in corporate tax years beginning after 1962, but
only while the shares were held and while the Company was “controlled”)
attributable to the shares sold or exchanged. If a foreign corporation is both a
PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC
with respect to the United States Shareholders of the CFC. This rule generally
will be effective for taxable years of United States Shareholders beginning
after 1997 and for taxable years of foreign corporations ending with or within
such taxable years of United States Shareholders. The PFIC provisions continue
to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders
that are less than 10% shareholders. Because of the complexity of Subpart F, a
more detailed review of these rules is outside of the scope of this
discussion.





The
amount of any backup withholding will not constitute additional tax and will be
allowed as a credit against the U.S. Holder’s federal income tax
liability.





46


Filing of
Information Returns.  Under a number of circumstances, United States
Investor acquiring shares of the Company may be required to file an information
return with the Internal Revenue Service Center where they are
required to file their tax returns with a duplicate copy to the
Internal Revenue Service Center, Philadelphia, PA 19255. In
particular, any United States Investor who becomes the owner, directly or
indirectly, of 10% or more of the shares of the Company will be required to file
such a return. Other filing requirements may apply, and management urges United
States Investors to consult their own tax advisors concerning these
requirements.





10.G.  Statement by
Experts


The
Company relied upon the financial statements audited by MRI Moores Rowland LLP,
as experts in accounting, in the preparation of this document.  The
Company's financial statements are referred to throughout the registration
statement, incorporated in Item 17, and attached immediately following the
registration statement as exhibits.  MRI Moores Rowland LLP consented
to the inclusion of the financial statements it audited.  MRI Moores
Rowland LLP is a member of the Institute of Charted Accountants of England and
Wales.  MRI Moores Rowland LLP's address is: 3 Sheldon Square,
Paddington, London W2 6PS United Kingdom.





10.H.  Document on
Display


--  NA
--





10.I.  Subsidiary
Information


-- No
disclosure required --





ITEM
11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK


The
Company believes no disclosures regarding market risk are required because the
Company owns no market risk sensitive investments.  The Company does
enter into license agreements often denominated in dollars and its financial
statements are calculated in British pounds sterling, which may result in
variations in the value of dollar denominated license agreements.  See
Table 4 for recent movements in the dollar/pound sterling exchange
rate.  The Company adjusts its licensing requests to reflect currency
exchange in the various foreign territories in which it licenses distribution
rights.





ITEM 12.
 DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES


12.A.  Debt
Securities
           --- No
Disclosure Necessary ---


12.B.  Warrants and
Rights        --- No Disclosure
Necessary ---


12.C.  Other
Securities
          --- No Disclosure
Necessary ---


12.D.  American
Depository Shares  -- No Disclosure Necessary ---





47


PART
II





ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES


--- No
Disclosure Necessary ---





ITEM 14.  MATERIALMODIFICATIONS TO THE RIGHTS OF
SECURITY


HOLDERS
AND USE OF PROCEEDS


--- No
Disclosure Necessary ---








ITEM 15.  CONTROLSAND PROCEDURES


---Not
Applicable---





ITEM 16.  RESERVED





ITEM 16A. AUDITCOMMITTEE FINANCIAL EXPERT


ITEM 16B. CODEOF ETHICS


ITEM 16C. PRINCIPALACCOUNTING FEES AND
SERVICES


ITEM 16D. EXEMPTIONSFROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES


ITEM 16E. PURCHASESOF EQUITY SECURITIES BY SEVEN ARTS/AFFILIATED
PURCHASERS


---Not
Applicable---





PART
III





ITEM 17.  FINANCIALSTATEMENTS


The
financial statements as required under Item No. 17 are attached hereto and found
immediately following the text of this Registration Statement.  The audit
report of Mazars LLP, Independent Chartered Accountants, is included herein
immediately preceding the audited financial statements.





ITEM 18.  FINANCIALSTATEMENTS


Seven
Arts has elected to provide financial statements pursuant to Item No.
17.





ITEM 19.  EXHIBITS


1.
      Memorandum of Incorporation*2.
      By-Laws and Board Memorandum (See exhibit No. 1)*3.
      Employment Agreement for Peter Hoffman*4.
      Langley Debenture Agreement*5.
      Armadillo Preferred Share Agreement*7.
      $8,300,000 Arrowhead Loan Agreement*8.
      $7,500,000 Cheyne Loan Agreement*9.
      Calculation of earnings per share*10.  Explanation
      of calculation of ratios – (Included in exhibit No. 9)*11.  List
      of Subsidiaries (See table 7 at item  No. 4C.
      above)*
              12.  Unique
      Stock Purchase Agreement*
              13.  Credit
      Agreement with Advantage Capital Community development Fund,
      L.L.C.*
              14.  Accountant's
      Consent Letter from Mazars LLP
              15.  Trafalgar
      Capital Specialized Investment Fund Agreements
              16.  Cheyne
      Loan Repurchase Agreement
              
              *previously
      filed


SIGNATURES





The
registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign
this registration statement on its behalf.





Seven Arts Pictures PLC





/s/ Peter Hoffman


________________________


Name: Peter Hoffman


Title:   Chief
Executive Officer













































































Form
20-FR/A
 Redlined
March 25,
2008
 48