TEAM COMMUNICATION GROUP INC, SB-2, 1999-07-20

TEAM COMMUNICATION GROUP INC
SB-2, 1999-07-20
MOTION PICTURE & VIDEO TAPE DISTRIBUTION

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1999
REGISTRATION NUMBER 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TEAM COMMUNICATIONS GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

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CALIFORNIA 3652 95-5419215
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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TEAM COMMUNICATIONS GROUP, INC.
12300 WILSHIRE BOULEVARD, SUITE 400
LOS ANGELES, CALIFORNIA 90025
(310) 442-3500
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES.)

DREW S. LEVIN
12300 WILSHIRE BOULEVARD, SUITE 400
LOS ANGELES, CALIFORNIA 90025
(310) 442-3500
(NAMES, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

BRUCE P. VANN, ESQ.
KELLY LYTTON MINTZ & VANN LLP
1900 AVENUE OF THE STARS, SUITE 1450
LOS ANGELES, CALIFORNIA 90067
TELEPHONE NO: (310) 277-5333
FACSIMILE NO: (310) 277-5953

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(d) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED PER SHARE OFFERING PRICE FEE
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Common Stock(1)............................. 685,000 $6.25 $4,281,250 $1,190.19
Common Stock Underlying Warrants(2)......... 381,408 $.43 $164,005 $0
Common Stock Underlying Warrants(2)......... 193,870 $.97 $188,054 $0
Common Stock Underlying Warrants(2)......... 20,000 $1.07 $21,400 $0
Common Stock Underlying Warrants............ 85,000 $2.16 $183,600 $51.04
Common Stock Underlying Warrants............ 100,000 $2.20 $220,000 $61.16
Common Stock Underlying Convertible
Debentures................................ 981,125 $6.25 $6,132,032 $1,704.70
Common Stock Underlying Convertible
Note(2)................................... 199,748 $6.25 $1,248,425 $0
TOTAL....................................... 2,646,151 $12,438,766 $3,010.09
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(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee.
(2) These shares of common stock were previously registered on Form SB-2
Registration Statement, File Number 333-26307. No filing fee is included
with respect to such shares.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 19, 1999.

PRELIMINARY PROSPECTUS

2,646,151 SHARES

TEAM COMMUNICATIONS GROUP, INC.
COMMON STOCK
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This prospectus relates to an aggregate of 2,646,151 shares of our common
stock which were previously issued to the shareholders listed in this prospectus
(the "Selling Shareholders"), or issuable to the Selling Shareholders pursuant
to convertible debentures (the "Debentures") or outstanding warrants (the "1999
Warrants") to purchase our common stock. Such shares of common stock are being
offered for the accounts of the Selling Shareholders on The NASDAQ SmallCap
Market at the then prevailing prices, or in negotiated transactions. We will not
receive any proceeds from the sale of the shares of common stock being
registered, but will receive the proceeds from the exercise of the Warrants.
This prospectus also covers 795,026 shares previously registered by us, which
shares may be issued upon the exercise of certain previously issued warrants
(the "Prior Warrants") and a convertible promissory note (the "Convertible
Note"). The 1999 Warrants and the Prior Warrants are sometimes hereinafter
referred to as the "Warrants".

Our common stock trades on the NASDAQ SmallCap Market under the symbol
"TMTV".

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 6.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The common stock offered hereby was or will be acquired by the Selling
Shareholders from us in private placements or upon the conversion of the
Debentures or the exercise of the Warrants and are "restricted securities" under
the Securities Act of 1933. This prospectus has been prepared to register the
shares of common stock under the Securities Act of 1933 to allow for future
sales by the Selling Shareholders to the public without any restrictions. To our
knowledge, the Selling Shareholders have made no arrangement with any brokerage
firm for the sale of the shares. The Selling Shareholders may be deemed
"underwriters" within the meaning of the Securities Act of 1933. Any commissions
received by a broker or dealer in connection with resales of the shares may be
deemed underwriting commissions or discounts under the Securities Act of 1933.
See "Plan of Distribution".

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The date of this prospectus is July , 1999.
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PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this
prospectus. This summary does not contain all the information that you should
consider before investing in the common stock. You should read the entire
prospectus carefully, including "Risk Factors" and the financial statements,
before making an investment decision.

THE COMPANY

We were formed in February 1995. We develop, produce and distribute a
variety of television programming, including series, specials and
made-for-television movies for exploitation in the domestic and international
television markets. We derive substantially all of our revenues from production
fees earned from our originally produced programs, distribution fees from the
exploitation of product acquired from others, and the exploitation of our
originally produced programs.

Our production activities are focused on family programming produced for
United States cable and network television channels such as The Discovery
Channel, The Family Channel, USA Network, and the Public Broadcasting System. In
addition, we co-developed and co-produced a reality based five-day per week
("strip") syndicated series, called "Strange Universe," with United/Chris-Craft
television stations and Rysher Entertainment. This series, which aired on
United/Chris-Craft stations, involved the production of 130 episodes over its
two, thirteen week commitments. We have also completed the production of a
series of 48 half hour episodes entitled "Amazing Tails," a reality based series
focusing on extraordinary pets, which has been financed in conjunction with
Friskies Pet Foods, a division of Nestles Food, and advertising leader The
Interpublic Group of Companies. All episodes of Amazing Tales have been produced
and delivered, and the series is currently airing on Discovery Communications'
Animal Planet. We have also received a firm commitment from Discovery Channel's
Animal Planet for the initial production of 13 one-hour drama episodes of the
"The Call of the Wild," based on Jack London's classic novel. Production of this
series is currently contemplated to begin in late summer (subject to financing
and obtaining adequate pre-sales for certain European territories), with
delivery to take place from December 1999 through February 2000.

In March 1999, our co-production of 22 episodes of Total Recall 2070, a
television series based on the hit movie "Total Recall," began to air on
Showtime Networks. Original episodes are still airing. We are waiting on
Showtime's decision as to whether it will order a second season. We maintain a
dramatic development and production department which continues developing and
will produce movies-of-the-week and drama series for exhibition on network
television, cable or ad hoc networks of independent stations which sometimes
form to air special programming. We also currently have distribution rights to
approximately 335 half-hours of family and documentary series and specials, and
190 hours of dramatic series and films.

RECENT EVENTS

We are currently in discussions with a number of distribution and
production companies regarding possible business combinations. On June 6, 1999,
we signed a letter of intent to purchase Dandelion Distribution Ltd., a United
Kingdom based television production and distribution company, for approximately
$5,000,000 in cash and common stock. The transaction is scheduled to be
completed by October 15, 1999.

In April 1999, we entered into a letter of intent with Value Management and
Research, A.G. ("VMR"), our financial advisors, to assist us in completing, on a
"best-efforts" basis, an offering of approximately $25 to $30 million of our
common stock on the German Deutsche Borse. An affiliate of VMR has agreed to co-
manage the underwriting. Subject to obtaining a commitment of a lead
underwriter, the offering is scheduled to be completed in October of 1999.

Our address is 12300 Wilshire Boulevard, Suite 400, Los Angeles, California
90025, and our telephone number is (310) 442-3500.

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THE OFFERING

Common Stock offered hereby... 2,646,151 shares

Common Stock to be outstanding
after the offering............ 6,716,496 shares(1)

Use of Proceeds............... General corporate purposes, including working
capital. (2) See "Use of Proceeds."
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(1) Assumes conversion of the Debentures, the exercise of the Warrants and the
issuance of 199,748 shares upon conversion of the Convertible Note.

(2) We will receive no proceeds from the sale of the common stock offered
hereby. We will receive $775,705 from the exercise of the Warrants, if all
the Warrants are exercised.

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SUMMARY OF FINANCIAL INFORMATION

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FOR THE FOR THE FOR THE FOR THE FOR THE
THREE MONTHS THREE MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
ENDED MARCH 31, ENDED MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
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(UNAUDITED) (UNAUDITED)
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STATEMENT OF OPERATIONS DATA:
Revenues...................... 3,502,000 1,573,400 13,581,900 6,875,600 5,749,800
Cost of revenues.............. 2,561,200 379,000 9,076,000 2,355,300 2,895,900
Gross profit.................. 940,800 1,194,400 4,505,900 4,520,300 2,853,900
General and administrative
expenses.................... 385,500 541,500 3,274,000 3,244,900 2,323,800
Net income from operations.... 555,300 652,900 1,231,900 1,275,400 530,100
Interest expense.............. 151,300 263,000 902,600 1,040,100 677,700
Interest income............... 31,900 48,000 202,900 211,800 58,300
Other income.................. -- -- -- -- 90,100
Net income (loss) before
income taxes................ 435,900 437,900 532,200 447,100 800
Provision for income taxes.... 87,000 -- 57,500 -- --
Extraordinary loss from early
extinguishment of debt...... -- -- 69,500 -- --
Net income (loss)............. 348,900 437,900 405,200 447,100 800
Net income (loss) per common
share basic(1).............. 0.11 0.39 0.22 0.40 0.00
Weighted average number of
shares outstanding
basic(1).................... 3,149,468 1,131,344 1,833,340 1,131,344 1,131,344
Net income (loss) per common
share diluted(1)............ 0.09 0.24 0.17 0.25 0.00
Weighted average number of
shares outstanding
diluted(1).................. 3,835,335 1,821,800 2,434,017 1,821,800 1,821,800
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MARCH 31, 1999
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ACTUAL AS ADJUSTED(2)
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BALANCE SHEET DATA:
Liquidity capital (deficit)(3).............................. (5,597,900) (2,927,070)
Total assets................................................ 19,979,200 21,454,905
Notes payable(4)............................................ 3,227,500 2,032,375
Line of credit(4)........................................... 850,000 850,000
Accrued interest(4)......................................... 619,900 619,900
Shareholder loan and note payable(4)........................ 450,000 450,000
Retained earnings (accumulated deficit)(2).................. 169,500 (195,375)
Shareholders' equity........................................ 8,778,100 11,843,930
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(1) See Note 2 of Notes to Consolidated Financial Statements for information
regarding the calculation of net income (loss) per share.

(2) The "As Adjusted" column reflects the sale of an additional $500,000 of
principal amount of the Debentures and the 1999 Warrants that occurred in
April 1999, less $105,000 allocated to paid-in capital as the value of the
warrants and conversion feature attached to the Debentures. The "As
Adjusted" column also reflects the conversion of the Debentures into shares
of common stock, as well as the related write-off of the original issue
discount associated with the initial sale of such securities. The resulting
adjustment to retained earnings (accumulated deficit) reflects the write-off
of the discounts associated with the early extinguishment of such debt. The
"As Adjusted" column also reflects the sale of 175,000 shares of common
stock in June 1999 to four of the Debenture holders. Finally, the "As
Adjusted" column reflects the exercise of all the Warrants.

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(3) Represents (i) cash and cash equivalents plus accounts receivables (net),
and the amount due from officer, less (ii) accounts payable, accrued
expenses and other liabilities, deferred revenue, accrued participations,
notes payable, shareholder loan and note payable, and accrued interest.

(4) See Notes 5, 7, and 8 of Notes to Consolidated Financial Statements.

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RISK FACTORS

You should consider carefully the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk. Additional risks
and uncertainties that are not yet identified or that we currently think are
immaterial may also materially adversely affect our business and financial
condition in the future.

GOING CONCERN ASSUMPTION.

Contained in the independent accountants' report included in our financial
statements for each of the fiscal years since our formation, and included in the
footnotes to the unaudited financial statements for the three months ended March
31, 1999, is an explanatory paragraph indicating that our financial condition
raises substantial doubt as to our ability to continue as a going concern. There
can be no assurance that future financial statements will not include a similar
explanatory paragraph if we remain unable to raise enough money or generate
sufficient cash flow from operations to cover the cost of running our business.
The existence of such an explanatory paragraph may have a material adverse
effect on our relationship with third parties who are concerned about our
ability to complete projects that we are contractually required to develop or
produce, and could also impact our ability to complete future financings.

WE HAVE A LIMITED OPERATING HISTORY THAT MAKES AN EVALUATION OF OUR BUSINESS
DIFFICULT.

We were incorporated in February 1995, and have a limited operating
history. Although we have generated profitable operations during each of the
fiscal years ended December 31, 1996, 1997 and 1998, and for the three months
ended March 31, 1999, we have experienced a negative cash flow from operations
during such periods. We can not assure you that we will continue to be
profitable in the foreseeable future or that we will be able to generate
positive cash flow from our operations. Our business plan is subject to all the
risks associated with starting a new business, including operating losses. In
addition, we will be subject to certain factors affecting the entertainment
industry generally, such as:

- sensitivity to general economic conditions;

- critical acceptance of our products; and

- intense competition.

The likelihood of our success must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with the formation of a new business.

LIQUIDITY DEFICIT.

As of March 31, 1999, we had retained earnings of $169,500 and a liquidity
deficit of ($5,597,900). Liquidity deficit is defined as:

- cash and cash equivalents plus accounts receivable (net), and the amount
due from officer, less

- accounts payable, accrued expenses and other liabilities, deferred
revenue, accrued participations, notes payable, shareholder loan and note
payable, and accrued interest.

NEED FOR ADDITIONAL CAPITAL, EXISTING DEFAULTS, DILUTION AND NO ASSURANCE OF
FUTURE FINANCINGS.

The entertainment industry is highly capital intensive. Despite our initial
public offering, our operations have been hurt by ongoing capital shortages
caused by a slowness in collecting receivables and the inability to complete a
long term banking relationship. Despite these problems, we have attempted to
address our capital requirements by:

- selling $1,850,000 in convertible debt, as well as $700,000 in equity to
certain of the holders of such debt;

- entering into a letter of intent to complete, on a "best-efforts" basis,
an offering of our common stock on Germany's Deutsche Borse; and

- selling $350,000 of additional debt financing, with warrants, as a bridge
to the German offering.
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These financings in general, and the convertible debt financing in
particular, are dilutive to our shareholders.

Despite the dilutive nature of these financings, we believe that completing
these offerings was critical to our short term financial needs. As of July 14,
1999 we had indebtedness and related accrued interest of $4,217,000, including
notes of a principal amount of $2,673,000, which matures within 6 months. We
have $514,900 principal amount of notes which have matured and are currently in
default. We are currently negotiating with these noteholders and have not yet
received any written action regarding the defaults under the notes. We believe,
however, that we will be able to cure these defaults by either converting the
notes to equity or raising additional financings to repay them. No assurance can
be given that we will be able to effectuate any of the foregoing alternatives,
or that if we seek to extend such obligations or refinance them, that such
extensions or refinancing alternatives will be on terms which are financially
advantageous to us.

If additional financing is not available, we will be required to:

- reduce or suspend our operations;

- seek an acquisition partner;

- or try other ways to sell securities on terms that may be highly dilutive
or otherwise disadvantageous to current shareholders.

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and Note 12 of Notes
to Consolidated Financial Statements.

OUR RELIANCE ON CERTAIN CUSTOMERS AND OUR ALLOWANCES FOR POSSIBLE UNCOLLECTIBLE
RECEIVABLES.

As of March 31, 1999, we had $4,295,000 in receivables. To cover the
possibility that one or more of our customers could fail to pay monies due to
us, we currently maintain a general reserve of approximately $337,000. If we are
required to make an additional allowance for these receivables, our results of
operations and financial condition in future periods could be adversely
affected. While we believe that each of the licensees are reasonable credit
risks any failure to pay could have a material adverse impact on our results.

OUR DEPENDENCE ON EMERGING MARKETS AND ON FOREIGN SALES.

A substantial portion of our revenues are, and for the foreseeable future
will most likely be, derived from the sale or license of our products to
recently established domestic television or cable networks such as:

- the WB Network;

- United Paramount Network;

- The Discovery Channel;

- The Learning Channel;

- the growing specialized pay market; and

- the foreign television networks.

In addition to these, a substantial portion of our revenues are dependent
on sales to licensees and distributors in foreign markets. Collecting
receivables from these customers is subject to the risks associated with doing
business with foreign companies including rapid changes in the political and
economic climates of such countries. If we become involved in a long term
dispute over how our product is being distributed in a foreign country, or are
forced to initiate collection activities to enforce the terms of a license or
distributor agreement, the profitability of any particular product may be
adversely effected.

As indicated above, substantially all of our receivables as of March 31,
1999 are trade receivables from entities domiciled outside the United States.
These receivables, totaling $4,295,000, represent 100% of all trade receivables
and 21.5% of our total assets. Any difficulty or delay in the collection of
these receivables would have a material adverse effect on us. The ongoing
economic crisis in Southeast Asia may impact our
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future sales for South Korea, Thailand and Indonesia. While we had no material
sales in this region, we have experienced significant delays in collecting on
sales in Japan.

BUSINESS COMBINATIONS.

We are currently in discussions with a number of distribution and
production companies regarding possible business combinations. On June 6, 1999,
we entered into a letter of intent to purchase Dandelion Distribution Ltd., for
$5,000,000 in cash and common stock. The transaction is subject to the drafting
of definitive acquisition agreements and the successful completion of our due
diligence review. If definitive agreements are finalized, but we are not ready
to close within 60 days of the signing of such agreements, then we will have to
pay Dandelion a penalty of $62,500.

COMPETITION.

The entertainment industry is highly competitive. We compete with many
entertainment organizations, who are all seeking, in varying degrees;

- the rights to literary properties;

- the services of creative and technical personnel;

- the financing for production of film and television projects; and

- favorable arrangements for the distribution of completed films.

Virtually all of our competitors are larger than we are, have been in
business longer than we have and have more resources at their disposal. The
entertainment industry is currently evolving into an industry in which certain
multi-national, multi-media entities, because of their control over key film,
magazine, and/or television content, as well as key network and cable outlets,
will be able to dominate certain communications industries activities in the
United States. These competitors have numerous competitive advantages, including
the ability to acquire financing for their projects and attract superior
properties, personnel, actors and/or celebrity hosts.

THE RISK THAT NOT ENOUGH EPISODES OF A SERIES WILL BE ORDERED TO ALLOW US TO
SYNDICATE THE SERIES.

There can be no assurance that once we commit to produce a series which has
been licensed to a network, that the network will order and broadcast enough
episodes so that we can syndicate the series in the United States. Typically,
there need to be at least 65 episodes of a series produced in order to "strip"
or syndicate the series in the daily re-run market. Networks can generally
cancel a series at stated intervals and, accordingly, do not commit in advance
to exhibit a series for more than a limited period. If a series is canceled
before the minimum number of shows necessary for syndication have been produced,
there is a significant chance that the production costs of the project will not
be fully recovered. In that event, our financial condition could be materially
and adversely affected. Similar risks apply even if a series is produced for a
non-network medium. See "Business -- Operations" for a discussion of the
financing of series and how deficits are potentially recouped. In addition, for
the three months ended March 31, 1999 and the twelve month period ended December
31, 1998, we had approximately $668,900 and $1,017,400 in development costs
associated with projects for which we are actively pursuing production
commitments, but which have not been set for principal photography. See "Risk
Factors -- Development Costs" for a discussion of the potential impact if such
costs were to be written off or otherwise amortized on an accelerated basis.

We presently have a commitment of 13 episodes for Call of the Wild, and
have completed 22 episodes for Total Recall 2070, which is not enough episodes
to syndicate or "strip" these series in the United States. The syndication
rights to the series, for which we are a profit participant, are owned by
Universal, by virtue of Universal's 1998 acquisition of Polygram Filmed
Entertainment. The show will be shown on a once a week syndication basis in
January 2000. If the show is not renewed, there will only be one season of
syndication, in which event we would not expect to receive significant amounts
relative to our profit interests.

FLUCTUATIONS IN OPERATING RESULTS.

Our revenues and results of operations are significantly dependent upon the
timing and success of the television programming we distribute, which cannot be
predicted with certainty. Revenues for any particular

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program may not be recognized until the program is produced and available for
delivery to the licensee. Production delays may impact the timing of when
revenues may be recognized under generally accepted accounting principles.
Significant sales of our product take place at the industry's major selling
markets, the most important of which are MIP-TV and MIPCOM-TV (the International
Film and Program Market for TV, Video, Cable & Satellite) which take place in
France in the second and fourth quarters, respectively and NATPE, which takes
place in the Untied States in January. Finally, production commitments are
typically obtained from networks in the spring (second) quarter, although
production activity and delivery may not occur until later periods. We may
experience significant quarterly variations in our operations, and results in
any particular quarter may not be indicative of results in subsequent periods.

Our results will also be affected by the allocation of revenue between
product we produce and own as compared to product which are distributed on
behalf of third party producers and for which we are paid a sales commission.
Where we are paid a sales commission, our expenses as a percentage of revenue
will typically be higher, because we record, as an expense, the participations
owing to the copyright owners. Where we are exploiting product which we own
outright, we do not record such expenses, and our margins will typically be
higher.

THE SPECULATIVE NATURE OF THE ENTERTAINMENT BUSINESS.

Substantially all of our revenues are derived from the production and
distribution of our television series and made-for-television movies. The
entertainment industry in general, and the development, production and
distribution of television programs, in particular, is highly speculative and
involves a substantial degree of risk. Since each project is an individual
artistic work and its commercial success is primarily determined by audience
reaction, which is volatile and unpredictable, there can be no assurance that
any entertainment property will make money. Even if a production is a critical
or artistic success, there is no assurance that it will be profitable.

DEPENDENCE UPON THE SERVICES OF DREW S. LEVIN AND THE REST OF OUR MANAGEMENT
TEAM.

We are, and will continue to be, heavily dependent on the services of Drew
S. Levin, our Chairman of the Board and Chief Executive Officer. The loss of Mr.
Levin's services for any substantial length of time would materially adversely
affect our results of operations and financial condition. Mr. Levin is party to
an employment agreement with us which expires in the year 2002. See
"Management -- Employment Agreements." We have also obtained a "key-man"
insurance policy covering Mr. Levin in the amount of $1,000,000.

In addition, we are highly dependent upon our ability to attract and retain
highly qualified personnel. Competition for such personnel is intense. There can
be no assurance that persons having the requisite skills and experience will be
available on terms acceptable to us or at all.

THE ABILITY TO MANAGE OUR GROWTH.

Subject to obtaining sufficient financing, we intend to pursue a strategy
which management believes may result in rapid growth. As our anticipated
development, production and distribution activities increase, it is essential
that we maintain effective controls and procedures regarding critical accounting
and budgeting areas, as well as obtain and/or retain experienced personnel.
There can be no assurance that rapid growth will occur or that, if such growth
does occur, that we will be able to attract qualified personnel or successfully
manage such expanded operations.

DEVELOPMENT COSTS.

Included in our assets as of March 31, 1999 and December 31, 1998 are
approximately $668,900 and $1,017,400 in television program costs in respect of
projects for which we are actively pursuing production commitments, but which
have not been set for principal photography. We intend, as required by
accounting standards, to write off the costs of all development projects when
they are abandoned or, even if still being developed, if they have not been set
for principal photography within three years of their initial development
activity. In the event we are unable to produce LoCoMoTioN, we would incur a
significant write-down with

9
<PAGE> 11

respect to the development costs of such project, which, in turn, may adversely
affect ongoing financing activities.

OUR PREFERRED STOCK AND POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF
OUR ARTICLES OF INCORPORATION AND BYLAWS.

Certain provisions of our Articles of Incorporation and Bylaws and certain
other contractual provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire control of us. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of our common stock.
Certain of these provisions allow us to issue preferred stock with rights senior
to those of the common stock without any further vote or action by the
shareholders, and impose various procedural and other requirements which could
make it more difficult for shareholders to affect certain corporate actions.
These provisions could also have the effect of delaying or preventing a change
in control. The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to the holders of our common
stock or could adversely affect the rights and powers, including voting rights,
of the holders of our common stock. In certain circumstances, such issuance
could have the effect of decreasing the market price of our common stock. We
have agreed that for a 13 month period following the closing of our initial
public offering, we will not, without the prior written consent of National
Securities Corporation, issue any equity securities. Issuance of securities
through the date hereof have been made with National Securities Corporation's
approval. This 13 month period expires on August 29, 1999.

VOLATILITY OF SHARE PRICE; LACK OF ACTIVE TRADING MARKET.

Our common stock has been listed on The NASDAQ SmallCap Market since July
29, 1998. We have also entered in to a letter of intent to complete, on a
"best-efforts" basis, an offering of our common stock in Germany. In April 1999,
we entered into a letter of intent with Value Management and Research, A.G.
("VMR"), our financial advisors, to assist us in completing, on a "best-efforts"
basis, an offering of approximately $25 to $30 million of our common stock on
the German Deutsche Borse. An affiliate of VMR has agreed to co-manage the
underwriting, subject to obtaining a commitment of a lead underwriter, the
offering is scheduled to be completed in October of 1999. We are currently
negotiating with European investment firms to be the lead underwriters. There
can be no assurance that we will be successful in completing that offering.

The market prices for securities of companies with limited operating
history, including us, have historically been highly volatile. Significant
volatility in the market price of our common stock may arise due to factors such
as:

- our developing business;

- our negative cash flow;

- relatively low price per share;

- relatively low public float;

- variations in quarterly operating results;

- general trends in the entertainment industry;

- the number of holders of our common stock; and

- the interest of securities dealers in maintaining a market for our common
stock.

As long as there is only a limited public market for our common stock, the
sale of a significant number of shares of our common stock at any particular
time could be difficult to achieve at the market prices prevailing immediately
before such shares are offered, could cause a severe decline in the price of our
common stock.

Even though our common stock is currently listed on The NASDAQ SmallCap
Market, there can be no assurance that an active trading market will continue or
that you will be able to resell your shares at prices equal to or greater than
the price you purchase them for. The NASDAQ SmallCap Market requires a minimum
of three market makers in our common stock. There can be no assurance that there
will always be enough market makers in our common stock to make a market.

10
<PAGE> 12

WE HAVE NEVER PAID A DIVIDEND AND DO NOT ANTICIPATE PAYING ONE IN THE
FORESEEABLE FUTURE.

We have not paid dividends since our formation and do not intend to pay any
dividends to our shareholders in the foreseeable future. No assurance can be
given that we will pay dividends at any time. We presently intend to retain
future earnings, if any, for the development and expansion of our business. See
"Dividend Policy."

SHARES ELIGIBLE FOR ADDITIONAL SALE AND EXERCISE OF REGISTRATION RIGHTS.

Sale of substantial amounts of our common stock in the public market or the
prospect of such sales could materially adversely affect the market price of our
common stock. Upon completion of this offering, we will have outstanding
approximately 5,736,470 shares of common stock, excluding all shares of common
stock underlying the Warrants and shares of common stock underlying any other
outstanding warrants and options. Of these shares, approximately 412,941 shares
are restricted shares under the Securities Act. The shares being offered hereby
will be immediately eligible for sale in the public market without restriction
on the date of this prospectus. In addition, we have issued options and warrants
which entitle the holders thereof to purchase 1,643,095 shares of our common
stock of which 980,026 are being registered herein. 795,026 of these shares were
previously registered as part of our initial public offering. Holders of
substantially all of such shares have entered into lockup agreements under which
they have agreed not to sell, or otherwise hypothecate or dispose of any of
their shares for 12 to 13 months after July 28, 1998. National Securities
Corporation has the right, at its discretion, to release shareholders from this
restriction. In addition, National Securities Corporation has a warrant which
may be exercised at any time during the four year period beginning 12 months
after the closing of the initial public offering to sell up to 150,000 shares of
our common stock. We intend to file a registration statement on Form S-8 under
the Securities Act to register the sale of approximately 700,000 shares of our
common stock reserved for issuance under our stock option, deferred stock and
restricted stock plan. Shares of our common stock issued upon exercise of
options after the effective date of the registration statement on Form S-8 will
be available for sale in the public market, subject in some cases to volume and
other limitations, including limitations imposed by the lockup agreements with
National Securities Corporation.

FORWARD-LOOKING STATEMENTS.

Although not applicable as a safe harbor to limit our liability for sales
made as a result of this offering, this prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. Such forward-looking statements may be
deemed to include, among other things, our plans to continue producing Total
Recall 2070 and to produce LoCoMoTioN and Call of the Wild in 1999 or 2000, and
establish new strategic alliances and business relationships and acquire
additional libraries of films and television series or companies. Actual results
could differ from those projected in any forward-looking statements for the
reasons detailed in the other sections of this "Risk Factors" portion of this
prospectus, as well as elsewhere in this prospectus. The forward-looking
statements are made as of the date of this prospectus and we assume no
obligation to update them, or to update the reasons why actual results could
differ from those projected in such forward-looking statements.

USE OF PROCEEDS

We will not receive any portion of the proceeds from the sale of common
stock to be sold in this offering. We will receive net proceeds of up to
approximately $775,705 from the exercise of the Warrants. Management currently
anticipates that any such proceeds will be utilized for working capital and for
other general corporate purposes.

DIVIDEND POLICY

We have never declared or paid cash dividends. We intend to retain and use
any future earnings in the development and expansion of our business.

11
<PAGE> 13

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated statement of operations data for the years ended
December 31, 1996, December 31, 1997 and December 31, 1998 and the consolidated
balance sheet data at such dates are derived from our Consolidated Financial
Statements included elsewhere in this prospectus that have been audited by
Stonefield Josephson, Inc., indicated in their respective reports which are also
included elsewhere in this prospectus. The selected consolidated financial data
for the three months ended March 31, 1999 and 1998 have been derived from the
unaudited consolidated financial data of the Company, which, in the opinion of
management, have been prepared on the same basis as the audited financial
statements and includes all normal and required adjustments necessary for fair
presentation. The results for the three months ended March 31, 1999 are not
necessarily indicative of future results. Such selected consolidated financial
data should be read in conjunction with those Consolidated Financial Statements
and the notes thereto. For a discussion of the appointment of Stonefield
Josephson, Inc., see "Experts."

<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
ENDED MARCH 31, ENDED MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
--------------- --------------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... 3,502,000 1,573,400 13,581,900 6,875,600 5,749,800
Cost of revenues.............. 2,561,200 379,000 9,076,000 2,355,300 2,895,900
Gross profit.................. 940,800 1,194,400 4,505,900 4,520,300 2,853,900
General and administrative
expenses.................... 385,500 541,500 3,274,000 3,244,900 2,323,800
Net income from operations.... 555,300 652,900 1,231,900 1,275,400 530,100
Interest expense.............. 151,300 263,000 902,600 1,040,100 677,700
Interest income............... 31,900 48,000 202,900 211,800 58,300
Other income.................. -- -- -- -- 90,100
Net income (loss) before
income taxes................ 435,900 437,900 532,200 447,100 800
Provision for income taxes.... 87,000 -- 57,500 -- --
Extraordinary loss from early
extinguishment of debt...... -- -- 69,500 -- --
Net income (loss)............. 348,900 437,900 405,200 447,100 800
Net income (loss) per common
share basic(1).............. 0.11 0.39 0.22 0.40 0.00
Weighted average number of
shares outstanding
basic(1).................... 3,149,468 1,131,344 1,833,340 1,131,344 1,131,344
Net income (loss) per common
share diluted(1)............ 0.09 0.24 0.17 0.25 0.00
Weighted average number of
shares outstanding
diluted(1).................. 3,835,335 1,821,800 2,434,017 1,821,800 1,821,800
</TABLE>

12
<PAGE> 14

<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------------
ACTUAL AS ADJUSTED(2)
----------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Liquidity capital (deficit)(3).............................. (5,597,900) (2,927,070)
Total assets................................................ 19,979,200 21,454,905
Notes payable(4)............................................ 3,227,500 2,032,375
Line of credit(4)........................................... 850,000 850,000
Accrued interest(4)......................................... 619,900 619,900
Shareholder loan and note payable(4)........................ 450,000 450,000
Retained earnings (accumulated deficit)(2).................. 169,500 (195,375)
Shareholders' equity........................................ 8,778,100 11,843,930
</TABLE>

- ---------------
(1) See Note 2 of Notes to Consolidated Financial Statements for information
regarding the calculation of net income (loss) per share.

(4) See Notes 5, 7, and 8 of Notes to Consolidated Financial Statements.

13
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial
statements and the notes thereto and the other financial information appearing
elsewhere in this prospectus. In addition to historical information, the
following discussion and other parts of this prospectus contain forward-looking
information that involves risks and uncertainties. Our actual results could
differ materially from those anticipated by such forward-looking information due
to factors discussed under "Risk Factors," "Business" and elsewhere in this
prospectus.

OVERVIEW

We derive substantially all of our revenues from production fees earned in
connection with our original programming, distribution fees from the licensing
of programming acquired from others, and the licensing of our original
programming. We were incorporated in February 1995 and began operations in March
1995.

We are engaged in developing concepts and acquiring literary and other
story properties, the most promising of which serve as the basis for our series,
pilot films, or made-for-television features. If a script is accepted for
production as a television feature or pilot, or if a pilot is accepted for
production as a series, we and the network or distributor negotiate a license
fee or distribution advance. This fee is a flat sum payment through which we
generally attempt to cover a significant portion of our production costs and
overhead. If programming is produced for an entity like PBS, which does not pay
significant license fees or distribution advances (and in fact, may not pay any
fee), we attempt to provide corporate sponsors or agreements for the license of
ancillary rights such as foreign or home video distribution.

With respect to series for the networks or pay cable channels, we generally
attempt to negotiate significant license fees for both series and movies of the
week. In many cases, we may invest additional sums in excess of network license
fees to produce the best possible made-for-television features, as such features
are an essential sales tool in gaining network acceptance of a proposed series,
if applicable. In these cases, we will attempt to cover the excess of production
costs from working capital, third-party financing, sales of the episodes in the
foreign marketplace, or a combination of these financing techniques. Where
necessary or desirable, we may seek to obtain funding in excess of network
license fees from a studio or a third party who will provide such financing in
return for a share of the profits from the syndication of such programming.
Similarly, for television series, we may invest amounts in excess of network
license fees in order to gain audience acceptance for the series and to enhance
the potential value of future syndication rights.

We recognize revenues from licensing agreements covering entertainment
product when the product is available to the licensee for telecast, exhibition
or distribution, and other conditions of the licensing agreements have been met
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 53
"Financial Reporting by Producers and Distributors of Motion Picture Films."

As required by SFAS No. 53, we value our film cost at the lower of
unamortized cost or net realizable value on an individual title basis. Film
costs represent those costs incurred in the development, production and
distribution of television projects. These costs have been capitalized in
accordance with SFAS No. 53. Amortization of film cost is charged to expense and
third party participations are accrued using the individual film forecast method
whereby expense is recognized in the proportion that current year revenues bear
to an estimate of ultimate revenue. We anticipate that a majority of our
production or acquisition costs for our projects will be amortized within three
years from the completion or acquisition of such project, with the balance
amortized over an additional two years.

Our trade receivables historically increase as revenue increases. We, in
accordance with SFAS No. 5, record an allowance for doubtful accounts based, in
part, on historical bad debt experience. In 1998, the Company recorded $664,000
as an allowance for doubtful accounts. In 1997, the Company recorded $1,115,600
as an allowance for doubtful accounts. Typically, when we make a sale of a
product, the purchaser of such product agrees to a payment schedule, usually
based upon a time table which is either tied to milestones in the development of
the product or the time period of the contract. If customers fail to make

14
<PAGE> 16

scheduled payments, our license agreements provide that we can repossess and
resell such product. Because these payments often are spread out over a period
of time, up to two years, the payments to be made in the future are recorded as
discounted trade receivables. As sales increase, our trade receivables balance
will increase accordingly. We believe we have adequate resources to collect our
trade receivables.

As of July 14, 1999, the Company was in technical default in respect of
obligations aggregating approximately $664,500, exclusive of interest. We
believe that we will cure such defaults on or about July 31, 1999 through
additional bridge financings.

RESULTS OF OPERATIONS

The three months ended March 31, 1999 versus the three months ended March
31, 1998. For the three months ended March 31, 1999, the Company reported a net
income of approximately $348,900 on total revenues of approximately $3,502,000
compared to net income of approximately $437,900 on total revenues of
approximately $1,573,400 for the same period ended March 31, 1998. Net income
decreased by approximately $270,200 for the three months ended March 31, 1999,
versus the three months ended March 31, 1998, primarily due to lesser margins on
programming sold in 1999 compared with 1998. Revenue for the period ended March
31, 1999 included approximately $3,100,000 on the completion of seven episodes
of Total Recall 2070, and approximately $400,000 on the recognition of the sale
of video rights for "Amazing Tails". Revenue for the period ended March 31,
1998, included $825,000 from a sale of Latin American rights to an acquired
library of eleven movies of the week and approximately $750,000 from the
recognition of revenue on sales of the second season of the Company's production
"Amazing Tails".

Cost relating to revenues was $2,561,200 for the three months ended March
31, 1999 as compared to $379,000 for the three months ended March 31, 1999. The
costs relate to amortization of production costs of television programming for
which revenue was recognized during the period. Gross profit margin on sales of
television programming for the three months end March 31, 1999 was 27 percent
compared to 76 percent for the period ended March 31, 1998. The lower gross
profit margin for the three months ended March 31, 1999 was due to the Company
selling more expensive, higher profile television drama programming produced and
owned by the Company and its partners as opposed to distributing reality based
programming and programming previously produced and acquired by the Company in
the three months ended March 31, 1998.

General and administrative expense decreased to $385,600 for the three
months ended March 31, 1999 from $541,500 for the same period in 1998. The
decrease is due to the Company's increased activities related to film cost
production and approximately $670,000 overhead was capitalized to film product
costs in accordance with SFAS No. 53. The amount of capitalized overhead was
partially offset by increases in salaries primarily due to hiring employees for
development and production of television programming.

Interest expense was $151,300 for the three months ended March 31, 1999, as
compared to $263,000 for the three months ended March 31, 1998. The decrease is
due to the retirement of debt.

Receivables at March 31, 1999 were $4,295,000. All the receivables as of
March 31, 1999, are receivables from entities domiciled outside the United
States. These receivables represent approximately 21% of the total assets of the
Company. In May 1999, in order to accelerate collections on a receivable arising
from a sale of Latin American film rights to library product, the Company
conveyed these rights to a new distributor. Payments in the aggregate amount of
$752,250 have been received to date, with an additional three equal quarterly
installments of $502,250 payable September 15, 1999, December 15, 1999 and March
15, 2000. In as much as the original receivable amount was, in management's
opinion, collectible there was no impact on operating results for the quarter
ended March 31, 1999. Management will continue to monitor the collection
experience of the new contract and if the installment payments due in September
are not received, will then provide reserves for the remaining contract balance.

Year ended December 31, 1998 versus year ended December 31, 1997. Revenues
for the year ended December 31, 1998 of $13,581,900 were comprised of
approximately $6,672,700 on sales and availability for Total Recall 2070
produced by us and Alliance/Atlantis, approximately $2,755,300 for the sale of a
movie of the week produced by us, "Earthquake in New York" to Fox Family
Channel, approximately $1,527,900 on

15
<PAGE> 17

sales for our reality based series "Amazing Tails", approximately $882,000 on
sales of satellite rights of the Australian television series "Water Rats", and
approximately $1,744,000 on sales of other library product acquired by us. For
the year ended December 31, 1998, approximately 26 percent of revenues were
attributable to sales to customers outside North America, i.e. United States and
Canada. Revenues for the year ended December 31, 1997, were comprised of
approximately $1,975,500 on sales of our reality based series "Amazing Tails",
approximately $1,250,000 on sales of "Water Rats", approximately $2,460,000 on
sales of movies acquired by us and approximately $1,190,100 on sales of other
reality based programming acquired by us. For the year ended December 31, 1997,
approximately 80 percent of revenues were attributable to sales to customers
outside North America. Within the foreign market, allocations among the four
principal geographic regions in which we do business, Europe, Asia and
Australia, South America and Africa, vary from period to period. The variations
in revenues relate to the type of product being offered, as well as local
economic trends and conditions, and the emergence of multiple broadcasting
channels in the applicable territory. See Note 9 to the Consolidated Financial
Statements for a breakdown of the geographic distribution of sales of our
product.

Cost of revenues was $9,076,000 for the year ended December 31, 1998 as
compared to $2,355,300 for the year ended December 31, 1997. The costs primarily
relate to amortization of production costs of television programming for which
revenue was recognized during the respective period. Cost of revenues increased
due to the increase in revenues.

Gross profit margin on sales of television programming for the year ended
December 31, 1998 was 33 percent compared to 66 percent for the period ended
December 31, 1997. The lower gross profit margin for the year ended December 31,
1998 was due to our producing and selling original programming as opposed to
primarily selling previously produced programming. We co-produced our first
drama series Total Recall 2070 with Alliance/Atlantis. Production of drama
series such as Total Recall 2070 are more expensive than the reality based
programming we had produced and acquired in 1997. Original programming generally
has higher amortization rates in its initial cycle until it demonstrates
audience acceptance. However, a successful drama series will be worth
substantially more than reality based programming in ancillary markets.

General and administrative expenses were approximately $3,274,000 for the
year ended December 31, 1998 as compared to $3,244,900 for the year ended
December 31, 1997. Included in general and administrative expenses was $664,000
as an allowance for doubtful accounts for the year ended December 31, 1998
compared to $1,115,600 for the year ended December 31, 1997. Subtracting the
effect from the allowance of doubtful, general and administrative expenses was
$2,610,000 for the year ended December 31, 1998 compared to $2,129,300 for the
year ended December 31,1997. The increase is primarily due to additional staff
hired in 1998 to focus on development of new television programming.

Interest expense was $902,600 for the year ended December 31, 1998, as
compared to $1,040,100 for the year ended December 31, 1997. The decrease is due
to the retirement of debt from the proceeds of our initial public offering.

Interest income was $202,900 for the year ended December 31, 1998 as
compared to $211,800 for the year ended December 31, 1997.

Earnings before extraordinary items increased $27,600 to $474,700 for the
year ended December 31, 1998 as compared to $447,100 for the year ended December
31, 1997. The increase is attributable to an increase in sales as discussed
above.

All $4,736,700 included in receivables as of December 31, 1998, are due
from entities domiciled outside the United States. These receivables represent
approximately 28 percent of our total assets. We have established $337,000 as an
allowance for doubtful accounts as of December 31, 1998. We believe the
allowance for doubtful accounts is adequate and we have adequate resources to
collect our trade receivables.

16
<PAGE> 18

LIQUIDITY AND CAPITAL RESOURCES

The entertainment industry is highly capital intensive. As of March 31,
1999, we had retained earnings of $169,500 and a liquidity deficit of
($5,597,900). Liquidity deficit is defined as:

- cash and cash equivalents plus accounts receivable (net), and the amount
due from officer, less

- accounts payable, accrued expenses and other liabilities, deferred
revenue, accrued participations, notes payable, shareholder loan and note
payable, and accrued interest.

We continue to finance our operations from our own sales and production
activities, notes payables, lines of credit and loans from our shareholders.
Despite our public offering on July 29, 1998, our operations have been hurt by
ongoing capital shortages caused by a slowness in collecting receivables and the
inability to complete a long term banking relationship. We continue to address
our capital requirements by:

- selling $1,850,000 in convertible debt, as well as $700,000 in equity to
certain of the holders of such debt;

- entering into a letter of intent to complete, on a "best-efforts" basis,
an offering of our common stock on Germany's Deutsche Borse;

- selling $350,000 of additional debt financing, with warrants, as a bridge
to the German offering; and

- seeking other financing as a bridge to the German offering.

As of March 31, 1999, we had cash and accounts receivable due to be
collected with one year of approximately $3,170,000. As of March 31, 1999 we had
indebtedness and related accrued interest of $5,213,500 including notes payable
of $3,325,800 of which all matures within one year, accrued interest of
$587,700, $850,000 outstanding on a revolving line of credit and $450,000
outstanding on a shareholder loan. Included in such sums are amounts which have
already started to mature. Approximately $2,655,000 in principal amount of notes
matures over the next 6 months, including $1,090,000 of notes which have matured
and are currently in default. As of July 14, 1999, we have reduced the principle
amount currently in default to $514,900. We are currently negotiating with these
noteholders and have not yet received any written action regarding the defaults
under these notes. We believe, however, that we will be able to cure these
defaults by either converting the notes to equity or raising additional
financings to repay them. No assurances can be given that we will be able to
effectuate any of the foregoing alternatives, or that if we seek to extend such
obligations or refinance them, that such extensions or refinancing alternatives
will be on terms which are financially advantageous to us.

As we continue to pursue financing alternatives and search for additional
capital as described above, we continue to explore a variety of other financial
alternatives to increase our working capital, including increasing our line of
credit with a commercial bank, and pursuing other types of debt and equity
financing. No assurance can be given that any such financings can be obtained or
that they will be on reasonably attractive terms.

Assuming the foregoing defaults are cured, we believe that our current
resources of cash, accounts receivable and available credit line will enable us
to operate at current expenditure levels through September 30, 1999. We further
believe that our projected cash flow from operations, with contemplated sales of
certain acquired programming and collections from those sales, will be
sufficient to permit us to conduct our operations as contemplated for only the
next 6 months, through January 15, 2000. Our belief is based upon certain
assumptions, including assumptions regarding the anticipated level of operations
and overhead, the anticipated sales of certain acquired programming, and
anticipated expenditures required for development and production of programming.
If sales do not materialize and financing is not completed by these dates, we
will have to limit our development and production activities, reduce our
overhead spending, restructure debt pay outs and take other cost reduction
measures. Further, even with if we successfully raising additional financing,
there is no assurance that we will be profitable or maintain positive cash flow.

17
<PAGE> 19

RECENT ACCOUNTING PRONOUNCEMENTS

In April 1998, Statement of Position 98-5 "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5") was issued. SOP 98-5 provides guidance on the
financial reporting of start-up costs and organization costs. We have adopted
this SOP and the adoption of this statement did not materially effect our
financial statements.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective for fiscal year beginning after
June 15, 1999. We anticipate that due to our limited use derivative instruments,
the adoption of SFAS No. 133 will not have a material effect on our financial
statements.

In October 1998, the FASB released an exposure draft of the proposed
statement on "Rescission of FASB Statement No. 53, Financial Reporting by
Producers and Distributors of Motion Picture Films." An entity that previously
was subject to the requirements of SFAS No. 53 would follow the guidance in a
proposed Statement of Position, "Accounting by Producers and Distributors of
Films." This proposed Statement of Position effects financial statements for
fiscal years beginning after December 15, 1999 and could have a significant
impact on our results of operations and financial position depending on its
final outcome. We have not concluded on its impact given the preliminary stages
of the proposed Statement of Position.

YEAR 2000 COMPLIANCE

As has been widely reported, many computer systems process dates based on
two digits for the year of a transaction and are unable to process dates in the
year 2000 and beyond. Since our formation in 1995, we have installed new
information systems which are year 2000 compliant. Although we do not expect
year 2000 to have a material adverse effect on our internal operations, it is
possible that year 2000 problems could have a significant adverse effect on our
suppliers and their ability to service us and to accurately process payments
received.

18
<PAGE> 20

BUSINESS

OVERVIEW

OUR HISTORY

We were formed in February 1995. We have focused our efforts on the
development, production and distribution of a variety of television programming,
including series, specials and made-for-television movies for exploitation in
the domestic and international television market. We derive substantially all of
our revenues from production fees earned from our original productions,
distribution fees from the exploitation of product acquired from others, and the
exploitation of our owned programming.

Our production activities have focused on (i) family programming produced
for U.S. cable and network television channels such as The Discovery Channel,
The Family Channel, USA Network, and the Public Broadcasting System ("PBS"), and
(ii) "how-to" instructional series, such as "Simply Style," a 60-episode series
which debuted during the third quarter of 1995 on The Learning Channel. In
addition, we co-developed and co-produced a reality based five-day per week
("strip") syndicated series, called "Strange Universe," with United/Chris-Craft
television stations and Rysher Entertainment. This series, which aired on
United/Chris-Craft stations, involved the production of 130 episodes over its
two, thirteen week commitments. We have also completed the production of a
series of 48 half hour episodes entitled "Amazing Tails," a reality based series
focusing on extraordinary pets, which has been financed in conjunction with
Friskies Pet Foods, a division of Nestles Food, and advertising leader The
Interpublic Group of Companies ("Interpublic"). All episodes of Amazing Tales
have been produced and delivered, and the series is currently airing on
Discovery Communications' Animal Planet.

In March 1999 our co-production of 22 episodes of a television series based
on the hit movie "Total Recall" began to air on Showtime Networks. Original
episodes are still airing. We are waiting for Showtime's decision as to whether
to order a second series. We maintain a dramatic development and production
department which is developing and will produce movies-of-the-week and drama
series for exhibition on network television, cable or ad hoc networks of
independent stations which sometimes form to air special programming. We also
maintain an international sales force and currently have distribution rights to
approximately 335 half-hours of family and documentary series and specials, and
190 hours of dramatic series and films. We are also developing a wide variety of
family, dramatic, reality-based and children's programing.

STRATEGY

The global television market has experienced substantial growth since 1985
and we believe this market will continue to experience substantial growth during
the foreseeable future as foreign state television monopolies end and commercial
broadcast outlets expand to provide increasingly varied and specialized content
to consumers throughout the world. In the U.S. alone, there have been numerous
new television channels which have commenced operation since 1985. Such growth
has led to the development and commercialization of specialized cable and
satellite channels and distribution outlets, which, in turn, has led to
increased demand for top quality and cost efficient programming in many
categories and subjects. Europe, Latin America and the Pacific Rim are all
experiencing similar growth with respect to satellite and cable channels.

Although we have been significantly impacted by recurring cash flow
problems, our operating strategy is to fulfill the demand for programming by:
(i) expanding the activities of our three operating departments, development and
production, distribution and licensing and merchandising and direct-marketing;
(ii) implementing strategic acquisitions of film, television and video libraries
and smaller production companies; and (iii) entering into joint ventures with,
or acquisitions of, unaffiliated third parties, with the intention that such
acquisitions or joint ventures would lower our financial risk should we expand,
as anticipated, into related activities, such as direct marketing and
interactive programming. We intend, subject to financing, to acquire, co-produce
and co-finance other series, movies and specials from third party producers in
order to increase our programming library and self distribute such product on a
worldwide basis.

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<PAGE> 21

We believe that there are unique business opportunities to acquire other
emerging companies, as well as more established production and distribution
entities, which are engaged in programming development, production, distribution
(including the dissemination of product on and through the Internet) and other
related media investments. While the number of distribution channels has been
increasing, we believe there are economic incentives, including economies of
scale and depth of financial and programming capability, for programmers and
distribution entities to consolidate. No assurance can be given that we will be
successful in obtaining the financing necessary for these acquisitions or that,
if consummated, such acquisitions would prove financially successful. In
addition, a significant acquisition of product or another company could require
us to obtain financing for such acquisition. No assurance can be given that such
financing will be available at all, or that if available it will be on terms
that are favorable to us.

OPERATIONS

We currently operate three principal departments: (i) development and
production; (ii) distribution; and (iii) licensing, merchandising, and
direct-marketing.

PRODUCTION

The production of television programming involves:

- the development of a creative concept into a television script or
teleplay;

- the selection of talent (including actors, directors, and other creative
personnel); and

- the filming, technical, and post-production work necessary to create a
finished product ready for exhibition.

Such programming is generally produced for initial prime-time exhibition on
one of the major U.S. networks, which include CBS, NBC, ABC and Fox. Such
programming may also be produced for new networks such as the United Paramount
Network and the Warner Bros.'s "WB" Network, first-run pay television exhibition
or directly for syndication (i.e., independent or non-network) television,
including PBS, as well as numerous basic and pay cable channels or services,
including HBO, Showtime, the Disney Channel, The Learning Channel, The Discovery
Channel, Arts and Entertainment Network and the History Channel.

We are engaged in developing concepts and acquiring literary and other
story properties, the most promising of which serve as the basis for the
production of series, pilot films, or made-for-television features. Once an idea
has been commissioned by us, it is presented to a network or other distributor
for acceptance. If a script is accepted for production as a television feature
or pilot, or if a pilot is accepted for production as a series, we negotiate a
license fee or distribution advance with the network or distributor. This fee is
a flat sum payment through which we generally attempt to cover a significant
portion of our production costs and overhead.

Entertainment companies in general attempt to finance the development costs
for television programming from their working capital and seek to cover a
substantial portion of their production costs, including overhead, through
license fees. If programming is produced for an entity like PBS, which does not
pay significant license fees or distribution advances (and in many instances,
may not pay any fee), we attempt to provide corporate sponsors or agreements for
the license of ancillary rights such as foreign or home video distribution. Even
without a fee or advance, we believe that we can defray a significant portion of
the production costs of PBS programming using these alternative financing
methods, thus availing ourselves of the key demographics of PBS viewership,
particularly in children's programming.

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<PAGE> 22

desirable, we may seek to obtain funding in excess of network license fees from
a studio or a third party who will provide such financing in return for a share
of the profits from the syndication of such programming. Similarly, for
television series, we may invest amounts in excess of network license fees in
order to gain audience acceptance for the series and to enhance the potential
value of future syndication rights.

There can be no assurance, however, that once we commit to fund production
of a series licensed to a network, the network will order and exhibit sufficient
episodes to enable us to syndicate the series. Typically, at least 65 episodes
of a series must be produced for it to be "stripped" or syndicated in the daily
re-run market. Generally, networks can cancel a series at stated intervals and,
accordingly, do not commit in advance to exhibit a series for more than a
limited period. If a series is canceled (or not carried for the period necessary
to create enough episodes for syndication purposes), there is a significant
chance that the production costs of the project will not be fully recovered.
Similar risks apply even if the series is produced for a non-network medium. We
believe, however, that foreign pre-sales and international co-production
opportunities will provide sufficient options to obtain production financing and
additional revenue potential. Moreover, basic cable channels continue to provide
outlets for series of between 13 to 26 episodes per season. We intend to focus
our production activity in the following areas or genres: Movies of the Week and
Mini-Series; Drama Series and Reality Series. It is our intention to expand the
production of dramatic programming, over the next 24 months. Such programming,
if any, will be licensed in foreign markets through our sales personnel where we
do not have foreign partners.

We acquired the rights to produce a weekly dramatic television series based
on the motion picture "Total Recall," which generated over $320 million in
world-wide box office receipts in 1990. We entered into an agreement with
Alliance Atlantis, a leading Canadian production company, pursuant to which
Alliance is co-producing and co-financing the initial 22 episodes of the series
with us. We also entered into an agreement with PolyGram, pursuant to which
PolyGram co-financed and acquired television distribution rights to the series
in the U.S. The domestic deal with PolyGram includes a 22 episode commitment in
exchange for a license fee and a percentage of the net profits of the series.
PolyGram sold the series, entitled Total Recall 2070, to the U.S. pay television
network, Showtime Network, where it debuted in March 1999. "First run" domestic
syndication is being handled by PolyGram for airing to begin in January 2000.
Miramax, which acquired the theatrical sequel rights to "Total Recall," has also
acquired worldwide (other than Canada, Japan and Spain) home video rights to the
series from us. Based upon our initial sales of the series with Polygram,
Miramax and various international broadcasters, the financial conditions
contained in the co-production agreement with Alliance Atlantis have been
satisfied. By co-producing the series with Alliance Atlantis, the series
qualifies for certain Canadian co-production and tax benefits. The proceeds from
all distribution of the series, after recoupment of production costs, will be
allocated 40% to us and 60% to Alliance. As part of the co-production agreement,
we are to assign our license agreements to the co-production and pay over to the
production account all deposits we have received to date.

As of the date hereto, television and home video sales of approximately $15
million have been made with respect to Total Recall 2070 for the U.S.
(Polygram), all of Asia and the Middle East, and parts of Europe, Latin America
and Canada. Still remaining for licensing, among other areas, are many of the
European territories, and parts of Latin America.

We have entered into agreements with the Family Channel for the development
of two movies of the week. The first, Earthquake in New York is a story about an
earthquake in New York City. The production was financed by the Family Channel.
We have received our executive producing fee. Earthquake in New York aired on
the Family Channel in October 1998. The second movie of the week, Down Fall, is
about an avalanche at an exclusive ski resort. The script for Down Fall which
has already been written, was paid for by the Family Channel. No funds have been
advanced for the Down Fall production as of this date.

The acquisition of the one hour dramatic series Water Rats, a high suspense
police action drama set in Sydney, Australia (116 episodes delivered for the
first four seasons), and the one hour dramatic series Cover Story,which takes
place on the set of a television entertainment magazine program (26 episodes
delivered), both of which were acquired from the Australian production company
Southern Star, are examples of our strategy to acquire programming from third
parties. We have the rights for distribution in all Latin American

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<PAGE> 23

countries, including Mexico and Puerto Rico, and have cumulative sales of
approximately $700,000 for Mexican broadcast television and pan-Latin American
satellite broadcast television with the majority of terrestrial broadcast rights
remaining available for sale.

We have also acquired Latin American home video and television distribution
rights to 78 hours of dramatic films from Beyond Distribution PTY Ltd., a
leading Australian production company. Its acquisition brings the total hours of
dramatic programming licensed by us in Latin America to 220.

Finally, we have received a firm commitment from Discovery Channel's Animal
Planet for the initial production of 13 one-hour episodes of The Call of the
Wild, based on Jack London's classic novel. Subject to financing, we anticipate
creating a Canadian co-venture. Production of this series is currently
contemplated to begin in the early summer (subject to financing and obtaining
adequate pre-sales for certain European territories), with delivery to take
place from October to December of this year.

LIVE ACTION AND ANIMATED CHILDREN'S PROGRAMMING. To take advantage of what
we believe is a significant television market for children's programming, we
intend to develop and produce inventive and original shows, including both
animated series and live-action series. We continue to develop LoCoMoTioN, a
program which incorporates, songs, games and exercise to stimulate both the
bodies and the minds of preschool children, and hope to sell the show to
domestic and international television markets in the fall of 1999. If the show
is successful, it is anticipated that it will provide us with licensing and
merchandising opportunities.

NON-FICTION/LIGHT ENTERTAINMENT PROGRAMMING. With the rapid expansion of
national cable and network programming outlets, consumer demand for non-fiction,
reality based "docudrama" programming has increased. Channels such as Fox, the
United Paramount Network, the Warners' Brothers Network, TBS, The Discovery
Channel, The Learning Channel and Lifetime have found quality non-fiction
programming to be a mainstay of their programming portfolio. We intend to
capitalize upon the programming expertise developed by management prior to our
formation.

We have an extensive development slate of new series which are currently
being sold in the international marketplace. Such programs include Strange
Universe, a 130 half-hour five day per week ("strip") syndicated series which
was produced in association with United/Chris-Craft television stations and
Rysher Entertainment. Amazing Tails, a weekly series of 48 half hours featuring
people and their pets, was initially financed by a presale for approximately
$1,441,700 to Interpublic for domestic distribution and broadcast. To date, we
have also licensed Amazing Tails in Japan for $300,000 and in the United
Kingdom, France, Italy, Spain, Portugal and Greece for an aggregate of $595,000.

Current co-productions include America's Scenic Railway Journeys, a six
hour documentary mini-series devoted to famous railway journeys. We have
co-produced this series with Oregon Public Television for the PBS Network and
have paid Oregon Public Television an advance for the international distribution
rights to the mini-series.

DISTRIBUTION

An active part of our business is the presentation of our own product as
well as product acquired from third-party producers to the international
marketplace. Our current library includes 335 half hours of reality based
series, mini-series and specials and 190 hours of dramatic series and film
programming. This includes drama and non-fiction programming as well as movies
of the week, and children's animation. With the rapid increase of networks and
channels, there is an expanding demand for top-quality programming. To access
these markets, our distribution personnel attend such major international trade
shows as MIPCOM-TV, MIP-TV and NATPE.

In territories such as Latin America, we use subdistributors who have
better connections and access to the purchasers in those regions.

In addition, we have an active "format" business overseas, where we
represent and "reformat" successful foreign shows for the domestic marketplace
and vice versa. We also currently represent several other custom formats which
are under consideration in numerous territories.

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<PAGE> 24

LICENSING, MERCHANDISING AND DIRECT MARKETING

Our strategic objectives encompass the exploitation of additional revenue
streams through licensing and merchandising efforts. We hope to generate new
profit centers from toy, publishing, CD-ROM, housewares, stationary, video,
apparel, and other product category licenses. Although no assurance can be given
that this strategy can be successfully implemented, the Company and Alliance
Atlantis, the co-producer of Total Recall 2070, have begun to focus on the
marketing and merchandising rights that are available with respect to the Total
Recall 2070 series. The financial importance of these rights will likely be
impacted by the decision to renew for a second season.

We also intend to focus on certain types of instructional or "how to"
programming that can be translated into direct marketing opportunities. By their
design, aspects of each how to, or instructional program can be extended into a
continuity club, infomercial, and retail products. For example, should we have
sufficient financing, we intend to develop from the series Amazing Tails a pet
"fan" club, with commercial tie-ins with its sponsors.

COMPETITION

The entertainment industry is highly competitive. We compete with, and will
compete with, many organizations, including major film studios, independent
production companies, individual producers and others, including networks, who
are seeking the rights to attractive literary properties, the services of
creative and technical personnel, the financing for production of film and
television projects and favorable arrangements for the distribution of completed
films. Many of our present and future competitors are organizations of
substantially larger size and capacity, with far greater financial and personnel
resources and longer operating history than us. Moreover, the entertainment
industry is currently evolving into an industry in which certain multinational,
multi-media entities, including Viacom/Paramount Pictures, The News
Corporation/Twentieth Century Fox, The Walt Disney Company/Cap Cities-ABC, Time
Warner/Turner Broadcasting and Westinghouse/CBS are anticipated to be in a
position, by virtue of their control over key film, magazine, and/or television
content and their control of key network and cable outlets, to dominate certain
communications industries activities. These competitors have numerous
competitive advantages, including the ability to acquire and attract superior
properties, personnel, actors and/or celebrity hosts and financing.

EMPLOYEES

We currently employ 13 full-time employees, six of whom are members of
senior management. From time to time, as projects go into production, temporary
employees are also employed by us.

DIVIDENDS

We currently intend to retain all earnings and thus will not be issuing
dividends. Moreover, certain of our notes restrict our ability to pay dividends,
and we anticipate similar prohibitions if we obtain a regular commercial line of
credit.

DESCRIPTION OF PROPERTY

We currently rent office space at 12300 Wilshire Boulevard, Los Angeles,
California from an unaffiliated third party, pursuant to a 36 month lease that
began on May 15, 1995 and was extended for an additional 12 months. The lease
terminated on May 14, 1999; however, we continue to be involved in discussions
to extend the lease. We continue to rent the space, which is approximately 4,700
square feet, on a month to month basis, at a monthly rate of $2.35 per square
foot. We believe that our current offices are adequate for our requirements, and
that additional space, if required, is available throughout the Los Angeles area
at commercially reasonable rates.

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<PAGE> 25

LEGAL PROCEEDINGS

In January 1999, we were served with a complaint in a matter styled Mel
Giniger & Associates vs. Team Communications Group, Inc. et al filed in the
Superior Court of the County of Los Angeles. In the complaint, the Plaintiff, an
individual who served as a sales agent for us, alleges that he is owed
commissions for sales of certain of our programming and that we have failed to
pay in full the amounts Plaintiff alleges are owed to him. The complaint seeks
damages for breach of contract, services rendered, account stated and for
payment of value for services rendered. We have filed an answer in this action,
and intend to vigorously defend ourselves.

In March 1999, we were served with notice of a Demand for Arbitration in a
matter styled Venture Management Consultant, LLC and TEAM Communications Group,
Inc. et al. with the American Arbitration Association. The demand stems from a
dispute between the parties concerning a consulting agreement to provide
investment banking services. We have filed an answer in this action, and intend
to vigorously defend ourselves.

At this time, the outcome of any of the above matters cannot be determined
with any certainty.

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<PAGE> 26

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Chairman of the Board, Chief Executive Officer and
Drew S. Levin.............. 45 Director
Jonathan D. Shapiro........ 43 President, Chief Operating Officer and Director
Eric Elias................. 44 Senior Vice President, Business and Legal Affairs
Timothy A. Hill............ 33 Senior Vice President, Chief Financial Officer, Secretary
Declan O'Brien............. 33 Senior Vice President, Development
W. Russell Barry(1)(2)..... 63 Director
Michael Jay
Solomon(1)(2)............ 61 Director
</TABLE>

- ---------------
(1) Member of the Compensation Committee

(2) Member of the Audit Committee

Drew S. Levin has been our President, Chief Executive Officer and Chairman
of the Board of since we were formed in 1995. With the hiring of Mr. Shapiro,
Mr. Levin relinquished the title of President. From 1987 through 1994, Mr. Levin
was President of DSL Productions, Inc. ("DSP"), a privately held company that
was sold to The Producer's Entertainment Group, Inc. ("TPEG") in 1994. Through
February 1995, he continued to act as president of DSP, which operated as a
subsidiary of TPEG. Mr. Levin has produced and co-produced hundreds of hours of
programming, including "Future Quest," for which Mr. Levin received an Emmy
Award, "Hollywood Stuntmakers," "FX Masters" and "Forces Beyond" for the
Discovery Network. Mr. Levin has extensive experience in international
co-productions, including co-producing a domestic and international version of
"Top of the Pops" with the British Broadcasting Company for the CBS television
network and the Montreux Rock Festival for the Showtime Network.

Jonathan D. (Jody) Shapiro has been President, Chief Operating Officer and
a Director since January 1, 1999. Before joining the Company, Mr. Shapiro was
employed at Harmony Holdings Inc., where he was Executive Vice President, as
well as President of Harmony Entertainment, Inc., from 1998 to 1999. During
1997, Mr. Shapiro was an independent consultant. From 1993 to December 1996, he
was President and Chief Executive Officer of CST Entertainment, Inc., where he
executive produced the award winning made for television movie "Wyatt Earp:
Return to Tombstone", as well as other series. From 1990 to 1993, Mr. Shapiro
was President of RHI Television Sales (formerly New Line Television
Distribution). From 1986 to 1990, he was at Qintex Entertainment, Inc., where he
served as both Executive Vice President of Qintex Telecommunications Group and
President of Hal Roach Studios Syndication, Inc. Mr. Shapiro began his career at
Telepictures Corporation, attaining the position of Senior Vice President of
Domestic Television.

Michael Jay Solomon has been a member of the Board of Directors since
August, 1998. Mr. Solomon has over 41 years experience in the entertainment
business. In 1978, Mr. Solomon founded Telepictures Corp., serving as its
Chairman of the Board and Chief Executive Officer. In 1985, Telepictures Corp.
merged with Lorimar Inc., with Mr. Solomon being appointed as the combined
companies' President. From 1989 to April 1994, Mr. Solomon was President of
Warner Bros. International Television, heading up that company's sales and
marketing to television, cable and satellite companies outside of the United
States. For the past four years, Mr. Solomon has been Chairman and Chief
Executive Officer of Solomon Broadcasting International, a television
communications company which he formed in April 1994. In 1997, Mr. Solomon
became the U.S. representative of Telefonica, Spain, in its new digital Pay TV,
Pay-Per-View and Basic Cable Television System -- Via Digital. Mr. Solomon
serves on the Boards of Directors of the International Council of the National
Academy of Television Arts and Sciences and the New York University Stern School
of Business.

W. Russell Barry has been a member of the Board of Directors since March
16, 1999. Mr. Barry has more than thirty years experience as a senior management
executive in broadcasting, television production,

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<PAGE> 27

and worldwide distribution. From 1961 to 1976, Mr. Barry worked for CBS and held
various sales and management positions including Vice President and General
Manager of KNXT (CBS owned station in Los Angeles). In 1976, he joined 20th
Century Fox as Vice President Network Sales and subsequently became President of
20th Century Fox Television. Recruited in 1981 by Playboy Enterprises as
President of their production company, he negotiated a joint venture with
Cablevision and launched the Playboy Channel. From 1983 to 1986, he was
President of Taft Entertainment Television. In 1986, he was named President, and
then in June of 1995, Chairman of Turner Program Services, the television
distribution company for Turner Broadcasting. During those twelve years, his
responsibilities included the worldwide marketing and sales of CNN, the MGM
library, Hanna Barbera and other Turner programing. Currently, he is a partner
in Bandit Films and consults for several companies.

Eric Elias has served in the capacity as Senior Vice President, Business
and Legal Affairs since our formation in 1995. Mr. Elias has previously served
as corporate counsel and general manager for a retail and wholesale leisure
electronics firm and, for the past twelve years, has been in general private
practice of law, providing business and legal affairs services for television
production entities similar to the Company.

Timothy A. Hill has been Senior Vice President, Chief Financial Officer and
Secretary since August 18, 1998. Prior to joining the Company, Mr. Hill served
as Controller for Spelling Films, Inc. From 1994 to 1996, Mr. Hill was a Manager
for Price Waterhouse LLP, where he worked with entertainment, media and
communications clients. From 1989 to 1994, he was Manager with Arthur Andersen
LLP. Mr. Hill is a certified public accountant. He received a Bachelor's of
Science Degree in Accounting from Pepperdine University. Mr. Hill is a member of
the American Film Market Association, where he serves as Chairman of the Finance
Committee.

Declan O'Brien has been Senior Vice President, Development since April 13,
1998. For the past 5 years, Mr. O'Brien has worked for several television and
motion picture companies located at The Walt Disney Company Studios. From 1996
to 1998, Mr. O'Brien served as Director of Development at Goldenring
Productions. Prior to 1996, he was involved in production at Touchstone
Pictures. Mr. O'Brien holds a Bachelor of Arts degree from California State
University, Pomona, where he was graduated with honors.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

In January 1997, CST Entertainment, Inc., a publicly held company primarily
involved in the colorization of old "black and white" film material, filed for
federal bankruptcy protection in the Southern District of California. From 1993
to December 1996, Mr. Shapiro, our current President, Chief Operating Officer
and a director, was president, chief executive officer and a director of CST
Entertainment, Inc.

COMPENSATION OF DIRECTORS

Under the 1996 Directors Plan, which plan has been incorporated into the
1999 Stock Option Plan, Deferred Stock and Restricted Stock Plan, Mr. Solomon
and Mr. Barry, who are non-employee directors, each received an option to
purchase 30,000 shares of our common stock at the then effective exercise price
of $2.50 per share and $2.00 per share, respectively.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL
AGREEMENTS

Drew Levin. We have entered into an employment agreement with Mr. Levin
(the "Levin Agreement") providing for his services as President and Chief
Executive Officer effective January 1, 1997 through December 31, 2001. With the
hiring of Mr. Shapiro, Mr. Levin relinquished the title of President. Pursuant
to the Levin Agreement, Mr. Levin will receive a salary of $220,000, plus
$145,000 per annum as an advance against a pro-rata portion of producer's fees
earned by Mr. Levin (the "Annual Salary"). Producer's fees in excess of $145,000
will be retained by us. Mr. Levin has agreed that any producer's fees relating
to Company produced programming shall be allocated to us. Pursuant to the Levin
Agreement, Mr. Levin will receive: (i) from 5% to 7.5% of our pre-tax profit
beginning in 1997 pursuant to a formula based on specified earnings levels; and
(ii) options to acquire an aggregate of 85,000 shares of our common stock at a
per share exercise price equal to the initial public offering price, which
options shall be deemed fully vested. The Levin
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<PAGE> 28

Agreement also provides that certain unpaid bonus compensation owing to Mr.
Levin will be applied to his loan from the Company.

The Levin Agreement also provides that if Mr. Levin dies or becomes unable
to perform his duties, functions and responsibilities for a period of 3
consecutive months or shorter periods aggregating 4 months within any 12 month
period, the Company may terminate Mr. Levin, in which case Mr. Levin or his
beneficiary shall be entitled to receive all of Mr. Levin's base salary, accrued
share of bonus for that fiscal year and thereafter for an additional one year
period. If the Company were to terminate Mr. Levin without cause, Mr. Levin
would be entitled to receive (i) a lump sum payment equal to the Annual Salary,
as well as unpaid vacation pay, unreimbursed business expenses and any other
monies payable to Mr. Levin under any employee benefit plan; (ii) the right to
obtain a transfer of any life insurance policy existing for the benefit of Mr.
Levin; and (iii) one half of the balance of the Annual Salary payable through
the end of then current term, as due and scheduled under the Levin Agreement as
if Mr. Levin had not been terminated, with a minimum payable of 1 year's Annual
Salary and a maximum payable of 2 years' Annual Salary.

Jonathan D. (Jody) Shapiro. We have entered into an employment agreement
with Mr. Shapiro (the "Shapiro Agreement") providing for his services as
President and Chief Operating Officer, effective as of November 22, 1998. As
part of the Shapiro Agreement, the Company's management agreed to use its best
efforts to elect Mr. Shapiro as a Director of the Company. The term of the
Shapiro Agreement commenced January 1, 1999 and continues until December 31,
1999. If during such period Mr. Shapiro is successful in helping the Company to
raise a minimum of $3,000,000 in debt or equity financing, the Shapiro Agreement
will be extended for an additional 2 years. Mr. Shapiro is to be paid a base
salary of $220,000 per year, plus a bonus to be determined by the Compensation
Committee of the Board of Directors based upon his performance. In addition,
applied against such bonus will be 2% of the gross dollars raised through Mr.
Shapiro's efforts and 1% of the Company's post tax profits. Mr. Shapiro's bonus,
which shall be paid on a quarterly basis, shall be a minimum of $25,000 for the
first year. The minimum bonus shall increase to $30,000 for the second year and
$40,000 for the third year. Mr. Shapiro will be granted 90,000 stock options at
an exercise price of $1.65 per share, such options to vest ratably over the
first 2 years of his employment.

Timothy A. Hill. We have entered into an employment agreement with Timothy
A. Hill (the "Hill Agreement") providing for his services as Senior Vice
President/Chief Financial Officer effective August 18, 1998. The term of the
Hill Agreement is for 1 year with the Company having an option to extend it for
1 additional year. Mr. Hill is to be paid a salary of $115,000 per year, plus a
minimum annual bonus of $10,000. Mr. Hill is to be granted 10,000 stock options
per year of service at the exercise price equal to of price of our common stock
on the grant date, to vest at the end of each year of service.

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to us for the fiscal
years ended December 31, 1996, 1997 and 1998 by our Chief Executive Officer (the
"Named Executive Officer"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY BONUS OPTIONS COMPENSATION
------------------------------ ---- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Drew S. Levin(5)........................ 1998 $220,000 $145,000 $13,400(4)
Chairman of the Board 1997 $220,000 $145,000
and Chief Executive Officer 1996 $350,000 $ 45,000(2) (3)
</TABLE>

- ---------------
(1) Other than salary described herein, the Company did not pay the Named
Executive Officer any compensation, including incidental personal benefits
in excess of 10% of the Named Executive Officer's salary.

(2) For the fiscal year ended December 31, 1996, Mr. Levin was entitled,
pursuant to the terms of his prior agreement, to a bonus equal to certain
producer's fees relating to the series Amazing Tails. During such

27
<PAGE> 29

period Mr. Levin received $45,000 and, pursuant to the terms of his new
employment agreement (which became effective upon the closing of the public
offering in August 1998), has agreed to apply the balance of such accrued but
unpaid bonus ($175,000) to repay certain loans made to him by the Company.
This amount ($175,000) was reflected in Mr. Levin's compensation for fiscal
1998. Mr. Levin will no longer receive production bonuses. The loan balance
is $179,400 as of the date hereof. Such amount is net of amounts owed to
Mr. Levin for accrued producer fees and the bonus effective April 1, 1998.
See "Certain Relationships and Related Transactions."

(3) Pursuant to the terms of Mr. Levin's restated employment agreement, Mr.
Levin was granted options to acquire 85,000 shares of our common stock at
$1.00 per share, exercisable upon our initial public offering. These options
are fully vested.

(4) Mr. Levin was entitled to receive a car allowance of $1,250 per month for 8
months and $850 per month for 4 months.

(5) For the fiscal year ending December 31, 1998, the Company has granted Mr.
Levin a bonus, effective as of April 1, 1998, of $70,000 in respect of his
services for 1997. This amount is in addition to his agreed upon contractual
compensation. In addition, Mr. Levin received a bonus of $30,000 pursuant to
the terms of his employment agreement for the fiscal year ended December 31,
1998.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of July 14, 1999, certain information
regarding the ownership of common stock by:

- each person who is known by us to own of record or beneficially more than
5% of the outstanding common stock;

- each of our directors;

- each named executive officer; and

- all directors and executive officers as a group.

Except as otherwise indicated, the shareholders listed in the table have
sole voting and investment power with respect to the shares indicated.

<TABLE>
<CAPTION>
AGGREGATE NUMBER PERCENT OF
OF SHARES BENEFICIAL SHARES
NAME AND ADDRESS(1) OWNED(2) OUTSTANDING
------------------- -------------------- -----------
<S> <C> <C>
Drew S. Levin(3)............................................ 684,123 11.8%
VMR Luxembourg, S.A.(4)..................................... 599,879 10.5%
Michael Jay Solomon(5)...................................... 50,000 *%
W. Russell Barry(6)......................................... 30,000 *%
Jonathan D. Shapiro(7)...................................... 22,500 *%
Esquire Trade & Finance(8).................................. 296,647 5.1%
All officers and directors as a group (8 persons)........... 799,123 13.6%
</TABLE>

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

(1) Address is c/o Team Communications Group, Inc., 12300 Wilshire Boulevard,
Suite 400, Los Angeles, California 90025.

(2) Gives effect to the anti-dilution provisions of the sale of 2.5% of our
common stock from Mr. Drew Levin to Mr. Morris Wolfson, Mr. Abraham Wolfson,
Mr. Aaron Wolfson and Wedmore Corporation N.V. and the conversion of the
Conversion Note computed on a fully diluted basis.

(3) Includes 249,488 shares which Mr. Joseph Cayre has agreed to transfer to Mr.
Levin pursuant to Mr. Levin's arrangements with Mr. Cayre. Mr. Levin has
pledged his shares and his options to Mr. Cayre pursuant to Mr. Cayre's loan
transaction with the Company. Includes options to acquire 85,000 shares of

28
<PAGE> 30

common stock at an exercise price of $1.00 per share which the Company
granted to Mr. Levin concurrently with the execution of his Employment
Agreement.

(4) Includes shares issuable pursuant to the terms of a warrant to purchase
100,000 shares of common stock, exercisable at $2.20 per share, which are
exercisable within 60 days.

(5) Includes an option to purchase 30,000 shares of common stock at an exercise
price $2.50 per share.

(6) Includes an option to purchase 30,000 shares of common stock at an exercise
price $2.00 per share.

(7) Pursuant to Mr. Shapiro's employment agreement, he has been granted options
to purchase 90,000 shares of common stock at an exercise price of $1.65 per
share, of which 22,500 shares are exercisable within 60 days.

(8) Includes shares issuable pursuant to the terms of a warrant to purchase
29,219 shares of common stock, exercisable at $2.16 per share, which are
exercisable within 60 days.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SHORT TERM BORROWINGS BY MR. LEVIN; TRANSACTIONS WITH JOSEPH CAYRE; TRANSACTIONS
WITH ERIC ELIAS

Short Term Borrowings by Mr. Levin. The Company has currently due from
officer a balance of $179,400. The Company had due from officer balances of
$145,400, $195,500 and $11,300 at December 31, 1998, December 31, 1997 and
December 31, 1996, respectively, representing short-term interest free loans
made by the Company to Mr. Levin, less producer's fees earned for services on a
Company production. At December 31, 1998, December 31, 1997 and December 31,
1996, the amount of such loans owed by Mr. Levin to the Company (which also
represents the highest amount borrowed during such periods) was $145,400,
$195,500 and $11,300, respectively. As of March 31, 1999, the amount of such
loans is $170,400, with a majority of the disinterested members of the Board of
Directors having approved the additional $25,000 loan. Such amount is net of
amounts owed to Mr. Levin for accrued producer fees and bonus effective April 1,
1998. Borrowings by any officer of the Company require the approval of a
majority of the disinterested members of the Board. There is no interest being
charged on the amount Mr. Levin owes the Company and there is no interest
accruing on the producer fees previously owed by the Company to Mr. Levin.

Transactions with Joseph Cayre. As of the date hereof, we were indebted to
Joseph Cayre, one of our original shareholders, in respect of a loan made in
April 1995 in the amount of $500,000 and interest on this loan currently accrues
at the prime rate established by Republic National Bank, New York, New York,
plus 2% per year. Mr. Cayre has waived the interest that accrued on this loan
prior to March 31, 1998. Mr. Cayre's loan is currently secured by Mr. Levin's
shares and all of the assets of the Company.

Mr. Cayre and Mr. Levin agreed that as of the closing of the Company's
initial public offering, Mr. Cayre would receive payment of $250,000 in respect
of the amounts owed to him, and the remaining debt of $500,000 would be extended
until August 31,1999. Subject to the foregoing, Mr. Levin and Mr. Cayre also
agreed to restructure Mr. Cayre's investment in the Company. Mr. Cayre agreed
that upon the closing of the Company's initial public offering, Mr. Cayre's
interest in the Company would be reduced to 214,874 shares of common stock by
transferring to Mr. Levin 195,774 shares of common stock held by Mr. Cayre. Mr.
Cayre entered into a consulting agreement with the Company pursuant to which he
was paid $260,000 for his consulting services to the Company through September
30, 1998. In February 1996, in connection with a prior restructuring of this
indebtedness, Mr. Cayre received options to purchase 48,743 shares of common
stock at a price of $.43 per share, which options are exercisable at the time of
the Company's initial public offering.

Transactions With Eric Elias. Mr. Elias, who serves as Senior Vice
President, Business and Legal Affairs, is paid through his private law firm. In
1997 Mr. Elias received approximately $125,000, including expense
reimbursements, for such legal services. In 1998, Mr. Elias received
approximately $170,000, including expense reimbursements, for such legal
services. On June 30, 1997, Mr. Elias was granted an option to purchase 12,500
shares of common stock at the Company's initial public offering price of $5.50
per share.

29
<PAGE> 31

We believe that the foregoing transactions were on terms no less favorable
to us than those available from unaffiliated parties. It is our current policy
that all transactions with officers, directors, 5% shareholders and their
affiliates will be entered into only if such transactions are approved by a
majority of the disinterested independent directors, and on terms no less
favorable to us than could be obtained from unaffiliated parties and are
reasonably expected to benefit us.

STOCK OPTION PLANS

As of May 26, 1999, our Board of Directors approved, and recommended for
adoption by the shareholders, who adopted such plan on June 11, 1999, the 1999
Stock Option, Deferred Stock and Restricted Stock Plan (the "1999 Stock Plan").
As part of the 1999 Stock Plan, we incorporated into it our 1996 Stock Awards
Plan and our 1996 Directors' Stock Option Plan. All outstanding awards under
those plans have been converted into equivalent awards under the 1999 Stock
Plan. Such awards will continue to have the same terms, conditions and exercise
prices as they had under the prior plans.

The 1999 Stock Plan increases the aggregate number of shares available for
the grant of options to an amount equal to 20% of then current outstanding
shares of our common stock, such figure to be adjusted as and when we increase
our outstanding shares of common stock. The initial number of shares shall be
approximately 700,000. The 1999 Stock Plan provides for the grant of qualified
incentive stock options ("ISOs") that meet the requirements of Section 422 of
the Code, stock options not so qualified ("NQSOs"), deferred stock and
restricted stock awards ("Grants"). The 1999 Stock Plan is administered by a
committee of directors appointed by the Board of Directors (the "Committee").
ISOs may be granted to our officers and key employees or any of our
subsidiaries. The exercise price for any ISO granted under the 1999 Stock Plan
may not be less than 100% (or 110% in the case of ISOs granted to an employee
who is deemed to own in excess of 10.0% of the outstanding common stock) of the
fair market value of the shares of common stock at the time the option is
granted. The exercise price for any NQSO granted under the 1999 Stock Plan may
not be less than 85.0% of the fair market value of the shares of common stock at
the time the option is granted. The purpose of the 1999 Stock Plan is to provide
a means of performance-based compensation in order to attract and retain
qualified personnel and to provide an incentive to those whose job performance
affects us.

The number of shares reserved for issuance under the 1999 Stock Plan is
subject to anti-dilution provisions for stock splits, stock dividends and
similar events. If an option granted under the 1999 Stock Plan expires or
terminates, or a Grant is forfeited, the shares subject to any unexercised
portion of such option or Grant will again become available for the issuance of
further options or Grants under the 1999 Stock Plan.

Under the 1999 Stock Plan, we may make loans available to stock option
holders, subject to the Committee's approval, in connection with the exercise of
stock options granted under the 1999 Stock Plan. If shares of common stock are
pledged as collateral for such indebtedness, such shares may be returned to us
in satisfaction of such indebtedness. If so returned, such shares shall again be
available for issuance in connection with future stock options and Grants under
the 1999 Stock Plan.

Unless previously terminated by the Board of Directors, no options or
Grants may be granted under the 1999 Stock Plan after May 25, 2009.

Options granted under the 1999 Stock Plan will become exercisable according
to the terms of the grant made by the Committee. Grants will be subject to the
terms and restrictions of the award made by the Committee. The Committee has
discretionary authority to select participants from among eligible persons and
to determine at the time an option or Grant is granted and in the case of
options, whether it is intended to be an ISO or a NQSO, and when and in what
increments shares covered by the option may be purchased. Under current law,
ISOs may not be granted to any individual who is not also an officer or employee
of ours or any of our subsidiaries.

30
<PAGE> 32

The exercise price of any option granted under the 1999 Stock Plan is
payable in full:

- in cash;

- by surrender of shares of our common stock already owned by the option
holder having a market value equal to the aggregate exercise price of all
shares to be purchased including, in the case of the exercise of NQSOs,
restricted stock subject to a Grant under the 1999 Stock Plan;

- by cancellation of indebtedness owed by us to the optionholder;

- by a full recourse promissory note executed by the optionholder; or

- by any combination of the foregoing.

The terms of any promissory note may be changed from time to time by the Board
of Directors to comply with applicable Internal Revenue Service or Securities
and Exchange Commission regulations or other relevant pronouncements.

The Board of Directors may from time to time revise or amend the 1999 Stock
Plan and may suspend or discontinue it at any time. However, no such revision or
amendment may impair the rights of any participant under any outstanding option
or Grant without such participant's consent or may, without shareholder
approval, increase the number of shares subject to the 1999 Stock Plan or
decrease the exercise price of a stock option to less than 100% of fair market
value on the date of grant (with the exception of adjustments resulting from
changes in capitalization), materially modify the class of participants eligible
to receive options or Grants under the 1999 Stock Plan, materially increase the
benefits accruing to participants under the 1999 Stock Plan or extend the
maximum option term under the 1999 Stock Plan.

31
<PAGE> 33

SELLING SHAREHOLDERS

The following table sets forth certain information with respect to the
Selling Shareholders.

We will not receive any proceeds from the market sales of the Selling
Shareholders shares, although we will receive the proceeds from the exercise of
the Warrants held by the Selling Shareholders. We are paying all costs and
expenses of registering the Selling Shareholders shares. Sales of the Selling
Shareholders shares or the potential of such sales could have an adverse effect
on the market price of our common stock. See "Risk Factors -- Shares Eligible
for Future Sale."

The Selling Shareholders and the number of shares they each hold are listed
below.

<TABLE>
<CAPTION>
SELLING SHAREHOLDERS SHARES OWNED
-------------------- ------------
<S> <C>
Austin Vest Amstolt Blazms.................................. 212,960
Esquire Trade & Finance..................................... 296,647
Nesher Inc.................................................. 46,323
Amro International.......................................... 185,316
VMR Luxembourg, S.A......................................... 599,879
Alan Parnes................................................. 5,000
Arab International Trust Co................................. 10,000
Duck Partners, LP........................................... 20,000
Gary & Paula Wayton......................................... 10,000
Michael Rosenbaum........................................... 20,000
RMK Financial LLC........................................... 15,000
Robert Bain................................................. 20,000
Robert Frankel.............................................. 7,470
Roger Triemstra............................................. 10,000
Roland McAbee............................................... 6,400
Swan Alley (Nominees) Limited............................... 20,000
Van Moer Santerre & Cie..................................... 50,000
Mathew & Barbara Geisser.................................... 3,204
Central Scale Co............................................ 9,613
Vijaya Rani Rekhala/Vijay-Kumar Rekhala, M.D................ 6,408
United Congregation Mesorah................................. 6,408
Samuel F. Marinelli......................................... 3,204
Mildred J. Geiss............................................ 3,204
Jon G. Kastnendieck......................................... 6,408
Cooperative Holding Corporation............................. 12,817
Aaron Wolfson............................................... 72,783
Abraham Wolfson............................................. 66,374
Arielle Wolfson............................................. 6,408
Eli Levitin................................................. 19,850
Morris Wolfson Family Limited Partnership................... 59,966
Levpol...................................................... 6,408
Wellington Corporation, N.V................................. 4,272
Crescent Capital Company, LLC............................... 8,544
Arthur Steinberg IRA Rollover............................... 2,136
Robert Steinberg IRA Rollover............................... 2,136
Robert Sam Steinberg -- A Partnership....................... 2,136
Von Graffenried AG.......................................... 4,272
Third World Trust Company LTD............................... 4,272
</TABLE>

32
<PAGE> 34

<TABLE>
<CAPTION>
SELLING SHAREHOLDERS SHARES OWNED
-------------------- ------------
<S> <C>
Alpha Ventures.............................................. 8,544
Tuch Family Trust........................................... 2,136
Alfred Ross................................................. 4,272
Fred Chanowski.............................................. 2,136
Allen Goodman............................................... 4,272
Felix D. Paige.............................................. 8,544
Andrew G. Rogal............................................. 4,272
Mark J. Levine.............................................. 2,136
Joseph Sullivan............................................. 4,272
Robert Gopen................................................ 2,136
Colony Financial Services................................... 2,136
John Carberry............................................... 2,136
Daniel & Thalia Federbush................................... 4,272
Michael S. Berlin, M.D...................................... 4,272
Phillip Tewel............................................... 29,191
Joe Cayre................................................... 48,743
South Ferry #2.............................................. 29,906
ACA Equities................................................ 4,700
D&M Investment Corp......................................... 8,545
Gilbert Karsenty............................................ 1,709
Chana Sasha................................................. 6,408
Affida Bank................................................. 60,950
Bill Nesmith................................................ 681
Mike Sposato................................................ 681
Bob Dorfman................................................. 2,349
Bristol Capital............................................. 20,934
Venture Management Consultants, LLC......................... 20,000
Infusion Capital............................................ 283,000
Marathon Consulting......................................... 50,000
Claudio Nessi............................................... 31,000
Dr. Michael Berlin.......................................... 1,000
DMT Technologies............................................ 100,000
Affida Bank................................................. 45,000
-----------
Total....................................................... 2,646,151
===========
</TABLE>

PLAN OF DISTRIBUTION

The shares of common stock subject to this prospectus may be sold from time
to time by the Selling Shareholders or their successors, assigns or transferees
in private transactions for their own accounts. The Selling Shareholders may
offer and sell the shares from time to time in transactions on The Nasdaq
SmallCap Market on terms to be determined at the time of such sales. The Selling
Shareholders may also make private transfers directly or through a broker or
brokers. Alternatively, the Selling Shareholders may from time to time offer
shares of common stock offered hereby to or through underwriters, dealers or
agents, who may receive consideration in the form of discounts and commissions;
such compensation, which may be in excess of normal brokerage commissions, may
be paid by the Selling Shareholders and/or purchasers of the shares of common
stock offered hereby for whom such underwriters, dealers or agents may act. The
Selling Shareholders and any dealers or agents that participate in the
distribution of the shares of common stock offered hereby may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities

33
<PAGE> 35

Act, and any discounts, commissions or concessions received and any profit
realized by them on the resale of shares as principals may be deemed
underwriting compensation under the Securities Act. The aggregate proceeds to
the Selling Shareholders from sales of the common stock offered hereby will be
the purchase price of the common stock less any brokers' commissions. The common
stock offered hereby may be sold from time to time in one or more transactions
at a fixed price, which may be changed, or at varying prices determined at the
time of such sale or at negotiated prices.

The common stock issuable upon exercise of the Warrants and offered hereby
will be issued by us in accordance with the respective terms thereof.

We are contractually obligated to keep this prospectus current for as long
a period as any Warrants remain outstanding and for two years thereafter. We may
from time to time notify the Selling Shareholders that this prospectus is not
current and that sales of the common stock may not occur until the prospectus is
supplemented by sticker or amendment, as appropriate. To the extent required,
the specific shares of common stock to be sold, the names of the Selling
Shareholders, the respective purchase prices and public offering prices, the
names of any agent, dealer or underwriter and any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement, or, if appropriate, a post-effective
amendment to the Registration Statement of which this prospectus forms a part.

The laws of certain states may require that sale of the shares of common
stock offered hereby be conducted solely through brokers or dealers registered
in those states. In addition, in certain states the shares of common stock
offered hereby may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption therefrom is available.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the common stock offered hereby may not
simultaneously engage in market making activities with respect to the common
stock for a period of [one] business day prior to the commencement of such
distribution. In addition, without limiting the foregoing, the Selling
Shareholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder including, without limitation, Regulation
M, which provisions may limit the timing of purchases and sales of common stock
by Selling Shareholders.

We will pay substantially all the expenses incurred by the Selling
Shareholders and us incident to this offering and the sale of the common stock
offered hereby to the public, but excluding any underwriting discounts,
commissions or transfer taxes. The expenses are estimated to be approximately
[$ ].

We have also agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act.

34
<PAGE> 36

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue up to 40,000,000 shares of common stock,
no par value. Holders of common stock are entitled to one vote for each share
held of record on each matter submitted to a vote of shareholders. There is
cumulative voting for election of directors. Subject to the prior rights of any
series of preferred stock which may from time to time be outstanding, if any,
holders of common stock are entitled to receive ratably, dividends when, as and
if declared by the Board of Directors out of funds legally available therefor
and, upon the liquidation, dissolution, or winding up of the Company, are
entitled to share ratably in all assets remaining after payment of liabilities
and payment of accrued dividends and liquidation preferences on the preferred
stock, if any. Holders of Common stock have no preemptive rights and have no
rights to convert their Common stock into any other securities. The outstanding
shares of common stock are validly authorized and issued, fully paid, and
nonassessable.

PREFERRED STOCK

We are authorized to issue up to 10,000,000 shares of Preferred Stock. The
Preferred Stock may be issued in one or more series, the terms of which may be
determined at the time of issuance by the Board of Directors, without further
action by shareholders and may include voting rights (including the right to
vote as a series on particular matters), preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund provisions.
We have no present plans for the issuance of shares of Preferred Stock and any
issuance of such Preferred Stock before August 29, 1999 will require the consent
of National Securities Corporation. The issuance of any Preferred Stock could
adversely affect the rights of the holders of common stock and therefore, reduce
the value of the common stock. The ability of the Board of Directors to issue
Preferred Stock could also discourage, delay or prevent a takeover. See "Risk
Factors -- Preferred Stock; Possible Anti-Takeover Effects of Certain Charter
Provisions."

WARRANTS

In connection with the issuance of prior secured notes, we have issued an
aggregate of 647,354 warrants, each warrant entitling the holder thereof to
acquire one share of common stock; 224,293 warrants are exercisable at an
exercise price equal to $0.43 per share, 29,191 warrants are exercisable at an
exercise price equal to $0.97 per share, 193,870 warrants are exercisable at
$0.97 per share, 20,000 warrants are exercisable at $2.45, 10,000 warrants are
exercisable at $2.00, 85,000 warrants are exercisable at $2.16, 50,000 warrants
are exercisable at $2.20 and 35,000 warrants are exercisable at $7.61, subject
to adjustment as hereinafter provided. The warrants may be exercised, at the
option of the holder at any time. Unless exercised during their term, the right
to exercise the warrants terminates on their expiration date.

We have also issued 147,924 warrants to other consultants and investors in
connection with prior financings. Of these warrants, 21,362 are exercisable at
$1.07 per share and 126,562 are exercisable at $0.43 per share, all of which are
currently exercisable. During 1998 and 1999, we granted warrants to purchase our
common stock to the following individuals and entities for services provided to
us: (i) 22,000 and 10,000 warrants, respectively, to Mansion House International
and Danny Chan, respectively, exercisable at $2.75 per share, (ii) 5,000
warrants to Hedblom Partners, exercisable at $3.50 per share, (iii) 200,000
warrants to Glen Michael Financial; 100,000 exercisable at $1.62 per share,
75,000 exercisable at $3.00 per share and 25,000 exercisable at $3.25 per share,
and (iv) 10,000 warrants to Ralph Olsen, exercisable at $2.00 per share. In
addition, we granted (x) 121,000 and 10,000 warrants, respectively, to Chase
Financial Limited and Robert Herskowitz, respectively, exercisable at $1.62 per
share and (y) an aggregate of 20,000 warrants, 5,000 each to Investor Relations
Services, Aurora Holdings, Amber Capital and Affiliated Services, respectively,
exercisable at $2.45 per share, in connection with debt that was raised. We also
issued to Michael Jay Solomon and Seth Wellenson, options to purchase 30,000
shares each, at $2.50 per share for agreeing to serve as members of our Board of
Directors. Mr. Wellenson's options were cancelled when he resigned as a
director. Sal Russo was issued 25,000 warrants exercisable at $1.88 per share,
25,000 exercisable at $3.00 per share and 25,000

35
<PAGE> 37

exercisable at $2.50 per share. Nick Kahala was issued 30,000 warrants
exercisable at $2.00 per share. W. Russell Barry was issued an option to
purchase 30,000 shares of our common stock at $2.00 per share.

The warrantholders have the opportunity to profit from a rise in the market
price of the common stock without assuming the risk of ownership of the shares
of common stock issuable upon the exercise of the warrants, with a resulting
dilution in the interests of the Company's shareholders by reason of exercise of
warrants at a time when the exercise price is less than the market price for the
common stock. Further, the terms on which we could obtain additional capital
during the life of the warrants may be adversely affected. The warrant holders
may be expected to exercise their warrants at a time when we would, in all
likelihood, be able to obtain any needed capital by an offering of common stock
on terms more favorable than those provided for by the warrants.

The holders of the warrants will not have any of the rights or privileges
of shareholders, including voting rights and rights to receive dividends, prior
to exercise of the warrants. We reserve out of its authorized but unissued
shares a sufficient number of shares of common stock for issuance on exercise of
the warrants. The common stock issuable on exercise of the warrants will be,
when issued, duly authorized and validly issued, fully paid, and nonassessable.

For a holder to exercise the warrants, there must be a current registration
statement in effect with the Commission and registration or qualification with,
or approval from, various state securities agencies with respect to the shares
or other securities underlying the warrants, or an opinion of our counsel that
there is an exemption from registration or qualification.

ANTIDILUTION. In the event that we shall at any time:

- declare a dividend, or make a distribution, on the outstanding common
stock payable in shares of our capital stock;

- subdivide the outstanding common stock into a greater number of shares of
common stock;

- combine the outstanding common Stock into a smaller number of shares; or

- issue any shares of its capital stock by reclassification of the common
stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation),

then, in each case, the exercise price per warrant share in effect at the time
of the record date for the determination of shareholders entitled to receive
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying such exercise price by a fraction, the numerator
of which shall be the number of shares of Common stock outstanding immediately
prior to such action, and the denominator of which shall be the number of shares
of common Stock outstanding after giving effect to such action. Upon such
adjustments to the exercise price, the number of warrant shares issuable upon
exercise of each warrant shall simultaneously be adjusted by multiplying the
number of warrant shares theretofore issuable upon exercise of such warrant by
the exercise price theretofore in effect and dividing the product so obtained by
the exercise price, as adjusted.

REORGANIZATIONS. In the event of any reclassification, capital
reorganization or other similar change of outstanding common stock, any
consolidation or merger involving the Company (other than a consolidation or
merger which does not result in any reclassification, capital reorganization, or
other similar change in the outstanding common stock), or a sale or conveyance
to another corporation of the property of the Company as, or substantially as,
an entirety, each warrant will thereupon become exercisable only for the kind
and number of shares of stock or other securities, assets or cash to which a
holder of the number of shares of Common stock issuable (at the time of such
reclassification, reorganization, consolidation, merger or sale) upon exercise
of such warrant would have been entitled upon such reclassification,
reorganization, consolidation, merger or sale. In the case above, the effect of
these provisions would be that the holder of a warrant would thereafter be
limited to exercising such warrant at the exercise price in effect at such time
for the amount of cash per share that a warrant holder would have received had
such holder exercised such warrant and received Common stock immediately prior
to the effective date of such cash merger or transaction.
36
<PAGE> 38

Depending upon the terms of such cash merger or transaction, the aggregate
amount of cash so received could be more or less than the exercise price of the
warrant.

EXERCISE PROCEDURE. Each holder of a warrant may exercise such warrant by
surrendering the certificate evidencing such warrant, with the subscription form
on the reverse side of such certificate properly completed and executed,
together with payment of the exercise price, to us at our executive offices. The
exercise price will be payable by cash or by certified or official bank check
payable in U.S. Dollars to the order of the Company. If fewer than all of the
warrants evidenced by a warrant certificate are exercised, a new certificate
will be issued for the remaining number of warrants. Certificates evidencing the
warrants may be exchanged for new certificates of different denominations by
presenting the warrant certificates at the office of the Company.

NATIONAL SECURITIES CORPORATION'S WARRANT

As part of our initial public offering, we issued to National Securities
Corporation a warrant to purchase for investment a maximum of 150,000 shares of
common stock. This warrant is exercisable for a four-year period commencing one
year from July 29, 1999. The exercise price is $7.425 per share (that being 135%
of the initial public offering price per share). The warrant is not be saleable,
transferable, assignable or hypothecatable prior to its exercise date except to
officers of National Securities Corporation and members of their selling group
and officers and partners thereof. The warrant contains anti-dilution
provisions. The warrant does not entitle National Securities Corporation to any
rights as a shareholder until it is exercised and shares are purchased
thereunder. The warrant and the shares of common stock thereunder may not be
offered for sale except in compliance with the applicable provisions of the
Securities Act. We have agreed that, if we shall cause to be filed with the
Securities and Exchange Commission either an amendment to the Registration
Statement from our initial public offering or a separate registration statement,
National Securities Corporation shall have the right during the seven-year
period commencing on July 29, 1999 to include in such amendment or Registration
Statement the shares of common stock issuable upon exercise of the warrant at no
expense to National Securities Corporation. Additionally, we have agreed that
for a period of 5 years from the closing of the initial public offering, upon
written demand by a holder or holders of a majority of the warrant, we will, on
one occasion, register the shares of common stock issuable upon exercise of the
warrant at our expense. In addition, we have agreed, that during the same 5 year
period, upon the written demand of any holder of the warrant, to promptly
register the shares of common stock underlying such holder's warrant at the
expense of such holder.

BRIDGE WARRANTS

In connection with the sale of the Debentures, we also sold warrants to
purchase 85,000 shares of common stock. The warrants are exercisable at an
exercise price equal to 110% of the per share market value as of the last
trading day prior to the date of the issuance of the warrants. This price, which
is subject to adjustment in the event of certain dilutive events, was $1.96 and
$2.56, respectively, at the closing dates. The warrants expire three years after
their date of issuance. Pursuant to the terms of purchase agreements and the
related registration rights agreements, we are obligated to file a registration
statement with respect to the shares issuable upon conversion of the Debentures
and the shares issuable upon exercise of the warrants within 75 days of the
initial closing date.

BRIDGE NOTES

To finance our working capital needs, we have issued a series of bridge
notes. In February 1997, we commenced the placement of units consisting off
$50,000 principal amount of 10% Convertible Notes (the "February 1997 Notes")
and 10,000 common stock purchase warrants. We sold an aggregate of $969,350
principal amount of the February 1997 Notes. The principal amount of, and
interest on, the February 1997 Notes were due and payable on our initial public
offering. The February 1997 Notes were convertible into shares of common stock
during the period commencing 60 days after the Closing Date and continuing
through the effective date of the initial public offering. Substantially all of
the notes holders have waived their right to convert.
37
<PAGE> 39

In June 1996 we commenced the placement of units consisting of $50,000
principal amount of 10% Secured Convertible Notes (the "June 1996 Notes") and
10,000 common stock purchase warrants. We sold an aggregate of $975,000
principal amount of the June 1996 Notes. The principal amount of, and interest
on, the June 1996 Notes shall be due and payable, if the holders thereof do not
otherwise notify us that they were converting their notes, on the completion of
our initial public offering. The June 1996 Notes are secured by substantially
all of our assets. To the extent not otherwise repaid, the June 1996 Notes
became convertible into shares of common stock, beginning 12 months after the
completion of our initial public offering, at a conversion price of $2.50 per
share, subject to an adjustment in certain events. Substantially all the holders
of these notes have waived their right to so convert.

In February 1996, we commenced the placement of units consisting of $50,000
principal amount of 12% Secured Notes (the "February 1996 Notes") and 10,000
common stock purchase warrants. We sold an aggregate of $900,000 principal
amount of the February 1996 Notes. The principal amount of, and interest on, the
February 1996 Notes shall be due and payable on the second anniversary of the
initial closing date thereof, and were secured by substantially all of our
assets. These notes were not convertible.

All but $588,750 of the February 1997 Notes, the June 1996 Notes and the
February 1996 Notes were repaid from the proceeds of our initial public
offering, other working capital, or subsequent conversions into our common
stock.

In December 1997, we obtained a loan in the amount of $315,000 from Venture
Management Consultants, LLC ("VMC"), affiliates of shareholders of the Company,
which accrues interest at 12% per year, and matured upon the earlier of the
closing of the Initial Public Offering or July 15, 1998. As the loan was not
repaid by February 15, 1998, we were required to pay VMC an additional fee of
$15,000. Included in the principal to be repaid is a $15,000 loan origination
fee. As of the date hereof, $120,000 of principal has been repaid on this note.

Between March 1998 and May 1998, we arranged for short term loans (the
"Interim Financing") of an aggregate of $1,642,000. A majority of such loans
were made by present shareholders and their affiliates. These loans mature as
follows: (i) $642,000 on July 15, 1998; (ii) $235,000 on June 15, 1998; (iii)
$115,000 on November 15, 1998; (iv) $150,000 on March 16, 1999; (v) $250,000 on
April 1, 1999; and (vi) $250,000 on April 18, 1999. These loans, other than the
$642,000, $115,000 and $235,000 loans accrue interest at 12% per year. The
$235,000 loan includes a $35,000 origination fee, and a $10,000 late fee as the
note was not paid at June 15, 1998. The note does not accrue interest. The
$642,000 loan has a fixed interest amount of $78,000 (which has not been paid
and is due upon the maturity of the loan) and includes a $42,000 loan
origination fee. The $115,000 loan includes a $15,000 loan origination fee and
begins to accrue interest at 18% per year if the loan goes into default. As of
July 15, 1999, the $150,000 March 16, 1999 Note and the $115,000 November 15,
1998 Note remain outstanding and are in default.

In May, June and July 1998, we arranged for loans from 10 parties of an
aggregate of $715,000 for specific production financing. These loans mature as
follows: (i) $375,000 on January 10, 2000; and (ii) $340,000 on August 1, 1999.
The $375,000 loans accrue interest as 12% per year and the $340,000 loan accrues
interest at 16% per year. Of the $375,000, there are two loan origination fees,
one for $8,000 and one for $8,500. If any payments under the $340,000 loan are
not paid within three days of being due, a late fee of 8% of the delinquent
amount will be assessed for each month the payment is delinquent. In addition,
if the loan is in default, at the lender's option, the unpaid principal and
accrued interest shall thereafter bear interest at the lessor of 25% per year or
the maximum legal rate. The loan may be prepaid, however, in order to prepay the
loan, we will have to pay the lender the lesser of all of the interest which
would have accrued through the maturity of the loan or $42,000. As of July 15,
1999, $100,000 remains outstanding and matures on January 10, 2000.

In January and March 1999, the Company sold to 5 investors an aggregate
principal amount of 1,850,000 of 8% convertible debentures and warrants to
purchase up to 185,000 shares of common stock. The holders of $1,000,000 of the
debentures have indicated they intend to convert their debentures into common
stock. All of the debentures are convertible into shares of common stock at the
option of the holder at any time after their purchase. The conversion price for
each debenture in effect on any conversion date will be the lesser of (A) an
38
<PAGE> 40

amount equal to 90% of the average per share market value for five consecutive
trading days immediately prior to the initial closing date or (B) an amount
equal to 85% of the per share market value for the trading day having the lowest
per share market value during the five trading days prior to the conversion
date. Purchasers effect conversions by surrendering the debentures to be
converted, together with the form of conversion notice attached thereto. If not
otherwise converted, the debentures mature three years from their original issue
date.

In June 1999, four of the debenture holders purchased an additional 175,000
shares of common stock for an aggregate of $700,000.

As of July 14, 1999, the Company was in technical default in respect of
obligations aggregating approximately $514,900, exclusive of interest. We
believe that we will cure such defaults on or about July 31, 1999 through
additional bridge financings.

TRANSFER AGENT

The transfer agent for our common stock is U.S. Stock Transfer Corporation,
1745 Gardena Avenue, Glendale, California 91204, telephone number (818)
502-1404, which also is responsible for record keeping functions in connection
with the same.

SHARES ELIGIBLE FOR FUTURE SALE

Our common stock trades on the NASDAQ SmallCap Market under the symbol
"TMTV". Sales of substantial amounts of our common stock in the public market or
the perception that such sales could occur could materially adversely affect the
prevailing market price and our ability to raise equity capital in the future.

Upon completion of the offering, and assuming the exercise of all of the
Warrants we will have outstanding 5,737,000 shares of common stock. Of these
shares, 412,941 are restricted shares. The shares that have been registered are
freely tradeable without restriction under the Securities Act, unless purchased
by "affiliates" as that term is defined in Rule 144 under the Securities Act.

The remaining shares of common stock outstanding upon completion of the
offering, determined as if all outstanding warrants have been exercised, will be
held by approximately 28 holders and will be "restricted securities" as that
term is defined in Rule 144 as promulgated under the Securities Act ("Restricted
Stock"). Restricted Stock may be sold in the public market only if registered or
if qualified for an exemption from registration under Rule 144 or Rule 701 as
promulgated under the Securities Act, which rules are summarized below, or
pursuant to another exemption from registration. Sales of the Restricted Stock
in the public market, or the availability of such shares for sale, could
materially adversely affect the market price of the common stock. In general,
under Rule 144, beginning 90 days after the date of the final prospectus from
our initial public offering, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Stock for at least one year (including the
holding period of any prior owner other than an affiliate of the Company) would
be entitled to sell within any three month period a number of shares that does
not exceed the greater of (i) one percent of the number of shares of common
stock then outstanding or (ii) the average weekly trading volume of the common
stock during the four calendar weeks preceding the filing of notice of such
sale. Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of ours at any time during the three months preceding a sale, and who
has beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an affiliate of ours) is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Any employee, officer or director of or consultant to us who purchased his
or her shares of common stock pursuant to a written compensatory plan or
contract may be entitled to rely on the resale provisions of Rule 701. Rule 701
permits affiliates of ours to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144, as described above.
Rule 701 further provides that nonaffiliated shareholders may sell such shares
in reliance on Rule 144 without having to comply with the
39
<PAGE> 41

public information, volume limitation or notice provisions of Rule 144. In both
cases, a holder of Rule 701 shares was required to wait until 90 days after the
date of the final prospectus from our initial public offering before selling
their shares.

We have agreed that for a period of 13 months from July 29, 1998, we will
not sell any securities, with the exception of the shares of common stock issued
upon exercise of currently outstanding options, without National Securities
Corporation's prior written consent, which consent shall not be unreasonably
withheld.

We intend to file a registration statement on Form S-8 under the Securities
Act of 1933 covering shares of common stock reserved for issuance under the 1999
Stock Plan. Based on the number of shares reserved for issuance under the 1999
Stock Plan, such registration statement would cover approximately 700,000
shares. Such registration statement will automatically become effective upon
filing. Accordingly, shares registered under such registration statement will,
subject to Rule 144 volume limitations applicable to our affiliates, be
available for sale in the open market, subject to vesting restrictions and the
lock-up agreements described above.

LEGAL MATTERS

Certain legal matters in connection with the validity of the shares of
common stock being offered hereby will be passed upon for us by Kelly Lytton
Mintz & Vann LLP, 1900 Avenue of the Stars, Suite 1450, Los Angeles, California
90067. Bruce P. Vann, a member of Kelly Lytton Mintz & Vann LLP, is the
beneficial owner of 4,273 shares of common stock and options to acquire an
additional 10,000 shares of common stock.

EXPERTS

The consolidated financial statements as of December 31, 1998 included in
this prospectus have been so included in reliance on the report of Stonefield
Josephson, Inc., independent accountants, and are so included in reliance upon
their reports given on their authority as experts in auditing and accounting.

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act of 1933 with respect to the
common stock offered hereby. This prospectus, which constitutes part of the
registration statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the Securities
and Exchange Commission. For further information regarding us and our common
stock, please review the registration statement, including exhibits, schedules
and reports filed as a part thereof. Statements in this prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement, set forth the material terms of such contract or other
document but are not necessarily complete, and in each instance reference is
made to the copy of such document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference. The registration statement, including the exhibits and schedules
thereto, may be inspected without charge at the principal office of the public
reference facilities maintained by the Securities and Exchange Commission at
Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, and at the Securities
and Exchange Commission's Regional Offices located at The Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained at prescribed rates by mail from the Public Reference Section
of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The registration statement, including the exhibits and schedules
thereto, can also be accessed through the EDGAR terminals in the Securities and
Exchange Commission's Public Reference Rooms in Washington, Chicago and New York
or through the World Wide Web at http://www.sec.gov.

40
<PAGE> 42

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Stonefield Josephson, Inc., Independent
Auditors.................................................. F-2
Consolidated Balance Sheet at March 31, 1999 (unaudited) and
December 31, 1998......................................... F-3
Consolidated Statement of Operations for the three months
ended March 31, 1999 (unaudited) and for the three months
ended March 31, 1998 (unaudited) and for the years ended
December 31, 1998 and December 31, 1997................... F-4
Consolidated Statement of Cash Flows for the three months
ended March 31, 1999 (unaudited) and for the three months
ended March 31, 1998 (unaudited) and for the year ended
December 31, 1998 and December 31, 1997................... F-5
Consolidated Statement of Cash Flows and Supplemental
Schedule of Non Cash Activities for the three months ended
March 31, 1999 and for the three months ended March 31,
1998 (unaudited) and for the years ended December 31, 1998
and December 31, 1997..................................... F-6
Consolidated Statement of Shareholders' Equity (Deficit) for
the three months ended March 31, 1999 (unaudited) and for
the years ended December 31, 1998 and December 31, 1997... F-7
Notes to Consolidated Financial Statements.................. F-8
</TABLE>

F-1
<PAGE> 43

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Team Communications Group, Inc.

We have audited the consolidated balance sheets of Team Communications
Group, Inc. and subsidiaries as of December 31, 1998, and the related
consolidated statements of income, shareholders' equity and cash flows for the
two years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects financial position of Team
Communications Group, Inc. and subsidiaries at December 31, 1998 and the
consolidated results of its operations and its cash flows for the years ended
December 31, 1998 and 1997, in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 12, the Company
has had significant cash used by its operating activities, and has been
dependent on outside equity investors and lenders to finance those operations,
and certain notes payable are past due. Continuation as a going concern will be
dependent upon continued outside financing. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans with respect to these matters are described in Note 12 to the financial
statements. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

/s/ STONEFIELD JOSEPHSON, INC.

STONEFIELD JOSEPHSON, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
April 15, 1999

F-2
<PAGE> 44

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED BALANCE SHEET

ASSETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents................................... $ 1,137,800 $ 1,027,700
Trade receivables, less allowance for doubtful accounts of
$337,000 and $337,000, respectively....................... 4,295,000 4,736,700
Television programming costs, less accumulated amortization
of $10,587,000 and $6,952,100, respectively............... 13,800,700 11,018,800
Due from officer............................................ 170,400 145,400
Fixed assets, net........................................... 19,900 16,400
Organizational costs and other assets....................... 555,400 82,700
----------- -----------
Total Assets...................................... $19,979,200 $17,027,700
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued expenses and other liabilities.... $ 1,897,500 $ 1,679,400
Deferred revenue............................................ 85,600 472,900
Accrued participations...................................... 4,070,600 3,025,800
Line of credit -- Bank...................................... 850,000 1,114,000
Notes payable............................................... 3,227,500 2,305,000
Accrued interest............................................ 619,900 530,900
Shareholder note payable.................................... 450,000 500,000
----------- -----------
Total Liabilities................................. 11,201,100 9,628,000
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 10,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common stock, no par value; 40,000,000 shares authorized;
3,316,135 and 2,816,135, respectively, issued and
outstanding............................................ 1,000 1,000
Paid in capital........................................... 8,607,600 7,612,700
Treasury Stock............................................ -- (34,600)
Accumulated Deficit....................................... 169,500 (179,400)
----------- -----------
Total shareholders' equity........................ 8,778,100 7,399,700
----------- -----------
Total liabilities and shareholders' equity........ $19,979,200 $17,027,700
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 45

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED INCOME STATEMENT

<TABLE>
<CAPTION>
FOR THE 3 FOR THE 3
MONTHS MONTHS FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------- -------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues......................... $3,502,000 $1,573,400 $13,581,900 $6,875,600
Cost of Revenues................. 2,561,200 379,000 9,076,000 2,355,300
General and administrative
expense........................ 385,500 541,500 3,274,000 3,244,900
---------- ---------- ----------- ----------
Earnings from operations......... 555,300 652,900 1,231,900 1,275,400
Interest expense................. 151,300 263,000 902,600 1,040,100
Interest income.................. 31,900 48,000 202,900 211,800
---------- ---------- ----------- ----------
Earnings before income taxes..... 435,900 437,900 532,200 447,100
Provision for income taxes, all
current........................ 87,000 -- 57,500 --
---------- ---------- ----------- ----------
Earnings before extraordinary
item........................... $ 348,900 $ 437,900 $ 474,700 $ 447,100
Extraordinary (loss) from early
extinguishment of debt (net of
income tax benefit of
$37,500)....................... -- -- (69,500) --
---------- ---------- ----------- ----------
Net Earnings..................... $ 348,900 $ 437,900 $ 405,200 $ 447,100
========== ========== =========== ==========
Basic earnings per common
share.......................... -- --
Earnings before extraordinary
item........................... $ 0.11 $ 0.39 $ 0.26 $ 0.40
Extraordinary (loss)............. -- -- (0.04) --
---------- ---------- ----------- ----------
Net Earnings -- Basic............ $ 0.11 $ 0.39 $ 0.22 $ 0.40
========== ========== =========== ==========
Weighted average number of shares
outstanding basic.............. 3,149,468 1,131,344 1,833,340 1,131,344
========== ========== =========== ==========
Diluted earnings per share
Earnings before extraordinary
item........................... $ 0.09 $ 0.24 $ 0.20 $ 0.25
Extraordinary (loss)............. -- -- (0.03) --
---------- ---------- ----------- ----------
Net Earnings -- Diluted.......... $ 0.09 $ 0.24 $ 0.17 $ 0.25
========== ========== =========== ==========
Weighted average number of shares
outstanding diluted............ 3,835,335 1,821,800 2,434,017 1,821,800
========== ========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 46

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE YEAR FOR THE YEAR
MONTHS ENDED MONTHS ENDED ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- -------------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................ $ 348,900 $ 437,900 $ 405,200 $ 447,100
Adjustments to reconcile net income to
cash used for operating activities:
Depreciation and amortization......... (3,500) 3,600 12,600 13,100
Amortization of television programming
costs............................... 1,497,700 409,300 8,980,300 1,455,000
Allowance for doubtful accounts....... -- -- 664,000 1,115,600
Additions to television programming
costs............................... (4,279,700) (994,600) (15,712,000) (2,186,200)
Amortization of notes payable
discount............................ 23,600 93,000 -- 372,000
Changes in assets and liabilities:
Decrease (increase) in trade
receivables......................... 441,700 (949,900) 1,340,100 (4,514,300)
Increase in organizational costs and
other assets........................ (472,700) (150,300) 495,300 (433,100)
Increase (decrease) in accounts
payable, accrued expenses and other
liabilities......................... 218,000 383,900 (1,553,700) 2,050,300
Increase (decrease) in deferred
revenue............................. (387,300) 49,000 (102,100) 570,500
Increase in accrued participations.... 1,044,800 (16,500) 2,041,000 (443,600)
Increase (decrease) in accrued
interest............................ 89,000 70,400 (367,400) 284,300
----------- --------- ------------ -----------
Net cash used for operating
activities........................ (1,479,500) (664,200) (3,796,700) (1,269,300)
----------- --------- ------------ -----------
INVESTING ACTIVITIES:
Decrease (increase) in due from officer... (25,000) (18,900) 50,100 (184,100)
----------- --------- ------------ -----------
Net cash provided (used) for
investing activities.............. (25,000) (18,900) 50,100 (184,100)
----------- --------- ------------ -----------
FINANCING ACTIVITIES:
Proceeds from shareholder loan and notes
payable................................. -- -- -- 1,423,560
Proceeds from issuance of note payable and
warrants................................ 1,290,300 658,100 2,681,000 --
Payments on bank line of credit........... (264,000) -- -- --
Proceeds from bank line of credit......... -- -- 1,114,000 --
Principal payment on loan due to
shareholder............................. (50,000) -- (240,000) (10,000)
Purchase treasury stocks.................. -- -- (34,600) --
Sale treasury stocks...................... 34,600 -- -- --
Extraordinary charge for early retirement
of debt................................. -- -- 69,500 --
Principal payment of notes payable........ -- (60,000) (5,372,600) --
Issuance of common stock.................. 603,700 -- 6,382,600 --
----------- --------- ------------ -----------
Net cash provided by financing
activities........................ 1,614,600 598,100 4,599,900 1,413,500
----------- --------- ------------ -----------
Net change in cash........................ 110,100 (85,000) 853,300 (39,900)
Cash at beginning of period............... 1,027,700 174,400 174,400 214,300
----------- --------- ------------ -----------
Cash at end of period..................... $ 1,137,800 $ 89,400 $ 1,027,700 $ 174,400
=========== ========= ============ ===========
Supplemental disclosure of cash flow
information:
Interest paid............................. $ -- $ -- $ 1,270,000 $ --
=========== ========= ============ ===========
Income taxes paid......................... $ -- $ -- $ 12,200 $ 4,000
=========== ========= ============ ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 47

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTAL SCHEDULE OF NON CASH ACTIVITIES

<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS THREE MONTHS FOR THE FOR THE
ENDED ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Extinguishment of TPEG settlement payable by
assignment of the treasury stock
receivable................................. -- -- -- 178,000
Issuance of warrants in conjunction with
notes payable.............................. -- -- 62,500 286,600
Issuance of shares in connection with
conversion of notes payable................ -- -- 53,600 --
Issuance of shares and warrants in connection
with services provided to the Company...... 603,700 -- 58,000 --
Issuance of shares in connection with
extinguishment of debt..................... 107,700 -- 458,000 --
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 48

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
--------------------- EARNINGS
NUMBER PAID IN TREASURY ACCUMULATED/
OF SHARES PAR VALUE CAPITAL STOCK (DEFICIT)
--------- --------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996............ 1,131,344 $1,000 $ 943,300 $ -- $(1,031,700)
Net Income for the Year
ended December 31, 1997............... -- -- -- -- 447,100
Issuance of warrants in connection with
private placement..................... -- -- 286,800 -- --
--------- ------ ---------- -------- -----------
Balance at December 31, 1997............ 1,131,344 $1,000 $1,230,100 $ -- $ (584,600)
Net Income for the Year
ended December 31, 1998............... -- -- -- -- 405,200
Issuance of shares in connection with
the initial public offering........... 1,500,000 -- 5,744,700 -- --
Issuance of shares in connection with
the extinguishment of debt............ 188,974 -- 458,000 -- --
[Purchase of Treasury Stock............. (17,000) -- -- (34,600) --]
Issuance of debt with beneficial
conversion feature.................... -- -- 66,100 -- --
Conversion of debt to equity............ -- -- 50,000 -- --
Issuance of warrants for services....... -- -- 58,000 -- --
Exercise of warrants.................... 12,817 -- 5,800 -- --
--------- ------ ---------- -------- -----------
Balance at December 31, 1998............ 2,816,135 $1,000 $7,612,700 $(34,600) $ (179,400)
Net Income for the three months ended
March 31, 1999........................ -- -- -- -- 348,900
Sale of Treasury Stock.................. 17,000 -- -- 34,600 --
Issuance of shares in connection with
extinguishment of debt................ 150,000 107,700
Issuance of stock for services.......... 333,000 -- 603,700 -- --
Issuance of warrants.................... -- -- 148,500 -- --
Issuance of debt with beneficial
conversion feature.................... 135,000
--------- ------ ---------- -------- -----------
Balance at March 31, 1999 (unaudited)... 3,316,135 $1,000 $8,607,600 $ -- $ 169,500
========= ====== ========== ======== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements
F-7
<PAGE> 49

TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- DESCRIPTION OF THE COMPANY:

Team Communications Group, Inc. (formerly known as DSL Entertainment Group,
Inc.) and its wholly owned subsidiaries (collectively, the "Company") are
primarily engaged in developing, producing, and distributing dramatic and
reality-based television series, mini-series, animated series, programs,
specials, and made-for-television movies for telecast, exhibition or
distribution in the domestic and foreign television and home video markets. The
Company's primary focus is on developing and producing family drama and children
programming and reality based programming for both domestic and international
broadcast networks and cable channels such as Discovery's Animal Planet, the
Learning Channel, the Showtime Networks, Fox Family Channel and the Discovery
Channel.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The accompanying consolidated statements include the accounts of Team
Communications Group, Inc. and subsidiaries. All significant intercompany
transactions and accounts have been eliminated.

Revenue Recognition

Revenue from licensing agreements covering entertainment product owned by
the Company is recognized when the entertainment product is available to the
licensee for telecast, exhibition or distribution, and other conditions of the
licensing agreements have been met in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 53, "Financial Reporting by Producers and
Distributors of Motion Picture Films." The portion of recognized revenue which
is to be shared with the producers and owners of the license program material
(participations payable and due to producers) is accrued as the revenue is
recognized. Deferred revenues consist principally of advance payments received
on television contracts for which program materials are not yet available for
broadcast or exploitation. Such amounts are normally repayable by the Company
only if it fails to deliver the related product to the licensee.

Sales to two major customers accounted for approximately 64% of the
Company's total operating revenue for the three months ended March 31, 1999.
Sales to four major customers accounted for approximately 69% of the Company's
total operating revenue for the year ended December 31, 1998. Sales to four
major customers accounted for approximately 88% of the Company's total operating
revenue for the year ended December 31, 1997.

Cash

The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Company has not experienced any losses
in such accounts. Cash equivalents consist of interest-bearing securities with
original maturities of less than 90 days.

Included in cash and cash equivalents as of March 31, 1999 and December 31,
1998, is an $860,000 certificate of deposit. This certificate of deposit is
restricted as it secures the Company's revolving line of credit of $850,000 with
Mercantile National Bank.

Television Program Costs

Television program costs are valued at the lower of unamortized cost or net
realizable value on an individual title basis. Television program costs
represent those costs incurred in the development, production and distribution
of television projects. These costs have been capitalized in accordance with
SFAS No. 53. Amortization of television program costs is charged to expense and
third-party participations are accrued using the individual film forecast method
whereby expense is recognized in the proportion that current year revenues

F-8
<PAGE> 50
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

bear to an estimate of ultimate revenue. Such estimates of ultimate revenue are
prepared and reviewed by management, and estimated losses, if any, are provided
for in full. Development costs are reviewed by management and charged to expense
when abandoned or, even if still being actively developed, if not set for
principal photography within three years of initial development activity.

During the three months ended March 31, 1999, as the Company increased its
activities related to film cost production, overhead was capitalized in
accordance with SFAS No. 53 based upon estimates of production related
activities as a percentage of anticipated film cost expenditures during 1999.
Management reviews the overhead rate throughout the year and will adjust the
overhead rate on a quarterly basis, if necessary. During the first quarter,
overhead in the amount of approximately $670,000 was capitalized to film
production costs.

Fixed Assets

Fixed assets include office furnishings, fixtures and equipment. Office
furnishings, fixtures and equipment are depreciated over a useful life of five
years. All depreciation expense is calculated using Modified Accelerated Cost
Recovery System. Fixed assets are net of $45,300 and $41,800 in accumulated
depreciation at March 31, 1999 and December 31, 1998, respectively.

Organizational Costs and Other Assets

The balance represents security deposits, prepaid expenses and the
unamortized portion of the original costs relating to the incorporation of the
Company.

Debt with Stock Purchase Warrants and Beneficial Conversion Features

The proceeds received from debt issued with stock purchase warrants is
allocated between the debt and the warrants, based upon the relative fair values
of the two securities and/or beneficial conversion features. Fair value of the
debt element of the financial instrument is determined by discounting the future
payments of principal and interest, based upon management's estimate of its
borrowing rate for similar financial instruments of this risk (generally 25%),
and the balance of the proceeds is accounted for as additional paid in capital.
The resulting debt discount is amortized to expense over the term of the debt
instrument, using the effective interest method. In the event of settlement of
such debt in advance of the maturity date, a loss is recognized based upon the
difference between the then carrying amount (i.e., face amount less unamortized
discount) and amount of payment.

Unclassified Balance Sheet

In accordance with the provisions of SFAS No. 53, the Company has elected
to present an unclassified balance sheet.

Financial Instruments

The carrying amounts of financial instruments including cash and cash
equivalents, short term accounts receivable, accounts payable, loans payable,
and deferred revenue approximated fair value as of March 31, 1999 and December
31, 1998 because of the relatively short maturity of these instruments. The
carrying value of long term accounts receivable and notes payable approximated
fair value as of March 31, 1999 and December 31, 1998 because the instruments
are valued at the Company's effective borrowing rate.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
F-9
<PAGE> 51
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Included in television program costs at March 31, 1999 and December 31,
1998 development is one project with aggregate capitalized costs of $451,600,
the development of which commenced in September of 1995. The Company continues
to develop this program and pursue production commitments. In the event the
Company is unable to produce this project, the Company may incur significant
write-downs in the future.

Common Stock

In January and April of 1997, the Company effected a 2.2776 and 1.0277 for
one share reverse stock splits, respectively. All share and per share data in
the financial statements reflect the reverse stock split for all periods
presented.

Concentration of Credit Risk

Two customers represented approximately 87% of the trade receivable balance
at March 31, 1999.

Three customers represented approximately 83% of the trade receivable
balance at December 31, 1998.

Net Earnings Per Common Share

For the years ended December 31, 1998 and December 31, 1997, the per share
data is based on the weighted average number of common and common equivalent
shares outstanding. For 1997, per share data is calculated in accordance with
Staff Accounting Bulletin of the Securities and Exchange Commission (SAB) No. 98
whereby common stock, options or warrants to purchase common stock or other
potentially dilutive instruments issued for nominal consideration must be
reflected in basic and diluted per share calculations for all periods in a
manner similar to a stock split, even if anti-dilutive. Accordingly, in
computing basic earnings per share, nominal issuances of common stock are
reflected in a manner similar to a stock split or dividend. In computing diluted
earnings per share, nominal issuances of common stock and potential common stock
are reflected in a manner similar to a stock split or dividend.

A portion of convertible debt was not included in the calculation of
weighted average shares as March 31, 1999, December 31, 1998 and December 31,
1997 because the Chairman and CEO has personally guaranteed to the Company that,
on certain debt, he will assume any convertible debt where the debt holder
wishes to convert in exchange for his own personal shares. The total number of
shares that this convertible debt may convert into is approximately 199,748.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of:

On April 1, 1997, the Company adopted the provision of SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of. This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amounts of the assets exceed the fair values of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell. Adoption of this statement did not have a material impact on the
Company's financial position, results of operations, or liquidity.

F-10
<PAGE> 52
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year 2000 Compliance

As has been widely reported, many computer systems process dates based on
two digits for the year of a transaction and are unable to process dates in the
year 2000 and beyond. Since the Company's formation in 1995, the Company has
installed new information systems which are year 2000 compliant. Although the
Company does not expect Year 2000 to have a material adverse effect on its
internal operations, it is possible that Year 2000 problems could have a
significant adverse effect on the Company's suppliers and their ability to
service the Company and to accurately process payments received.

New Accounting Pronouncements

The Company has adopted SFAS No. 130 "Reporting Comprehensive Income" and
SFAS No. 131 "Disclosures About Segments of an Enterprise and Related
Information". Adoption of these pronouncements did not materially affect the
financial statements.

Recent Pronouncements Effective Subsequent to 1998

In April 1998, Statement of Position 98-5 "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5") was issued. SOP 98-5 provides guidance on the
financial reporting of start-up costs and organization costs. The SOP is
effective for financial statements for fiscal years beginning after December 15,
1998. The Company does not anticipate that the adoption of this statement will
have a material effect on its financial statements.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective for fiscal years beginning after
June 15, 1999. The Company anticipates that due to its limited use of derivative
instruments, the adoption of SFAS No. 133 will not have a material effect on its
financial statements.

In October 1998, the FASB released an exposure draft of the proposed
statement on "Rescission of FASB Statement No. 53, Financial Reporting by
Producers and Distributors of Motion Picture Films". An entity that previously
was subject to the requirements of SFAS No. 53 would follow the guidance in a
proposed Statement of Position, "Accounting by Producers and Distributors of
Films." This proposed Statement of Position would be effective for financial
statements for fiscal years beginning after December 15, 1999 and could have a
significant impact on the Company's results of operations and financial position
depending on its final outcome. The Company has not concluded on its impact
given the preliminary stages of the proposed Statement of Position.

Unaudited Interim Consolidated Financial Statement

In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 1999, and the results of operations and cash flows for
the three month period ended March 31, 1999 have been included. The results of
operations for the three month period ended March 31, 1999, are not necessarily
indicative of the results to be expected for the full fiscal year. For further
information, refer to the financial statements and footnotes thereto included in
the Company's 10-KSB filed for the year ended December 31, 1998.

F-11
<PAGE> 53
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 -- TELEVISION PROGRAM COSTS:

Television program costs consist of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
In process and development................................ $ 668,900 $ 1,017,400
Released, less accumulated amortization................... 13,131,800 10,001,400
----------- -----------
Total television program costs.................. $13,800,700 $11,018,800
=========== ===========
</TABLE>

Based on management's estimates of future gross revenue as of March 31,
1999, approximately 60% of the $13,800,700 in unamortized released television
program costs will be amortized during the three years ending March 31, 2001 and
80% will be amortized during the five years ending March 31, 2003.

NOTE 4 -- INCOME TAXES:

Deferred taxes result from temporary differences in the recognition of
expense for tax and financial statement reporting purposes.

A reconciliation of the difference between the statutory federal income tax
rate and the Company's effective income tax rate applied to income (loss) before
income taxes are as follows for the periods ending:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Statutory federal tax rate................................. 34% 34%
State income tax provision................................. 3% 0%
Benefits of operating loss carryforward.................... (26)% (34)%
--- ---
Effective tax rate......................................... 11% 0%
=== ===
</TABLE>

The Company accounts for taxes under SFAS No. 109, which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in financial statements or tax
returns. Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

The components of the net deferred tax asset are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
Net operating loss (carryforward)........................... $ 61,156
Valuation allowance......................................... $(61,156)
--------
Net deferred tax asset.................................... $ --
--------
Total current and deferred taxes payable.................... $ --
========
</TABLE>

At December 31, 1998, the Company has a federal net operating loss
carryforward of $180,000.

NOTE 5 -- RELATED PARTY TRANSACTIONS:

The due from officer balance of $145,400 at December 31, 1998, represents
payments made by the Company on behalf of and short-term interest free loans
made to the Chairman and CEO, less producer's fees earned by the Chairman and
CEO for services on a company production.

F-12
<PAGE> 54
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The shareholder loan and note payable balance are comprised of the
following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
Promissory note:
12% secured promissory note due August 31, 1999........... $450,000 $500,000
-------- --------
$450,000 $500,000
======== ========
</TABLE>

In April 1995, the Company entered into a $500,000 promissory note with a
shareholder. The note accrues interest at 10% through December 31, 1995 and at
12% thereafter. The note and all unpaid interest is due August 31, 1999, as
amended. The note is secured by all of the Chairman and CEO's shares and the
assets of the Company. The shareholder has waived all accrued interest relating
to this note totaling $165,000 through March 31, 1998. Interest subsequent to
March 31, 1998 is accruing at prime plus two percent, currently 9.5%.

NOTE 6 -- COMMITMENTS AND CONTINGENCIES:

In January 1999, the Company was served with a complaint in a matter styled
Mel Giniger & Associates vs. Team Communications Group, Inc. et al. filed in the
Superior Court of the County of Los Angeles. In the complaint, the Plaintiff, an
individual who served as a sales agent for the Company, alleges that he is owed
commissions for sales of certain of the Company's programming and that the
Company has failed to pay in full the amounts Plaintiff alleges are owed to him.
The complaint seeks damages for breach of contract, services rendered, account
stated and for payment of value for services rendered. The Company has filed an
answer in this action and intends to vigorously defend itself.

In March 1999, the Company was served with notice of a Demand for
Arbitration in a matter styled Venture Management Consultant, LLC and TEAM
Communications Group, Inc. et al. with the American Arbitration Association. The
demand stems from a dispute between the parties concerning a consulting
agreement to provide investment banking services. The Company has filed an
answer in this action and intends to vigorously defend itself.

At this time, the outcome of any of the above matters cannot be determined
by the Company with any certainty. The Company is subject to the above mentioned
litigation and other various claims and lawsuits in the ordinary course of
business. In the opinion of management, the ultimate resolution of these matters
will not have a material adverse effect on the Company's financial condition,
results of operations or cash flows.

The Company leases office space and certain office equipment. The total
lease expense was $30,600, $24,000, $118,400 and $96,300 for the periods ended
March 31, 1999, March 31, 1998, December 31, 1998 and December 31, 1997,
respectively. The various operating leases to which the Company is presently
subject require minimum lease payments for the years ending December 31, as
follows:

F-13
<PAGE> 55
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7 -- LINE OF CREDIT -- BANK

The Company currently has a $850,000 line of credit with its bank, secured
by a certificate of deposit and certain receivables, which accrues interest on
the outstanding balance at 1.75% over Mercantile Bank's certificate of deposit
rate. The agreement expires June 15, 2000.

As of March 31, 1999 and December 31, 1998, the outstanding balance of the
line credit was $850,000 and $1,114,000, respectively.

NOTE 8 -- NOTE PAYABLE:

Notes payable consists of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
Debentures:
8% secured convertible debentures, net of
discounts due 2002.................... $1,093,900 --
Private placements:
12% secured notes due August 1999(i) $225,000... $ 225,000
10% secured convertible notes due August
1999(ii) 283,700... 296,000
10% secured notes due August 1999(iii) 80,000.... 80,000
Promissory notes:
10% secured promissory note due August
1999(iv) 250,000... 250,000
11% unsecured promissory note past due(v) 124,900... 124,900
12% secured note due April 1999, past
due(vi) 150,000... 150,000
12% secured note due March 1999, past
due(vii) 150,000... 150,000
12% secured note due April 1999(viii) 350,000... 350,000
18% secured note past due(ix) 115,000... 115,000
12% secured note due January 2000(x) 175,000... 284,100
16% secured note due August 1999(xi) 30,000.... 30,000
10% secured note due March 1999, past
due(xii) 200,000... 250,000
---------- ----------
$3,227,500 $2,305,000
========== ==========
</TABLE>

On January 30, 1999, the Company sold $850,000 principal amount of 8%
convertible debentures and 85,000 warrants. On March 16, 1999, the Company sold
$500,000 principal amount of 8% convertible debentures and 50,000 warrants.
These convertible debentures have the same terms for conversion. The conversion
price for each debenture will be the lesser of a) 90% of the average per share
market value for five consecutive days prior to the Initial Closing date or b)
85% of the per share market value for the trading day having the lowest per
share market value during the five trading days prior to the conversion date. If
not otherwise converted, the debentures mature on January 27, 2002, and March
15, 2002, respectively. These beneficial conversion features are included in
additional paid in capital. The related discount is amortized over the life of
the note using the effective interest method.

On March 31, 1999, the Company sold an additional $500,000 principal amount
of 8% convertible debentures and 50,000 warrants. These debentures have the same
terms as described above and mature, unless

F-14
<PAGE> 56
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

converted prior, on March 30, 2002. The Company finalized the sale of these
debentures and received the proceeds on April 7, 1999.

In 1998, the Company recognized a $69,500 extraordinary loss as a result of
the early redemption of certain notes. The extraordinary loss consisted of the
write-off of the associated debt discount, net of income tax benefits of
$37,500. These beneficial conversion features are included in additional paid in
capital. The related discount is amortized over the life of the note using the
effective itnerest method.

(i) During February - June 1996, the Company participated in a private
placement offering. The Company sold 18 placement units to the following
investors: Matthew and Barbara Geisser, Central Scale Co., Vijaya Kani
Rehala, Vijay-Kumar Rekhala, M.D., United Congregation Mesorah, Samuel
Marinelli, Mildred Geiss, Jon Kastendieck, Bank Leumi-Affida Bank,
Cooperative Holding Corporation, Aaron Wolfson, Abraham Wolfson, Arielle
Wolfson, and LEVPOL. Each unit consisted of a $50,000 note payable with
interest of 12% per annum, compounded quarterly, and 6,408 Common Stock
Purchase warrants. The accrued interest balance was $122,900 at December
31, 1998. Each warrant entitles the holder to buy one share of common stock
at an exercise price of $0.43. The warrants are exercisable commencing two
business days following the effective date of the registration statement
relating to an initial public offering, July 29, 1998, and terminating on
the July 29, 2001. Through this private placement, the Company raised
$900,000 and issued 115,351 warrants. Principal and interest were due no
later than July 15, 1998, $675,000 was redeemed at the initial public
offering. The remainder of the noteholders extended the maturity date to
August 1999. The notes are secured by substantially all of the assets of
the Company. The fair value of the notes and the carrying amount and fair
value of the associated warrants were determined by the market rate,
approximately 25%, based upon management's estimate of its borrowing rate
in an arm's length transaction for a financial instrument of this risk. The
notes were discounted at this market rate. The value of the warrants
amounted to $162,000 and is included in paid in capital.

(ii) During June - October 1996, the Company participated in a second
private placement offering. The Company sold 19.5 placement units to the
following investors: Wellington Corporation, Crescent Capital Company, LLC,
Arthur Steinberg IRA Rollover, Robert Steinberg IRA Rollover, Robert Ram
Steinberg, A Partnership, Von Graffenried AG, Alpha Ventures, Tuch Family
Trust, Third World Trust Company LTD., Alfred Ross, Fred Chanowski, Allen
Goodman, Felix Paige, Rogal America, Mark Levine, Joseph Sullivan, Robert
Gopen, Colony Financial Services, John Carberry, Daniel and Thalia
Federbush, and Michael Berlin. Each unit consisted of a $50,000 senior
convertible note payable with interest of 10% per annum, compounded
quarterly, and 4,272 Common Stock Purchase warrants.

The notes are convertible at their principal amount into common stock
of the Company at any time one year after the initial public offering, July
29, 1998, through maturity at the conversion price of $5.00 per share
subject to adjustment in certain circumstances. Each warrant entitles the
holder to buy one share of common stock at an exercise price of $0.43. The
warrants are exercisable commencing two business days following the
effective date of the registration statement relating to an initial public
offering, July 29, 1998, and terminating on July 29, 2001. As of December
31, 1996, the Company raised $975,000 and issued 83,308 warrants. Principal
and interest were due no later than July 15, 1998 and $679,000 was redeemed
at the initial public offering. The remainder of the noteholders extended
the maturity date to August 1999. The accrued interest balance was $108,500
at December 31, 1998. The notes are secured by substantially all of the
assets of the Company. The carrying amount and fair value of the notes and
associated warrants were determined by the market rate, approximately 25%,
for a financial instrument of this risk. The notes were discounted at this
market rate. The value of the warrants amounted to $381,928 and is included
in paid in capital.

(iii) During January 1997, the Company participated in a third private
placement offering. The Company sold 19.4 units to the following investors:
Alan Parness, Arab International Trust Co., Duck
F-15
<PAGE> 57
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Partners, LP, Gary and Paula Wayton, Michael Rosenbaum, RMK Financial LLC,
Robert Bain, Robert Frankel, Roger Triemstra, Roland McAbee, Swan Alley
Limited, and Van Moer Santerr & Cie. Each unit consisted of a $50,000
senior note payable with interest of 10% per annum, payable at six month
intervals, and 10,000 Common Stock Purchase warrants. In 1998 $889,000 was
repaid. The maturity date of the notes is August 1999. Each warrant
entitles the holder to buy one share of common stock at an exercise price
of $0.97. The warrants are exercisable commencing two business days
following the effective date of the registration statement relating to an
initial public offering and terminating on the third anniversary of that
date. As of September 30, 1997, the Company raised $969,000 and issued
193,870 warrants. The accrued interest balance was $41,100 at December 31,
1998. The notes are secured by substantially all of the assets of the
Company. The carrying amount and fair value of the notes and associated
warrants were determined by the market rate, approximately 25%, for a
financial instrument of this risk. The notes were discounted at this market
rate. The value of the warrants amounted to $286,797 and is included in
paid-in capital.

(iv) In April 1996, the Company entered into a $500,000 promissory
note with South Ferry #2, L.P., an outside investor, to finance a
television program. The note accrues interest at 10% per annum and is due
on August 20, 1999, as amended. At the initial public offering, $250,000
was repaid. The accrued interest balance was $124,200 at December 31, 1998.
The note is secured by certain assets and rights associated with the
television program. There were 29,906 warrants (exercisable at $0.43 per
warrant) issued in connection with this note. The fair value of the note
was estimated using discounted cash flow methods based on the Company's
borrowing rates, approximately 25%, for similar types of borrowing
arrangements with comparable terms and maturities.

(v) In September 1996, the Company entered into a $150,000 unsecured
promissory note with Time Life to repay an advance provided to the Company
in October 1995. The note bears interest at 11% per annum from October 1995
and required payments such that the note would be repaid by March 31, 1997.
As of December 31, 1998, there was $29,700 of accrued interest. During
1997, the Company made a $10,000 principal payment. During 1996, the
Company made a $30,250 payment, of which $15,125 was applied to the
principal balance, and $15,125 was applied to accrued interest. The holder
of the note has not filed a notice of default and the Company is
negotiating an extension of the payment terms.

(vi) In March 1998, the Company obtained a loan in the amount of
$150,000 from Arab Commerce Bank, which carries interest at 12% per annum
and matures on April 1, 1999. As of December 31, 1998 there was accrued
interest of $13,800. The note is secured by substantially all the assets of
the Company.

(vii) In March 1998, the Company obtained a loan in the amount of
$150,000 from Nick Kahla, which carries interest at 12% per annum and
matures on March 16, 1999. As of December 31, 1998, there was accrued
interest of $14,100. The note is secured by substantially all the assets of
the Company.

(viii) Between March 1998 and May 1998, the Company arranged $650,000
in short-term loans. $300,000 was repaid at the initial public offering.
These loans bear an interest rate of 12%, and $100,000 matures in March
1999 and $250,000 matures in April 1999. At December 31, 1998, the accrued
interest was $29,400.

(ix) In May 1998, the Company obtained a loan in the amount of
$115,000 from the High Bridge Fund. The loan includes a $15,000 loan
origination fee and begins to accrue interest at 18% per year if the loan
goes into default. At December 31, 1998, the accrued interest was $2,000.
The loan matured November 15, 1998 and management is currently negotiating
a settlement of this note.

(x) In May and June 1998, the Company arranged with nine parties for
$375,000 of long term loans. The loans mature January 2000. Of the
$375,000, there are two loan origination fees, one for $8,000 and one for
$8,500. Two notes are convertible at their principal and interest amount
into common
F-16
<PAGE> 58
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

stock of the Company at any time through maturity at the conversion price
of 50% of the current per share market value. One note is convertible at
its principal and interest amount into common stock of the Company at the
conversion price of 75% of the current per share market value. These
conversion features were valued at $62,500 and included in paid in capital.
The resulting discount on the notes payable is amortized over the life of
the note using the effective interest method. At December 31, 1998,
$284,100 principal amount remained outstanding. The loans accrue interest
at 12% per annum. As of December 31, 1998, there was accrued interest of
$22,700.

(xi) In July 1998, the Company arranged a loan for $340,000. The loan
matures August 1999. The loan bears an interest rate of 16% per annum. At
December 31, 1998, $30,000 principal amount remained outstanding. As of
December 31, 1998, there was accrued interest of $11,100.

(xii) On December 29, 1998, the Company arranged a loan for $250,000.
The loan accrues interest at 10% per annum. The loan matures on March 31,
1999.

NOTE 9 -- GEOGRAPHIC INFORMATION:

The Company operates in a single industry segment, the development,
production and distribution of television programming. All of the Company's
operations are conducted in the United States.

A summary of the Company's revenues by geographic area is presented below:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
---------- ---------- ------------ ------------
UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
North America................. $2,626,000 $ 748,400 $ 9,844,500 $1,483,600
Europe........................ -- -- -- 307,100
South America................. 428,000 825,000 1,351,800 3,798,900
Asia.......................... 448,000 -- 1,412,900 136,000
Australia and Africa.......... -- -- 72,700 1,250,000
---------- ---------- ----------- ----------
Total......................... $3,502,000 $1,573,400 $13,581,900 $6,975,600
========== ========== =========== ==========
</TABLE>

NOTE 10 -- STOCK OPTION PLANS:

The Company has established stock option plans for its employees and
consultants (the "1995 Stock Option Plan") and for its non-employee directors
(the "1995 Stock Option Plan for Non-Employee Directors").

The 1995 Stock Option Plan allows for options (including Incentive Stock
Options) to be granted to employees and consultants at less than fair market
value at date of grant. These options may be immediately exercisable and expire
over a period determined by the Stock Option Committee of the Board of Directors
(the "Committee"). The Committee is comprised of two members of the Board of
Directors. The total number of options available to grant under this plan is
270,000.

The 1995 Stock Option Plan for Non-Employee Directors allows for a set
number of immediately exercisable options to be granted at fair market value to
non-employee members of the Board of Directors. The total number of options
available to grant under this plan is 67,500. There were no options granted
exercised, forfeited, expired or outstanding pursuant to the Director Plan for
the year ended December 31, 1998.

F-17
<PAGE> 59
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A summary of the Key Employee Plan as of and for the periods December 31,
1998 and December 31, 1997 is presented below:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
KEY EMPLOYEE PLAN SHARES EXERCISED PRICE
----------------- ------- ----------------
<S> <C> <C>
Outstanding as of January 1, 1997.................... 35,000 $1.14
Granted............................................ -- --
Exercised.......................................... -- --
Forfeited/Expired.................................. -- --
-------
Outstanding as of December 31, 1997 and
December 31, 1998.................................. 35,000
=======
Weighted-average fair value of options outstanding... $ 1.14
=======
</TABLE>

The following table summarizes information about options outstanding at
December 31, 1998 and December 31, 1997:

<TABLE>
<CAPTION>
SHARES EXERCISABLE AT
DECEMBER 31, 1998, DATE
TOTAL SHARES EXERCISE PRICE DECEMBER 31, 1997 OPTIONS EXPIRE
------------ -------------- --------------------- --------------
<S> <C> <C> <C> <C>
30,000 $1.00 10,000 July 1, 2006
5,000 $2.00 5,000 June 6, 2006
------ ------
35,000 15,000
====== ======
</TABLE>

The Company has elected, as permitted by SFAS No. 123, "Accounting for
Stock Based Compensation", to account for its stock compensation arrangements
under the provisions of APB No. 25, "Accounting for Stock Issued to Employees".
Accordingly, because the exercise price of the Company's employee stock options
equals or exceeds the market price of the underlying stock on the date of grant,
no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is
required by SFAS 123 and has been determined as if the Company had accounted for
its employee stock options under the fair value method of such pronouncement.
The fair value for these options was estimated at the date of grant using the
binomial option pricing model with the following weighted average assumptions:
risk-free interest rate of 6.33%, no dividend yield, expected lives of two and a
half years, and volatility of 0%.

For purposes of pro forma disclosure, the estimated fair value of the
options is zero, hence neither pro forma net income nor earnings per share are
presented.

In January 1997, the Company's shareholders voted to freeze the 1995 Stock
Option Plans and adopt two new plans, the Team Communications Group, Inc. Stock
Awards plan (the "1996 Employee Plan") and the Team Communications Group, Inc.
Directors' Stock Option Plan (the "1996 Director's Plan").

The 1996 Directors Plan allows Directors who are not employees of the
Company, on the effective date of an initial public offering and each annual
anniversary thereof, to receive options to purchase 2,500 shares. The option
price per share of Common Stock purchasable upon exercise of such stock options
shall be 100% of the fair market value on the date of grant. Such options shall
be exercisable immediately on the date of grant by payment in full of the
purchase price in cash. The aggregate number of shares of Common Stock that may
be granted pursuant to the 1996 Directors Plan is 20,000.

The aggregate number of shares of Common Stock that may be granted under
the 1996 Employee Plan is 180,000. The Employee Plan provides for the authority
by the Employee Plan Committee to grant ISO's to any key employee of the Company
or any affiliate of the Company and to determine the terms and conditions of
each grant, including without limitation, the number of shares subject to each
ISO. The ISO exercise price

F-18
<PAGE> 60
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

will also be determined by the Committee and will not be less than the fair
market value of the Common Stock on the date of grant. The exercise price will
not be less than 110% of such fair market value and the exercise period will not
exceed five years if the participant was the holder of more than 10% of the
Company's outstanding voting securities.

NOTE 11 -- SUBSEQUENT EVENTS:

In June 1999, the shareholders increased the authorized common stock shares
from 18,000,000 to 40,000,000 and increased authorized preferred stock shares
from 2,000,000 to 10,000,000. All references in the financial statements to
number of shares of Company's common stock and preferred stock have been
retroactively restated.

NOTE 12 -- GOING CONCERN:

The Company's financial statements for the years ended December 31, 1998
and December 31, 1997 have been prepared on a going concern basis which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company expects to incur
substantial expenditures to produce television programs and/or acquire
distribution rights to television programs produced by third parties. The
Company's working capital plus limited revenue from the licensing of its current
inventory of television programs will not be sufficient to fund the Company's
ongoing operations, including completing projects that the Company is
contractually required to develop or produce.

Management recognizes that the Company must generate additional resources
to enable it to continue operations. Management's plans include the sale of
additional equity securities. However, no assurance can be given that the
Company will be successful in raising additional capital. Further, there can be
no assurance, assuming the Company successfully raises additional equity, that
the Company will achieve profitability or positive cash flow.

F-19
<PAGE> 61

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER
IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 2
Risk Factors.......................... 6
Use of Proceeds....................... 11
Dividend Policy....................... 11
Selected Consolidated Financial
Data................................ 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 19
Management............................ 25
Security Ownership of Certain
Beneficial Owners and Management.... 28
Certain Relationships and Related
Transactions........................ 29
Selling Shareholders.................. 32
Plan of Distribution.................. 33
Description of Securities............. 35
Shares Eligible for Future Sale....... 39
Legal Matters......................... 40
Experts............................... 40
Additional Information................ 40
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

UNTIL , 1999 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
2,646,151 SHARES
COMMON STOCK
TEAM COMMUNICATIONS
GROUP, INC.
------------------------

PROSPECTUS
------------------------

JULY , 1999

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 62

PART II

EXHIBITS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Directors of the Company are presently entitled to indemnification as
expressly authorized under Section 317 of the California General Corporation Law
("Section 317") and the Bylaws of the Company (which generally authorize the
Company to indemnify its Agents where such indemnification is authorized by
Section 317). Section 317 provides a detailed statutory framework covering
indemnification of any agent of a corporation who is threatened to be made a
party to any legal proceeding by reason of his or her actions on behalf of the
corporation.

Article 5 of the Company's Articles of Incorporation (Exhibit 3.1) provides
that a director will not be liable for monetary damages arising out of the
director's breach of his or her fiduciary duties to the Company and the
shareholders to the fullest extent permissible under the California law.
Liability for breach of a director's fiduciary duty arises when the director has
failed to exercise sufficient care in reaching decisions or otherwise attending
to his responsibilities as a director and in other circumstances. Article V does
not eliminate these duties; it only eliminates monetary damage awards occasioned
by a breach of these duties. Accordingly, a breach of fiduciary duty is still a
valid basis for a suit seeking to stop a proposed transaction from occurring.
However, after a transaction has occurred, the shareholders do not have a claim
against directors for monetary damages based on a breach of fiduciary duty, even
if that breach involves negligence on the part of the directors. Additionally,
as a practical matter, equitable remedies such as rescission may not be
available after a transaction has already been consummated or in other
circumstances.

The Company intends to enter into indemnification agreements with the
Company that attempt to provide the maximum indemnification allowed under the
California law. The Indemnification Agreements will make mandatory
indemnification which is permitted by California law in situations in which the
Indemnitee would otherwise be entitled to indemnification only if the Board of
Directors, the Shareholders, independent legal counsel retained by the Company
or a court in which an action was or is pending made a discretionary
determination in a specific case to award such indemnification. However, in part
because the California law was only recently enacted, the extent to which the
indemnification permitted by the California law may be expanded by
indemnification agreements is unsettled and has yet to be the subject of any
judicial interpretation.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses in connection with the issuance and distribution of the
securities being registered are as follows (estimated except as noted):

<TABLE>
<S> <C>
SEC registration fee (estimate)............................. $
NASD filing fee (estimate)..................................
Printing and engraving expenses.............................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Transfer agent and registration fees and expenses...........
Miscellaneous...............................................
--------
Total............................................. $
========
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

1. A loan in the principal amount of $322,000 was made in January 1996 from
AMAE Ventures, an affiliate of Mr. Wolfson, which was used by the Company for
general overhead purposes and bears interest at 12%. This note is due on the
earlier to occur of July 15, 1998 or the closing of the Offering. The holder of
such note has the right to convert the principal amount into 3% of the Company's
Common Stock on a fully diluted basis through the completion of the Offering,
and has indicated that it intends to convert such note.

II-1
<PAGE> 63

2. Mr. Cayre and Mr. Levin have agreed, subject to documentation, that as
of the closing of the Offering, Mr. Cayre will receive payment of $250,000 in
respect of the amounts owed to him, and the remaining debt, subject to adequate
collateralization (which may include cash collateral) shall be extended until
July 15, 1998. Subject to the foregoing, Mr. Levin and Mr. Cayre have also
agreed to restructure Mr. Cayre's investment in the Company. Mr. Cayre agreed
that upon the closing of the Offering, Mr. Cayre's interest in the Company would
be reduced to 164,874 shares of the Company's Common Stock by transferring to
Mr. Levin 195,774 shares of the Company's Common Stock held by Mr. Cayre. In
February 1996, in connection with a prior restructuring of this indebtedness,
Mr. Cayre received options to purchase 48,743 shares of Common Stock of $.43 per
share.

3. In June 1996, South Ferry #2, L.P., an entity controlled by Mr.
Wolfson's brother, advanced to the Company the sum of $500,000 in respect of
LoCoMoTioN in consideration of which such entity received options to acquire
29,906 shares of Common Stock at $.43 per share. This loan bears interest at 10%
and is due on the earlier to occur of July 15, 1998 or the closing of the
Offering.

4. The Chana Sasha Foundation, an entity controlled by Mr. Wolfson,
extended the Company a $400,000 line of credit on a secured basis in November
1996, which credit line has been used and subsequently repaid by funds from the
Company's operations In October 1996, Mr. Wolfson extended the Company
approximately $400,000 of credit on a secured basis, which credit line has been
used and subsequently repaid by funds from the Company's operations. Mr. Wolfson
received 6,408 shares of the Company's Common Stock with respect to such
extension of credit.

5. The July 1996 proceeds from the sale of the note in the Total Recall
Financing was used to acquire the rights to produce a television series based on
the motion picture "Total Recall." This note, which was sold to ACA Equities,
D&M Investments and Gilbert Karsentry, was secured by the Company's underlying
rights to the "Total Recall" series, bore interest at 10%. In addition, the
holders of this note received an aggregate of 53,403 shares of common stock,
warrants to acquire 14,954 shares of Common Stock at an exercise price of $.43
and a 13% net profit participation in the Company's interest in the series. As
of the date hereof, $1,200,000 has been repaid in respect to this obligation.
Mr. Wolfson received 8,544 shares of the Company's Common Stock and 2% of the
net profits of the series with respect to the Total Recall Financing.

6. The Company commenced two private placements under Rule 506 of
Regulation D of its Secured Notes in February and in May, 1996. In February
1996, the Company sold to 14 accredited investors $900,000 in principal amount
of secured promissory notes which bear interest at 12% and are due upon the
earlier to occur of the closing of the Offering or July 15, 1998. These notes
were sold to the following investors: Matthew and Barbara Geisser, Central Scale
Co., Vijaya Kani Rehala, Vijay-Kumar Rekhala, M.D., United Congregation Mesorah,
Samuel Marinelli, Mildred Geiss, Jon Kastendieck, Bank Leumi-Affida Bank,
Cooperative Holding Corporation, Aaron Wolfson, Abraham Wolfson, Arielle
Wolfson, and LEVPOL. Between June and November 1996, the Company sold to 22
accredited investors $975,000 in principal amount of secured notes which bear
interest at 10% and are due at the earlier of this Offering or July 15, 1998.
These notes were sold to the following investors: Wellington Corporation,
Crescent Capital Company, LLC, Arthur Steinberg IRA Rollover, Robert Steinberg
IRA Rollover, Robert Ram Steinberg, A Partnership, Von Graffenried AG, Alpha
Ventures, Tuch Family Trust, Third World Trust Company LTD, Alfred Ross, Fred
Chanowski, Allen Goodman, Felix Paige, Rogal America, Mark Levine, Joseph
Sullivan, Robert Gopen, Colony Financial Services, John Carberry, Daniel and
Thalia Federbush, and Michael Berlin. An aggregate of 198,659 warrants to
purchase a like number of shares of Common Stock at an exercise price of $.43
per share were issued in connection with such private placements. The holders of
these notes have waived all conversion rights with respect thereto.

7. During 1996, the Company issued 21,362 warrants (10,681 to William
Nesmith and 10,681 to Michael Sposato) exercisable at $1.07, 20,934 warrants
exercisable at $0.43 to Bristol Capital, 33,000 warrants, 13,000 of which were
issued at $1.00 and 20,000 of which were issued at $2.50, to Joseph Farber and
2,349 warrants exercisable at $0.43 to Robert Dorfman. The Company also issued
to Bristol Capital 2,777 shares of Common Stock. The warrants and shares were
issued in connection with consulting services provided to the Company, such
services relating primarily to advice regarding obtaining additional

II-2
<PAGE> 64

financing and the structuring of securities issued by the Company, none of which
were directly or indirectly related to the Offering. The Company recognized
$5,000 in compensation related to these warrants during the year ended December
31, 1996. In 1995, the Company issued 10,000 warrants exercisable at $1.00 to
Bruce P. Vann, Esq., for his services as legal counsel to the Company.

8. In October 1996, the Company obtained a loan from Affida Bank in the
amount of $300,000 and, in connection therewith, issued warrants to acquire
29,191 shares of Common Stock at an exercise price of $.97 per share.

9. In January, February and March 1997, the Company completed the sale of
$969,000 of convertible secured notes to 13 accredited investors (the "February
1997 Notes") pursuant to Rule 506 of Regulation D as promulgated under the
Securities Act. Each of the foregoing notes are secured, pro-rata and pari
passu, by liens on substantially all of the Company's assets, except that the
February 1997 Notes are junior to the prior notes. An aggregate of 193,970
warrants to purchase a like number of shares of Common Stock at an exercise
price of $1.00 per share were issued in connection with such placements. The
February 1997 Notes were sold to the following investors: Alan Parness, Arab
International Trust Co., Duck Partners, LP, Gary and Paula Wayton, Michael
Rosenbaum, RMK Financial LLC, Robert Bain, Robert Frankel, Roger Triemstra,
Roland McAbee, Swan Alley Limited, and Van Moer Santerr & Cie.

10. In March, April and May, 1998 the Company arranged for short term loans
of $1,642,000 from eight accredited investors. The notes issued pursuant to such
loans were sold to the following investors: HighBridge Fund Ltd., Nick Kahla,
David Tresley, Arab Commerce Bank, Charles Santerre, Philippe de Cock de
Rameyen, Anders Ulegard and Kevodrew Realty Inc.

11. Between September 1998 and January 1999 we issued 483,000 shares of our
common stock to the following individuals and entities: (i) 59,000 shares to
Delbert Reedy pursuant to the conversion of a certain promissory note, dated May
29, 1998, in the amount of Fifty Thousand Dollars ($50,000); (ii) 59,000 shares
to the Carter Family Trust, pursuant to the conversion of a certain promissory
note, dated May 29, 1998, in the amount of Fifty Thousand Dollars ($50,000);
(iii) 31,000 shares to Claudio Nessi pursuant to a certain promissory note,
dated June 18, 1998, in the amount of Fifty Thousand Dollars ($50,000); (iv)
1,000 shares for Dr. Michael Berlin in connection with certain accommodations
made by Dr. Michael Berlin; and (v) 50,000 shares to Marathon Consulting, Inc.,
and 283,000 shares to Investor Relations Services, Inc., in connection with a
consulting agreement, dated as of November 17, 1998.

12. During 1998, we granted warrants to purchase our common stock to the
following individuals and entities for services provided to us: (i) 22,000 and
10,000 warrants, respectively, to Mansion House International and Danny Chan,
respectively, exercisable at $2.75 per share, (ii) 5,000 warrants to Hedblom
Partners, exercisable at $3.50 per share, (iii) 200,000 warrants to Glen Michael
Financial; 100,000 exercisable at $1.62 per share, 75,000 exercisable at $3.00
per share and 25,000 exercisable at $3.25 per share, and (iv) 10,000 warrants to
Ralph Olsen, exercisable at $2.00 per share. In addition, we granted (x) 121,000
and 10,000 warrants, respectively, to Chase Financial Limited and Robert
Herskowitz, respectively, exercisable at $1.62 per share and (y) an aggregate of
20,000 warrants, 5,000 each to Investor Relations Services, Aurora Holdings,
Amber Capital and Affiliated Services, respectively, in connection with debt
that was raised. We also issued to Michael Jay Solomon and Seth Wellenson,
30,000 warrants each, exercisable at $2.50 per share for agreeing to serve as
members of our Board of Directors. Mr. Wellenson's warrants were cancelled when
he resigned as a director.

13. In January and March 1999, the Company sold to 5 investors 1,850,000 of
8% convertible debentures and warrants to purchase up to 185,000 shares of
common stock. The holders of $1,000,000 of the debentures have indicated they
intend to convert their debentures into common stock. All of the debentures are
convertible into shares of common stock at the option of the holder at any time
after their purchase. The conversion price for each debenture in effect on any
conversion date will be the lesser of (A) an amount equal to 90% of the average
per share market value for five consecutive trading days immediately prior to
the initial closing date or (B) an amount equal to 85% of the per share market
value for the trading day having the lowest per share market value during the
five trading days prior to the conversion date. Purchasers effect conversions by
surrendering the debentures to be converted to the Company, together with the
form of
II-3
<PAGE> 65

conversion notice attached thereto. If not otherwise converted, the debentures
mature three years from their original issue date. The warrants are exercisable
at an exercise price equal to 110% of the per share market value as of the last
trading day prior to the date of the issuance of the warrants. This price, which
is subject to adjustment in the event of certain dilutive events, was $1.96 and
$2.56, respectively, at the closing dates. The warrants expire three years after
their date of issuance. Pursuant to the terms of purchase agreements and the
related registration rights agreements, the Company is obligated to file a
registration statement with respect to the shares issuable upon conversion of
the debentures and the shares issuable upon exercise of the warrants within 75
days of the initial closing date.

In June 1999, four of the debenture holders purchased an additional 175,000
shares of common stock for an aggregate of $700,000.

14. On March 9, 1999, W. Russell Barry was granted 30,000 options to
purchase common stock at an exercise price of $2.00 per share.

The above securities were offered by the Registrant in reliance upon an
exemption from registration under either (i) Section 4(2) of the Securities Act
as transactions not involving any public offering, or (ii) Rule 701 under the
Securities Act. No underwriters were involved in connection with the sales of
securities referred to in this Item 15.

ITEM 27. (a) EXHIBITS

<TABLE>
<C> <S>
3.1 Articles of Incorporation(1)
3.2 By-laws of the Company(1)
4.1 Form of Warrant Agreement March 1996(1)
4.2 Form of Warrant Agreement May 1996(1)
4.3 Form of Warrant Agreement February 1997(1)
4.4 Form of Convertible Note March 1996 and related Security
Agreement(1)
4.5 Form of Convertible Note May 1996 and related Security
Agreement(1)
4.6 Form of Convertible Note February 1997(1)
4.7.1 Extensions relating to South Ferry #2, L.P. Indebtedness(1)
4.7.2 Extensions relating to Certain February 1996 Convertible
Notes(1)
4.8 Restated Joe Cayre Agreement(1)
4.9 Agreement with AMAE Ventures, related note and Security
Agreement(1)
4.10 Agreements re Total Recall Financing July 1996(1)
4.11 Agreements re LoCoMoTioN Financing with South Ferry #2,
L.P.(1)
4.12 1996 Employee Stock Option Plan(1)
4.13 1996 Directors Stock Option Plan(1)
4.14 Form of Financial Advisory Agreement between National
Securities Corporation and the Company(1)
4.15 Specimen Certificate(1)
4.16 Form of National Securities Corporation's Warrant(1)
4.17 Venture Management Consultants L.L.C., December 1997
Promissory Note(1)
4.18 Form of Promissory Notes(1)
4.19 Securities Purchase Agreement between the Company and
Austinvest Anstalt Balzers; Esquire Trade & Finance Inc.;
Amro International, S.A. and Nesher Inc.(3)
4.20 Form of Debenture(3)
4.21 Form of Warrant(3)
</TABLE>

II-4
<PAGE> 66

<TABLE>
<C> <S>
4.22 Form of Registration Rights Agreement between the Company and Austinvest Anstalt Balzers; Esquire
Trade & Finance Inc.; Amro International, S.A. and Nesher Inc.(3)
5.1 Opinion and Consent of Kelly Lytton Mintz & Vann LLP(7)
10.1 Agreement with Mel Giniger(1)
10.2 Agreement with Beyond Distribution PTY. Limited(1)
10.3 Interpublic Group of Companies Contract(1)
10.4 Employment Agreement, dated as of January 1, 1997, between the Company and Drew Levin(1)
10.5 Lease between the Company and TCW, amended as of March 20, 1998(1)
10.6 Agreement with Alliance Production Ltd. re Total Recall(1)
10.7 Interpublic -- Team Co-financing Agreement(1)
10.8 Miramax Term Sheet(1)
10.9 Agreement with Leucadia Film Corp.(1)
10.10 Agreements with the Family Channel re Quake and Down Fall(1)
10.11 Agreements with Discovery Communications, Inc., re Amazing Tails II(1)
10.14 Consulting Agreement, dated October 9, 1997, as amended as of December 31, 1997, between the Company
and Joseph Cayre(1)
10.16 Letter of Intent to list securities on the German Market(2)
10.18 Employment Agreement, dated as of August 18, 1998 between the Company and Timothy A. Hill(4)
10.19 Employment Agreement dated as November 22, 1998, between the Company and Jonathan D. Shapiro(4)
10.20 Dandelion Distribution Ltd., Letter of Intent, dated June 6, 1996(5)
10.21 Investment Banking Agreement by and between the Company and Glen Michael Financial(6)
21 Subsidiaries of the Registrant(1)
23.1 Consent of experts and named counsel(6) (consent of Kelly Lytton Mintz & Vann LLP included in
Exhibit 5.1)
27 Financial Data Schedule(6)
</TABLE>

- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on Form
SB-2, file No. 333-26307, effective July 29, 1998.

(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated March 29, 1999.

(3) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated February 5, 1999.

(4) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
dated April 15, 1999.

(5) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated June 8, 1999.

(6) Filed herewith.

(7) To be filed by amendment.

ITEM 28. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the California General Corporation Law, the Articles of
Incorporation of the registrant, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim of or indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or
II-5
<PAGE> 67

controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the registrant
will, unless in the opinion of counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The Registrant hereby undertakes that:

(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement."

(2) That, for the purpose of determining any liability under the
Securities Act, each such posteffective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-6
<PAGE> 68

SIGNATURES

In accordance with the requirement of the Securities Act of 1933, the
registrant certifies that it has reasonable ground to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Los Angeles, State of California, on this 19th day of
July, 1999.

TEAM COMMUNICATIONS GROUP, INC.

By: /s/ DREW LEVIN
------------------------------------
Drew Levin
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>

/s/ DREW LEVIN Chairman of the Board, Chief Executive July 19, 1999
- -------------------------------------- Officer and Director
Drew Levin

/s/ JONATHAN D. SHAPIRO President, Chief Operating Officer and July 19, 1999
- -------------------------------------- Director
Jonathan D. Shapiro

/s/ TIMOTHY A. HILL Senior Vice President, Chief Financial July 19, 1999
- -------------------------------------- Officer and Secretary
Timothy A. Hill

/s/ MICHAEL JAY SOLOMON Director July 19, 1999
- --------------------------------------
Michael Jay Solomon

/s/ W. RUSSELL BARRY Director July 19, 1999
- --------------------------------------
W. Russell Barry
</TABLE>

II-7
<PAGE> 69

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
3.1 Articles of Incorporation(1)................................
3.2 By-laws of the Company(1)...................................
4.1 Form of Warrant Agreement March 1996(1).....................
4.2 Form of Warrant Agreement May 1996(1).......................
4.3 Form of Warrant Agreement February 1997(1)..................
4.4 Form of Convertible Note March 1996 and related Security
Agreement(1)................................................
4.5 Form of Convertible Note May 1996 and related Security
Agreement(1)................................................
4.6 Form of Convertible Note February 1997(1)...................
4.7.1 Extensions relating to South Ferry #2, L.P.
Indebtedness(1).............................................
4.7.2 Extensions relating to Certain February 1996 Convertible
Notes(1)....................................................
4.8 Restated Joe Cayre Agreement(1).............................
4.9 Agreement with AMAE Ventures, related note and Security
Agreement(1)................................................
4.10 Agreements re Total Recall Financing July 1996(1)...........
4.11 Agreements re LoCoMoTioN Financing with South Ferry #2,
L.P.(1).....................................................
4.12 1996 Employee Stock Option Plan(1)..........................
4.13 1996 Directors Stock Option Plan(1).........................
4.14 Form of Financial Advisory Agreement between National
Securities Corporation and the Company(1)...................
4.15 Specimen Certificate(1).....................................
4.16 Form of National Securities Corporation's Warrant(1)........
4.17 Venture Management Consultants L.L.C., December 1997
Promissory Note(1)..........................................
4.18 Form of Promissory Notes(1).................................
4.19 Securities Purchase Agreement between the Company and
Austinvest Anstalt Balzers; Esquire Trade & Finance Inc.;
Amro International, S.A. and Nesher Inc.(3).................
4.20 Form of Debenture(3)........................................
4.21 Form of Warrant(3)..........................................
4.22 Form of Registration Rights Agreement between the Company
and Austinvest Anstalt Balzers; Esquire Trade & Finance
Inc.; Amro International, S.A. and Nesher Inc.(3)...........
5.1 Opinion and Consent of Kelly Lytton Mintz & Vann LLP(7).....
10.1 Agreement with Mel Giniger(1)...............................
10.2 Agreement with Beyond Distribution PTY. Limited(1)..........
10.3 Interpublic Group of Companies Contract(1)..................
10.4 Employment Agreement, dated as of January 1, 1997, between
the Company and Drew Levin(1)...............................
10.5 Lease between the Company and TCW, amended as of March 20,
1998(1).....................................................
10.6 Agreement with Alliance Production Ltd. re Total
Recall(1)...................................................
10.7 Interpublic -- Team Co-financing Agreement(1)...............
10.8 Miramax Term Sheet(1).......................................
10.9 Agreement with Leucadia Film Corp.(1).......................
</TABLE>
<PAGE> 70

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.10 Agreements with the Family Channel re Quake and Down
Fall(1).....................................................
10.11 Agreements with Discovery Communications, Inc., re Amazing
Tails II(1).................................................
10.14 Consulting Agreement, dated October 9, 1997, as amended as
of December 31, 1997, between the Company and Joseph
Cayre(1)....................................................
10.16 Letter of Intent to list securities on the German
Market(2)...................................................
10.18 Employment Agreement, dated as of August 18, 1998 between
the Company and Timothy A. Hill(4)..........................
10.19 Employment Agreement dated as November 22, 1998, between the
Company and Jonathan D. Shapiro(4)..........................
10.20 Dandelion Distribution Ltd., Letter of Intent dated June 6,
1999(5)
10.21 Investment Banking Agreement by and between the Company and
Glen Michael Financial(6)
21 Subsidiaries of the Registrant(1)...........................
23.1 Consent of experts and named counsel(6) (consent of Kelly
Lytton Mintz & Vann LLP included in Exhibit 5.1)............
27 Financial Data Schedule(6)..................................
</TABLE>

- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on Form
SB-2, file No. 333-26307, effective July 29, 1998.

(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated March 29, 1999.

(3) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated February 5, 1999.

(4) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
dated April 15, 1999.

(5) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated June 8, 1999.

(6) Filed herewith.

(7) To be filed by amendment.

<PAGE> 1

EXHIBIT 10.21

INVESTMENT BANKING AGREEMENT

This agreement (the "Agreement") is made as of the 17th day of November
("Effective Date") by and between Team Entertainment Group (a California Corp.)
and Glenn Michael Financial, Inc. a New York Corporation ("Glenn Michael").

WHEREAS, the Company desires that Glenn Michael provide certain services as
set forth and more fully described in Section 2 of this Agreement; and

WHEREAS, Glenn Michael wishes to provide the services to the Company; and

WHEREAS, Glenn Michael is organized to provide financial consulting
services.

NOW, THEREFORE, in consideration of the mutual agreements herein, the
Company and Glenn Michael do hereby agree as follows:

1. Recitals. The above recitals are true, correct, and are herein
incorporated by reference.

2. Services Rendered by Glenn Michael. Glenn Michael agrees to perform
services including, but not limited to (i) advice to and consulting
with the Company's management concerning investor profile information,
method of expanding investor support and increasing investor awareness
of the Company and services; (ii) securities broker and research
analyst relations, assisting in preparation and formation of due
diligence meeting, and research analyst relations, assisting in
preparation and formation of due diligence meeting, and attendance at
conventions and trade shows: (iii) making itself available for
financial public relations and marketing consulting; and (iv) making
itself available for personal consultations with officers, directors
and key employees of the Company, as well as the Company's principal
financial, sales and/or operating officers.

The Company acknowledges that neither Glenn Michael nor any of its
affiliates is an officer, director or agent of the Company, that in
rendering advice or recommendations to the Company Glenn Michael is
not and will not be responsible for any management decisions on behalf
of the company and that Glenn Michael is not authorized or empowered
to commit the company to any recommendation or course of action.
<PAGE> 2
Glenn Michael shall devote such of its time and efforts as it determines
is necessary to discharge its duties hereunder. The Company acknowledges
that Glenn Michael is engaged in other business activities and that they
will continue such activities during the term of the Agreement. Glenn
Michael shall not be restricted from the engaging in other business
activities during the term of this Agreement, but shall not agree to
represent any direct competitor of the Company.

3. RESPONSIBILITIES OF THE COMPANY. The Company shall provide Glenn Michael
with appropriate financial and business information about the Company as
requested by Glenn Michael.

4. COMPENSATION. For the services rendered by Glenn Michael to the company
under the terms of this Agreement, in consideration of the execution of
this agreement by Glenn Michael, the Company shall pay compensation to
Glenn Michael as follows:

(a) For these services, the Company agrees to give to Glenn Michael
options to purchase 100,000 shares of Team Entertainment Group at
$1.625 and 100,000 shares at $3.00.

(b) Glenn Michael will be reimbursed for all documented out-of-pocket
expenses incurred in the performance of its responsibilities
outlined above. All expenses over $100 will be pre-approved by the
Company.

5. TERM. The term of this Agreement shall be for a period beginning on the
date hereof and ending one (1) year thereafter.

6. RELATIONSHIP OF THE PARTIES. Nothing in this Agreement shall be construed
as establishing a partnership of joint venture between the parties
hereto. The Company specifically understands that Glenn Michael is acting
hereunder as an independent contractor. Glenn Michael services hereunder
are not exclusive and Glenn Michael at all times shall be free to perform
the same or similar services for others which shall not be deemed a
conflict of interest nor a breach of this Agreement, however Glenn
Michael agrees not to perform the same or similar services for any
company which is in direct competition with the Company.

<PAGE> 3
7. INDEMNIFICATION.

(a) Company shall indemnify Glenn Michael and its affiliates and their
respective directors, officers, employees, agents and controlling persons
(Glenn Michael and each such person and entity being an "Indemnified Party"
for purposes of this Section) from and against any and all losses, claims,
damages and liabilities, jointly or severally, to which such indemnified
Party may become subject under any applicable federal or state law, or
otherwise related to or arising out of any transaction contemplated by this
Agreement and the performance by Glenn Michael of the services contemplated
by this Agreement, provided that the Company shall not be liable for any of
the foregoing to the extent they arise from the negligence or misconduct of
the Indemnified Party. In the event that the foregoing indemnity is
unavailable or insufficient to hold any Indemnified Party harmless, then
the Company shall contribute to amounts paid or payable by such
Indemnified Party in respect of such losses, claims, damages and
liabilities in such proportion as approximately reflects the relative
benefits received by, and the fault of, the Company and such Indemnified
Party in connection with the matters as to which such losses, claims,
damages and liabilities relate and other equitable considerations, provided
however that nothing in this sentence shall be construed as altering or
limiting in any way the effect of the proviso contained in the immediately
preceding sentence.

(b) Glenn Michael shall indemnify the Company and its affiliates and their
respective directors, officers, employees, agents and controlling persons
(the Company and each such person and entity being an "Indemnified Party"
for purposes of this Section) from and against any and all losses, claims,
damages and liabilities, jointly or severally, to which such Indemnified
Party may become subject under any applicable federal or state law, or
otherwise related to or arising out of any transaction contemplated by this
Agreement and the performance by Glenn Michael of its obligations
contemplated by this Agreement, provided that Glenn Michael shall not be
liable for any of the foregoing indemnity is unavailable or insufficient to
hold any Indemnified Party harmless, then Glenn Michael shall contribute to
amounts paid or payable by such Indemnified Party in respect of such
losses, claims, damages and liabilities in such proportion as approximately
reflects the relative benefits received by, and the fault of, Glenn Michael
and such Indemnified Party in connection with the matters as
<PAGE> 4
to which such losses, claims, damages & liabilities relate and other
equitable considerations, provided however that nothing in this sentence
shall be construed as altering or limiting in any way the effect of the
proviso contained in the immediately preceding sentence.

8. DISCLOSURE. Any financial advice rendered by Glenn Michael pursuant to
this Agreement may not be disclosed publicly in any manner without the
prior written approval by Glenn Michael. All non-public information
given to Glenn Michael by the Company will be treated by Glenn Michael
as confidential information, and Glenn Michael agrees not to make use of
such information other than in connection with its performance of this
Agreement, provided, however, that any such information may be disclosed
if required by any court or governmental or regulatory authority, board
or agency. Non-public information shall not include any information
which (i) is or becomes generally available to the public other than as
a result of a disclosure by Glenn Michael (ii) was available to Glenn
Michael prior to its disclosure to Glenn Michael by the Company,
provided that such information is not known by Glenn Michael to be
subject to another confidentiality agreement with another party; or
(iii) becomes available to Glenn Michael on a non-confidential basis
from a source other than the Company, provided that such source is not
bound by a confidentiality agreement by the Company.

9. NOTICE. Any or all notices, designations, consents, offers, acceptance
or other communication proved for herein shall be given in writing and
delivered in person or by registered or certified mail, return receipt
requested, directed to the address shown below unless notice of change
of address is furnished:

If to Glenn Michael:

Glenn Michael Financial, Inc.
534 Broadhollow Road
Melville, NY 11747

If to Team Entertainment Group:
12300 Wilshire Blvd.
Suite 400
Los Angeles, CA 90025

<PAGE> 5
10. WAIVER. Unless agreed to in writing, the failure of either party at any
time to require performance by the other of any provisions hereunder
shall not affect its rights thereafter to enforce the same, not shall a
waiver by either party of any breach of any provision hereof, be taken
or held in by a waiver of any other proceeding or succeeding breach of
any term or provision of this Agreement. No extension of time for the
performance of any obligation or act shall be deemed to be in extension
of time for the performance of other obligations or acts hereunder.

11. COMPLETE AGREEMENT. This Agreement contains the entire Agreement
between the parties with respect to the contents hereof and superceedes
all prior agreements and understandings between the parties with respect
to such matters, whether written or oral. Neither this Agreement, nor
any term or provision hereof may be changed, waived, discharged or
amended in any manner other than by any instrument in writing, signed by
the party against which the enforcement of the change, waiver, discharge
or amendment is sought.

12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original but all of which shall
constitute but one agreement.

13. BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding upon the
parties hereto, their heirs, legal representative, successors, and
assigns and shall not be assignable by either party, except upon prior
written consent by both parties to this Agreement.

14. HEADINGS. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the
scope or intent of any of the provisions of this Agreement.

15. SURVIVAL. Any termination of this Agreement shall not, however, affect
the on-going provisions of this Agreement which shall survive such
termination in accordance with their terms.

16. SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under
applicable law. But if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule, such invalidity, illegality or unenforceability will not
affect any other provision or any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and
enforced in

<PAGE> 6
such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines
that any provision hereof is unenforceable because of the duration or
scope of such provision, such courts shall have the power to reduce
the scope or the duration of such provision, as the case may be, and,
in its reduced form, such provision shall then be enforceable.

17. CHOICE OF LAW. This Agreement shall be governed by, construed,
interpreted and the rights of the parties determined in accordance
with the laws of the State of Delaware without reference to the
principles of conflicts of law.

IN WITNESS WHEREOF, the parties executed this Agreement as of the effective
date of this Agreement.

TEAM ENTERTAINMENT GROUP

By: /s/ JODY SHAPIRO
----------------------------
Jody Shapiro, President

GLENN MICHAEL FINANCIAL, INC.

By: /s/ GLENN LANAIA
----------------------------
Glenn Lanaia, President

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated April 15, 1999, relating
to the financial statements of Team Communications Group, Inc., which appears in
such Prospectus. We also consent to the references to us under the headings
"Experts" and "Selected Consolidated Financial Data" in such Prospectus.

/s/ STONEFIELD JOSEPHSON, INC.

STONEFIELD JOSEPHSON, INC.
Santa Monica, California
July 15, 1999

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements as of March 31, 1999 and for the
three months then ended and is qualified in its entirety by reference to such
financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,137,800
<SECURITIES> 0
<RECEIVABLES> 4,295,000
<ALLOWANCES> 337,000
<INVENTORY> 13,800,700
<CURRENT-ASSETS> 1,137,800
<PP&E> 19,900
<DEPRECIATION> 45,300
<TOTAL-ASSETS> 19,979,200
<CURRENT-LIABILITIES> 11,201,100
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 8,777,100
<TOTAL-LIABILITY-AND-EQUITY> 19,979,200
<SALES> 3,502,000
<TOTAL-REVENUES> 3,502,000
<CGS> 2,561,200
<TOTAL-COSTS> 2,946,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 183,200
<INCOME-PRETAX> 435,900
<INCOME-TAX> 87,000
<INCOME-CONTINUING> 348,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 348,900
<EPS-BASIC> 0.11
<EPS-DILUTED> 0.08

</TABLE>