NEW CINEMA PARTNERS
10SB12G/A, 2000-10-13
BUSINESS SERVICES, NEC
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                               FIRST AMENDMENT TO
                                  FORM 10-SB


                   GENERAL FORM FOR REGISTRATION OF SECURITIES
     Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934



                            NEW CINEMA PARTNERS
              -----------------------------------------------------
             (Exact name of Registrant as specified in its charter)


             NEVADA                                    87-0772357
 -------------------------------------    -------------------------------------
   (State or other jurisdiction of                    (IRS  Employer
   Incorporation  or  Organization)                Identification  No.)


              357 Bay St., Suite 404, Toronto, Ontario  M5H2T7
          ------------------------------------------------------------
                    (Address of Principal Executive offices)


Issuer's  Telephone  Number:   (416) 367 - 8299
                               -----------------


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

                                      None

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

                         Common Stock, $0.001 par value
                                (Title of Class)

DOCUMENTS  INCORPORATED  BY  REFERENCE:  See  the Exhibit Index attached hereto.


<PAGE>
                               TABLE OF CONTENTS


PART  I                                                                     Page

Item  1.     Description  of  Business                                         4

Item  2.     Management's Discussion and Analysis or Plan of
             Operation                                                        18

Item  3.     Description  of  Property                                        19

Item  4.     Security Ownership of Certain Beneficial Owners
             and  Management                                                  20

Item  5.     Directors,  Executive  Officers, Promoters and
             Control  Persons                                                 22

Item  6.     Executive  Compensation                                          23

Item  7.     Certain Relationships and Related Transactions                   23

Item  8.     Description  of  Securities                                      24





PART  II


Item  1.     Market Price for Common  Equity  and  Other Shareholder Matters  25

Item  3.     Changes  in  and  Disagreements  with  Accountants               26

Item  4.     Recent  Sales  of  Unregistered  Securities                      26

Item  5.     Indemnification  of  Directors  and  Officers                    27




PART  F/S    Financial  Statements                                            28


PART  III

Item  1.     Index  to  Exhibits                                              47

                                        2
<PAGE>
     This  Registration  Statement  contains  forward-looking  statements  which
involve  risks and uncertainties.  When used in this Registration Statement, the
words  "believes,"  "anticipates,"  "expects" and other such similar expressions
are intended to identify such forward-looking statements.  Actual results of the
Company  (as  defined below) may differ significantly from the results discussed
in  the  forward-looking statements.  Factors that might cause such a difference
include,  but  are  not limited to, those discussed in "Item 1. - Description of
Business  - Risk Factors."  Readers are cautioned not to place undue reliance on
these  forward-looking  statements, which speak only as of the date hereof.  The
Company  undertakes  no  obligation  to  publicly  release  the  results  of any
revisions  to  these  forward-looking  statements  which  may be made to reflect
events  or  circumstances  after the date hereof or to reflect the occurrence of
unanticipated  events.

     An  investment  in New Cinema  Partners   (the  "Company")  is highly
speculative  and involves a high degree of risk.  Prospective  investors  should
consider the risk factors  involved in an investment  in the Company,  including
the  following:  (a) that the Company is a development  stage company that has a
limited operating history, (b) the Company has not generated a profit, (c) there
is intense competition in the industry in which the Company operates and (d) the
uncertainty of future funding.  Prospective investors should carefully read each
section  of this  registration  statement  which  contain  these and other  risk
factors.

                                   3
<PAGE>

PART  I.
--------

ITEM  1.     DESCRIPTION  OF  BUSINESS

ORGANIZATION  AND  CHARTER


     New Cinema  Partners,  Inc.,  (the  "Company") was formed under the laws of
Nevada on February 2, 1998 under the name Valance 9 Development, Inc. to develop
and market a world wide web authoring  software  product.  The initial amount of
authorized  capital was  $100,000  consisting  of  100,000,000  shares of Common
Stock,   $0.001  par  value.  A  copy  of  the  Company's  initial  Articles  of
Incorporation is attached hereto and is incorporated by reference. See Part III,
Item 1.

     On April 17, 1998, the Company's  Articles of  Incorporation  were amended.
The purpose of the  amendment  was to change the name of the  corporation  from
Valance 9  Development,  Inc.  to  Valence  9  Development,  Inc.  A copy of the
Company's  certificate of amendment to the Articles of Incorporation is attached
hereto and is incorporated by reference. See Part III, Item 1.


     Valence  9  Development,  Inc.  filed a Form  15(c)211  with  the  National
Association  of Securities  Dealers (NASD) to allow its Common Stock to trade on
the OTC Bulletin  Board.  The  Company's  Common Stock began  trading on the OTC
Bulletin Board in July of 1998, under the trading symbol "VLND." In August, 1998
the symbol was changed at Valence 9 Development, Inc.'s request to "VNIN."


    On August 27, 1999 the Company's  Articles of  Incorporation  were amended.
The purpose of the  amendment  was to change the name of the  corporation  from
Valence 9  Development,  Inc. to New Cinema  Partners.  A copy of the  Company's
certificate of amendment to the Articles of Incorporation is attached hereto and
is incorporated by reference. See Part III, Item 1.

     On August 31, 1999, the Company and New Cinema Partners,  Inc.  executed an
Acquisition  Agreement  whereby  the  Company  acquired  all of the  issued  and
outstanding  common stock of New Cinema Partners,  Inc., a Canadian  corporation
formed on February 18, 1999. At that time the Company  changed its main business
to that of New Cinema  Partners,  Inc.,  which was to develop,  locate,  design,
construct, manage, and operate "high tech" specialized theater venues, including
digital  interactive movies, IMAX films and other specialized films. The Company
has been unable to successfully  create,  finance and commence operations of any
of these theaters.

     On July 4,  2000,  the  Company  consummated  an asset  purchase  agreement
acquiring certain  intellectual  properties,  comprising scripts and storylines,
owned by 1255234 Ontario,  Inc., also known as Stone Canyon Pictures. As part of
the  transaction,  Mr.  Damian Lee,  founder and one of the  principals of Stone
Canyon  Pictures,  became the Chief  Executive  Officer and the  Chairman of the
Board of Directors of the Corporation.

     Through the assets  acquired  from Stone Canyon  Pictures,  and through the
industry expertise of its new Chief Executive  Officer,  Damian Lee, the Company
plans to be  involved  in  developing,  financing,  producing  and  distributing
television series and feature films.

     The Company was delisted for  non-compliance  with the OTC Bulletin Board's
reporting  requirements  in May of 1999,  and  since  that  time  the  Company's
securities have been traded on the pink sheets under the trading symbol "NCPP."

                                        4
<PAGE>
MATERIAL  CHANGES  IN  CONTROL  SINCE  INCEPTION  AND  RELATED  BUSINESS HISTORY


     There is only one class of stock - the Company's  common stock. The initial
four  shareholders  ( the  "Initial  Control  Group") of the Company were issued
25,100,000 common shares of the Company's common stock at inception.  This group
consisted  of the  officers  and  directors  of the Company and their  designees
(Wayne Walrath,  Lewis Hayse, Michael Gordy, Francois Escher, and Robert Short).
From February to March of 1999,  the Company did a series of offerings  pursuant
to Rule 504  promulgated  under  Regulation D of the  Securities Act of 1933, as
amended.  The total amount of common  shares  issued at the  completion of those
offerings was  32,588,800,  with the Initial  Control Group  controlling  77% of
those shares.

     The Initial Control Group was comprised of the following shareholders:

Shareholder Name                            Amount of Shares

R. Short                                       100,000
W. Walrath                                  12,750,000
CAAT, Inc.                                   6,125,000
Transitions & Perspectives Inc               6,125,000

Total:                                      25,100,000


     In June,  1999,  the  Company  issued  and then  cancelled  438,637  shares
pursuant to a  letter of intent to acquire  Image  Advertising  Plc. The shares
were cancelled because the acquisition was never consummated.


     In June,  1999,  the  Company  did an 800 to 1 reverse  split of its common
stock,  resulting in the Company's  issued and  outstanding  common shares going
from  32,588,800 to 40,736 shares.  The reverse stock split was done in order to
prepare  the  Company to be able to acquire a new  business,  once it had became
evident that the then-current business was not viable.


     On August 31, 1999, the Company and New Cinema Partners,  Inc.  executed an
Acquisition  Agreement  whereby  the  Company  changed  its  name to New  Cinema
Partners  and  acquired  all of the issued and  outstanding  common stock of New
Cinema  Partners,  Inc., in exchange for  4,000,000  shares of its common stock.
This  transaction  resulted in the former  shareholders of New Cinema  Partners,
Inc.,  becoming  the holders of the  4,000,000  newly issued  shares,  (the "New
Control Block"). The New Control Block shares as described herein are held by:

Shareholder Name                Amount of Shares

Ultimatte Entertainment, Ltd.       900,000
1028215 Ontario Ltd.                600,000
45473 BC Limited                    300,000
1345519 Ontario Corp.               900,000
John Cox                            385,000
Marshal Reid                        465,000
Financial Innovations, Ltd.          50,000
Gold Crown, Ltd.                    400,000

Total:                            4,000,000


     In  September,  1999 the  Company  issued  7,000,000  free  trading  shares
pursuant to Rule 504  promulgated  under  Regulation D of the  Securities Act of
1933, as amended.  The total amount of common shares issued at the completion of
this  offerings was  11,040,736  with the Control Group holding  36.23% of those
shares.



     In May, 2000, the Company issued  3,000,000  restricted  shares to total of
six  corporations  to do consulting to help find a new business for the Company.
This  brought  the  Company's  total  issued and  outstanding  common  shares to
14,040,736, of which the New Control Block held 4,000,000 shares, or 28.5%.

     In  June,  2000,  the  Company  consummated  an  asset  purchase  agreement
acquiring certain  intellectual  properties,  comprising scripts and storylines,
owned by 1255234  Ontario,  Inc., also known as Stone Canyon  Pictures,  and its
shareholders and debt holders.  The purchase price was 10,000,000  shares of the
Company's  common stock.  The  shareholders of these  10,000,000  shares are the
"Current Control Block" and they hold 10,000,000 out of 24,140,736, or 41.6%, of
the Company's common shares. The members of the Current Control Block are:

Shareholder Name                  Amount of Shares

Damian Lee                                 975,000
Briar Communications, Inc.                 950,000
Pine Wood Studios, Inc.                    950,000
Mike Mastercolo                            975,000
John D'Acunto                              500,000
Joseph Balerino                            500,000
Avi Amar                                   525,000
Pacifica Technologies, Ltd.                750,000
Westcape Technologies, Ltd.                700,000
Jessica Mathison                           625,000
Portico Industries, Ltd.                   650,000
Andrew Currah                              500,000
Currah & Sons, Ltd.                        500,000
Aviam Holdings, Ltd.                       700,000
543637 B.C. Ltd.                           100,000
Margaret Hales                              50,000
Susan Hales                                 25,000
Ken Hales                                   25,000

Total                                   10,000,000


                                        5
<PAGE>
BUSINESS OF THE COMPANY

Overview

     New Cinema  Partners,  Inc. (the  "Company" or "New Cinema") plans to be an
integrated  entertainment  company  that will  develop,  produce and  distribute
original  film,  television,  internet  and video game  programming.  New Cinema
intends to manage and co-ordinate all aspects of a program's life, including the
development of original ideas or the purchase of literary rights; the engagement
of writers,  directors,  cast and crew; the arrangement of production financing;
the carrying out of production  and  post-production;  and the  exploitation  of
worldwide distribution rights.


     In order to do this,  the Company plans to utilize the assets and expertise
it  acquired  in the  asset  acquisition  from  Stone  Canyon  Pictures  ("Stone
Pictures"),  formerly operated by the Company's Chief Executive Officer,  Damian
Lee,  which was a producer  of feature  films.  The assets  acquired  from Stone
Canyon are comprised of  intellectual  property  including  six  completed  film
scripts and two program pilot scrips intended as television  series and internet
programs.  New Cinema  believes that it will be  successful  in  developing  and
producing  entertainment media and intends to target projects that have what the
Company  believes to be commercial  appeal,  creative merit and committed  third
party financing.

     The Company believes that due to the special financial incentives available
in Canada,  which include Federal and Provincial labor rebate programs and other
tax related benefits which fluctuate from time to time and province to province,
in conjunction with the added financial incentive to produce film and television
programming  in Canada in the form of the U.S.  to  Canadian  currency  exchange
ratio,  it's base in Ontario,  Canada  will  provide it with access to a pool of
talent including experienced film crews and actors and actresses which, in turn,
will  contribute to its slate of what it believes  will be quality  programming.
The Company believes that Toronto has or will become  recognized  throughout the
entertainment  industry  as a major  center  for  the  production  of  film  and
television programs. The Company believes that its success will be dependent, in
large part, on its ability to identify and retain creative talent.



Competitive Positioning

     The Company believes that the combination of the following  strengths which
the  Company  believes  it has will  provide it with a  sustainable  competitive
position in the  world wide entertainment industry:

         Track Record of Damian Lee


     Damian Lee, the Chief Executive Officer of the Company,  has a track record
of  delivering  what the Company  believes  are quality  movies,  as measured by
viewership and critical acclaim. This record includes projects such as Watchers,
Ski  School,  Death Wish V,  Jungle  Boy,  Baby on Board,  and Fun.  The Company
believes that his  experience  can be utilized to create demand for New Cinema's
existing and new scripts.



          Creative Talent


     Via Damian Lee and the assets it acquired from Stone Canyon  Pictures,  New
Cinema has  significant  in-house  creative  capability  that will  enable it to
conceive and create original programming.  In addition,  Mr. Lee has established
personal,   professional  and  contractual  relationships  within  the  creative
community including directors,  actors, writers, comedians and musicians. Due to
what the Company  believes to be the wealth of  creative  talent  located in the
Company's  region,  management  views  its  position  in  Toronto,  Canada  as a
considerable   strategic   advantage  in  maintaining  a  rich  and  distinctive
development  slate (i.e. the various projects possible to have under development
at any one time) and also  positions  it to use Canadian  financial  benefits as
previously  described.  The quality  and extent of  creative  talent in Toronto,
Canada is a widely accepted view throughout the industry as Toronto has become a
major center for the  production  of  television  and film product and has often
been deemed by the media as "Hollywood North".


         Diversified Production Slate


     The Company  will focus on a diverse  production  slate  including  comedy,
action,  science  fiction,  drama and family  programming.  This broad  focus is
intended  to  contribute  to longer term value of a film or  television  library
should the Company be successful at building any such library.



     The Company plans to focus on a diverse  production slate including comedy,
action,  science  fiction,  drama  and  family  programming.  This  broad  focus
internationally  is  intended  to  contribute  to longer term value of a film or
television  library  should  the  Company be  successful  at  building  any such
library.


                                        6
<PAGE>
         Focus on Proprietary Production

     New Cinema does not intend to pursue "service  productions"  (i.e. does not
intend to produce  for others for a fee).  Rather,  New Cinema  plans to take an
equity position in all of its productions, whether developed in-house or through
the  acquisition  of  rights  to  properties.  As a result  of this  proprietary
interest,  the Company  intends to retain a long term  economic  interest in its
programming, thereby increasing the value of its library of programming.

         International Distribution Capability

          New Cinema plans to develop international  distribution  capability to
enable it to enhance revenue and margins through:

          (i)  control  the  exploitation  of its  programming  in  order to
               optimize  the  revenue  potential  of a  production  or  group of
               productions;

          (ii) retain distribution fees, which are intended to range from 10% to
               35% of a production's total distribution revenue;

          (iii)improve its  understanding  of the market for its productions and
               thereby  enhance its ability to develop  commercially  successful
               productions; and

          (iv) broaden its revenue base by distributing programming developed by
               production   companies   which  do  not  have  an   international
               distribution capability.

         Technical and Creative Expertise in Special
         Effects and Computer-Generated Imaging


     Increasingly,  special effects and  computer-generated  imaging ("CGI") are
playing  a  central  role in the film and  television  production  process.  CGI
extends the bounds of what is creatively possible, permitting visual effects for
television  productions  that until recently were  prohibitively  expensive.  As
well, CGI assists in containing the costs of  production.  The Company  believes
that  effective  use of special  effects may act as a substitute  for  "bankable
stars",  particularly in feature films,  and may preclude the need to hire crews
and shoot film "on location" in the future.  The Company  intends to utilize CGI
effects in an attempt to lower its costs and create high production  values.  To
this end the Company has met with a number of individuals  involved in the CGI
field in order to  ascertain  what type of  investment  will be  required by the
Company in order to create an in-house CGI department.


         Vertical Integration


     New Cinema plans to manage and co-ordinate all aspects of a program's life,
from  conception  through to  distribution.  Vertical integration is intended to
provide the Company with the ability to preserve  business and creative  control
over its  productions,  retain  revenues which would  otherwise be paid to third
parties and complete productions in a cost-effective manner.


Corporate Strategy


     New Cinema  intends  to focus on growing  its core  business  of  producing
original film and television  programming for both the North American and global
markets.  In  addition,  when and if  possible,  the Company  intends to achieve
growth through the  development  of what it believes to be quality  intellectual
properties  such as scripts or rights to  literary  works that are  intended  to
strengthen the Company's core business. The key elements of the Company's growth
strategy are as follows:

(i)  to create a position as a a producer of independent film and television for
     distribution world-wide;

(ii) to produce programs a broad range of genre;

(iii)to create strong  relationships  with  distributors  of film and television
     properties;

(iv) to develop and exploit  intlellectual  properties utilizing the highest and
     best use of technology available to it; and

(v)  to  develop   multi-media  product  in  addition  to  film  and  television
     productions as a natural industry progression;




The Development, Production and Distribution Process

     New  Cinema  plans to manage and  coordinate  all  aspects of a  property's
program life. The process of development,  production financing,  production and
distribution intended to be undertaken by New Cinema is described below.

                                        7
<PAGE>
         Development

     The first stage in the  creation  of a  television  or film  program is the
"development"  process.  Development is to begin with a concept either generated
internally by New Cinema's  creative staff or acquired from a third party in the
form of rights to a proposal,  a literary  property or a completed  script.  The
development process entails refining the concept,  engaging writers and drafting
and revising a script.  The process is complete when a finished script is, or in
the case of a television series, one or more scripts are, ready for production.


     New  Cinema  believes  that  it can  finance  a  substantial  portion  of a
project's  development budget through a project-specific  development advance to
be obtained from one or both of a broadcaster or third party  investors.  If the
project  goes  into  production,  this  advance  will be  incorporated  into the
production  budget and it is intended  that the advance  will be recouped by the
investor from the actual production budget. If development financing is obtained
from a  broadcaster,  the  development  agreement  will  typically  provide  the
broadcaster with an option to license the broadcast rights to the project in the
event  that it enters the  production  phase.  Alternatively,  the  Company  may
explore various methods of private placement finance or limited  partnerships to
finance  development.  However,  the company has not  financed  any  development
projects  to date.  The  Company  is  exploring  the  proper  structure  for any
development  financing including limited partnerships and other forms of private
placement  financing.  Based on feedback  which the Company has  received  from
potential  investors,  the Company  believes that it will have a better audience
for its development financing once the Company becomes a fully reporting issuer.
The Company is currently endeavoring to satisfy all reporting requirements which
will enable the Company to resume trading on the OTC Electronic Bullitin Board
as a fully  reporting  issuer.  In the mean time the  Company  is  refining  its
current slate of intellectual properties which are currently in development.


         Production Financing


     Prior to making a commitment  to produce a project,  the  Company's  policy
will be to arrange for third party  financing for at least 90% of a production's
cost. The financing  environment in the industry  generally permits producers to
finance 75% to 90% of their production  budget from a combination of broadcaster
license  fees,  pre-sales  and  after-market  fees - which are the  licensing of
rights to second cycle of distribution and specialty  markets such as airline or
military  use.  The  Company  believes  that  the  balance  of  10%  to 25% of a
production's cost will typically be financed through one or more of:



          1.   Financing from a producer.  One or more producers,  including New
               Cinema,  may  provide  production  financing  (in which case they
               would   typically   share  the  revenues  from   distribution  in
               proportion to the percentage of the total production  budget that
               they have financed).


          2.   Financing  from a  foreign  co-producer.  A program  produced  in
               compliance  with  an  international   co-production   treaty,  as
               certified by, will generally be eligible for Canadian  government
               incentives and tax benefits in both the production and the treaty
               country.  These  incentives are intended to reduce the portion of
               the program  costs borne by the  co-producers,  thereby  reducing
               risk. Status as a co-produced  program also should make it easier
               for the program to penetrate  foreign markets.  See "The Film and
               Television Industry - Co-Productions".


          3.   Pre-sale  of rights  to  foreign  broadcasters.  A  producer  may
               license broadcast rights to foreign broadcasters in order to fund
               a portion of a project's  production  budget. New Cinema plans to
               negotiates   the  shortest   possible   license   terms  for  any
               territories that it pre-sells.

     Another form of production  financing is intended to be through the sale of
distribution rights to a third party distributor in order to obtain financing in
the form of a distribution  advance. New Cinema plans on retaining  distribution
rights  to its  productions  and  therefore  does  not  intend  to  finance  its
productions  through third party  distributors.  However,  as part of its growth
strategy for its  distribution  business,  New Cinema  intends to provide  other
producers  with  distribution  advances  in order to  acquire  programs  for its
library.

     When  financing  for 100% of the  production  budget  is  committed,  these
commitments,  together with  additional  security,  will be pledged to a bank or
other industry lender in order to obtain interim  financing.  Interim  financing
will be  necessary  on the  majority of the  Company's  productions  because the
timing of cash flow from financing sources will not match the cash flow required
for  production.  Interim  financing  will be repaid  from the  proceeds  of the
pledged financing commitments.


     The Company has made an arrangement with Lion's Gate Entertainment, a major
international  distributor,   in  Vancouver  B.C.,  Canada  for  the  production
financing on one or more of its projects in  development.  However,  the Company
has  not  accepted  or  rejected  the  terms  to  any  such  arrangement  and is
alternatively  currently focusing on refining development projects and preparing
for the development financing stage.



         Production

     Production  of  a  film  or  television   program   entails  three  phases:
pre-production,  production  and  post-production.  During  pre-production,  the
Company  engages  directors,  casts and crews,  prepares  a detailed  budget and
shooting schedule,  and creates the overall design of the production,  including
selecting  locations and the design of costumes and sets. The  production  phase
involves  the  principal   photography  on  location   and/or  on  set.   During
post-production,  the program is edited and re-recorded, CGI, if any, is applied
to the live action  portions,  titles are added, and a musical score is prepared
and incorporated.

     At  the  completion  of  production,   the  program  is  delivered  to  the
distributor  for  delivery.
                                        8
<PAGE>
         Distribution

     The distribution of movies and television  programs  involves the licensing
of rights to exhibit and exploit a program.  Part of the  distribution  revenues
from productions are derived from licensing these rights to broadcasters,  video
distributors or merchandise distributors in all parts of the world. Typically, a
license  gives a  broadcaster  the right to televise the product  within a given
geographical  region over a particular  period of time. The license is generally
limited as to the number of transmissions  and the permitted medium of broadcast
(such as conventional free television or cable television).

     A typical  distribution  agreement  permits the  distributor  to collect an
ongoing fee ranging from 10% to 35% of total distribution revenues and to deduct
certain expenses  (collectively  the  "Distribution  Fees") before remitting the
balance  of the  distribution  revenues.  Producers  and  equity  investors  are
entitled to the balance of  distribution  revenues after payment of Distribution
Fees  and  repayment  of  production  costs,  distributor  advances,  government
incentive  financing and third party debt financing.  For those  productions for
which it is the sole producer and distributor, New Cinema intends to implement a
policy of  maintaining  an  entitlement  to at least  40% of total  distribution
revenues.

     After market and television program distribution has significant  potential
for long-term  earnings because multiple sales are possible for any one program.
Programs can be licensed to conventional,  specialty, pay per view and satellite
television  and for  video or laser  disc  distribution.  In  addition,  where a
program or movie has a long-term or high incidence of viewership,  opportunities
may exist for exploiting merchandising rights in connection with the program.

Development Activities


     New Cinema intends to select intellectual  properties to develop based on a
strategy   which   utilizes  the   opportunities   in  the  North  American  and
international broadcast markets.

     New Cinema intends for its development  activities to be primarily  focused
on: (i) comedy and variety for the Canadian and U.S. market;  and (ii) evergreen
programming, consisting primarily of science fiction and family programming, for
the global market.  The Company also intends to pursue other formats suitable to
specialty  channels  (information  and  documentaries),   dramatic  mini-series,
television  movies and feature  films when the  creative and  commercial  merits
suggest low risk and significant international appeal. The Company believes that
comedy and variety  programs have broad appeal in the Canadian and U.S.  market,
can be produced for a  relatively  low cost in high volume and yield stable cash
flow. The Company  believes that science fiction and family  programming,  while
having comparatively higher costs of production, will be produced for the global
market and the Company  believes  that it tends to be more  evergreen in that it
may be  licensed  for  re-broadcast  over a longer  time  period than many other
genres,  allowing for significant  revenue potential  following  recovery of its
costs of production.

     While the Company plans to  eventually  have the capacity for as many as 20
projects on its development  slate at any one time,  active  development  begins
only when a  broadcaster  and/or a third  party  agency  provides a  development
advance  or through  development  financing.  The  Company  currently  has eight
projects on its development slate and has neither received  broadcaster or third
party development advances for any of the projects.



                                        9
<PAGE>
Distribution Activities


     New  Cinema  plans  to   distribute   its  programs   through   established
international  distributors  which are used  industry  wide.  However,  whenever
possible the company plans to distribute  its programs  directly to the buyer or
broadcaster in order to save on the high cost of distribution fees normally paid
to distributors or distribution agents

     The Company plans on participating in industry wide trade shows as would be
customary when attempting to market any entertainment  product in the television
and film industries.

     New  Cinema's  planned  distribution   activities  include  exploiting  the
possibility of merchandising potential of its programming.




         Building A Library


     New Cinema intends to retain copyright ownership  percentages to any of the
productions  which it  completes.  While the  Company's  library of scripts  and
intellectual  property  currently  consist primarily of proprietary , it is the
Company's  intention to acquire rights from third party creators of intellectual
properties.  In this way,  the  Company's  library of  projects  in  development
through the intellectual  properties and ultimately  through the completion of a
finished  production  can grow to be much  larger  than the  Company's  produced
properties would allow.

     As its  library of  completed  productions  is built and  growsthe  company
should be able to derive revenue.



         Acquisition of Distribution Rights


     New  Cinema's  strategy  is to  acquire  distribution  rights  to  programs
produced  by  producers  that do not  have a  distribution  by  offering  modest
financing  (no more than 10% of budget)  in the form of an advance or  guarantee
against  distribution  rights.  In doing so, New Cinema intends to form creative
alliances with these  producers.  This will only be achieved once the Company is
able to finance its development strategy.



Multi-Media and Interactive Ventures


     The  Company  plans to pursue a broad  range of  development  entertainment
products for new interactive delivery systems,  such as the Internet.  The goals
of this aspect of the business are:

     (i)  to utilize and build CGI and special effects.

     (ii) to  develop  entertainment  products  such as  interactive  games  and
          on-line services.

     While the future of  distribution  and delivery of  entertainment  products
remains uncertain, the Company believes that they will be digitally-based with a
high degree of interactive capability.  If the Company is successful in creating
expertise in CGI, the Company believes it will provide natural synergies for the
production of  entertainment  products for digital  delivery systems such as the
Internet. The Company is in the development stage and currently has no expertise
in this area however,  has the goal of pursuing the highest and best  technology
available.


Strategic Acquisitions and Alliances


     The Company  intends to establish  relationships  with  producers and other
participants in the film and television  industry in North America.  The Company
believes that these  relationships,  if developed,  together with other industry
contacts,  may result in opportunities for potential  acquisitions or alliances.
Acquisition  and alliance  opportunities  will be  considered to the extent that
they complement the Company's current  operations and offer potential for growth
in areas  considered  strategic  to the  Company's  future.  The  Company has no
present understandings,  commitments or agreements with respect to any strategic
acquisitions or alliances.


                                        10
<PAGE>


Current and Planned Projects

     The  Company  has a variety of  projects  currently  in  various  stages of
development. Some of the projects will be co-produced and co-financed with other
companies in the industry. Damian Lee will often act in the capacity of Producer
on  these  projects.  In some  instances  he will  also be the  Director  and/or
Screenwriter. Although there is no assurance that the Company will be successful
in  producing  any of these  projects,  or that if produced  the  intended  lead
actor,as  identified  below, will in fact be the lead actor, for during the next
twelve months the Company will pursue further  development and production of the
following projects:

LEGION: Budget $ 4,300,000
An action adventure to star Dolph Lundgren
Based on a story by Damian Lee and Dolph Lundgren.
A  completed  film  script with artist  attached  currently  in the  development
finance  stage which the Company owns 100% of the rights as acquired  from Stone
Canyon Pictures.

DOUBLE TROUBLE: Budget $ 18,500,000
An action adventure to star Steven Seagal.
Original script by Steve Tymon, based on a story by Steven Seagal.
A  completed  film  script with artist  attached  currently  in the  development
finance  stage which the Company owns 100% of the rights as acquired  from Stone
Canyon Pictures.

THE RECEPTION: Budget $ 4,500,000
An action adventure;
Original script by Damian Lee.
A completed  film script  currently in the  development  finance stage which the
Company owns 100% of the rights as acquired from Stone Canyon Pictures.


MARY BREATH: Budget $ 1,200,000 (pilot)
An erotic drama for Internet/TV distribution;
A television concept pilot and pilot script currently in the development finance
stage which the Company  owns 100% of the rights as acquired  from Stone  Canyon
Pictures.

E.COM: Budget $ 6,600,000 (pilot)
A 'new economy' episodic drama (ER, L.A. Law); cast undecided
Now being written by Charle Demirs and Lara Daans.
A television concept pilot and pilot script currently in the development finance
stage which the Company  owns 100% of the rights as acquired  from Stone  Canyon
Pictures.


JAKE FOR MAYOR: Budget $3,800,000
A Drama;
Original Script by Lou Aguilar and Damian Lee.
A completed  film script  currently in the  development  finance stage which the
Company owns 100% of the rights as acquired from Stone
Canyon Pictures.

FREEWORLD: Budget $ 4,800,000
A science fiction thriller;
Original script by Damian Lee.
A completed  film script  currently in the  development  finance stage which the
Company owns 100% of the rights as acquired from Stone Canyon Pictures.

OUT OF THE JUNGLE: Budget $ 1,800,000
An action adventure;
Original script by J. O'brien and B. Abraham.
A completed  film script  currently in the  development  finance stage which the
Company owns 100% of the rights as acquired from Stone Canyon Pictures.

TROUBLED WATERS: Budget $ 12,500,000
An action adventure
Based on a story by Steven Seagal wrtitten by Steven Seagal and Damian Lee
A  completed  film  script currently  in the  development
finance  stage which the Company owns 100% of the rights as acquired  from Stone
Canyon Pictures.

     During the next  twelve  months the Company  intends to be in the  constant
process  of  reviewing   additional   projects   offered  for  their  input  and
participation.  The Company  believes that part of it's ability to succeed will
be what it perceives  to be Mr.  Lee's  ability to separate the winners from the
losers  and, if  necessary,  take an active part in the  writing,  directing  or
producing  of a picture  in which  the  Company  has an  interest.  The  Company
believes  that Mr. Lee is willing  and  capable of  nurturing  new talent  while
developing and  maintaining  relationships  with  established  and  credentialed
artists and distributors.




     The Company is also in discussions  with Dolph Lundgren and Steven Segal to
put them under  non-exclusive  contract  for one film per year over an  extended
time  period  the status of these  discussions  is  ongoing  and will  depend on
completing sufficient financing to enter into the development phase of financing
and the contract  financing as described below. The Company envisions that these
contracts would be financed via a series of Limited  Partnerships,  the proceeds
of which  would be used to  purchase  an  annuity  from a  recognized  insurance
company or similar  institution.  The annuity  would  provide the 'talent'  with
monthly  income over the life of the  contract,  intended to be three years at a
time.  Due, in the Company's  opinion,  to the cyclical income stream typical of
working in the film industry,  the proposal has, at the preliminary  stage,  met
with what the Company  believes to be good  response.  It is  envisioned  by the
Company  that the limited  partnerships  would be  structured  where the Company
would act as  principal  of a wholly  owned  subsidiary  which would then act as
general  partner and in turn the limited  partners  would be purchasing  limited
partnership  units in the partnership.  The partnership would own the percentage
of any given project of the remainder  interest  after  production  financing or
third party production commitments.  Traditionally in such limited partnerships,
the limited  partner is paid their principal first in addition to owning half of
the partnership share of the project.






Facilities

     The Company  rents 2,500  square feet of space on a month to month basis at
375 Bay St. in Toronto,  Canada,  for $3,500 per month,  in which its  executive
offices are  located.  This space is rented to the Company by Olympia & York who
has no affiliation to the Company.

                                        11
<PAGE>
                        THE FILM AND TELEVISION INDUSTRY

     The  film  and  television  industry  is  experiencing  significant  growth
globally as a result of advancements  in cable and satellite  technology and the
continued growth of audiences in foreign markets. This has been evidenced by the
growth of foreign box office receipts and by increasing  television  penetration
in  developing  regions.  The  combination  of these  factors has  resulted in a
worldwide  proliferation of television channels and increased demand for new and
existing programming.

The Film and Television Production Industry


     The independent  film and television  production  industry has demonstrated
strong growth over the last five years, with annual  production  increasing from
$1.4  billion  in  1991-92 to $2.8  billion  in  1996-97  (Source:  The Film and
Television  Report).  A number  of  factors  have  contributed  to this  growth,
including  an  increase  in the  demand  for  programming  from  North  American
broadcasters,   an  increase  in  demand  for   independent   productions   from
international  television  broadcasters and an increase in the volume of foreign
production  activity taking place. Sales to foreign  broadcasters have become an
important source of revenue to film and television producers.  (Source: The Film
and Television Report).


Conventional Television

     With  the  proliferation  of  television  channels  , the  market  share of
conventional   free   television  has  decreased.   In  response,   conventional
broadcasters are focusing on distinguishing their services from others.

     The  growth in  private  conventional  television  has also had a  positive
effect on producers of  programming.  This upward trend can be attributed to the
advent of large new private  cable  television  stations and the impact of their
respective programming commitments made part of their licensing process.

Specialty Television

     Specialty  television  services differ from  conventional  channels in that
these services receive a distribution fee from the cable  distributors for their
carriage.  This fee is stipulated by a dollar amount per subscriber per month if
it is carried on the basic cable  service.  The fee is used as a  reference  for
negotiating a subscriber fee if the service is carried on a discretionary basis.


     The programming  demanded by specialty television channels is generally for
niche  audiences  and, as a result,  the license  fees  payable for this type of
programming are lower than for traditional  network  programming.  However,  the
proliferation  of  specialty  channels  means an  increasing  number of  program
purchasers  and an  increasing  number  of hours  of  programming  demand  to be
satisfied.  There is therefore a demand for producers to create  programming for
low cost in high volume for the North  American  market and an  opportunity  for
distributors to enhance the value of their  libraries by  re-licensing  existing
programs.


Feature Films

     While the television industry has grown over the last decade, growth in the
feature film sector has remained  relatively  flat.  The challenges of obtaining
adequate  financing for feature films and marketing  them in a manner which will
attract audiences in the current distribution and exhibition  environment remain
obstacles to success.  However, the increase in audience interest in independent
films and recent successes of  non-Hollywood  financed films, as measured by box
office receipts, suggest a considerable opportunity for feature film producers.

Skilled Labor Force


     The  technical,  creative and  logistical  skills in the Canadian  film and
television  industries have grown in the past 15 years as a result,  in part, of
the substantial increase in film and television productions undertaken in Canada
for U.S. distributors. The Company believes that this, combined with significant
increases in Canadian production activity,  has developed the technical capacity
of Canadian  production  personnel to a level highly competitive with production
centers such as New York, Los Angeles and London.


COMPETITION

     Substantially  all of the  Company's  revenues  will be  derived  from  the
production and  distribution of films and television  programs.  The business of
producing and distributing film and television  programs is highly  competitive.
The Company will face intense  competition with other producers and distributors
many of whom are  substantially  larger and have  greater  creative,  financial,
technical and  marketing  resources  than the Company.  The Company will compete
with other film and  television  production  companies for ideas and  storylines
created by third parties as well as for actors,  directors  and other  personnel
required  for a  production.  Many  of  these  film  and  television  production
companies  are  substantially  larger  and  have  greater  creative,  financial,
technical and marketing resources than the Company.

                                       12
<PAGE>
EMPLOYEES


     New Cinema  currently  has 6 full-time  employees,  including the Company's
president,  Damian Lee. Mr. Lee is currently the only  contract  employee of the
Company.  Mr. Lee has also entered  into a  non-competition  agreement  with the
Company, attached hereto as part of xhibit 6.1. In addition, the Company intends
to retain individuals,  including directors, cast and crew, with the appropriate
skills and background as required for particular  projects under  development or
in production.



     None of the Company's full-time employees are unionized.  However,  most of
the  companies  productions  will be  established  under  seperate  wholly owned
corporation of the Company,  called  production  subsidiaries,  and  individuals
employed  by any of the  Company's  production  subsidiaries  may be  members of
guilds or unions which bargain  collectively  with producers on an industry-wide
basis from time to time. The Company intends to maintain very good relationships
with its employees and the guilds and unions.



TRADE NAMES

     The  Company  plans  to  file  for  Trademark  applications  for use in the
Company's  business,  but has not yet done so. However, in the event the Company
cannot protect its marks or does not have suitable protection for its marks, the
business of the Company may be adversely affected.



RISK FACTORS


     In evaluating the Company and its business,  prospective  investors  should
consider  carefully the following risk factors in addition to other  information
contained herein:


Limited Operating History; Lack of Profitability.

     The Company was organized on February 1998, has extremely limited resources
and has had no revenues.  The Company's activities to date have consisted of two
business ventures which failed to be economically viable, and then searching for
a  third  business  venture  which  was  found  in the  form  of  the  Company's
acquisition  of the  assets  of  Stone  Canyon  Pictures  and the  new  business
direction. The Company's operations are subject to all the risks inherent in the
establishment  and operation of a new business  enterprise.  The Company has not
achieved profitability.

     The Company's prospects must be considered in light of the risks,  expenses
and  difficulties  frequently  encountered by companies in their early stages of
growth,  which  include,  but are not  limited  to,  limited  access to capital,
competing against  companies with strong brand names and better  capitalization,
and hiring and  retaining  qualified  personnel.  To address  these  risks,  the
Company  must,  among other things,  create,  maintain and increase its customer
base,  maintain  and develop  relationships  with  suppliers  and  distributors,
implement  and  successfully  execute its  business  and  marketing  strategies,
continue to develop  and expand its  product  line,  provide  superior  customer
service and order fulfillment, respond to competitive developments, and attract,
retain and motivate  qualified  personnel.  There can be no  assurance  that the
Company will be successful in  addressing  such risks,  and the failure to do so
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.

Reliance on Key Personnel

     The Company is  substantially  dependent  upon the  services of certain key
personnel,  particularly  Damian Lee, its Chief Executive Officer.  Mr. Lee is a
contract  employee  and has  also  signed  confidentiality  and  non-competition
agreements. The loss of his services could have a material adverse effect on the
business of the  Company.  The Company  maintains  no key man life  insurance in
respect of Mr. Lee.


Limited Trading Market.

     The common stock of the Company  presently  trades  sporadically on the OTC
Pink Sheets and was recently  removed from the OTC Bulletin Board market because
it did not timely become  reporting  Under the  Securities Act of 1934 and reach
the stage of no  comments  with the staff of the United  States  Securities  and
Exchange  Commission  with  respect to this filing.  Presently,  there is only a
limited  market  for the  Common  Shares  of the  corporation  and  there  is no
assurance  that such a market  will  continue.  Thus,  holders of the  Company's
common  stock may have  difficulty  in  selling  their  shares in the event they
desire to do so.


Need for Additional Financing.

     Since the  Company  has  failed to  produce  revenues  or a profit  and has
negative cash flow, any future  acquisitions and continued  business  operations
will probably require the Company to raise additional  capital.  There can be no
assurance that the Company will be able to raise  additional  funds when needed,
or if funds are available, on terms acceptable to the Company. Further, the cash
requirements  of the Company have been met by way of loans. If the Company fails
to continue to obtain such loans the Company would be adversely affected.




Unpredictability of Commercial Success

     A  majority  of the  Corporation's  revenues,  if any,  will arise from the
production  and  distribution  of  television  series and  feature  films.  Each
production is an individual  artistic work and its  commercial  success  depends
primarily on public reception,  which is unpredictable.  Even if the Corporation
limits risk through its production financing strategy, there can be no guarantee
of the financial success of a television series or feature film.


Modification or Removal of Canadian Incentive and Regulatory Programs:

     The  Corporation  believes that it will benefit from a number of advantages
relating to Canadian  incentive and regulatory  programs designed to promote the
production  and  distribution  of Canadian  programs.  For example,  the Company
believes it will benefit from the  regulations of the Canadian  Radio-television
and  Telecommunications   Commission  which  require  Canadian  broadcasters  to
broadcast a minimum number of Canadian-content  programs.  These regulations may
be modified,  from time to time, in whole or in part, or removed altogether.  In
such event, the Corporation would be required to find alternate  financing so as
to adapt to such changes.  The Corporation is not aware of any proposed  changes
which would have adverse consequences for the Corporation.





Risks Related to the Nature of the Entertainment Industry

     The entertainment  industry  historically has involved a substantial degree
of risk. Acceptance of entertainment  programming represents a response not only
to the  programming's  artistic  components,  but also to the review of critics,
promotion by the  distributor,  the quality and  acceptance  of other  competing
programs   released  into  the  marketplace  at  or  near  the  same  time,  the
availability of alternative  forms of entertainment and leisure time activities,
general  economic  conditions,  public  tastes  generally  and other  intangible
factors,  all of which  could  change  rapidly  and  cannot  be  predicted  with
certainty.  There is a risk that some or all of the Company's  programming  will
not be successful,  possibly  resulting in a portion of costs not being recouped
or anticipated  profits not being  realized.  While New Cinema will  continually
endeavor to develop new programming, there can be no assurance that revenue from
existing  or  future  programming  will  replace  a  possible  loss  of  revenue
associated with the cancellation of any particular production.

     In order to mitigate  risk,  individual  productions  are financed  through
pre-sales,  investments by third-parties and government incentive programs.  The
Company  plans to  institute  a policy of  ensuring  that 90% of the  production
budget  is  secured  prior to the  Company  making a  commitment  to  produce  a
particular production.
                                        13
<PAGE>
Potential for Budget Overruns and Other Production Risks

     A production's costs may exceed its budget.  Risks such as labor disputes,
death or disability of a star performer, changes relating to technology, special
effects or other aspects of production,  shortage of necessary equipment, damage
to film negatives, master tapes and recordings or adverse weather conditions may
cause cost overruns and delay or frustrate completion of a production.  Although
the Company intends to complete its productions  within budget,  there can be no
assurance  that  it will be able to do so.  The  Company  plans  on  maintaining
insurance  policies and when necessary,  completion  bonds,  covering certain of
these  risks.  There can be no  assurance  that any overrun  resulting  from any
occurrence  will be adequately  covered or that such  insurance  and  completion
bonds will  continue to be available  on terms  acceptable  to the Company.  New
Cinema  has  never  made a  material  claim  on its  insurance  or  called  on a
completion bond. In the event of substantial  budget  overruns,  the Company may
have to seek  additional  financing  from  outside  sources in order to complete
production of a film or television  program. No assurance can be given as to the
availability of such financing on terms acceptable to the Company.  In addition,
in the event of substantial budget overruns, there can be no assurance that such
costs will be recouped,  which could have a significant  impact on the Company's
results of operations.

Fluctuating Results of Operations

     Results of  operations  for any period are  significantly  dependent on the
number and timing of television  programs delivered or made available to various
media.   Consequently,   the  Company's  results  of  operations  may  fluctuate
materially  from  period to period  and the  results  of any one  period are not
necessarily  indicative  of  results  for  future  periods.  Cash flows may also
fluctuate and are not necessarily  closely correlated with revenue  recognition.
Although  traditions are changing,  due, in part, to increased  competition from
new channels,  industry  practice is that broadcasters make most of their annual
programming commitments between February and June in order that new programs can
be ready for telecast at the start of the broadcast  season in September,  or as
mid-season replacements in January. Because of this annual production cycle, New
Cinema's  revenues will probably not be earned on an even basis  throughout  the
year. Results from operations  fluctuate  materially from quarter to quarter and
the results for any one quarter are not  necessarily  indicative  of results for
future quarters.

Technological Change

     Technological  change may have a material  adverse  effect on the Company's
business,  results of operations and financial  condition.  The emergence of new
production or CGI technologies or a new digital television broadcasting standard
may  diminish  the  value of the  Company's  existing  equipment  and  programs.
Although  the Company is committed to  production  technologies  such as CGI and
digital  post-production,  there  can be no  assurance  that  it will be able to
implement   its  program,   or  to   incorporate   other  new   production   and
post-production  technologies which may become de facto industry  standards.  In
particular,  the  advent  of  new  broadcast  standards,  which  may  result  in
television  programming  being presented with greater  resolution and on a wider
screen than is  currently  the case,  may diminish  the  evergreen  value of the
Company's  programming  library,  if it successfully  develops one, because such
productions  may not be able to take full advantage of such features.  There can
be no assurance that the Company will be successful in adapting to these changes
on a timely basis.

Competition


     Substantially  all of the  Company's  revenues  are to be derived  from the
production  and  distribution  of television  programs and feature  movies.  The
business of producing and  distributing  film and television  programs is highly
competitive.  The Company faces  intense  competition  with other  producers and
distributors  many of whom are  substantially  larger and have greater creative,
financial,  technical  and  marketing  resources  than the Company.  The Company
competes  with  other film and  television  production  companies  for ideas and
storylines  created by third parties as well as for actors,  directors and other
personnel required for a production.  There can be no assurance that the Company
will be able to compete  successfully  against  this  competition  or that other
companies  will not  enter  the  Company's  markets  and that  they will be more
successful than the Company.


International Operations

     The Company's  international  operations depend, in part, on local economic
conditions,  currency  fluctuations,  changes in local regulatory  requirements,
compliance with a variety of foreign laws and regulations and cultural barriers.
In addition,  political instability in a foreign nation may adversely affect the
ability of the Company to distribute its product in that country. As a result of
the foregoing international risks, the Company's international operations may be
adversely effected.
                                        14
<PAGE>
Labor Relations

     Many  individuals  associated  with the  Company's  projects are members of
guilds or unions which bargain  collectively  with producers on an industry-wide
basis  from  time to time.  While  the  Company  intends  to  maintain  positive
relationships with the guilds and unions in the industry, a strike or other form
of labor  protest  affecting  those  guilds or unions  could,  to some  extent,
disrupt  production  schedules  which  could  result  in delays  and  additional
expenses.

Defamation Insurance

     The Company intends to produce  satirical  comedies.  The content of such a
program may subject the Company to claims from individuals  alleging  defamation
of  character.  It is  possible  that a  substantial  award for  damages  may be
rendered  against the Company and that the Company  will be  uninsured  or under
insured.  While the Company plans to obtain errors and omissions  insurance on a
project by project  basis,  it is  possible  that the  Company  may be unable to
obtain appropriate  insurance at reasonable costs to protect itself in the event
of such a claim.

Importance of Management Estimates in Reported Revenues and Earnings

     The Company  will make  numerous  estimates as to its revenues and matching
production and direct distribution  expenses on a project by project basis. As a
result of this accounting  policy,  earnings may widely  fluctuate if management
has not accurately forecast the revenue potential of a production.

Exchange Rates

     The return to the Company from foreign  exploitations  of its properties is
customarily paid in U.S. currency.  The Company's main production facilities are
in Ontario,  Canada,  and as such the Company may be affected by fluctuations in
the exchange rate of the U.S. dollar.  Currency exchange rates are determined by
market  factors  beyond the control of the  Company  and may vary  substantially
during  the course of a  production  period.  In  addition,  the  ability of the
Company to  repatriate  to the United  States and / or Canada  funds  arising in
connection  with foreign  exploitation  of its  properties may also be adversely
affected by currency and exchange control  regulations imposed by the country in
which the production is exploited.  At present,  the Company is not aware of any
existing  currency or exchange  control  regulations in any country in which the
Company  currently  contemplates  exploiting its properties  which would have an
adverse  effect  on the  Company's  ability  to  repatriate  such  funds.  Where
warranted  the Company will hedge its foreign  exchange  risk through the use of
derivative products.


                                        15
<PAGE>


Business Dependent Upon Key Employee.


     The business of the Company is  specialized.  The  continued  employment of
Damian Lee is critical to the Company's business. There can be no assurance that
in the  future  the  Company  will be able to retain  Mr.  Lee or other  equally
qualified  individuals  to run the affairs of the  Company.  Mr. Lee has entered
into an employment and  non-competetion  contracts with the Company (see Exhibit
XX), but in the event that the services Mr. Lee are not available to the Company
the Company will be  materially  and  adversely  affected.  See "Business of the
Company".





Dividends.

     No  dividends  have  been  paid on the  Shares  and the  Company  does  not
anticipate  the payment of cash  dividends  in the  foreseeable  future.  If the
operations of the Company become  profitable,  it is  anticipated  that, for the
foreseeable  future,  any  income  received  therefrom  would be  devoted to the
Company's  future  operations and that cash  dividends  would not be paid to the
Company's shareholders.
                                        16
<PAGE>

Penny Stock Rules.

     The Company  believes  its Common  Stock will be subject to the Penny Stock
Rules  promulgated  under the  Securities  Exchange Act of 1934 due to its price
being less than $5.00 per share. If the Company were to meet the requirements to
exempt its securities from application of the Penny Stock Rules, there can be no
assurance  that such price will be maintained if a market  develops and thus the
Penny Stock Rules may come into effect.

     These  rules   regulate   broker-dealer   practices  in   connection   with
transactions  in "penny  stocks." Penny stocks  generally are equity  securities
with a price of less than $5.00  (other than  securities  registered  on certain
national  securities  exchanges or quoted on the NASDAQ  system,  provided  that
current  price and  volume  information  with  respect to  transactions  in such
securities is provided by the exchange or system). The Penny Stock Rules require
a  broker-dealer,  prior to a transaction in a penny stock not otherwise  exempt
from the rules, to deliver a standardized  risk disclosure  document prepared by
the Commission that provides  information  about penny stocks and the nature and
level of risks in the penny stock market.  The  broker-dealer  also must provide
the customer  with  current bid and offer  quotations  for the penny stock,  the
compensation of the  broker-dealer  and its salesperson in the transaction,  and
monthly account  statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations,  and the broker dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the  transaction and must be given to the customer in
writing before or with the customer's confirmation.

     In addition, the Penny Stock Rules require that prior to a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer  must make a
special written  determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's  written agreement to the transaction.
These  disclosure  requirements  may have the  effect of  reducing  the level of
trading activity in the secondary market for the Company's securities. While the
Company's  Common Stock remains subject to the Penny Stock Rules,  investors may
find it more difficult to sell such securities.

Possible Rule 144 Sales.

     A total of 24,140,736  Shares were issued and outstanding as of the date of
this  registration  statement.  As of  the  date  hereof  7,000,000  shares  are
restricted  securities and may be sold in open market transactions in compliance
with Rule 144 adopted under the Securities Act, which provides in pertinent part
that each Officer, Director and affiliate,  after holding the securities for two
years, may sell every three months in brokerage  transactions an amount equal to
the greater of 1% of the  Company's  outstanding  Common Shares or the amount of
the average weekly trading  volume,  if any, during the four weeks preceding the
sale.  Sales  under  Rule 144 may have a  depressive  effect on the price of the
Common Shares in the  over-the-counter  market. (See "Principal  Shareholders.")
Sales of Shares owned by insiders  may have a depressive  effect on the price of
the Shares in the over-the-counter market. (See "Description of Securities.")

Lack Of Diversification.

     The  Company's  proposed  operations,  even  if  successful,  will  in  all
likelihood result in the Company engaging in a business which is concentrated in
only one industry. Consequently, the Company's activities will be limited to the
film industry. The Company's inability to diversify its activities into a number
of areas may subject the Company to economic  fluctuations  within a  particular
business  or industry  and  therefore  increase  the risks  associated  with the
Company's operations.

 Regulation.

     Although the Company  will be subject to  regulation  under the  Securities
Exchange  Act of 1934,  management  believes  the Company will not be subject to
regulation under the Investment  Company Act of 1940,  insofar as the Company is
not engaged in the business of investing or trading in securities.  However, the
Company may considor purchasing equity positions in other entertainment  related
companies as part of its expansion plans. In the event the Company does conclude
such  transactions,  which  were  to  result  in  the  Company  holding  passive
investment  interests in a number of entities,  the Company  could be subject to
regulation under the Investment  Company Act of 1940. In such event, the Company
would be required to register as an investment  company and could be expected to
incur  significant  registration and compliance costs . The Company has obtained
no formal  determination  from the Securities and Exchange  Commission as to the
status  of  the  Company  under  the   Investment   Company  Act  of  1940  and,
consequently,  any  violation of such Act would  subject the Company to material
adverse consequences.
                                        17
<PAGE>
Item  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                      FOR THE YEAR ENDING FEBRUARY 29,2000
                   AND FOR THE THREE MONTHS ENDED MAY 31, 2000

   The following  discussion relates to the results of our operations to date,
and our financial condition:

     This  prospectus  contains  forward  looking  statements  relating  to  our
Company's  future economic  performance,  plans and objectives of management for
future operations, projections of revenue mix and other financial items that are
based  on the  beliefs  of,  as well  as  assumptions  made  by and  information
currently  known to, our  management.  The words  "expects,  intends,  believes,
anticipates,  may, could, should" and similar expressions and variations thereof
are intended to identify forward-looking  statements.  The cautionary statements
set forth in this  section are  intended to  emphasize  that actual  results may
differ materially from those contained in any forward looking statement.

Development stage activities.

     The Company has been a  development  stage  enterprise  from its  inception
February 18, 1999 to May 31, 2000.  Since July, 2000 the Company has been in the
process of developing a film production and  distribution  business by utilizing
assets and talent it acquired  pursuant to an asset  acquisition  consummated on
June 27,  2000.  Prior to that the  Company  had been  involved  in a venture to
develop and market internet  software,  and a venture to create own and manage a
proprietary type of movie theatres, none of which had resulted in any revenues.


     Since December,  1999 management has devoted the majority of its efforts to
initiating the process of finding a suitable  business for the Company to become
involved with, obtaining the intellectual  property assets, and reorganizing the
Company  thereforth  to  enable  it to go into film  production,  obtaining  new
customers for sale of film and  television  productions,  developing  sources of
supply,  developing and testing its marketing  strategy and finding a management
team to begin the process of: completing its marketing goals; and furthering its
research and development for its products.

     These  activities  were funded by the Company's  management and investments
from  stockholders  in the amount of 163,994 . The Company has not yet generated
sufficient  revenues  during its limited  operating  history to fund its ongoing
operating  expenses,  repay  outstanding  indebtedness,  or fund its projects or
product  development  activities.  There can be no assurance that development of
any  project  will be  completed  in a  timely  manner  and  within  the  budget
constraints of management and that the Company's marketing research will provide
a profitable path to utilize the Company's marketing plans.


     During this  period,  management  has  continued  to finance is  activities
through the issuances of stock and officer  loans,  and has devoted the majority
of its efforts to initiating the process of the preparing  market plans to enter
the business of film  production,  obtaining new customers for sale of completed
projects , developing  sources of supply,  developing  and testing its marketing
strategy and finding a management  team to begin the process of:  completing its
marketing  goals;  furthering  its marketing  research and  development  for its
products;  completing  the  documentation  for the  filing  of Form 10 with  the
Securities and Exchange  Commission to become a fully  reporting  Company to the
SEC. These  activities  were funded by the Company's  management and investments
from stockholders.

     The Company has not yet generated  sufficient  revenues  during its limited
operating period of reorganization to fund its ongoing  operating  expenses,  or
fund its marketing  plans and product  development  activities.  There can be no
assurance that  development  of the marketing  plans will be completed and fully
tested in a timely manner and within the budget  constraints  of management  and
that the Company's  marketing research will provide a profitable path to utilize
the  Company's  marketing  plans.  Further  investments  into market  design and
implementation  and development,  marketing research as defined in the Company's
operating plan will significantly  reduce the cost of development,  preparation,
and  processing of purchases  and orders by enabling the Company to  effectively
compete in the market place.

      Results of Operations for the year ended February 29, 2000.

     For the year ended  February 29, 2000,  the Company  generated net sales of
$-0-.  The Company's cost of goods sold for the year ended February 29, 2000 was
$-0-.  The Company's  gross profit on sales was $-0- for the year ended February
29, 2000.

     The Company's  general and  administrative  costs aggregated  approximately
$1,418,134 for the year ended February 29, 2000. These expenses  represent carry
over losses from the Company's  reorganization,  bank charges and the payment of
fees  to  the  stock  transfer  agent  and  other  expenses  necessary  for  the
continuation of the business.
                                        18
<PAGE>

Results of Operations  for the three months ended  May 31, 2000.

     For the three months ended May 31, 2000.,  the Company  generated net sales
of $-0-.  The  Company's  cost of goods sold for the three  months ended May 31,
2000 was $-0- . The  Company's  gross  profit  on sales  was $-0- for the  three
months ended May 31, 2000.

     The Company's  general and  administrative  costs aggregated  approximately
$78,289  for the three  months  ended May 31,  2000.  This  increase  represents
essentially fees for the time spent doing the marketing  research,  planning and
reorganization of the business for its entry into the film and movie industry.

Liquidity and Capital Resources.

     The Company had a cash  balance of $7,763 at May 31,  2000,  as compared to
$99 for the year ended February 29, 2000.  Working  capital at February 29, 2000
and May 31, 2000 was  negative at $ 204,364 and $128,895  respectively.  For the
year  ended  February  29,  2000 and for the three  months  ended May 31,  2000,
working  capital was  provided by  management  for the payment of  expenses.  At
February 29, 2000 and May 31, 2000,  the Company  continued to be funded through
shareholder loan balances aggregating $163,491 and 163,994 respectively.


     During the next twelve  months the Company's  Plan of Operation  recognizes
that due to the fact that the company does not have  sufficient  cash on hand to
continue its current  operations  based on its current general and  admistrative
expenses  that the company  will  require  private  placement  financing or will
require  additional loans from shareholders or the officers and directors of the
Company.  Additionally, the Company recognizes that there are no assurances that
it will be successful in obtaining any private  placement  financing the Company
is confident that it will be capable of obtaining such loans.

     Additionally,  the  Company  believes  that upon  completion  of becoming a
reporting  company and commences  trading on the NASD Electronic  Bulletin Board
that its  ability to  complete  private  placement  financing  will be made more
feasible.

     The  Company  will  continue  to  explore  development  financing  for  its
entertainment  projects in development  which may contribute to basic  corporate
general and  administrative  expenses however management of the company realizes
that  there  is no  assurance  that it  will  be  successful  in  obtaining  any
development financing for its entertainment projects in development. The Company
does not  intend to sell any of its  intellectual  property  rights at this time
however,  in connection  with the  development  financing  strategy it may joint
venture or co-produce projects related to the underlying intellectual property.

     The Company does not  anticipate a significant  increase or decrease in the
number of full time employees it currently employs.

     In view of the uncertainties  concerning the Companies  continued existence
as a going  concern,  the  Company  plans  to  pursue  its  business  plan as an
independent film production company. In order to mitigate the possibility of the
Company  failing to maintain as a going  concern  the Company  will  endeavor to
initiate the following steps:

1.   Become a fully reporting  company and apply to have its common stock traded
     on the OTC Electronic  Bulletin Board.  Management of the Company  believes
     that should the Company resume trading on the OTC Electronic Bulletin Board
     that the  Company  will  have a better  chance  of  completing  development
     financing  for  selected  projects.  This  is a  critical  element  of  the
     companies  ability to continue as a going concern due to credibility of the
     Company to investors and possible improved  liquidity in the trading of the
     companies common stock which would increase the Companies ability to attain
     financing.

2.   The  Company  believes  that  it  can  leverage  its  current  intellectual
     properties and industry relationships in order to successfully proceed from
     development to production of such projects.

3.   Identify the appropriate  financing  strategy to finance one or more of the
     Companies intellectual properties through the development phase.

4.   Work closely with global  distributors to secure  production  financing for
     any given project.

5.   Pursue production on any given project.

6.   Capitalize on any completed project.

7.   Pursue additional intellectual properties.

8.   Gain relationships with creative talent including Stars.

9.   Repeat the development through production process if successful.

     In Managements  opinion the Company has the potential to realize this plan.
Specifically,  the Company  believes that  intellectual  property  acquired from
Stone Canyon Pictures represent quality programs creatively and could have broad
commercial  appeal.  Management also believes that Damian Lee will be successful
at attracting major talent to projects, which is a major industry requirement to
attain distribution  appeal. The Company's current expenses are manageable.  All
six  employees  have not taken a salary to date and will not draw a salary until
such time as the Company  completes a significant  financing.  Management  loans
should satisfy current  expenses until such time the Company  completes any such
financing and management  believes that it will be capable of maintaining  under
current arrangements for at least the next twelve months.

     Thereafter,  if cash generated from  operations is  insufficient to satisfy
the Company's working capital and capital expenditure requirements,  the Company
may be  required  to  sell  additional  equity  or  debt  securities  or  obtain
additional credit facilities.  There can be no assurance that such financing, if
required, will be available on satisfactory terms, if at all.



Item  3.  DESCRIPTION  OF  PROPERTY

     The Company  rents 2,500  square feet of space on a month to month basis at
357 Bay St. in Toronto,  Canada,  for $3,500 per month,  in which its  executive
offices are  located.  This space is rented to the Company by Olympia & York who
has no affilliation to the Company.
                                        19
<PAGE>
Item  4.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

     The  following  table sets forth certain  information  known to the Company
regarding the beneficial  ownership of Common Stock as of August 1, 2000, by (i)
each Director of the Company, (ii) each executive officer of the Company,  (iii)
all directors and executive  officers as a group,  and (iv) each person known to
the Company to be the beneficial owner of more than 5% of its outstanding shares
of Common Stock.


<TABLE>
<CAPTION>
                                     Shares Beneficially Owned
                                     -------------------------
                                                   Percentage
Directors and Executive Officers      Shares Held   Owned (1)
- --------------------------------      -----------   ---------
<S>                                     <C>          <C>
Damian Lee  (2)                          975,000      4.04%
Chief Executive
Officer,
Chairman of the
Board of Directors
102 Bloor St. W
Toronto, ON M551M8
Canada

Briar Communications, Inc. (2)          950,000       3.95
2 Elm Avenue, #24
Toronto, ON  M4T 1T8

Pine Wood Studios, Inc.  (2)            950,000       3.95
120 Adelaide St. West
Suite 2401
Toronto, ON  M5H1T1

Mike Mastercolo (2)        `            975,000       4.04
357 Bay Street
Suite 404
Toronto, On M5H2T7

John D'Acunto   (2)                     500,000       2.04
357 Bay Street
Suite 404
Toronto, On M5H2T7


Joseph Balerino (2)                     500,000       2.04
357 Bay Street
Suite 404
Toronto, On M5H2T7

Avi Amar  (2)                           525,000       2.18
983 Apt. 3
Rehov Eilat, Ashdod
Israel

Pacifica Technologies, Ltd. (2)         750,000       3.10
4060 Burton Avenue
Richmond, BC
V7C4M1

Westcape Technologies, Ltd. (2)         700,000       2.90
260 QueensQuay West,
Suite 3108
Toronto, ONT  M5J 2N3

Jessica Mathison (2)                    625,000       2.60
1550 Johnston
White Rock, BC
VHB 328

Portico Industries, Ltd. (2)            650,000       2.70
4060 Burton Avenue
Richmond, BC  V7C4M1
                                        20
<PAGE>
Andrew Currah (2)                       500,000       2.04
56 Temperance St. 6th Floor
Toronto, Ontario  M5H 3V5

Currah & Sons, Ltd.  (2)                500,000       2.04
56 Temperance St. 6th Floor
Toronto, Ontario M5H 3V5


Aviam Holdings, Ltd.(2)                 700,000       2.90
2269 Lakeshore Blvd
Suite 2806
Toronto, ON  M8V 3X6

543637 B.C. Ltd. (2)                    100,000       0.44
4060 Burton Avenue
Richmond, BC V7C 4M1

Margaret Hales  (2)                      50,000       0.22
4060 Burton Avenue
Richmond, BC V7C 4M1

Susan Hales   (2)                        25,000       0.11
4060 Burton Avenue
Richmond, BC V7C 4M1

Ken Hales  (2)                           25,000       0.11
4060 Burton Avenue
Richmond, BC V7C 4M1

Martin Lapedus
Chief Financial
Officer and a Director
179 Oakhurst Drive
Thornhill ON L4J8H6
Canada

Paul Walters
Director
1300 Islington Ave. #2402
Toronto, ON M9A5C4
Canada

Marvin Sazant
Director
5 Julian Rd.
Downview, ON M3M3C2
Canada

John Cox                                385,000      1.61%
Director
131 Bloor St. W.
Toronto, ON M551R1
Canada

As a group (3)                       10,385,000      43.01%
(19 persons)

<FN>
(1)  Percentage  of  ownership  is based on  24,140,736  shares of Common  Stock
     issued and outstanding as of August 1, 2000.

                                        21
<PAGE>
(2)  At this time the Company is treating the  Company's  shareholders  who were
     previous  shareholders  of Stone Canyan,  all of whom  together  received a
     total of 10,000,000  shares of the  Company's  common stock in exchange for
     Stone Canyan's  assets,  as being part of the group  beneficially  owned by
     Damian Lee..

(3)  If the prior  shareholders of Stone Canyan are not included unless they are
     directors or  management  of the Company,  then these  numbers go down to 5
     persons ( Damian Lee, Martin Lapedus, Paul Walters, Marvin Sazant, and John
     Cox)  holding  1,360,000  shares  representing  5.63% of the  total  shares
     outstanding.
</FN>
</TABLE>
Item  5.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS

     The  Board  of  Directors  of the Company is comprised of only one class of
director.  Each director is elected to hold office until the next annual meeting
of  shareholders  and  until  his  successor  has  been  elected  and qualified.
Officers  are  elected  annually by the Board of Directors and hold office until
successors  are duly elected and qualified.  The following is a brief account of
the  business  experience of each director and executive officer of the Company.

     The position(s)  held by each Officer and Director of the Company are shown
on the following  table.  Each Director was elected or re-elected in July, 2000,
and will serve for one year or until the next  annual  meeting of the  Company's
Shareholders and until a successor is elected and has qualified.

<TABLE>
<CAPTION>
                          Age           Position
<S>                      <C>           <C>
Damian Lee                50            Chief Executive Officer,  Prsident,
                                        Chairman of the Board of Directors
Martin Lapedus            57            Chief Financial Officer and a Director
Paul Walters              46            Director
Marvin Sazant             64            Director
John Cox                  68            Director
</TABLE>

     Damian Lee has been the Chief Executive Officer, President, and Chairman of
the Board of  Directors  of the  Company  since  July 4, 2000,  pursuant  to the
Company's  asset purchase of Stone Canyon  Pictures,  Inc. Prior to that, Mr.
Lee had been the  President  of Stone Canyon  Pictures,  Inc., a producer and
developer of television  series and full length  movies from  September of 1997.
From  February,  1990 to December,  1996,  Mr. Lee was the President of Richmond
House Productions,  Inc. of Toronto,  Ontario,  Canada. Mr. Lee received a BA in
political science from the University of Guelph in 1970.

     Martin Lapedus has been the Company's Chief Financial  Officer,  secretary,
and a Director since November 1, 1999. Mr. Lapedus is a chartered  accountant in
Ontario,  Canada,  and has been self employed since  graduating with a degree in
accounting from Queens University, of Ontario, Canada, in 1967.

     Paul Walters has been a Director of the Company  since July 4, 1999.  Since
April of 1991 Mr. Walters has worked as an independent sales  representative for
Royal LePage real estate of Toronto, Canada. Prior to that Mr. Walters had spent
13 years in the  banking  industry  working at varied  positions  in the Toronto
Dominion Bank of Toronto,  Canada.  Mr. Walters received his BA in economics and
history from the University of Western Ontario in 1977.

     Dr.  Marvin  Sazant has been a Director of the Company since March 1, 2000.
Dr. Sazant  received his M.D. from the University of Toronto in 1961, and a B.A.
in biology from the  University  of Toronto in 1957.  Since 1967 Dr.  Sazant has
been a self employed physician in Toronto, Canada.

     John Cox has been a Director  of the Company  since March 1, 2000.  Mr. Cox
was a principal  in Coventry  Lane Jaguar car  dealership  of Toronto,  Ontario,
Canada  from  1993 to 1999,  and was the  President  and a  principal  of Jaguar
Rolls-Royce on Bay car dealership of Toronto, Ontario, Canada from 1983 to 1992.

                                       22
<PAGE>
Item  6.  EXECUTIVE  COMPENSATION

     The following table sets forth the compensation paid during the fiscal year
ended December 31, 1999, to the Company's  Chief  Executive  Officer and each of
the Company's officers and directors.  No person received  compensation equal to
or exceeding  $100,000 in fiscal 1999 and no bonuses were awarded  during fiscal
1998.


     The Company has  explored  various  forms of  financing to finance both the
companies  ongoing  general and  administrative  expenses and its first phase of
project  based  development  financing  however,  has  not  initiated  any  such
financing  since its  acquisition  of the assets of Stone Canyon  Pictures.  The
Company  intends to pursue these  financing  upon  becoming  compliant  with all
reporting  requirements to become a fully reporting issuer and resume trading on
the OTC Electronic  Bullitin  Board.  If and when such a financing is completed,
then at that  time the  Company  will  negotiate  and  enter  into  compensation
agreements  with  management,  except for Mr. Lee who has already entered into a
contract with the Company.



<TABLE>
<CAPTION>
                                         Annual  Compensation               Awards             Payouts
                                   ------------------------------  -------------------------  ---------
                                                           Other                                            All
                                                           Annual   Restricted    Securities               Other
                                                          compen-      Stock      Underlying     LTIP     Compen-
                                                           sation    Award(s)    Options/SAR   Payouts    sation
Name and Principal Position  Year  Salary ($)  Bonus ($)    ($)         ($)          (#) (1)     ($)        ($)
- ----------                   ----  ----------  ---------  -------  -----------  ------------  ---------  --------
<S>                          <C>   <C>         <C>        <C>       <C>          <C>           <C>       <C>

Damian Lee(2)
Chief Executive              2000      -0-         -0-         -0-      -0-        480,000       -0-         -0-
Officer, President           1999      -0-         -0-         -0-      -0-             -0-      -0-         -0-
Chairman of the              1998      -0-         -0-         -0-      -0-             -0-      -0-         -0-
Board of Directors           1997      -0-         -0-         -0-      -0-             -0-      -0-         -0-

Martin Lapedus               2000      -0-         -0-         -0-      -0-        480,000       -0-         -0-
Chief Financial              1999      -0-         -0-         -0-      -0-             -0-      -0-         -0-
Officer, Secretary           1998      -0-         -0-         -0-      -0-             -0-      -0-         -0-
 and a Director              1997      -0-         -0-         -0-      -0-             -0-      -0-         -0-

Paul Walters                 2000      -0-         -0-         -0-      -0-        480,000       -0-         -0-
Director                     1999      -0-         -0-         -0-      -0-             -0-      -0-         -0-
                             1998      -0-         -0-         -0-      -0-             -0-      -0-         -0-
                             1997      -0-         -0-         -0-      -0-             -0-      -0-         -0-

Marvin Sazant                2000      -0-         -0-         -0-      -0-        480,000       -0-         -0-
Director                     1999      -0-         -0-         -0-      -0-             -0-      -0-         -0-
                             1998      -0-         -0-         -0-      -0-             -0-      -0-         -0-
                             1997      -0-         -0-         -0-      -0-             -0-      -0-         -0-

John Cox                     2000      -0-         -0-         -0-      -0-        480,000       -0-         -0-
Director                     1999      -0-         -0-         -0-      -0-             -0-      -0-         -0-
                             1998      -0-         -0-         -0-      -0-             -0-      -0-         -0-
                             1997      -0-         -0-         -0-      -0-             -0-      -0-         -0-

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

1.   On August 1, 2000,  the Company  granted each director  options to purchase
     480,000  shares  of the  Company's  common  stock at the price of $0.50 per
     share.  These  shares  are  to  be  registered  on  Form  S-8  as  soon  as
     practicable, and will expire on August 1, 2001.

2.   On September 1, 2000 the Company entered into an employment  agreement with
     its Chief  Executive  Officer,  Damian Lee, which entails  compensation  of
     $10,000  per  month   however,   the  contract   specifies   that  no  cash
     consideration  will be paid to Mr.  Lee until  such time as the  Company is
     successful  at   completing   adequate   financing.   In  the  interim  the
     compensation owed to Mr. Lee under the agreement will accrue.

Item  7.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

TRANSACTIONS  WITH  MANAGEMENT  AND  OTHERS



     The Company  received a loan from Pueblo  Trust,  a related  party,  in the
amount of $150,000.  The loan bears interest at 6.5% per year and is due on July
9, 2004.

     The Pueblo Trust is the majority  shareholder  of Ultimatte  Entertainment,
Ltd. Which was a control block shareholder.

     In connection  with obtaining  this loan, the Company  granted an option to
purchase  250,000  shares  of  common  stock to a third  party.  The  option  is
exercisable  at $2.50 per  share  for nine  months  after  the  Company  files a
registration statement.  This option has been valued at $758,000 using the Black
Sholes option pricing model with the following  assumptions:  Interest rate, 4%;
Volatility rate, 200%; Expected life, 1 year; Dividend yield, $0.

     The Company  had an urgent need for cash at the time the loan was made,  to
meet crital cash  requirements.  Due to its precarious  financial  postion,  the
Company  was  required  to  provide  favorable  terms in the  options  issued in
connection with obtaining the financing.

     Other  than  this  transaction,there  have been no  material  transactions,
series of similar transactions,  currently proposed  transactions,  or series of
similar transactions,  to which the Company or any of its subsidiaries was or is
to be a party,  in which the amount  involved  exceeds  $60,000 and in which any
director  or  executive  officer,  or any  security  holder  who is known to the
Company to own of record or beneficially more than five percent of the Company's
Common  Stock,  or any member of the  immediate  family of any of the  foregoing
persons, had a material interest.


                                       23
<PAGE>
CERTAIN  BUSINESS  RELATIONSHIPS

     There  have  been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company  or any of its subsidiaries was or is to be a party, in which the amount
involved  exceeds $60,000 and in which any director or executive officer, or any
security  holder  who  is  known to the Company to own of record or beneficially
more  than  five  percent  of  the  Company's Common Stock, or any member of the
immediate  family  of  any  of  the foregoing persons, had a material interest.

Item  8.  DESCRIPTION  OF  SECURITIES

     The Company's  authorized  capital consists of 100,000,000 shares of common
stock,  $0.001  par  value  per  share,  of  which  24,140,736  are  issued  and
outstanding.  Each holder of record of Common  Stock is entitled to one vote for
each share held on all matters properly  submitted to the shareholders for their
vote. Cumulative voting is not authorized by the Articles of Incorporation.


     Holders  of  outstanding  Common  Stock  are  entitled  to those  dividends
declared by the Board of Directors out of legally  available funds,  and, in the
event of  liquidation,  dissolution or winding up of the affairs of the Company,
holders are entitled to receive ratably the net assets of the Company  available
to the  shareholders.  Holders of  outstanding  Common Stock have no preemptive,
conversion or redemptive  rights. To the extent that additional shares of Common
Stock are issued, the relative  interests of the then existing  shareholders may
be diluted.





TRANSFER  AGENT


     The Company uses  Executive  Registrar  and  Transfer  Agency,  Inc.  whose
mailing address is 3118 W. Thomas Rd., Ste. 707, Phoenix, AZ 85017 to act as its
transfer agent for its Common Stock.  The Company acts as transfer agent for all
of its other securities.



INTEREST  OF  NAMED  EXPERTS  AND  COUNSEL

     The financial  statements of the Company at December 31, 1999,  included in
this  Disclosure  Statement,  have been audited by Merdinger,  Fruchter  Rosen &
Corso,  P.C. as indicated in their report with respect  thereto and are included
herein in  reliance  upon  authority  of said  firm as  experts  in giving  said
reports.

                                       24
<PAGE>

PART II

Item  1.  MARKET  PRICE  OF  AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER  SHAREHOLDER  MATTERS

Market  for  Common  Stock

     The  Company's  Common  Stock is quoted on the pink sheets under the symbol
"NCPP." The  following  table sets forth the high and low bid prices as reported
by FinancialWeb.com,  Inc. for the periods ending June 30, 2000 and prior. These
quotations  for the fiscal year 1998,  and the first two quarters of 199 reflect
trading  done by  Valence 9  Development,  Inc.,  under the symbol  "VNIN."  All
quotations reflect  inter-dealer  prices,  without retail mark-up,  mark-down or
commissions, and may not reflect actual transactions.  As of June 30, 2000 there
were 296 shareholders of Common Stock.

<TABLE>
<CAPTION>
                           High              Low
2000                      -----              ----
-----
<S>                       <C>               <C>
Second Quarter            $0.25              0.06
First Quarter             $0.25              0.10


1999
-----
Fourth Quarter            $2.94             $0.16
Third Quarter              5.06              1.06
Second Quarter             2.71              1.12
First Quarter              4.25              2.00

1998
-----
Fourth Quarter             4.62              2.12
Third Quarter              4.12              0.62

</TABLE>

Dividends

     The  Company  has  never declared or paid any cash dividends on its capital
stock.  The  Company  currently  intends  to  retain all available funds and any
future  earnings  of  its  business for use in the operation of its business and
does  not  anticipate  paying any cash dividends in the foreseeable future.  The
declaration,  payment  and  amount of future dividends, if any, will depend upon
the  future  earnings,  results  of  operations,  financial position and capital
requirements  of  the  Company,  among  other  factors,  and will be at the sole
discretion  of  the  Board  of  Directors.


Item  2.  LEGAL  PROCEEDINGS


     The Company had previously occupied premises in a different  location.  The
Company  maintains that it did not sign, and did not enter into, a lease for the
previous  location.  The real estate property manager  maintains that there is a
five-year lease, and that legal action will commence to recover outstanding rent
and damages. The Company has no knowledge of any legal action, believes there is
no merit to any  possible  action,  and has not  included  a  provision  for any
outstanding rent or damages in these financial statements.




                                       25
<PAGE>

Item  3.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS

     There have been no changes in, and no  disagreements  with,  the  Company's
public accountants.

Item  4.     RECENT  SALES  OF  UNREGISTERED  SECURITIES

     At inception in June of 1998, the Company issued  25,100,000  common shares
to its founders in reliance upon section 4(2) of the  Securities  Act of 1933 in
exchange for assets and services valued at $25,100.

     On February 23, 1998,  the Company  issued  7,100,000  shares of its common
stock to non-US  citizens  at $0.001 per  share,  for a total  consideration  of
$7,100.  This issuance was a transaction  exempt from registration under Section
4(2)  of  the  Securities  Act  and  Regulation  D,  Rule  504  thereunder  as a
transaction  not involving a public  offering.  No commission  was paid on these
sales.

     On March 5, 1998,  the Company issued 388,800 shares of its common stock at
$0.50 per share,  for a total  consideration  of $194,400.  This  issuance was a
transaction  exempt from  registration  under Section 4(2) of the Securities Act
and  Regulation D, Rule 504  thereunder as a transaction  not involving a public
offering. No commission was paid on these sales.

     On September 28, 1998,  the Company  escrowed  438,637 shares of its common
stock for the proposed  acquisition of Image  Advertising Plc. These shares were
exempt  from  registration  under  Section  4(2)  of  the  Securities  Act.  The
acquisition  did not occur and said  shares were  returned  to the Company  from
escrow and were cancelled and retired in June, 1999.

     On June 22, 1999,  the Company did an 800 to 1 reverse  split of its common
stock,  resulting in the Company's  issued and  outstanding  common shares going
from 32,588,800 to 40,736 shares.

     On August 31, 1999, the Company  issued  4,000,000 of its commons shares to
the owners of New Cinema Partners,  Inc.  pursuant to an Acquisition  Agreement.
This  transaction  was  exempt  from  registration  under  Section  4(2)  of the
Securities  Act and Rule 144  thereunder.  Stock issued  under these  exemptions
carries certain resale  restrictions and the stock certificates bear restrictive
legends. The Company valued this transaction at $159,435.

     On September 14, 1999,  the Company issued  7,000,000  shares of its common
stock at $0.14 per share, for a total  consideration of $980,000.  This issuance
was a transaction  exempt from registration under Section 4(2) of the Securities
Act and  Regulation  D, Rule 504  thereunder  as a  transaction  not involving a
public offering. No commission was paid on these sales.


     On May 22, 2000, the Company issued  3,000,000 of its commons shares to six
consulting  corporations hired to help the Corporation find a new business. This
transaction  was exempt from  registration  under Section 4(2) of the Securities
Act and Rule 144 thereunder. Stock issued under these exemptions carries certain
resale  restrictions and the stock  certificates bear restrictive  legends.


     On July 4, 2000, the Company issued 10,000,000 of its commons shares to the
owners of New Cinema Partners,  Inc. pursuant to an Acquisition Agreement.  This
transaction  was exempt from  registration  under Section 4(2) of the Securities
Act and Rule 144 thereunder. Stock issued under these exemptions carries certain
resale  restrictions and the stock  certificates bear restrictive  legends.  The
Company valued this transaction at $1,000,000.

     On July 10, 2000,  the Company issued 100,000 shares of Common Stock to Jay
Hait, Esq., valued at $10,000,  for legal services rendered pursuant to Rule 701
promulgated under Section 3(b) of the Securities Act of 1933. The Company relied
on the  following  facts in  determining  that Rule 701 was  available:  (a) the
shares were  issued  pursuant  to a written  agreement  between Mr. Hait and the
Company,  (b) Mr. Hait rendered  bonafide  services not in  connection  with the
offer or sale of securities in capital raising transaction,  (c) the shares were
issued pursuant to a written contract relating to the issuance of shares paid as
compensation  for services  rendered,  and (d) the amount of shares  offered and
sold in reliance on Rule 701 did not exceed  $500,000 and all securities sold in
the last 12 months have not exceeded $5,000,000.

                                       26
<PAGE>
ITEM  5.  INDEMNIFICATION  OF  DIRECTORS  AND  OFFICERS

     The Company's Bylaws, grants  indemnification to the Company's officers and
directors,  present and former, for expenses incurred by them in connection with
any proceeding that they are involved in by reason of their being or having been
an officer or director of the Company.  The person being  indemnified  must have
acted in good faith and in a manner he or she  reasonably  believed  to be in or
not opposed to the best interests of the Company.

     Insofar as  indemnification  for liability arising under the Securities Act
may be permitted to directors or officers the Company  pursuant to the foregoing
provisions,  or  otherwise,  the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore,  unenforceable.  In the event that a claim for
indemnification  against such liabilities (other than the payment by the Company
of  expenses  incurred  or paid by a director  or officer of the  Company in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director or officer in connection  with the  securities  being  registered,  the
Company  will,  unless in the  opinion of its legal  counsel the matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question of 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.

                                        27
<PAGE>


                                   PART F/S

FINANCIAL STATEMENTS.






                               NEW CINEMA PARTNERS
                          (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED FINANCIAL STATEMENTS
                       FEBRUARY 29, 2000 AND MAY 31, 2000


















                                       28
<PAGE>
                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                        CONSOLIDATED FINANCIAL STATEMENTS








                                    CONTENTS



                                                          PAGE

INDEPENDENT AUDITORS' REPORT                                1

CONSOLIDATED BALANCE SHEET                                  2

CONSOLIDATED STATEMENT OF OPERATIONS                        3

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS                4

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY          5

CONSOLIDATED STATEMENT OF CASH FLOWS                        6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                  7-13




                                       29
<PAGE>











                          INDEPENDENT AUDITORS' REPORT




TO THE BOARD OF DIRECTORS OF NEW CINEMA PARTNERS:

We have  audited  the  accompanying  consolidated  balance  sheet of New  Cinema
Partners (A  Development  Stage Company) as of February 29, 2000 and the related
consolidated  statements  of  operations,   comprehensive  loss,   stockholders'
deficiency  and cash flows for the period from February 18, 1999  (inception) to
February 29, 2000.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of New
Cinema  Partners as of February  29,  2000 and the  consolidated  results of its
operations and its cash flows for the period from February 18, 1999  (inception)
to  February  29,  2000  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 1 to the
accompanying  financial  statements,  the Company has no  established  source of
revenue, which raises substantial doubt about its ability to continue as a going
concern.  Management's plans in regard to this matter are also discussed in Note
1. These financial  statements do not include any adjustments  that might result
from the outcome of this uncertainty.



                               /s/MERDINGER, FRUCHTER ROSEN & CORSO
                                  MERDINGER, FRUCHTER ROSEN & CORSO, P.C.
                                  Certified Public Accountants

New York, New York
May 15, 2000






                                       30
<PAGE>

<TABLE>
<CAPTION>
                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS






                                                                        May 31,              February 29,
                                                                         2000                    2000
                                                                  --------------------     ------------------
             ASSETS                                                   (Unaudited)
        CURRENT ASSETS
<S>                                                               <C>                      <C>

          Cash and cash equivalents                               $            7,763       $             99
                                                                  --------------------     ------------------
              Total current assets                                             7,763                     99


       OTHER ASSETS
          Debt issuance costs, net of accumulated amortization
           of $138,900 and $101,000                                          619,100                657,000
                                                                  --------------------     ------------------
             Total assets                                                    626,863                657,099
                                                                  ====================     ==================


             LIABILITIES AND STOCKHOLDERS' EQUITY
         CURRENT LIABILITIES
             Accounts payable                                     $          198,636        $       115,000
             Shareholder advance                                              13,491                 13,994
                                                                  --------------------     ------------------
                Total current liabilities                                    212,127                128,994
             Loan payable - related party                                    150,000                150,000
                                                                  --------------------     ------------------
                Total liabilities                                            362,127                278,994
                                                                  --------------------     ------------------


        STOCKHOLDERS' EQUITY
          Common stock, $0.001 par value;
            100,000,000 shares authorized,
            14,040,736 and 11,040,736
            shares issued and outstanding                                     14,041                 11,041
          Additional paid-in-capital                                       2,213,394              1,886,394
          Deficit accumulated during
            the development stage                                         (1,974,323)            (1,525,634)
          Cumulative foreign currency translation adjustment                  11,624                  6,304
                                                                  --------------------     ------------------
             Total stockholders' equity                                     264,736                 378,105
                                                                  --------------------     ------------------

             Total liabilities and stockholders' equity           $        626,863         $       657,099
                                                                  ====================     ==================


</TABLE>




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

                                      - 2 -

                                       31
<PAGE>
<TABLE>
<CAPTION>


                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF OPERATIONS


                                                                                        February 18,         February 18,
                                                                                            1999                 1999
                                                                   Three Months          (inception)         (inception)
                                                                       Ended           To February 29,     To May 31, 2000
                                                                   May 31, 2000             2000
                                                                -------------------- -------------------- -------------------
                                                                    (Unaudited)                              (Unaudited)
<S>                                                             <C>                  <C>                  <C>
       Revenue                                                  $              -     $               -    $               -


       Selling, general and administrative expenses                       408,289            1,418,134            1,826,423
       Amortization of debt issuance costs                                 37,900              101,000              138,900
       Interest expense                                                     2,500                6,500                9,000
                                                                -------------------- -------------------- -------------------

       Loss from operations before provision for income taxes        (    448,689)         (1,525,634)           (1,974,323)


       Provision for income taxes                                               -                   -                     -
                                                                -------------------- -------------------- -------------------


       Net loss                                                 $    (    448,689)    $    (1,525,634)       $   (1,974,323)
                                                                ==================== ==================== ===================


       Net loss per share - basic and diluted                   $   (        0.04)    $    (     0.21)       $   (     0.25)
                                                                ==================== ==================== ===================

       Weighted average number of common shares
        outstanding                                                    11,366,823           7,218,713             7,969,985
                                                                ==================== ==================== ===================


</TABLE>

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

                                      - 3 -

                                       32
<PAGE>

<TABLE>
<CAPTION>

                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                  CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS




                                           Three Months         February 18, 1999
                                                Ended              (Inception)
                                           May 31, 2000      to February 29, 2000
                                            (Unaudited)

<S>                                             <C>                       <C>

Net loss                                        $ (   448,689)            $ (1,855,634)


Foreign currency translation adjustment                 5,320                    6,304
                                                  ------------               ----------


Comprehensive loss                              $ (   443,369)            $ (1,849,330)
                                                ==============             ============



</TABLE>



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

                                      - 4 -

                                       33
<PAGE>
<TABLE>
<CAPTION>


                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                                                                  Defecit
                                                                                                 Accumulated    Foreign
                                                                                  Additional     During the    Currency
                                                                Common Stock       Paid in       Development   Translation
                                                           Shares       Amount     Capital         Stage       Adjustment    Total
                                                         ----------    --------   ---------- --------------- ----------- -----------
<S>               <C> <C>                                              <C>           <C>      <C>             <C>            <C>
Balance, February 18, 1999 (Inception)                            -    $      -      $     -  $        -      $    -         $    -
                                                                              -                                    -

Sale of common stock, February 18, 1999                   4,000,000       4,000      155,435           -           -        159,435

Acquisition of public shell corporation, August 31, 1999     40,736          41      (    41)          -           -              -

Sale of common stock, September 15, 1999                  7,000,000       7,000      973,000           -           -        980,000

Issuance of options in connection with debt                       -           -      758,000           -           -        758,000

Net loss                                                          -           -            - ( 1,525,634  )        -     (1,525,634)

Foreign currency translation adjustment                           -           -            -           -       6,304          6,304
                                                         -----------   ---------  ---------- ------------    --------    -----------

Balance, February 29, 2000                               11,040,736      11,041    1,886,394 ( 1,525,634  )    6,304        378,105

Issuance of shares in connection with asset acquisition,
  May 22, 2000 (unaudited)                                3,000,000       3,000      297,000           -           -        330,000


Net loss (unaudited)                                              -           -            -  (  448,689  )        -       (448,689)


Foreign currency translation adjustment (unaudited)               -           -            -           -       5,320          5,320
                                                         -----------   ---------  ---------- ------------    --------    -----------


Balance, May 31, 2000 (unaudited)                        14,040,736    $ 14,041   $2,183,394 $(1,974,323  )  $11,624      $264,736
                                                         ===========   =========  ========== ============    ========    ===========


</TABLE>


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

                                      - 5 -

                                       34
<PAGE>
<TABLE>
<CAPTION>

                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                        February 18, 1999
                                                                      Three Months       (Inception) to         February 18, 1999
                                                                     Ended May 31,      February 29, 2000          (Inception)
                                                                          2000                                   to May 31, 2000
                                                                    ----------------- ----------------------   --------------------
                                                                      (Unaudited)                                  (Unaudited)
  CASH FLOWS FROM OPERATING ACTIVITIES
       <S>                                                            <C>                 <C>                    <C>

       Net loss                                                       $  (   448,689)     $      (1,525,634)     $      (1,974,323)
       Stock based compensation                                              330,000                                       330,000
       Amortization of debt issuance costs                                    37,900                101,000                138,900
       Increase in accounts payable                                           83,636                115,000                198,636
                                                                    ----------------- ----------------------   --------------------
  NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
                                                                               2,847             (1,309,634)            (1,306,787)
                                                                    ----------------- ----------------------   --------------------


  CASH FLOWS FROM FINANCING ACTIVITIES -
       Sale of common stock                                                        -              1,139,435              1,139,435
       Proceeds of loan payable                                                    -                150,000                150,000
       Shareholder advances                                          (          503)                 13,994                 13,491
                                                                    ----------------- ----------------------   --------------------

  NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES
                                                                     (          503)              1,303,429              1,302,926
                                                                    ----------------- ----------------------   --------------------

  Effect of currency translation on cash                                       5,320                  6,304                 11,624
                                                                    ----------------- ----------------------   --------------------

  NET INCREASE IN CASH AND CASH EQUIVALENTS
                                                                               7,664                     99                  7,763

  CASH AND CASH EQUIVALENTS -
    beginning of period                                                                                                          -
                                                                                  99                      -
                                                                    ----------------- ----------------------   --------------------

  CASH AND CASH EQUIVALENTS - end of period                                        $                      $                      $
                                                                               7,763                     99                  7,763
                                                                    ================= ======================   ====================

 SUPPLEMENTAL INFORMATION:
     During the period ended February 29, 2000, the Company paid no cash for
     interest or income  taxes.  During the period ended May 31,  2000,  the
     Company paid no cash for interest or income taxes (unaudited).

 SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITY:
     The Company issued options in connection  with obtaining a loan.  These
     options have been valued at $758,000.

     During the period  ended May 31,  2000,  the Company  issued  3,000,000
     shares of Common Stock,  valued at $330,000,  for services  provided in
     connection with an asset acquisition (unaudited).
</TABLE>

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

                                      - 6 -

                                       35
<PAGE>



                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The  accompanying  financial  statements  include  the  accounts  of New  Cinema
Partners ("Nevada"),  a Nevada corporation formed on February 2, 1998 as Valence
9 Development,  Inc. and its wholly owned subsidiary New Cinema  Partners,  Inc.
("Ontario"),  a Canadian  corporation  formed on February 18,  1999.  Nevada and
Ontario  are  collectively  referred  to  as  the  "Company".   All  significant
inter-company accounts and transactions have been eliminated in consolidation.

The Company  conducts its operations from offices  located in Toronto,  Ontario,
Canada.

Effective  August 31, 1999,  Nevada  acquired all of the issued and  outstanding
common  stock of  Ontario.  As a result of this  transaction,  Ontario's  former
shareholder  obtained control of Nevada, a shell corporation with no operations.
For accounting purposes, this acquisition has been treated as a recapitalization
of Ontario.

The financial statements presented include only the accounts of Ontario from its
inception  (February  18,  1999)  through  February  29, 2000 and of Nevada from
August 31, 1999 through February 29, 2000.

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  However,  the Company has no established  source of
revenue.  This factor raises  substantial  doubt about the Company's  ability to
continue as a going concern. Without realization of additional capital, it would
be  unlikely  for the  Company to continue  as a going  concern.  The  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification of recorded asset amounts and  classification of liabilities that
might be necessary should the Company be unable to continue in existence.


In view of the uncertainties  concerning the Company's  continued existence as a
going  concern,  the Company plans to pursue its business plan as an independent
film  production  company.  In order to mitigate the  possibility of the Company
failing to remain a going  concern,  the Company  will  endeavor to initiate the
following steps:




                                      - 7 -

                                       36
<PAGE>

                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000


NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES
        (Continued)

*    Become a fully reporting  company and apply to have its common stock traded
     on the OTC Electronic  Bulletin Board.  Management of the Company  believes
     that should the Company resume trading on the OTC Electronic Bulletin Board
     it will  have a better  chance of  completing  develoipment  financing  for
     selected  projects.  This is a critical element of the Company to investors
     and  possible  improved  liquidity in the trading of the  Company's  common
     stock which would increase the Company's ability to attain financing.

*    The Company  believes it can leverage its current  intellectual  properties
     and  industry   relationships   in  order  to  successfully   proceed  from
     development to production of such projects.

*    Identify the appropriate  financing  strategy to finance one or more of the
     Company's intellectual properties through the development phase.

*    Work closely with global  distributers to secure  production  financing for
     any given project.

*    Pursue any given project.

*    Capitalize on any completed project.

*    Pursue additional intellectual properties.

*    Gain relationships with creative talent including Stars.

*    Repeat the development through production process, if successful.


In  management's  opinion,  the Company has the  potential to realize this plan.
Specifically,  the Company  believes that  intellectual  property  acquired from
Stone Vanyon  Pictures  represents  quality  programs  creatively and could have
broad commercial appeal.  Management also believes that it will be successful at
attracting major talents to projects,  which is a major industry  requirement to
attain  distribution  appeal.  Management  loans should satisfy current expenses
until such time the Company completes  financing and management believes that it
will be capable of maintaining under current  arrangements for at least the next
twelve months.




                                      - 8 -


                                       37
<PAGE>


                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES
         (Continued)


Thereafter,  if cash generated from  operations is  insufficient  to satisfy the
Company's working capital and capital expenditure requirements,  the Company may
be required to sell additional  equity or debt  securities or obtain  additional
credit facilities.  There can be no assurance that such financing,  if required,
will be available on satisfactory terms, if at all.


Unaudited Financial Information
In the opinion of the Company, the accompanying unaudited consolidated financial
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
adjustments)  necessary to present  fairly its financial  position as of May 31,
2000 and the results of its operations and cash flows for the three months ended
May 31, 2000. These statements are condensed and therefore do not include all of
the  information  and  footnotes  required  by  generally  accepted   accounting
principles for complete financial statements.  The results of operations for the
three months ended May 31, 2000 are not necessarily indicative of the results to
be expected for the full year.

Nature of Operations
The Company is currently a development-stage company under the provisions of the
Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") NO. 7.

The  Company is engaged  in the  location  based  entertainment  industry,  with
activities in the location,  design,  construction,  management and operation of
"high tech",  specialized theater venues,  including digital interactive movies,
IMAX films and other  specialized films in the "2D", "3D" format and live action
and animation features.

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

Cash and Cash Equivalents
The Company  considers all highly  liquid  investments  purchased  with original
maturities of three months or less to be cash equivalents.

Concentration of Credit Risk
The Company  places its cash in what it believes to be  credit-worthy  financial
institutions.  However,  cash balances may exceed FDIC insured levels at various
times during the year.


                                      - 9 -

                                       38
<PAGE>

                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES
         (Continued)

Fair Value of Financial Instruments
The carrying value of cash and cash equivalents,  accounts payable, loan payable
and advance from shareholder approximates fair value due to the relatively short
maturity of these instruments.

Income Taxes
Income  taxes are  provided  for  based on the  liability  method of  accounting
pursuant to SFAS No. 109, "Accounting for Income Taxes".  Deferred income taxes,
if any,  are  recorded  to  reflect  the tax  consequences  on  future  years of
differences  between the tax bases of assets and liabilities and their financial
reporting amounts at each year-end.

Translation of Foreign Currency
The Company translates the foreign currency financial statements of its Canadian
subsidiary in accordance with the requirements of SFAS No. 52, "Foreign Currency
Translation".  Assets and liabilities are translated at current  exchange rates,
and related  revenue and expenses are  translated at average  exchange  rates in
effect during the period.  Resulting  translation  adjustments are recorded as a
separate component in stockholders'  equity.  Foreign currency transaction gains
and losses are included in the statement of operations.

Earnings Per Share
The  Company  calculates  earnings  per share in  accordance  with SFAS No. 128,
"Earnings Per Share",  which requires  presentation  of basic earnings per share
("BEPS") and diluted  earnings per share  ("DEPS").  The  computation of BEPS is
computed by dividing  income  available to common  stockholders  by the weighted
average number of outstanding common shares during the period. DEPS gives effect
to all dilutive  potential  common  shares  outstanding  during the period.  The
computation of DEPS does not assume conversion,  exercise or contingent exercise
of securities that would have an antidilutive effect on earnings. As of February
29, 2000, the Company has no securities that would effect loss per share if they
were to be dilutive.

Comprehensive Income
SFAS No. 130, "Reporting  Comprehensive  Income",  establishes standards for the
reporting  and  display  of  comprehensive  income  and  its  components  in the
financial statements. The items of other comprehensive income that are typically
required to be displayed are foreign currency items,  minimum pension  liability
adjustments,  and unrealized gains and losses on certain investments in debt and
equity securities.


                                     - 10 -
                                       39
<PAGE>

                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000




NOTE 2 -          CORPORATE REORGANIZATION AND MERGER

On August 31, 1999,  Nevada, a public shell, and Ontario executed an Acquisition
Agreement (the  "Agreement")  that provided that Nevada would acquire all of the
issued  and  outstanding  common  stock  of  Ontario.  In  connection  with  the
transaction, the sole shareholder of Ontario received 4,000,000 shares of Nevada
common stock for its 4,000,000 shares of Ontario.

As a result of this  transaction the former  shareholder of Ontario  acquired or
exercised  control  over a majority  of the shares of Nevada.  Accordingly,  the
transaction has been treated for accounting  purposes as a  recapitalization  of
Ontario and, therefore,  these financial  statements represent a continuation of
the accounting acquirer, Ontario, not Nevada, the legal acquirer.



In accounting for this transaction:

i)   Ontario is deemed to be the purchaser and surviving  company for accounting
     purposes.  Accordingly, its net assets are included in the balance sheet at
     their historical book values;

ii)  Control of the net assets and  business  of Nevada was  acquired  effective
     August 31, 1999 (the "Effective Date"). This transaction has been accounted
     for as a purchase of the assets and  liabilities  of Nevada by Ontario.  At
     the effective date Nevada had no assets or liabilities.

iii) The consolidated  statements of operations and cash flows include Ontario's
     results  of  operations  and cash  flows from  February  18,  1999 (date of
     inception) and Nevada's results of operations from the Effective Date.

NOTE 3 - INCOME TAXES

The  components  of the  provision for income taxes for the period from February
18, 1999 (inception) to February 29, 2000, are as follows:

                     Current Tax Expense
                         U.S. Federal                         $           -
                         State and Local                                  -
                                                              --------------
                     Total Current                                        -

                                     - 11 -
                                       40

<PAGE>
                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000


                     Deferred Tax Expense
                         U.S. Federal                                     -
                         State and Local                                  -
                     Total Deferred                                       -

                     Total Tax Provision (Benefit) from
                      Continuing Operations                    $           -
                                                               =============

     The  reconciliation  of the  effective  income  tax  rate  to  the  Federal
statutory rate is as follows:

                    Federal Income Tax Rate                          34.0%
                    Effect of Valuation Allowance                (   34.0)%
                                                                ---------
                    Effective Income Tax Rate                         0.0%
                                                              ===========


At February 29, 2000, the Company had net  carryforward  losses of approximately
$1,526,000.  Because of the current uncertainty of realizing the benefits of the
tax carryforward,  a valuation  allowance equal to the tax benefits for deferred
taxes has been established.  The full realization of the tax benefit  associated
with the  carryforward  depends  predominantly  upon the  Company's  ability  to
generate taxable income during the carryforward period.

Deferred  tax assets and  liabilities  reflect  the net tax effect of  temporary
differences  between the carrying amount of assets and liabilities for financial
reporting  purposes  and  amounts  used for  income  tax  purposes.  Significant
components of the Company's  deferred tax assets and  liabilities as of February
29, 2000 are as follows:

 Deferred Tax Assets
  Loss Carryforwards                          $    519,000

  Less:  Valuation Allowance                   (   519,000)
                                              ------------
  Net Deferred Tax Assets               $                -
                                         ==================

 Net operating loss carryforwards expire in 2020.

NOTE 4 - COMMON STOCK

On  September  15,  1999,  the Company sold  7,000,000  shares of common  stock,
pursuant to a private placement, for  proceeds of $980,000.


On May 22, 2000, the Company issued 3,000,000 shares for services (see note 7).


                                     - 12 -

                                       41
<PAGE>
                               NEW CINEMA PARTNERS
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000


NOTE 5 - LOAN PAYABLE - RELATED PARTY


The Company received a loan from Pueblo Trust, a related party, in the amount of
$150,000.  The loan bears  interest at 6.5% per year and is due on July 9, 2004.
The Pueblo Trust is the majority  shareholder of Ultimatte  Entertainment,  Ltd.
Which was a control block shareholder..

In  connection  with  obtaining  this  loan,  the  Company  granted an option to
purchase  250,000  shares  of  common  stock to a third  party.  The  option  is
exercisable  at $2.50 per  share  for nine  months  after  the  Company  files a
registration statement.  This option has been valued at $758,000 using the Black
Sholes option pricing model with the following  assumptions:  Interest rate, 4%;
Volatility rate, 200%; Expected life, 1 year; Dividend yield, $0.

The Company had an urgent need for cash at the time the loan was made, to meet
crital cash requirements.  Due to its precarious financial postion, the Company
was required to provide favorable terms in the options issued in connection with
obtaining the financing.


NOTE 6 - SHAREHOLDER ADVANCES

A shareholder  has advanced funds to the Company for working  capital  purposes.
These advances bear no interest and are due upon demand.


NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company leases its premises on a month-to-month basis. Rent expense included
in the statement of operations for the initial period ended February 29, 2000 is
$47,612.

The Company had  previously  occupied  premises  in a  different  location.  The
Company  maintains that it did not sign, and did not enter into, a lease for the
previous  location.  The real estate property manager  maintains that there is a
five-year lease, and that legal action has commenced to recover outstanding rent
and damages. The Company has no knowledge of any legal action, believes there is
no merit to any  possible  action,  and has not  included  a  provision  for any
outstanding rent or damages in these financial statements.

NOTE 8 -  ASSET ACQUISITION COSTS


On May 22, 2000, the Company issued 3,000,000 shares of Common Stock,  valued at
$330,000,  in  connection  with the asset  acquisition  described in Note 9. The
amount has been recorded as an expense in the statement of operations.


NOTE 9 - SUBSEQUENT EVENTS


The  Company   consummated  an  asset  purchase   agreement   acquiring  certain
intellectual  properties,  comprising  scripts and storylines,  owned by 1255234
Ontario,  Inc.,  also known as Stone  Canyon  Pictures.  The  purchase  price is
10,000,000  shares  of  Company  common  stock,   valued  at  $0.10  per  share.




                                     - 13 -

                                       42
<PAGE>
                                  PART IV

ITEM 1.  EXHIBIT INDEX.

EXHIBIT
NUMBER        DESCRIPTION                          LOCATION
-------  ------------------------------  ----------------------------
(2)      Articles of Incorporation
         and Bylaws:

   2.1   Articles of Incorporation*       Filed electronically herewith

   2.2   Bylaws*

   6.1   Employment and Non-competition Agreements with Damian Lee**


(10)(a)  Consents - Experts:

    10.1 Consent of Accountant*

    27   Financial Data Schedule*

*  Incorporated by reference from the Company's Form 10-SB
   filed on August 9, 2000.

** Filed electronically herewith
                                        47

<PAGE>


                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, there unto duly authorized.

                                        NEW CINEMA PARTNERS
                                        (Registrant)



Date:  August 8, 2000                   By:  /s/ Damian Lee
                                            ----------------------------
                                             Damian Lee
                                            Chairman  and
                                            Chief  Executive  Officer

     In accordance with the requirements of the Securities Exchange Act of 1934,
this  Disclosure  Statement  has been  signed by the  following  persons  in the
capacities and on the dates stated.



Signature                          Title                   Date



/s/  Martin Lapedus         Chief Financial Officer and     August 8, 2000
----------------------      a  Director
Martin Lapedus


/s/   Paul Walters          Director                        August 8, 2000
----------------------
Paul Walters


/s/ Marvin Sazant           Director                        August 8, 2000
----------------------
Marvin Sazant



/s/ John Cox                Director                        August 8, 2000
----------------------
John Cox

                                       48
<PAGE>
EX-6.1

This Agreement made the 5th day of September, 2000

BETWEEN:

(1)      Damian Lee
         Whose registered address is:
         102 Bloor St. W.
         Penthouse #1
         Toronto, ON  M5S 1M8
         Canada


         (the "Employee")

and

(2)      New Cinema Partners
         Whose registered head office is at:
         355 Bay Street, Suite 404
         Toronto, ON  M5H 2T7

         (the "Company")

Recitals

WHEREAS the Employee has certain  skills and  abilities  which are useful to the
ongoing development and growth of the Company; and

WHEREAS  the  Company is engaged in the  business of  developing  and  marketing
intellectual  property in the  Entertainment  field and requires the Employee to
perform various services in connection with the ongoing development,  leadership
and finance of the Company;

SERVICES

1.01 The Employee  agrees to provide the following  services to the Company upon
     the terms and conditions set out in this Agreement:



a)   The Employee shall submit a written report to the the board of directors of
     the Company,  on a monthly basis,  on the  developments of the Company with
     the task of developing the  intellectual  properties  which the Company has
     acquired from Stone Canyon  Pictures and other  projects  which may develop
     from time to time (The "Projects").

     Additionally,  the employee shall  participate in all corporate tasks which
     may be  required  in the  companies  efforts to regain  its  listing on the
     NASDAQ  Bullitin  Board and agrees to  maintain  all  listing  requirements
     subsequent to the filing of the initial Form 10-SB.(the "Objective")

b) Any  relative  tasks and  services  as may be  dictated  in  relation  to the
Objective including and not limited to:

1.       The Development of the Business Plan
2.       The Development of Proforma Financial Projections
3.       The Development of a Plan of Finance for the Company
4.       The Development of a Plan of Finance for the Projects.
5.       Carry out the tasks and objectives as set forth
         in the Business and Financial Plans.
6.       Carrying out the tasks as required by law for reporting purposes.
7.       Any further studies or consultation that would lend to
         the Objective of the Company.

1.02 The Employee shall provide his/her  services with reasonable care and skill
     and to the  best of  his/her  ability  principally  at the  address  of the
     Company.

1.03     The Employee shall act under this Agreement as an an Employee.

1.04 The Employee  reserves full control of his/her  activities as to the method
     and manner of performing services under this Agreement.

TERM

2.01 This Agreement shall be for a period of One Year (12) Months  commencing on
     the 5th of September, 2000 and terminating on the 5th of September, 2000.

FEE

3.01 The Company  shall pay to the Employee a fee of $10,000 per month,  payable
     on the 15th of each month commencing in September, 2000.

3.02     It is further  understood  that the Executive  earns  various  industry
         standard  professional  fees  from the  exploitation  of the  Projects.
         Including but not limited to Producers  Fees,  Writers Fees (other than
         those  scripts  which have  previously  been  acquired by the Company),
         Directors Fees, Acting Fees, etc.

4.01     The  Company  shall  reimburse  the  Employee  for  all  out of  pocket
         expenses, long distance telephone, fax, and travel incurred as a result
         of the  performance  of his duties under this  Agreement.  The Employee
         shall  provide  the Company  with  documentation  or other  evidence of
         actual payment and shall invoice the Company  separately.  Such invoice
         will be payable by the Company within ten (10) days of receipt thereof.

4.02     It is  understood  that until such time as the Company  has  sufficient
         funds as will be provided  under the Finance Plan to make payment under
         the  terms of this  agreement  that  the  Executive  will be owed  such
         compensation   however   accrued   until   payment  is  available   for
         distribution to the Executive.

TERMINATION

(a)      5.01 Without  limiting the foregoing,  either party may upon six months
         (180) days if prior to the Company receiving it's lisitng on the NASDAQ
         Bullitin Board or sixty (60) days if after such listing through written
         notice terminate this Agreement

PROVIDED that the Company may not terminate this Agreement solely for the reason
of the  Employee's  absence  through  illness or injury  unless such  illness or
injury  prevents the Employee  from  providing any services to the Company for a
period of two  consecutive  weeks,  or an  aggregate  period two weeks in any 12
calendar months.




CONFIDENTIAL INFORMATION

6.01 The Employee  agrees to treat as confidential  any information  relating to
     the Company's technology, technical processes, business affairs or finances
     or any  other  information  relating  to  the  Company,  its  subsidiaries,
     affiliates,  suppliers or customers, learned solely as a result of services
     performed under this Agreement.

6.02 Upon  termination  of this  Agreement  the  Employee  shall  deliver to the
     Company any and all documents, computer disks or other material prepared by
     him/her pursuant to this Agreement.

Notice

7.01 Any notice given by either party under this  Agreement  shall be in writing
     and  shall be sent by mail or  facsimile  transmission  to the  last  known
     address of the other party.

Entire Agreement

8.01 This Agreement constitutes the entire Agreement between the parties.

GOVERNING LAW

9.01 This Agreement shall be construed in accordance with the laws of Ontario.

Agreed to this 5th day of August, 2000.

New Cinema Partners


/s/ Martin Lapedus
By: Martin Lapedus, CFO

The Executive


         /s/ Damian Lee
Damian Lee


<PAGE>


                   CONFIDENTIALITY & NON-COMPETITION AGREEMENT

         THIS AGREEMENT is made the 5th day of September, 2000,

B E T W E E N:

                              NEW CINEMA PARTNERS,
                        a corporation incorporated under
                         the laws of the State of Nevada
                               (the "Corporation")

                                     - and -

                                  Damian Lee ,
                          an individual residing in the
                                 City of Toronto
                           in the Province of Ontario
                                (the "Executive")

         WHEREAS:

1.  The Corporation is employing the Executive as its President and C.E.O. ; and

2.       The  Corporation  desires  to  receive  from  the  Executive  covenants
         relating   to   non-disclosure   of   confidential    information   and
         non-competition, and the employment of the Executive by the Corporation
         is conditional on the Corporation receiving such covenants,

         THE PARTIES AGREE AS FOLLOWS:

1.       Treatment of Information

         (a) The Executive  acknowledges  that as the of the  Corporation and in
any other  positions  that the  Executive  may  hold,  in and as a result of the
Executive's  employment  by the  Corporation,  the Executive  shall,  or may, be
making use of,  acquiring or adding to  information  about  certain  matters and
things which are  confidential to the  Corporation and which  information is the
exclusive property of the Corporation.

         (b)  As a  material  inducement  to the  Corporation  to  employ  or to
continue to employ the Executive and to pay to the  Executive  compensation  for
such  services to be  rendered to the  Corporation  by the  Executive  (it being
understood  and agreed by the parties that the  compensation  shall also be paid
and received in consideration of this agreement),  the Executive agrees that the
Executive shall not,  except with the prior written consent of the  Corporation,
or except if the  Executive is acting as an employee of the  Corporation  solely
for the benefit of the Corporation in connection with the Corporation's business
and in accordance  with the  Corporation's  business  practices  and  employment
policies, at any time during or following the term of the Executive's employment
by the Corporation,  directly or indirectly,  disclose, divulge, reveal, report,
publish,  transfer or use for any purpose any of the information  which has been
obtained  or  disclosed  to the  Corporation  as a  result  of  the  Executive's
employment by the Corporation,  including any of the information  referred to in
section 2.
         (c)  Disclosure  of any  information  of the  Corporation  shall not be
prohibited if the disclosure is directly  pursuant to a valid and existing order
of a court  or  other  governmental  body or  agency  within  Canada;  provided,
however,  that (i) the  Executive  shall first have given  prompt  notice to the
Corporation  of any possible or  prospective  order (or  proceeding  pursuant to
which any order may result), and (ii) the Corporation shall have been afforded a
reasonable opportunity to prevent or limit any disclosure.

2.       Definition of Protected Information

         (a) For purposes of this agreement,  the term  "Protected  Information"
shall mean all of the  information  referred  to in  paragraph  1 and all of the
following  materials  and  information  (whether  or not  reduced to writing and
whether or not  patentable  or  protectible  by  copyright)  which the Executive
receives, received access to, conceived or developed, in whole or part, directly
or  indirectly,   in  connection  with  the  Executive's   employment  with  the
Corporation or in the course of the Executive's  employment with the Corporation
(in any capacity, whether executive,  managerial,  planning,  technical;  sales,
research, development,  manufacturing,  engineering or otherwise) or through the
use of any of the Corporation's facilities or resources:

         (i)      production  processes,  marketing techniques and arrangements,
                  mailing  lists,  purchasing  information,   pricing  policies,
                  quoting  procedures,   financial  information,   customer  and
                  prospect names and requirements,  employee, customer, supplier
                  and  distributor  data  and  other  materials  or  information
                  relating to the Corporation's  business and activities and the
                  manner in which the Corporation does business;

         (ii)     discoveries,    concepts,   and   ideas   including,   without
                  limitation, the nature and results of research and development
                  activities,   processes,  formulas,  inventions,   technology,
                  techniques, "know-how" designs, drawings and specifications;

         (iii)    any other materials or information  related to the business or
                  activities of the Corporation which are not generally known to
                  others engaged in similar businesses or activities; and

          (iv) all ideas  which are derived  from or related to the  Executive's
               access to or knowledge of any of the above  enumerated  materials
               and information.

         (b) Failure to mark any of the Protected  Information as  confidential,
proprietary or Protected  Information shall not affect its status as part of the
Protected Information under the terms of this agreement.

         (c) For purposes of this agreement,  the term  "Protected  Information"
shall not include  information  which is or becomes publicly  available  without
breach of (i) this  agreement,  (ii) any other  agreement or instrument to which
Corporation  is a  party  or a  beneficiary,  or  (iii)  any  duty  owed  to the
Corporation  by the Executive or any third party;  provided,  however,  that the
Executive  acknowledges and agrees that, except as otherwise provided in section
1(c), if the Executive shall seek to disclose, divulge, reveal, report, publish,
transfer or use, for any purpose, any Protected Information, the Executive shall
bear the burden of proving  that any  information  shall  have  become  publicly
available without any breach.

3.       Ownership of Information

         (a) Subject to section 3(c), the Executive acknowledges and agrees that
all rights,  title and interest in any  Protected  Information  shall remain the
exclusive property of the Corporation.  Accordingly,  the Executive specifically
agrees  and  acknowledges  that he  shall  have  no  interest  in the  Protected
Information,  including, without limitation, no interest in know-how, copyright,
trade-marks or trade names, notwithstanding the fact that the Executive may have
created or contributed to the creation of the same.

         (b) The  Executive  does  hereby  waive  any  moral  rights  which  the
Executive may have with respect to the Protected Information.

         (c) Sections  3(a) and (b) shall not apply in respect of any  invention
for which no  equipment,  supplies,  facility or  Protected  Information  of the
Corporation was used, which was developed  entirely on the Executive's own time,
and which does not (i) relate to the business of the Corporation, (ii) relate to
the  Corporation's  actual or demonstrably  anticipated  processes,  research or
development,  or (iii) result from any work  performed by the  Executive for the
Corporation. The Executive agrees immediately to disclose to the Corporation all
Protected  Information developed in whole or in part by the Executive during the
term of the  Executive's  employment  with the  Corporation and to assign to the
Corporation any right, title or interest the Executive may have in the Protected
Information. The Executive agrees to execute any instruments and to do all other
things  reasonably  requested  by the  Corporation  (both  during  and after the
Executive's  employment with the Corporation) in order to vest more fully in the
Corporation all ownership rights in those items  transferred by the Executive to
the Corporation.

4.       Covenants Not to Compete

         The Executive  shall not,  except with the prior written consent of the
Corporation,  at any time during the period of the  Executive's  employment with
the  Corporation  and for a  further  period  of two  (2)  years  following  the
termination of the  Executive's  employment  with the Corporation for any reason
whatsoever, directly or indirectly, in any manner whatsoever, including, without
limitation,  either individually or in partnership or jointly, or in conjunction
with any person or persons,  as principal,  agent,  shareholder  or in any other
manner  whatsoever,  carry  on or be  engaged  in  or  be an  employee  of or be
concerned  with, or lend money to, or guarantee the debts or obligations  of, or
permit  his name or any part  thereof  to be used or  employed  by any person or
persons  engaged in or concerned  with or  interested in a business in Canada or
the United States that is competitive with or similar to the business carried on
by the Corporation from time to time. In this section 4, the term "person" shall
mean and include any individual, corporation,  partnership, firm, joint venture,
syndicate,  association,  trust,  government,  governmental  agency  or board or
commission or authority, and any other form of entity or organization.

5.       Covenants Not to Hire Employees

         It is  recognized  and  understood by the parties that the employees of
the Corporation are an integral part of the  Corporation's  business and that it
is extremely important for the Corporation to use its maximum efforts to prevent
the  Corporation  from losing those  employees.  It is therefore  understood and
agreed by the  parties  that,  because of the nature of the  business  as of the
Corporation,  it is necessary to afford fair protection to the Corporation  from
the  loss  of  any  employees.  Consequently  as a  material  inducement  to the
Corporation  to employ the Executive,  the Executive  covenants and agrees that,
for the period  commencing  on the date of the  termination  of the  Executive's
employment with the Corporation,  for any reason whatsoever,  and ending two (2)
years after the termination of the Executive's  employment with the Corporation,
the Executive  shall not,  directly or indirectly,  hire or engage or attempt to
hire or engage any individual who shall have been an employee of the Corporation
at any time during the one (1) year period prior to the date of the  Executive's
termination of employment with the Corporation,  whether for or on behalf of the
Executive  or for any  entity  in which  the  Executive  shall  have a direct or
indirect  interest,  or any subsidiary of affiliate of any entity,  whether as a
proprietor, partner, co-venturer,  financier, investor or stockholder, director,
officer, employer, employee, servant, agent, representative or otherwise.

6.       Injunctive Relief

         The Executive  understands and agrees that the Corporation shall suffer
irreparable harm in the event that the Executive breaches any of the Executive's
obligations  under this agreement and that monetary  damages shall be inadequate
to compensate the Corporation for the breach. Accordingly,  the Executive agrees
that, in the event of a breach or  threatened  breach by the Executive of any of
the provisions of this  agreement,  the  Corporation,  in addition to and not in
limitation of any other rights, remedies or damages available to the Corporation
at law or in equity,  shall be entitled to an interim injunction,  interlocutory
injunction and permanent  injunction in order to prevent or to restrain any such
breach  by  the  Executive,  or by any  or  all  of  the  Executive's  partners,
co-venturers,  employers,  employees,  servants, agents, representatives and any
and all  persons  directly  or  indirectly  acting for, on behalf of or with the
Executive.

7.       Materials

         All notes, data, tapes, reference items, sketches, drawings, memoranda,
records,  files, diskettes and other materials in any way relating to any of the
information   referred  to  in  sections  1  and  2  (including   any  Protected
Information) or to the  Corporation's  business shall belong  exclusively to the
Corporation  and the  Executive  agrees  to turn  over  to the  Corporation  all
originals and all copies of the materials in the Executive's possession or under
the Executive's  control at the request of the Corporation or, in the absence of
a  request,   on  the  termination  of  the  Executive's   employment  with  the
Corporation.

8.       Accounting for Profits; Indemnification

         The  Executive  agrees that if the  Executive  shall violate any of the
Executive's covenants or agreements under this agreement,  the Corporation shall
be  entitled  to an  accounting  and  repayment  of all  profits,  compensation,
royalties,  commissions,  remunerations or benefits which the Executive directly
or indirectly shall have realized or may realize relating to, growing out of, or
in connection with any violations; the remedy shall be in addition to and not in
limitation  of any  injunctive  relief or other  rights or remedies to which the
Corporation  is or may be entitled at law or in equity or  otherwise  under this
agreement. The Executive agrees to defend, indemnify the Corporation against and
in respect of (i) any and all losses and  damages  resulting  from,  relating or
incident to, or arising out of any  misrepresentation or breach by the Executive
of any warranty,  covenant or agreement made or contained in this agreement; and
(ii) any and all actions, suits, proceedings,  claims, demands, judgments, costs
and expenses (including reasonable lawyers' fees) incidental to the foregoing.

9.       Reasonableness of Restriction; Severability

         (a) The Executive has carefully  read and  considered the provisions of
sections 1 through 8 and, having done so, agrees that the restrictions set forth
in these paragraphs are fair and reasonable and are reasonably  required for the
protection  of  the  interests  of  Corporation  and  its  business,   officers,
directors, and employees. The Executive further agrees that the restrictions set
forth in this  agreement  shall not  impair  the  Executive's  ability to secure
employment  within  the  field or fields of the  Executive's  choice  including,
without limitation, those areas in which the Executive is, is to be, or has been
employed by the Corporation.

         (b) In the event that any  provision  or part of any  provision of this
agreement shall be deemed void or invalid by a court of competent  jurisdiction,
the remaining  provisions or parts shall be and remain in full force and effect.
The Executive agrees that the breach or alleged breach by the Corporation of:

         (i)      any covenant contained in another agreement (if any)
                  between the Corporation and the Executive, or

         (ii)     any obligation owed to the Executive by the Corporation,

shall not affect the validity or  enforceability of the covenants and agreements
of the Executive set forth in this agreement.

10.      No Prior Agreements

         The Executive  represents the Executive's  performance of all the terms
of this agreement do not and shall not breach any fiduciary or other duty or any
covenant,  agreement or understanding  (including any agreement  relating to any
proprietary  information,  knowledge  or  data  acquired  by  the  Executive  in
confidence,  trust or  otherwise  prior  to the  Executive's  employment  by the
Corporation)  to which  the  Executive  is a party or by the  terms of which the
Executive may be bound.  The  Executive  covenants and agrees that the Executive
shall not  disclose to the  Corporation,  or induce the  Corporation  to use any
proprietary information, knowledge or data belonging to any previous Corporation
or others.  The  Executive  further  covenants  and agrees not to enter into any
agreement  or  understanding,  either  written  or oral,  in  conflict  with the
provisions of this agreement.

11.      Executive's Status

         Nothing  in  this  agreement  shall  be  construed  as  constituting  a
commitment, guarantee, agreement or understanding of any kind or nature that the
Corporation  shall  continue to employ the  Executive,  nor shall this agreement
affect in any way the right of the  Corporation  to terminate the  employment of
the  Executive  at any time and for any  reason.  No change  of the  Executive's
duties as an Executive of the Corporation shall result in, or be deemed to be, a
modification of the terms of this agreement.

12.      Independent Legal Advice

         The Executive  represents and warrants to the  Corporation  that (i) he
has  read and  understands  this  Agreement,  and (ii)  that he has  either  (a)
obtained independent legal advice in connection with his execution, delivery and
performance of this  Agreement,  or (b)  voluntarily  elected not to obtain such
advice.

13.      Burden and Benefit; Corporation

         This agreement  shall be binding on, and shall enure to the benefit of,
the  Corporation and the Executive,  and their  respective  heirs,  personal and
legal  representatives,  successors and assigns. As used in this agreement,  the
term  "Corporation"  shall also  include any  corporation  or entity  which is a
parent,  subsidiary or affiliate of the Corporation.  The Executive  consents to
the enforcement of any and all of the provisions of this agreement by or for the
benefit  of the  Corporation  and any  other  corporation  or  entity  as to any
Protected Information.

14.      Governing Law

         This  agreement  shall at all times and in all respects be governed and
construed in accordance  with the laws of the Province of Ontario,  as they were
as at the date of execution of this agreement by both parties hereto.

15.      Notices

         (a) Any notice required or permitted to be given to the Executive shall
be sufficiently given, if delivered to the Executive  personally or if mailed by
registered mail to the Executive's address last known to the Corporation.

         (b) Any notice  required or  permitted  to be given to the  Corporation
shall be sufficiently  given if mailed by registered  mail to the  Corporation's
head office at its address last known to the Executive.

         (c)      Any notice given by mail shall be deemed to have been given
                  forty eight (48) hours after the time it is posted.

         16.      Entire Agreement

         This agreement  contains the entire agreement and  understanding by and
between the  Corporation  and the Executive with respect to the subject  matter,
and no representations, promises, agreements or understandings, written or oral,
express or implied,  not contained in this agreement,  shall be valid or binding
unless the same is in writing and signed by the party  intended to be bound.  No
waiver of any provision of this agreement shall be valid unless it is in writing
and  signed  by the party  against  whom the  waiver  is sought to be  enforced;
moreover,  no valid waiver of any provision of this agreement at arty rime shall
be deemed a waiver of any other provision of this agreement at the time or shall
be deemed a valid waiver of the provision at any other time.

17.      Headings

         The headings and other captions in this  agreement are for  convenience
and  reference  only  and are not to be  construed  in any way as  additions  or
limitations of the covenants and agreements contained in this agreement.

         IN  WITNESS  WHEREOF,  the  Corporation  and the  Executive  have  duly
executed this agreement on the date first written above.


                                       NEW CINEMA PARTNERS INC.


                                       Per:     ___/s/ Martin Lapedus
                                          ---------------------------------
                                       Name:     __ Martin Lapedus
---------------------------------
                Witness
                                       Title: Chief Financial Executive
                                      I have authority to bind this Corporation.



                                       DAMIAN LEE, (The Executive)

                                       Name: /s/ DAMIAN LEE,
                                            ---------------------------------



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