SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURUSANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

                   For The Fiscal Year Ended December 31, 2002

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

                         Commission File Number 0-25308

                             FIRST LOOK MEDIA, INC.
             (Exact name of Registrant as specified in its charter)

         Delaware                                13-3751702
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or  organization)


    8000 Sunset Blvd., Penthouse East,
         Los Angeles, CA                                 90046
(Address of principal executive offices)               (zip code)

       Registrant's telephone number, including area code: (323) 337-1000

        Securities Registered Pursuant to Section 12(b) of the Act: None

           Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.001 per share
                                (title of class)

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

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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes / / No /X/

<PAGE>

     As of June  28,  2002  (the  last  business  day of the  registrant's  most
recently  completed  second fiscal  quarter),  the aggregate market value of the
voting and  non-voting  common equity held by  non-affiliates  of the registrant
(based on the closing  sale price on such date as  reported on the OTC  Bulletin
Board) was $4,118,372.

     The number of shares of common stock  outstanding  as of April 11, 2003 was
14,539,573.

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<PAGE>


                                     PART I

ITEM 1.  BUSINESS

General

     First  Look  Media,   Inc.   specializes  in  the  acquisition  and  direct
distribution  of, and  worldwide  license  and sale of  distribution  rights to,
independently  produced feature films in a wide variety of genres.  These genres
include:

     o action;
     o art-house;
     o comedy;
     o drama;
     o foreign  language;
     o science fiction; and
     o thrillers.

We have  accumulated a library of  distribution  rights,  including sales agency
rights, in various media and markets to more than 330 feature films.

We operate in numerous capacities, including as:


     o    a distributor  or a sales agent.  We are appointed as a distributor or
          sales agent with respect to distribution rights to films for specified
          terms,  territories  and media  from  independent  producers.  In this
          capacity,  we receive  distribution  or sales agency fees. In exchange
          for being  appointed as distributor  or sales agent,  we may assist in
          securing  production  financing  for a film  (including  arranging  or
          assisting others in arranging pre-sales, co-productions,  "soft" money
          sources such as governmental  subsidies or tax motivated  investments,
          bank loans  including  "gap"  financing  or third  party  equity).  In
          addition,  we occasionally  commit to pay the  independent  producer a
          minimum  guaranteed  payment  ranging from  approximately  $100,000 to
          $5,000,000 at or after delivery of the completed  film.  These minimum
          guaranteed   payments   represent   varying  portions  of  the  films'
          production costs,  including,  on occasion,  substantially all of such
          costs.  These minimum  guaranteed  payments may enable the independent
          producer to obtain  financing for the  production or completion of the
          film.  By providing  these  financing  services or minimum  guaranteed
          payments,  we are often  able to secure  more  extensive  distribution
          rights on more favorable terms. We also distribute  pictures  directly
          in the United States both theatrically through our First Look Pictures
          division   and  on  video  and  DVD   through   our  First  Look  Home
          Entertainment division.

     o    a producer. We selectively produce motion pictures that we distribute,
          generally  acquiring fully developed projects ready for pre-production
          and contracting out pre-production and production activities.

     Historically,   we  have  focused  on  licensing  theatrical,   video,  pay
television, free television,  satellite and other distribution rights to foreign
sub-distributors   in  major  international   territories  and  regions.   These
activities  accounted  for  approximately  46.2%,  53.4%  and 66.3% of our total
revenues in 2002, 2001 and 2000, respectively.

     Recently,  we have become more active with  distribution  activities in the
U.S. where we engage directly in domestic  theatrical  distribution  through our
First Look Pictures division and domestic video and DVD distribution through our
First Look Home Entertainment  division. Our theatrical  distribution activities
include  booking motion  pictures for exhibition at movie theaters and promoting
motion pictures with advertising and publicity campaigns. Our home entertainment
distribution activities include the promotion and sale of videocassettes and DVD
units to local, regional and national video/DVD retailers.

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<PAGE>

     In 2001,  we launched a television  commercial  production  division  which
generated  $1,158,000 of gross revenue in 2002 and $263,000 in 2001. Although we
produced four  commercials  during 2002 and 2001, we ultimately  determined that
the general  economic  environment  was too difficult to sustain this  division.
Accordingly,  in the third  quarter of 2002,  we  eliminated  substantially  all
overhead related to this division.  In the future,  if we produce any television
commercials,  we will likely use a company  partially  owned by  Christopher  J.
Cooney,  our co-chairman and chief executive  officer,  and Jeffrey Cooney,  our
executive vice president and a director,  to provide all support services needed
in exchange for a fee.

Corporate Information

     Our company was  incorporated  in Delaware in December  1993 under the name
"Entertainment/Media  Acquisition  Corporation" in order to acquire an operating
business in the  entertainment  and media  industry.  We consummated our initial
public  offering in February  1995, and in October 1996, we merged with Overseas
Filmgroup, Inc., a privately-held Delaware corporation ("Overseas Private") that
had  been  operating   since  February  1980.  Our  company  was  the  surviving
corporation in the merger.  Upon consummation of the merger, we changed our name
to "Overseas  Filmgroup,  Inc." We operated under the name "Overseas  Filmgroup,
Inc." until  January  2001.  In January 2001, we changed our name to "First Look
Media, Inc." in order to reflect the broadening of our operations beyond foreign
distribution of independently produced feature films to additional areas such as
theatrical and video distribution in the United States and television commercial
production.

     Our  principal  executive  offices are  located at 8000  Sunset  Boulevard,
Penthouse East, Los Angeles, California 90046, and our telephone number is (323)
337-1000.

Recent Developments

Current Business Environment, Film Performance, Overhead Levels

     Over the past year,  we have felt the  significant  impact of the worldwide
economic  downturn.  Specifically,  reduced  advertising  spending  has impacted
broadcasters and has resulted in various  bankruptcies  (especially in Germany),
reduced program  spending,  consolidation  and  uncertainty.  Additionally,  the
tragedy  of  September  11th,  along  with the war with  Iraq,  has  created  an
atmosphere of reduced activity. Until recently, much of our product,  consisting
of lower budget feature films which typically do not have significant theatrical
distribution,  has been  supported  by the  worldwide  expansion  of  television
broadcasters  and  their  programming  needs.  Current  market  conditions  have
softened  demand for our product.  The "reality"  programming  trend further has
impacted  the  market  for  lower  budget  feature  films as  broadcasters  have
gravitated to this lower cost form of programming.  Additionally,  certain films
we have chosen to produce,  invest in or acquire have not  performed  well. As a
result,  these films have generated little margin or have incurred losses,  some
of which have been  significant.  We also have  continued to maintain a level of
overhead  that  anticipated  better  performance  in our  sales,  licensing  and
distribution activities.  Consequently, this performance level has not generated
sufficient  margin to cover  overhead  costs.  Offsetting  these  trends to some
extent has been the growth of the DVD market;  however, this growth has not been
sufficient to offset lost revenue.  As a result, we have reported  significantly
less revenue  compared to last year, have incurred  losses and have  experienced
increased  bad debts.  In light of our  situation,  we have been  analyzing  our
current  business plan,  our  alternatives  and the need for further  capital to
implement an updated business plan.

     Credit Agreement

     The recent  operating  losses and negative  cash flow we have  experienced,
along with the general  market  conditions  for our  business,  have resulted in
ongoing review and  discussions  with our primary lender,  JPMorgan  Securities,
Inc.  ("JPMorgan") and participating  banks in our credit facility.  In February
2003,  JPMorgan  requested  that we  voluntarily  reduce the amount  that we are
permitted to borrow under our credit  facility in relation to our library value.
The credit  agreement  initially  provided  that we could  borrow up to 50% (the
"advance  rate") of the  valuation of our library,  conducted by an  independent
third party approved by JPMorgan.  JPMorgan  requested that this advance rate be
reduced by 5% (to 45%) as of April 1, 2003, an additional 5% (to 40%) as of July
1, 2003,  and a final 5% (to 35%) as of October 1, 2003.  In February  2003,  we
agreed to these reductions,  which are reflected in our amended credit agreement
included as an exhibit to this report.

                                       4
<PAGE>

     As of December 31, 2002, our cumulative  losses resulted in a breach of the
covenant  contained  in the credit  agreement  with  JPMorgan  that sets forth a
minimum level of net worth that we are required to maintain. We have requested a
waiver of this breach.  JPMorgan currently is considering our request and we are
in negotiation  with respect to further  modifications  JPMorgan will require to
the credit  agreement in exchange for such waiver.  At this point,  JPMorgan has
indicated that these modifications will likely include an immediate reduction of
the   commitment   level  under  the  credit   agreement  from  $40  million  to
approximately  $20 million,  with further  reductions so that by January 1, 2004
the  commitment  level will be $15  million.  The minimum net worth  requirement
would be waived until December 31, 2003,  subject to our  maintaining a positive
net worth as calculated  pursuant to Generally  Accepted  Accounting  Principles
("GAAP").  These modifications  require the agreement of 51% of the voting right
of  the  participating  banks  (the  percentage  based  upon  the  proportionate
commitment  of  each  bank  to  the  total  commitment  of $40  million).  Final
resolution  of this  matter is expected by April 30,  2003.  Until then,  we are
precluded from drawing further funds under the credit facility.

Strategic Objectives

     We have sought to become a leading independent  worldwide film distribution
company.  We have  aggregated  a library  of over 330 motion  pictures  and have
developed the capacity to:

     o    license motion picture rights worldwide;

     o    arrange  production  financing  through  a wide  variety  of  sources,
          including international "soft" money sources such as German tax funds,
          UK tax  funds and  similar  funding  sources,  "gap"  financing  (bank
          financing where the bank providing  financing lends against  estimated
          value of unsold distribution rights),  pre-sales (sales of territorial
          distribution rights in advance of a film being produced),  third party
          equity, and other sources;

     o    distribute films theatrically in the U.S.; and

     o    distribute films on video and DVD in the U.S.

     Historically,  most of the films we have  acquired  have had lower  budgets
(between  $1,000,000 and  $8,000,000) and have had limited,  if any,  theatrical
distribution.  During the 1980s,  much of the demand for lower  budget films was
fueled by the creation and growth of a home video marketplace. During the 1990s,
the video  marketplace  matured and the value of video rights  declined.  At the
same time, there was an expansion of television  broadcast  channels  (including
premium and basic  cable  service  channels)  worldwide.  Internationally,  this
expansion was the result of "privatization" of broadcasters,  whereby government
owned and controlled broadcasting was diminished and free enterprise resulted in
an  expanding  market.  This  expansion  supported  lower budget films which had
little, if any, theatrical distribution.  Most recently,  television values have
softened and,  although the DVD market has created some revenue growth,  reduced
revenues from  television  broadcasters  throughout  the world have impacted our
performance  significantly.  These shifts in the  marketplace  have forced us to
review our past  operating  strategy  and  develop an  updated  strategy,  which
includes:

     Drawing upon our  reputation,  experience  and  relationships  with foreign
sources  to provide  sales  services  and  financing  for an altered  profile of
product.  We believe  that we enjoy a prominent  position  in the  international
independent  film  marketplace.  In the past, we have utilized our expertise and
relationships  to  access  various  forms  of  financing  for  the  creation  of
relatively  low budget  feature  films.  We believe we need to capitalize on our
reputation,   expertise  and  relationships  for  films  that  have  significant
theatrical distribution,  generally through third party distributors rather than
through  our own  distribution  division,  First Look  Pictures.  Our  preferred
situation will be where a major U.S. studio is handling the U.S. distribution of
the film.  This will  require us to refocus our  sourcing of product and develop
new relationships.

     Reducing our risk by limiting our direct  investment in  acquisition  costs
and film  production.  In light of our  difficulties,  we  recently  reduced our
direct  investment in films.  We generally  believe that an  investment  between

                                       5

<PAGE>

$50,000  and  $200,000  per film will be  necessary  to  continue a pipeline  of
product for our home entertainment division.  Additionally, we believe there may
be situations that will require  limited  investment of up to $250,000 to secure
rights  to a  particular  film  for our  core  operation,  international  sales.
Overall,  we expect to reduce our level of investment  dramatically  and to rely
instead on providing  sales agency  services for films produced with third party
sources of  production  funding.  Additionally,  we plan to assist third parties
with securing  financing  through third party sources for films having  domestic
theatrical  distribution through a U.S.  distribution company other than our own
and preferably a U.S. major studio.

     Expanding  our home  entertainment  division.  In 2001,  we  created a home
entertainment  division  called "First Look Home  Entertainment."  This division
directly distributes films on videocassette and DVD. We released 17 films in the
U.S.  video/DVD  market  during 2001 and 28 films in 2002. We plan to release at
least 30 films in the U.S.  video/DVD market in 2003. This operating division is
generating  positive gross margin with low risk acquisition and marketing costs.
In the past year, this division  generated  approximately  $7.6 million in gross
revenues.  We believe  there is  opportunity  to further  expand this  division.
Currently,  many of the films we release  through First Look Home  Entertainment
have had no theatrical exposure.  Additionally, most of our releases are feature
films.  We believe that we can expand our revenues if we are able to  distribute
more films that have had some level of theatrical  distribution  in the U.S. and
also distribute other specialized product more suitable for purchase rather than
rental, such as children's programming and other niche programming.

     Expanding our domestic theatrical distribution activities.  During 2002, we
released three films, with minimal success. However, we continue to believe that
there is significant opportunity in the U.S. theatrical distribution market. Our
strategy has been to create a separate  funding  source (a "P & A Fund") for the
marketing and distribution costs associated with the U.S.  theatrical release of
films.  In  connection  with the June 2002  private  placement  with Seven Hills
Pictures,  LLC ("Seven Hills"), we established a joint venture company,  with an
initial $4 million of equity  capital,  for  purposes of funding  marketing  and
distribution costs of certain pictures to be released  theatrically either by us
or Seven Hills. We have had discussions  with Seven Hills regarding our interest
in seeking  additional equity and debt capital from other sources to enhance the
capacity  and ability of this joint  venture.  Once we expand the P&A Fund,  our
strategy for  theatrically  releasing  films will be to: (i) acquire  films with
little or no upfront payment for the U.S.  distribution rights and instead offer
meaningful (up to $1,000,000)  commitments to spend  marketing and  distribution
funds  related to the  release of the given film and (ii)  release  eight to ten
films per year.  Until we conclude  additional  equity and/or debt  arrangements
with respect to the P & A Fund, we will continue to release films with resources
that we provide.

The Motion Picture Industry

     Generally

     The motion picture industry consists of two principal activities:

     o    production, which encompasses the creation,  development and financing
          of motion pictures; and

     o    distribution,   which  involves  the  promotion  and  exploitation  of
          feature-length  motion  pictures  in a  variety  of  media,  including
          theatrical  exhibition,  home video,  television  and other  ancillary
          markets, both domestically and internationally.

     The  United  States  motion  picture  industry  is  dominated  by the major
studios,  including The Walt Disney  Company,  Paramount  Pictures  Corporation,
Warner Brothers Inc.,  Universal Pictures,  Twentieth Century Fox, Sony Pictures
Entertainment,  and MGM/UA. The major studios,  which historically have produced
and distributed the vast majority of  high-grossing  theatrical  motion pictures
released  annually  in the  United  States,  are  typically  large,  diversified
corporations  that have strong  relationships  with creative talent,  television
broadcasters and channels,  Internet service providers, movie theater owners and
others involved in the entertainment  industry. The major studios also typically
have  extensive  national  or  worldwide  distribution   organizations  and  own
extensive motion picture libraries.

         Motion picture libraries, consisting of motion picture copyrights and
distribution rights owned or controlled by a film company, can be valuable
assets capable of generating revenues from worldwide commercial exploitation in

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<PAGE>

existing media and markets, and potentially in future media and markets
resulting from new technologies and applications. The major studios also may own
or be affiliated with companies that own other entertainment related assets such
as music and merchandising operations and theme parks. The major studios' motion
picture libraries and other entertainment assets may provide a stable source of
earnings which can offset the variations in the financial performance of their
new motion picture releases and other aspects of their motion picture
operations.

     During  the  past  15  years,   independent   production  and  distribution
companies,  many with financial and other ties to the major studios, have played
an important role in the production and  distribution of motion pictures for the
worldwide feature film market. These companies include:

     o    Miramax Films Corporation, now owned by The Walt Disney Company, which
          produced  Chicago,  The Hours,  Gangs of New York,  Scary  Movie,  the
          Scream film series, Shakespeare in Love and Chocolat;

     o    New Line Cinema  Corporation/Fine Line Features, now owned by AOL/Time
          Warner, which produced the Lord of the Rings series, the Austin Powers
          films, The Mask, Teenage Mutant Ninja Turtles and the Nightmare on Elm
          Street series;

     o    USA Films (formerly October Films and now owned by Vivendi/Universal),
          which produced Traffic, Secrets & Lies and Breaking the Waves together
          with Gramercy Pictures,  which produced Dead Man Walking and Fargo, is
          part of USA Films and USA Network;

     o    Artisan  Entertainment  Inc., which  distributed  Boat Trip,  National
          Lampoon's Van Wilder and The Blair Witch Project; and

     o    Lion's Gate Films,  which  produced  and  distributed  Narc,  Frailty,
          Monster's Ball and American Psycho.

     As a result of  consolidation  in the domestic motion picture  industry,  a
number of previously  independent  producers and distributors have been acquired
or are otherwise affiliated with major studios.  However, there are also a large
number  of  other  production  and  distribution   companies  that  produce  and
distribute motion pictures that have not been acquired or become affiliated with
the major studios. In contrast to the major studios,  independent production and
distribution  companies  generally  produce and distribute fewer motion pictures
and  do  not  own  production  studios,   national  or  worldwide   distribution
organizations,  associated  businesses  or extensive  film  libraries  which can
generate gross revenues sufficient to offset overhead,  service debt or generate
significant cash flow.

     The motion picture  industry is a world-wide  industry.  In addition to the
production and  distribution  of motion  pictures in the United  States,  motion
picture  distributors  generate  substantial  revenues from the  exploitation of
motion pictures  internationally.  In recent years, there has been a substantial
increase in the amount of filmed entertainment  revenue generated by U.S. motion
picture  distributors  from foreign  sources.  International  revenues of motion
picture  distributors from filmed  entertainment  grew from  approximately  $1.1
billion in 1990 to approximately  $2.6 billion in 2000. This growth has been due
to a number of factors, including the general worldwide acceptance of and demand
for motion pictures  produced in the United States,  the  privatization  of many
foreign television  industries,  growth in the number of foreign households with
videocassette players and growth in the number of foreign theater screens.

     Many countries and territories,  such as Australia,  Canada, China, France,
Germany,  Hong Kong, India, Italy, Japan,  Russia,  Spain and the United Kingdom
have  substantial  indigenous  film  industries.  As in the United States,  in a
number  of  these  countries  the  film  industry,   and  in  some  cases,   the
entertainment  industry, in general, is dominated by a small number of companies
that maintain  large and  diversified  production and  distribution  operations.
However,  like in the United States, in most of these countries,  there are also
smaller,  independent,  motion picture  production and  distribution  companies.
Foreign  distribution  companies not only distribute motion pictures produced in
their countries or regions but also films licensed or  sub-licensed  from United
States  production  companies and distributors.  In addition,  film companies in
many foreign countries produce films not only for local  distribution,  but also
for export to other countries,  including the United States.  While some foreign
language  films  and  foreign  English-language  films  appeal  to a  wide  U.S.
audience,  most foreign  language  films  distributed  in the United  States are
released on a limited basis because they draw a specialized audience.

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<PAGE>


     Motion Picture Production

     Motion  picture  production  begins  with the  screenplay  adaptation  of a
popular novel or other literary work acquired by the producer or the development
of an  original  screenplay  having  its  genesis  in a story  line or  scenario
conceived by a writer and acquired by the producer.  In the  development  phase,
the producer typically seeks production financing and tentative commitments from
a director,  the principal cast members and other creative personnel. A proposed
production   schedule   and  budget  also  are   prepared   during  this  phase.
Pre-production  begins upon  completing the  screenplay and arranging  financing
commitments. In this phase, the producer:

     o    engages creative personnel to the extent not previously committed;

     o    finalizes  the  filming  schedule  and  production   budget;   obtains
          insurance and secures completion guaranties, if necessary; establishes
          filming  locations and secures any  necessary  studio  facilities  and
          stages; and

     o    prepares for the start of actual filming.

     Principal  photography,  which is the  actual  filming  of the  screenplay,
generally  extends  from eight to sixteen  weeks for a film  produced by a major
studio and for as little as four to eight  weeks for low budget  films and films
produced by independent  production companies.  The length of filming depends in
each case upon  factors  such as budget,  location,  weather  and  complications
inherent in the screenplay.  Following completion of principal photography,  the
film enters the post-production  phase. During this phase, the motion picture is
edited, opticals,  dialogue, music and any special effects are added, and voice,
effects and music sound tracks and pictures  are  synchronized.  This results in
the production of a negative from which release prints of the motion picture are
made.

     Production costs consist primarily of:

     o    acquiring or developing the screenplay;

     o    compensating creative and other production personnel;

     o    film studio and location rentals;

     o    equipment rentals;

     o    film stock and other costs incurred in principal photography; and

     o    post-production  costs,  including the creation of special effects and
          music.

     Distribution expenses,  which consist primarily of the costs of advertising
and preparing  release prints,  are not included in direct production costs. The
major studios generally fund production costs from cash flow generated by motion
pictures and related activities or, in some cases, from unrelated  businesses or
through  off-balance  sheet  methods.  Substantial  overhead  costs,  consisting
largely of  salaries  and related  costs of the  production  staff and  physical
facilities  maintained by the major  studios,  also must be funded.  Independent
production  companies generally avoid incurring overhead costs as substantial as
those  incurred by the major  studios by hiring  creative  and other  production
personnel  and  retaining  the  other  elements  required  for   pre-production,
principal  photography and  post-production  activities on a  picture-by-picture
basis.  As a  result,  these  companies  do not own  sound  stages  and  related
production facilities,  and, accordingly, do not have the fixed payroll, general
administrative  and other  expenses  resulting from ownership and operation of a
studio.  Independent  production  companies  also may finance  their  production
activities  on a  picture-by-picture  basis.  Sources  of funds for  independent
production  companies include bank loans,  pre-licensing of distribution rights,
foreign government subsidies,  equity offerings and joint ventures.  Independent
production companies generally attempt to obtain all or a substantial portion of
their  financing  of  a  motion  picture  prior  to  commencement  of  principal
photography,  at which point  substantial  production costs begin to be incurred
and require payment.

     As part of obtaining  financing for its films,  an  independent  production
company often is required by its lenders and distributors who advance production
funds to obtain a completion  bond or production  completion  insurance  from an
acceptable   completion   guarantor  which  names  the  lenders  and  applicable
distributors  as  beneficiaries.  The  guarantor  assures the  completion of the
particular  motion  picture on a certain date. If the motion  picture  cannot be
completed  for the agreed  upon  budgeted  cost,  the  completion  guarantor  is
obligated to pay the additional  costs  necessary to complete the picture by the
agreed upon delivery date. If the completion  guarantor fails to timely complete
and deliver the motion  picture on or before the agreed upon delivery  date, the
completion  guarantor  is  required  to pay  the  lenders  and  distributor,  if
applicable,  an amount equal to the aggregate amount the lenders and distributor
have loaned or advanced to the independent producer.

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<PAGE>

     In connection  with the production and  distribution  of a motion  picture,
major studios and independent  production  companies generally grant contractual
rights to actors, directors,  screenwriters, owners of rights and other creative
and financial  contributors  to share in net revenues  from a particular  motion
picture.   Except  for  the  most   sought-after   talent,   these   third-party
participations  are generally  payable after all  distribution  fees,  marketing
expenses, direct production costs and financing costs are recovered in full.

     Major studios and independent film companies in the United States typically
incur  obligations to pay residuals to various  guilds and unions  including the
Screen  Actors Guild,  the  Directors  Guild of America and the Writers Guild of
America.  Residuals  are  payments  required to be made on a  picture-by-picture
basis by the motion  picture  producer to the various  guilds and unions arising
from the  exploitation  of a motion  picture in markets  other than the  primary
intended market.  Residuals are calculated as a percentage of the gross revenues
derived from the  exploitation  of the picture in these ancillary  markets.  The
guilds and unions typically obtain a security  interest in all of the producer's
rights in the motion  picture  being  exploited  to ensure  satisfaction  of the
residuals  obligation.  This security  interest  usually is  subordinate  to the
security  interest of the lenders  financing the  production  cost of the motion
picture and the completion  bond company  guaranteeing  completion of the motion
picture.  Under a producer's  agreement with the guilds and unions, the producer
may  transfer  the  obligation  to pay the  residuals  to a  distributor  if the
distributor  assumes  the  obligation  to  make  the  residual  payment.  If the
distributor does not assume those obligations,  the producer is obligated to pay
those residuals.

     Motion Picture Distribution

     General

     Motion picture distribution  involves domestic and international  licensing
of the picture for:

     o    theatrical exhibition;

     o    videocassettes and digital video discs (DVD);

     o    presentation on television,  including pay-per-view, basic and premium
          cable, network, syndication or satellite;

     o    marketing of the other rights in the picture and  underlying  literary
          property,  which may include books,  merchandising and soundtracks;

     o    non-theatrical  exhibition,  which includes airlines, hotels and armed
          forces facilities; and

     o    exploitation via the Internet, which is still evolving.

     Although  releases by the major  studios  typically  are licensed and fully
exploited  in all of the  foregoing  media,  films  produced or  distributed  by
independent  film  companies  are often not  exploited in all of the media.  For
example,  some films may not receive theatrical  exhibition in the United States
or various other  territories and instead may be released directly on home video
or as a pay  television  premiere or  otherwise  exploited  on a pay  television
service. In limited circumstances, these films may then be released in theaters.

     Production companies with distribution divisions typically distribute their
motion pictures themselves.  Production companies without distribution divisions
may retain the  services of sales agents or  distributors  to exploit the motion
pictures produced by them in selected or all media and territories. Distribution
companies may directly  exploit  distribution  rights  licensed to, or otherwise
acquired,  by them by booking  motion  pictures  with movie  theaters or selling
videocassettes to video retailers. Alternatively, they may grant sub-licenses to
domestic or foreign  sub-distributors  to exploit  completed  motion pictures in
particular territories or media.

                                       9
<PAGE>


     Acquisition of distribution rights
     ----------------------------------

     A sales  agent does not  generally  acquire  distribution  rights  from the
producer or other owner of rights in the motion picture.  Instead, he acts as an
agent for the producer or rights  owner,  licensing the  distribution  rights to
distributors  on behalf of the  producer or rights owner in exchange for a sales
agency fee.  This fee  typically is computed as a percentage  of gross  revenues
from licenses obtained by the sales agent. A distributor  generally licenses and
takes a grant of distribution  rights from the producer or other rights owner of
the motion picture for a specified term in a particular territory or territories
and  media,  generally  in  exchange  for a  distribution  fee  calculated  as a
percentage of gross revenues  generated by the  distribution  of exploitation of
the motion picture.  The distributor may agree to pay the producer of the motion
picture an advance or a minimum  guarantee  upon the  delivery of the  completed
motion picture. This amount is to be recouped by the distributor out of revenues
generated from the  exploitation  of the motion  picture in particular  media or
territories.  After  receiving  its ongoing  distribution  fee and recouping the
advance  or minimum  guarantee  plus its  distribution  costs,  the  distributor
generally  pays the  remainder of revenues in excess of an ongoing  distribution
fee to the producer of the motion picture.

     Obtaining  license  agreements with a distributor or distributors  prior to
completion of a motion picture which provide for payment of a minimum  guarantee
is often referred to as the  pre-licensing  or pre-selling of film rights.  This
pre-selling may enable the producer to obtain financing for its project by using
the  contractual  commitment  of the  distributor  to pay the advance or minimum
guarantee as collateral to borrow production funding.  In the past,  pre-selling
of film rights  provided a means for financing  film  production.  However,  the
ability to pre-sell film rights in various  territories and media, the amount of
pre-sales  that can be obtained in certain  territories  and media and thus, the
percentage of a film's budget that can be covered with pre-sales, fluctuates. In
recent  years,  independent  film  companies  generally  have not  been  able to
pre-sell as great a percentage of a film's budget as they have in past years.

     The  producer  also  may be able to  acquire  additional  production  funds
through gap financing.  Although gap financing currently is being made available
by multiple lenders, certain banks have ceased providing this type of financing,
and many banks that provide gap  financing  are becoming  more  conservative  in
their  approach  to  these  lending  practices.  As a  result,  there  can be no
assurance that lenders will continue to make funds  available on this basis.  In
some circumstances,  the distributor is entitled to recover any unrecouped costs
and advances  from a film  licensed to the  distributor  from the revenues  from
another film or films also licensed to the  distributor.  This is commonly known
as cross collateralizing.

     In  addition to  obtaining  distribution  rights in a motion  picture for a
limited  duration,  a  distributor  also may  acquire  all or a  portion  of the
copyright  in the  motion  picture  or license  certain  distribution  rights in
perpetuity.  Both major studios and  independent  film  companies  often acquire
motion pictures for distribution  through a customary industry arrangement known
as a negative pickup,  under which the studio or independent film company agrees
to pay a specified minimum guaranteed amount to a production company in exchange
for all rights to the film upon  completion  of  production  and delivery of the
film. The production company normally finances  production of the motion picture
pursuant to  financing  arrangements  with banks and other  lenders in which the
lender  receives an assignment of the production  company's  right to payment of
the minimum  guarantee and is granted a security interest in the film and in the
production company's rights under its arrangement with the studio or independent
film  company.  When the major studio or  independent  film company picks up the
completed  motion  picture,  it  pays  the  minimum  guarantee  or  assumes  the
production  financing   indebtedness  incurred  by  the  production  company  in
connection  with  the  film.  In  addition,  the  production  company  is paid a
production  fee and  generally is granted a  participation  in net revenues from
distribution of the motion picture.

                                       10

<PAGE>
     The distribution cycle
     ----------------------

     Concurrently  with  their  release in the United  States,  motion  pictures
typically  are  released in Canada and also may be released in one or more other
international markets. Generally, a motion picture that is released theatrically
is available  for  distribution  in other media during its initial  distribution
cycle as follows:
<TABLE>
<CAPTION>
<S>                                                                     <C>

                                                             Number of months following initial
Marketplace (Media)                                          Domestic theatrical release
------------------                                           ----------------------------------

International theatrical                                     Concurrent
Domestic home video and DVD (initial release)                4-6 months
Domestic pay-per-view                                        6-9 months
International home video and DVD (initial release)           6-12 months
Domestic pay television                                      12-15 months
International television (pay or free)                       18-24 months
Domestic free television (network, barter syndication,       30-33 months
syndication and basic cable)
</TABLE>

     Films  often  remain in  distribution  for  varying  periods  of time.  For
example, major studio motion pictures that are released theatrically can play in
theaters  for  several  weeks  following  their  initial  release  or, at times,
including  in the case of  successful  art-house  films that are  released  on a
limited basis,  for several months.  On the other hand,  unsuccessful  films may
play  in  theaters  for  only  a  short  period  of  time.   Once   released  on
videocassette,  a motion picture may remain available on videocassette  for many
years. Similarly a motion picture can be licensed to various forms of television
for many years  after its first  release.  The  release  periods set forth above
represent  standard holdback periods.  A holdback period represents a stipulated
period of time  during  which  release of the motion  picture in other  media is
prevented  to allow the  motion  picture to  maximize  its value in the media in
which it is currently being released.  Holdback  periods are often  specifically
negotiated with various  distributors on a media-by-media  basis.  However,  the
periods set forth above  represent  our  estimate  of typical  current  holdback
periods in the motion picture industry.

     In general, if a film is not released theatrically in the United States and
is instead first released on domestic home video,  television  exploitation does
not commence until four to eight months after the video release. Thereafter, the
same general release patterns indicated in the table above typically apply. If a
film premieres on United States pay  television,  the pay television  service is
typically  licensed for a four to six week exclusive airing period.  The license
generally will provide for limited  airings made up of five to eight  exhibition
days with multiple  airings  permitted on each exhibition day. The provisions of
the  license  also  usually  provide for the pay  television  service to receive
subsequent  airing periods  following a period in which the film can be released
on video or sometimes even  theatrically  and a period during which the film may
be broadcast on free television.

     A substantial  portion of a film's  ultimate  revenues are generated in its
initial  distribution cycle. The initial  distribution cycle usually consists of
the first five years after the film's  initial  domestic  release  and  includes
theatrical,  video, and pay and free television.  Commercially successful motion
pictures,  however,  may continue to generate  revenues after the film's initial
distribution cycle from the re-licensing of distribution rights in certain media
and from the  licensing  of  distribution  rights with  respect to new media and
technologies  and in emerging  markets.  Although  there has been a  substantial
increase  over  the  past  fifteen  years  in the  revenues  generated  from the
licensing  of rights in  ancillary  media  such as home  video,  DVD,  cable and
pay-per-view,  the theatrical  success of a motion picture remains a significant
factor in  generating  revenues  in foreign  markets  and in other media such as
video and television.  For example, retail video stores currently purchase fewer
copies of  videocassettes  of motion  pictures  that have not been  theatrically
released, and purchase more copies of major studio theatrical hits.

     Theatrical
     ------------

     The  theatrical  distribution  of a motion  picture,  whether in the United
States or  internationally,  involves  the  licensing  and booking of the motion
picture to movie theaters,  the promotion of the picture through advertising and
publicity  campaigns  and the  manufacture  of  release  prints  from  the  film
negative.  Expenditures  on these  activities,  particularly  on  promotion  and
advertising,  are often  substantial  and may have a  significant  impact on the
ultimate success of the film's theatrical release. In addition, expenditures can
vary significantly depending upon a number of factors including:

                                       11
<PAGE>

     o    the markets and regions in which the film is distributed;

     o    the media used to promote the film such as newspaper,  television  and
          radio;

     o    the number of screens on which the motion  picture is to be exhibited;
          and

     o    the ability to exhibit motion pictures during peak exhibition seasons.

     With a release by a major studio,  the vast majority of these costs,  which
primarily consist of advertising  costs, are incurred prior to the first weekend
of the film's domestic theatrical release. Accordingly, there is not necessarily
a  correlation   between  these  costs  and  the  film's   ultimate  box  office
performance.  In  addition,  the  ability to  distribute  a picture  during peak
exhibition seasons,  including the summer months and the Christmas holidays, and
in the most popular  theaters,  may affect the theatrical  success of a picture.
Films  distributed  theatrically  by an  independent  film company are sometimes
released on a more limited basis which allows the distributor to defer marketing
costs until it is able to assess the initial public acceptance of the film.

     While  arrangements  for the  exhibition of a film vary greatly,  there are
certain economic relationships generally applicable to theatrical  distribution.
Theater  owners  retain a  portion  of the  admissions  paid at the box  office,
typically  referred to as gross box office receipts.  The share of the gross box
office receipts  retained by a theater owner  generally  includes a fixed amount
per week, in part to cover overhead,  plus a percentage of receipts that usually
increases over time.  Although these  percentages vary widely, a theater owner's
share of a particular  film's revenues will normally be approximately 50% to 65%
of gross box office  receipts.  The  balance  of the gross box office  receipts,
referred to as gross film rentals,  is paid to the distributor.  The distributor
then retains a  distribution  fee, which is typically 25% to 35%, from the gross
film  rentals.  This  percentage  is used  to  recover  the  costs  incurred  in
distributing  the film,  which consist  primarily of marketing  and  advertising
costs and the cost of release prints for  exhibition.  The balance of gross film
rentals,  after deducting  distribution fees and distribution  costs recouped by
the distributors, is then applied against the recoupment of any advance paid for
the distribution rights plus interest and the balance is paid to the producer or
other rights owner of the film.

     Home video and DVD
     ------------------

     A motion picture released theatrically  typically will become available for
videocassette  and digital  video disc ("DVD")  distribution  within four to six
months after its initial  domestic  theatrical  release.  Certain  films are not
initially  released  theatrically  but may instead be released  directly to home
video and DVD. Given the increasing  preference of retail video stores for films
which have achieved successful  theatrical releases,  it has become increasingly
difficult to generate significant revenues from films first released directly on
video/DVD.

     Home  video   distribution   consists   of  the   promotion   and  sale  of
videocassettes to local, regional and national video retailers that rent or sell
videocassettes to consumers primarily for home viewing. Recently, the market for
videocassettes  has been  supplemented  by,  and in some ways  replaced  by, the
market for DVD's.  DVD units are typically  available both to rental markets and
sell-through  markets at the same time and today are priced  between  $14 to $16
per unit.  Impacted by this, per unit pricing on videocassettes has dropped over
the past years  quite  dramatically  as  consumers  convert  from  videocassette
players to DVD players. Additionally, revenue sharing arrangements (arrangements
whereby  retail stores and chains pay little or nothing for each  cassette,  but
rather  shares the  revenue  generated  from  renting  such  cassette,  with the
licensor),  have  significantly  impacted the  business.  In such  arrangements,
revenue  related to a particular  video  release is earned over a period of time
(generally  up to one  year),  rather  than on the first  day of video  release.
Following the initial  marketing  period,  selected films may be remarketed at a
wholesale  price of $5.00 to $7.50 or less for sale to  consumers.  A few  major
releases  with broad  appeal  may be  initially  offered by a film  distribution
company at a price  designed  for  sell-through  rather  than  rental when it is
believed  that the  ownership  demand by  consumers  will result in a sufficient
level of sales to justify the reduced margin on each cassette sold.  Today, most
home video  distribution  contracts in  international  territories  are arranged
similarly to those in domestic  territories,  although the wholesale  prices may
differ.

                                       12
<PAGE>
     Television
     ----------

     Television rights for films initially released theatrically that have broad
appeal generally are licensed:

     o    first to  pay-per-view  for an  exhibition  period  within six to nine
          months following initial domestic theatrical release;

     o    then to pay  television  approximately  12 to 15 months after  initial
          domestic theatrical release;

     o    thereafter to basic cable  broadcasters or in certain cases to network
          television for an exhibition period; and

     o    then to syndication or "free" television.

     Pay-per-view  allows  subscribers  to  pay  for  individual  programs.  Pay
television  allows  cable  television  subscribers  to  view  such  services  as
HBO/Cinemax, Showtime/The Movie Channel, Encore Media Services or others offered
by their cable system operators for a monthly subscription fee. Pay-per-view and
pay  television  are now  delivered  not only by  cable,  but also by  satellite
transmission,  and films are usually licensed in both of these media. Films that
are not  initially  released  in the  domestic  theatrical  market may  premiere
instead on pay television  followed in some limited  circumstances by theatrical
release.  Groups of motion  pictures  often are packaged and licensed as a group
for exhibition on television over a period of time and, therefore, revenues from
these television  licensing  packages may be received over a period that extends
beyond the initial distribution cycle of a particular film. Motion pictures also
are licensed and packaged by producers and distributors for television broadcast
in international markets by government or privately owned television studios and
networks.  Pay  television is less developed  outside the United States,  but is
experiencing  significant   international  growth.  The  prominent  foreign  pay
television services include Canal+,  Premiere, STAR TV, British Sky Broadcasting
and the international operations of several U.S. cable services,  including HBO,
the Disney Channel, Turner Broadcasting and DirecTV.

     Non-theatrical and other rights
     -------------------------------

     Films may be  licensed  for use by  airlines,  schools,  public  libraries,
community  groups,  the  military,  correctional  facilities,  ships  at sea and
others.  Music contained in a film may be licensed for sound  recording,  public
performance  and sheet  music  publication.  Rights in  motion  pictures  may be
licensed  to  merchandisers  for the  manufacture  of  products  such  as  toys,
T-shirts,  posters and other merchandise.  Rights also may be licensed to create
novels from a screenplay  and to generate  other related book  publications,  as
well as interactive games on platforms such as CD-ROM and CD-I.

Our Motion Picture Distribution

     International distribution

     Our management has considerable  expertise in  international  distribution.
Robert  B.  Little,  our  co-chairman  of  the  board  and  president,  and  his
international  distribution team have substantial experience in licensing motion
pictures  for  distribution  outside  the United  States and have been active in
international   motion  picture  sales  for  many  years.  They  have  developed
relationships  with  distributors  in most  territories  through  foreign  sales
activities   and  have   established   extensive   relationships   with  various
international  financing sources.  In addition,  we are a founding member of the
American Film  Marketing  Association,  which sponsors the American Film Market.
The American Film Market, along with the Cannes Film Festival and MIFED, are the
major  annual  international  film  markets  that are  attended by  distributors
worldwide.  We participate  annually with a sales office at all three major film
markets,  as well as three major television and two major video markets. We also
attend many film festivals throughout the world including Sundance,  the Toronto
Film  Festival  and others.  From time to time,  we also may engage  independent
representatives to assist us in acquiring and licensing motion picture rights.

                                       13
<PAGE>

     We license  distribution  rights  internationally  in various media such as
theatrical,  video/DVD,  pay television,  free  television,  satellite and other
rights to  foreign  sub-distributors  on either an  individual  rights  basis or
grouped in combinations of rights.  We license these rights to  sub-distributors
in  international   territories   either  on  a   picture-by-picture   basis  or
occasionally  pursuant to output  arrangements.  Currently,  our most  important
international territories are Australia, the Benelux countries,  Canada, France,
Germany, Italy, Japan, Scandinavia, Spain and the United Kingdom.

     The terms of our license  agreements  with  foreign  sub-distributors  vary
depending  upon the  territory  and media  involved  and whether  the  agreement
relates to a single or multiple motion pictures.  Most of our license agreements
provide   that  we  will   receive  a  minimum   guarantee   from  the   foreign
sub-distributor  with all or a majority of the minimum  guarantee paid prior to,
or  upon  delivery  of,  the  film to the  sub-distributor  for  release  in the
particular territory. The remainder of any unpaid minimum guarantee generally is
payable   at   specified   intervals   after   delivery   of  the  film  to  the
sub-distributor.  The minimum guarantee is recovered by the  sub-distributor out
of the revenues generated from exploitation of the picture in the territory. The
foreign   sub-distributor  retains  a  negotiated  distribution  fee,  generally
measured as a percentage of the gross revenues  generated from its  distribution
of the motion  picture,  recovers  its  distribution  expenses  and the  minimum
guarantee and ultimately  pays us the remainder of any receipts in excess of the
distributor's   ongoing   distribution   fee.   We  must  rely  on  the  foreign
sub-distributor's  ability to successfully  exploit the film in order to receive
any proceeds in excess of the minimum guarantee.

     We  occasionally  do not  receive  a  minimum  guarantee  from the  foreign
sub-distributor and instead negotiate terms that usually result in an allocation
of gross revenues between the  sub-distributor  and us. Typically,  the terms of
these types of arrangements provide for the sub-distributor to retain an ongoing
distribution  fee,  calculated  as a percentage of the  sub-distributor's  gross
receipts in the  territory,  recover its expenses and pay remaining  receipts in
excess of the ongoing distribution fee to us. Alternatively,  often with respect
to video rights, the terms may provide for a royalty to be paid to us calculated
as a percentage of the sub-distributor's gross receipts from exploitation of the
video rights without deduction for the sub-distributor's distribution expenses.

     At times, we enter into output arrangements with local foreign distributors
whereby  the  foreign  sub-distributor  receives  the  right,  typically  for  a
specified  period and number of motion pictures,  to distribute  motion pictures
that we have released in a particular  territory and designated  media.  In some
circumstances,  the foreign  sub-distributor  pays us a minimum  guarantee  on a
picture-by-picture   basis  with  each  minimum  guarantee  having  been  either
pre-negotiated  or computed as a  stipulated  percentage  of the  production  or
acquisition cost of each picture.

     Domestic distribution

     In addition to obtaining foreign  distribution  rights, we have been active
in acquiring domestic  distribution rights. We exploit our domestic distribution
rights in a variety of ways. In 1993, we established  First Look  Pictures,  our
domestic theatrical  releasing  operation,  and in 1999 we began releasing films
directly  on video  under  First Look Home  Entertainment.  Some of the films we
license or distribute receive domestic theatrical release by First Look Pictures
or  video  release  by First  Look  Home  Entertainment.  We may  license  films
initially to television  broadcasters  for release  initially on television.  We
also  license to third  party  distributors,  such as Fox  Searchlight,  who may
release a picture theatrically and distribute the film in other media as well.

     We   occasionally   license   domestic   video   rights   of  a   film   to
sub-distributors,  including  Blockbuster,  Inc., USA Films and Columbia TriStar
Home Video. In addition,  we have created First Look Home  Entertainment,  which
released  28 films on video in 2002,  and we expect to release at least 30 films
during 2003.

     We license distribution rights directly to pay television services
including HBO, Showtime and Encore, as well as smaller services, pay-per-view
services and basic cable services, including USA, Lifetime, Bravo and the
Independent Film Channel. Although we have not engaged in significant licensing
or syndication of domestic free television rights except as part of a license of
rights in multiple media, we control these rights to a significant portion of
the films in our library and have licensed these rights in certain films to
third parties.


                                       14
<PAGE>

     In some cases, we will license the right to distribute a film  domestically
in  multiple  media  to a major  studio,  a  division  of a major  studio  or an
independent distributor. Although the terms of these licenses vary, we typically
will  be  paid  a  minimum  guarantee.   The  sub-distributor   then  retains  a
distribution fee, measured as a percentage of the gross receipts received by the
sub-distributor  from exploitation of the film,  recovers its distribution costs
and the advance paid to us, and ultimately pays us the remainder of any receipts
in excess of an ongoing distribution fee.

     We do not  always  receive  a  minimum  guarantee  from  the  licensing  of
distribution rights to foreign and domestic sub-distributors. This has caused us
to rely more  heavily  on the  actual  financial  performance  of the film being
distributed.  In some  circumstances,  whether  we  receive a minimum  guarantee
depends upon the media.  For example,  in the case of motion  pictures that have
not  been  theatrically  released,  we may  enter  into  video/DVD  distribution
arrangements with  sub-distributors  where no minimum guarantee is paid to us or
where the minimum guarantee paid to us is significantly  less than those paid to
us for similar  films in the past.  In  addition,  even if we do obtain  minimum
guarantees from our  sub-distributors,  the minimum guarantees do not assure the
profitability of our motion pictures or our operations.  Additional revenues may
be necessary from  distribution  of a motion picture to enable us to recover any
investment in the motion picture in excess of the aggregate  minimum  guarantees
obtained from  sub-distributors,  pay for  distribution  costs,  pay for ongoing
acquisition  and  development  of other motion  pictures by us and cover general
overhead.  While the pre-licensing of distribution rights to sub-distributors in
exchange for minimum  guarantees  may reduce some of our risk from  unsuccessful
films,  it also may result in us receiving lower revenues with respect to highly
successful films.

     First Look Pictures

     First Look Pictures  directly  distributes  some of the motion pictures for
which we control  domestic  rights to  theaters  throughout  the United  States.
During 2002, First Look Pictures released three films (A Song for Martin, Elling
and Skins).  Although some of First Look Pictures' future releases may appeal to
a wide  audience,  many of our  releases to date have been  foreign  language or
art-house films intended to appeal primarily to sophisticated audiences.

     We believe that we can benefit in several ways by theatrically distributing
films in the United States  directly  through First Look Pictures.  The domestic
theatrical success of a motion picture can be a significant factor in generating
revenues  from its  distribution  in ancillary  media and foreign  markets.  For
example,  retail video stores  purchase few copies of  videocassettes  of motion
pictures that have not been theatrically  released.  In addition,  we believe we
are generally able to obtain more favorable distribution terms in our agreements
with foreign and domestic sub-distributors in other media with respect to motion
pictures  that have been  theatrically  released in the United  States.  We also
believe  that,  in some  cases,  First Look  Pictures'  operations  enable us to
achieve  domestic  theatrical  release  for films  that might not  otherwise  be
released in U.S. theaters. In addition, we believe that our ability to release a
film  theatrically in the U.S. enables us to attract more  recognizable  talent,
higher  profile  producers and more promising  motion picture  projects for both
domestic  and foreign  distribution  and that by  theatrically  releasing  films
ourselves in the United States,  we can retain a significantly  greater share of
the revenue from domestic media in the event of a highly  successful  theatrical
release.

     Films distributed  theatrically in the United States by First Look Pictures
typically  have been  released  on a limited  basis to  initially  less than 100
screens and in selected  cities,  expanding to new cities or regions  based upon
the  performance  of the film.  Some  films that are  released  in new cities as
prints become  available from cities where the  engagement has closed,  reducing
the number of prints needed and the aggregate cost of the prints. We may release
appropriate  films with more mass market  appeal on a wide release  basis either
through First Look Pictures or, more likely, by licensing the film to a domestic
distributor with more significant financial and distribution resources.

     The cost to First Look Pictures to distribute a specialized  motion picture
or  art-house  film  on  a  limited-release  basis  has  typically  ranged  from
approximately  $100,000 to $2,000,000.  Expenditures  for prints,  marketing and
advertising represent a substantial portion of the costs of releasing a film. In
connection  with the  acquisition  of domestic  theatrical  rights to a film, we
occasionally  commit to spend no less than a specified minimum amount for prints
and advertising  costs.  These costs are in addition to the direct production or
acquisition costs and other distribution expenses of the films.

                                       15


<PAGE>

     Generally,  in addition to receiving a distribution fee, we are entitled to
recover our print and advertising expenditures. Although First Look Pictures may
at times utilize standard broadcast television advertising,  First Look Pictures
typically  supports its limited  releases with local  newspaper  and, in certain
instances, some cable television advertising. First Look Pictures also relies on
local and national publicity,  such as reviews or articles in local and national
publications  and  appearances  of a  film's  principal  artists  on  radio  and
television talk shows. In contrast, distributors of national, wide release films
rely  primarily  on  national  advertising   campaigns,   including  substantial
television advertising, to attract theatergoers.

     The success of a domestic  theatrical release by First Look Pictures can be
affected by a number of factors outside our control. These factors include:

     o    audience and critical acceptance;

     o    the availability of motion picture screens;

     o    the success of competing films in release;

     o    awards  won  by  First  Look   Pictures'   releases  or  that  of  its
          competition;

     o    inclement weather; and

     o    competing televised events such as sporting and news events.

     As a result of the foregoing, and depending upon audience acceptance of the
films distributed  through First Look Pictures,  we expect that in some cases we
may not recover  all of our  distribution  expenses or derive any profit  solely
from domestic theatrical  distribution revenue of First Look Pictures' releases.
In  addition,  we cannot  assure  you that  total  revenues  from any First Look
Pictures'  release,  including revenues derived from the film in ancillary media
and international  markets, will be sufficient to allow us to recover all of our
costs or to realize a profit.

         During 2002, First Look Pictures released the following three motion
pictures:
<TABLE>
<CAPTION>
<S>                             <C>                                     <C>                             <C>
Title                    Major Creative Elements              Storyline                           Release Date
------------------------ ------------------------------------ ----------------------------------- --------------------

Elling                   Producer: Dag Alveberg               Based on the best selling           May 2002
                         Director: Petter Naess               Norwegian novel by Ulla
                         Cast: Per Christian Ellefsen, Sven   Isaksson, Elling, directed by
                         Nordin and Marit Pia Jacobsen        Petter Naess, is a slyly funny and
                                                              emotionally affecting odd
                                                              couple comedy about two misfits
                                                              trying to find their places in
                                                              society.

Song for Martin          Producer: Bille August, Lars         A beautiful and heart wrenching     Released in
                         Kolvig, Michael Lundberg and         portrait of a woman's love for      December 2001 for
                         Michael Obel                         her husband in the face of a        a one week Oscar
                         Director: Bille August               terrible and incurable disease.     qualifying run and
                         Cast: Sven Wollter, Viveka Seldahl                                       re-released in
                         and Reine Brynolfsson                                                    June 2002


Skins                    Producer: Jon Kilik                  An inspirational tale about the     September 2002
                         Director: Chris Erye                 relationship between two Sioux
                         Cast: Eric Schweig, Graham Greene    Indian brothers living on the
                                                              Pine Ridge Indian reservation.

</TABLE>


                                      16
<PAGE>

We expect to release the following titles during 2003:


<TABLE>
<CAPTION>
<S>                                     <C>                             <C>                             <C>
                                                                                                  Release Date
------------------------ ------------------------------------ ----------------------------------- --------------------
Lawless Heart            Producer: Martin Pope                Lust, deception, adultery,          February 2003
                         Director:  Tom Hunsinger and Neil    jealousy, sex and desire all play
                         Hunter                               feature roles as they infiltrate
                         Cast:  Douglas Henshall, Tom         the protagonists' lives in
                         Hollander and Bill Nighy             unexpected ways.


Don't Tempt Me           Producer: Edmundo Gil                Two angels, one from heaven and     July 2003
                         Director:  Agustin Diaz Yanes        one from hell, come to earth to
                         Cast:  Penelope Cruz, Victoria       save the soul of a boxer.
                         Abril
Dr. Sleep aka Hypnotic   Producer:                            A twisted psychological thriller    September 2003
                         Director:  Nick Willing              about a hypnotherapist who
                         Cast:  Goran Visnjic, Miranda Otto   has the gift of reading people's
                         and Shirley Henderson                minds.

Fellini: I'm a Born      Producer: Damian Pettigrew           An outstanding portrait of          April 2003
Liar                     Director: Damian Pettigrew           Federico Fellini, a member of the
                         Cast:  Roberto Benigni, Federico     pantheon of the cinema's greatest
                         Fellini, Terrence Stamp and Donald   directors. Interviews with the
                         Sutherland                           maestro and those who worked with
                                                              him. Provides illuminating
                                                              insight into the world of Fellini.

The Navigators           Producer: Rebecca O'Brien            The story chronicles the issues     June 2003
                         Director: Ken Loach                  confronting railway workers
                         Cast:  Joe Duttine, Stee Huison,     following the privatization of the
                         Tom Craig, Dean Andrews              British Railroad

Angela                   Producer: Lierka & Rita Rusic        The true story of an attractive     August 2003
                         Director:  Roberta Torre             Sicilian who participates in her
                         Cast: Donatella Finocchiaro,         drug dealing husband's mafia
                         Andrea Di Stefano, Mario Puplella    linked business.

Autumn Spring            Producer: Jaroslav Kucera, Jiri      Winner of four Czech Lion Awards,   July 2003
                         Bartoska and Jaroslav Boucek         this charming motion picture is a
                         Director:   Vladimir Michalek        spirited ode to people of all
                         Cast:  Vlastimil Brodsky, Stella     ages.  A film of universal appeal
                         Zazvorkova, Stanislav Zindulka       it is a celebration of living
                                                              life to the fullest.


</TABLE>

                                       17
<PAGE>

     We cannot  assure that the motion  pictures  scheduled for release by First
Look  Pictures  in 2003 or any  motion  pictures  thereafter  will  actually  be
released or released in accordance  with its  anticipated  schedule.  The motion
picture  business  is subject to  numerous  uncertainties,  including  financing
requirements,  personnel  availability  and the release  schedule  of  competing
films.

Our Acquisition of Rights, Production and Financing

     We acquire sales and distribution rights from a wide variety of independent
production companies and producers. We generally acquire rights to single films,
as compared to acquiring films pursuant to multi-picture  acquisition agreements
with  independent  film  companies or producers.  We commit to acquire rights to
motion  pictures  at  various  stages in the  completion  of a film,  from films
completed  and ready for release to developed or  undeveloped  film projects for
which we may arrange financing or production services to complete.  In acquiring
rights,  we generally  seek to obtain rights to  commercially  appealing  motion
pictures with  substantially  lower direct  negative costs than motion  pictures
released by the major studios.

     In order to fund the  acquisition  costs of the films for which we  acquire
rights, we have primarily relied on:

     o    our credit facility;

     o    other lenders  willing to finance our  contractual  minimum  guarantee
          obligations to the films' producers or rights owners;

     o    working capital;

     o    pre-sales;

     o    gap financing;

     o    insurance backed financing structures; and

     o    other  third  party  equity  sources  such as  private  investors  and
          international  partnerships  receiving  tax  incentives  through  film
          investment activities.

     The films  that we sell,  license  and  distribute  generally  have  direct
negative costs ranging from  $1,000,000 to $7,000,000.  We may acquire rights to
finance or produce  motion  pictures  with direct  negative  costs and marketing
costs below or  substantially in excess of the average direct negative costs and
marketing  costs of the films that we have  distributed.  As part of our overall
business  strategy,  we intend to emphasize films with more  recognizable  cast,
directors and producers and greater  production values and which may accordingly
have broader appeal in the competitive  theatrical  market. We also will attempt
to limit our exposure with respect to production and  acquisition  costs through
accessing third party equity sources such as private investors.

     We  sometimes  acquire  limited  distribution  or sales rights and at other
times acquire worldwide rights,  occasionally including the copyright, to films.
The rights we acquire  may depend upon  whether we agree to pay the  producer or
other rights owner a minimum guarantee. Additionally, as part of our acquisition
of theatrical, video and television distribution rights, we may obtain the right
to exploit ancillary rights, such as music or sound track rights,  merchandising
rights,  or rights to  produce  CD-ROMs  or other  interactive  media  products.
Although we may license these rights to  sub-distributors,  we historically have
not derived any significant revenues from these ancillary rights.

                                       18


<PAGE>

     In distribution  arrangements where we do not pay a minimum guarantee,  the
amounts  payable  by us to the  rights  owner will  depend  upon our  success in
licensing  the  film  and the  financial  performance  of the  film  itself.  In
acquiring distribution rights to a completed or incomplete film, however, we may
agree to pay the rights owner a minimum  guarantee  that is  independent  of the
financial performance of the film. Historically,  the minimum guarantees paid by
us have  ranged  from  approximately  $25,000 to  $5,000,000,  although  in some
circumstances  they may exceed  these  amounts.  Depending  upon the  particular
arrangement,  a minimum guarantee may be payable in full at the time of delivery
of the completed  film or in  installments  following  complete  delivery of the
film. The rights owner also may receive  additional  payments as a result of our
exploitation  of  the  distribution  rights  to  the  film.  After  receiving  a
distribution fee and recovering our distribution expenses and minimum guarantee,
we pay the remainder of revenues in excess of an ongoing distribution fee to the
rights owner.

     We typically  receive a larger share of gross receipts from the license and
distribution of motion pictures for which we have provided a minimum  guarantee.
At times,  the minimum  guarantee  paid by us may represent all or a substantial
portion of the film's production costs. In those  circumstances,  we may receive
worldwide  distribution rights in all media and may also obtain ownership of the
copyright to the film with the producer. In 2002, we provided minimum guarantees
for  25  films  ranging  from  $10,000  to  $1,865,000,  including  three  which
represented  a  significant  portion  of  the  final  production  costs  of  the
respective  film.  Additionally,  with  respect  to  three  films,  we  provided
guarantees  that sales,  net of our fees and expenses,  would achieve  specified
levels  within a period  of three  years  following  commencement  of  principal
photography of the related film.

     Our  commitment to pay a minimum  guarantee with respect to films that have
not begun production often enables the production  company or producer to obtain
financing for its project, if needed. In some cases, our contractual  commitment
to pay a  minimum  guarantee  upon  delivery  of a  film  serves  as  sufficient
collateral for a bank or other  financing party to lend  production  funds.  The
bank typically will insure  delivery of the film to us by requiring the producer
to purchase a completion guaranty.  To enable the production company or producer
to  borrow  production  funding,  or to  borrow  at  preferential  bank fees and
interest  rates,  we also  may  have  to  secure  our  purchase  or  acquisition
commitment,  which we  generally  have done by obtaining a letter of credit from
our lenders.  In some situations,  the production  company or producer of a film
initially may obtain funds:

     o    from other distribution  companies that obtain  distribution rights in
          specified media or territories, for example, the domestic distribution
          rights or distribution rights in Germany or the United Kingdom;

     o    by accessing  foreign  governmental film industry  incentive  programs
          such as  programs  offered in the past by the Isle of Man,  the United
          Kingdom, Canada, Germany, Australia and New Zealand; or

     o    by using its own  resources  or other  resources  available to it, and
          subsequently approaching us to supply the remaining funds necessary to
          complete or  co-finance  the film in exchange  for our  obtaining  the
          remaining distribution rights to the motion picture.

     We also have been actively involved in co-financing  arrangements.  When we
participate in co-financing arrangements,  we will commit to fund a portion of a
particular film's production costs in combination with others.


     In June 2000, we entered into a "first look" agreement with The Little Film
Company,  Inc.  and Ellen  Dinerman  Little,  our former  co-chairman,  co-chief
executive  officer and president.  The agreement  provides for a three-year term
ending in June 2003. Under this agreement,  we have an exclusive "first look" on
any project  that The Little Film  Company  owns or controls or which it has the
right to submit to us or any  project  that it has the right to  acquire  or may
wish to acquire for  development or production.  The agreement also provides for
us to pay The Little Film Company  annual  overhead for office space and related
expenses, an annual fee and a discretionary  revolving development fund. We also
compensate The Little Film Company on a project-by-project basis.

                                       19

<PAGE>

     In  connection  with the purchase of certain of our  securities by Rosemary
Street  Productions,  LLC  ("Rosemary  Street")  in June 2000,  Rosemary  Street
assigned to us a first look agreement with Grandview Pictures LLC and Jon Kilik.
The agreement  provided for a three-year term which ended in May 2002. Under the
agreement,  we had an  exclusive  "first  look" on any  project  that  Grandview
Pictures  wanted to produce and which it owned or controlled or which it had the
right to submit to us under the  agreement  or which it had the right to acquire
or wished to acquire for development and/or  production,  or had been authorized
by third parties to submit to us for development and/or production, as a feature
length  theatrical motion picture or television  production.  The agreement also
provided for us to pay to Grandview  Pictures  annual  overhead for its New York
office, including an annual salary for Jon Kilik and fees for Kilik's production
services  based  on  the  cash  budget  of  the  applicable  pictures.  We  also
compensated  Grandview Pictures for each theatrical or television motion picture
produced by Kilik. Skins was the only film to be produced under our "first look"
agreement with Grandview Pictures.

     During 2002, we were involved in arranging  and/or  providing a significant
portion of the  production  financing  for three motion  pictures (The Boys From
County Clare, Bone Snatcher, and American Rap Stars), one of which was completed
by the end of 2002 and the other  two will be  completed  in the  first  half of
2003.  We attempt to minimize  the risks  associated  with any  development  and
production activities that we conduct in a variety of ways. We do not maintain a
substantial  staff of creative  or  technical  personnel.  We also do not own or
operate sound stage and related production facilities and,  accordingly,  do not
have the fixed payroll,  general and administrative and other expenses resulting
from such  ownership.  In addition,  in those  circumstances  where we produce a
film,  we  generally  attempt  to acquire  fully  developed  projects  ready for
pre-production  with,  when  feasible,  completed  scripts,  directors  and cast
members who are  committed to or are  interested  in the project.  Many projects
also have a  producer  involved  or  committed.  However,  if at the time of our
acquisition  of rights in a project,  a producer is not  formally or  informally
committed to a project,  we may also engage a production  services  company or a
producer  to  supervise   and  arrange  all   pre-production,   production   and
post-production  activities in exchange for a production fee and a participation
in net revenues from the film.

     The  following  chart  provides  information   regarding  completed  motion
pictures first made  available to us for  distribution  during 2002,  other than
those  films  described  under "Our  Motion  Picture  Distribution  -First  Look
Pictures."
<TABLE>
<CAPTION>
<S>                           <C>                         <C>                        <C>
Motion Picture Title        Genre                Territories Acquired           Selected Cast
--------------------        -----                --------------------           -------------
24 Hours in London          Thriller             The U.S. (Video and DVD rights Gary Olsen, John Benfield
                                                 only)

American Rap Stars          Documentary          The universe                   Snoop Dogg, Jay Z

Attic Expeditions           Thriller             The U.S. (Video and DVD rights Seth Green, Jeffrey Combs
                                                 only)

Avalanche                   Disaster             The U.S. (Video and DVD rights Thomas Ian Griffith, C. Thomas Howell
                                                 only)

Ball in the House           Dark Comedy          Universe excluding the U.S.    Johathan Tucker, Jennifer Tilly
                                                 and Canada

Between Strangers           Drama                Universe excluding the Baltic  Sophia Loren, Malcolm McDowell
                                                 states, Bulgaria, Canada,
                                                 Czech, CIS, Italy, Hungary and
                                                 Poland

Castle Rock                 Adventure            Universe excluding the U.S.    Ernest Borgnine, Pamela Bach
                                                 and Canada
</TABLE>
                                       20

<PAGE>
<TABLE>
<CAPTION>
<S>                           <C>                         <C>                               <C>
Motion Picture Title        Genre                Territories Acquired                   Selected Cast
--------------------        -----                --------------------                   -------------
Dahmer                      Horror               The U.S. (Video and DVD rights         Jeremy Renner, Bruce Davison
                                                 only)

Dark Summer                 Thriller             The universe                           Robert Culp, Mia Kirschner

Dead Awake                  Horror               The U.S. (Video and DVD rights         Stephen Baldwin, Michael Ironside
                                                 only)

Dumb Luck                   Romantic Comedy      The universe excluding the             Scott Baio, Todd Bridges
                                                 U.S. and Canada

Elling                      Comedy               The U.S. and Canada                    Per Christian Ellefsen, Sven Nordin

Epicenter                   Disaster             The U.S. (Video and DVD rights         Traci Elizabeth Lords, Gary Daniels
                                                 only)

Evelyn                      Drama                The universe excluding the             Pierce Brosnan, Julianna Margulies
                                                 U.S. and Canada

Faithless                   Drama                The U.S. (Video and DVD rights         Lena Endre, Erland Josephson
                                                 only)

Gabriela                    Romance              The U.S. (Video and DVD rights         Jaime Pl Gomez, Seidy Lopez
                                                 only)

Gaudi Afternoon             Comedy               The U.S. (Video and DVD rights         Judy Davis, Marcia Gay Harden
                                                 only)

Gentlemen's Game            Drama                The universe                           Gary Sinise, Mason Gamble

Hired Hand                  Drama                The universe excluding U.K.            Peter Fonda, Verna Bloom

I'll Take You There         Romantic Comedy      The U.S. (Video and DVD rights         Ally Sheedy
                                                 only)

Jimmy show                  Drama                Universe excluding the U.S.            Frank Whaley, Ethan Hawke
                                                 and Canada

Julie Walking Home          Drama                The universe excluding                 Miranda Otto, William Fichtner
                                                 Germany, Poland, Hungary,
                                                 Czech, Slovenia, Romania,
                                                 India and Canada

Last Run                    Thriller             The U.S. (Video and DVD rights         Armande Assante, Ornella Muti
                                                 only)

Lawless Heart               Romance              The universe (excluding pay TV         Douglas Hensall, Tom Hollander
                                                 in U.K.

Little Red                  Urban Drama          The U.S. (Video and DVD rights         Brandon Price, Char Clay
                                                 only)

Local Boys                  Drama                The universe                           Mark Harmon, Jeremy Sumpter

Lone Hero                   Action               The U.S. (Video and DVD rights         Lou Diamond Phillips, Sean Patrick
                                                 only) Flanery

Lost Voyage                 Sci-Fi Thriller      The U.S. (Video and DVD rights         Judd Nelson, Lance Henriksen
                                                 only)
</TABLE>

                                       21
<PAGE>
<TABLE>
<CAPTION>
<S>                           <C>                         <C>                                      <C>
Motion Picture Title        Genre                Territories Acquired                   Selected Cast
--------------------        -----                --------------------                   -------------
Lovers Lane                 Horror               The U.S. (Video and DVD rights         Anna Faris
                                                 only)

Malicious Intent            Thriller             The U.S. (Video and DVD rights         Tom Arnold, William Forsythe
                                                 only)

No Place Like Home          Family               Universe excluding the U.S.            Judge Reinhold, Richard Moll
                                                 and Canada

Nora                        Drama                The U.S. (Video and DVD rights         Ewan McGregor, Susan Lynch
                                                 only)

The Operator                Thriller             The U.S. (Video and DVD rights         Michael Laurence, Jacqueline Kim
                                                 only)

Pinata                      Horror               The universe                           Jaime Pressly, Nicholas Brendon

Pressure                    Thriller             The U.S. (Video and DVD rights         Kerr Smith, Lochlyn Munro
                                                 only)

Retrievers                  Family               Universe excluding the U.S.            Robert Hays, Mel Harris
                                                 and Canada

The Scoundrel's Wife        Drama                Universe excluding the U.S.            Tatum O'Neal, Julian Sands
                                                 and Canada

Skins                       Drama                The universe                           Graham Greene, Eric Schweig

Snapshots                   Romance              The universe excluding                 Burt Reynolds, Carmen Chaplin
                                                 Belgium, Netherlands and
                                                 Luxemburg

Song for Martin             Drama                The U.S. and Canada                    Sven Wollter, Viveka Seldahl

The Surge                   Sci-fi Horror        The U.S. (Video and DVD rights         Mat Scollon, Melissa R. Martin
                                                 only)

Triggerman                  Comedy               The universe                           Neil Morrissey, Donnie Wahlberg
</TABLE>

Our Film Library of Distribution Rights

     Our film  library  consists  of rights to a broad  range of films,  most of
which  were  produced   since  1980.  At  December  31,  2002,  we  had  various
distribution  rights to more than 330 motion  pictures,  including  more than 73
motion  pictures in which we own an interest in the  copyright.  With respect to
these  films  where we do not own the  copyright,  the term of our  distribution
rights generally range from 12 to 25 years or more from the date of acquisition,
and typically  extend to many, if not all, media for exhibition  worldwide or in
specified territories.

     In addition to exploitation  of  distribution  rights to motion pictures in
our library in the major media, we are able to exploit various  ancillary rights
in the films under certain situations. We have arranged for the music in several
motion  pictures  that  we  have   distributed  to  be  released  as  soundtrack
recordings,  including Waking Ned Devine, A Merry War, Mrs. Dalloway, The Secret
of Roan Inish, Party Girl, The Big Squeeze and Infinity.  Although  exploitation
of these  soundtracks and other ancillary rights have not generated  significant
revenues for us to date, our ownership or control of ancillary  rights to motion
pictures  in our  library,  including  interactive  rights,  remake  rights  and
merchandising rights, may provide future sources of additional revenues.

                                       22
<PAGE>


     Additionally,  we have  granted to Yahoo!  Inc. the right to exploit on the
Internet  approximately  fifty titles from our film library on a revenue sharing
basis.  As of  December  31,  2002,  we have  received  no  revenues  from  this
arrangement.

Major Customers

     In 2000,  USA  Network  accounted  for  $3,014,000  or  13.3% of our  total
revenues.  During the years ended December 31, 2001 and 2002, no single customer
accounted for 10% or more of our revenues.

Employees

     As of April 11, 2003,  we employed 46 full-time  employees  and 1 part-time
employee.  Some of our  subsidiaries  are or may become  subject to the terms in
effect  from  time  to  time  of  various  industry-wide  collective  bargaining
agreements,  including  the Writers  Guild of America,  the  Directors  Guild of
America,  the Screen Actors Guild and the  International  Alliance of Theatrical
Stage  Employees.  We  may  assume  a  production  company's  obligation  to pay
residuals to these various entertainment guilds and unions. A strike, job action
or labor  disturbance  by the members of any of these  entertainment  guilds and
unions  could  have a  material  adverse  effect on the  production  of a motion
picture within the United States, and, consequently, on our business, operations
and results of operations.  These  organizations all have engaged in strikes and
similar activities.  We believe that our current relationship with our employees
is satisfactory.

Competition

     Motion picture distribution,  finance and production are highly competitive
businesses.  The competition  comes both from companies within the same business
and from companies in other entertainment media that create alternative forms of
leisure entertainment. We compete with major film studios including:

     o    The Walt Disney Company, including Miramax;

     o    Paramount Pictures Corporation;

     o    Universal Pictures;

     o    Sony Pictures Entertainment;

     o    Twentieth Century Fox; and

     o    Warner Brothers Inc., including New Line Cinema.

     We also  compete  with  numerous  independent  and foreign  motion  picture
production and distribution  companies.  Many of the organizations with which we
compete have  significantly  greater  financial and other resources than us. Our
ability to compete  successfully  depends  upon the  continued  availability  of
independently produced,  domestic and foreign motion pictures and our ability to
identify  and  acquire  distribution  rights to, and  successfully  license  and
distribute,  motion  pictures with  commercial  potential.  A number of formerly
independent motion picture companies have been acquired in recent years by major
entertainment   companies.   These  transactions  have  significantly  increased
competition for the acquisition of distribution rights to independently produced
motion pictures.

     Films that we  distribute  or finance also compete for audience  acceptance
and exhibition outlets with motion pictures that other companies  distribute and
produce.  As a result,  the  success of any of the films that we  distribute  or
finance is dependent not only on the quality and  acceptance of that  particular
film, but also on the quality and acceptance of other  competing  films released
into the  marketplace  at or near the same time.  With  respect to our  domestic
theatrical  releasing  operations,  a substantial majority of the motion picture
screens in the United  States  typically  are committed at any one time to films
distributed  nationally  by the major film  studios,  which  generally buy large
amounts of advertising on television and radio and in newspapers and can command
greater access to available screens.  Although some movie theaters specialize in
the exhibition of independent,  specialized motion pictures and art-house films,
there is intense  competition for screen  availability  for these films as well.
Given the  substantial  number of motion pictures  released  theatrically in the
United States each year,  competition  for  exhibition  outlets and audiences is
intense. In addition,  there also have been rapid technological changes over the
past fifteen years.  Although  technological  developments  have resulted in the
creation of additional revenue sources from the licensing of rights with respect
to new media, these developments also have resulted in increased  popularity and
availability of alternative  and competing  forms of leisure time  entertainment
including pay/cable television programming and home entertainment equipment such
as videocassettes, interactive games and computer/Internet use.

                                       23
<PAGE>

Regulation

     In 1994,  the United States was unable to reach an agreement with its major
international trading partners to include audio-visual works, such as television
programs and motion pictures,  under the terms of the General Agreement on Trade
and Tariffs Treaty.  The failure to include  audio-visual works under the treaty
allows many countries to continue  enforcing  quotas that restrict the amount of
United  States-produced  television programming which may be aired on television
in those countries.  The Council of Europe has adopted a directive requiring all
member states of the European Union to enact laws specifying  that  broadcasters
must reserve a majority of their transmission  time,  exclusive of news, sports,
game shows and  advertising,  for European works.  The directive does not itself
constitute  law, but must be  implemented  by  appropriate  legislation  in each
member country.  In addition,  France requires that original French  programming
constitute a required  portion of all  programming  aired on French  television.
These  quotas  generally  apply  only  to  television  programming  and  not  to
theatrical  exhibition  of  motion  pictures,   but  quotas  on  the  theatrical
exhibition  of motion  pictures  could also be enacted in the future.  We cannot
assure you that additional or more restrictive  theatrical or television  quotas
will  not be  enacted  or that  countries  with  existing  quotas  will not more
strictly  enforce such quotas.  Additional  or more  restrictive  quotas or more
stringent  enforcement of existing quotas could  materially and adversely affect
our  business  by  limiting  our  ability to fully  exploit our rights in motion
pictures  internationally  and,  consequently,  to assist or  participate in the
financing of these motion pictures.

     Distribution  rights to motion pictures are granted legal  protection under
the copyright laws of the United States and most foreign  countries.  These laws
provide  substantial civil and criminal  sanctions 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.  We are aware of reports of
extensive  unauthorized  misappropriation  of  videocassette  rights  to  motion
pictures  which may include  motion  pictures  distributed by us. Motion picture
piracy is an industry-wide  problem.  The Motion Picture Association of America,
an industry trade  association,  operates a piracy hotline and  investigates all
reports  of  such  piracy.   Depending  upon  the  results  of   investigations,
appropriate  legal  action may be brought by the owner of the rights.  Depending
upon the extent of the piracy, the Federal Bureau of Investigation may assist in
these investigations and related criminal prosecutions.

     Motion  picture  piracy is also an  international  problem.  Motion picture
piracy is extensive in many parts of the world,  including  South America,  Asia
including Korea,  China and Taiwan, the countries of the former Soviet Union and
other  former  Eastern  bloc  countries.  In  addition  to  the  Motion  Picture
Association,  the Motion Picture Export Association, the American Film Marketing
Association  and the American Film Export  Association  monitor the progress and
efforts made by various countries to limit or prevent piracy. In the past, these
various trade  associations have enacted  voluntary  embargoes of motion picture
exports to certain  countries  in order to  pressure  the  governments  of those
countries to become more  aggressive in preventing  motion  picture  piracy.  In
addition,  the United States government has publicly  considered trade sanctions
against specific countries that do not prevent copyright  infringement of United
States produced motion  pictures.  We cannot assure you that voluntary  industry
embargoes  or United  States  government  trade  sanctions  will be enacted.  If
enacted,  these  actions could impact the amount of revenue that we realize from
the international  exploitation of motion pictures  depending upon the countries
subject to and the duration of such action.  If not enacted or if other measures
are not taken,  the motion  picture  industry  as a whole,  and our  business in
particular, may continue to lose an indeterminate amount of revenues as a result
of motion picture piracy.

     The Code and  Ratings  Administration  of the  Motion  Picture  Association
assigns ratings indicating age-group suitability for theatrical  distribution of
motion pictures.  We sometimes,  although not always, submit our motion pictures
for these ratings.  In certain  circumstances,  motion  pictures that we did not
submit for rating might have received  restrictive ratings,  including,  in some
circumstances, the most restrictive rating which prohibits theatrical attendance
by  persons  below the age of  seventeen.  Unrated  motion  pictures,  or motion
pictures receiving the most restrictive  rating, may not be exhibited in certain
movie theaters or in certain  locales,  thereby  potentially  reducing the total
revenues  generated  by these  films.  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.  In 1997, the major broadcast
networks and the major television  production companies  implemented a system to
rate television  programs.  This television rating system has not had a material
adverse  effect  on  the  motion  pictures   distributed  by  us.  However,  the
possibility  exists that the sale of theatrical motion pictures for broadcast on
domestic  free  television  may  become  more  difficult  because  of  potential
advertiser  unwillingness to purchase  advertising  time on television  programs
that are rated for  limited  audiences.  We cannot  assure you that  current and
future restrictions on the content of motion pictures may not limit or adversely
affect our ability to exploit certain motion pictures in particular  territories
and media.

                                       24
<PAGE>

ITEM 2.  PROPERTIES

     Our  principal  executive  offices are  located at 8000  Sunset  Boulevard,
Penthouse East, Los Angeles,  California 90046 and consist of 15,491 square feet
of office  space.  Our payments  under the lease are  approximately  $41,000 per
month. The lease expires on May 31, 2007.

     From February 2001 to January 2002, we occupied  approximately 1,500 square
feet of office space located at 222 East 44th Street,  New York, New York 10017,
a building  owned by  EUE/Screen  Gems (a company  owned in part by  Christopher
Cooney,  our co-chairman and chief executive  officer,  and Jeffrey Cooney,  our
executive  vice president and a director).  EUE/Screen  Gems permitted us to use
the space without  paying any rent. In February  2002, we relocated our New York
operations  to 603 Greenwich  Street,  New York,  New York 10014.  This space is
approximately  4,000  square  feet  and is in a  building  owned,  in  part,  by
Christopher  Cooney.  We have not paid any rent  since  occupying  the  space in
February  2002 and no formal  arrangements  have been made  regarding any future
rent to be paid with respect to these premises.

     In May 2001,  we entered  into a sublease  for 4,000  square feet of office
space  located  at  2932  Nebraska  Avenue,  Santa  Monica,  California  for our
television  commercial  production  operations.  We  have  since  relocated  the
operations  to our  offices in New York and have  further  sublet  the  premises
through the end of the lease term, which expired on March 31, 2003.

ITEM 3.  LEGAL PROCEEDINGS

     We are  engaged in legal  proceedings  incidental  to our  normal  business
activities. In the opinion of management, none of these proceedings are material
in relation to our financial position.


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

     Not applicable.

                                       25
<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock has been quoted on the OTC Bulletin Board under the symbol
"FRST" since January 11, 2002,  and our warrants were quoted on the OTC Bulletin
Board under the symbol  "FRSTW" from  January 11, 2002 until  February 16, 2002,
the date the warrants  expired.  Prior to January 11, 2002, our common stock and
warrants  were quoted on the OTC  Bulletin  Board  under the symbols  "OSFG" and
"OSFGW,"  respectively.  The following table sets forth the high and low closing
bid  quotations  for the periods  indicated.  The  quotations  represent  prices
between  dealers and do not include retail markups or markdowns or  commissions.
They may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
   <S>                                                      <C>            <C>             <C>             <C>
                                                                Common Stock                     Warrants
                                                                ------------                     --------
   2001                                                     High($)       Low($)          High($)        Low($)
                                                            ----          ---             ----           ---
   First quarter...................................         1-3/16        3/4              4/64          1/32
   Second quarter..................................          26/32        1/2              3/64          1/64
   Third quarter...................................          23/32      17/32              3/32          0.01
   Fourth quarter..................................           1.01      13/32              3/32          0.01

   2002
   First quarter...................................            5/8        3/8              N/A            N/A
   Second quarter .................................          15/16        1/8              N/A            N/A
   Third quarter                                              9/16       7/16              N/A            N/A
   Fourth quarter .................................            1/2       5/16              N/A            N/A
</TABLE>

     As of April 11, 2003, there were  approximately 34 holders of record of our
common  stock and there  were  14,539,573  shares of  common  stock  issued  and
outstanding.  We believe that there are more than 250  beneficial  owners of our
common stock.

     On April 11,  2003,  the last  reported  sale price of our common  stock as
reported on the OTC Bulletin Board was $0.26.

Dividends

     We have not paid cash dividends on our common stock and we presently intend
to retain  future  earnings  to finance the  expansion  and  development  of our
business and not pay dividends on our common  stock.  Any  determination  to pay
cash  dividends  in the  future  would  be at the  discretion  of the  board  of
directors  and would be  dependent  upon our  results of  operations,  financial
condition,  contractual  restrictions  and other factors deemed relevant at that
time by the board of directors.  In addition,  certain covenants in our JPMorgan
facility with JPMorgan substantially restrict payment of cash dividends.

Recent Sales of Unregistered Securities

     None.

                                       26

<PAGE>


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The following selected consolidated financial data as of and for each
of the years in the five-year period ended December 31, 2002 are derived from
our consolidated financial statements. The selected consolidated financial data
set forth below should be read in conjunction with our consolidated financial
statements and the notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," each included elsewhere in this
report.
<TABLE>
<CAPTION>
<S>                                                                                <C>
                                                                             Year Ended December 31,
                                                        ------------------------------------------------------------------
                                                                      (in thousands, except per share data)
                                                        ------------------------------------------------------------------
                                                             2002         2001        2000         1999         1998
                                                        ------------------------------------------------------------------
Statement of Operations Data:
Revenues..............................................         $26,299     $35,144      $22,625      $33,784      $25,585
Film cost amortization................................          19,779      24,258       16,850       30,888       21,015
Distribution and marketing  costs.....................           7,541       7,101        4,774            -            -
Selling, general and administrative...................           7,928       6,947        6,473        2,983        2,960
Income (loss) from operations.........................         (8,549)     (3,162)      (5,472)         (87)        1,610
Income (loss) before tax and cumulative effect of
   accounting change..................................         (9,287)     (3,792)      (6,230)      (1,989)          112
Income tax provision (benefit)........................              91          62          137        (736)           53
Income (loss) before cumulative effect of
   accounting change..................................         (9,378)     (3,854)      (6,367)      (1,253)           59
Cumulative effect of accounting change(1).............               -           -     (14,123)            -            -
Net income (loss) ....................................         (9,378)     (3,854)     (20,490)      (1,253)           59
Basic and diluted net income (loss) per share
   before cumulative effect...........................           (.71)      (0.38)       (0.78)       (0.21)         0.01
Cumulative effect.....................................               -           -       (1.74)            -            -
Net income (loss) per share after cumulative
   effect.............................................           (.71)      (0.38)       (2.52)       (0.21)         0.01
Basic and diluted weighted average number of
   shares outstanding.................................          13,270      10,191        8,131        5,990        5,732
</TABLE>
-----------------------
(1)      During the year ended December 31, 2000, we recorded a one-time,
         pre-tax non-cash charge of $15,582,000 ($14,123,000 after taxes)
         relating to our adoption of new film accounting standards in June 2000
         pursuant to SOP 00-2, which is discussed in detail in "Management's
         Discussion and Analysis of Financial Condition and Results of
         Operations - Relevant Accounting Provisions."
<TABLE>
<CAPTION>
<S>                                                                                     <C>
                                                                             Year Ended December 31,
                                                                ---------------------------------------------------------
                                                                        (in thousands, except per share data)
                                                                ---------------------------------------------------------
                                                                2002        2001         2000          1999         1998
                                                                ---------------------------------------------------------
Balance Sheet Data:
Film costs, net of accumulated amortization....................$23,198     $18,304      $13,393      $28,363      $29,003
Total assets....................................................41,922      45,471       42,280       62,647       50,209
Total long-term liabilities.....................................20,254      14,500        6,500       19,764       22,013
Total liabilities...............................................39,263      39,420       32,375       49,348       38,588
Total shareholders' equity.......................................2,659       6,051        9,905       13,299       11,621

</TABLE>

                                       27

<PAGE>


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Forward-Looking Statements

     When used in this Form 10-K and in future  filings by our company  with the
Securities and Exchange  Commission,  the words or phrases "will likely result,"
"management   expects"  or  "we  expect,"  "will  continue,"  "is  anticipated,"
"estimated"  or similar  expressions  are intended to identify  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of  1995.  Readers  are  cautioned  not to  place  undue  reliance  on any  such
forward-looking  statements,  each of which speak only as of the date made. Such
statements  are  subject to certain  risks and  uncertainties  that could  cause
actual results to differ materially from historical earnings and those presently
anticipated or projected.  These risks are included in "Business," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in
"Exhibit 99: Risk Factors"  included in this Form 10-K. We have no obligation to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect  anticipated or  unanticipated  events or
circumstances occurring after the date of such statements.

General

     The  operations  of the company were  established  as a private  company in
February 1980 under the name Overseas Filmgroup, Inc. We were formed in December
1993  under  the  name  "Entertainment/Media  Acquisition  Corporation"  for the
purpose of  acquiring  an  operating  business  in the  entertainment  and media
industry.  We acquired the  operations  of Overseas  Filmgroup,  Inc.  through a
merger in October  1996 and we were the  surviving  corporation  in the  merger.
Immediately  following the merger,  we changed our name to "Overseas  Filmgroup,
Inc." and succeeded to the operations of the private  company.  In January 2001,
we  changed  our name to  "First  Look  Media,  Inc." in  order to  reflect  the
broadening  of our  operations  beyond  foreign  distribution  of  independently
produced feature films to additional areas such as U.S. theatrical and video/DVD
distribution, Internet content development and television commercial production.
Although we initially intended to expand into Internet content  development,  we
no longer have immediate plans to do so. Additionally, although we expanded into
television  commercial  production,  during 2002 we substantially  withdrew from
these activities due to market conditions.

     Today, we are principally involved in the acquisition and worldwide license
or sale of distribution  rights to independently  produced motion  pictures.  We
directly  distribute motion pictures in the domestic theatrical market under the
name "First Look  Pictures"  and in the  domestic  video  market  under the name
"First  Look  Home  Entertainment."   Recently,  the  market  for  lower  budget
independent motion pictures which have not had a significant  theatrical release
in the U.S. has experienced  significant  difficulty,  mainly as a result of the
general economic downturn,  the tragedy of September 11th, the war with Iraq and
more  specifically,   the  financial  difficulties  of  television  broadcasters
worldwide.  These difficulties,  together with low margins and losses related to
the poor performance of films that we chose to produce, invest in or acquire and
a  level  of  overhead  disproportionate  to  margins  generated,  impacted  our
performance during 2002,  resulting in decreased revenues,  increased write-offs
of film costs and increased bad debt expenses.  In light of our  performance and
market  conditions,  we have  been  reviewing  our  current  business  plan  and
considering our alternatives.

     Additionally,  in February  2003,  at the  request of our  primary  lender,
JPMorgan,  we agreed to modify our credit  agreement to reduce the amount we can
borrow under the agreement as described below. Further, as of December 31, 2002,
the  losses  we have  incurred  have  resulted  in our  breach  of the net worth
covenant  under our credit  agreement.  We currently are engaged in  discussions
with   JPMorgan   and  other   participating   banks  with  respect  to  further
modifications  to the credit  agreement,  which  likely  will  result in further
reductions in our ability to borrow funds under our credit facility.

Relevant Accounting Provisions

     In June 2000, the Accounting  Standards Executive Committee of the American
Institute of Certified  Public  Accountants  issued  Statement of Position 00-2,
"Accounting  by  Producers or  Distributors  of Films"  ("SOP  00-2").  SOP 00-2
establishes  new  film  accounting  standards,   including  changes  in  revenue
recognition  and accounting for  advertising,  development  and overhead  costs.
Additionally,  in June 2000, the Financial  Accounting  Standards Board ("FASB")
issued Statement 139 ("SFAS 139") which rescinds FASB 53 on financial  reporting
by motion  picture film  producers  or  distributors.  SFAS 139 requires  public
companies to follow the guidance provided by SOP 00-2. We elected early adoption
of SOP 00-2 and, as a result,  a cumulative  charge for the change in accounting
principle of $15,582,000 ($14,123,000 net of income taxes) has been reflected in
our Consolidated Statement of Operations for the year ended December 31, 2000.

                                       28

<PAGE>

Critical accounting policies and estimates

     The SEC recently issued  Financial  Reporting  Release No. 60,  "Cautionary
Advice  Regarding  Disclosure  About Critical  Accounting  Policies" ("FRR 60"),
suggesting  companies  provide  additional  disclosure  and  commentary on those
accounting  policies  considered  most critical.  FRR 60 considers an accounting
policy to be critical if it is important to our financial  condition and results
of operations,  and requires  significant  judgment and estimates on the part of
management  in its  application.  For a summary  of our  significant  accounting
policies,  including the critical  accounting  policies discussed below, see the
accompanying notes to the consolidated financial statements.

     Additionally,  in 2002, the SEC issued Financial  Reporting Release No. 61,
"Commission  Statement About  Management's  Discussion and Analysis of Financial
Condition and Results of Operations:  ("FRR 61"). FRR 61 suggests that companies
provide  additional  information  concerning  liquidity  and  capital  resources
including;  off-balance  sheet  arrangements;  certain  trading  activities that
include  non-exchange  traded contracts accounted for at fair value; and effects
of  transactions  with related and certain other parties.  Accordingly,  we have
described in detail the  off-balance  sheet  arrangements  as they relate to us,
both below  under  Liquidity  and  Capital  Resources,  and in the  accompanying
footnotes to the consolidated financial statements.

     The  preparation  of our  financial  statements  in  conformity  with  GAAP
requires management to make estimates, judgments and assumptions that affect the
reported amounts of assets and liabilities,  disclosure of contingent assets and
liabilities at the date of the financial  statements and the reported  amount of
expenses  during the reporting  period.  On an ongoing basis,  we evaluate these
estimates,  which  are  based on  historical  experience  and on  various  other
assumptions  that are believed to be  reasonable  under the  circumstances.  The
result of these  evaluations  forms the basis  for  making  judgments  about the
carrying  values of assets and  liabilities  and the reported amount of expenses
that are not readily apparent from other sources. Actual results may differ from
these estimates under different  assumptions.  The following accounting policies
require significant management judgments and estimates:

     Accounting  for the production and  distribution  of motion  pictures is in
accordance with SOP 00-2, which requires  management's judgment as it relates to
total  revenues to be received and costs to be incurred  throughout  the life of
each film. These judgments are used to determine the amortization of capitalized
film  costs  associated  with  revenues  earned  and  any net  realizable  value
adjustments.

     Management is required to make  judgments,  based on historical  experience
and future expectations,  as to the collectibility of accounts  receivable.  The
allowances  for doubtful  accounts and sales returns  represent  allowances  for
customer  trade  accounts  receivable  that are  estimated  to be  partially  or
entirely  uncollectible.  These  allowances  are  used  to  reduce  gross  trade
receivables to their net realizable  value. We record these  allowances based on
estimates related to the following factors: (i) customer specific allowances and
(ii) an estimated amount, based on our historical experience, for issues not yet
identified.

     Certain  balance  sheet  liabilities  require  significant   judgments  and
estimates by  management.  We  continually  evaluate  these  estimates  based on
changes in the  relevant  facts and  circumstances  and  events  that may impact
estimates.  While  management  believes that the current  reserves are adequate,
there can be no assurance that these factors will not change in future periods.

     We base these  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.
There can be no  assurance  that  actual  results  will not  differ  from  these
estimates.

                                       29
<PAGE>


Results of operations

      Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

     Revenues  decreased by $8,445,000 (24.0%) to $26,699,000 for the year ended
December 31, 2002, compared to $35,144,000 for the year ended December 31, 2001.
The decrease in revenues was primarily  due to decreases in revenues  related to
the licensing of distribution rights to third party  distributors,  primarily in
the  international  markets  ($16,597,000  for the year ended  December 31, 2002
compared to  $27,366,000  for the year ended  December 31, 2001).  Additionally,
revenues  related to the theatrical  release of films decreased by approximately
$1,633,000 ($356,000 for the year ended December 31, 2002 compared to $1,989,000
for the year ended December 31, 2001).  Partially  offsetting  these  decreases,
revenues from the direct  distribution of video and DVD in the U.S. increased by
$3,580,000  ($7,598,000  for the  year  ended  December  31,  2002  compared  to
$4,018,000 for the year ended December 31, 2001).

     Film costs as a  percentage  of  revenues  increased  to 74.1% for the year
ended December 31, 2002, compared to 69.0% for the year ended December 31, 2001.
Film costs as a percentage  of revenues  fluctuate  from year to year based upon
the specific components of revenue and their related costs in the specific year.
In accordance with new accounting  standards  established  pursuant to SOP 00-2,
distribution  and  marketing  costs were  expensed as incurred  during the years
ended December 31, 2002 and 2001.  Distribution and marketing costs increased to
$7,541,000  for the year ended  December 31, 2002 compared to $7,101,000 for the
year  ended  December  31,  2001.  The  increase  reflects  increased  video/DVD
marketing and distribution  expenses ($2,392,000 for the year ended December 31,
2002 compared to $2,313,000 for the year ended December 31, 2001) related to the
increased  number of video/DVD  releases during the year ended December 31, 2002
compared to the year ended  December 31, 2001 as well as increased  distribution
and marketing costs associated with the licensing of film rights internationally
($3,718,000  for the year ended December 31, 2002 compared to $2,944,000 for the
year ended December 31, 2001).These increase were partially offset by a decrease
in print and advertising  expenses for theatrical  releases  ($1,431,000 for the
year ended  December 31, 2002 compared to $1,844,000 for the year ended December
31,  2001).  As a  percentage  of  revenues  distribution  and  marketing  costs
increased to 28.2% for the year ended  December 31, 2002,  compared to 20.2% for
the year ended December 31, 2001.

     Selling, general and administrative expenses, net of amounts capitalized to
film costs,  increased  by  $981,000  (14.1%) to  $7,928,000  for the year ended
December 31, 2002,  compared to $6,947,000 for the year ended December 31, 2001.
The largest  increase  was in the area of bad debt expense  ($2,176,000  for the
year ended  December 31, 2002 compared to $1,268,000 for the year ended December
31, 2001). Other increases included:

     o    Accounting fees of $90,000;
     o    Insurance of $43,000;
     o    Rent of $143,000;
     o    Repairs and maintenance of $10,000;
     o    Storage of $18,000;
     o    Franchise taxes of $26,000;
     o    Travel of $14,000; and
     o    Decreased capitalized overhead of $23,000.

     These increases were partially offset by decreases as follows:

     o    Advertising expenses of $10,000;
     o    Depreciation expense of $30,000;
     o    Legal fees of $33,000;
     o    Publicity of $35,000;
     o    Compensation expense of $162,000;
     o    Shipping and messenger costs of $14,000; and
     o    Telephone expenses of $15,000.

                                       30
<PAGE>

     Net other  expense  increased  by $108,000  to $738,000  for the year ended
December  31, 2002,  compared to $630,000 for the year ended  December 31, 2001.
The  increase  in  net  other  expense  was  primarily  due  to  a  decrease  in
miscellaneous  income of  $195,000,  partially  offset by a decrease in interest
expense of $19,000 and an increase in interest income of $68,000.

     As a result of the above, we had a net loss of $9,378,000 (after income tax
and foreign  withholding tax expense of $91,000) for the year ended December 31,
2002  compared  to a net  loss of  $3,854,000  (after  income  tax  and  foreign
withholding tax expense of $62,000) for the year ended December 31, 2001.

      Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     Revenues increased by $12,519,000 (55.3%) to $35,144,000 for the year ended
December 31, 2001, compared to $22,625,000 for the year ended December 31, 2000.
The  increase in revenues  was  primarily  due to the growth of revenue from our
motion  pictures  segment  with  respect  to  direct  distribution  in the  U.S.
($6,007,000  for the year ended December 31, 2001 compared to $1,736,000 for the
year ended  December 31, 2000) and  increases  in ancillary  revenue,  including
airline revenue and executive  producing and other fees ($3,150,000 for the year
ended  December 31, 2001  compared to $196,000  for the year ended  December 31,
2000). Additionally,  the licensing of film rights generated $25,366,000 for the
year ended December 31, 2001 compared to $20,306,000 for the year ended December
31, 2000.

     The commercial  production  segment  generated  $263,000 for the year ended
December 31, 2001 compared to no income for the year ended December 31, 2000.

     In accordance  with new accounting  standards  established  pursuant to SOP
00-2,  distribution  and marketing  costs were  expensed as incurred  during the
years ended  December 31, 2001 and 2000.  Film costs as a percentage of revenues
decreased to 69.0% for the year ended  December 31, 2001,  compared to 74.5% for
the year ended  December  31, 2000.  The  decrease  was due to generally  higher
distribution  fee rates (our  gross  margin) on films  generating  the  greatest
amount of revenue during the year ended December 31, 2001,  compared to the year
ended  December  31,  2000.   Distribution  and  marketing  costs  increased  to
$7,101,000  for the year ended  December 31, 2001 compared to $4,774,000 for the
year ended  December 31,  2000.  The increase is  reflective  of increased  U.S.
theatrical and video/DVD distribution  activities in the year ended December 31,
2001  compared to the year ended  December 31, 2000. As a percentage of revenues
distribution  and marketing costs decreased to 20.2% for the year ended December
31, 2001, compared to 21.1% for the year ended December 31, 2000.

     Selling, general and administrative expenses, net of amounts capitalized to
film  costs,  increased  by  $474,000  (7.3%) to  $6,947,000  for the year ended
December 31, 2001,  compared to $6,473,000 for the year ended December 31, 2000.
The  largest  increase  was in the  area of  compensation  expense  ($1,361,000)
related to our expansion of existing and new operational  areas,  including U.S.
theatrical releasing (First Look Pictures), U.S. video and DVD operations (First
Look Home  Entertainment)  and the television  commercial  production  operation
(First Look Artists). Other increases included:

     o    Bank charges of $10,000;
     o    Dues and subscriptions of $15,000;
     o    Equipment lease payments of $13,000;
     o    Insurance of $15,000;
     o    Employee benefits of $36,000;
     o    Office overhead relating to commercial directors of $52,000;
     o    Office  and  computer  supplies  of  $79,000;
     o    Parking expenses of $13,000;
     o    Rent of $33,000;
     o    Repairs and maintenance of $15,000;
     o    Screenings and research of $18,000; and
     o    Shipping and messenger costs of $28,000.

                                       31
<PAGE>

     These increases were partially offset by decreases as follows:

     o    Bad debt expense of $608,000;
     o    Increased capitalized expenses of $310,000;
     o    Consulting fees of $17,000;
     o    Legal fees of $195,000;
     o    Officer's fringe benefits of $25,000;
     o    Publicity of $12,000; and
     o    Franchise taxes of $41,000.

     Net other  expense  decreased by $128,000  (16.9%) to $630,000 for the year
ended  December 31, 2001,  compared to $758,000 for the year ended  December 31,
2000.  The  decrease in net other  expense was  primarily  due to an increase in
interest  income of $49,000,  a decrease in interest and  financing  expenses of
$434,000,  increased  revenue from the sale of software of $242,000 and increase
miscellaneous  income of $22,000  partially offset by the decreased revenue from
the sale of securities of $625,000.

     As a result of the above,  we had a loss before income taxes and cumulative
effect of accounting  change of $3,792,000 for the year ended December 31, 2001,
compared to a loss before income tax benefit and cumulative effect of accounting
change of $6,230,000 for the year ended December 31, 2000.

     We  recorded a  one-time  charge for the  cumulative  effect of  accounting
change of  $14,123,000,  net of income tax  benefit of  $1,459,000  for the year
ended December 31, 2000.

     As a result  of the  above,  we had a net loss of  $3,854,000  for the year
ended December 31, 2001 (reflecting  foreign  withholding taxes of $53,000,  and
state taxes of $9,000),  compared to net loss of $20,490,000  for the year ended
December 31, 2000 (reflecting  foreign  withholding taxes of $131,000 and states
taxes of $6,000).

Liquidity and Capital Resources

     We require  substantial  capital for the  acquisition  of film rights,  the
funding of  distribution  costs and  expenses,  the payment of ongoing  overhead
costs  and the  repayment  of debt.  The  principal  sources  of  funds  for our
operations  has been cash flow  from  operations,  bank  borrowings  and  equity
financings.

     June 2002 Private Placement

     In June 2002, we consummated a private placement with Seven Hills, in which
we sold to Seven Hills,  for an aggregate  cash  purchase  price of  $6,050,000,
2,630,434  shares of our common stock and  five-year  warrants to purchase up to
1,172,422  shares of our common  stock at an exercise  price of $3.40 per share.
Warrants to purchase 881,137 shares of common stock are immediately  exercisable
and will expire on June 25, 2007.  Warrants to purchase 291,285 shares of common
stock ("Note  Warrants")  only will become  exercisable  upon  conversion of the
convertible  promissory note described below, in proportion to the amount of the
note  converted if the note is not  converted in whole,  and will expire on June
25, 2007.  If no portion of the note is converted  into common  stock,  then the
Note Warrants will not become exercisable.  As of December 31, 2002, Seven Hills
owned approximately 18.1% of our outstanding voting securities.

     Additionally,  in May  2002,  we and  Seven  Hills  formed a joint  venture
company that will provide  marketing and  distribution  funds for the theatrical
release  of motion  pictures  that we or Seven  Hills  select on an  alternating
basis. In June 2002, Seven Hills funded our $2,000,000  capital  contribution to
the joint venture company pursuant to a convertible promissory note issued by us
and the joint venture  company.  The investment in the joint venture  company is
reported  as an asset on the  balance  sheet  under  "Investment".  The  related
liability, discounted by $245,666 for the fair market value of the Note Warrant,
has been reported as a liability on the balance sheet  combined with other notes
payable under "Notes payable". The discounted amount will be amortized using the
effective  interest  rate method over the term of the note  through the maturity
date.  The note bears interest at a rate of 4% per annum,  payable  quarterly in
arrears.  Principal and unpaid accrued  interest on the note are payable on June
25, 2008. The note is recourse  against us as to interest only (accrued prior to
the maturity  date) and against the joint venture  company as to both  principal
and interest. Seven Hills also funded its own $2,000,000 capital contribution to
the joint venture company in June 2002.

                                       32
<PAGE>

     June 2000 Private Placement

     In June 2000, we consummated a private  placement with Rosemary Street,  in
which  we sold to  Rosemary  Street  for an  aggregate  cash  purchase  price of
$17,000,000:

     o    5,097,413 shares of our common stock;

     o    904,971  shares of our Series A preferred  stock,  each share of which
          automatically converted into two shares of common stock on October 15,
          2001; and

     o    five-year  warrants to purchase up to  2,313,810  shares of our common
          stock at an exercise price of $3.40 per share.

     As of December 31, 2002,  Rosemary Street owned  approximately 42.8% of our
voting securities.

     JPMorgan Facility

     Concurrently  with the consummation of the June 2000 private placement with
Rosemary  Street,  we entered into a $40 million  credit  facility with JPMorgan
(formerly  Chase  Securities,  Inc.  and The  Chase  Manhattan  Bank)  and other
commercial banks and financial institutions. A portion of the proceeds from this
credit facility was used to repay  outstanding  loans and accrued interest under
our previous credit facility with Coutts & Co. and Bankgesellschaft  Berlin A.G.
The remaining  proceeds have been used to finance our  production,  acquisition,
distribution  and  exploitation  of feature length motion  pictures,  television
programming,  video  product  and rights and for  working  capital  and  general
corporate  purposes.  During the years  ended  December  31,  2002 and 2001,  we
borrowed $4,000,000 and $8,000,000, respectively, under the JPMorgan facility.

     Under the JPMorgan  facility,  we borrow funds through  loans  evidenced by
promissory  notes.  The loans are made  available  through a  revolving  line of
credit  which may be reduced,  partially  or in whole,  at any time and is to be
fully paid on June 20, 2005. The JPMorgan  facility also provides for letters of
credit to be issued from time to time upon our request.  Amounts  available  for
drawing  (referred to as the "borrowing  base") under the JPMorgan  facility are
calculated  each month and cannot  exceed the $40 million  commitment.  The main
components  of the borrowing  base include a library  credit (a  percentage,  or
"advance  rate,"  of the value of our film  library,  based  upon a third  party
valuation of future cash flows,  which, under the terms of the credit agreement,
is required to be updated every twelve months) and an accounts receivable credit
(85% of net accounts  receivable which are acceptable to JPMorgan).  At December
31, 2002,  the advance  rate was 50%. In  connection  with the  amendment to the
credit facility described below, the advance rate was reduced to 45% on April 1,
2003 and will be  further  reduced  to 40% on July 1, 2003 and 35% on October 1,
2003.  At December 31, 2002, we had borrowed an aggregate of  $18,500,000  under
the JPMorgan facility and an additional $2,045,000 was available to borrow based
upon borrowing base calculations provided to JPMorgan as of December 31, 2002.

     The amounts borrowed under the JPMorgan  facility bear interest,  as we may
select,  at rates based on either LIBOR plus 2% or a rate per annum equal to the
greater  of (a) the Prime Rate plus 1%, (b) the Base CD Rate plus 2% and (c) the
Federal Funds Effective Rate plus 1.5% (as these terms are defined in the credit
agreement).  In  addition  to an annual  management  fee of  $125,000,  we pay a
commitment fee on the daily average  unused portion of the JPMorgan  facility at
an annual rate of 0.5%. Upon entering the JPMorgan facility,  we paid a one-time
fee of approximately  $848,000 as a cost of acquiring the JPMorgan facility. The
JPMorgan  facility  restricts the creation or incurrence of  indebtedness or the
issuance of additional  securities.  The JPMorgan  facility is collateralized by
all of our tangible and intangible assets and future revenues.

                                       33
<PAGE>

     In  February  2003,  upon the  request  of  JPMorgan,  we  entered  into an
amendment  to the JPMorgan  facility,  pursuant to which we agreed to reduce the
amounts we are able to borrow in relation to our library value as follows:

     o    From  February 18, 2003 to March 31, 2003 - the lesser of  $11,000,000
          or 50% of the library  value;

     o    From April 1, 2003 to June 30, 2003 - the lesser of $10,000,000 or 45%
          of the library value;

     o    From July 1, 2003 to September  30, 2003 - the lesser of $9,000,000 or
          40% of the library value;

     o    From  October 1, 2003 to the  expiration  of the term of the  JPMorgan
          facility  (June 20, 2005,  unless  modified as described  below) - the
          lesser of $8,000,000 or 35% of the library value.

     As of December 31, 2002, our cumulative  losses resulted in a breach of the
covenant  contained  in the credit  agreement  with  JPMorgan  that sets forth a
minimum level of net worth that we are required to maintain. We have requested a
waiver of this breach.  JPMorgan currently is considering our request and we are
in negotiation  with respect to further  modifications  JPMorgan will require to
the credit  agreement in exchange for such waiver.  At this point,  JPMorgan has
indicated that these modifications will likely include an immediate reduction of
the   commitment   level  under  the  credit   agreement  from  $40  million  to
approximately  $20 million,  with further  reductions so that by January 1, 2004
the  commitment  level will be $15  million.  The minimum net worth  requirement
would be waived until December 31, 2003,  subject to our  maintaining a positive
net worth as  calculated  pursuant  to GAAP.  These  modifications  require  the
agreement of 51% of the voting right of the participating  banks (the percentage
based upon the proportionate  commitment of each bank to the total commitment of
$40  million).  Final  resolution  of this matter is expected by April 30, 2003.
Until  then,  we are  precluded  from  drawing  further  funds  under the credit
facility.

     Off Balance Sheet Commitments

     In  addition  to  direct  bank  borrowings,   we  occasionally  enter  into
contractual  arrangements  whereby  we commit  to pay  certain  amounts  for the
acquisition  of  distribution  rights of a film at a date in the  future.  These
contractual  commitments  are sometimes used by producers or other rights owners
to access production financing with respect to the given film. These commitments
generally are subject to the rights owner meeting certain conditions,  including
delivery  by the rights  owner to us of  certain  physical  materials  and legal
documents  relating  to the film that will  enable us to  properly  exploit  the
rights we are  acquiring.  Once these  conditions  are met, we become  obligated
under our contract to pay the amounts called for in the given contract. We treat
these types of commitments as liabilities,  includable in our balance sheet only
upon  satisfaction  of the  conditions  to our  obligation  and  disclose  these
obligations  as  commitments.  As of  December  31,  2002,  the  total  of these
outstanding  commitments was $5,386,000,  of which $2,453,000 was reflected as a
liability on our balance sheet  (Payable to Producers)  and  $2,933,000  was not
reflected  as a  liability  on our balance  sheet,  but will be once the various
conditions  to our  commitment,  including  delivery  of the related  film,  are
satisfied.

     Additionally,  we have entered into arrangements with German film financing
partnerships  whereby  we have  guaranteed  that  within  three  years  from the
commencement  of principal  photography  of the related film,  the licensing and
distribution proceeds, net of our fees and expenses,  will be no less than sixty
to eighty percent (depending upon the specific arrangement) of the amount funded
toward the production cost of the related film. These  guarantees  generally are
not recorded as  liabilities  unless and until we expect that  proceeds from the
licensing and  distribution  of the related film,  net of our fees and expenses,
will be  insufficient  to cover the guarantee  within the agreed upon period for
the  particular  film.  As of December 31, 2002,  we had three such  commitments
outstanding,   whereby  the  total  amount  committed  was  $10,238,000.   These
guarantees are summarized below.

<TABLE>
<CAPTION>
                    <S>       <C>          <C>               <C>                 <C>                <C>                 <C>


                  Term of Guarantee                      Minimum Potential
                  ---------------                        Amount of Future    Current Carrying                    Projected Future
                  From         To          Guarantee        Payments        Amount of Liability  Assets Held        Contracts
                  ----         --        ------------    ------------       ------------------   -----------        ----------
Film 1          10/04/01    10/04/04      $ 5,240,000    $   2,598,000          $      -       $ 2,675,000      $  2,200,000
Film 2          12/03/00    12/03/03        3,998,000        3,559,000         2,046,000         1,683,000         1,996,000
Film 3          01/31/02    01/31/05        1,000,000        717,000           371,000           712,000           695,000
                                      --------------------------------------------------------------------------------------------
                                         $ 10,238,000        $   6,874,000       $ 2,417,000       $ 5,070,000      $  4,891,000
                                      ============================================================================================
</TABLE>
                                       34
<PAGE>

In the event any of the guarantees are drawn upon, we have the right to retain
proceeds from the collection of accounts receivable in addition to proceeds from
the future contracts of distribution rights in the respective film where the
guarantee had been called (both, net of our fees and expenses) until we have
recovered any guarantee paid. The table above reflects the amount of cash and
accounts receivable held ("Assets Held") along with our estimate of the value of
future licenses of distribution rights ("Projected Future Contracts") to the
respective film as of December 31, 2002. We expect that the possibility of
having to honor our contingent obligations under these agreements is remote and
in the event any of the guarantees are drawn upon, we believe that proceeds from
the liquidation of accounts receivable and further distribution rights will be
sufficient to cover the maximum amount of future payments under each guarantee.

     Resources

     At  December  31,  2002,  we had  cash and cash  equivalents  of  $713,000,
compared to cash and cash  equivalents of $1,673,000 as of December 31, 2001. At
December  31,  2002,  $2,045,000  was  available  for us to draw down  under the
JPMorgan facility.  As of April 11, 2003, we have reduced the amount outstanding
under  the  JPMorgan  facility  by  $2,000,000  to  $16,500,000  and we  have an
unrestricted cash balance of approximately $1,900,000.

     For the years  ended  December  31,  2002 and  December  31,  2001,  we had
operating  losses of  $8,549,000  and  $3,162,000,  respectively.  These  losses
included  certain  non-cash  items,  including  bad debt  expense  and film cost
write-downs.  Bad debt expense was  $2,176,000  for the year ended  December 31,
2002,  compared to $1,268,000  for the year ended  December 31, 2001.  Film cost
write-downs  were  $3,189,000  for the year ended  December 31, 2002 compared to
$1,815,000 for the year ended December 31, 2001.

     Operating activities used cash of $10,498,000 and $6,723,000, respectively,
for the years ended  December 31, 2002 and December 31, 2001.  The increased use
of cash reflects our increased  investment in film costs of $17,105,000  for the
year ended  December 31, 2002 compared to $9,922,000 for the year ended December
31, 2001.

     Our  commitments  as of  December  31,  2002  require  the  expenditure  of
approximately $5,386,000 during 2003.  Additionally,  under our current plans we
anticipate  requiring  approximately  $2,140,000  in  additional  funds  for the
acquisition of product.

     Our  significant  net  losses  and  negative  cash flow along with the most
recent  modification and pending  modifications  under our credit agreement with
JPMorgan raise  questions  about our ability to continue as a going concern.  We
have been reviewing our past business plan, alternative plans and other options.
We have  made  reductions  in  overhead,  including  staff  reductions,  certain
consulting  contracts  have not been renewed,  and we have not renewed our first
look  arrangement  with  Grandview  Pictures.  We also are  considering  further
reductions in overhead.  Budgeted film investment has been significantly reduced
from 2002.  Additionally,  we are actively in  discussion  with various  parties
regarding  potential  strategic  relationships,  equity  investment  and revised
business  plans. If we are not successful in generating  sufficient  future cash
flow from operations in accordance with our current or an altered business plan,
raising  additional  capital  through  public or private  financings,  strategic
relationships or other arrangements will be necessary.  This additional funding,
if needed,  might not be available on acceptable  terms,  or at all.  Failure to
raise  sufficient  capital,  if and when needed,  could have a material  adverse
effect on our business,  results of operations and financial condition including
our ability to continue to operate as a going concern.

                                       35
<PAGE>



ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk related to changes in interest  rates.  We do
not use derivative  financial  instruments.  Because only a small portion of our
revenues  are  denominated  in foreign  currency,  we do not believe  there is a
significant  risk  imposed on us due to the  fluctuations  in  foreign  currency
exchange rates. The table below provides  information about our debt obligations
as of December 31, 2002,  including  principal  cash flows and related  weighted
average interest rates by expected maturity dates:
<TABLE>
<CAPTION>
                                                        <S>         <C>        <C>          <C>        <C>          <C>
                                                                             Expected Maturity Date
                                                                             -----------------------
                                                                                 (in thousands)

                                                       2003        2004        2005        2006        2007      Thereafter
                                                       ----        ----        ----        ----        ----      ----------

Borrowings under credit facility                        -           -        $18,500        -                        -
  Average interest rate                                3.7%        3.7%        3.7%         -           -            -
Subordinated note payable                               -           -           -           -           -          $2,000
  Average interest rate                                 4%         4%           4%          4%          4%           4%
</TABLE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The report of independent  accountants,  consolidated  financial statements
and notes to our consolidated  financial statements appear in a separate section
of this report (beginning on page F-1) following Part IV.

     The following table sets forth selected unaudited  quarterly financial data
for each of the quarters in the two years ended  December  31, 2002  (amounts in
thousands except for per share data):
<TABLE>
<CAPTION>
<S>                                                     <C>              <C>              <C>                 <C>
                                                                                  2002
                                                                                  -----
                                                                             Quarter Ended
                                                                             -------------
                                                    March 31          June 30         September 30       December 31
                                                 --------------- ------------------ ------------------ -----------------
Revenues                                              $  6,781       $   5,092          $   5,759         $   9,067
Income (loss) from operations                             (271)         (2,437)            (3,185)           (2,656)
Net income (loss)                                         (526)         (2,616)            (3,415)           (2,821)
Basic and diluted loss per share                          (.04)          (0.22)             (0.23)            (0.22)

                                                                                  2001
                                                                                  ----
                                                                             Quarter Ended
                                                                             -------------
                                                    March 31          June 30         September 30       December 31
                                                 --------------- ------------------ ------------------ -----------------
Revenues                                              $ 10,243      $   9,759          $   8,171         $   6,971
Income (loss) from operations                              333           (458)              (635)           (2,402)
Net income (loss)                                          129           (673)              (835)           (2,475)
Basic and diluted income (loss) per share                 0.01           (0.07)            (0.09)            (0.23)
</TABLE>

                                       36
<PAGE>

     The  increase  in loss from  operations  during the fourth  quarter of 2001
compared  to the  previous  three  quarters  was  due to  the  expansion  of our
operations and increases in:

     o    write-offs  of  film  costs   relating  to  certain   projects   under
          development;

     o    marketing and distribution expenses in connection with preparation for
          the upcoming film festivals;

     o    bad debt write-offs; and

     o    legal and  consulting  fees  relating to valuation of our film library
          and capital investment opportunities other than Rosemary Street.

The lower net loss for the  quarter  ended  September  30,  2001  reflected  the
capital gain that we  recognized on our sale of 17,454 shares of common stock of
Yahoo!, Inc. during the quarter.

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     Not applicable.

                                       37
<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Our  current  directors  and  executive   officers  are  set  forth  below.
Biographical information concerning each of the directors and executive officers
is presented on the following pages.  Information is presented as of the date of
this report.
<TABLE>
<CAPTION>
<S>                             <C>                <C>

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


Christopher J. Cooney           42             Co-Chairman of the Board and
                                               Chief Executive Officer


Robert B. Little                58             Co-Chairman of the Board and President


William F. Lischak              45             Chief Operating Officer, Chief
                                               Financial Officer and Secretary

Jeffrey Cooney                  45             Executive Vice President - Creative Affairs
                                               and Director

Stephen K. Bannon               49             Director

Scot K. Vorse                   42             Director

Barry R. Minsky                 60             Director

Joseph Linehan                  41             Director

Patrick Costello                46             Director

Reverge Anselmo                 41             Director

</TABLE>

Current Officers and Directors

     Christopher  J. Cooney has served as co-chairman of our board and our chief
executive  officer since June 2000.  Since August 1999, Mr. Cooney has served as
president of Rosemary  Street, a New York-based  entertainment  holding company.
Since 1986, Mr. Cooney has served in various  positions at EUE/Screen Gems, Ltd.
("EUE/Screen  Gems"),  a  New  York-based  television  commercial  facility  and
production  house,  including as head of  production  from 1986 to 1988, as vice
president in charge of all  facilities  from 1988 to 1992, and as vice president
of physical  production  from 1992 to 1996. In 1996,  Mr. Cooney led  EUE/Screen
Gems in the acquisition of DeLaurentis Studios.  Since 1996, Mr. Cooney has been
responsible for overseeing all commercial and daytime television  production for
the North  Carolina  operations  of  EUE/Screen  Gems.  Mr. Cooney also holds an
ownership  interest in EUE/Screen Gems. In 1984, Mr. Cooney formed Total Picture
Company to produce  concert films,  commercials and videos for record labels and
musical  instrument  manufacturers.  Prior to that,  Mr.  Cooney was employed by
Independent  Artists  as  an  assistant  producer  of  international  television
commercials. Mr. Cooney received his B.A. from Boston University. Christopher J.
Cooney is the brother of Jeffrey Cooney,  our Executive Vice President  Creative
Affairs, and a director of our company.

     Robert B.  Little has been  president  of our  company  since June 2000 and
co-chairman of our board of directors since our merger with Overseas  Private in
October  1996.  Mr.  Little also served as our co-chief  executive  officer from
October 1996 to June 2000. Mr. Little  co-founded  Overseas  Private in February
1980 and served as chairman of the board of Overseas  Private from February 1987
until  October 1996 and its chief  executive  officer from  February  1990 until
October 1996.  Mr. Little was a founding  member of the American Film  Marketing
Association,  the organization  which established the American Film Market,  and
served  multiple terms on its board of directors.  In 1993, Mr. Little served on
the City of Los Angeles Entertainment Industry Task Force, a task force composed
of industry leaders focused on maintaining and enhancing Los Angeles' reputation
as the entertainment  capital of the world. Mr. Little is also a founding member
of The  Archive  Council,  an  industry  support  group  for the  University  of
California at Los Angeles Archive Film Preservation Program, and a member of the
board of directors of the Antonio  David Blanco  Scholarship  Fund, an endowment
fund that annually  benefits  deserving  students in the UCLA Department of Film
and  Television.  Mr.  Little  was an  executive  producer  of Titus,  which was
nominated for an Academy Award(R) in 1999.

                                       38
<PAGE>

     William  F.  Lischak  has  served as our  chief  operating  officer,  chief
financial  officer and secretary of our company since October 1996.  Mr. Lischak
also served as a director of our company from October 1996 until June 2002.  Mr.
Lischak  served as chief  operating  officer of Overseas  Private from September
1990 until  October 1996 and its chief  financial  officer from  September  1988
until October 1996. Mr. Lischak, a certified public  accountant,  previously had
worked in public  accounting,  including  from 1982 to 1988 with the  accounting
firm of Laventhol & Horwath.  Mr.  Lischak has a masters  degree in taxation and
has taught courses in the extension  program at UCLA in accounting,  finance and
taxation  for motion  pictures and  television.  Mr.  Lischak  attended New York
University's  Tisch School of Arts and received a bachelor's  degree in business
administration from New York University's Leonard N. Stern School of Business.

     Jeffrey Cooney has served as our executive vice president-creative  affairs
and a director of our company since June 2000. Since August 1999, Mr. Cooney has
served as  creative  director  of  Rosemary  Street.  Mr.  Cooney  also holds an
ownership interest in EUE/Screen Gems. In 1990, Mr. Cooney formed Jeffrey Cooney
Films and until  August 1999  directed  commercials  for clients  such as Kodak,
Mitsubishi,  Procter & Gamble and General Mills.  Mr. Cooney  received a B.A. in
English from Holy Cross College. Jeffrey Cooney is the brother of Christopher J.
Cooney, the co-chairman of our board and our chief executive officer.

     Stephen  K.  Bannon has been a director  of our  company  and member of our
executive  committee  since its inception in December 1993. From October 1996 to
June 2000,  he served as vice chairman of our board of directors and Chairman of
its executive committee. From December 1993 until October 1996, he served as our
Chairman of the Board.  From June 1991 through July 1998,  Mr.  Bannon served as
the chief  executive  officer of Bannon & Co., Inc., an investment  banking firm
specializing in the entertainment, media and communications industries. Bannon &
Co.  formed a joint  venture  with  Societe  Generale in 1996  creating  Societe
Generale Bannon to undertake media and entertainment investment banking. In July
1998,  Societe Gererale  purchased the joint venture.  Mr. Bannon is currently A
Partner of The Firm,  one of the  largest  talent  management  companies  in the
entertainment business. Mr. Bannon is in charge of The Firm's Strategic Advisory
Services Division.

     Scot K. Vorse  became a director  of our  company  in  January  1995.  From
January 1995 until October 1996, he served as our treasurer and  secretary,  and
from January 1995 until  November  1996, he served as our vice  president.  From
June 1991 through July 1998, Mr. Vorse served as an executive vice president and
the chief  financial  officer of Bannon & Co.,  Inc.  After the  acquisition  of
Bannon & Co., Inc. by SG Cowen  Securities  Corporation  in July 1998, Mr. Vorse
served as managing  director  and co-head of SG Cowen  Securities  Corporation's
media and entertainment  group until March 2000. Since March 2000, Mr. Vorse has
been managing his personal investments and consulting.

     Barry R. Minsky has served as a director  of our  company  since June 2000.
Since 1977,  Mr. Minsky has served as president of Wharton  Capital  Corporation
and since 1996 as chief executive officer of Wharton Capital  Partners,  Ltd., a
New  York-based   investment  banking  firm  which,  along  with  its  partners,
facilitates financing for public companies and institutional clients. Mr. Minsky
has  assisted  public  and  private   corporations  in  merger  and  acquisition
activities,  sourcing financing and developing financial strategies.  Mr. Minsky
also  has  experience  in  music  publishing,  film  libraries,  motion  picture
production  and  distribution.  Mr.  Minsky  received a B.S.  in  economics  and
graduated  on  the  dean's  list  from  the  Wharton   School,   University   of
Pennsylvania.

     Joseph Linehan has served as a director of our company since June 2000. Mr.
Linehan  has been  employed  in  various  capacities  with The Union  Labor Life
Insurance  Co.  since 1984.  Since April  2001,  Mr.  Linehan has served as vice
president-private  capital.  Mr.  Linehan  received a B.A.  and M.B.A.  from the
University of Maryland.

                                       39
<PAGE>


     Patrick  Costello  has served as a director of our company  since  February
2003. Since May 1997, Mr. Costello has served as the Chief Financial  Officer of
Northway  Management Company,  LLC, a private investment  company.  Since August
1998, he has served as the Chief Financial Officer of Seven Hills. From May 1992
to  May  1997,  Mr.  Costello  was  the  Chief  Financial  Officer  of  PanAmSat
International  Corporation and was elected a director of PanAmSat  International
Corporation  in October 1996. Mr.  Costello  continues to serve as a director of
PanAmSat Corporation. Mr. Costello is a certified public accountant.

     Reverge Anselmo has served as a director of our company since May 2002. Mr.
Anselmo formed Seven Hills in 1996 to create and produce  independent  films and
he currently  serves as president of Seven Hills.  Most  recently,  Mr.  Anselmo
wrote and directed  Stateside,  starring  Jonathan  Tucker,  Rachael Leigh Cook,
Agnes Bruckner and Val Kilmer. The romantic drama will be released  theatrically
in late 2003. Through Seven Hills Mr. Anselmo,  wrote, directed and produced the
feature  films The  Outfitters  which was an official  selection of the Sundance
Film Festival and Lover's Prayer which starred Kristen Dunst and was distributed
by our company.  Mr. Anselmo also wrote the Harper Collins novel The Cadillac of
Six-Bys.  Mr. Anselmo is currently in development on his screenplays Runaway Bay
and Over the Waves.  Mr. Anselmo is also the owner and co-founder of the monthly
magazine Magnificat.

Board of Directors

     Our  board of  directors  is  divided  into  three  classes,  each of which
generally  serves for a term of three  years,  with only one class of  directors
being elected in each year. The term of the first class of directors, consisting
of Reverge  Anselmo,  Joseph Linehan and Barry R. Minsky,  would have expired at
the annual meeting of our stockholders in 2002 but, as we did not have an annual
meeting that year, will expire on the date of this year's annual meeting and the
new term will expire at the annual meeting of our stockholders in 2005. The term
of the second class of  directors,  consisting  of Robert B. Little,  Stephen K.
Bannon and  Christopher  J.  Cooney,  will  expire at the annual  meeting of our
stockholders  in 2003.  The term of the third class of directors,  consisting of
Scot K. Vorse,  Patrick  Costello and Jeffrey Cooney,  would have expired at the
annual meeting of stockholders in 2001 but, as we did not have an annual meeting
that year,  will  expire on the date of this year's  annual  meeting and the new
term will  expire at the annual  meeting of our  stockholders  in 2004.  In each
case,  each director  serves from the date of his election  until the end of his
term and until his successor is elected and qualifies.

Committees

     Executive Committee. Christopher J. Cooney, Robert B. Little and Stephen K.
Bannon currently serve on the executive committee.  During intervals between the
meetings of the board of directors, the executive committee exercises all powers
of the board of directors (except those powers specifically reserved by Delaware
law or our  Bylaws  to the  full  board  of  directors)  in the  management  and
direction  of the  business  and  conduct  of our  affairs in all cases in which
specific directions have not been given by the board.

     Compensation  Committee.  Joseph  Linehan and  Stephen K. Bannon  currently
serve on the compensation committee.  The compensation committee administers our
stock option plans to the extent contemplated thereby and reviews, approves, and
makes recommendations with respect to compensation of officers,  consultants and
key employees.

     Audit  Committee.  The audit  committee  currently  consists  of Stephen K.
Bannon and Scot K. Vorse.  The functions of the Audit  Committee  are: to review
and approve the  selection of, and all services  performed  by, our  independent
auditors;  to meet and consult with and to receive reports from, our independent
auditors and our  financial  and  accounting  staff;  and to review and act with
respect to the scope of audit  procedures,  accounting  practices  and  internal
accounting and financial controls.

                                       40
<PAGE>

Amended and Restated Voting Agreement

     We previously were party to a Voting Agreement,  dated as of June 20, 2000,
by and among us, Rosemary  Street,  Robert Little,  Ellen Little  (together with
Robert  Little,  referred to as the  "Littles"),  MRCo.,  Inc.,  Christopher  J.
Cooney, Jeffrey Cooney and Wharton Capital Partners, Ltd. relating to the voting
of shares of our common  stock  owned by the  parties.  In  connection  with the
closing  of the  transaction  with Seven  Hills in June  2002,  we and the other
parties to the Voting  Agreement  entered  into an Amended and  Restated  Voting
Agreement with Seven Hills that supersedes the prior Voting  Agreement and which
provides that:


     o    So long as Robert  Little is employed as our  president or the Littles
          own 5% or more of our Voting Securities (as defined), each of Rosemary
          Street,  Wharton and Seven Hills will use its best efforts to nominate
          and vote for Mr. Little to serve as a member of our board of directors
          and will not vote its "Voting Securities" to remove Robert Little as a
          director, except for "cause" (as defined).

     o    So  long  as  Christopher  Cooney  and  Jeffrey  Cooney  own,  in  the
          aggregate,   directly  or  indirectly,   5%  or  more  of  our  Voting
          Securities, each the Littles, Rosemary Street, Wharton and Seven Hills
          will use its best efforts to nominate and vote for Christopher  Cooney
          and Jeffrey  Cooney to serve as members of our board of directors  and
          will not vote its Voting  Securities to remove  Christopher  Cooney or
          Jeffrey Cooney as a director, except for cause.

     o    So long as MRCo., Inc. owns 5% or more of our Voting Securities,  each
          of the Littles,  Rosemary Street, Wharton and Seven Hills will use its
          best  efforts to nominate  and vote for a designee  of MRCo.,  Inc. to
          serve as a member  of our  board  of  directors  and will not vote its
          Voting  Securities to remove such  designee as a director,  except for
          cause.

     o    So long as Seven Hills owns 5% or more of our Voting Securities,  each
          of the Littles,  Rosemary Street and Wharton will use its best efforts
          to nominate and vote for two individuals  designated by Seven Hills to
          serve  as  members  of our  board of  directors  and will not vote its
          Voting  Securities to remove such  designees as directors,  except for
          cause.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
our directors  and  executive  officers and persons who own more than 10% of our
common stock to file with the Securities and Exchange Commission initial reports
of  ownership  and reports of changes in ownership of our common stock and other
equity securities.  Our executive  officers,  directors and 10% stockholders are
required by SEC  regulations  to furnish us with  copies of Section  16(a) forms
they file. To our knowledge, based solely upon a review of the Forms 3 and 4 and
amendments thereto furnished to us during our most recent fiscal year, the Forms
5 furnished  to us with  respect to our most  recent  fiscal  year,  and written
representations  of our  directors,  executive  officers  and 10%  stockholders,
during the year ended December 31, 2002,  all Section 16(a) filing  requirements
applicable  to our  executive  officers,  directors  and 10%  stockholders  were
complied with.

                                       41
<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

         The following table sets forth the total compensation paid or accrued
during 2002, 2001 and 2000 to our chief executive officer and our two other
executive officers who earned more than $100,000 during those periods:
<TABLE>
<CAPTION>
                <S>                     <C>        <C>          <C>             <C>             <C>                 <C>

                                                                                                Long Term
                                                                                              Compensation
                                                            Annual Compensation                  Awards
                                               -------------------------------------------------------------------------------

                                                                    Other Annual     Securities            All
                                                                      Compen-       Underlying           Other
           Name and                   Year    Salary       Bonus       sation       Options/SARS       Compensation
          Principal Position                   ($)          ($)         ($)             (#)               ($)
         --------------------         ----    ------       -----   ------------    -----------        --------------
Christopher J. Cooney                 2002     200,000       0           0              0                660(1)
Co-chairman of the board and          2001     200,000       0           0              0                870(1)
chief executive officer               2000     100,000(2)    0           0              0                0



Robert B. Little                      2002     300,000       50,000(3)   40,000(4)      0                6,660(5)
Co-chairman of the board and          2001     300,000       50,000(3)   40,000(4)      0                5,931(6)
president                             2000     215,865(7)    37,500(8)   36,371(9)      250,000          38,715(10)


William F. Lischak                    2002     225,000       50,000      0(11)          0                10,655(12)
Chief operating officer, chief        2001     212,980       50,000      0(11)          0                12,570(13)
financial officer and secretary       2000     212,980       150,000     0(11)          75,000           12,286(14)

----------------------------------
</TABLE>

(1)  Represents  disability insurance premiums paid by us for the benefit of Mr.
     Cooney.

(2)  Represents  salary  earned by Mr.  Cooney  commencing  in June 2000 when he
     became  co-chairman of the board and chief executive  officer in connection
     with the closing of the private placement with Rosemary Street.


(3)  Represents bonus earned by Mr. Little pursuant to his employment  agreement
     of which $25,000 has been deferred.


(4)  Represents  general  expenses  allowance  payable  pursuant to Mr. Little's
     employment agreement.


(5)  Represents $6,000 in contributions we made on behalf of Mr. Little pursuant
     to our 401(k) plan and $660 in disability insurance premiums paid by us for
     the benefit of Mr. Little.


(6)  Represents $3,400 in contributions we made on behalf of Mr. Little pursuant
     to our 401(k) plan and $2,531 in disability  insurance  premiums paid by us
     for the benefit of Mr. Little.


(7)  Represents  salary earned by Mr. Little as our co-chairman of the board and
     co-chief  executive  officer  through  June 2000.  In  connection  with the
     closing of the private  placement  with  Rosemary  Street in June 2000,  we
     amended Mr. Little's  existing  employment  agreement to provide for him to
     serve as co-chairman of the board and president.


(8)  Represents bonus earned by Mr. Little pursuant to his employment agreement.


(9)  Represents $11,852 of auto expense allowance, $3,750 in business management
     fees and $20,769 of general expense allowance paid pursuant to Mr. Little's
     employment agreement.


(10) Represents $3,115 in contributions we made on behalf of Mr. Little pursuant
     to our  401(k)  plan,  $32,966  in life  insurance  premiums  and $2,634 in
     disability insurance premiums paid by us for the benefit of Mr. Little.

                                       42
<PAGE>

(11) Prerequisites  with  respect to the  executive  officer  did not exceed the
     lesser of $50,000 or 10% of the executive officer's salary and bonus.


(12) Represents  $4,860  in  contributions  we made  on  behalf  of Mr.  Lischak
     pursuant to our 401(k) plan, $5,135 in life insurance  premiums and $660 in
     disability insurance premiums we paid for the benefit of Mr. Lischak.


(13) Represents  $4,500  in  contributions  we made  on  behalf  of Mr.  Lischak
     pursuant to our 401(k) plan,  $5,135 in life insurance  premiums and $2,935
     in disability insurance premiums we paid for the benefit of Mr. Lischak.


(14) Represents  $4,260  in  contributions  we made  on  behalf  of Mr.  Lischak
     pursuant to our 401(k) plan,  $6,139 in life insurance  premiums and $1,887
     in disability insurance premiums we paid for the benefit of Mr. Lischak.

     There were no options granted to the executive  officers named above during
the year ended December 31, 2002.

     The following table summarizes the number of exercisable and  unexercisable
options held by the  executive  officers  named above at December 31, 2002,  and
their value at that date if such options were in-the-money:
<TABLE>
<CAPTION>
<S>                                     <C>             <C>                       <C>                             <C>

                                                AGGREGATED OPTION EXERCISES IN 2002 AND
                                                    FISCAL YEAR-END OPTION VALUES

                                                                             Number of Securities
                                                                            Underlying Unexercised        Value of Unexercised
                                                                           Options at December 31,       In-the-Money Options at
                                  Shares Acquired on                                 2002                   December 31, 2002
                                       Exercise         Value Realized    Exercisable/ Unexercisable   Exercisable/ Unexercisable
Name                                     (#)                  ($)                    (#)                           ($)
-----------------------------------------------------------------------------------------------------------------------------------
Christopher J. Cooney                                                                0/0                           0/0
Co-chairman of the board and              0                    0
chief executive officer

Robert B. Little
Co-chairman of the board and              0                    0
president                                                                         250,000/0                        0/0

William F. Lischak
Chief operating officer,                  0                    0
chief financial officer and
secretary                                                                        66,668/8,332                      0/0
</TABLE>

Director Compensation

     Pursuant to the  automatic  option grant program under our 1996 Basic Stock
Option  and  Stock  Appreciation  Rights  Plan,  each  individual  serving  as a
non-employee board member on October 31, 1996 was granted a non-qualified option
to purchase 5,000 shares of common stock. In addition,  each member of the board
who is not employed by us receives an automatic grant of a non-qualified  option
to purchase  5,000 shares of the common stock (i) upon  becoming a board member,
whether through election at a meeting of our stockholders or through appointment
by the  board  of  directors  and  (ii) on the date of each  annual  meeting  of
stockholders, if such individual is to continue to serve as a board member after
such meeting;  provided such  individual has served as a non-employee  member of
the board of directors for at least six months. Each such automatic option grant
is, among other things, exercisable at the fair market value of the common stock
on the date of the automatic grant and is generally exercisable after completion
of one year of service to the board of  directors  measured  from the  automatic
grant date.  In addition,  we  reimburse  all  directors  for travel and related
expenses  incurred  in  connection  with their  activities  on our  behalf.  Our
directors are not otherwise compensated for serving on the board.

                                       43
<PAGE>



Compensation Committee Interlocks And Insider Participation

     Our  compensation  committee was  established in October 1996 and currently
consists of Joseph Linehan and Stephen K. Bannon.  Mr. Linehan has served as one
of our  directors  since June 2000.  Mr. Bannon was our chairman of the board of
directors during 1996 until consummation of the merger with Overseas Private and
served as vice  chairman of the board of directors and chairman of the executive
committee from October 1996 to June 2000. The compensation  committee  currently
administers both of our stock option plans to the extent contemplated thereby.

Compensation Arrangements For Current Executive Officers

     Christopher J. Cooney

     In June 2000, we entered into an employment  agreement with  Christopher J.
Cooney,  which provided for Mr. Cooney to serve as our  co-chairman of the board
and the chief  executive  officer for a one-year term that expired in June 2001.
Under the terms of the agreement,  Mr. Cooney received a base salary of $200,000
and was  entitled  to receive an annual  $25,000  bonus if our  pre-tax  profits
exceeded  $500,000 in any year during the term.  Mr. Cooney also was entitled to
an additional bonus, if any, as established by the board at the beginning of the
employment  term based on our achieving  certain profit  targets.  The agreement
contained a non-compete  clause whereby Mr. Cooney agreed not to compete with us
for the duration of the agreement. Mr. Cooney has continued to be compensated on
the same terms as set forth in his expired employment agreement.

     Robert B. Little

     In June 2000, we entered into an amended and restated employment  agreement
with Robert B. Little, which provides for Mr. Little to serve as our co-chairman
of the board and the  president for a three-year  term ending in June 2003.  Mr.
Little  receives a base salary of $300,000  and a  guaranteed  bonus of $50,000,
which will be increased  by $25,000 on a  cumulative  basis for each year of the
employment  term in which our pre-tax profits exceed  $500,000.  Mr. Little also
will be entitled to an additional  bonus,  if any, as may be  established by the
board  at the  beginning  of  each  year of the  employment  term  based  on our
achieving  certain profit  targets.  If we achieve these targets,  Mr.  Little's
employment  agreement  will be  automatically  renewed  on the same terms for an
additional  two-year term.  Regardless of whether we achieve the targets, we may
give Mr. Little  written  notice at least six months prior to the  expiration of
the  initial  employment  term that we elect to extend the  initial  term for an
additional  two years.  If the initial term is not renewed,  Mr.  Little will be
entitled to receive $400,000 in cash, payable in six equal monthly  installments
of $66,666,  with the first payment to be made within 30 days after  termination
of the initial term.  The agreement  contains a non-compete  clause  whereby Mr.
Little  agreed not to compete with us for the duration of the  agreement and for
one year after its termination.

     William F. Lischak

     In June 2000, we entered into an amended and restated employment  agreement
with William F. Lischak,  which  provides for Mr.  Lischak to serve as our chief
operating  officer and chief  financial  officer for a three-year term ending in
June 2003. Mr. Lischak receives a base salary of $225,000 and a guaranteed bonus
of $50,000,  which will be increased  by $15,000 on a cumulative  basis for each
year of the employment  term in which our pre-tax profits exceed  $500,000.  Mr.
Lischak  also  will be  entitled  to an  additional  bonus,  if  any,  as may be
established  by the board at the beginning of each year of the  employment  term
based on our achieving certain profit targets. If we achieve these targets,  Mr.
Lischak's employment  agreement will be automatically  renewed on the same terms
for an additional  two-year term.  Regardless of whether we achieve the targets,
we may  give  Mr.  Lischak  written  notice  at least  six  months  prior to the
expiration  of the initial  employment  term that we elect to extend the initial
term for an  additional  two years.  If the  initial  term is not  renewed,  Mr.
Lischak  will be  entitled  to receive  $300,000  in cash,  payable in six equal
monthly  installments  of $50,000,  with the first  payment to be made within 30
days after termination of the initial term. The agreement contains a non-compete
clause whereby Mr. Lischak agreed not to compete with us for the duration of the
agreement and for one year after its termination.

                                       44
<PAGE>

     In connection with the June 2000 private placement with Rosemary Street, we
granted Mr. Lischak an option under our 1996 Basic Stock Option Plan to purchase
75,000  shares of common  stock at an exercise  price of $3.40 per share.  As of
December 31, 2002,  66,668 options were  exercisable.  2,083 options will become
exercisable on the last day of each of the next 4 consecutive months thereafter.
Once exercisable, the options will remain exercisable until April 2005.

     Jeffrey Cooney

     In June 2000, we entered into an employment  agreement with Jeffrey Cooney,
which provides for Mr. Cooney to serve as our executive vice  president-creative
affairs for a three-year  term ending in June 2003.  Mr. Cooney  receives a base
salary  of  $60,000  and will  receive  a  $25,000  bonus  for each  year of the
employment  term in which our pre-tax profits exceed  $500,000.  Mr. Cooney also
will be entitled to an additional  bonus,  if any, as may be  established by the
board  at the  beginning  of  each  year of the  employment  term  based  on our
achieving  certain profit  targets.  If we achieve these targets,  Mr.  Cooney's
employment  agreement  will be  automatically  renewed  on the same terms for an
additional  two-year term.  Regardless of whether we achieve the targets, we may
give Mr. Cooney  written  notice at least six months prior to the  expiration of
the  initial  employment  term that we elect to extend the  initial  term for an
additional  two years.  If the initial term is not renewed,  Mr.  Cooney will be
entitled to receive $100,000 in cash, payable in six equal monthly  installments
of  $16,666.67,  with  the  first  payment  to be  made  within  30  days  after
termination  of the initial term.  The agreement  contains a non-compete  clause
whereby  Mr.  Cooney  agreed  not to  compete  with us for the  duration  of the
agreement and for one year after its termination.

Stock Option Plans

     Amended and Restated 1996 Special Stock Option Plan and Agreement

     The Amended and  Restated  1996  Special  Stock  Option Plan and  Agreement
primarily  provides  equity  incentives  to each of Robert B.  Little  and Ellen
Dinerman Little. Under the special option plan, on October 31, 1996, each of Ms.
Little and Mr. Little was granted two non-qualified  options to purchase a total
of  1,100,000  shares of common  stock.  All  2,200,000  shares of common  stock
initially  reserved for issuance  under the special  option plan were subject to
the options granted to the Littles.

     In June  2000,  we  amended  the  special  option  plan.  Pursuant  to this
amendment,  we cancelled all of the options outstanding under the special option
plan and granted each of Ms. Little and Mr. Little an option to purchase 250,000
shares of common stock at an exercise price of $3.40 per share.  The options are
immediately  exercisable  and  expire in June 2005.  As of  December  31,  2002,
neither of these options had been exercised.

     1996 Basic Stock Option Plan

     In October 1996, our stockholders  approved the 1996 Basic Stock Option and
Stock  Appreciation  Rights Plan under which a total of 550,000 shares of common
stock are available for grant to our regular full-time  employees,  non-employee
members of the board of directors, independent consultants and other persons who
provide  services to us on a regular or  substantial  basis.  Awards  consist of
stock options  (both  non-qualified  options and options  intended to qualify as
incentive  stock  options  under  Section 422 of the Internal  Revenue Code) and
stock  appreciation  rights.  As of December  31,  2002,  options to purchase an
aggregate  of 259,500  shares of common stock were  outstanding  under the basic
option plan, with exercise prices ranging from $1.75 to $5.25 per share.

     2000 Performance Equity Plan

     In November 2000, our  stockholders  approved the 2000  Performance  Equity
Plan,  under which a total of 1,000,000 shares of common stock are available for
grant to our key employees, officers, directors and consultants.  Awards consist
of stock options (both non-qualified  options and options intended to qualify as
incentive  stock  options  under  Section  422 of the  Internal  Revenue  Code),
restricted stock awards,  deferred stock awards,  stock appreciation  rights and
other  stock-based  awards,  as described  in the 2000 plan.  As of December 31,
2002,  options to purchase an  aggregate  of 10,000  shares of common stock were
outstanding under the 2000 plan at an exercise price of $1.75 per share.

                                       45
<PAGE>

     Non-Plan Options

     In July 1999, we granted options to Gary Stein to purchase 10,000 shares of
our common stock at an exercise  price of $2.44 per share in  consideration  for
rendering consulting services to us. These options are currently exercisable and
will remain exercisable until July 2009.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table sets forth certain  information  as of April 11, 2003
with respect to the common stock ownership of:

     o    those persons or groups known to beneficially  own more than 5% of our
          voting securities;

     o    each director;

     o    each executive officer whose  compensation  exceeded $100,000 in 2002;
          and

     o    all current directors and executive officers as a group.

Beneficial  ownership  is  determined  in  accordance  with Rule 13d-3 under the
Securities Exchange Act of 1934. The information  concerning the stockholders is
based  upon  information  furnished  to  us by  these  stockholders.  Except  as
otherwise  indicated,  all of the shares of common stock are owned of record and
beneficially  and the persons  identified have sole voting and investment  power
with respect to the shares.  Except as  otherwise  indicated in the table below,
the business  address of each of the persons listed is care of First Look Media,
Inc., 8000 Sunset Boulevard, Penthouse East, Los Angeles, California 90046.
<TABLE>
<CAPTION>
<S>                                         <C>                                     <C>

                                    Amount and Nature of                Percent of Class
Name of Beneficial Owner            Beneficial Ownership                of Voting Securities
---------------------------------- ----------------------------------- ------------------------------

Christopher J. Cooney                7,830,430(1) (13)                       48.5%
c/o First Look Media, Inc.
603 Greenwich Street 2nd Floor
New York, New York 10014

Robert B. Little                     1,864,406(2) (13)                       12.4%

William F. Lischak                     334,560(3)                             2.3%

Jeffrey Cooney                       7,830,430(1) (13)                       48.5%
c/o First Look Media, Inc.
603 Greenwich Street 2nd Floor
New York, New York 10014

Stephen K. Bannon                      146,324(4)                             1.0%
c/o Jeffries Bannon
Media Fund LLC
11100 Santa Monica Blvd.
Los Angeles, California 90025

</TABLE>
                                       46
<PAGE>
<TABLE>
<CAPTION>
<S>                                         <C>                                     <C>

                                    Amount and Nature of                Percent of Class
Name of Beneficial Owner            Beneficial Ownership                of Voting Securities
---------------------------------- ----------------------------------- ------------------------------

Scot K. Vorse                         151,323(5)                              1.0%
c/o 1863 Mango Way
Los Angeles, California 90049

Barry R. Minsky                       990,735(6)                              6.7%
c/o Wharton Capital Partners, Ltd.
545 Madison Avenue
New York, New York 10022

Joseph Linehan                         5,000(7)                                 *
c/o The Union Labor Life
Insurance Co.
111 Massachusetts Avenue, N.W.
Washington, DC 20011

Reverge Anselmo                     4,672,421(8)                             28.2%
c/o Seven Hills Pictures, LLC
1041 North Formosa Avenue
West Hollywood, California 90046

Patrick Costello                           0(9)                                 *
c/o Northway Management
164 Mason Street
Greenwich, Connecticut 06830

Rosemary Street Productions, LLC   7,830,430(10)                             48.5%
222 East 44th Street
New York, New York 10017

Seven Hills Pictures, LLC           4,672,421(11)                            28.2%
1041 North Formosa Avenue
West Hollywood, California 90046

Ellen Dinerman Little               1,864,406(13)                            12.4%
c/o Savitsky & Co.
1901 Avenue of the Stars
Suite 1450
Los Angeles, California 90067

Dolphin Offshore Partners, L.P.       1,435,447                               9.9%
c/o Dolphin Management
129 East 17th Street
New York, New York 10003

Wharton Capital Partners, Ltd.       690,735(13)                              4.8%
545 Madison Avenue
New York, New York 10022

</TABLE>

                                       47
<PAGE>
<TABLE>
<CAPTION>
<S>                                         <C>                                     <C>
---------------------------------- ----------------------------------- ------------------------------

                                    Amount and Nature of                Percent of Class
Name of Beneficial Owner            Beneficial Ownership                of Voting Securities
---------------------------------- ----------------------------------- ------------------------------

Voting Group                        15,057,992(12) (13)                      80.5%

All current executive officers      15,995,199(14)                           83.6%
and directors as a
group (10 persons)

</TABLE>

-----------------------
*        Less than 1%

(1)  Represents shares of common stock beneficially owned by Rosemary Street, of
     which  Christopher  J.  Cooney is one of the two  designated  managers  and
     president and of which Jeffrey Cooney is one of the two designated managers
     and creative director.

(2)  Represents  (i)  1,364,406  shares of common  stock held by the  Littles as
     community  property in a revocable  living  trust,  (ii) 250,000  shares of
     common stock issuable upon exercise of immediately  exercisable options and
     (iii) 250,000  shares of common stock issuable upon exercise of immediately
     exercisable  options  granted to such person's  spouse which generally only
     may be exercised by such person's spouse. Such person disclaims  beneficial
     ownership of the shares subject to his or her spouse's options.

(3)  Includes  (i) 82,917  shares of common  stock  issuable  upon  exercise  of
     immediately  exercisable  options  and (ii)  2,083  shares of common  stock
     issuable  upon  exercise of options  that become  exercisable  on April 30,
     2003.

(4)  Includes   25,000  shares  of  common  stock   issuable  upon  exercise  of
     immediately exercisable options.

(5)  Represents  (i) 25,000  shares of common stock  issuable  upon  exercise of
     immediately  exercisable  options and (ii)  126,323  shares of common stock
     contributed by Mr. Vorse to a revocable living trust for the benefit of Mr.
     Vorse's spouse.

(6)  Represents  (i) 690,735  shares of common  stock  owned by Wharton  Capital
     Partners  Ltd.,  a New York  corporation  of which Mr.  Minsky  holds a 50%
     interest,  (ii) 295,000  shares of common stock  issuable  upon exercise of
     immediately exercisable warrants,  95,000 of which are held by Mr. Minsky's
     spouse and (iii) 5,000 shares of common  stock  issuable  upon  exercise of
     immediately exercisable options.

(7)  Represents   5,000  shares  of  common  stock  issuable  upon  exercise  of
     immediately exercisable options.

(8)  Represents  shares of common stock  beneficially  owned by Seven Hills,  of
     which Reverge Anselmo is the sole member and manager. Excludes 5,000 shares
     of common stock  issuable  upon  exercise of options  granted in June 2002,
     which become exercisable one year from the date of grant.

(9)  Excludes  5,000 shares of common stock  issuable  upon  exercise of options
     granted in February 2003,  which become  exercisable one year from the date
     of grant.

(10) Includes  1,613,810  shares of  common  stock  issuable  upon  exercise  of
     immediately exercisable warrants.

(11) Includes  (i) 881,137  shares of common  stock  issuable  upon  exercise of
     immediately  exercisable  warrants,  (ii)  869,565  shares of common  stock
     issuable upon the conversion of a $2,000,000  principal  amount  promissory
     note and (iii)  291,285  shares of common stock  issuable  upon exercise of
     warrants that became  exercisable  upon the  conversion  of the  promissory
     note.

                                       48
<PAGE>

(12) The Voting Group consists of Rosemary Street,  Christopher Cooney,  Jeffrey
     Cooney, Robert and Ellen Little,  Wharton Capital Partners,  Ltd. and Seven
     Hills,  each of whom is a party to, and has agreed to vote their  shares in
     accordance with, the Amended and Restated Voting Agreement described below.
     Each of the members of this group  shares  voting power with respect to the
     shares of common  stock held by each of the  members.  The number of shares
     set forth in the table includes the shares held by each member.

(13) Does not include shares held by other members of the Voting Group (see Note
     12) with  respect to which each member  shares  voting power with the other
     members of such group.

(14) Includes  shares  referred  to as  being  included  in notes 1  through  9.
     Excludes shares referred to in such notes as being excluded.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     First Look Agreement with the Little Film Company. Through June 2000, Ellen
Dinerman Little was employed as our co-chairman of the board, co-chief executive
officer and president.  In June 2000, our existing employment agreement with Ms.
Little was  terminated  and we entered  into a "first look"  agreement  with The
Little Film Company and Ms. Little. The agreement provides for a three-year term
ending in June 2003.  Pursuant  to the first  look  agreement,  the Little  Film
Company receives:

     o    an annual fee of $100,000;

     o    a discretionary  revolving development fund of $100,000 for The Little
          Film Company's use in the  option/acquisition  of literary properties,
          engagement of writers and other customary development costs; and

     o    customary  overhead,  including  office  space,  staff,  telephone and
          reasonable travel costs, of up to $150,000 per year.

     The Little Film Company also is compensated on a project-by-project  basis,
through fixed  producer  fees equal to 3.5% of the all inclusive  budget of each
picture produced with a minimum of $150,000 and maximum of $500,000 per picture.
Additionally,  The Little Film Company may earn certain contingent  compensation
based upon the  performance  of the given picture.  We have an exclusive  "first
look" on any  project  that The Little  Film  Company  owns or  controls  or any
project that it has the right to acquire or may wish to acquire for  development
or  production.  The Little Film  Company  furnishes us with the services of Ms.
Little in connection with the development and possible  production of theatrical
motion pictures based upon accepted artist submissions meeting certain criteria.
We did not compensate The Little Film Company  relative to the production of any
films during 2002 and 2001.

     Consulting  Agreement with Wharton Capital Partners,  Ltd. In October 2000,
we entered into a consulting  agreement with Wharton Capital Partners Ltd. Barry
R.  Minsky,  one of our  directors,  is the chief  executive  officer  and a 50%
stockholder of Wharton. Under the agreement,  Wharton received a one-time fee of
$100,000 and a monthly fee of $4,166 for 24 months  beginning in November  2000.
If Wharton  introduces us to a financing  source and we consummate any public or
private  equity  and/or debt  financing  with the source  during the term of the
consulting  agreement or during the two-year period  following the expiration of
the  agreement,  then we also will pay Wharton an amount  equal to (i) 5% of all
funds received by us from such public or private equity financing and (ii) 3% of
all  funds  received  by  us  from  such  public  or  private  debt   financing.
Additionally,  upon  completion of an equity-based  financing,  we will issue to
Wharton  warrants to purchase  shares of common  stock equal to 5% of the common
stock or common stock  equivalents  issued in the financing at an exercise price
equal to 120% of the five-day  average closing bid price prior to the closing of
such  financing.  The warrants will be  exercisable on a cashless basis and will
have registration rights.

     Film Marketing and Distribution  Agreement with First Look/Seven Hills, LLC
and Seven Hills. In May 2002, we formed a joint venture company with Seven Hills
to provide marketing and distribution funds for the theatrical release of motion
pictures.  Reverge Anselmo, one of our directors, is the sole member and manager
of Seven  Hills,  and  Patrick  Costello,  one of our  directors,  is the  chief
financial  officer  of  Seven  Hills.  In June  2002,  Seven  Hills  funded  our
$2,000,000  capital  contribution  to the joint  venture  company  pursuant to a
convertible promissory note issued by the joint venture company and us. The note
bears  interest at a rate of 4% per annum,  payable  quarterly  in arrears,  and
principal and unpaid accrued  interest on the note are payable on June 25, 2008.
The note is  recourse  against  us as to  interest  only  (accrued  prior to the
maturity  date) and against the joint venture  company as to both  principal and
interest.  Also in June 2002, we entered into a Film Marketing and  Distribution
Agreement with Seven Hills and the joint venture company,  pursuant to which the
joint  venture  company will market and  distribute  motion  pictures that Seven
Hills Pictures or we select on an  alternating  basis.  Under the agreement,  we
will receive a distribution  fee equal to 10% of the  Theatrical  Gross Receipts
(as defined in the agreement) derived from the U.S.  theatrical  distribution of
each  picture   designated  by  Seven  Hills  that  the  joint  venture  company
distributes.  During 2002,  the joint venture did not market or  distribute  any
movies and therefore no fees were earned or received by us.

                                       49
<PAGE>

ITEM 14. CONTROLS AND PROCEDURES.

Within  the  90-day  period  prior  to the  filing  of this  annual  report,  an
evaluation of the  effectiveness  of our disclosure  controls and procedures was
made  under  the  supervision  and with  the  participation  of our  management,
including our chief executive officer and chief financial officer. Based on that
evaluation,  the chief executive  officer and chief financial  officer concluded
that our  disclosure  controls  and  procedures  are  effective  to ensure  that
information  required to be  disclosed  by us in reports  that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and  forms.  Subsequent  to the date of their  evaluation,  there  were no
significant  changes in our  internal  controls or in other  factors  that could
significantly  affect these  controls,  including  any  corrective  actions with
regard to significance deficiencies and material weaknesses.


                                       50
<PAGE>


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a)(1) INDEX TO FINANCIAL STATEMENTS

                                                                   Page(s) in
                                                                   Form 10-K
                                                                   ---------
Report of Independent Accountants                                     F-1

Consolidated Financial Statements:

Consolidated Balance Sheets - December 31, 2002
  and 2001                                                            F-2

Consolidated Statements of Operations - Years Ended
  December 31, 2002, 2001 and 2000                                    F-3

Consolidated Statements of Cash Flows -
  Years Ended December 31, 2002, 2001 and 2000                        F-4

Consolidated Statements of Shareholders' Equity - Years
  Ended December 31, 2002, 2001 and 2000                              F-5

Notes to Consolidated Financial Statements                            F-6


        (a)(2) INDEX TO FINANCIAL STATEMENTS SCHEDULES

        Schedule II - Valuation and Qualifying Accounts               S-1

        (a)(3)   EXHIBITS
<TABLE>
<CAPTION>
<S>                 <C>
EXHIBIT
NUMBER          DESCRIPTION
------          ----------

3.1             Restated Certificate of Incorporation. Incorporated by reference to Exhibit
                3.1 to our Current Report on Form 8-K,  dated October 25, 1996,  filed with
                the SEC on November 12, 1996.


3.2             Bylaws,  as amended on June 20, 2000.  Incorporated by reference to Exhibit
                3.2 to our Amended  Current Report on Form 8-K/A filed with the SEC on June
                29, 2000.

3.3             Certificate of Designations for Series A Preferred  Stock.  Incorporated by
                reference to Exhibit 3.3 to our Amended Current Report on Form 8-K/A, filed
                with the SEC on June 29, 2000.

3.4             Amendment to our Restated  Certificate of  Incorporation.  Incorporated  by
                reference  to Exhibit 3.4 to our Annual  Report on Form 10-K for the fiscal
                year ended December 31, 2000.
</TABLE>

                                       51
<PAGE>
<TABLE>
<CAPTION>
<S>                 <C>
4.1             Form of Common Stock Certificate.  Incorporated by reference to Exhibit 4.1
                to our Current Report on Form 8-K,  dated October 25, 1996,  filed with the
                SEC on November 12, 1996.

4.5             Warrant, dated October 31, 1996, issued to Jefferson Capital Group, Ltd. to
                purchase  shares of our common stock.  Incorporated by reference to Exhibit
                4.6 to our current report on Form 8-K,  dated October 25, 1996,  filed with
                the SEC on November 26, 1996.

4.6             Warrant,  dated June 20, 2000 issued in connection with the Rosemary Street
                transaction.  Incorporated  by  reference  to  Exhibit  4.8 to our  Amended
                Current Report on Form 8-K/A filed with the SEC on June 29, 2000.

4.7             Warrant,  dated June 25, 2002, to purchase  881,137  shares of common stock
                issued to Seven  Hills.  Incorporated  by  reference  to Exhibit 4.7 to our
                Amended Current Report on Form 8-K/A, filed with the SEC on July 2, 2002.

4.8             Warrant,  dated June 25, 2002, to purchase  291,285  shares of common stock
                issued to Seven  Hills.  Incorporated  by  reference  to Exhibit 4.8 to our
                Amended Current Report on Form 8-K/A, filed with the SEC on July 2, 2002.

10.1            Indemnity  Agreement,  dated  October  31,  1996,  between us and Robert B.
                Little.  Incorporated by reference to Exhibit 10.3 to our Current Report on
                Form 8-K, dated October 25, 1996, filed with the SEC on November 12, 1996.

10.2            Indemnity  Agreement,  dated  October 31,  1996,  between us and William F.
                Lischak. Incorporated by reference to Exhibit 10.4 to our Current Report on
                Form 8-K, dated October 25, 1996, filed with the SEC on November 12, 1996.

10.3            Indemnity  Agreement,  dated  October 31,  1996,  between us and Stephen K.
                Bannon.  Incorporated by reference to Exhibit 10.5 to our Current Report on
                Form 8-K, dated October 25, 1996, filed with the SEC on November 12, 1996.

10.4            Indemnity Agreement,  dated October 31, 1996, between us and Scot K. Vorse.
                Incorporated  by reference  to Exhibit  10.6 to our Current  Report on Form
                8-K, dated October 25, 1996, filed with the SEC on November 12, 1996.

10.5            1996 Basic Stock Option and Stock Appreciation Rights Plan. Incorporated by
                reference to Exhibit  10.20 to our Annual  Report on Form 10-K for the year
                ended December 31, 1996.

10.6            Lease Agreement dated April 21, 1987, as amended. Incorporated by reference
                to  Exhibit  10.30 to our  Annual  Report on Form  10-K for the year  ended
                December 31, 1996.

10.7            Amendment,  dated April 1, 1997 to Lease  Agreement,  dated April 21, 1987.
                Incorporated  by  reference to Exhibit  10.31 to our Annual  Report on Form
                10-K for the year ended December 31, 1997.

10.8            Movie and  Motion  Picture  Programming  Agreement,  dated  July 19,  1999,
                between  broadcast.com  inc. and our company.  Incorporated by reference to
                Exhibit  10.34 to our  Quarterly  Report on Form 10-Q for the quarter ended
                June 30, 1999.*
</TABLE>

----------------------------
*Confidential treatment has been granted for portions of such exhibit.

                                       52
<PAGE>
<TABLE>
<CAPTION>
<S>                 <C>
10.9            Securities Purchase  Agreement,  dated May 3, 2000, between our company and
                Rosemary Street.  Incorporated by reference to Exhibit 10.35 to our Amended
                Current Report on Form 8-K/A, filed with the SEC on June 29, 2000.

10.10           Assignment  and  Assumption  Agreement  between our  company  and  Rosemary
                Street.  Incorporated  by reference to Exhibit 10.36 to our Amended Current
                Report on Form 8-K/A, filed with the SEC on June 29, 2000.

10.11           Amended and Restated  1996 Special  Stock Option Plan and  Agreement  among
                the Littles and our company.  Incorporated by reference to Exhibit 10.37 to
                our Amended  Current  Report on Form 8-K/A,  filed with the SEC on June 29,
                2000.

10.12           Stock Option  Agreement  between us and William  Lischak.  Incorporated  by
                reference  to Exhibit  10.38 to our Amended  Current  Report on Form 8-K/A,
                filed with the SEC on June 29, 2000.

10.13           Amended and Restated  Employment  Agreement  between  Robert Little and us.
                Incorporated by reference to Exhibit 10.39 to our Amended Current Report on
                Form 8-K/A, filed with the SEC on June 29, 2000.

10.14           Amended and Restated  Employment  Agreement between William Lischak and us.
                Incorporated by reference to Exhibit 10.40 to our Amended Current Report on
                Form 8-K/A, filed with the SEC on June 29, 2000.

10.15           Employment  Agreement between  Christopher  Cooney and us.  Incorporated by
                reference  to Exhibit  10.41 to our Amended  Current  Report on Form 8-K/A,
                filed with the SEC on June 29, 2000.

10.16           Employment  Agreement  between  Jeffrey  Cooney  and  us.  Incorporated  by
                reference  to Exhibit  10.42 to our Amended  Current  Report on Form 8-K/A,
                filed with the SEC on June 29, 2000.

10.17           First  Look  Agreement  between  The  Little  Film  Company,  Inc.  and us.
                Incorporated by reference to Exhibit 10.43 to our Amended Current Report on
                Form 8-K/A, filed with the SEC on June 29, 2000.

10.18           Note  and  Debt   Contribution   Agreement   among  the   Littles  and  us.
                Incorporated by reference to Exhibit 10.44 to our Amended Current Report on
                Form 8-K/A, filed with the SEC on June 29, 2000.

10.19           Form of  Management  Letter  between each of Robert Little and Ellen Little
                and us.  Incorporated  by reference to Exhibit 10.45 to our Amended Current
                Report on Form 8-K/A, filed with the SEC on June 29, 2000.

10.20           Voting Agreement among our company,  Rosemary Street,  the Littles,  MRCo.,
                Inc.,  Christopher Cooney and Jeffrey Cooney.  Incorporated by reference to
                Exhibit 10.46 to our Amended  Current Report on Form 8-K/A,  filed with the
                SEC on June 29, 2000.

10.21           Form of Credit, Security,  Guaranty and Pledge Agreement,  dated as of June
                20, 2000, among our company, as Borrower,  the Guarantors named therein and
                the Lenders named therein, with The Chase Manhattan Bank, as Administrative
                Agent, and The Chase Manhattan Bank, as Issuing Bank (without schedules and
                exhibits).  Incorporated  by  reference  to  Exhibit  10.47 to our  Amended
                Current Report on Form 8-K/A, filed with the SEC on June 29, 2000.
</TABLE>

                                       53
<PAGE>
<TABLE>
<CAPTION>
<S>                 <C>
10.22           Copyright Security Agreement,  dated as of June 20, 2000 (without schedules
                and  exhibits).  Incorporated  by reference to Exhibit 10.48 to our Amended
                Current Report on Form 8-K/A, filed with the SEC on June 29, 2000.

10.23           Consulting  Agreement,  dated  October  1,  2000,  between  us and  Wharton
                Capital  Partners,  Ltd.  Incorporated  by  reference  to  Exhibit 5 to the
                Schedule 13D filed by Wharton with the SEC on November 28, 2000.

10.24           2000  Performance  Equity Plan.  Incorporated by reference to Exhibit 10.27
                to our Annual  Report on Form 10-K for the fiscal year ended  December  31,
                2000.

10.25           Amendment No. 1, dated May 16, 2001 to the Credit,  Security,  Guaranty and
                Pledge  Agreement,  dated  as of June  20,  2000,  among  our  company,  as
                Borrower,  the Guarantors named therein and the Lenders named therein, with
                The Chase Manhattan Bank, as Administrative  Agent, and the Chase Manhattan
                Bank,  as Issuing Bank.  Incorporated  by reference to Exhibit 10.28 to our
                Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.

10.26           Amendment  No. 2, dated as of September  17, 2001 to the Credit,  Security,
                Guaranty and Pledge Agreement, dated as of June 20, 2000, as amended, among
                our company,  as Borrower,  the  Guarantors  named  therein and the Lenders
                named therein,  with The Chase Manhattan Bank, as Administrative Agent, and
                The Chase  Manhattan  Bank, as Issuing Bank.  Incorporated  by reference to
                Exhibit  10.26 to our Annual  Report on Form 10-K for the fiscal year ended
                December 31, 2001.

10.27           Agreement  of Sublease  dated  November 15, 2001  between  Scott  Mednick &
                Associates,  Inc. and First Look Media,  Inc.  Incorporated by reference to
                Exhibit  10.27 to our Annual  Report on Form 10-K for the fiscal year ended
                December 31, 2001.

10.28           Securities  Purchase  Agreement,  dated  as of May 20,  2002,  between  our
                company and Seven Hills.  Incorporated by reference to Exhibit 10.28 to our
                Current Report on Form 8-K, filed with the SEC on May 29, 2002.

10.29           First  Amendment to  Securities  Purchase  Agreement,  dated as of June 25,
                2002.  Incorporated by reference to Exhibit 10.28(a) to our Amended Current
                Report on Form 8-K/A, filed with the SEC on July 2, 2002.

10.30           Secured Convertible  Promissory Note in favor of Seven Hills.  Incorporated
                by reference to Exhibit 10.29 to our Amended  Current Report on Form 8-K/A,
                filed with the SEC on July 2, 2002.

10.31           Pledge  and  Security  Agreement  between  our  company  and  Seven  Hills.
                Incorporated by reference to Exhibit 10.30 to our Amended Current Report on
                Form 8-K/A, filed with the SEC on July 2, 2002.

10.32           Investor   Rights   Agreement   between  our   company  and  Seven   Hills.
                Incorporated by reference to Exhibit 10.31 to our Amended Current Report on
                Form 8-K/A, filed with the SEC on July 2, 2002.
</TABLE>

                                       54
<PAGE>

<TABLE>
<CAPTION>
<S>                 <C>
10.33           Limited Liability  Company  Agreement of F/SLLC.  Incorporated by reference
                to Exhibit 10.32 to our Amended  Current  Report on Form 8-K/A,  filed with
                the SEC on July 2, 2002.

10.34           Film Marketing and  Distribution  Agreement among our company,  Seven Hills
                and  F/SLLC.  Incorporated  by  reference  to Exhibit  10.33 to our Amended
                Current Report on Form 8-K/A, filed with the SEC on July 2, 2002.

10.35           Amended and  Restated  Voting  Agreement  among our  company,  Seven Hills,
                Rosemary Street, the Littles,  MRCo, Inc., Wharton,  Christopher Cooney and
                Jeffrey  Cooney.  Incorporated by reference to Exhibit 10.34 to our Amended
                Current Report on Form 8-K/A, filed with the SEC on July 2, 2002.

10.36           Amendment  No.3,  dated  as of June  24,  2002,  to the  Credit,  Security,
                Guaranty and Pledge  Agreement  dated as of June 20, 2000, as amended among
                our  company,  as  Borrower,  the  Guarantors  named  therein,  the Lenders
                referred to therein, and JPMorgan Chase Bank, as Administrative Bank and as
                Issuing  Bank.  Incorporated  by reference to Exhibit  10.35 to our Amended
                Current Report on Form 8-K/A, filed with the SEC on July 2, 2002.

10.37           Amendment  No. 4, dated as of February 18, 2003,  to the Credit,  Security,
                Guaranty and Pledge  Agreement  dated as of June 20, 2000, as amended among
                our  company,  as  Borrower,  the  Guarantors  named  therein,  the Lenders
                referred to therein, and JPMorgan Chase Bank, as Administrative Bank and as
                Issuing Bank. Filed herewith.

21               Subsidiaries of the Registrant. Filed herewith.

23              Consent of PricewaterhouseCoopers LLP. Filed herewith.

99              Risk factors. Filed herewith.
</TABLE>


                                       55
<PAGE>


                                   SIGNATURES



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

Dated: April 15, 2003                FIRST LOOK MEDIA, INC.

                            By:      /s/ Christopher J. Cooney
                                     ----------------------------
                                     Christopher J. Cooney
                                     Co-Chairman of the Board of Directors
                                     and Chief Executive Officer

                                       56
<PAGE>


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

SIGNATURE                      TITLE                               DATE
---------                      -----                               ----

/s/Christopher J. Cooney        Co-Chairman of the Board           April 15, 2003
---------------------------      of Directors and Chief
Christopher J. Cooney            Executive Officer
                                 (Principal Executive Officer)


/s/ Robert B. Little            Co-Chairman of the Board of        April 15, 2003
---------------------------      Directors and President
Robert B. Little


/s/ William F. Lischak          Chief Operating Officer,           April 15, 2003
--------------------------       Chief Financial Officer and
William F. Lischak               Secretary (Principal Financial
                                 and Accounting Officer)



/s/ Jeffrey Cooney              Executive Vice President -         April 15, 2003
-----------------------------    Creative Affairs and Director
Jeffrey Cooney


                                Director
--------------------------
Stephen K. Bannon


                                Director
------------------------------
Scot K. Vorse


                                Director
---------------------------
Barry R. Minsky


/s/ Joseph Linehan              Director                           April 15, 2003
---------------------------
Joseph Linehan


/s/ Reverge Anselmo             Director                           April 15, 2003
---------------------------
Reverge Anselmo


                                Director
---------------------------
Patrick Costello
</TABLE>

                                       57
<PAGE>


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Annual Report of First Look Media, Inc. (the
"Company") on Form 10-K for the year ended December 31, 2002 as filed with the
Securities and Exchange Commission (the "Report"), each of the undersigned, in
the capacities and on the dates indicated below, hereby certifies pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

1.      The Report fully  complies  with the  requirements  of Section  13(a) or
15(d) of the Securities Exchange Act of 1934; and

2.      The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.


April 15, 2003

                                           /s/ Christopher J. Cooney
                                           ---------------------------
                                           Christopher J. Cooney
                                           Chief Executive Officer



                                           /s/ William F. Lischak
                                           ---------------------------
                                           William F. Lischak
                                           Chief Financial Officer, Chief
                                           Operating Officer and Secretary




                                       58
<PAGE>


                            CERTIFICATION PURSUANT TO
                          RULE 13a-14 AND 15d-14 UNDER
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Christopher J. Cooney, certify that:

1. I have reviewed this annual report on Form 10-K of First Look Media, Inc.;

2.  based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  the  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange  Act Rules  13a-14 and  15d-14)  for the  registrant  and we have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
procedures  as of a date within 90 days of the filing date of this annual report
(the "Evaluation Date"); and

     (c) presented in this annual report our conclusions about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and to the audit committee
of the  registrant's  board of directors (or persons  performing  the equivalent
functions):

     (a) all  significant  deficiencies  in the design or  operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. the  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Dated:  April 15, 2003                     /s/ Christopher J. Cooney
                                           -----------------------------------
                                           Christopher J. Cooney
                                           Chief Executive Officer


                                       59
<PAGE>


                                  CERTIFICATION
                    PURSUANT TO RULE 13a-14 AND 15d-14 UNDER
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, William F. Lischak, certify that:

1. I have reviewed this annual report on Form 10-K of First Look Media, Inc.;

2.  based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  the  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
procedures  as of a date within 90 days of the filing date of this annual report
(the "Evaluation Date"); and

     (c) presented in this annual report our conclusions about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and to the audit committee
of the  registrant's  board of directors (or persons  performing  the equivalent
functions):

     (a) all  significant  deficiencies  in the design or  operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. the  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Dated:  April 15, 2003             /s/ William F. Lischak
                                   --------------------------------------------
                                   William F. Lischak
                                   Chief Financial Officer,
                                   Chief Operating Officer and Secretary


                                       60
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
  Shareholders of First Look Media, Inc. (formerly known as
  Overseas Filmgroup, Inc.):

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of income,  shareholders' equity and cash flows present
fairly, in all material  respects,  the financial  position of First Look Media,
Inc. ("the Company") and its  subsidiaries at December 31, 2002 and December 31,
2001,  and the results of their  operations and their cash flows for each of the
three years in the period ended December 31, 2002 in conformity  with accounting
principles  generally accepted in the United States of America.  These financial
statements   are  the   responsibility   of  the   Company's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing  standards  generally  accepted in the United States of America,  which
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has incurred  operating  losses and negative
cash flows from  operations  for the past three years which  raises  substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard to these matters are also  described in Note 1. The financial  statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.

/s/ PricewaterhouseCoopers LLP
Century City, California

March 28, 2003





                                      F-1
<PAGE>



FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                                      Year Ended December 31,
                                                                                                     -------------------------
                                                                                                      2002            2001
                                                                                                ----------------------------------
                                                                                                         (in thousands)
<S>                                                                                             <C>                  <C>
                                            ASSETS:
Cash and cash equivalents                                                                             $    713        $   1,673
Accounts receivable, net of allowance for doubtful accounts of $2,401,000
   and $1,150,000, respectively                                                                         14,545           23,668
Investment                                                                                               2,000                -
Film costs, net of accumulated amortization                                                             23,198           18,304
Other assets                                                                                             1,466            1,826
                                                                                                ----------------------------------
     Total assets                                                                                     $ 41,922        $  45,471
                                                                                                ==================================

                             LIABILITIES AND SHAREHOLDERS' EQUITY:

Accounts payable and accrued expenses                                                                 $  1,632        $   1,777
Accrued interest payable                                                                                    84              166
Deferred revenue                                                                                         1,209              810
Payable to producers                                                                                    16,084           21,987
Notes payable                                                                                           20,254           14,680
                                                                                                ----------------------------------
     Total liabilities                                                                                  39,263           39,420
                                                                                                ----------------------------------

Commitments and contingencies (Note 10)

Shareholders' equity:

Common stock, $.001 par value, 50,000,000 shares authorized; 14,584,573 and
   11,658,848 shares issued at December 31, 2002 and 2001, respectively;
   14,539,573 and 11,613,848 shares
   outstanding at December 31, 2002 and 2001, respectively                                                  15               12
Additional paid-in capital                                                                              36,657           30,674
Accumulated deficit                                                                                    (33,926)         (24,548)
Treasury stock at cost, 45,000 shares                                                                      (87)             (87)
                                                                                                ----------------------------------
Total shareholders' equity                                                                               2,659            6,051
                                                                                                ----------------------------------
     Total liabilities and shareholders' equity                                                       $ 41,922        $  45,471
                                                                                                ==================================
</TABLE>

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

                                      F-2
<PAGE>


FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                        Year Ended December 31
                                                                                       ------------------------
                                                                                    2002             2001            2000
                                                                                    ----             ----            ----
                                                                                   (in thousands except per share amounts)
<S>                                                                             <C>               <C>             <C>
   Revenues                                                                     $   26,699        $  35,144       $  22,625

   Expenses:
        Film costs                                                                  19,779           24,258          16,850
        Distribution and marketing                                                   7,541            7,101           4,774

        Selling, general and administrative                                          7,928            6,947           6,473
                                                                                ----------        ---------       ---------

        Total expenses                                                              35,248           38,306          28,097
                                                                                ----------        ---------       ---------
            Loss from operations                                                    (8,549)          (3,162)         (5,472)
                                                                                ----------        ---------       ---------

        Other income (expense):
            Interest income                                                            144               76              27
            Interest expense                                                        (1,118)          (1,137)         (1,571)
            Other income                                                               236              431             786
                                                                                ----------        ---------       ---------
                  Total other expense                                                 (738)            (630)           (758)
                                                                                ----------        ---------       ---------
        Loss before income taxes and cumulative effect
            of accounting change                                                    (9,287)          (3,792)         (6,230)


        Income tax provision                                                            91               62             137
                                                                                ----------        ---------       ---------

        Loss before cumulative effect of accounting change                          (9,378)          (3,854)         (6,367)


        Cumulative effect of accounting change (net of income taxes)                     -                -         (14,123)
                                                                                ----------        ---------       ---------

                  Net loss                                                      $   (9,378)       $  (3,854)      $ (20,490)
                                                                                ==========        =========       =========
        Basic and diluted loss per share:

        Loss before cumulative effect of accounting change                      $    (0.71)       $   (0.38)      $   (0.78)

        Cumulative effect                                                                -                -           (1.74)
                                                                                ----------        ---------       ---------
        Net loss                                                                $    (0.71)       $   (0.38)      $   (2.52)
                                                                                ==========        =========       =========

        Weighted average number of common shares outstanding                        13,270           10,191           8,131
                                                                                ==========        =========       =========
</TABLE>

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

                                      F-3
<PAGE>

FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                           Year Ended December 31,
                                                                                         ---------------------------
                                                                                      2002             2001              2000
                                                                                      ----             ----              ----
                                                                                                (in thousands)
<S>                                                                             <C>               <C>              <C>
Cash flows from operating activities:

Net loss                                                                        $    (9,378)      $     (3,854)    $    (20,490)
Adjustments to reconcile net loss to net cash (used in)
   provided by operating activities
     Cumulative effect of accounting change                                               -                  -           15,582
     Film costs                                                                      19,779             24,258           16,850
     Additions to film costs                                                        (17,105)            (9,922)          (2,865)
     Payments to producers                                                          (13,472)           (20,847)         (13,472)
     Capital gains and other non-cash income                                             22                  -             (625)
     Changes in operating assets and liabilities:
       Accounts receivable                                                            9,123              2,915            3,506
       Related party receivables                                                          -                  -              149
       Other assets                                                                     360               (354)            (693)
       Accounts payable and accrued expenses                                           (226)               358             (485)
       Deferred income taxes                                                              -                  -           (1,459)
       Deferred revenue                                                                 399                723             (832)
                                                                                -----------       ------------     ------------
             Net cash used in operating activities                                  (10,498)            (6,723)          (4,833)
                                                                                -----------       ------------     ------------
Cash flows from investing activities:
        Investment                                                                   (2,000)                 -                -

     Sale of marketable securities                                                        -                  -            2,056
                                                                                -----------       ------------     ------------
             Net cash (used in ) provided by investing activities                    (2,000)                 -            2,056
                                                                                -----------       ------------     ------------
Cash flows from financing activities:
     Issuance of equity instruments, net of expenses                                  5,718                  -           16,420
     Investment by significant shareholder                                                -                  -              130
     Net borrowings (pay down) under credit facility                                  4,000              8,000          (11,554)
       Convertible note payable and warrant                                           2,000                  -                -
     Net pay down of subordinated note payable                                         (180)              (436)          (1,095)
     Net pay down of note payable to shareholders                                         -                  -             (650)
     Decrease in restricted cash position                                                 -                  -               88
                                                                                -----------       ------------     ------------
             Net cash provided by financing activities                               11,538              7,564            3,339
                                                                                -----------       ------------     ------------

Net (decrease) increase in cash and cash equivalents                                   (960)               841              562

Cash and cash equivalents at beginning of year                                        1,673                832              270
                                                                                -----------       ------------     ------------
Cash and cash equivalents at end of year                                        $       713       $      1,673     $        832
                                                                                ===========       ============     ============

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
     Interest                                                                   $     1,097       $        893     $      1,875
                                                                                ===========       ============     ============
     Income taxes                                                               $        11       $          9     $          6
                                                                                ===========       ============     ============
     Foreign withholding taxes                                                  $        80       $         53     $        131
                                                                                ===========       ============     ============
Non-cash financing activities:
     Contribution of capital by significant shareholder                         $         -       $          -     $      2,023
                                                                                ===========       ============     ============
</TABLE>

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

                                      F-4

<PAGE>

FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (in thousands)

<TABLE>
<CAPTION>




                                                       Preferred Stock          Common Stock           Additional
                                                       ---------------        -----------------         Paid-in       Accumulated
                                                     Number      Amount       Number     Amount         Capital         Deficit
                                                     ------      ------       ------     ------       ----------       -----------

                                                   ---------------------------------------------------------------------------------
<S>                                                <C>           <C>          <C>        <C>           <C>              <C>
Balance at December 31, 1999                               -     $      -       6,341    $      6    $    12,107        $    (204)

Issuance of common stock, preferred
   stock and warrants                                    905            1       5,097           5         16,414                -
Retirement of common stock                                 -            -      (1,589)         (1)             1                -
Forgiveness of notes payable, accrued
   expenses and contribution of capital                    -            -           -           -          2,153                -

Comprehensive income:
---------------------
Reversal of unrealized holding gain upon
    sale of investment available for sale                  -            -           -           -              -                -
Net loss                                                   -            -           -           -              -          (20,490)
Total comprehensive income
                                                   ---------------------------------------------------------------------------------
Balance at December 31, 2000                             905            1       9,849          10         30,675          (20,694)
Conversion of preferred stock to common                 (905)          (1)      1,810           2             (1)               -
Net loss                                                   -            -           -           -              -           (3,854)
                                                   ---------------------------------------------------------------------------------
Balance at December 31, 2001                               -            -      11,659          12         30,674          (24,548)
Issuance of common stock in exchange for
outstanding warrants                                       -            -         295           -              -               -
Issuance of warrants in connection with note               -            -           -           -            268               -
Issuance of common stock and warrants                      -            -       2,630           3          5,715               -
Net loss                                                   -            -           -           -                          (9,378)
                                                   ---------------------------------------------------------------------------------
Balance at December 31, 2002                               -       $    -      14,584       $  15       $ 36,657       $  (33,926)
                                                   =================================================================================
</TABLE>

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

                                     F-5(1)
<PAGE>

FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Cont'd)
                                 (in thousands)

<TABLE>
<CAPTION>



                                                   Accumulated
                                                       Other                           Total
                                                    Comprehensive       Treasury     Shareholders'
                                                      Income              Stock        Equity
                                                     -----------        ---------   -----------

                                                 ----------------------------------------------
<S>                                                 <C>               <C>         <C>
Balance at December 31, 1999                        $   1,477         $    (87)    $   13,299

Issuance of common stock, preferred
   stock and warrants                                       -                -         16,420
Retirement of common stock                                  -                -              -
Forgiveness of notes payable, accrued
   expenses and contribution of capital                     -                -          2,153

Comprehensive income:
---------------------
Reversal of unrealized holding gain upon
    sale of investment available for sale              (1,477)               -         (1,477)
Net loss                                                    -                -        (20,490)
                                                                                       ------
Total comprehensive income                                                            (21,967)
                                                 --------------------------------------------
Balance at December 31, 2000                                -              (87)         9,905
Conversion of preferred stock to common                     -                -              -
Net loss                                                    -                -         (3,854)
                                                 --------------------------------------------
Balance at December 31, 2001                                -              (87)         6,051
Issuance of common stock in exchange for
outstanding warrants                                        -                -              -
Issuance of warrants in connection with note                -                -            268
Issuance of common stock and warrants                       -                -          5,718
Net loss                                                    -                -         (9,378)
                                                 --------------------------------------------
Balance at December 31, 2002                         $      -          $   (87)     $   2,659
                                                 ============================================
</TABLE>

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

                                     F-5(2)
<PAGE>


FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS:

General

First Look Media, Inc. (formerly known as Overseas Filmgroup,  Inc.) ("Company")
is  principally  involved in the  acquisition  and worldwide  license or sale of
distribution  rights to independently  produced motion pictures.  Certain motion
pictures are  directly  distributed  by the Company in the  domestic  theatrical
market under the name "First Look  Pictures",  and in the domestic  video market
under the name  "First  Look  Home  Entertainment.  The  Company  also  produces
television commercials under the name "First Look Artists".

Liquidity and Capital Resources

For the two years ended December 31, 2002,  the Company had operating  losses of
$11,711,000  and its  operating  activities  used  $17,221,000  of  cash.  As of
December 31, 2002,  the Company had cash and cash  equivalents  of $713,000 and,
based on its  calculations,  approximately  $2,045,000  available  for borrowing
under its JPMorgan Credit Facility (see Note 6). The recent operating losses and
negative cash flow the Company has  experienced,  along with the general  market
conditions  for the  Company's  business,  has  resulted  in ongoing  review and
discussions   between  the  Company  and  its  primary   lender,   JPMorgan  and
participating banks in its credit facility. In February 2003, JPMorgan requested
that the Company  voluntarily  reduce the amount that it is  permitted to borrow
under the credit facility in relation to its library value. The credit agreement
initially  provided that the Company could borrow up to 50% (the "advance rate")
of the  valuation  of its  library,  conducted  by an  independent  third  party
approved by JPMorgan. JPMorgan asked that this advance rate be reduced by 5% (to
45%) as of April 1, 2003, an  additional  5% (to 40%) as of July 1, 2003,  and a
final 5% (to 35%) as of October 1, 2003. On February 18, 2003 management  agreed
to these  reductions,  which are reflected in an amended  credit  agreement (see
Note 14).

The Company's  significant net losses and negative cash flow along with the most
recent  modification and pending  modifications  under the credit agreement with
JPMorgan raise questions  about its ability to continue as a going concern.  The
Company has been reviewing its past business plan,  alternative  plans and other
options.   The  Company  has  made  reductions  in  overhead,   including  staff
reductions,  certain consulting contracts have not been renewed, and the Company
has not revnewed its first look arrangement with Grandview Pictures. The Company
also is considering further reductions in overhead. Budgeted film investment has
been significantly reduced from 2002.  Additionally,  the Company is actively in
discussion with various parties  regarding  potential  strategic  relationships,
equity  investment and revised  business plans. If the Company is not successful
in generating sufficient future cash flow from operations in accordance with its
current or an altered business plan,  raising  additional capital through public
or private  financings,  strategic  relationships or other  arrangements will be
necessary.  This  additional  funding,  if  needed,  might not be  available  on
acceptable  terms, or at all. Failure to raise sufficient  capital,  if and when
needed,  could  have a  material  adverse  effect on the  business,  results  of
operations and financial condition of the Company,  including the ability of the
Company to continue to operate as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The  consolidated  financial  statements  of the Company  include the  financial
position,  results of  operations  and cash flows of the  Company and its wholly
owned subsidiaries.  All significant intercompany balances and transactions have
been eliminated.

Revenues

Revenues  from  nonrefundable   guarantees  payable  by   sub-distributors   are
recognized  when the film  becomes  available  for  release  and  certain  other
conditions are met in accordance with Statement of Position 00-2, "Accounting by
Producers or Distributors of Films" ("SOP 00-2"). Amounts received in advance of
the film being available are recorded as deferred revenue. Revenues from direct

                                      F-6
<PAGE>

theatrical  distribution  of films are  recognized  on the dates of  exhibition.
Revenues  from home video market are  recognized,  net of a reserve for returns,
upon availability of product to retailers.

Film Costs

The Company  accounts  for film costs in  accordance  with SOP 00-2.  Film costs
include the direct costs of acquiring  and  producing  motion  picture  product.
Capitalized  costs are  amortized  using the  individual  film  forecast  method
whereby  expense is recognized in the proportion  that current year revenues for
each film bear to  management's  estimate of ultimate  revenues.  Film costs are
stated at the lower of net unamortized cost or net realizable value.

In June 2000,  the  Accounting  Standards  Executive  Committee  of the American
Institute of Certified Public  Accountants  issued SOP 00-2, which replaces SFAS
No. 53. SOP 00-2 was adopted for the Company's fiscal year beginning  January 1,
2000.  SOP  00-2   establishes   new  accounting   standards  for  producers  or
distributors of films,  including changes in revenue  recognition and accounting
for  advertising,  development and overhead costs.  Under the new standard,  all
exploitation  costs such as advertising  and marketing  costs for theatrical and
television  products  will be expensed as incurred,  whereas  under the previous
standards,  these  costs  were  capitalized  and  amortized  over the  products'
lifetime revenues. In addition, the new standard requires that development costs
for abandoned projects be charged directly to expense rather than being included
in production  overhead and  reestablished  as film costs.  The Company  elected
early  adoption of SOP 00-2 and, as a result,  in 2000, a cumulative  charge for
the change in accounting  principle of  $15,582,000  ($14,123,000  net of income
taxes) has been reflected in the Company's  Consolidated Statement of Operations
for the year ended December 31, 2000.

Payables to Producers

The Company accounts for  participations due to producers in accordance with SOP
00-2.  Management's estimate of ultimate participations is accrued as an expense
using the individual  film forecast  method whereby expense is recognized in the
proportion  that  current  year  revenues  for each  film  bear to  management's
estimate of ultimate revenues.  In the year ending December 31, 2003, management
expects  to make  payments  of  approximately  $13,000,000  to  settle  producer
liabilities outstanding at December 31, 2002.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of
less  than  three  months  to be cash  equivalents.  The  carrying  value of the
Company's  cash  and  cash  equivalents  approximate  fair  value  due to  their
short-term nature.

Fixed Assets

Fixed assets are stated at cost less accumulated  depreciation.  Depreciation is
provided  over the  estimated  useful  lives of assets,  which range from 5 to 7
years using the straight line method.  Leasehold improvements are amortized over
the shorter of the useful lives of assets or the term of the lease.

Long-Lived Assets

The Company  reviews its  long-lived  assets for impairment  whenever  events or
circumstances  indicate  that the  carrying  amount  of such  assets  may not be
recoverable.  An impairment loss would be recognized when estimated undiscounted
future cash flows  expected to result from the use of the asset and its eventual
disposition  is less than its  carrying  amount.  If such assets are  considered
impaired, the amount of the impairment loss recognized is measured as the amount
by which the  carrying  value of the asset  exceeds the fair value of the asset,
fair value being  determined  based upon discounted cash flows.  The Company has
recorded  write-downs  of film costs  amounting to  $3,189,000,  $1,815,000  and
$494,000 for the years ended December 31, 2002, 2001 and 2000 respectively, as a
result of downward adjustments of projected ultimate revenues. These write-downs
are included in film costs in the Consolidated Statements of Operations.

                                      F-7
<PAGE>

Fair Value of Financial Instruments

The  recorded  value  of the  Company's  cash  and  cash  equivalents,  accounts
receivable,  accounts  payable and accrued  liabilities and payable to producers
approximate  their  fair value due to the  relative  short  maturities  of these
instruments. The fair value of notes payable approximates the recorded value due
to the stated interest rate on such instruments.

Segment Reporting

The Company adopted  Statement of Financial  Accounting  Standards  ("SFAS") No.
131,  "Disclosures  about  Segments of an  Enterprise  and Related  Information"
effective  January  1,  2000.  SFAS No. 131  establishes  standards  for the way
companies  report  information  about  operating  segments in interim and annual
financial  statements.  It also  establishes  standards for related  disclosures
about products and services, geographic areas and major customers. The Company's
management  has  determined  that  the  Company  operated  within  two  discrete
reportable business segments for the years ended December 31, 2002 and 2001, and
one discrete reportable business segment for the year ended December 31, 2000.

Income Taxes

The Company  records income taxes in accordance  with the provisions of SFAS No.
109,  "Accounting  for  Income  Taxes".  The  standard  requires,   among  other
provisions,   an  asset  and  liability   approach  to  recognize  deferred  tax
liabilities  and assets for the expected  future tax  consequences  of temporary
differences  between the financial  statement  carrying amounts and tax basis of
assets and  liabilities.  Valuation  allowances  are provided if, based upon the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.

Basic and Diluted Loss per Share

Basic  and  diluted  net loss per share is  computed  by  dividing  the net loss
applicable to common  stockholders  by the weighted  average number of shares of
common stock and common equivalent shares outstanding.  Common equivalent shares
related to all stock options,  warrants and  convertible  preferred stock during
the three years ended December 31, 2002 have been excluded from the  computation
below because their effect is anti-dilutive.

The following table sets forth common stock equivalents (potential common stock)
that are not  included  in the  diluted  net loss per share  calculations  above
because their effect would be anti-dilutive for the years indicated:

                                                    Year Ended December 31,
                                                    -----------------------
                                               2002         2001           2000
                                               ----         ----           ----
Weighted average common stock equivalents:
     Convertible preferred stock                   -             -       904,971
     Stock options                           749,766       375,076     1,546,377
     Warrants                              3,658,400     7,551,310     6,118,319

Accounting for Stock-Based Compensation

The Company  accounts for  stock-based  employee  compensation  arrangements  in
accordance  with the provisions of Accounting  Principles  Board ("APB") No. 25,
"Accounting for Stock Issued to Employees," and FASB Interpretation  ("FIN") No.
28  "Accounting  for Stock  Appreciation  Rights and Other Variable Stock Option
Award Plans an  Interpretation  of APB Opinions No. 15 and 25" and complies with
the  disclosure  requirement  of  Statement of  Financial  Accounting  Standards
("SFAS") No. 123,  "Accounting for Stock-Based  Compensation." Under APB No. 25,
compensation  cost, if any, is recognized  over the  respective  vesting  period
based on the difference, if any, on the date of grant, between the fair value of
the Company's  common stock and the grant price.  The Company accounts for stock
issued to  non-employees  in accordance  with the provisions of SFAS No. 123 and
EITF 96-18,  "Accounting  for Equity  Instruments  that are issued to other than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."

In March 2000,  the  Financial  Accounting  Standards  Board  issued FIN No. 44,
"Accounting for Certain Transactions involving Stock Compensation." FIN No. 44

                                      F-8
<PAGE>

provides  guidance for issues arising in applying APB No. 25. FIN No. 44 applies
specifically  to new  awards,  exchanges  of awards in a  business  combination,
modification to outstanding  awards, and changes in grantee status that occur on
or after July 1, 2000,  except for the  provisions  related to repricing and the
definition of an employee  which apply to awards issued after December 15, 1998.
The  Company's  financial  statements  have been  prepared  under  the  guidance
provided by FIN No. 44.

The Company applies APB No. 25 and related  interpretations to account for stock
options  granted  to  employees  and  directors.   Had  compensation  cost  been
recognized  pursuant to the fair value  approach of SFAS No. 123, the  Company's
pro  forma  net loss and net loss per share  applicable  to common  stockholders
would have been as follows:

<TABLE>
<CAPTION>

                                                                                      2002          2001          2000
                                                                                      ----          ----          ----
<S>                                                                                  <C>          <C>             <C>
Net loss before cumulative effect of accounting change:

       As reported                                                                 $ (9,378)   $   (3,854)     $  (6,367)

       SFAS 123 pro forma                                                            (9,378)       (3,924)        (6,700)

Net loss:

       As reported                                                                   (9,378)       (3,854)       (20,490)

       SFAS 123 pro forma                                                            (9,378)       (3,924)       (20,823)

Basic and diluted net loss per share:

       As reported

         Net loss before cumulative effect of accounting change                       (0.71)        (0.38)         (0.78)
         Net loss                                                                     (0.71)        (0.38)         (2.52)

       SFAS 123 pro forma

         Net loss before cumulative effect of accounting change                       (0.71)        (0.39)         (0.82)
         Net loss                                                                     (0.71)        (0.39)         (2.56)

</TABLE>

The fair value of each stock  option  granted has been  estimated on the date of
grant  using  the  Black  Scholes   option-pricing   model  with  the  following
weighted-average assumptions:

          Risk-free interest rate                        3.5%
          Expected life (in years)                    4 years
          Dividend yield                                   0%
          Expected volatility                             50%

Concentration of Credit Risk

Financial  instruments  that  potentially  subject  the  Company to credit  risk
consist primarily of cash and accounts  receivable.  The Company places its cash
with a financial institution and, at times, such amounts may be in excess of the
FDIC insurance  limits.  Concentration  of credit risk  associated with accounts
receivable  is limited due to the large  number of  customers,  as well as their
dispersion across  geographic areas. The Company performs credit  evaluations of
its  customers  and generally  does not require  collateral.  As of December 31,
2002, two customers had outstanding balances of 14.8% and 11.1% of the Company's
total accounts receivable.

Comprehensive Income

The Company has adopted the provisions of SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes  standards for reporting  comprehensive income
and its components in financial  statements.  Comprehensive  income, as defined,

                                      F-9
<PAGE>

includes all changes in equity during a period from non-owner sources.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and
reported  amount of revenues and expenses  during the reporting  period.  Actual
results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to amounts reported in prior periods to
conform with the current year presentation.

Recent Accounting Pronouncements

On December 31, 2002, the FASB issued SFAS No. 148,  "Accounting for Stock-Based
Compensation-Transition  and Disclosure," which amends SFAS No. 123, "Accounting
for Stock-Based  Compensation," to provide  alternative methods of transition to
the fair value method of accounting for stock-based  employee  compensation.  It
also amends the disclosure provisions of and requires prominent disclosure about
the effects on reported net income of a company's  accounting  policy  decisions
with respect to stock-based employee compensation.  In addition,  this statement
amends APB No. 28, "Interim  Financial  Reporting," to require  disclosure about
those effects in interim  financial  information.  SFAS No. 148 is effective for
financial  statements  for fiscal  years ending  after  December  15, 2002.  The
disclosure  requirements for interim financial  statements  containing condensed
consolidated  financial  statements are effective for interim periods  beginning
after  December  15,  2002.  The Company does not intend to adopt the fair value
method  of  accounting  for  stock-based   compensation  of  SFAS  No.  123  and
accordingly  SFAS No.  148 is not  expected  to have a  material  impact  on the
Company's financial position, results of operations or cash flows.

NOTE 3 - EQUITY INVESTMENTS:

June 2002 Securities Purchase Agreement with Seven Hills

In June 2002, the Company  consummated a private  placement with Seven Hills, in
which the Company sold to Seven Hills,  for an aggregate  cash purchase price of
$6,050,000,  2,630,434  shares  of the  Company's  common  stock  and  five-year
warrants to purchase up to 1,172,422  shares of the Company's common stock at an
exercise price of $3.40 per share (Note 8). As of December 31, 2002, Seven Hills
owned approximately 18.1% of the Company's outstanding voting securities.

Additionally,  in May 2002,  the Company and Seven Hills formed a joint  venture
company that will provide  marketing and  distribution  funds for the theatrical
release  of motion  pictures  that the  Company  or Seven  Hills  selects  on an
alternating  basis.  In June 2002,  Seven Hills funded the Company's  $2,000,000
capital  contribution  to the joint  venture  company  pursuant to a convertible
promissory  note (Note 6) issued by the Company and the joint  venture  company.
The  investment  in the joint  venture  company is  reported  as an asset on the
balance  sheet under  "Investment".  Seven Hills also funded its own  $2,000,000
capital contribution to the joint venture company in June 2002.

June 2000 Securities Purchase Agreement with Rosemary Street

In June 2000,  the Company  consummated  a Securities  Purchase  Agreement  with
Rosemary  Street in which the Company  sold to Rosemary  Street for an aggregate
cash price of  $17,000,000  (i) 5,097,413  shares of common stock,  (ii) 904,971
shares of Series A  convertible  preferred  stock  (which  were  converted  into
1,809,942  shares of common stock in October 2001) and (iii) five-year  warrants
to  purchase up to  2,313,810  shares of common  stock for an exercise  price of
$3.40 per share.  Direct  expenses  associated  with the  issuance  of stock and
warrants  amounted to $580,000  through December 31, 2001, which were charged to
equity. As of December 31, 2002, Rosemary Street owned approximately 42.8% of

                                      F-10
<PAGE>

the Company's voting securities.

In accordance with the terms of the Securities  Purchase Agreement with Rosemary
Street,  in June 2000, the Littles,  former co-chairs of the Board of Directors,
co-chief executive officers and significant stockholders of the Company, forgave
$2,023,000 in notes and other payables owed to them by the Company. In addition,
the Littles  contributed to the Company $130,000 in cash and 1,588,812 shares of
the Company's  common stock they owned. In return,  in accordance with the terms
of the  Securities  Purchase  Agreement,  the  Company  paid  $1,430,000  to the
Littles.

NOTE 4 - MARKETABLE SECURITIES:

In July 1999, the Company and  broadcast.com  entered into an agreement  whereby
broadcast.com was granted the right to exhibit, via the Internet,  certain films
owned by the Company. Additionally, broadcast.com received 562,527 shares of the
Company's common stock in consideration for 11,302 shares in  broadcast.com.  In
July 1999, the Company  received  17,454 shares of common stock of Yahoo!,  Inc.
("Yahoo!"),  reflecting  a 2 for 1 stock  split,  in exchange  for its shares of
broadcast.com,  following  Yahoo!'s  acquisition of  broadcast.com.  The Company
accounted  for its  investment in Yahoo!  under the  provisions of SFAS No. 115,
"Accounting  for  Certain  Investments  in  Debt  and  Equity  Securities".  The
investment in Yahoo!  was classified as an  available-for-sale  security and was
carried on the balance  sheet at fair value.  During 2000,  the Company sold all
its shares of Yahoo! common stock for approximately $2,056,000.

NOTE 5 - FILM COSTS:

Film costs consist of the following:
                                                            December 31,
                                                            ------------
                                                         2002           2001
                                                         ----           ----
                                                           (in thousands)
Films in release net of accumulated amortization       $ 15,601       $ 13,167
Films not yet available for release                       7,597          5,137
                                                       --------       --------
                                                       $ 23,198       $ 18,304
                                                       ========       ========

Interest costs capitalized to films were $236,000,  $191,000 and $186,000 during
the years ended  December 31, 2002,  2001 and 2000,  respectively.  Based on the
Company's  estimates  of  projected  gross  revenues  as of December  31,  2002,
approximately  82% and 90% of  unamortized  film  costs  applicable  to films in
release and not yet released, are expected to be amortized during the next three
years, respectively.

NOTE 6 - NOTES PAYABLE:

Notes payable consist of the following:

                                              2002           2001
                                              ----           ----
                                                (in thousands)

Borrowing under credit facility            $ 18,500        $ 14,500
Subordinated note payable                     1,754           1,806
                                           --------        --------
                                           $ 20,254        $ 14,680
                                           ========        ========

Concurrently  with the  consummation of the Securities  Purchase  Agreement with
Rosemary  Street (Note 3), in June 2000 the Company entered into a five-year $40
million revolving credit facility (the "JPMorgan Credit Facility") with JPMorgan
(formerly  Chase  Securities,  Inc.  and The  Chase  Manhattan  Bank)  and other
commercial banks and financial institutions. A portion of the proceeds from this
credit  facility was used to refinance  outstanding  loans and accrued  interest
under  the   Company's   previous   credit   facility  with  Coutts  &  Co.  and
Bankgesellschaft  Berlin A.G. (the  "Coutts/Bankgesellschaft  Credit Facility").
The  remaining  proceeds  have been used to finance  the  Company's  production,
acquisition,  distribution and exploitation of motion pictures,  and for working
capital  and  general  corporate  purposes  (Note 14).  During  the years  ended

                                      F-11
<PAGE>

December 31, 2002 and 2001,  the Company  borrowed  $4,000,000  and  $8,000,000,
respectively, under the JPMorgan Credit Facility.

The amounts  borrowed under the JPMorgan Credit  Facility bear interest,  as the
Company may select,  at rates based on either  LIBOR plus 2% or a rate per annum
equal to the greater of (a) the Prime Rate plus 1%, (b) the Base CD Rate plus 2%
and (c) the Federal Funds  Effective  Rate plus 1.5% (as these terms are defined
in the JPMorgan Credit Facility Agreement).  In addition to an annual management
fee of $125,000,  the Company pays a commitment  fee on the daily average unused
portion of the JPMorgan Credit Facility at an annual rate of 0.5%. Upon entering
the JPMorgan  facility,  we paid a one-time fee of  approximately  $848,000 as a
cost of acquiring  the  JPMorgan  facility.  Additionally,  in 2001 we added one
lender  (increasing  total commitments to $40,000,000 from $33,000,000) and paid
an additional fee of $42,000.  The JPMorgan  facility  restricts the creation or
incurrence  of  indebtedness  or the  issuance  of  additional  securities.  The
JPMorgan  facility is  collateralized  by all tangible and intangible assets and
future revenues of the Company.

As of December 31, 2002, the Company's cumulative losses resulted in a breach of
the covenant  contained in the credit  agreement with JPMorgan that sets forth a
minimum level of net worth that the Company is required to maintain. The Company
has requested a waiver of this breach.  JPMorgan  currently is considering  this
request and the Company is in negotiation with respect to further  modifications
JPMorgan will require to the credit  agreement in exchange for such waiver (Note
14).

In  addition to the  amounts  outstanding  under the  JPMorgan  Credit  Facility
Agreement,  during 1998 the Company borrowed $2,000,000 from another lender, the
proceeds of such loan were used to acquire  rights to a  particular  film.  This
subordinated   note  bore   interest  at  the  Prime  Rate  plus  1.5%  and  was
collateralized  by amounts due under  distribution  agreements from the specific
film. The outstanding remaining obligation of $180,000 was fully repaid in March
2002.

In May 2002,  the Company and Seven Hills formed a joint  venture  company (Note
3). In connection with formation of the joint venture, the Company and the joint
venture issued a $2,000,000 convertible promissory note to Seven Hills. The note
bears  interest at a rate of 4% per annum,  payable  quarterly  in arrears,  and
principal and unpaid interest on the note are payable on June 25, 2008. The note
is  recourse  against  the Company as to  interest  only  (accrued  prior to the
maturity  date) and against the joint venture  company as to both  principal and
interest.  The note has been discounted by approximately  $268,000, the value of
the 291,285  warrants  issued in  connection  with this note (see Note 8), which
discount will be amortized over the term of the note.

NOTE 7 - INCOME TAXES:

The components of the provision for income taxes on earnings before income taxes
are as follows:

                                         Years ended December 31,
                                         ------------------------
                                 2002              2001              2000
                                 ----              ----              ----
                                              (in thousands)
    Current
      State                    $       11        $       9           $       6
      Foreign withholding              80               53                 131
                               ----------        ---------           ---------
                                       91               62                 137
                               ----------        ---------           ---------
    Deferred
      State                             -                -                   -
      Federal                           -                -                   -
                               ----------        ---------           ---------
                                        -                -                   -
                               ----------        ---------           ---------
                               $       91        $      62           $     137
                               ==========        =========           =========

The provision for income taxes differs from the amount of income tax  determined
by applying the applicable U.S.  statutory income tax rates to loss before taxes
and  cumulative  effect  of  accounting  change,  as a result  of the  following
differences:

                                      F-12
<PAGE>

                                                  Years ended December 31
                                                  -----------------------
                                              2002        2001         2000
                                              ----        ----         ----
Federal statutory rate                       (34.0)%     (34.0)%     (34.0)%

State taxes, net of federal benefit and
  income not subject to tax                   (3.0)%      (3.0)%       (3.0)%

Deferred tax asset valuation allowance         36.5%       36.5%       37.0%

Other                                           1.5%        2.1%        2.2 %
                                             -------     -------     --------
                                                1.0%        1.6%        2.2 %
                                             =======     =======     ========

The deferred taxes relate primarily to differences arising from the amortization
of film costs for book and tax  purposes and the  benefits  associated  with tax
loss and foreign withholding tax credit  carryforwards.  The foreign withholding
taxes are substantially recouped from the producers' share of revenue.

The Company has  provided a valuation  allowance  for the full amount of its net
deferred  tax assets since  realization  of any future  benefit from  deductible
temporary differences and net operating loss and tax credit carryforwards cannot
be sufficiently assured at December 31, 2002.

At December 31, 2002, the Company had net operating loss  carryforwards for both
federal  and  state  income  tax  purposes  of  approximately   $30,000,000  and
$4,600,000,  respectively,  which expire at various dates between 2006 and 2022,
respectively.  The net operating  losses can be carried forward to offset future
taxable  income,  if any.  Utilization  of the  carryforwards  may be subject to
utilization   limitations  which  may  inhibit  the  Company's  ability  to  use
carryforwards in the future.

NOTE 8 - SHAREHOLDERS' EQUITY:

Common Stock

During 2000,  the Company  increased the number of  authorized  shares of common
stock, $.001 par value, from 25,000,000 to 50,000,000 shares.

Preferred Stock

During 2000, the Company  increased the number of authorized shares of preferred
stock, $.001 par value, from 2,000,000 to 10,000,000 shares.

Series A Preferred Stock

In accordance with the terms of the Securities  Purchase Agreement with Rosemary
Street (Note 3), in June 2000,  the Company  issued  904,971  shares of Series A
Preferred  Stock.  Pursuant to the  agreement,  all shares of Series A Preferred
Stock were  automatically  converted into common stock on a 2:1 basis in October
2001.

Stock Option Plans

In October 1996, the Company's stockholders approved the 1996 Basic Stock Option
and Stock  Appreciation  Rights Plan ("1996  Plan"),  under which  incentive and
non-qualified  stock  options  and stock  appreciation  rights may be granted to
certain employees, directors,  independent consultants and certain other persons
who  provide  services  to the  Company to  purchase  up to a maximum of 550,000
shares of common stock.  The 1996 Plan calls for annual  grants to  non-employee
directors of 5,000 shares at an exercise price equal to the fair market value of
the  common  stock  on the  date of  grant,  which  is the  date  of the  Annual
Stockholders  meeting.  These options are exercisable one year after the date of
grant and  expire on the  earlier  of ten years  from the date of grant or three
years  from  the date on which  the  director  ceases  to be a  director  of the
Company.

                                      F-13
<PAGE>

As part of the Securities  Purchase Agreement with Rosemary Street (Note 3), the
Company  cancelled all outstanding  stock options granted to the Littles.  Under
the terms of the  Company's  1996 Special  Stock  Option Plan,  the Littles held
options to purchase up to 2.2 million shares of common stock at exercise  prices
ranging from $5.00 to $8.50 per share.  These stock  options were issued in 1996
and vested over a five-year period. The Company subsequently granted the Littles
fully  vested  stock  options to purchase  500,000  shares of common stock at an
exercise price of $3.40 per share.

In November  2000,  the  Company's  stockholders  approved the 2000  Performance
Equity Plan ("2000  Plan"),  under which a total of  1,000,000  shares of common
stock are  available for grant to the  Company's  key  employees,  directors and
independent  consultants.  Awards  consist of stock  options,  restricted  stock
awards,  deferred stock awards,  stock appreciation rights and other stock-based
awards, as described in the 2000 plan.

The Board of Directors is responsible for  administration  of the 2000 Plan. The
Board  determines the term of each award,  including the option  exercise price,
the number of shares for which each option is granted and the rate at which each
option is  exercisable.  Incentive  stock options  granted  pursuant to the Plan
cannot be granted  with an  exercise  price of less than 100% of the fair market
value on the  date of  grant  (110%  if the  award  is  issued  to a 10% or more
shareholder).  The term of the options  granted under the Plan cannot be greater
than 10 years; 5 years for certain  optionees who have an ownership  interest in
the  Company  or one if its  subsidiaries.  Options  granted  under the Plan are
exercisable at times and increments as specified by the Board of Directors.

An aggregate of 1,550,000  shares of common stock were  reserved for grant under
the 1996 Plan and the 2000 Plan, of which  1,280,000  shares were  available for
future grant at December 31, 2002.

The following table summarizes stock option  transactions during the years ended
December 31, 2002, 2001 and 2000:

                                                               Weighted
                                              Number of      Average Price
                                                Shares         Per Share
                                              ----------     -------------

Balance at December 31, 1999                   2,380,000     $        6.48

     Granted during 2000                         650,000              3.20

     Cancelled during 2000                     2,200,000              6.78
                                              ----------     -------------

Balance at December 31, 2000                     830,000     $        3.22

     Cancelled during 2001                        60,000              1.88
                                              ----------     -------------

Balance at December 31, 2001                     770,000     $        3.18

     No activity during 2002                           -     $           -
                                              ----------     -------------

Balance at December 31, 2002                     770,000     $        3.18
                                              ==========     =============
Exercisable at December 31, 2002                 761,000     $        3.18
                                              ==========     =============


                                      F-14
<PAGE>

The following summarizes prices and terms of options outstanding at December 31,
2002:

                            Stock Options Outstanding
                            -------------------------
                                        Weighted Average        Number
                        Number             Remaining         Exercisable at
                     Outstanding at   Contractual Life in     December 31,
Exercise Price     December 31, 2002        Years                2002
--------------     -----------------  -------------------      ---------

 $      1.75          10,000                  7.88               10,000
 $      1.88          20,000                  3.15               20,000
 $      2.25          20,000                  3.71               20,000
 $      2.38          30,000                  5.41               30,000
 $      2.44         100,000                  5.90              100,000
 $      3.40         575,000                  3.15              566,000
 $      5.25          15,000                  3.39               15,000
                     -------                                    -------
                     770,000                  3.68              761,000
                     =======                                    =======

Warrants

In June 2002, in accordance with the terms of the Securities  Purchase Agreement
with Seven Hills (Note 3), the Company  issued Seven Hills  warrants to purchase
up to 1,172,422  shares of common stock at an exercise price of $3.40 per share.
Warrants to purchase 881,137 shares of common stock are immediately  exercisable
and will expire on June 25, 2007.  Warrants to purchase 291,285 shares of common
stock ("Note  Warrants")  only will become  exercisable  upon  conversion of the
convertible  promissory note described in Note 3, in proportion to the amount of
the note  converted if the note is not  converted  in whole,  and will expire on
June 25, 2007. If no portion of the note is converted  into common  stock,  then
the Note  Warrants will not become  exercisable.  All of these  warrants  remain
unexercised at December 31, 2002.

In June 2000, in accordance with the terms of the Securities  Purchase Agreement
with Rosemary  Street (Note 3) the Company issued  Rosemary  Street  warrants to
purchase  2,313,810  shares of common stock. The Company also issued warrants to
purchase  600,000  shares of common stock to  individuals  as  compensation  for
services  rendered  in  connection  with  closing  of  the  Securities  Purchase
Agreement.  The Company also issued warrants to purchase 75,000 shares of common
stock to an  individual  in  consideration  of his consent to the  assignment by
Rosemary Street to the Company of his first look agreement.  These warrants have
an exercise price of $3.40 per share, are fully vested,  expire in June 2005 and
remain unexercised at December 31, 2002.

In 1996, the Company issued  warrants to purchase  62,500 shares of common stock
at an  exercise  price of $5.00 per share.  The  warrants  are fully  vested and
expire in October 2003. At December 31, 2002, these warrants remain unexercised.

In 1995,  the company  issued  warrants to purchase  4,500,000  shares of common
stock were issued at an exercise price of $5.00 per share.  In January 2002, the
Company exchanged 4,135,579 of 4,500,000 outstanding warrants for 295,291 shares
of the  Company's  common  stock.  The  remaining  364,421  warrants  expired in
February 2002.

NOTE 9 - RELATED PARTY TRANSACTIONS:

Through  June 2000,  Ellen  Dinerman  Little was  employed by the Company as its
co-chairman of the board,  co-chief  executive  officer and  president.  In June
2000, the Company and Ms. Little  terminated Ms.  Little's  existing  employment
agreement and the Company  entered into a first look  agreement  with The Little
Film Company,  Inc. and Ms. Little. The agreement provides for a three-year term
ending in June 2003.  Pursuant  to the first  look  agreement,  The Little  Film
Company receives (i) an annual fee of $100,000;  (ii) a discretionary  revolving
development  fund  of  $100,000  for  The  Little  Film  Company's  use  in  the
option/acquisition  of  literary  properties,  engagement  of writers  and other
customary  development  costs;  and (iii) customary  overhead,  including office
space, staff, telephone and reasonable travel costs of up to $150,000 per year.

                                      F-15
<PAGE>

The Little Film Company also will be compensated on a project-by-project  basis.
The Company will have an  exclusive  "first look" on any project that The Little
Film Company owns or controls or any project that it has the right to acquire or
may wish to acquire for development or production.  The Little Film Company will
furnish  the Company  with the  services of Ms.  Little in  connection  with the
development  and possible  production of theatrical  motion  pictures based upon
accepted artist submissions meeting certain criteria.  We did not compensate The
Little Film  Company  relative to the  production  of any films  during 2002 and
2001.

In October 2000,  the Company  entered into a consulting  agreement with Wharton
Capital Partners Ltd.  ("Wharton").  Barry Minsky, a director of the Company, is
the  chief  executive  officer  and a 50%  stockholder  of  Wharton.  Under  the
agreement,  Wharton  received a one-time fee of  $100,000,  and a monthly fee of
$4,166 for 24 months  beginning  in November  2000.  If Wharton  introduces  the
Company to a financing source and the Company  consummates any public or private
equity and/or debt  financing  with the source during the term of the consulting
agreement  or  during  the  two-year  period  following  the  expiration  of the
agreement,  then the Company  also will pay Wharton an amount equal to (i) 5% of
all funds received by the Company from such public or private  equity  financing
and (ii) 3% of all funds  received  by the  Company  from such public or private
debt financing.  Additionally, upon completion of an equity-based financing, the
Company  will issue to Wharton  warrants  to  purchase  shares of the  Company's
common stock equal to 5% of the common stock or common stock equivalents  issued
in the  financing  at an exercise  price equal to 120% of the  five-day  average
closing bid price prior to the closing of such  financing.  The warrants will be
exercisable on a cashless basis and will have  registration  rights.  During the
three years ended December 31, 2002, the Company  recorded  expenses of $37,500,
$50,000 and $112,500, respectively, related to services rendered by Wharton.

In May 2002,  the  Company  and Seven Hills  formed a joint  venture  company to
provide  marketing and distribution  funds for the theatrical  release of motion
pictures.  Reverge  Anselmo,  a director of the Company,  is the sole member and
manager of Seven Hills, and Patrick Costello,  a director of the Company, is the
chief  financial  officer of Seven Hills.  In June 2002,  Seven Hills funded the
Company's  $2,000,000 capital contribution to the joint venture company pursuant
to a  convertible  promissory  note issued by the Company and the joint  venture
company  (Notes 3 and 6). Also in June 2002,  the  Company,  Seven Hills and the
joint venture company entered into a Film Marketing and Distribution  Agreement,
pursuant to which the joint venture  company will market and  distribute  motion
pictures that the Company or Seven Hills selects on an alternating  basis. Under
the agreement,  the Company will receive a distribution  fee equal to 10% of the
Theatrical  Gross Receipts (as defined in the  agreement)  derived from the U.S.
theatrical distribution of each picture designated by Seven Hills that the joint
venture  company  distributes.  During 2002, the joint venture did not market or
distribute  any movies and  therefore  no fees were  earned or  received  by the
Company.

NOTE 10 - COMMITMENTS AND CONTINGENCIES:

The Company  leases office space and office  equipment  under various  operating
leases,  which expire  between 2003 and 2007.  Total rental  expense under these
leases for the years ended December 31, 2002, 2001 and 2000 amounted to $517,000
$278,000 and  $255,000,  respectively.  Minimum  annual  rental  payments  under
non-cancelable leases are as follows:

         2003                       $     511,000
         2004                             508,000
         2005                             503,000
         2006                             503,000
         2007                             205,000
                                    -------------
                                    $   2,230,000
                                    =============

As of December 31, 2002, the Company was committed to pay minimum  guarantees of
approximately  $2,933,000  contingent  upon  delivery  of  certain  films to the
Company.

Additionally,  the  Company  has  entered  into  arrangements  with  German film
financing  partnerships  whereby the Company has  guaranteed  that within  three

                                      F-16
<PAGE>

years from the  commencement  of principal  photography of the related film, the
licensing and distribution proceeds,  net of fees and expenses,  will be no less
than sixty to eighty percent  (depending  upon the specific  arrangement) of the
amount funded toward the production cost of the related film.  These  guarantees
generally are not recorded as liabilities  unless and until  management  expects
that proceeds from the licensing and  distribution  of the related film,  net of
fees and expenses, will be insufficient to cover the guarantee within the agreed
upon period for the  particular  film. As of December 31, 2002,  the Company had
three such  commitments  outstanding,  whereby the total  amount  committed  was
$10,238,000. These guarantees are summarized below.

<TABLE>
<CAPTION>

                      Term of Guarantee                    Maximum Potential  Current Carrying
                    --------------------                       Amount of        Amount of                      Projected Future
                      From         To         Guarantee     Future Payments      Libaility       Assets Held      Contracts
                     ------      ------       ---------    ----------------   ----------------   -----------   ----------------
<S>                 <C>         <C>          <C>           <C>                <C>                <C>           <C>
Film 1              10/04/01    10/04/04     $ 5,240,000     $   2,598,000     $         -       $ 2,675,000       $  2,200,000
Film 2              12/03/00    12/03/03       3,998,000         3,559,000       2,046,000         1,683,000          1,996,000
Film 3              01/31/02    01/31/05       1,000,000           717,000         371,000           712,000            695,000
                                          -------------------------------------------------------------------------------------
                                             $10,238,000     $   6,874,000     $ 2,417,000       $ 5,070,000       $  4,891,000
                                          =====================================================================================
</TABLE>

In the event any of the  guarantees are drawn upon, the Company has the right to
retain  proceeds  from the  collection  of  accounts  receivable  in addition to
proceeds from the future contracts of distribution rights in the respective film
where the guarantee had been called  (both,  net of fees and expenses)  until we
have  recovered any guarantee  paid. The table above reflects the amount of cash
and accounts receivable held ("Assets Held") along with management's estimate of
the  value  of  future  contracts  of  distribution  rights  ("Projected  Future
Contracts") to the respective film as of December 31, 2002.  Management  expects
that the possibility of having to honor its contingent  obligations  under these
agreements  is remote  and in the event any of the  guarantees  are drawn  upon,
management  believes that proceeds from the  liquidation of accounts  receivable
and further  distribution  rights will be sufficient to cover the maximum amount
of future payments under each guarantee.

NOTE 11 - FOREIGN SALES AND SIGNIFICANT CUSTOMERS:

The Company's foreign revenues are summarized as follows:

                                           Years Ended December 31,
                                           ------------------------
                                  2002              2001               2000
                                  ----              ----               ----
                                                (in thousands)
    Western Europe              $      8,478     $     11,782        $     9,289
    Asia                               1,280            2,420              1,999
    Latin America                      1,676            1,684              1,139
    Eastern Europe                       600              641                806
    Other                                306            2,238              1,775
                                ------------     ------------        -----------
                                $     12,340     $     18,765        $    15,008
                                ============     ============        ===========

No customers  accounted for 10% or more of the Company's  revenues for the years
ended December 31, 2002 and 2001, one customer accounted for $3,014,000 or 13.3%
of the revenues for the year ended December 31, 2000.

NOTE 12 - 401(K) PLAN

The Company has a 401(K) plan, which covers  substantially  all employees.  Each
participant  is  permitted  to make  voluntary  contributions  not to exceed the
lesser of 15% of his or her respective  compensation or the applicable statutory
limitation.  The Company  matches  one-half of the first 4%  contributed  by the
employee.  Amounts  contributed  by each  employee  are  immediately  vested and
amounts  contributed by the Company vest over a five-year  period at the rate of
20% per year. The Company's contributions to the plan were $48,000,  $35,000 and
$24,000 in 2002, 2001 and 2000, respectively.

                                      F-17
<PAGE>

NOTE 13 - SEGMENT INFORMATION

The Company has managed its business in two operating  segments:  Motion Picture
Distribution and Television Commercial Production.  The segments were determined
based upon the types of products and services provided and sold by each segment.

     The Motion Picture  Distribution  segment acquires  licenses,  distributes,
sells and otherwise exploits distribution rights to motion pictures.  Activities
include direct  theatrical,  video and DVD  distribution  in the U.S. as well as
licensing of rights to other theatrical,  video and DVD distributors and to pay,
basic and free  television  broadcasters  throughout  the world.  The Television
Commercial Production segment produces commercials for manufacturers and service
providers who use the commercial to promote their  products and services.  There
were no  inter-segment  transactions  during  the years  reported.  The  Company
evaluates  performance  based on income or loss from operations  before interest
expense  and taxes.  The  Television  Commercial  Production  segment has become
relatively  inactive and the Company has eliminated  substantially  all overhead
related to this segment.  In the future,  if the Company produces any television
commercials,  it will likely use a company  partially  owned by  Christopher  J.
Cooney,  the Company's  co-chairman  and chief  executive  officer,  and Jeffrey
Cooney,  the Company's  executive vice president and a director,  to provide all
support services needed in exchange for a fee.

Financial information by operating segment is set forth below:

<TABLE>
<CAPTION>


                                        Year Ended and as of December 31, 2002            Year Ended and as of December 31, 2001
                                        --------------------------------------            --------------------------------------
                                                      Television                                        Television
                                        Motion        Commercial                         Motion         Commercial
                                       Pictures       Production         Total          Pictures        Production         Total
                                    --------------- ---------------  --------------- --------------- ----------------- -------------
                                                    (in thousands)                                    (in thousands)
<S>                                 <C>             <C>              <C>             <C>             <C>               <C>
Revenues from external
    Customers                           $ 25,541         $   1,158      $  26,699       $  34,881          $    263        $ 35,144

Loss from operations
    before interest and taxes             (9,481)              125         (9,356)         (2,387)             (775)         (3,162)

Total assets                              41,729               193         41,922          45,264               207          45,471

</TABLE>


NOTE 14 - SUBSEQUENT EVENTS (UNAUDITED):

     As of December 31, 2002, the Company has sustained  cumulative losses which
have resulted in a breach of the covenant contained in the credit agreement with
JPMorgan  that sets  forth a  minimum  level of net worth  that the  Company  is
required  to  maintain.  The  Company  has  requested  a waiver of this  breach.
JPMorgan currently is considering this request and the Company is in negotiation
with  respect  to  further  modifications  JPMorgan  will  require to the credit
agreement  in exchange for such waiver.  At this point,  JPMorgan has  indicated
that these  modifications  will likely  include an  immediate  reduction  of the
commitment  level under the credit  agreement from $40 million to  approximately
$20 million,  with further  reductions so that by January 1, 2004 the commitment
level will be $15  million.  The minimum net worth  requirement  would be waived
until December 31, 2003, subject to the Company maintaining a positive net worth
as calculated  pursuant to GAAP . These  modifications  require the agreement of
51% of the voting right of the  participating  banks (the percentage  based upon
the  proportionate  commitment  of each  bank  to the  total  commitment  of $40
million).  Final  resolution of this matter is expected by April 30, 2003. Until
then,  the Company is  precluded  from  drawing  further  funds under the credit
facility.

                                      F-18
<PAGE>



FIRST LOOK MEDIA, INC.
(formerly known as Overseas Filmgroup, Inc.)

Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                                    Balance at             Charged to
                                                   Beginning of            Costs and                    Balance at
          Allowance for Doubtful Accounts              Year                 Expenses       Deductions   End of Year
          -------------------------------          -------------           ---------       ----------  -------------
                                                                                 (in thousands)
<S>                                                <C>                     <C>             <C>         <C>
Year Ended December 31, 2002                       $       1,150           $   2,175       $    (924)  $       2,401
Year Ended December 31, 2001                               1,100               1,268          (1,218)          1,150
Year Ended December 31, 2000                               1,100               1,876          (1,876)          1,100


</TABLE>












                                      S-1
<PAGE>



To the Board of Directors
And shareholders of First Look Media, Inc.

Our audits of the consolidated  financial  statements  referred to in our report
dated March 28, 2003, appearing in this Annual Report on Form 10-K also included
an audit of the financial statement schedule listed in Item 8 of this Form 10-K.
In our opinion,  this  financial  statement  schedule  presents  fairly,  in all
material  respects,  the  information set forth therein when read in conjunction
with the related consolidated financial statements.


PricewaterhouseCoopers LLP
Century City, California
March 28, 2003













                                      S-2