ODYSSEY PICTURES CORP, S-1/A, 1997-07-02

ODYSSEY PICTURES CORP
S-1/A, 1997-07-02
MOTION PICTURE & VIDEO TAPE PRODUCTION

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1997

REGISTRATION NO. 333-20701
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

ODYSSEY PICTURES CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
NEVADA 7820 95-4269048
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
or Incorporation or Classification Code Number) Identification
Organization) Number)
</TABLE>

1875 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(310) 229-2430
(Address, including zip code, and telephone number, including area code,
of Registrant's Principal Executive Office)

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

HOWARD J. KERKER, ESQ.
600 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 758-0700
(Address, including zip code, and telephone number, including area code, of
Agent for Service)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If any of the securities being registered on this Form are offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of earlier effective registration statement for
the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE
<S> <C> <C> <C>
Common Stock, par value $.01 per share............ 1,210,622 $ .44 $532,674
Common Stock, par value $.01 per share............ 500,000 1.06 $530,000

<CAPTION>
AMOUNT OF
TITLE OF EACH CLASS OF REGISTRATION
SECURITIES TO BE REGISTERED FEE(3)
<S> <C>
Common Stock, par value $.01 per share............ $184
Common Stock, par value $.01 per share............ $183
</TABLE>

(1) Includes 1,210,622 shares of Common Stock issued by the Company to selling
stockholders (of which 170,455 Shares have been estimated for purposes of
determining the amount of the registration fee, but which amount will be
finally determined on the effective date), and 500,000 shares of Common
Stock underlying warrants issued by the Company.

(2) Estimated solely for the purpose of determining the amount of the
registration fee pursuant to Rule 457 under the Securities Act of 1933 on
the basis of the closing price of the Company's Common Stock on June 18,
1997 ($.44 per share), as reported on National Association of Securities
Dealers, Inc.'s Bulletin Board Trading System, and the exercise price of
Common Stock purchase warrants ($1.06 per share), the underlying shares of
which are included herein.

(3) Total registration fee of $367 is less than the $1,125 registration fee paid
with original filing; no additional fee paid herein.

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

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 501

<TABLE>
<CAPTION>
FORM S-1 CAPTION AND LOCATION IN
ITEM NO. INFORMATION CALLED FOR BY ITEM PROSPECTUS OR REGISTRATION STATEMENT
- ------------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
1 Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........... Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus
2 Inside Front and Outside Back Cover Pages
of Prospectus.................................... Additional Information; Outside Back Cover Page of
Prospectus
3 Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges............... Prospectus Summary, Page ; Risk Factors, Page
; Ratio of Earnings to Fixed Charges,
Inapplicable
4 Use of Proceeds.................................... Use of Proceeds, Page
5 Determination of Offering Price.................... Outside Front Cover Page of Prospectus;
Determination of Offering Price, Page
6 Dilution........................................... Dilution, Page
7 Selling Security Holders........................... Selling Stockholders, Page
8 Plan of Distribution............................... Outside Front Cover Page of Prospectus; Plan of
Distribution, Page
9 Description of Securities to be Registered......... Description of Securities, Page
10 Interests of Named Experts and Counsel............. Interests of Named Experts and Counsel, Page
11 Information with Respect to the Registrant......... Price Range of Common Stock, Page ; Dividend
Policy, Page ; Selected Consolidated
Financial Data, Page ; Management's
Discussion and Analysis of Financial Conditions
and Results of Operations, Page ; Business,
Page ; Legal Proceedings, Page ;
Management, Page ; Certain Relationships and
Related Transactions, Page ; Principal
Stockholders, Page ; Description of
Securities, Page ; Shares Eligible for Future
Sale, Page ; Index to Financial Statements,
Page F-1
12 Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities...................................... Undertakings, Page II-
13 Other Expenses of Issuance and
Distribution..................................... Other Expenses of Issuance and Distribution, Page
II-
14 Indemnification of Directors and Officers.......... Indemnification of Directors and Officers, Page II-
15 Recent Sales of Unregistered Securities............ Recent Sales of Unregistered Securities,
Page II-
16 Exhibits and Financial Statement Schedules......... Exhibits, Page II-
17 Undertakings....................................... Undertakings, Page II-
</TABLE>

i
<PAGE>
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED JULY 2, 1997

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

1,710,622 SHARES

ODYSSEY PICTURES CORPORATION

COMMON STOCK
------------------

This Prospectus relates to the subsequent resale or offer for sale by
Selling Stockholders (as hereinafter defined) of up to 1,710,622 shares (the
Shares) of Common Stock, par value $.01 per share ("Common Stock"), of Odyssey
Pictures Corporation ("Odyssey" or the "Company"), a Nevada corporation,
including 1,210,622 Shares currently owned by the Selling Stockholders and
500,000 Shares which may be issued to the Selling Stockholders upon the exercise
of Common Stock Purchase Warrants granted by the Company (the "Warrants"). The
distribution of the Shares may be effected in one or more transactions through
one or more brokers or dealers, or in privately negotiated transactions, at
market prices prevailing at the time of sale or at prices otherwise negotiated.
All of the Shares offered hereby are being offered by certain of the Company's
stockholders (the "Selling Stockholders"). The Company will not receive any of
the proceeds from the sale of the Shares except in connection with the prior
exercise of the Warrants by the Selling Stockholders.

Upon any sale of the Shares covered by this Prospectus, Selling Stockholders
and any participating brokers or dealers may be deemed to be underwriters as
that term is defined in the Securities Act of 1933, as amended (the "Act"), and
commissions or discounts or any profits realized on the sale of such Shares
received by Selling Stockholders and such brokers or dealers may be deemed to be
underwriting commissions or discounts within the meaning of the Act.

The Common Stock of the Company trades in the over-the-counter market on the
NASDAQ's OTC Bulletin Board under the symbol "OPIX". On June 18, 1997, the
closing price of the Common Stock was $.44 per share. Trading in the Common
Stock is subject to specific penny stock rules that impose substantial burdens
on the marketability of the Common Stock. See "Risk Factors--Loss of Nasdaq
Small Cap Market Listing."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
DISCOUNTS AND SELLING
PRICE TO PUBLIC(1) COMMISSIONS(2) STOCKHOLDERS(3)
<S> <C> <C> <C>
Per Share.......................................... $ -- $
Total(4)........................................... $ -- $
</TABLE>

(1) Estimated based on the closing bid price of the Common Stock on ,
1997. The Shares being offered hereby will be offered from time to time by
the Selling Stockholders based on the prevailing market price for the Shares
at the time of sale.

(2) There are no underwriting costs involved.

(3) Before deducting estimated offering expenses of $125,000.

(4) Assumes the sale of 1,210,622 Shares currently owned by the Selling
Stockholders, the exercise of 500,000 Warrants owned by the Selling
Stockholders, and the subsequent sale of the Shares underlying the Warrants.

THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
(This page has been left blank intentionally.)

2
<PAGE>
PROSPECTUS SUMMARY
THE COMPANY

Odyssey Pictures Corporation ("Odyssey" or the "Company") was formed in
December 1989 as a holding company. At such time, the Company had no material
assets. In September 1990, Double Helix Films, Inc. ("Double Helix"), a producer
of low budget films, and Odyssey Entertainment Ltd. ("OEL"), an international
film distribution company, were merged with wholly-owned subsidiaries of the
Company (the "Mergers"). Subsequent to the Mergers, each of Double Helix and OEL
became a wholly-owned subsidiary of the Company. In June 1991, the Company sold
Double Helix and thereafter began to focus on the distribution of motion
pictures in overseas markets as its primary business. The Company is committed
to expanding its activities in the foreign distribution of high quality motion
pictures and expects that the international distribution of films will continue
to be its primary line of business.

The Company generally acquires its distribution rights from independent
producers of motion pictures, rather than from major motion picture studios
which generally have their own in-house distribution departments. Typically, the
rights obtained from the independent producer cover all overseas markets and
relate to all media, including theatrical release, video distribution, and all
forms of television including cable and satellite distributed media. The
distribution rights acquired by the Company generally break down into two broad
categories:

- SALES AGENCY REPRESENTATION. As a sales agent, the Company typically
undertakes to represent and license a motion picture in all markets and
media on a best-efforts basis, with no guarantees or advances, for a fee
usually ranging from 15-20% of the licensing revenues, and typically for a
term ranging from seven to fifteen years.

- DISTRIBUTION. As a distributor, the Company may provide the producer of
the film with a guarantee of a portion of the budget of the project. This
guarantee may be in the form of a bank commitment to the producer, secured
by license agreements with foreign licensees, which is used by the
producer to finance the production. Typically, the Company receives a
distribution fee of 25-35% over a term ranging from 15 years to
perpetuity. In addition, the Company may acquire a profit participation in
the film project.

The Company's management seeks to identify attractive projects very early in
their development, either through relationships with producers, directors and
agents or through industry announcements of new productions. In addition, the
Company's acquisitions personnel attends festivals and film markets, such as the
Sundance Film Festival and the Cannes Film Festival, in order to locate new
product. The Company may acquire rights either to "new" films (i.e., films for
which production has not yet been commenced or completed or, if completed, not
yet released into their initial exhibition market), or "completed" films,
sometimes referred to as "library" films (i.e., films which have been completed
and released into their initial exhibition market).

Once the rights to a picture are obtained either as sales agent or
distributor, the Company will then seek to license its rights to foreign
subdistributors in the territories for which it has acquired distribution
rights. In general, the licensing of rights to subdistributors includes all
media other than satellite, although satellite is included in some
subdistributors' territories. The subdistributor in each territory generally
pays for its distribution rights with a down payment at the time the contract is
executed with the balance due upon delivery of the picture to the distributor.

The Company's strategy is to capitalize on its reputation and the experience
of its management to expand the scale and scope of its activities in the
international film distribution business.

3
<PAGE>
In January, 1997, the Company changed its name from Communications and
Entertainment Corp. to Odyssey Pictures Corporation following approval of the
name change at the Company's Annual Meeting of Stockholders in November, 1996.

THE OFFERING

All of the Shares offered hereby are being offered by Selling Stockholders
of the Company, and no Shares are being offered by the Company. This offering
includes 1,210,622 Shares owned by the Selling Stockholders and 500,000 Shares
which may be acquired by Selling Stockholders upon the exercise of Warrants. The
Shares (and Warrants) were acquired by the Selling Stockholders either as a
result of direct equity investments in the Company, in consideration of services
rendered to the Company, in exchange for existing debt of the Company, or upon
the settlement of claims against the Company. See "Business-- Recent
Financings."

<TABLE>
<S> <C>
Common Stock Offered by the Company.... None

Common Stock Offered by Selling
Stockholders......................... 1,710,622 Shares of Common Stock, consisting of
1,210,622 Shares currently owned and 500,000 Shares
which may be acquired upon exercise of Warrants
(See "Selling Stockholders").

Common Stock to be Outstanding After
The Offering......................... 4,456,637 shares (does not include the 500,000
Shares registered hereunder which are issuable upon
exercise of the Warrants; also does not include an
additional 1,717,833 shares reserved for issuance
upon the exercise of other outstanding stock
options and warrants issued to officers, directors,
employees and other third parties, ranging in
exercise price from $.625 per share to $18.96 per
share).

Use of Proceeds........................ The Company will not receive any proceeds from the
sale of Common Stock by Selling Stockholders,
except to the extent Warrants are exercised. If all
Warrants for which underlying Shares are registered
hereunder were to be exercised, the Company would
receive $530,000 in proceeds from the exercise of
the Warrants.

Nasdaq OTC Bulletin Board Symbol....... "OPIX"

Fiscal Year End........................ June 30
</TABLE>

Due to the close proximity in time between the acquisition of the Shares by
the Selling Stockholders and the offering of those Shares pursuant to this
Prospectus, the Selling Stockholders (other than the exchanging noteholders who
acquired their notes in a private placement in 1995) may be deemed to be
statutory "underwriters" as that term is defined in Section 2(11) of the Act. As
statutory "underwriters", the Selling Stockholders may be covered under the
civil liability provisions of Section 11 of the Act which may impose a higher
degree of due diligence upon the Selling Stockholders with respect to the
information contained in this Prospectus than may otherwise exist in the absence
of such underwriter status.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The summary historical consolidated financial data presented below for each
of the five fiscal years in the period ended June 30, 1996 have been derived
from the Company's audited Consolidated Financial Statements for the indicated
periods. The summary historical consolidated financial data presented below for
the nine month periods ended March 31, 1997 and 1996 have been derived from the
Company's unaudited Consolidated Financial Statements for the periods indicated,
which statements contain all accruals and adjustments (consisting only of normal
recurring adjustments) which management considers necessary for a fair
presentation of the financial information for such periods. The results of
operations for the nine month period ended March 31, 1997 are not necessarily
indicative of the operating results that may be expected for the full fiscal
year. The finacial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the audited Consolidated Financial Statements and Notes thereto,
the unaudited Consolidated Financial Statements and Notes thereto, and the other
financial information included elsewhere in this Prospectus.

The information presented below is in thousands, except for per share data.

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEARS ENDED JUNE 30, ENDED MARCH 31,
----------------------------------------------------- --------------------
1996 1995 1994 1993 1992 1997 1996
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues............................. $ 1,011 $ 1,521 $ 14,797 $ 31,430 $ 29,947 $ 130 $ 744
Income (loss) from continuing
operations......................... (4,960) (6,852) (7,607) (1,450) 1,814 459 (4,382)
Income (loss) from discontinued
operations......................... (458) (766) 187 -- --
Income (loss) before extraordinary
gain............................... (4,960) (7,310) (8,373) (1,263) 1,814 -- --
Extraordinary gain(a)................ 725 -- --
Net income (loss).................... $ (4,960) $ (7,310) $ (8,373) $ (1,263) $ 2,539 $ 459 $ (4,382)
PER SHARE DATA:*
Income (loss) from continuing
operations......................... $ (2.17) $ (2.94) $ (3.18) $ (0.57) $ 0.90 $ .16 $ (1.92)
Income (loss) from discontinued
operations......................... (0.20) (0.32) .07 -- --
Extraordinary gain(a)................ 0.36 -- --
Net income (loss).................... $ (2.17) $ (3.14) $ (3.50) $ (0.50) $ 1.26 $ .16 $ (1.92)
Cash Dividends....................... -- -- -- -- -- -- --
Weighted average shares*............. 2,284 2,332 2,392 2,551 2,065 2,899 2,282
BALANCE SHEET DATA
Film costs........................... $ 1,001 $ 10,656 $ 13,127 $ 10,614 $ 10,736 $ 787 $ 1,050
Total assets......................... 2,488 15,078 27,949 35,409 50,411 2,006 2,726
Indebtedness......................... 562 249 179 366 179 837 492
Shareholders' Equity (Deficit)....... (2,749) 1,979 9,796 18,786 21,856 (1,835) (2,403)
</TABLE>

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

(a) Consists of the utilization of a net operating loss carryforward

* Per Share data and weighted average shares for all periods have been
restated to reflect the effect of a one-for-six reverse stock split in March
1996.

5
<PAGE>
RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing any of the shares of Common Stock offered
hereby.

CONTINUING OPERATING LOSSES. The Company incurred a net loss in each of its
fiscal years ended June 30, 1993, 1994, 1995 and 1996 of $1,263,418, $8,373,486,
$7,309,651 and $4,959,716, respectively. Management anticipates that the Company
will incur a net loss for the fiscal year ending June 30, 1997, and will
continue to incur net operating losses for the fiscal year ending June 30, 1998,
and there can be no assurance that the operations of the Company will become
profitable in the future. Continued operating losses will materially impair the
Company's ability to secure capital funding in the future.

NEGATIVE NET WORTH; NEED FOR ADDITIONAL FINANCING; GOING CONCERN. As of
March 31, 1997, the Company had a negative net worth of $1,835,267. Accordingly,
the Company will be totally dependent on outside sources of funding to sustain
its business and operations while it continues to incur operating losses. Since
the Company does not anticipate that it will be generating sufficient revenues
to sustain its operations until July, 1998, the Company will require substantial
additional financing to fund its operations during the 1998 fiscal year, and
possibly thereafter. However, no assurance can be given that the Company will be
successful in obtaining outside financing for future periods on terms deemed
favorable to the Company, if at all. If the Company is unable to obtain such
additional financing, and is unable to restore itself to profitability in the
near future, the Company's ability to meet its ongoing obligations would be
materially adversely affected. The Company's independent accountants have
included an explanatory paragraph in their report on the Company's financial
statements stating that the Company's recurring losses from operations, net
capital deficiency and insufficient working capital raise substantial doubts
about its ability to continue as a going concern. See Financial Statements.

DEFAULT ON OUTSTANDING NOTES AND OBLIGATIONS. In August and October of
1995, the Company concluded a private placement pursuant to which it issued
unsecured promissory notes to unaffiliated investors in the aggregate amount of
$312,500. The notes had a maturity date of one year and were due to be paid by
the Company upon their respective due dates on August 28 and October 3, 1996.
The Company made a proposal to the noteholders which involved the payment of
current interest on the notes and either the deferral of the maturity date of
the notes (the first proposal) or the cancellation of the notes in their
entirety (the second proposal), in each case in exchange for varying amounts of
registered stock of the Company. (See "Business-Recent Financings-1995 Private
Placement"). As of the date of this Prospectus, noteholders representing
$262,500 in principal amount of the notes elected the second proposal. The
remaining note for $50,000 (held by a single investor) has not been paid on its
due date, and is currently in default. Although this note is unsecured, a
continuing default on the note could impair the Company's ability to raise
additional capital in the future.

On July 17, 1997, a long term note of the Company in the amount of $179,000
will mature. At the present time, the Company does not have the capital
resources necessary to pay this note on its scheduled maturity date. Although
the Company has received a written proposal from a third party (Kinnevik Media
Properties, Ltd.) to provide financing to the Company in the amount of $500,000
(a portion of the proceeds of which would be used to pay the note), the terms of
such financing are currently being negotiated and no assurance can be given that
such financing will be consummated or, if so, on what terms. See
"Business--Recent Financings." If such financing is not completed prior to the
scheduled maturity date of the note, then unless alternative financing can be
arranged by the Company on or before such date, as to which there can be no
assurance, the Company will be in default on the scheduled maturity date of the
note.

LOSS OF NASDAQ SMALLCAP MARKET LISTING. On May 1, 1996, the Nasdaq Stock
Market, Inc. ("Nasdaq") notified the Company that its Shares of Common Stock
were being deleted from Nasdaq's

6
<PAGE>
SmallCap Market, effective May 2, 1996, because the Company did not maintain a
combined capital and surplus of $1,000,000, as required by Section 1(c)(3) of
Schedule D of the NASD By-Laws. Since May 2, 1996, the Company's Shares have
traded in the over-the-counter market on Nasdaq's OTC Bulletin Board, an NASD
sponsored and operated inter-dealer automated quotation system originally
introduced as an alternative to "pink sheet" trading of over-the-counter
securities. Management does not anticipate that the Company will meet Nasdaq's
requirements for re-listing on the SmallCap Market in the near future, and,
until such time, the Company's ability to obtain third party financing may be
adversely affected by its failure to trade in the SmallCap Market. Moreover,
although the Company believes that the OTC Bulletin Board has been recognized as
an acceptable alternative to "pink sheet" trading (as published by The National
Quotation Bureau Incorporated), there can be no assurance that the liquidity and
prices of the Company's Shares in the secondary market will not be adversely
affected by the trading of such Shares on the OTC Bulletin Board.

In addition, as a result of the Common Stock being deleted from Nasdaq,
trading in the Common Stock is also subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended, which require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a penny stock (generally, any non-Nasdaq equity security that
has a market price of less than $5.00 per share, subject to exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers by such requirements
may discourage broker-dealers from effecting transactions in the Common Stock,
which could severely limit the market price and liquidity of the Common Stock.

RECENT CHANGE IN MANAGEMENT. A change in the entire Board of Directors of
the Company occurred in April 1995 in connection with the settlement of a proxy
contest, and an entirely new management team was installed by the newly
appointed Board in September, 1995. As a result of the complete turnover both at
the Board and management levels of the Company, new management has been unable
to focus its attention entirely on prospective business strategies for the
Company, having to devote a significant portion of its time to reviewing,
documenting and resolving problems attributable to prior management's activities
and actions. In many cases, appropriate records have not been available to
support prior management actions, impacting not only on new management's time
and resources, but also resulting in additional legal, accounting and other
professional costs for the company.

LITIGATION RISK. The Company is presently engaged in several lawsuits, all
of which have arisen out of or in connection with certain actions taken by prior
management of the Company. (See "Legal Proceedings"). Although the Company
believes that the outcome of all current litigation will not have a material
impact on its financial condition, such litigation activity nevertheless
consumes substantial management time and Company resources, financial and
otherwise, and there can be no assurance as to the outcome of such litigation or
the amount of damages the Company would sustain if it did not prevail in any of
such proceedings.

RISKS ASSOCIATED WITH THE MOTION PICTURE INDUSTRY. The motion picture
industry is highly speculative and inherently risky. There can be no assurance
of the economic success of any motion picture since revenues derived from the
production and distribution of films (which do not necessarily bear a direct
correlation to the production or distribution costs associated therewith) depend
primarily upon their acceptance by the public, which cannot be predicted. The
commercial success of films also depends upon the quality and acceptance of
other competing films released into the marketplace at or near the same time,
the availability of alternative forms of entertainment and leisure time
activities, general economic conditions and other tangible and intangible
factors, all of which can change and cannot be predicted with

7
<PAGE>

certainty. For the fiscal year ended June 30, 1996, revenues from the
distribution of a single motion picture accounted for approximately 50.2% of the
Company's revenues for such period.

COMPETITION. Film distribution is a highly competitive business with
competition coming both from companies within the motion picture industry and
companies in other entertainment media. Many of these competitors have
significantly greater financial and other resources than the Company. With many
of the major motion pictures studios having their own domestic and international
distribution departments, the pool of films available to distribution companies
such as Odyssey is somewhat limited, and, as a result, the Company is generally
forced to look to independent producers of motion pictures for distribution
product. Traditionally, with respect to the distribution of independently
produced films, the Company has competed primarily with other independent film
companies and numerous smaller distribution companies for the acquisition of
distribution rights to such films. However, in the wake of the recent commercial
success of many independently produced films, major studios and other
entertainment companies have shown renewed interest in acquiring the
distribution rights to such films, and the Company anticipates increased
competition for the acquisition of such distribution rights in the foreseeable
future.

FLUCTUATION OF OPERATING RESULTS. Most of the Company's revenues are
expected to be derived from the international distribution of feature-length
motion pictures produced by unrelated third parties. Consequently, the Company
will not have control over a variety of related factors including, without
limitation, the production schedules of new films, the release schedules of the
motion pictures it distributes or audience responses. Therefore, the Company's
revenues and earnings will fluctuate significantly from quarter to quarter and
the revenues and earnings in any particular period may not be indicative of the
results for any future period. Revenues for the nine and three month periods
ended March 31, 1997 were $130,226 and $42,051 respectively, as compared to
$744,374 and $636,352 for the comparable periods in the previous year. Although
no new films became available for delivery in any of these periods, the higher
revenues generated for the 1996 periods were derived primarily from sales of
unexploited rights in the Company's library of previously completed films. In
addition, prior management left the Company without any new film projects, and
although new management has been somewhat successful in securing the
distribution rights to new film projects, such projects generally require a
minimum of twelve months of production time prior to delivery of the film, if
delivery is made at all. As a result, with respect to any new film project
acquired by the Company, there will generally be a significant time lag before
the Company realizes any revenues from the distribution of such film, and any
delays and/or cancellations during the production of the film may further
postpone or eliminate entirely the realization of revenues from such film.

DEPENDENCE ON KEY PERSONNEL; NO KEY MAN LIFE INSURANCE. The Company's
success depends to a significant extent upon the performance of its management
team, particularly Stephen R. Greenwald, Co-Chairman and Chief Executive
Officer, and Ira N. Smith, Co-Chairman and President. The loss of services of
either could have a material adverse impact on the Company. The Company does not
maintain key man life or disability insurance on either Mr. Greenwald or Mr.
Smith and may not be able to attract and/or retain a suitable replacement in the
event of the death or incapacity of either party. The Company's success will
also depend upon its ability to motivate and retain other key employees and to
attract and retain qualified personnel in the future. See "Management".

VOLATILITY OF STOCK PRICE. The Company's Common Stock is currently being
quoted on Nasdaq's OTC Bulletin Board system, and recently has been subject to
limited trading activity. As a result of the limited trading volume, and other
factors such as general economic conditions and prevailing market conditions,
the Common Stock has experienced and is likely to continue to experience in the
future significant price and volume fluctuations which could adversely affect
the market price of the Common Stock without regard to the operating performance
of the Company.

NO DIVIDENDS. The Company has not declared or paid any cash dividends on
its Common Stock to date and does not anticipate declaring or paying any
dividend in the foreseeable future. Any future

8
<PAGE>
determination as to payment of dividends by the Company will be at the
discretion of the Company's Board of Directors and will be dependent upon the
Company's results of operations, financial condition and capital requirements,
availability of distributable profits, if any, contractual restrictions and
other factors considered relevant by the Board of Directors.

DILUTION. Based on the Company's current negative net worth, and the sale
of Shares by Selling Stockholders rather than by the Company (so that the
proceeds of the offering will be for the benefit of Selling Stockholders and
there will be no increase in the net tangible book value of the Company's Common
Stock as a result of the offering), purchasers of Common Stock offered hereby
will experience substantial dilution in the net tangible book value per share of
Common Stock from the public offering price. See "Dilution". Additional dilution
may also be incurred in the future upon the exercise of outstanding options and
warrants granted by the Company.

AUTHORIZATION OF PREFERRED STOCK. The Company's Articles of Incorporation
authorize the issuance of "blank check" Preferred Stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Common Stock. In the event of issuance, the
Preferred Stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company. See
"Description of Capital Stock".

SHARES ELIGIBLE FOR FUTURE SALE. There will be 4,456,637 shares of Common
Stock outstanding upon consummation of the offering, excluding shares issuable
upon exercise of outstanding warrants granted by the Company to officers,
directors, employees and other third parties. With the exception of 457,896
Shares held by affiliates of the Company ("Affiliate Shares"), and 36,213
restricted shares held by non-affiliates of the Company for a period of less
than two years, all such shares are freely tradeable either because they were
originally registered in a public offering, have been held by their respective
owners for a period in excess of two years (and therefore are eligible for sale
in the public markets), or are being registered in this offering. The remaining
shares will only be eligible for sale in accordance with the resale limitations
of Rule 144 ("Rule 144") under the Securities Act of 1933, as amended (the
"Securities Act"), or pursuant to an effective registration statement under the
Securities Act or an applicable exemption from the registration requirements of
the Securities Act. In addition, there are outstanding options and warrants to
purchase a total of 2,217,833 shares of Common Stock, of which 500,000 Shares
are being registered pursuant to this offering and will be available for sale in
the open market without restriction upon exercise of the Warrants relating
thereto. Upon exercise of the remaining warrants, the Shares issuable thereunder
will only be eligible for sale in accordance with the resale limitations of Rule
144, or pursuant to an effective registration statement under the Securities Act
or an applicable exemption from the registration requirements of the Securities
Act. (See "Shares Eligible for Future Sale").

No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of shares for future sale, pursuant
to either Rule 144, this Prospectus, future registration statements, or
otherwise, will have on the market price of shares of Common Stock prevailing
from time to time. Sales of substantial amounts of Common Stock (including the
shares issuable upon the exercise of Warrants), or the perception that such
sales could occur, could adversely affect prevailing market prices for the
Common Stock.

LIMITATIONS OF LIABILITY OF DIRECTORS AND OFFICERS. The Company's Articles
of Incorporation include provisions to limit, to the full extent permitted by
Nevada law, the personal liability of directors of the Company for monetary
damages arising from a breach of their fiduciary duties as directors. The
Articles of Incorporation also include provisions to the effect that (subject to
certain exceptions) the Company shall, to the maximum extent permitted from time
to time under the laws of the State of Nevada, indemnify, and upon request shall
advance expenses to, any director or officer to the extent permitted under such
law as it

9
<PAGE>
may from time to time be in effect. In addition, the Company's By-Laws require
the Company to indemnify, to the full extent permitted by law, any director,
officer, employee or agent of the Company for acts which such persons reasonably
believes are not in violation of the Company's corporate purposes as set forth
in the Articles of Incorporation. As a result of such provisions in the Articles
of Incorporation and the By-Laws of the Company, stockholders may be unable to
recover damages against the directors and officers of the Company for actions
taken by them which constitute negligence, gross negligence or a violation of
their fiduciary duties, which may reduce the likelihood of stockholders
instituting derivative litigation against directors and officers and may
discourage or deter stockholders from suing directors, officers, employees and
agents of the Company for breaches of their duty of care, even though such an
action, if successful, might otherwise benefit the Company and its stockholders.

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of Common
Stock offered by Selling Stockholders pursuant to this Prospectus, and none of
such proceeds will be available otherwise for use by the Company or for the
Company's benefit. However, to the extent any Warrants are exercised prior to
the sale of the underlying Shares offered hereby, the Company will receive the
proceeds from the exercise of such Warrants, up to a maximum of $530,000,
although no assurance can be given that the Warrants, or any portion thereof,
will be exercised at any time, if at all.

10
<PAGE>
PRICE RANGE OF COMMON STOCK

The following table sets forth the range of high and low bid information for
the Common Stock of the Company as reported by the Nasdaq Stock Market, Inc.
("Nasdaq") on a quarterly basis for each of the two preceding fiscal years, and
for the nine month period ended March 31, 1997. On May 1, 1996, Nasdaq notified
the Company that its shares of Common Stock were being deleted from Nasdaq's
SmallCap Market, effective May 2, 1996, because the Company did not maintain a
combined capital and surplus of $1,000,000, as required by Section 1(c)(3) of
Schedule D of the NASD By-Laws. Since May 2, 1996, the Company's shares have
traded in the over-the-counter market on the OTC Bulletin Board. The Company's
Common Stock trades under the symbol "OPIX".

No dividends have been declared or paid with respect to the Common Stock.

On March 6, 1996, the Company declared a reverse one-for-six stock split
(the "Reverse Split") of its Common Stock, effective on March 18, 1996. The
share prices reflected below for all periods prior to the Reverse Split have
been adjusted upward (by a multiple of six) to give effect to the Reverse Split
for such prior periods on a pro forma basis.

The bid quotations represent inter-dealer prices and do not include retail
mark-ups, mark-downs or commissions and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
COMMON STOCK
--------------------
<S> <C> <C>
FISCAL 1995 HIGH LOW
- ----------------------------------------------------------------------------- --------- ---------
First Quarter................................................................ $ 6.96 $ 3.18
Second Quarter............................................................... 5.64 1.32
Third Quarter................................................................ 6.96 1.86
Fourth Quarter............................................................... 5.82 2.28

FISCAL 1996
- -----------------------------------------------------------------------------

First Quarter................................................................ $ 4.00 $ 2.12
Second Quarter............................................................... 2.75 1.37
Third Quarter................................................................ 2.37 1.50
Fourth Quarter............................................................... 1.81 .40

FISCAL 1997
- -----------------------------------------------------------------------------
<S> <C> <C>

First Quarter................................................................ $ .87 $ .50
Second Quarter............................................................... 1.37 .43
Third Quarter................................................................ 1.07 .62
</TABLE>

As of March 31, 1997, there were 4,617 record holders of the Company's
Common Stock. On March 31, 1997, the closing bid price of the Company's Common
Stock was $.84 per share.

11
<PAGE>
DIVIDEND POLICY

The Company has not paid any cash dividends on its Common Stock since its
inception. The Company intends to retain its earnings, if any, to finance the
growth and development of its business and does not anticipate paying cash
dividends on its Common Stock in the foreseeable future. The payment of any
future dividends will be at the discretion of the Company's Board of Directors
and will depend upon, among other things, the future earnings, capital
requirements and financial condition of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

DETERMINATION OF OFFERING PRICE

Although the Selling Stockholders may determine the offering price of the
Shares being offered hereunder, it is expected that the offering price will be
determined by the market price for the Company's Common Stock as quoted on
Nasdaq's OTC Bulletin Board from time to time. There is not expected to be any
material disparity between the offering price of the Common Stock being
registered and the market price of the Company's Common Stock as quoted from
time to time on the OTC Bulletin Board.

12
<PAGE>
CAPITALIZATION

Since the offering hereunder is being made exclusively by Selling
Stockholders, and none of the proceeds of the offering will be received by the
Company, the capitalization of the Company will not be affected by the offering,
except to the extent that certain of the Shares being offered by the Selling
Stockholders have been issued to such Selling Stockholders immediately prior to
the date of this Prospectus in exchange and cancellation of certain existing
debt of the Company, as follows: (i) 595,455 Shares have been issued in exchange
for $262,500 of the Company's 12% senior unsecured promissory notes (see
"Business--Recent Financings--1995 Private Placement"); and (ii) 120,000 Shares
have been issued to prior counsel of the Company in exchange for a $70,000
promissory note due to such counsel (see "Business--Recent
Financings--Settlement with Prior Counsel).

DILUTION

The difference between the public offering price per share of Common stock
and the net tangible book value per share after this offering constitutes the
dilution to investors in this offering. Net tangible book value per share is
determined by dividing the net tangible book value of the Company (total
tangible assets less total liabilities) by the number of outstanding shares of
Common Stock. Since all of the Shares offered hereby are being offered by
Selling Stockholders, the net tangible book value of the Company will not be
affected by this offering, except with respect to the Shares issued to Selling
Stockholders immediately prior to the date hereof in exchange and cancellation
of existing date (see "Capitalization"), the cumulative effect of which would be
to reduce the negative net tangible book value of the Company by an aggregate
amount of approximately $332,500 and to increase the number of outstanding
Shares of the Company by 715,455 Shares.

At March 31, 1997, the net tangible book value of the Company was
($1,835,267), or ($.56) per share. After giving effect to the transactions
referenced above, the net tangible book value of the Company (on a pro forma
basis) would be ($1,502,767), or ($.38) per share. Since the offering by Selling
Stockholders will not affect the net tangible book value of the Company,
investors in this offering will be subject to dilution in an amount equal to the
difference between the selling price of the Shares purchased hereunder and the
then existing net tangible book value per share of the Company's Common Stock on
the date of purchase.

13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected historical consolidated financial data presented below for each
of the five fiscal years in the period ended June 30, 1996 have been derived
from the Company's audited Consolidated Financial Statements for the indicated
periods. The selected historical consolidated financial data presented below for
the nine month periods ended March 31, 1997 and 1996 have been derived from the
Company's unaudited Consolidated Financial Statements for the periods indicated,
which statements contain all accruals and adjustments (consisting only of normal
recurring adjustments) which management considers necessary for a fair
presentation of the financial information for such periods. The results of
operations for the nine month period ended March 31, 1997 are not necessarily
indicative of the operating results that may be expected for the full fiscal
year. The finacial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the audited Consolidated Financial Statements and Notes thereto,
the unaudited Consolidated Financial Statements and Notes thereto, and the other
financial information included elsewhere in this Prospectus.

The information presented below is in thousands, except for per share data.

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

(a) Consists of the utilization of a net operating loss carryforward

* Per Share data and weighted average shares for all periods have been
restated to reflect the effect of a one-for-six reverse stock split in March
1996.

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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

NINE AND THREE MONTHS ENDED MARCH 31, 1997 AND 1996

Revenues for the nine month and three month periods ended March 31, 1997
decreased to $130,226 and $42,051 from $744,374 and $636,352 for the comparable
nine and three month periods ended March 31, 1996. There were no new films which
became available for delivery in either periods.

Costs related to revenues decreased to $391,406 and $263,508 respectively,
for the nine and three month periods ended March 31, 1997 from $795,618 and
$636,423 for the comparable nine and three month periods ended March 31, 1996.
The decrease is primarily related to lower revenues in the current nine and
three month periods than in the comparable nine and three month period.
Additionally, in the nine and three month period ended March 31, 1997 the
Company wrote off $165,425 of unrecoupable film costs. It also expensed $76,297
resulting from the settlement of the litigation with Film Bridge. (See "Legal
Proceedings").

Selling, general and administrative expenses increased by $467,882 (46.3%)
to $1,477,677 for the nine month period from $1,009,795 for the comparable 1996
period. For the 1997 three month period such expenses increased by $321,674
(114.8%) to $601,781 from $280,107 for the comparable 1996 three month period.
The increase is primarily related to higher salaries, legal and accounting fees
and because, in the comparable nine and three month period there were
significant decreases in personnel and related expenses, due to the closure of
the Company's New York office and the relocation of its Los Angeles office.

Other income for the nine month period ended March 31, 1997 consisted of a
$818,776 gain from the sale of certain distribution and subdistribution rights
in certain films to a third party, recognition of a $1,345,758 gain from the
cancellation of a contractual obligation related to the Company's distribution
rights in "Wuthering Heights", and recognition of a gain in the amount of
$198,567 from the settlement of an outstanding litigation with Generale Bank
(formerly known as Credit Lyonnais Bank Nederland N.V.) and Cinecom
Entertainment Group Inc. There was no other income recognized in the respective
nine month period ended March 31, 1996.

On January 2, 1996 the Company entered into an agreement with it joint
venture partner to sell its related joint ventures through which it held
approximately 50% ownership interests in four theatrical motion pictures. As a
result of this the company incurred a loss of $3,262,478 and $186,415
respectively in the nine and three month period ended March 31, 1996.

Interest expense increased by $5,204 to $64,798 for the nine month period
ended March 31, 1997 from $59,594 for the comparable 1996 period. Interest
expense decreased by $6,657 to $18,017 for the three month period ended March
31, 1997 from $24,674 for the comparable 1996 period.

The Company did not recognize any tax benefits related to its losses from
operations for either period due to its inability to carry-back such losses to
prior years.

As of March 31, 1997, the Company had a federal net operating loss
carryforward, for tax purposes, of approximately $26,000,000, expiring through
2010, available to be used to reduce future tax liability. Due to limitations
imposed by the Internal Revenue Service, the utilization of approximately
$4,900,000 of these net operating losses will be limited to approximately
$350,000 per year.

The Company's principal activities have been the acquisition of rights in
either completed or incomplete motion pictures and the licensing of these rights
to sub-distributors in foreign countries. As of March 31, 1997, the Company had
agreements in principle with sub-distributors relating to distribution
commitments or guarantees of approximately $3.7 million that had not been
recognized in the statement of

15
<PAGE>

operations. The Company will recognize these guarantees in revenues and the
costs related to such revenues when motion pictures are completed and available
for delivery. It is possible that changes in schedules and cancellations of
pictures may defer and/or reduce the amounts of revenues that will be recognized
in later periods.

Included in the Company's film costs is approximately $683,000 related to a
film project entitled "Downrange". Pre-production on the picture was suspended
in April, 1997 due to the lack of adequate production financing. Pre-production
on the picture is scheduled to resume in the Fall of 1977, subject to completion
of financing. Although no assurance can be given, the Company believes that it
will be able to secure the necessary funding to resume pre-production on the
picture. However, in the event that the Company cannot arrange such financing,
the project would be terminated and the Company would be required to take a
write down on film costs associated with the picture in the amount of
approximately $683,000.

RESULTS OF OPERATIONS

YEARS ENDED JUNE 30, 1996 AND 1995

Operations for the fiscal year ended June 30, 1996 ("fiscal 1996") resulted
in a loss from continuing operations of $4,959,716, compared to a loss from
continuing operations of $6,851,458 for the fiscal year ended June 30, 1995
("fiscal 1995"). The loss for fiscal 1996 is primarily the result of a
$3,262,478 loss on the sale of interests in joint ventures relating to four
theatrical films, and from the continued decline in film distribution revenue.
The loss for fiscal 1995 is due to a substantial decline in revenues, as
compared to the previous fiscal year, and certain write-offs, including film
costs and receivables resulting from the settlement of litigation with Home Box
Office Inc. ("HBO"), costs associated with the sale or abandonment of film
development projects and unrecoverable distribution costs.

Revenues declined 34% to $1,010,826 for fiscal 1996 from $1,521,434 for
fiscal 1995. Revenues for both periods reflect the continued licensing of rights
in the Company's library of feature films. There were no new films which became
available for delivery to the Company in either period, partly due to prior
management's failure to acquire rights to new film projects.

Costs related to revenues for fiscal 1996 exceeded film distribution
revenues by $35,473, primarily due to the write-off of unrecoverable
distribution costs. For fiscal 1995 costs related to revenues exceeded revenues
by $3,223,896, primarily due to write-offs of approximately $2,518,000
associated with the settlement of litigation with Home Box Office, Inc., and
write-offs of film development projects, film assets acquired in settlement of
loans receivable and unrecoverable distribution costs.

As of January 2, 1996, the Company entered into an agreement with its joint
venture partner to sell its related joint ventures through which it held
approximately 50% ownership interests in four theatrical motion pictures. As a
result of the sale, the assets and obligations of the joint ventures, heretofore
included in the consolidated financial statements of the Company, were
eliminated, including approximately $3,485,000 of funds held in joint venture
accounts, net film costs of approximately $6,051,000, payable due to producers
and participants of approximately $7,244,000, deferred income of $520,000 and
other net obligations of approximately $272,000.

Selling, general and administrative expenses decreased $2,140,156 (58%) to
$1,565,307 for fiscal 1996 from $3,705,463 for fiscal 1995. The reductions in
expenses is a direct result of new management's efforts to eliminate unnecessary
overhead. Expenses for fiscal 1996 reflect significant decreases in personnel
and related expenses, rent (due to the closure of the New York office and the
relocation of the Los Angeles office) and professional fees.

The decrease in interest income for fiscal 1996 is due to a reduction in the
average available cash balances, including funds held in joint venture accounts.

16
<PAGE>
Interest expense increased to $97,701 for fiscal 1996 from $19,498 for
fiscal 1995. The increased interest resulted primarily from the private
placement sale of an aggregate of $312,500 principal amount of 12% Senior
Unsecured Promissory Notes in August and October 1995.

The Company did not recognize any tax benefits related to its losses from
operations for the 1996 and 1995 fiscal years due to its inability to carry-back
such losses to prior years.

As of June 30, 1996, the Company had federal net operating loss
carryforwards, for tax purposes, of approximately $27,000,000, expiring through
2011, available to be used to reduce future tax liability. Due to limitations
imposed by the Internal Revenue Service, the utilization of approximately
$4,900,000 of these net operating losses will be limited to approximately
$350,000 per year.

The Company's principal activity has been the acquisition of rights in
either completed motion pictures or motion pictures in development or
pre-production, and the licensing of these rights to subdistributors in foreign
countries. As of June 30, 1996, the Company had agreements in principle with
subdistributors relating to distribution commitments or guarantees of
approximately $6 million that had not been recognized in the statement of
operations, an increase of $4.9 million from June 30, 1995. The Company will
recognize these guarantees in revenues and the costs related to such revenue
when motion pictures are completed and available for delivery. It is possible
that changes in schedules and cancellations of pictures may defer and/or reduce
the amounts of revenues that will be recognized in later periods.

YEARS ENDED JUNE 30, 1995 AND 1994

Revenues declined 90% to $1,521,434 for fiscal 1995 from $14,797,040 for the
fiscal year ended June 30, 1994 ("fiscal 1994"). The decline in revenues is due
to the unavailability of financing to acquire rights to new film projects, and
the cancellation of the output agreement with HBO. There were no films which
became available for delivery in fiscal 1995. Revenues for fiscal 1994 were
largely attributable to the initial availability of four motion pictures
produced by HBO.

Film costs exceeded film distribution revenues for fiscal 1995 due primarily
to the write-off of approximately $2,518,000 of film costs and receivables
resulting from the settlement of a lawsuit with HBO, the write-off of
approximately $401,000 associated with the sale or abandonment of film
development projects, and the write-off of approximately $394,000 of film assets
acquired in settlement of loans receivable for ATC II, Inc. and the write-off of
unrecoverable distribution costs on films of approximately $357,000. Film costs
as a percentage of revenues for fiscal 1994 were 91%. Film costs for fiscal 1994
also reflect provision for doubtful accounts, the write-downs of two pictures to
net realizable value and the write-off of costs related to certain abandoned
film projects.

Selling, general and administrative expenses decreased 36% to $3,705,463,
compared to $5,757,010 for fiscal 1994. The decrease in expenses is largely due
to cost cutting measures implemented by management because of the decline in
revenues, partially offset by increased legal and professional fees and costs
associated with the proxy contest. Fiscal 1994 expenses also included the
write-off of $311,000 of costs incurred in connection with an abandoned
financing transaction and the write-off of $203,000 of costs associated with an
abandoned acquisition.

The loss for fiscal 1994 includes a provision for loss on investment of
$3,363,829 attributable to its investment in ATC II Corp.

The Company did not recognize any tax benefits related to its loss from
operations for fiscal 1995 due to its inability to carryback such losses to
prior years. The Company recorded benefits for income taxes of $179,000 for
fiscal 1994 attributable to pretax losses from continuing operations. The
benefit is lower than expected based on the pretax losses due to limitations on
the Company's ability to carryback such losses to prior years.

17
<PAGE>
The loss from discontinued operations of $458,193 for fiscal 1995 includes
the write off of $393,588 of film rights acquired in settlement of loans made by
ComEnt Funding Corp. ("CFC"), the Company's finance subsidiary, and $64,605 of
loss from operations of Global Intellicom, the shares of which were acquired in
December 1994 and sold in April 1995. The loss from discontinued operations of
$765,566 for fiscal 1994 was associated with the discontinued operations of CFC
and includes the write-off of deferred costs, including the balance of deferred
start up costs related to the formation of CFC.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1997, the Company held approximately $79,000 of cash.

In many instances, the Company acquires the rights to motion picture
productions prior to their completion. As a result, there may be a substantial
delay between the time the Company enters into distribution agreements with
producers and sub-distribution agreements with foreign sub-distributors and the
time it recognizes revenues and generates cash from each production.

In the past, the Company has been dependent on obtaining outside financing
to acquire distribution rights to films. New management has reduced the
Company's reliance on outside financing by placing more emphasis on acquiring
distribution rights through arrangements which require lower or no advance
payments. At present, the Company may not be able to secure distribution rights
by issuing letters of credit or advancing significant production funds, as it
has in the past.

In December, 1996, the Company settled the outstanding litigation with
Generale Bank ("Generale") (formerly known as Credit Lyonnais Bank Nederland
N.V.) and Cinecom Entertainment Group Inc. Pursuant to the settlement agreement
with Generale, the Company agreed to pay to Generale the sum of $275,000 in
complete satisfaction of the claim, payable $25,000 upon execution of the
settlement agreement, $25,000 on each of June 30 and December 31 in the years
1997, 1998 and 1999, and $100,000 on June 30, 2000. Interest on the installments
(at the floating rate of LIBOR plus 1% per annum) will be waived provided the
Company remains in compliance with the agreed upon payment schedule. The Company
has not yet paid either the initial $25,000 payment or the first installment due
June 30, 1997.

The Company presently has outstanding a note receivable from Kinnevik Media
Properties, Ltd. ("Kinnevik") in the amount of $300,000 which is due on April 7,
1998 (the "Kinnevik Note"). Through June 16, 1997, the Company has secured
interim financing against the Kinnevik Note in the amount of $125,000. Such
interim financing has been provided on a demand loan basis primarily from
certain officers and directors of the Company. Although no assurance can be
given, the Company anticipates that within the next 60 days it will be able to
discount the Kinnevik Note with Kinnevik for approximately $285,000, thereby
generating net proceeds to the Company of approximately $160,000 (after payment
of the interim financing). In the event the Kinnevik Note is not discounted by
the issuer, the Company will seek additional interim financing against the
balance of the Kinnevik Note from third parties, although no assurance can be
given that such financing could be arranged.

Kinnevik has also agreed to provide the Company with a $500,000 revolving
line of credit to be secured by accounts receivable and other contractual rights
acquired by the Company. The Company may access this line of credit provided the
accounts receivable and/or contractual rights offered as collateral by the
Company are acceptable to Kinnevik based on generally accepted lending practices
in the motion picture industry. To date, the Company has not presented any
receivables for financing under this credit arrangement.

The Company has also received a written proposal from Kinnevik for
additional financing in the amount of $500,000 (the "Kinnevik Financing"), the
terms of which are currently being negotiated by the Company. Such additional
financing would be in the form of a long term loan or convertible preferred
stock which could be prepaid or redeemed upon the occurrence of certain events.
Although there can be no assurance that this transaction will be consummated,
the Company anticipates that the financing will be

18
<PAGE>

completed prior to September 1, 1997. If completed, the proceeds of this
financing, together with the net proceeds generated from the financing or
discounting of the Kinnevik Note, would provide the Company with approximately
$650,000 in additional funding. Such additional funding (if available) would be
used to pay a long term note of the Company in the amount of $179,000 which
matures in July, 1997, and to fund the Company's operating costs over a period
of four to six months. However, even if the Kinnevik Financing is completed (as
to which there can be no assurance), since the Company does not anticipate that
it will be generating sufficient revenues to sustain its operations until
approximately July, 1998, the Company will require substantial additional
financing to fund its operations over the next fiscal year. Accordingly, if the
Company fails to consummate either the Kinnevik Financing or any alternative or
additional financing which would be required to fund the Company's operations
over such period of time, there is substantial doubt that the Company would have
the ability to continue as a going concern throughout the next fiscal period.

Net increase (decrease) in cash were $419,480 and $(1,402,578) for the years
ended June 30, 1996 and 1995 respectively. Net cash used in operations was
$(1,343,970) and $(1,062,971) for the years ended June 30, 1996 and 1995
respectively. Net cash provided by (used in) investing activities was $1,493,450
and $(339,607) for the years ended June 30, 1996 and 1995, respectively. The net
cash increase for the year ended June 30, 1996 was primarily related to the sale
of the Company's approximately 50% interests in four theatrical motion pictures,
of which the proceeds were $1,500,000, and from the sale of Senior Notes in the
net amount of $270,000. The net cash decrease for the year ended June 30, 1995
was primarily due to the investment in Global Intellicom, Inc. shares in the
amount of $1,049,002 which was partially offset by the proceeds from the sale of
that stock for $326,440.

Net increase (decrease) in cash were $(383,711) and $834,849 for the nine
months ended March 31, 1997 and 1996, respectively. Net cash provided by (used
in) operations was $(1,025,231) and $570,161 for the nine months ended March 31,
1997 and 1996 respectively. Net cash used in investing activities was $8,480 and
$5,312 for the nine months ended March 31, 1997 and 1996, respectively. The net
cash decrease for the nine months ended March 31, 1997 was primarily related to
the use of funds in order to sustain its current operation. This was partially
offset by proceeds from the private placement sale of common stock in the amount
of $375,000 and from the receipt of the $500,000 initial payment related to the
granting to Kinnevik Media Properties, Ltd. of certain subdistribution rights
in, and other distribution rights to, certain films for which the Company was
acting as distribution agent, and from receipt of a second installment from
Kinnevik in the amount of $266,826 ($275,000 minus a discount of $8,174 for
early payment). The net cash increase for the nine months ended March 31, 1996
was primarily related to the sale of the Company's approximately 50% interests
in four theatrical motion pictures, of which the proceeds were $1,500,00, and
from the sale of Senior Notes in the net amount of $270,000.

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BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

Odyssey Pictures Corporation ("Odyssey" or the "Company"), formerly known as
Communications and Entertainment Corp., was formed in December 1989 as a holding
company. At such time, the Company had no material assets. In September 1990,
Double Helix Films, Inc. ("Double Helix"), a producer of low budget films, and
Odyssey Entertainment Ltd. ("OEL"), an international film distribution company,
were merged with wholly-owned subsidiaries of the Company (the "Mergers").
Subsequent to the Mergers, each of Double Helix and OEL became a wholly-owned
subsidiary of the Company. In June 1991, the Company sold Double Helix and
thereafter began to focus on the distribution of motion pictures in overseas
markets as its primary business.

A change in the entire Board of Directors of the Company (the "Board")
occurred on April 12, 1995 pursuant to the terms of a Settlement Agreement,
dated as of March 31, 1995 (the "Settlement Agreement"), by and among Robert
Hesse, Shane O'Neil, Lawrence I. Schneider, Henry N. Schneider, Robert E.
Miller, Jr., Russell T. Stern, Jr. (collectively, a group of shareholders
originally formed to effect a change in management control of the Company and
known as the "CECO Shareholders Committee"), and the Company, OEL, Global
Intellicom, Inc., each of Jerry Silva, Robert Ferraro, N. Norman Muller, Thomas
W. Smith and David A. Mortman (constituting all the directors of the Company at
the time of the execution of the Settlement Agreement and hereinafter referred
to collectively as the "Former Directors"), and others.

As contemplated by the Settlement Agreement, on April 11, 1995, the Former
Directors increased the size of the Board from five to six directors and elected
Henry N. Schneider, a designee of the CECO Shareholders Committee, a new
director effective upon the closing of the Settlement Agreement. The closing of
the Settlement Agreement occurred on April 12, 1995 and, upon the closing, the
resignations of the Former Directors became effective. After the closing, Henry
N. Schneider, as sole remaining director of the Company, elected Lawrence I.
Schneider, Russell T. Stern, Jr., Patrick J. Haynes, III and Robert E. Miller,
Jr. as new directors of the Company. In addition to the change in the
composition of the Board, the Settlement Agreement provided for the settlement
of all outstanding litigation between the Company and the CECO Shareholders
Committee. The CECO Shareholders Committee disbanded upon the closing of the
Settlement Agreement. Effective September 8, 1995, each of Messrs. Haynes, Stern
and Henry N. Schneider resigned as directors of the Company and were replaced by
Stephen R. Greenwald and Ira N. Smith, each of whom was appointed to the Board
by the remaining members thereof on such date. See "Management--Executive
Officers and Directors."

During the early 1990s, the Company developed an excellent reputation in
overseas markets for the distribution of quality motion picture entertainment, a
reputation which the Company's management believes it continues to enjoy despite
its recent difficulties. Past films distributed by the Company which enjoyed
considerable success in the overseas market include such well-known productions
as Sidney Lumet's "Q & A," Blake Edward's "Switch," Michael Caton Jones' "This
Boy's Life," Irwin Winkler's "Guilty by Suspicion" and "Sniper." The Company is
committed to expanding its activities in the foreign distribution of high
quality motion pictures and expects that the international distribution of films
will continue to be its primary line of business.

On March 6, 1996, the Company declared a reverse one-for-six stock split of
its Common Stock (the "Reverse Split"), effective March 18, 1996. All share
amounts and per share prices reflected in this Prospectus have been adjusted to
give effect to the Reverse Split.

The Company's principal executive offices are located at 1875 Century Park
East, Suite 2130, Los Angeles, California 90067. The Telephone number is
310-229-2430, and the fax number is 310-229-2434.

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FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Since the sale of its Double Helix subsidiary in 1991, the Company has been
engaged in only one industry segment and line of business, the international
distribution of motion pictures. See "Selected Consolidated Financial Data."

FOREIGN SALES AND DISTRIBUTION OPERATIONS

GENERAL:

The foreign distribution of films involves two principal activities--the
acquisition of rights from the licensor or the seller, usually the producer of
the film, and the licensing of the distribution rights to subdistributors in
foreign markets. In general, the rights obtained from the producer relate to all
media, including theatrical distribution, video and all forms of television.

Other than with respect to films produced and distributed directly by major
motion picture studios, it is unlikely that subdistributors in foreign
territories would bypass the Company and deal directly with the licensors of
film rights. Historically, independent licensors of film rights prefer to deal
with a single sales agent/distributor rather than deal with various
subdistributors in foreign markets. Consequently, even if a particular
subdistributor attempted to perform the function of the Company, it is unlikely
that the film's licensor would be willing to deal with such subdistributor.
Furthermore, with respect to any particular film, the Company typically enters
into an exclusive distributorship arrangement, thereby precluding others from
competing with the Company with respect to that film.

TERMS OF LICENSE AGREEMENTS WITH PRODUCERS OF FILMS:

The acquisition of film distribution rights by the Company generally breaks
down into two broad categories:

- SALES AGENCY REPRESENTATION. As a sales agent, the Company will undertake
to represent and license a motion picture in all markets and media on a
best-efforts basis, with no guarantees or advances, for a fee of 15-20%,
and typically for a term ranging from seven to fifteen years.

TERMS OF SUBDISTRIBUTION AGREEMENTS WITH FOREIGN DISTRIBUTORS:

Foreign distribution is generally handled by a distributor such as the
Company which coordinates worldwide sales in all territories and media. Once the
rights to a picture are obtained either as sales agent or distributor, the
Company will then seek to license its rights to subdistributors in the
territories for which it has acquired distribution rights. In general, the grant
of rights to the subdistributors includes all media other than satellite,
although satellite is included in some subdistributors' territories. The Company
relies on local subdistributors to physically deliver the motion picture and
related marketing materials and to collect revenues from local exhibitors and
other local distributors of the film. Typically, the territorial rights for a
specific medium such as television exhibition are sold for a "cycle" of
approximately seven years, after which the rights become available for license
for additional cycles. The subdistributor in each territory generally pays for
its distribution rights with a down payment at the time the contract is executed
with the balance due upon delivery of the picture to the subdistributor.
(Delivery soccurs upon the Company's acceptance of the master negative and its
obtaining access to the interpositive and certain other items necessary for the
distribution of the film). In certain instances, the subdistributors'
obligations for the payment due on delivery are secured by a letter of credit.
Sales take place primarily at three film markets--

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Cannes, France in May; MIFED in Milan, Italy in October; and the American Film
Market ("AFM") in Los Angeles in February.

In general, after financing (if any) is repaid, the Company applies the
distribution receipts from its subdistributors to the payment of commissions due
to the Company and to the recovery of any distribution expenses advanced by the
Company. Additional distribution receipts, if any, are shared by the Company and
the producer according to the percentages negotiated in the agreement between
the Company and the producer.

INDEPENDENT FILM PRODUCTION AND PRODUCT ACQUISITION

Overseas film distribution companies such as the Company primarily represent
independent producers of motion pictures (rather than major motion picture
studios) in all overseas markets and all media, including theatrical release,
television and home video distribution, and cable or satellite-distributed
media.

Producers seek to be independent producers of motion pictures for a variety
of reasons, including greater creative control of a project and potentially a
greater profit participation through the retention of the copyright or the
ability to sell the film directly in particular markets. Often, young, new
directors and producers have no choice but to independently produce their
projects, and the motion picture industry has a long history of "breakthrough"
films produced at very low cost by first time producers and directors which
subsequently achieve considerable revenues. Recent examples include "Pulp
Fiction", "Four Weddings and a Funeral" and "The Crying Game". The Company
generally obtains its product from among these independently produced films
rather than from major motion picture studios which typically have their own
in-house distribution networks. Nevertheless, from time to time, the Company may
enter into a "split rights" arrangement with a studio to represent a film in the
overseas market.

BUSINESS STRATEGY

The Company's strategy is to capitalize on its reputation and the experience
of its management to expand the scale and scope of its activities in the
international film distribution business.

The Company's film acquisition strategy is to seek out and acquire quality
films with broad appeal in overseas markets. In addition, the Company intends to
maximize the risk/return profile of its film assets by building a portfolio of
films with minimal levels of risk and financial exposure. In the past, the
Company has been dependent on obtaining outside financing to acquire
distribution rights to films. New management has reduced the Company's reliance
on outside financing by placing more emphasis on acquiring distribution rights
through arrangements which require lower or no advance payments. At present, the
Company is not able to secure distribution rights by issuing letters of credit
or advancing significant production funds, as it has in the past. Generally, the
films that the Company represents are financed by the producers of the film,
through independent loan or equity financing, utilizing the license agreements
generated by the Company as collateral for production loans.

To ensure a flow of quality film projects to the Company and to create
opportunities for the Company to acquire ownership interests in films, the
Company intends to enter into certain "first-look" and "second-look" agreements
with successful film producers. Under these arrangements, the producers agree to
give the Company a first or second (after a major studio) "look" at any film
projects they are developing. This

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"look" gives the Company the right to acquire foreign and/or domestic
distribution rights, to serve as an executive producer on the project for a fee
and to acquire an ownership interest in the project with little or no financial
risk. See "Business--Producer Agreements".

As part of its overall business strategy, the Company will consider selling
portions of its distribution rights from time to time for current cash
consideration, thereby accelerating all or part of the future revenues that may
be derived from the distribution of these films in foreign markets. See
"Business--Sales of Distribution Rights".

SALES OF DISTRIBUTION RIGHTS

On January 2, 1996, the Company entered into an agreement with Regency
International Pictures, B.V. ("Regency"), the Company's joint venture partner,
to sell the Company's interest in the related joint ventures through which it
held approximately 50% ownership interests in four theatrical motion pictures,
entitled "Switch", "Q & A," "Guilty by Suspicion" and "This Boy's Life".
Pursuant to the agreement with Regency, the Company received $1,000,000 on
January 23, 1996 and $500,000 on February 14, 1996, in exchange for all of the
Company's interests in the joint ventures. In addition, the Company retained a
contingent interest in certain receivables, not to exceed $212,500, and a
contingent interest in future revenues from the pictures.

On October 7, 1996, the Company consummated an agreement with Kinnevik Media
Properties, Ltd. ("Kinnevik"), pursuant to which the Company granted to Kinnevik
subdistribution rights in, and sold to Kinnevik other distribution rights to,
certain films for which the Company was acting as distribution agent. In
exchange for these rights, Kinnevik agreed to pay to the Company a total cash
consideration of $1,075,000, payable $500,000 on closing, $275,000 six months
after closing, and $300,000 eighteen months after closing. In addition, the
Company retained a continuing right to receive revenues from certain of the
films, valued by management at a minimum of approximately $150,000. Kinnevik
also agreed to provide the Company with a $500,000 revolving line of credit to
be secured by accounts receivable and other contractual rights acquired by the
Company. As part of the transaction, Kinnevik received stock options
(exercisable over a three year period) to purchase 100,000 Shares of the
Company's Common Stock at an exercise price of $.625 per share. The closing bid
price of the Company's Common Stock on October 7, 1996 was $1.375 per share.

Through June 16, 1997, the Company had secured interim financing of $125,000
against the final Kinnevik installment of $300,000. Such interim financing was
provided on a demand loan basis primarily from certain officers and directors of
the Company. See "Certain Relationships and Related Transactions." Although no
assurances can be given, the Company anticipates that it will be able to
discount the final installment with Kinnevik itself (in which event the Company
will repay the interim financing), or secure additional interim financing
against the balance of the Kinnevik obligation from other third parties.

On June 17, 1997, the Company also received a written proposal from Kinnevik
for additional financing in the amount of $500,000, the terms of which are
currently being negotiated by the Company. Such additional financing would be in
the form of a long term loan or convertible preferred stock which could be
prepaid or redeemed, as the case may be, upon the occurrence of certain events.
Although there can be no assurance that this financing will be consummated, the
Company anticipates that it will be completed prior to September 1, 1997. If
completed, the proceeds of this financing, together with the net proceeds of the
financing or discounting of the final Kinnevik installment, if available, would
be used to pay a long term note of the Company in the amount of $179,000 which
matures in July, 1997, and to fund the Company's operating costs over a period
of four to six months. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources." See "Risk
Factors--Negative Net Worth; Need for Additional Financing; Going Concern."

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CURRENT "INVENTORY" OF DISTRIBUTION RIGHTS

The Company's current inventory of film distribution rights consists of 11
films, two of which are "library" films (i.e., films already in distribution),
and nine of which are new films which have either recently been completed (but
not yet released) or are in various stages of pre-production.

The two "library" films are as follows:

- "Mr. Write", a high energy romantic comedy about an aspiring playwright
who falls hopelessly in love with a stunning actress. The film stars Paul
Reiser, Martin Mull and Jessica Tuck and was originally released in the
U.S.

- "Rich Girl", a romantic film about a spoiled rich girl who leaves home and
falls in love with a rock star from the wrong side of the tracks.

The Company has acquired overseas distribution rights to the following nine
new films, three of which are recently completed but not yet released ("Up, Down
& Sideways," "Danger in Paradise," and "Mujeres Infieles"), and six of which are
in various stages of pre-production with delivery anticipated in 1997 and/or
1998:

- "Up, Down and Sideways", an urban comedy set in Athens, Greece directed by
Michael Cacoyannis, who directed "Zorba the Greek", and starring Irene
Papas;

- "Danger in Paradise", an action/adventure film in which "paradise" turns
into a danger zone for two men on a sailing trip; starring Frank Stallone.

- "Mujeres Infieles," a film concerning the romantic and erotic adventures
of three women; directed by internationally recognized Adolfo Martinez
Solares and winner of Best Foreign Film Award at Worldfest Houston.

- "Dark Angel 2" (in pre-production), a sequel to the successful science
fiction thriller starring Dolph Lundgren, "Dark Angel I (I Come In
Peace)". The film is budgeted at $3 million and was written by Harv
Zimmel, who wrote "Shoot to Kill";

- "Wasteland" (in pre-production), an action, adventure film starring
Jonathon Schaech in which dark skies fall upon a man who travels down a
desert road to escape his past, only to find that his past is infinitely
brighter than his future. The film is budgeted at $5 million and will be
directed by Cameron Thor.

- "King Lear" (in pre-production), a contemporary adaptation of the
Shakespearean play starring Paul Sorvino and Mira Sorvino. This film is
tentatively budgeted at $8-10 million.

- "Downrange" (in pre-production), an action, adventure film in which two
women accidentally stumble upon military maneuvers and an ex-Green Beret
must save the day. This film is budgeted at $3 million.

- "Corrigan" (in pre-production), a romantic drama in which a handsome
provocateur, posing as a cripple, brings new love and excitement to the
life of a sophisticated widow who allows his charade to continue for her
own purposes. The film is tentatively budged at $3 million and will be
directed by Peter Markham, who directed "The English Patient."

- "Hostage" (in pre-production), an action thriller starring Jeff Fahey and
William Devane, in which an expert hostage negotiator (Jeff Fahey) is
lured out of seclusion and finds himself hunting down the renegade bomber
responsible for his wife's death. The film is tentatively budgeted at $3
million.

- "Winter" (in pre-production), a drama set in the small village of Kirchen,
Germany in 1944, in which a group of SS art thieves overthrow the corrupt
local boss which, in turn, inspires his assistant to mastermind the daring
escape of a fugitive Jewish doctor. The film is tentatively budgeted at $5
million.

As of March 31, 1997, the Company had agreements in principle with
subdistributors relating to distribution commitments or guarantees of
approximately $3.7 million that had not been recognized in the statement of
operations. The Company will recognize these guarantees as revenues and the
costs related to such revenues when the motion pictures to which they relate are
completed and available for delivery. It is

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possible that changes in production schedules and/or cancellations of pictures
may defer and/or reduce the amount of revenues that will be recognized in later
periods.

PRODUCER AGREEMENTS

The Company will seek to implement its strategy by entering into
"first-look" and "second look" agreements with certain producers. In exchange
for these "look" rights, the Company may agree to cover certain overhead
expenses of the producers, recoupable out of revenues from the films developed.
In addition, the Company may grant certain of its producers stock options on the
commencement of production of a film. The Company has entered into a "first
look" agreement with Presto Productions. Presto is one of the producers of "Dark
Angel 2" and "Winter," and produced "Mr. Write", a Paul Reiser comedy film which
Presto has licensed to the Company for both domestic and foreign sales. Presto
will receive compensation at the rate of $2,000 per month during the term of its
agreement with the Company. The original one year term of the agreement has
expired but the Company has extended the agreement on a month-to-month basis.
Stephen R. Greenwald, a Director and Chief Executive Officer of the Company, has
an interest in Presto which varies on a film-by-film basis between 16% and 50%.
Mr. Greenwald has no indirect interest (through Presto) in the film "Mr. Write,"
a one-third share in Presto's interest in the film "Winter," and a 50% share of
Presto's interest in the film "Dark Angel 2." The Company believes that the
terms of its arrangement with Presto are no less favorable than could be
arranged with other independent third party producers. See "Certain
Relationships and Related Transactions."

RECENT FINANCINGS

1995 PRIVATE PLACEMENT:

In August and October of 1995, the Company concluded a private placement
pursuant to which it issued unsecured promissory notes to unaffiliated investors
in the aggregate amount of $312,500. The notes have a maturity date of one year
and bear interest at the rate of 12% per annum. A total of 6.25 units were sold
at a purchase price of $50,000 per unit. In addition, warrants were issued to
the purchasers at the rate of 4,167 warrants for each unit sold, or a total of
26,042 warrants (on a post Reverse Split basis). Each warrant certificate
entitles the holder thereof to purchase one share of common stock at an exercise
price of either $2.83 per share (the August warrants) or $2.37 per share (the
October warrants) over a three year period commencing one year after the closing
of the private placement. After paying expenses and commissions of $42,500, the
Company received net proceeds of $270,000 from the private placement. The notes
issued in the private placement were due to be paid by the Company upon their
respective due dates on August 28 and October 3, 1996. The Company has made
alternative proposals to the noteholders which would involve the payment of
current interest and either the deferral of the maturity date of the notes (the
first proposal) or the cancellation of the notes in their entirety (the second
proposal), in each case in exchange for varying amounts of registered stock of
the Company. In the first proposal, the maturity date of the notes would be
deferred until December 15, 1997 and the warrants would be exchanged for
registered shares in an amount equal to 20% of the principal amount of the
notes, with shares valued at $.75 per share. In the second proposal, the notes
and warrants would be cancelled and the notes would be exchanged for registered
shares in an amount equal to 150% of the principal amount of the notes, with
shares valued at either $.75 per share or at current market value on the date of
the exchange. As of the date of this Prospectus, noteholders representing
$262,500 in principal amount of the notes elected the second proposal
(collectively, the "Exchanging Noteholders"), with all but one Exchanging
Noteholder electing to exchange at $.75 per share, resulting in the issuance of
an aggregate of 595,455 Shares of Common Stock to the Exchanging Noteholders,
which Shares are included in the within offering. See "Selling Stockholders".
The remaining notes for $50,000 (held by a single investor) have not been paid
and are in default. (See "Risk Factors"). The Company has paid current interest
on all of the notes through the first anniversary date of the respective notes.

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PARAMOUNT PICTURES SETTLEMENT:

In 1992, the Company gave a $2.7 million contractual guarantee to Paramount
Pictures to acquire all of the foreign distribution rights to the film
"Wuthering Heights". The payment was never made by the Company and new
management of the Company had been negotiating with Paramount since October 1995
with respect to a resolution of this matter. In December, 1996, the Company and
Paramount executed a settlement agreement pursuant to which Paramount agreed to
cancel the outstanding indebtedness of $2.7 million in full, in exchange for
which the Company agreed to (i) relinquish all further distribution rights to
"Wuthering Heights"; (ii) assign to Paramount all of its rights in any
outstanding distribution agreements for the film, and any receivables to be
generated therefrom; and (iii) guarantee that Paramount will collect a total of
$500,000 in sales revenue from existing distribution agreements no later than
January 15, 1997. Although existing license agreements yielded approximately
$420,000 in net revenues prior to January 15, 1997, such net revenues were being
held by Film Bridge International (the Company's sales agent) in connection with
certain disputes between the parties and were not available to be paid over to
Paramount on January 15. The Company resolved its dispute with Film Bridge in
May 1997, at which time the Company paid $250,000 to Paramount. The Company is
currently negotiating with Paramount regarding the timing of the remaining
$250,000 payment, although the Company anticipates that the payment will be due
within one year. See discussion of the Film Bridge litigation under
"Business--Legal Proceedings."

GENERALE BANK SETTLEMENT:

In December, 1996, the Company settled an outstanding claim with Generale
Bank ("Generale"), as successor in interest to Credit Lyonnais Bank Nederland
N.V. and Cinecom Entertainment Group, Inc. ("Cinecom"). Essentially, Cinecom had
claimed that the Company, through one of its subsidiaries (operating at the time
under the direction of prior management), had failed to remit to Cinecom
assigned distribution proceeds in the amount of $566,283.33 from the foreign
distribution of two films entitled "Aunt Julia and the Scriptwriter" and "The
Handmaiden's Tale". Pursuant to the settlement agreement with Generale, the
Company agreed to pay to Generale the sum of $275,000 in complete satisfaction
of the claim, payable $25,000 upon execution of the settlement agreement,
$25,000 on each of June 30 and December 31 in the years 1997, 1998 and 1999, and
$100,000 on June 30, 2000. Interest on the installments (at the floating rate of
LIBOR plus 1% per annum) will be waived provided the Company remains in
compliance with the agreed upon payment schedule. The Company has not yet paid
either the initial $25,000 payment or the first installment payment due on June
30, 1997.

SETTLEMENT WITH PRIOR COUNSEL:

In January, 1997, prior counsel to the Company agreed to exchange a
promissory note in the face amount of $70,000 (and waive an additional claim of
approximately $15,000 for services rendered) in exchange for 120,000 Shares of
the Company's Common Stock, provided such Shares were included in the
Registration Statement of which this Prospectus forms a part. Such Shares have
been issued upon the effectiveness of this registration and are included herein
for the benefit of prior counsel. See "Selling Stockholders".

1997 FINANCING:

On February 26, 1997, the Company completed the sale of 500,000 shares of
its Common Stock, and 500,000 Common Stock purchase warrants, to four (4)
offshore European investors in consideration of an aggregate purchase price of
$375,000, paid all cash at closing. The warrants are exercisable over a three-
year period (expiring February 25, 2000) at a purchase price of $1.06 per share.
One of the investors, Johann Schotte, was also retained by the Company as a
financial consultant for a period of one year from the date of closing at the
rate of $2,500 per month. The investors were also given the right to designate
one of the investors (or another third party) to serve as a member of the Board
of Directors of the Company, although such right has not been exercised to date.

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INTERIM FINANCING:

In April, 1997, Stephen R. Greewald, Lawrence I. Schneider and Robert E.
Miller, Jr., all directors of the Company, made loans to the Company in the
amounts of $50,000, $25,000 and $25,000, respectively. Each loan is payable on
demand, bears interest at the rate of 9.25% per annum, and is secured by a
collateral assignment of the Company's $300,000 receivable from Kinnevik. See
"Business--Sales of Distribution Rights." In consideration of making such loans,
the lenders received five-year warrants to purchase shares of Common Stock of
the Company, exercisable at $1.00 per share. Messrs. Schneider and Miller each
received 25,000 warrants in consideration of their respective $25,000 loans to
the Company, and Mr. Greenwald (or his designee) received 50,000 warrants in
consideration of his $50,000 loan to the Company. In addition to the foregoing,
an independent, unaffiliated third party made a $25,000 loan to the Company in
June, 1997 on the same terms and conditions as the loans made by Messrs.
Greenwald, Schneider and Miller. See "Certain Relationships and Related
Transactions."

COMPETITION

The entertainment industry generally, and the film industry in particular,
are highly competitive. The Company competes both for the acquisition of film
product to distribute in overseas markets as well as with other distributors for
the placement of its product with overseas subdistributors and users. The
Company's competition includes the smaller independent producers as well as the
major motion picture studios, many of which have their own in-house domestic and
international distribution departments. Many of the Company's competitors have
financial and other resources which are significantly greater than those
available to the Company.

Management believes that the Company will be able to compete in this
environment as it continues to enjoy a favorable reputation overseas and, as a
result of the consolidation in the film industry, is one of relatively few
reliable overseas distributors of independently produced motion pictures.

OPERATIONS

The Company's operations have been greatly reduced as a result of the
restructuring of the Company by new management. The Company maintains a single
office in Los Angeles (see "Properties") and maintains a small staff of fewer
than ten full-time employees and such additional part-time employees as may be
needed from time to time.

TAX LOSS CARRYFORWARD

The Company is entitled to the benefits of certain net operating loss
carryforwards to reduce its tax liability. The utilization by the Company of
such tax loss carryforwards is limited under applicable provisions of the
Internal Revenue Code of 1986, as amended, and the applicable regulations
promulgated thereunder. As of June 30, 1996, there were approximately $27
million in net operating loss carryforwards remaining to be used to reduce tax
liability. The utilization of approximately $4.9 million of these losses in
future periods will be limited to approximately $350,000 per year.

FACILITIES

On May 9, 1996, the Company entered into a two year lease, commencing June
1, 1996, for office premises located at 1875 Century Park East, Suite 2130, Los
Angeles, California 90067. The monthly rental is $5,301 per month and the
premises consist of 3,272 square feet of rentable space. The Company conducts
all of its operations out of these leased premises, although Messrs. Greenwald,
Smith and Schneider, the principal executive officers of the Company, devote a
significant portion of their time to the Company's business out of their
respective New York offices without additional charge or expense to the Company
other than reimbursement of $1,000 per month to an affiliate of Mr. Greenwald
for the use of office space at 380 Lexington Avenue, New York, New York.

27
<PAGE>
Rent expense for each of the fiscal years ended June 30, 1996, 1995 and 1994
was $38,772, $297,287, and $489,559, respectively.

LEGAL PROCEEDINGS

On December 20, 1990, Hibbard Brown & Company, Inc. ("Hibbard Brown") filed
a complaint entitled HIBBARD BROWN & COMPANY, INC. V. DOUBLE HELIX FILMS, INC.,
ODYSSEY ENTERTAINMENT LTD. AND COMMUNICATIONS AND ENTERTAINMENT CORP. in the
Supreme Court of the State of New York, County of New York. The Complaint sought
payment of $300,000 under an agreement with the Company, Odyssey, Double Helix
and Hibbard Brown dated December 21, 1989 for certain investment banking
services allegedly performed in introducing Odyssey and Double Helix and
assisting them in consummation of the Mergers by which they became wholly-owned
subsidiaries of the Company. A counterclaim seeking recovery of $50,000 paid to
Hibbard Brown upon execution of the Agreement was asserted.

Hibbard Brown's motion for summary judgment was granted in October, 1991. On
January 30, 1992, the Company moved, by order to show cause, to renew and
thereupon deny, dismiss or stay Hibbard Brown's previously granted motion for
summary judgment on the ground that Hibbard Brown had intentionally concealed
the fact that it was an unauthorized foreign corporation transacting business in
New York. By Order dated March 2, 1992, the court granted the Company's motion
in part by renewing the action and staying judgment pending Hibbard Brown's
qualification in New York. On October 29, 1992, Hibbard Brown moved for an order
vacating the stay of judgment, a declaration that it was now an authorized
foreign corporation and reinstatement of the summary judgment granted in
October, 1991 or, in the alternative, to rehear its motion for summary judgment
on the original papers and grant judgment in its favor.

On January 29, 1993, Double Helix, Odyssey and the Company cross-moved for
an order granting reargument and/or renewal of Hibbard Brown's motion for
summary judgment and consolidating the litigation with an action that the
Company had brought against Hibbard Brown (described below), or staying the
issuance, entry and execution of judgment pending the resolution and trial of
the Company's action against Hibbard Brown.

On March 26, 1993, the court issued a Decision and Order vacating the stay
of entry of the $300,000 judgment against the Company and granting the Company's
cross-motion for a stay of execution pending the determination of the Company's
action against Hibbard Brown. The Company's cross-motions for reargument and
renewal and consolidation were denied.

By Decision and Order dated June 18, 1993, the court affirmed the stay of
execution of the judgment, but required the Company to obtain a bond to secure
the stay. The Company obtained a non-collateral bond.

On March 5, 1992, the Company instituted an action entitled COMMUNICATIONS
AND ENTERTAINMENT CORP. V. HIBBARD BROWN & COMPANY in the Supreme Court, New
York County, for the return of 150,000 shares of Common Stock previously issued
on the ground that Hibbard Brown failed to perform the required services.
Hibbard Brown counterclaimed for breach of contract.

In July 1993, after considerable pre-trial discovery, the Company and
Hibbard Brown moved for summary judgment. By Decision and Order dated August 11,
1993, the court denied both motions. Both parties appealed. On March 3, 1994,
the appellate court affirmed the denial of summary judgment.

On or about October 14, 1994, Hibbard Brown filed a voluntary petition for
relief under Chapter 11, Title 11 of the United States Code with the United
States Bankruptcy Court, Southern District of New York. Consequently, the
Company's action against Hibbard Brown has been automatically stayed. The
Company has filed a Proof of Claim.

28
<PAGE>

On or about December 30, 1994, Krishna Shah, who allegedly served as
President of Double Helix from about July 1991 until about March 1993, brought
an action in the Superior Court of California, Los Angeles County, entitled
KRISHNA SHAH V. NORMAN MULLER, COMMUNICATIONS AND ENTERTAINMENT CORP., ATC II,
CARNEGIE FILM GROUP, INC., JERRY MINSKY, PERRY SCHEER, SUSAN BENDER, LARRY
MYERS, ROBERT HESSE, DOUBLE HELIX FILMS, INC. AND DOES 1-100. Mr. Muller, a
former Chairman of the Board and CEO of the Company, had demanded that the
Company indemnify him against any expenses, judgments and amounts paid in
settlement of the litigation. The Company contends that, by virtue of Mr.
Muller's wrongful actions and failure to comply with various obligations to the
Company, it is not required to provide indemnification. The Complaint alleges
claims for breach of an oral agreement to pay Mr. Shah $152,000 (which he
allegedly advanced for the benefit of Double Helix) and to give him a 19.5%
ownership interest in its corporate successors, and money paid, services
rendered and fraud against the Company, Double Helix and Mr. Muller. Mr. Shah
also alleges a claim for intentional infliction of emotional distress against
Mr. Muller. Mr. Shah seeks to recover unspecified compensatory, punitive,
exemplary and emotional distress damages. A trial has been scheduled for July
28, 1997.

In August 1995, G.P. Productions, Inc. ("GP") and Greenwich Subject Films,
Inc. ("Greenwich") commenced an action entitled G.P. PRODUCTIONS, INC. AND
GREENWICH STUDIOS, INC. V. DOUBLE HELIX FILMS, INC., COMMUNICATIONS AND
ENTERTAINMENT, INC., KRISHNA SHAW, GERALD MULLER AND NORMAN MULLER in the United
States District Court, Southern District of Florida (Case No. 95-1188). Mr.
Muller has demanded that the Company indemnify him against any expenses,
judgements and amounts paid in settlement of the action. The Company contends
that, by virtue of Mr. Muller's breaches of fiduciary duty and violation of his
obligations to the Company, it is not required to provide indemnification.

GP and Greenwich allege that they are the exclusive owners of the films "The
Gallery" and "South Beach". They assert claims for copyright infringement,
unfair competition, breach of contract, accounting, conversion, civil theft,
conspiracy and fraudulent conveyance. The Complaint demands a recall of the
films, an attachment, preliminary and permanent injunctive relief, an
accounting, and unspecified compensatory, punitive and treble damages. The
Company's motion to transfer venue of the action was granted in November 1995,
and the case was transferred to the United States District Court for the
Southern District of New York. There has been no activity in this matter since
the transfer of venue in 1995.

On or about September 18, 1995, the agent for the landlord for the premises
formerly occupied by the Company at 800 Third Avenue, New York, New York, filed
a Summons and Verified Complaint against the Company in the Supreme Court of the
State of New York, County of New York, entitled JOSEPH P. DAY REALTY CORP. V.
COMMUNICATIONS AND ENTERTAINMENT CORP. The plaintiff alleged that it was due
$66,694 from the Company (plus interest) for rent allegedly owed during the
period from April through September, 1995. The Company had vacated the premises
on April 12, 1995. Summary judgment was awarded to the plaintiff on May 22, 1996
and a judgment was entered for $74,142 on May 31, 1996. The Company's motion for
reconsideration of the matter on the grounds that the landlord wrongfully
refused to consider and accept a subtenant for the lease was denied by the Court
and is currently under appeal. In December, 1996, the Company made application
for a stay of enforcement of the judgment pending the Company's appeal. Such
application is currently pending before the court. On July 8, 1996, the
plaintiff commenced a second action against the Company in the same court for
$121,000 for rent allegedly owed during the period from October 1995 through
July 1996. The Company has filed an Answer in this action and plaintiff has
filed a motion for summary judgment. Such motion is being opposed by the Company
and is currently pending before the Court. In June, 1997, a settlement was
reached between the parties with respect to both actions, pursuant to which the
plaintiff agreed to accept 355,000 shares of the Company's Common Stock in full
settlement of the actions, provided the shares are fully registered and
delivered prior to August 15, 1997. Such shares have been issued upon the
effective date of this Prospectus and are included herein for the benefit of
plaintif and its designees. See "Selling Stockholders."

On or about October 10, 1995, Canon Financial Services filed a Complaint in
the Superior Court of New Jersey entitled CANON FINANCIAL SERVICES, INC. V.
COMMUNICATIONS AND ENTERTAINMENT CORP. The plaintiff

29
<PAGE>
is claiming that it is due $47,499.83, plus damages, pursuant to a lease
agreement. The Company has filed an Answer in this action and plaintiff's motion
for summary judgment has been denied by the Court. No trial date has yet been
set in this matter.

On or about December 5, 1995, Robert F. Ferraro, a former director of the
Company, brought an action against the Company in the Supreme Court of the State
of New York, New York County. The action was brought on a promissory note in the
amount of $25,000 and plaintiff obtained a judgment on a summary judgment
motion. The plaintiff has not yet moved to enforce the judgment and the Company
is considering whether or not it has a claim for indemnification against prior
management (including the plaintiff) in connection with the issuance of the
note.

On or about January 23, 1996, an action was filed in the Los Angeles
Superior Court entitled GREENBERG, GLUSKER, FIELDS, CLAMAN & MACHTINGER V.
ODYSSEY DISTRIBUTORS LTD., ODYSSEY ENTERTAINMENT LTD. AND COMMUNICATIONS AND
ENTERTAINMENT CORPORATION, in which the plaintiff seeks damages in the amount of
$33,849.98 for legal services rendered to the Company and its subsidiaries. In
June, 1997, the parties reached a settlement pursuant to which the plaintiff
agreed to accept $7,000 in cash and 40,000 fully registered shares of the
Company's Common Stock (plus an additional cash amount to the extent the
aggregate market value of the shares on the date of delivery is less than
$20,000). Such shares have been issued on the effective date of this Prospectus
(with an aggregate market value of $ ) and are included herein for the
benefit of plaintiff. See "Selling Stockholders".

On or about March 12, 1996, an action was filed in Los Angeles Municipal
Court entitled JUDY HART V. ODYSSEY DISTRIBUTORS, LTD. The plaintiff is claiming
that she is due $17,920.49 pursuant to a promissory note previously issued to
her by the Company. The Company has filed a cross-claim against the plaintiff
seeking offsets against the amount due and other damages.

On or about March 25, 1996, a class action complaint was filed in Los
Angeles Superior Court entitled DENNIS BLEWITT V. N. NORMAN MULLER, JERRY
MINSKY, DORIAN INDUSTRIES, INC. AND COMMUNICATIONS AND ENTERTAINMENT
CORPORATION. The complaint seeks damages in connection with the Company's
treatment in its financial statements of the disposition of its Double Helix
subsidiary in June 1991. The complaint seeks unspecified damages on behalf of
all persons who purchased shares of the Company's common stock from and after
June 1992. The complaint was served on the Company on or about July 8, 1996. A
second action, alleging substantially similar grounds, was filed in December,
1996 in the United States District Court for the Southern District of California
under the caption heading "Diana Pfannebecker v. N. Norman Muller,
Communications and Entertainment Corp., Jay Behling, Jeffrey S. Konvitz, Tom
Smith, Jerry Silva, David Mortman, Price Waterhouse & Co., Todman & Co., and
Renato Tomacruz." (Following the filing of the second action, the first action
was dismissed by stipulation in May, 1997). The Company has filed a motion to
dismiss the Complaint in the second action and a hearing on the motion has been
scheduled for July, 1997. In connection with this matter, Messrs. Muller, Smith
and Mortman, former directors of the Company, have demanded that the Company
indemnify them against any expenses, judgments, and amount paid in settlement of
the litigation. The Company contends that, by virtue of their wrongful actions
and failure to comply with various obligations to the Company, it is not
required to provide such indemnification.

On March 11, 1996, the Company and Film Bridge International, Inc. ("Film
Bridge") executed a memorandum regarding the proposed formation of a joint
venture for the purpose of acquiring and exploiting film distribution rights.
Shortly thereafter, the Company advised Film Bridge that it was terminating the
proposed joint venture but desired to enter into negotiations for a consulting
agreement with Film Bridge. Negotiations continued until August, 1996 but did
not result in a new agreement between the parties. On September 18, 1996, Film
Bridge filed a complaint in Los Angeles County Superior Court, entitled FILM
BRIDGE INTERNATIONAL V. COMMUNICATIONS AND ENTERTAINMENT CORP., AND DOES 1
THROUGH 50, INCLUSIVE, contending that the Company had breached the terms of the
proposed joint venture agreement with Film Bridge. On December 19, 1996, the
Company filed a cross-complaint against Film

30
<PAGE>

Bridge alleging that, since the end of June, 1996, Film Bridge had failed to
furnish the Company with a proper accounting of its revenues and expenses in
connection with the sale to foreign licensees of various films in which the
Company had an interest (including "Wuthering Heights", among others) and had
failed to make payment of at least $450,000 to the Company for monies due and
owing to the Company from the foreign sales of such films. An agreement was
reached between the parties in May, 1997, as a result of which the Company
received $336,000 of the monies being held by Film Bridge, with the balance
being retained by Film Bridge as sales commissions and in full settlement of the
litigation.

On November 21, 1996, Jerry Silva, a former director of the Company,
commenced two actions against the Company, one in the Supreme Court of the State
of New York, and one in the Civil Court of the State of New York. In the Supreme
Court action, the plaintiff is seeking money damages in the amount of $500,000
for indemnification of plaintiff as a past officer and director of the Company,
unjust enrichment, tortious interference with plaintiff's rights to sell his
shares in the Company, and attorneys fees. The Civil Court matter is an action
to collect on a promissory note in the amount of $22,500, plus attorneys fees.
The Company has filed an Answer in each action. The Company intends to
vigorously contest both actions and to assert affirmative defenses and
counterclaims for fraud in the inducement, failure of consideration and breach
of fiduciary duty.

On November 21, 1996, the law firm of Halperin, Klein & Halperin (counsel to
Mr. Silva) commenced an action against the Company in the Civil Court of the
State of New York on a returned check in the amount of $5,000 for legal services
allegedly rendered to the Company. The check was originally issued to plaintiff
in April, 1995 in connection with the change of control of the Company at that
time. The Company has filed an Answer in the action and intends to defend the
matter on the basis of a failure of consideration.

Other than the foregoing, there are no material legal proceedings pending to
which the Company is a party or pursuant to which any of its properties is
subject.

31
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following are the executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>

Stephen R. Greenwald................................. 57 Chief Executive Officer; Co-Chairman in the Office of
the Chairman; and Director

Ira N. Smith......................................... 56 President; Co-Chairman in the Office of the Chairman;
and Director

Lawrence I. Schneider................................ 59 Co-Chairman in the Office of the Chairman; and
Director

Robert E. Miller, Jr................................. 49 Director

Marvin Grossman...................................... 50 Executive Vice-President and Chief Financial Officer
</TABLE>

STEPHEN R. GREENWALD (57) has served as Chief Executive Officer and
Co-Chairman in the Office of the Chairman of the Company since September, 1995.
Since 1990, Mr. Greenwald has been a consultant to banks and other clients in
the media and film business, most recently having served as Chief Executive
Officer of Vision International, an international film distribution company
based in Los Angeles, from February 1994 through June, 1996. Mr. Greenwald has
also been involved in financing and distributing independently produced motion
pictures, including, among others, "Blue Velvet," "Dune," "King of Comedy,"
"Ragtime," "Crimes of the Heart" and "Manhunter." Together with Ira Smith, Mr.
Greenwald co-produced the film "Amityville II: The Possession." Mr. Greenwald
devotes substantially all of his time to the business of the Company.

IRA N. SMITH (56) has served as Co-Chairman in the Office of the Chairman of
the Company since September, 1995, and as President of the Company since March,
1996. During the period from 1987 through 1994, Mr. Smith served in various
executive capacities (including Chairman, Chief Executive Officer and Chief
Financial Officer) of Music Theater International, an organization which
licenses rights to musicals in secondary markets. During the period from 1988
through June 1995, Mr. Smith also served as Vice-Chairman and Chief Executive
Officer of the Alexander Doll Company ("Alexander"), a manufacturer of
collectible and specialty dolls. In April 1995, Alexander filed a voluntary
petition for bankruptcy under Chapter 11 of the federal bankruptcy laws. The
company remained as a debtor in possession and in June, 1995, the bankruptcy
court authorized the sale of all of the assets of the company to an unaffiliated
third party. In December 1995, following the sale of the company's assets, the
court signed an order directing the company to pay to creditors 100% of allowed
priority claims and 85% of allowed general unsecured claims. During the period
from 1992 to date, Mr. Smith has also served as Co-Chairman of SESAC, Inc., one
of three United States performing rights licensing organizations. Prior to 1987,
Mr. Smith was actively engaged in financing motion pictures and film projects,
including, among others, "Three Days of the Condor," "Dune," "King of Comedy,"
"SOB," "Amityville 3-D," "Conan the Barbarian," "Halloween II" and "Halloween
III." Together with Mr. Greenwald, Mr. Smith co-produced the film "Amityville
II: The Possession." Mr. Smith devotes substantially all of his time to the
business of the Company.

LAWRENCE I. SCHNEIDER (59) has served as Co-Chairman in the Office of the
Chairman of the Company since September, 1995. Mr. Schneider is a private
investor and has been Chairman of Global Capital since January 1994. from 1987
to December 1993, Mr. Schneider was a principal of S&S Investments, a private
investment firm. Mr. Schneider devotes a portion of his time to the business of
the Company.

32
<PAGE>
ROBERT E. MILLER JR. (49) is a private investor and principal shareholder of
Word Power Incorporated d/b/a Hollywood North Productions, a privately-held
development company for feature films and movies-of-the-week. Mr Miller is also
Associate Director of Trade Task Group, Inc., a strategic planning consulting
firm where he has served as manager of client development since 1984. He is also
a board member emeritus of the International Standards Institute and a member of
the board of advisors of the World Film Institute, sponsors of "The Family Film
Awards."

MARVIN GROSSMAN (50) has served as Executive Vice-President and Chief
Financial Officer of the Company since June 1996. For the two year period prior
thereto, Mr. Grossman served as Executive Vice-President and Chief Financial
Officer of Vision International, a company engaged in the international film
distribution business. Prior thereto, Mr. Grossman maintained an independent
accounting practice and served as a consultant to Credit Lyonnais Bank and Bank
of America in connection with bankruptcy matters and workout arrangements.
During the period from 1991 through 1993, he also served as Chief Financial
Officer of Post Logic, a company engaged in audio and post production services.

CHANGE IN MANAGEMENT CONTROL

A change in the entire Board of Directors of the Company (the "Board")
occurred on April 12, 1995 pursuant to the terms of a Settlement Agreement,
dated as of March 31, 1995 (the "Settlement Agreement"), by and among Robert
Hesse, Shane O'Neil, Lawrence I. Schneider, Henry N. Schneider, Robert E.
Miller, Jr., Russell T. Stern, Jr. (collectively, the "CECO Shareholders
Committee"), and the Company, Global Intellicom, Inc., and each of Jerry Silva,
Robert Ferraro, N. Norman Muller, Thomas W. Smith and David A. Mortman
(constituting all the directors of the Company at the time of the execution of
the Settlement Agreement and hereinafter referred to collectively as the "Former
Directors") and others.

As contemplated by the Settlement Agreement, on April 11, 1995, the Former
Directors increased the size of the Board from five to six directors and elected
Henry N. Schneider, a designee of the CECO Shareholders Committee, a new
director effective upon the closing of the Settlement Agreement. The closing of
the Settlement Agreement occurred on April 12, 1995 and, upon the closing, the
resignations of the Former Directors became effective. After the closing, Henry
N. Schneider, as the sole remaining director of the Company, elected Lawrence I.
Schneider, Russell T. Stern, Jr., Patrick J. Haynes, III and Robert E. Miller,
Jr. as new directors of the Company. In addition to the change in the
composition of the Board, the Settlement Agreement provided for the settlement
of all outstanding litigation between the Company and the CECO Shareholders
Committee. The CECO Shareholders Committee was a group of stockholders of the
Company originally formed to effect a change in the Company's management. The
CECO Shareholders Committee disbanded upon the closing of the Settlement
Agreement. Effective September 8, 1995, each of Messrs. Haynes, Henry N.
Schneider and Stern resigned as directors of the Company and were replaced by
Stephen R. Greenwald and Ira N. Smith, each of whom was appointed to the Board
by the remaining members thereof on such date. At a meeting of the Board on
March 6, 1996, the number of Directors was fixed at four (4).

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

For the fiscal year ended June 30, 1996, there were six meetings and/or
written consents in lieu of meetings of the Board of Directors. All Directors
attended or consented to each of the meetings (and consents in lieu of meetings)
of the Board of Directors during said fiscal year. The Board of Directors does
not presently have any standing nominating, audit or compensation committees,
the customary functions of such committees being performed by the entire Board
of Directors.

EXECUTIVE COMPENSATION

The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer of the
Company, the four (4) most highly compensated executive officers

33
<PAGE>
who were executive officers as of June 30, 1996, and two (2) other individuals
who held executive positions with the Company during a portion of the fiscal
year ended June 30, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
----------------------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ---------------------------------- ----------- --------- ----------- ----------------- ------------- -------------

<S> <C> <C> <C> <C> <C> <C>
Stephen R. Greenwald.............. 1996 60,000 (2) -- -- 216,667(2) 75,000(1)(2)
Chief Executive Officer; 1995 -- -- -- -- --
Co-Chairman 1994 -- -- -- -- --

Ira N. Smith...................... 1996 60,000(1) -- -- 216,667 75,000(1)
President; Co-Chairman 1995 -- -- -- -- --
1994 -- -- -- -- --

Lawrence I. Schneider(2).......... 1996 60,000(1) -- -- 216,667 75,000(1)
Co-Chairman 1995 -- -- -- 8,333 --
1994 -- -- -- -- --

Joshua B. Grode(3)................ 1996 24,872 -- -- 33,333 --
Executive Vice-President 1995 -- -- -- -- --
1994 -- -- -- -- --

Marvin Grossman(4)................ 1996 -- -- -- -- --
Chief Financial Officer 1995 -- -- -- -- --
1994 -- -- -- -- --

Shane O'Neil(5)................... 1996 167,214 -- -- 15,000 --
President 1995 85,519 -- -- 16,666 --
1994 -- -- -- -- --

Jay Behling(6).................... 1996 135,385 -- -- 12,500 --
Chief Financial Officer 1995 95,573 -- -- -- --
1994 127,250 -- -- -- --
</TABLE>

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

(1) Messrs. Greenwald, Smith and Schneider each deferred $75,000 of their annual
compensation during the fiscal year ended June 30, 1996 pursuant to the
terms of their respective compensation agreements with the Company. Pursuant
to such agreements, Messrs. Greenwald, Smith and Schneider were issued
convertible promissory notes for the amount of such deferred compensation,
payable in full within twelve months from the date of issue with interest at
2% over prime. Such notes were converted into shares of Common Stock of the
Company on June 10 and June 30, 1996 at the average closing bid price in
effect for the Common Stock for the 10-day trading period immediately
preceding the date of each respective election. On June 10, $60,000 of each
note (plus accrued interest) was converted into 83,120 shares of Common
Stock at a price of $.75 per share, and on June 30, $15,000 of each note was
converted into 19,231 shares of Common Stock at a price of $.78 per share.
See "Compensation Agreements, Termination of Employment and
Change-in-Control Arrangements" for a more detailed explanation of the terms
of the compensation agreements between the Company and each of Messrs.
Greenwald, Smith and Schneider, and for additional information with respect
to the conversion of deferred compensation notes during the 1997 fiscal
year. Such compensation agreements became effective on October 1, 1995.

34
<PAGE>
(2) The cash compensation, stock awards and stock options reflected as being
paid to or received by Mr. Greenwald in the foregoing table were actually
paid to or received by G & H Media, Ltd., a consulting firm of which Mr.
Greenwald is a principal and controlling party. The compensation to Mr.
Greenwald does not include compensation paid to a law firm of which Mr.
Greenwald is a member, and the compensation to Mr. Schneider does not
include compensation (in the form of stock options) paid to an affiliated
corporation for financial consulting services rendered to the Company. See
"Certain Relationships and Related Transactions."

(3) Mr. Grode commenced employment with the Company on April 1, 1996. His
present salary is at the rate of $60,000 per annum.

(4) Although Mr. Grossman was elected to his present position with the Company
on May 22, 1996, he did not begin to receive compensation from the Company
until the beginning of the 1997 fiscal year (i.e., July 1, 1996). Mr.
Grossman is presently employed on an hourly basis by the Company.

(5) Mr. O'Neil was replaced by Mr. Smith as President of the Company effective
March 26, 1996, although Mr. O'Neil continued to receive consulting
compensation through the end of the 1996 fiscal year through an affiliated
company, Cerberus, Inc.

(6) Mr. Behling resigned as Chief Financial Officer of the Company effective May
22, 1996, although he continued to receive consulting compensation from the
Company through October, 1996.

OPTIONS/STOCK APPRECIATION RIGHTS

The following table provides information with respect to stock options and
stock appreciation rights ("SARs") granted to the named executive officers
during the fiscal year ended June 30, 1996.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZED
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERMS
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED YEAR SHARE DATE 5% 10%
- ------------------------------------- ----------- ------------- ----------- ----------- ---------- ----------

<S> <C> <C> <C> <C> <C> <C>
Stephen R. Greenwald................. 16,667(1) 2.3% $ 2.832 10/28/98 $ 7,433 $ 15,617
200,000(1) 28.1% $ 1.875 3/06/01 $ 103,200 $ 228,800

Ira N. Smith......................... 16,667 2.3% $ 2,832 10/28/98 $ 7,433 $ 15,617
200,000 28.1% $ 1.875 3/06/01 $ 103,200 $ 228,800

Lawrence I. Schneider(3)............. 16,667 2.3% $ 2.832 10/28/98 $ 7,433 $ 15,617
200,000 28.1% $ 1.875 3/06/01 $ 103,200 $ 228,800

Joshua B. Grode...................... 33,333 4.7% $ 1.875 3/06/01 $ 17,200 $ 38,132

Marvin Grossman...................... -- -- -- -- -- --

Shane O'Neil......................... 15,000(2) 2.1% $ 1.50 3/26/99 $ 3,525 $ 7,350

Jay Behling.......................... 12,500 1.7% $ 2,832 8/28/99 $ 5,424 $ 11,626
</TABLE>

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

(1) The stock options reflected as being issued to Stephen R. Greenwald in the
foregoing table were actually issued to G & H Media, Ltd., a consulting firm
of which Mr. Greenwald is a principal and controlling party.

(2) The stock options reflected as being issued to Shane O'Neil in the foregoing
table were actually issued to Cerberus, Inc., a consulting firm of which Mr.
O'Neil is a principal and controlling party.

35
<PAGE>
(3) The chart does not reflect options for 83,333 shares issued to Global
Capital Resources, Inc., an affiliate of Mr. Schneider, for financial
consulting services rendered to the Company. See "Certain Relationships and
Related Transactions."

AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTIONS/SAR VALUE TABLE

The following table provides information on options/SAR exercises in the
fiscal year ended June 30, 1996 by the named executive officers and the value of
such officers' unexercised options/SARs at June 30, 1996.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR END OPTIONS
ACQUIRED ON VALUE ------------------------------ ---------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE
- -------------------------------- ----------------- --------------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>

Stephen R. Greenwald............ -- -- 216,667 -- 0

Ira N. Smith.................... -- -- 216,667 -- 0

Lawrence I. Schneider(1)........ -- -- 225,000 -- 0

Joshua B. Grode................. -- -- 33,333 -- 0

Marvin Grossman................. -- -- -- -- --

Shane O'Neil.................... -- -- 31,666 -- 0

Jay Behing...................... -- -- 12,500 -- 0

NAME UNEXERCISABLE
- -------------------------------- -----------------
<S> <C>
Stephen R. Greenwald............ --
Ira N. Smith.................... --
Lawrence I. Schneider(1)........ --
Joshua B. Grode................. --
Marvin Grossman................. --
Shane O'Neil.................... --
Jay Behing...................... --
</TABLE>

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

(1) The chart does not reflect options for 83,333 shares issued to Global
Capital Resources, Inc., an affiliate of Mr. Schneider, for financial
consulting services rendered to the Company. See "Certain Relationships and
Related Transactions."

REPRICING OF OPTIONS

On December 2, 1996, the Board of Directors voted to lower the exercise
price of the following Warrants to $1.00 per share to create further incentives
for management of the Company and to bring the warrant exercise price into line
with Warrants granted to other parties performing services for the Company: With
respect to Lawrence Schneider, 8,333 Warrants granted in April, 1995 at an
exercise price of $3.91 per share; 16,667 Warrants granted in October, 1995 at
an exercise price of $2.83 per share; and 200,000 Warrants granted in March,
1996 at an exercise price of $1.87 per share; with respect to Robert Miller,
8,333 Warrants granted in April, 1995 at an exercise price of $3.91 per share;
33,333 Warrants granted in October, 1995 at an exercise price of $2.83 per
share; and 25,000 Warrants granted in March, 1996 at an exercise price of $1.87
per share; with respect to each of Ira Smith and G&H Media, Ltd. (an affiliate
of Stephen R. Greenwald), 16,667 Warrants granted in October, 1995 at an
exercise price of $2.83 per share; and 200,000 Warrants granted in March, 1996
at an exercise price of $1.87 per share; and with respect to Josh Grode, 33,333
Warrants granted in March, 1996 at an exercise price of $1.87 per share. The
closing bid price of the Company's Common Stock on December 2, 1996 was $.69 per
share.

DIRECTOR COMPENSATION

The Company does not have any standard arrangements pursuant to which
directors of the Company are compensated for services provided as a director.
Nevertheless, during the fiscal year ended June 30, 1996, Messrs. Schneider,
Greenwald and Smith were each issued 16,667 stock options in consideration of
serving on the Board of Directors of the Company. Such options are exercisable
for the three year period commencing October 28, 1995 at an original exercise
price of $2.83 per share (subsequently lowered to

36
<PAGE>
$1.00 per share by action of the Board in December 1996). In addition, during
the 1996 fiscal year, the Board of Directors granted to Robert Miller, the only
outside director on the Company's Board of Directors, stock options to purchase
25,000 shares of the Company's Common Stock at an exercise price of $1.875 per
share (subsequently lowered to $1.00 per share by action of the Board in
December, 1996). Such options were issued on March 6, 1996 and are exercisable
for the five-year period ending March 6, 2001. Mr. Miller abstained on the
voting which authorized the issuance of such stock options to Mr. Miller.

All directors are entitled to reimbursement for expenses reasonably incurred
in attending Board of Directors' meetings.

COMPENSATION AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.

On October 1, 1995, Messrs. Greenwald, Smith and Schneider executed
compensation agreements with the Company (the "Agreements") pursuant to which
the named parties agreed to render management services to the Company for a
three year period ending October 1, 1998. Pursuant to these Agreements, each of
the parties agreed to serve as a Co-Chairman in the Office of the Chairman of
the Company and, in addition, Mr. Greenwald agreed to serve as Chief Executive
Officer. (In March, 1996, Mr. Smith also agreed to serve as President of the
Company). The Agreements were superseded by agreements executed on March 6,
1996. The subsequent agreements (also defined as the "Agreements") were
substantially identical to the original Agreements in all material respects with
respect to cash compensation but modified the provisions regarding the issuance
of stock options. (In the subsequent Agreement with Mr. Greenwald, the named
party is G & H Media, Ltd. rather than Mr. Greenwald individually; G & H Media,
Ltd. is a consulting firm of which Mr. Greenwald is a principal and controlling
party).

The Agreements provide for compensation at the rate of $15,000 per month,
$20,000 per month and $25,000 per month during the first, second and third years
of the respective terms of the Agreements. In addition, in the event the annual
budget and income projections of the Board are met for any 12 month period
during the term of the Agreements, then each party will be entitled to receive
one-third of 2% of the budgeted gross income for such twelve month period, and
an additional one-third of 5% of the gross income, if any, in excess of the
budgeted gross income. Messrs. Greenwald, Smith & Schneider have agreed to defer
the implementation of the bonus provisions of the Agreements until the fiscal
year ending June 30, 1998.

In the event any Agreement is terminated due to death or disability, then
the estate of the decedent or the representatives of the disabled party will be
entitled to receive full compensation for the greater of twelve months or the
balance of the term of the Agreement.

Each of Messrs. Greenwald, Smith and Schneider agreed that with respect to
each calendar quarter during the term of his respective Agreement, the following
percentage of his compensation would be paid: (i) no payment if the current
assets of the Company as of the end of the previous calendar quarter are less
than $500,000; (ii) one-third if the current assets as of the end of the
previous calendar are more than $500,000, but less than $1,000,000; (iii)
two-thirds if the current assets as of the end of the previous calendar quarter
are more than $1,000,000 but less than $1,500,000; and (iv) full payment if the
current assets as of the end of the previous calendar quarter are more than
$1,500,000. For purposes of the Agreement, "current assets" are defined as
accounts and contract receivables due within 12 months plus cash and cash
equivalents. Any portion of the compensation not paid would be deferred and
would be paid in twelve months with interest pursuant to a promissory note
issued by the Company, provided that the note could be converted into Common
Stock of the Company at any time prior to payment in full at the average closing
bid price in effect for the Common Stock for the 10-day trading period
immediately preceding the date of the conversion election.

During the quarter ended December 31, 1995, each of Messrs. Greenwald, Smith
and Schneider deferred 100% of their compensation for the quarter, or $45,000
each. During each of the next two quarters, they deferred one-third of their
compensation, or a total of $30,000 each. On June 10 and

37
<PAGE>

June 30, 1996, each of Messrs. Greenwald, Smith and Schneider converted their
deferred compensation notes of $75,000 (plus accrued interest) into a total of
102,351 shares of Common Stock at prices of $.75 and $.78 per share,
respectively. On September 30, 1996, they each converted deferred compensation
notes of $15,000 for the quarter then ended into a total of 26,316 Shares of
Common Stock at a conversion price of $.57 per Share. For the quarters ended
December 31, 1996 and March 31, 1997, they each deferred $30,618 and $25,202,
respectively, of additional compensation, none of which has yet been converted
into Common Stock of the Company. See "Executive Compensation."

The Agreements also provided for the issuance of 200,000 stock options to
each of Messrs. Greenwald, Smith and Schneider, exercisable during the five year
period commencing March 6, 1996 at an exercise price of $1.875 per share
(subsequently lowered to $1.00 per share by action of the Board in December
1996). See "Options/Stock Appreciation Rights."

On December 2, 1996, the Board of Directors granted 100,000 Common Stock
purchase warrants to each of Stephen R. Greenwald, Ira N. Smith and Lawrence I.
Schneider in consideration of services rendered to the Company. The warrants
were granted for a five-year period and are exercisable at a purchase price of
$1.00 per share.

In April, 1997, the Company granted additional Common Stock purchase
warrants to Stephen R. Greenwald (or his designee), Lawrence I. Schneider and
Robert E. Miller, Jr. in consideration of providing certain interim financing to
the Company. See "Certain Relationships and Related Transactions."

COMPENSATION COMMITTEE REPORT AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION

Executive officer compensation is determined by the entire Board of
Directors, consisting of Messrs. Greenwald, Smith, Schneider and Miller. The
Board has not appointed or designated a separate compensation committee to
determine or set executive compensation. With the exception of Robert Miller,
all members of the Board of Directors are executive officers of the Company and
all are subject to compensation agreements containing substantially the same
terms and provisions. See "Compensation Agreements, Termination of Employment
and Change-in-Control Arrangements." The Board's executive compensation policy
is intended to attract and retain key executives, compensate them at appropriate
levels and provide them with both cash and equity incentives to enhance the
Company's value for all of its stockholders. Although the compensation
agreements entered into by Messrs. Greenwald, Smith and Schneider were not
determined by arms-length negotiation between such individuals and the Company,
the Board of Directors believes that the compensation paid to such individuals
is comparable to, if not less than, the compensation paid to executives of other
comparable companies in the film and entertainment industry.

38
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Lawrence I. Schneider, a member of the Board of Directors of the Company and
one of three Co-Chairmen in the Office of the Chairman of the Company, is a
principal of Global Capital Resources, Inc., a New York based financial
consulting services firm ("Global Capital"). During the 11 month period from
May, 1995 through March, 1996, Global Capital rendered financial consulting
services to the Company in connection with the change of management control of
the Company. Such services were rendered to the Company at the agreed upon rate
of $15,000 per month. However, in order to conserve the cash resources of the
Company, Global Capital agreed to accept stock options from the Company in lieu
of a cash payment. On March 6, 1996, the Board of Directors of the Company (with
Mr. Schneider abstaining from the voting) authorized the issuance to Global
Capital of stock options to purchase 83,333 shares of Common Stock of the
Company, exercisable over a five-year period at the exercise price of $1.875 per
share. Global Capital has not rendered any additional services to the Company
since March, 1996 and is not under any contract or agreement to do so.

On August 1, 1996, the Board of Directors of the Company offered to
reimburse the members of the CECO Shareholders Committee in kind for all
expenses incurred by such members in connection with the change of management
control of the Company effected in April, 1995. (See "Change in Control"). The
Board offered to reimburse such expenses by issuing stock options to the
committee members in an amount equal to one and one-third times the amount of
such expenses. Robert Miller, a director of the Company, agreed to accept
options to purchase 40,000 shares of the Company's Common Stock, exercisable
over a five-year period at an exercise price of $.75 per share, representing the
then current market price of the Company's Common Stock on the date of grant. In
exchange, Mr. Miller released his claim for reimbursement of approximately
$30,000 of expenses incurred by Mr. Miller in connection with the change of
control. Lawrence I. Schneider, a director of the Company and also a member of
the CECO Shareholders Committee, has not agreed to accept options in lieu of his
claim for reimbursement of expenses in connection with the change of control.

During the fiscal year ended June 30, 1996, the law firm of Herbst &
Greenwald, of which Mr. Greenwald, a director of the Company, is a member,
received fees for legal services rendered to the Company in the amount of
$2,500. During the nine month period ended March 31, 1997, such firm received
additional fees for legal services rendered to the Company in the amount of
$21,564. The firm of Herbst & Greenwald (or an affiliate thereof) is also
reimbursed $1,000 per month by the Company for providing office space to Mr.
Greenwald while he attends to the Company's affairs in his New York office.

The Company has entered into a "first look" agreement with Presto
Productions, a production company in which Stephen R. Greenwald, Director and
Chief Executive Officer of the Company, has an interest. (See "Business-Producer
Agreements"). Mr. Greenwald's interest in Presto varies on a film-by-film basis
between 16% and 50%. Of the three films being produced by Presto in which the
Company has an interest (i.e., "Mr. Write," "Winter" and Dark Angel 2"), Mr.
Greenwald has no indirect interest (through Presto) in "Mr. Write," a one-third
share of Presto's interest in "Winter," and a 50% share of Presto's interest in
"Dark Angel 2." The Company believes that the terms of its arrangement with
Presto are no less favorable than could be arranged with other independent third
party producers.

In April, 1997, Stephen R. Greenwald, Lawrence I. Schneider and Robert E.
Miller, Jr. made loans to the Company in the amounts of $50,000, $25,000, and
$25,000, respectively. Each loan is payable on demand, bears interest at the
rate of 9.25% per annum, and is secured by a collateral assignment of the
Company's $300,000 receivable due from Kinnevik. See "Business-Sales of
Distribution Rights." In consideration of making such loans, the lenders
received five-year warrants to purchase shares of Common Stock of the Company,
exercisable at $1.00 per share. Messrs. Schneider and Miller each received
25,000 warrants in consideration of their respective $25,000 loans to the
Company, and Mr. Greenwald (or his designee) received 50,000 warrants in
consideration of his $50,000 loan to the Company. In addition to the foregoing,
an independent, unaffiliated third party made a $25,000 loan to the Company in
June, 1997 on the same terms and conditions as the loans made by Messrs.
Greenwald, Schneider and Miller.

39
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth information concerning ownership of Common
Stock, as of the date of this Prospectus, by each person known by the Company to
be the beneficial owner of more than five percent of the Common Stock, each
director and executive officer and by all directors and executive officers of
the Company as a group.

<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENTAGE
OF BENEFICIAL OWNER STATUS OWNED OF CLASS
- ---------------------------------------------------------- ---------------------- ----------------- -----------
<S> <C> <C> <C>
Lawrence I. Schneider..................................... Director, 563,434(1) 11.80%
450 Park Avenue Co-Chairman
New York, NY 10022
Robert E. Miller, Jr...................................... Director 202,333(2) 4.52%
900 4th Avenue
Seattle, WA 98164
Ira N. Smith.............................................. Director, 445,231(3) 9.54%
421 W 54th Street President,
New York, NY 10019 Co-Chairman
Stephen R. Greenwald...................................... Director, CEO, 495,231(4) 10.52%
380 Lexington Ave. Co-Chairman
New York, NY 10168
Marvin Grossman........................................... Exec. V-P, Tres., 35,000(5) (6)
1875 Century Park East CFO
Los Angeles, CA 90067
Each of the Equity Investors(7)........................... -- 250,000(7) 5.60%
All Executive Officers & Directors as a Group (5
Persons)................................................ 1,741,229(8) 30.96%
</TABLE>

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

(1) Includes presently exercisable options to purchase 433,333 shares of Common
Stock, 83,333 of which are held by Global Capital Resources, Inc., an
affiliated corporation.

(2) Includes presently exercisable options to purchase 131,666 shares of Common
Stock; also includes 61,167 shares held jointly with Mr. Miller's wife, and
9,500 shares held in an individual retirement account for Mr. Miller's wife,
as to which latter shares Mr. Miller disclaims beneficial ownership.

(3) Includes presently exercisable options to purchase 316,667 shares of Common
Stock.

(4) Includes presently exercisable options to purchase 366,667 shares of Common
Stock.

(5) Includes presently exercisable options to purchase 35,000 shares of Common
Stock.

(6) Less than 1%.

(7) On February 26, 1997, the Company completed the sale of 500,000 shares of
its Common Stock, and 500,000 Common Stock purchase warrants, to the
following four investors, each of whom received 125,000 shares of Common
Stock and 125,000 warrants: Johann Schotte, A Hero from Zero N.V., Gold Leaf
Pictures Belgium bvba and Chardonnay Enterprises, Ltd. Accordingly, the
250,000 shares reflected in the above table for each of the equity investors
includes presently exercisable warrants to purchase 125,000 shares of Common
Stock. Although management is not aware of any agreement or understanding
requiring the investors to act in concert with respect to their Shares,
management believes that the equity investors have either business or
personal relationships with each other, and therefore there exists the
possibility that the equity investors may act as a group with respect to
their Shares.

(8) Includes presently exercisable options to purchase 1,283,333 shares of

Common Stock.

40
<PAGE>
SELLING STOCKHOLDERS

None of the Selling Stockholders has ever held any position or office with
the Company or had any other material relationship with the Company, other than
providing services on a contract basis.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF
NUMBER OF WARRANTS SHARES TO SHARES TO
SHARES OWNED OWNED BE SOLD BE OWNED
PRIOR TO PRIOR TO PURSUANT TO AFTER
NAME OF SELLING STOCKHOLDER OFFERING OFFERING PROSPECTUS(1) OFFERING(2)
- ----------------------------------------------------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Equity Investors(3)........................................ 500,000 500,000 500,000 500,000
Exchanging Noteholders(4).................................. 595,455 0 595,455 0
Olshan Grundman et al. .................................... 120,000 50,000 120,000 0
Greenberg, Glusker et al. ................................. 40,000 0 40,000 0
Corporate Imaging.......................................... 26,000 0 26,000 0
Lloyd Trufelman............................................ 7,500 0 7,500 0
David A. Somerstein........................................ 91,667 0 66,667 25,000
Marylou Paolucci, As Attorney(5)........................... 177,500 0 177,500 0
Amos Weinberg, As Attorney(5).............................. 177,500 0 177,500 0
Total...................................................... 1,735,622 550,000 1,710,622 525,000
</TABLE>

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

(1) Assumes the exercise of all Warrants held by the Equity Investors and the
sale of the Shares issuable upon exercise of the Warrants; does not include
the 50,000 Shares underlying the warrants held by Olshan Grundman, which
Shares are not being registered hereunder.

(2) Assumes the sale of all Shares covered by this Prospectus.

(3) Each of the following four Equity Investors owns 125,000 Shares of Common
Stock and 125,000 Warrants: Johan Schott, A Hero from Zero N.V., Gold Leaf
Pictures Belgium bvba, and Chardonnay Enterprises, Ltd. The shares included
in this Prospectus on behalf of the Equity Investors include only the Shares
underlying the warrants.

(4) The Exchanging Noteholders consist of the following persons: William M.
Tucker (50,000 Shares), Ken Chamberlin (100,000 Shares), Harold Fogelquist
(50,000 Shares), Martha & Craig London (50,000 Shares), Lois & Alan Bauer
(50,000 Shares), Jack Spitzer (100,000 Shares), Brian & Helen Meyers (50,000
Shares), Marilyn & Robert Chandross (25,000 Shares) and William Schwartz
(50,000 Shares).

(5) Marylou Paolucci is the attorney for 800 Third Avenue Associates; Amos
Weinberg is the attorney for Joseph P. Day Realty Corp.

PLAN OF DISTRIBUTION

The Shares covered by this Prospectus are being registered by the Company
for the respective accounts of the Selling Stockholders. Although the Company
will receive proceeds upon exercise of Warrants by the Equity Investors (if and
when exercised), the Company will not receive any of the proceeds from sales of
Shares by the Selling Stockholders. The Company understands that none of such
Shares will be offered through underwriters.

The Shares may be offered and sold from time to time as market conditions
permit in the over-the-counter market at prices and terms then prevailing or at
prices related to the then-current market price, or in privately negotiated
transactions. The Shares may be sold by one or more of the following methods,
without limitation: (a) a block trade in which a broker or dealer so engaged
will attempt to sell the Shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions; and
(d) face-to-face transactions between

41
<PAGE>
sellers and purchasers without a broker/dealer. In effecting sales, brokers or
dealers engaged by the Selling Stockholders may arrange for other brokers or
dealers to participate. Such brokers or dealers may receive commissions or
discounts from Selling Stockholders in amounts to be negotiated. Such brokers
and dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. As of the date of this Prospectus, the Company understands that the
Selling Stockholders do not have any agreement, arrangement or understanding
with any brokers or dealers concerning the distribution of their respective
shares.

Due to the close proximity in time between the acquisition of the Shares by
the Selling Stockholders and the offering of those Shares pursuant to this
Prospectus, the Selling Stockholders (other than the Exchanging Noteholders) may
be deemed to be statutory "underwriters" as that term is defined in Section
2(11) of the Act. As statutory "underwriters," the Selling Stockholders may be
covered under the civil liability provisions of Section 11 of the Act which may
impose a higher degree or due diligence upon the Selling Stockholders with
respect to the information contained in this Prospectus than may otherwise exist
in the absence of such underwriter status. The Company has agreed to indemnify
the Selling Stockholders against such potential liabilities.

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue 40,000,000 shares of Common Stock, par
value $.01 per share. As of the date of this Prospectus, there were outstanding
4,456,637 shares of Common Stock.

Subject to preferences that may be applicable to any Preferred Stock (as
hereinafter defined) outstanding at the time, the holders of outstanding shares
of Common Stock are entitled to receive dividends out of assets legally
available therefor at such time and in such amounts as the Board may, from time
to time, determine in its sole discretion. Holders of Common Stock are also
entitled to one vote for each share of Common Stock held of record on all
matters submitted to a vote of stockholders. The Common Stock is not entitled to
preemptive rights and is not subject to redemption. Upon liquidation,
dissolution or winding up of the Company, the assets legally available for
distribution to stockholders are distributable ratably among the holders of the
Common Stock and of any participating Preferred Stock outstanding at that time
after payment of the liquidation preferences, if any, on all outstanding
Preferred Stock and payment of creditors' claims. Each outstanding share of
Common Stock is fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized to issue 10,000,000 shares of Preferred Stock, par
value $.10 per share (the "Preferred Stock"), from time to time in one or more
series. As of the date of this Prospectus, there were no shares of Preferred
Stock outstanding.

The Board is authorized to provide for the issuance of Preferred Stock in
one or more series, to establish from time to time the number of shares to be
included in each such series, to fix the rights, preferences and privileges of
the shares of each such series and any qualifications, limitations or
restrictions thereon, and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then
outstanding), without any further vote or action by stockholders. The Board may
authorize and issue Preferred Stock with voting or conversion rights that could
adversely affect the voting power or other rights of the holders of Common
Stock, because the terms of the Preferred Stock that might be issued could
conceivably prohibit the Company's consummation of any merger, reorganization,
sale of substantially all its assets, liquidation or other extraordinary
corporate transaction, absent approval of the outstanding shares of Preferred
Stock. Thus, the issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company. The Company has no

42
<PAGE>

current plan to issue any shares of Preferred Stock, except perhaps in
connection with a possible transaction with Kinnevik. See "Business--Sales of
Distribution Rights."

OPTIONS AND WARRANTS

The Company presently has outstanding a total of 2,217,833 options and
warrants, exercisable at prices ranging from $.625 per share to $18.96 per
share. Of the 1,710,622 shares of Common Stock to be offered pursuant to this
Prospectus, included therein are shares of Common Stock underlying 500,000 of
the Company's outstanding warrants (see "Selling Stockholders").

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BY-LAWS

The Company's Articles of Incorporation provide for indemnification of the
Company's officers and directors to the fullest extent permitted by law. As
permitted by the Nevada Revised Statutes, the Company's Articles of
Incorporation also provide that directors of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for acts or omissions not
in good faith or which involve intentional misconduct, fraud or a knowing
violation of law, or (ii) under certain sections of Nevada law relating to
prohibited dividends or distributions. As a result of this provision, the
Company and its stockholders may be unable to obtain monetary damages from a
director for breach of his or her duty of care to the Company. The foregoing
provision of the Articles of Incorporation may reduce the likelihood of
derivative litigation against directors and may discourage or deter stockholders
or management from instituting a lawsuit against directors for breaches of their
fiduciary duties, even though such an action, if successful, otherwise might
have benefited the Company and its stockholders.

DIVIDEND POLICY

Holders of Common Stock are entitled to receive such dividends as may be
declared and paid from time to time by the Board of Directors out of funds
legally available therefor. The Company intends to retain any earnings for the
operation and expansion of its business and does not anticipate paying cash
dividends in the foreseeable future. Any future determination as to the payment
of cash dividends will depend upon future earnings, results of operations,
capital requirements, the Company's financial condition and such other factors
as the Board of Directors may consider.

NOTES AND LOANS PAYABLE

On July 15, 1997, $179,000 in principal amount of 6% Convertible
Subordinated Debentures will become due. When originally issued in July, 1987,
the debentures were convertible into shares of Common Stock of the Company at
the conversion price of $12.50 per share. After giving effect to changes in the
capitalization of the Company since the issuance of the debentures, and the
one-for-six Reverse Split in March, 1996, the current conversion price for the
debentures is approximately $117.65 per share.

In April, 1995, the Company issued a note in the principal amount of $70,000
to its outside counsel for legal services rendered. The note was repayable in
October, 1995, together with interest at the rate of 7%. In February 1996, the
noteholder agreed to extend the due date to December 31, 1996. In connection
with the extension, the Company granted warrants to purchase 16,667 shares of
the Company's Common Stock at an exercise price of $1.88 per share, exercisable
over a three year period. Upon the effective date of this Prospectus, the note
was exchanged for 120,000 Shares of the Company's Common Stock, which Shares are
included in this offering. See "Selling Stockholders."

43
<PAGE>

of 4,167 warrants for each unit sold, or a total of 26,042 warrants (on a post
Reverse Split basis). Each warrant certificate entitles the holder thereof to
purchase one share of common stock at an exercise price of either $2.83 per
share (the August warrants) or $2.37 per share (the October warrants) over a
three year period commencing one year after the closing of the private
placement. After paying expenses and commissions of $42,500, the Company
received net proceeds of $270,000 from the private placement. The notes issued
in the private placement were due to be paid by the Company upon their
respective due dates on August 28 and October 3, 1996. The Company has made a
proposal to the noteholders which would involve the payment of current interest
and either the deferral of the maturity date of the notes (the first proposal)
or the cancellation of the notes in their entirety (the second proposal), in
each case in exchange for varying amounts of registered stock of the Company. In
the first proposal, the maturity date of the notes would be deferred until
December 15, 1997 and the warrants would be exchanged for registered shares in
an amount equal to 20% of the principal amount of the notes, with shares valued
at $.75 per share. In the second proposal, the notes and warrants would be
cancelled and the notes would be exchanged for registered shares in an amount
equal to 150% of the principal amount of the notes, with shares valued either at
$.75 per share or at current market value on the date of the exchange. As of the
date of this Prospectus, noteholders representing $262,500 in principal amount
of the notes have elected the second proposal (with all but one Exchanging
Noteholder electing to exchange at $.75 per Share), resulting in the issuance of
an aggregate of 595,455 Shares of Common Stock to the Exchanging Noteholders,
which Shares are included in the within offering. See "Selling Stockholders."
The remaining notes for $50,000 (held by a single investor) have not been paid
and are in default. (See "Risk Factors"). The Company has paid current interest
on all of the notes through the first anniversary date of the respective notes.

In April, 1997, Stephen R. Greenwald, Lawrence I. Schneider and Robert E.
Miller, Jr., all directors of the Company, made loans to the Company in the
amounts of $50,000, $25,000 and $25,000, respectively. Each loan is payable on
demand, bears interest at the rate of 9.25% per annum, and is secured by a
collateral assignment of the Company's $300,000 receivable from Kinnevik. See
"Business--Sales of Distribution Rights." In consideration of making such loans,
the lenders received five-year warrants to purchase shares of Common Stock of
the Company, exercisable at $1.00 per share. Messrs. Schneider and Miller each
received 25,000 warrants in consideration of their respective $25,000 loans to
the Company, and Mr. Greenwald (or his designee) received 50,000 warrants in
consideration of his $50,000 loan to the Company. In addition to the foregoing,
an independent, unaffiliated third party made a $25,000 loan to the Company in
June, 1997 on the same terms and conditions as the loans made by Messrs.
Greenwald, Schneider and Miller. See "Certain Relationships and Related
Transactions."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock of the Company, and
the indenture agent for the 6% notes due in July, 1997, is Continental Stock
Transfer & Trust Company, Two Broadway, New York, New York 10004.

SHARES ELIGIBLE FOR FUTURE SALE

There will be 4,456,637 shares of Common Stock outstanding upon consummation
of the offering, excluding shares issuable upon exercise of outstanding warrants
granted by the Company to the Equity Investors, to officers, directors,
employees and other third parties. With the exception of 457,896 Shares held by
affiliates of the Company ("Affiliate Shares"), and 36,213 restricted shares
held by non-affiliates of the Company for a period of less than two years, all
such shares are freely tradeable either because they were originally registered
in a public offering, have been held by their respective owners for a period in
excess of two years (and therefore are eligible for sale in the public markets),
or are being registered in this offering. The remaining shares will only be
eligible for sale in accordance with the resale limitations of Rule 144 ("Rule
144") under the Securities Act of 1933, as amended (the "Securities Act"), or
pursuant to

44
<PAGE>

an effective registration statement under the Securities Act or an applicable
exemption from the registration requirements of the Securities Act. In addition,
there are outstanding options and warrants to purchase a total of 2,217,833
shares of Common Stock, of which 500,000 Shares are being registered pursuant to
this offering and will be available for sale in the open market without
restriction upon exercise of the Warrants relating thereto. Upon exercise of the
remaining warrants, the Shares issuable thereunder will only be eligible for
sale in accordance with the resale limitations of Rule 144, or pursuant to an
effective registration statement under the Securities Act or an applicable
exemption from the registration requirements of the Securities Act.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least one year, including persons who may be deemed "affiliates" of the Company,
will be entitled to sell in any three-month period a number of shares that does
not exceed the greater of (i) 1% of the then outstanding shares of Common Stock
or (ii) the average weekly trading volume of the Common Stock during the four
calendar weeks immediately preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission. Sales pursuant to Rule 144
are also subject to certain other requirements relating to manner of sale,
notice and availability of current public information about the Company. A
person (or persons whose shares are aggregated) who is not deemed to have been
an affiliate of the Company at any time during the three months immediately
preceding the sale is entitled to sell restricted shares pursuant to Rule 144(k)
without regard to the limitations described above, provided that two years have
expired since the later of the date on which such restricted shares were first
acquired from the Company or from an affiliate of the Company.

No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of shares for future sale, pursuant
to either Rule 144, this Prospectus, future registration statements, or
otherwise, will have on the market price of shares of Common Stock prevailing
from time to time. Sales of substantial amounts of Common Stock (including the
shares issuable upon the exercise of stock options), or the perception that such
sales could occur, could adversely affect prevailing market prices for the
Common Stock.

LEGAL MATTERS

The validity of the securities being offered hereby and certain other legal
matters in connection therewith will be passed upon for the Company by Howard J.
Kerker, P.C., 45 West 45th Street, New York, New York 10036.

EXPERTS

The consolidated financial statements of the Company as of June 30, 1996 and
1995 and for each of the three years in the period ended June 30, 1996 included
in this Prospectus have been so included in reliance on the report (which
contains explanatory paragraphs relating to the Company's ability to continue as
a going concern, loan defaults and litigation as described in Notes 3, 10 and
11, respectively, to the consolidated financial statements) of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

45
<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL

During the calendar year 1996, the Company's legal counsel, Howard J.
Kerker, P.C., received 10,000 shares of the Company's Common Stock and warrants
to purchase 41,667 shares of the Company's Common Stock at $1.87 per share
(subsequently lowered to $1.00 per share by action of the Board in December,
1996) for a period of five years, expiring on March 5, 2001, in consideration of
legal services rendered to the Company.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at its Regional Offices located at Room
1400, 500 West Madison Street, Chicago, Illinois 60661, and 7 World Trade
Center, 13th Floor, New York, New York 10048, and copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Additionally, copies
of reports, proxy statements and other information filed with the Commission
electronically by the Company may be inspected by accessing the Commission's
Internet site at http://www.sec.gov. Since May 2, 1996, the Company's Common
Stock has been quoted on Nasdaq's OTC Bulletin Board, and such reports, proxy
statements and other information can also be inspected at the office of Nasdaq
Operations, 1735 K Street, NW, Washington, DC 20006, with respect to filings
made prior to May 2, 1996, the date the Company's Shares of Common Stock were
delisted from Nasdaq's SmallCap Market.

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete and are qualified in their entirety by
reference to each such contract, agreement or other document which is filed as
an exhibit to the Registration Statement. The Registration Statement, including
the exhibits and schedules thereto, may be inspected without charge, and copies
thereof may be made at prescribed rates, at the principal and regional offices
of the Commission referenced above.

46
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Accountants................................................................... F-2

Financial Statements:

Consolidated Balance Sheets as of June 30, 1996 and 1995, and March 31, 1997...................... F-3

Consolidated Statements of Operations for the Years Ended June 30, 1996, 1995 and 1994 and the F-4
Nine Month Periods Ended March 31, 1996 and 1997................................................

Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Years Ended June 30, F-5
1996, 1995 and 1994 and the Nine Month Periods Ended March 31, 1996 and 1997....................

Consolidated Statements of Cash Flows for the Years Ended June 30, 1996, 1995 and 1994 and the F-6
Nine Month Periods Ended March 31, 1996 and 1997................................................

Notes to Consolidated Financial Statements........................................................ F-7 - F-24
</TABLE>

All schedules have been omitted because the requested information is not
required, or, because the information required is included in the financial
statements or notes thereto.

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

PRICE WATERHOUSE

To the Board of Directors and
Shareholders of
Communications and Entertainment Corp.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of
Communications and Entertainment Corp. and its subsidiaries at June 30, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended June 30, 1996 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinon on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in Note 10 to the financial statements, the Company has defaulted
on payments due in August and October 1996 relating to notes payable. The
Company has proposed to the noteholders to defer the maturity of the notes and
exchange existing warrants for shares, or to cancel the notes in their entirety
in exchange for shares. Both proposals are subject to registration statements
becoming effective. As of October 6, 1996 several noteholders had accepted the
first proposal and one noteholder had accepted the second proposal; however as
some noteholders have not accepted either of the proposals, the ultimate outcome
of this matter cannot be determined at present.

As dicussed in Note 11, the Company is a defendant in various lawsuits. The
Company has filed several counteractions and preliminary hearings and discovery
proceedings on several actions are in progress. The ultimate outcome of the
litigation cannot be determined at present. Not all liabilities that may result
upon adjudication have been accrued in the accompanying financial statements.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations,
has a net capital deficiency and has insufficient working capital to meet its
current obligations and liquidity needs. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

PRICE WATERHOUSE LLP

Los Angeles, California
October 14, 1996

F-2
<PAGE>

ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, JUNE 30, MARCH 31,
1996 1995 1997
-------------- -------------- --------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS:
Cash........................................................... $ 462,971 $ 43,491 $ 79,260
Funds held in joint venture accounts........................... 3,836,732
Note receivable................................................ 300,000
Accounts receivable, net of allowances of $53,788, $288,687 and
$53,788...................................................... 996,574 524,510 818,825
Film costs, net................................................ 1,000,968 10,655,863 786,615
Other assets................................................... 27,945 17,702 20,848
-------------- -------------- --------------
$ 2,488,458 $ 15,078,298 $ 2,005,548
-------------- -------------- --------------
-------------- -------------- --------------

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT):
LIABILITIES:
Accounts payable and accrued expenses........................ $ 912,629 $ 1,210,455 $ 1,643,205
Due to producers and participants............................ 3,760,142 11,119,560 1,399,177
Deferred revenues............................................ 3,000 520,000 21,933
Notes and loans payable...................................... 561,500 249,000 836,500
-------------- -------------- --------------
5,237,271 13,099,015 3,840,815
-------------- -------------- --------------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock, par value $.10;
Authorized--10,000,000 shares
Issued--none...............................................
Class A stock, par value $.01;
Authorized--10,000,000 shares
Issued--none...............................................
Common stock, par value $.01;
Authorized--6,666,666 shares
Issued and outstanding--2,591,242
2,284,189 and 3,279,515 shares............................. 25,913 22,842 32,796
Capital in excess of par value............................... 25,911,366 25,682,817 26,358,583
Accumulated deficit.......................................... (28,686,092) (23,726,376) (28,226,646)
-------------- -------------- --------------
Total shareholders' equity (deficit)......................... (2,748,813) 1,979,283 (1,835,267)
-------------- -------------- --------------
$ 2,488,458 $ 15,078,298 $ 2,005,548
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>
OSYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED MARCH 31,
------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1997 1996
------------- ------------- ------------- ------------- -------------
(UNAUDITED)
REVENUES:............................. $ 1,010,826 $ 1,521,434 $ 14,797,040 $ 130,226 $ 744,374
------------- ------------- ------------- ------------- -------------
EXPENSES:
Costs related to revenues........... 1,046,299 4,745,330 13,514,864 391,406 795,618
Selling, general and administrative
expenses.......................... 1,565,307 3,705,463 5,757,010 1,477,677 1,009,795
------------- ------------- ------------- ------------- -------------
2,611,606 8,450,793 19,271,874 1,869,083 1,805,413
------------- ------------- ------------- ------------- -------------
Operating loss...................... (1,600,780) (6,929,359) (4,474,834) (1,738,857) (1,061,039)
OTHER INCOME (EXPENSES):
Other income........................ 2,263,101 --
Interest income..................... 1,243 97,399 79,959 1,212
Interest expense.................... (97,701) (19,498) (28,216) (64,798) (59,594)
Loss on sale of joint venture
interest.......................... (3,262,478) (3,262,478)
Provision for loss on investment.... (3,363,829)
------------- ------------- ------------- ------------- -------------
Income (Loss) from continuing
operations before provision for
income taxes...................... (4,959,716) (6,851,458) (7,786,920) 459,446 (4,381,899)
Benefit for income taxes............ 179,000
------------- ------------- ------------- ------------- -------------
Income (Loss) from continuing
operations........................ (4,959,716) (6,851,458) (7,607,920) 459,446 (4,381,899)
Loss from discontinued operations... (458,193) (765,566)
------------- ------------- ------------- ------------- -------------
Net income (loss)................... $ (4,959,716) $ (7,309,651) $ (8,373,486) $ 459,446 $ (4,381,899)
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
LOSS PER SHARE:
Income (Loss) from continuing
operations........................ $ (2.17) $ (2.94) $ (3.18) $ 0.16 $ (1.92)
Loss from discontinued operations... (0.20) (0.32)
------------- ------------- ------------- ------------- -------------
Net income (loss)................... $ (2.17) $ (3.14) $ (3.50) $ 0.16 $ (1.92)
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Weighted average common shares
outstanding*...................... 2,283,611 2,331,579 2,391,550 2,898,573 2,282,294
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Fully diluted net income (loss) per
share............................. $ (2.17) $ (3.14) $ (3.50) $ 0.14 $ (1.92)
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Weighted average common shares
outstanding....................... 2,282,611 2,331,579 2,391,550 3,398,573 2,282,294
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>

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

* Shares outstanding for all periods have been adjusted to give effect to a 1
for 6 reverse stock split on March 18, 1996.

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
CLASS A STOCK COMMON STOCK
------------------------ ----------------------------
AMOUNT AMOUNT CAPITAL IN
($.01 PAR ($.01 PAR EXCESS OF ACCUMULATED
SHARES VALUE) SHARES VALUE) PAR VALUE DEFICIT
------------ ---------- -------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balances--June 30, 1993............. 2,554,132 $ 25,541 2,241,482 $ 22,414 $ 28,046,619 $ (8,043,239)
Purchase of 402,200 shares of
treasury stock..................
Treasury shares retired and
cancelled....................... (162,833) (1,628) (1,880,173)
Conversion of Class A stock....... (213,429) (2,134) 22,676 227 1,907
Net loss.......................... (8,373,486)
------------ ---------- -------------- ------------ --------------- ---------------
Balances--June 30, 1994............. 2,340,703 23,407 2,101,325 21,013 26,168,353 (16,416,725)
Conversion of Class A stock....... (254,148) (2,541) 27,002 270 2,271
Cancellation of unexchanged
shares.......................... (520,740) (5,207) (10,496) (105) 5,312
Automatic conversion of Class A
stock to Common................. (1,565,815) (15,659) 166,358 1,664 13,995
Dividend of shares of
subsidiary...................... (507,114)
Net loss.......................... (7,309,651)
------------ ---------- -------------- ------------ --------------- ---------------
Balances--June 30, 1995............. -- -- 2,284,189 22,842 25,682,817 (23,726,376)
Issuance of shares to officers in
payment of notes................ 307,053 3,071 228,949
Cash payments in lieu of
fractional shares on conversion
of Class A stock................ (400)
Net loss.......................... (4,959,716)
------------ ---------- -------------- ------------ --------------- ---------------
Balances--June 30, 1996............. -- -- 2,591,242 $ 25,913 $ 25,911,366 $ (28,686,092)
Issuance of shares to officers in
payment of notes................ 78,948 789 44,211
Re-issue of unexchanged shares
previously cancelled............ 65,825 659 (659)
Issuance of shares in
consideration for services
rendered........................ 43,500 435 33,665
Sale of shares to equity
investors....................... 500,000 5,000 370,000
Net income........................ 459,446
------------ ---------- -------------- ------------ --------------- ---------------
Balances--March 1997 (Unaudited).... -- -- 3,279,515 $ 32,796 $ 26,358,583 $ (28,226,646)
------------ ---------- -------------- ------------ --------------- ---------------
------------ ---------- -------------- ------------ --------------- ---------------

TOTAL
TREASURY SHAREHOLDERS'
STOCK EQUITY
AT COST (DEFICIT)
-------------- --------------
<S> <C> <C>
Balances--June 30, 1993............. $ (1,264,986) $ 18,786,349
Purchase of 402,200 shares of
treasury stock.................. (616,815) (616,815)
Treasury shares retired and
cancelled....................... 1,881,801
Conversion of Class A stock.......
Net loss.......................... (8,373,486)
-------------- --------------
Balances--June 30, 1994............. -- 9,796,048
Conversion of Class A stock.......
Cancellation of unexchanged
shares..........................
Automatic conversion of Class A
stock to Common.................
Dividend of shares of
subsidiary...................... (507,114)
Net loss.......................... (7,309,651)
-------------- --------------
Balances--June 30, 1995............. -- 1,979,283
Issuance of shares to officers in
payment of notes................ 232,020
Cash payments in lieu of
fractional shares on conversion
of Class A stock................ (400)
Net loss.......................... (4,959,716)
-------------- --------------
Balances--June 30, 1996............. -- $ (2,748,813)
Issuance of shares to officers in
payment of notes................ 45,000
Re-issue of unexchanged shares
previously cancelled............ --
Issuance of shares in
consideration for services
rendered........................ 34,100
Sale of shares to equity
investors....................... 375,000
Net income........................ 459,446
-------------- --------------
Balances--March 1997 (Unaudited).... -- $ (1,835,267)
-------------- --------------
-------------- --------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED MARCH 31,
------------------------------- --------------------
1996 1995 1994 1997 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations.................... $(4,959,716) $(6,851,458) $(7,607,920) $(459,446) $(4,381,899)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Loss on sale of joint venture interest............. 3,262,478
Amortization of film costs......................... 634,179 2,149,723 1,465,593 951,711 3,815,641
Decreases in (additions to) film costs............. (185,401) (72,259) (3,978,027) (737,358) 5,790,699
Other depreciation and amortization................ 44,307 187,219 94,539 16,082 28,439
Provision for loss on investment................... 3,363,829
Equity in losses of subsidiary held for sale....... 64,605
Gain on sale of shares of subsidiary............... (5,062)
Issuance of shares of subsidiary stock in payment
of legal fees and services....................... 155,905
Issuance of Common Stock in payment of legal fees
and services..................................... 34,100
Issuance of shares of stock to officers in payment
of deferred compensation......................... 232,020 45,000
Cash payments in lieu of fractional shares......... (400)
Decrease (increase) in assets net of sale of joint
venture interest:
Funds held in joint venture accounts............. 352,723 (1,799,603) (1,586,376) 3,836,732
Accounts receivable, net......................... (406,331) 9,998,736 4,134,846 177,749 (239,498)
Note Receivable.................................... 300,000
Other............................................ (5,500) 258,007 98,023 (505) 2,616
(Decrease) increase in liabilities net of sale of
joint venture interest:
Accounts payable and accrued expenses............ (199,628) (576,731) 221,572 730,576 (203,111)
Issuance of note in payment of legal fees........ 70,000
Due to producers and participants................ (115,701) (4,616,323) 2,671,157 (2,420,965) (7,559,458)
Deferred revenues................................ 3,000 38,875 (1,144,621) 18,933 (520,000)
--------- --------- --------- --------- ---------
Net cash provided by (used in) continuing operations... (1,343,970) (998,366) (2,267,385) (1,025,231) 570,161
--------- --------- --------- --------- ---------
Discontinued operations:
Net loss............................................. (458,193) (765,566)
Amortization......................................... 393,588 368,971
--------- --------- --------- --------- ---------
Total from discontinued operations..................... -- (64,605) (396,595) -- --
--------- --------- --------- --------- ---------
Net cash provided by (used in) operations.............. (1,343,970) (1,062,971) (2,663,980) (1,025,231) 570,161
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collections of loans relating to lending activities.... 393,588 1,421,172
Acquisition of fixed assets............................ (6,550) (10,633) (26,092) (8,480) (5,312)
Investment in Global Intellicom, Inc................... (1,049,002)
Proceeds from the sale of Global Intellicom, Inc.
shares............................................... 326,440
Proceeds on sale of joint venture interest............. 1,500,000
Costs relating to investment........................... (119,961)
--------- --------- --------- --------- ---------
Net cash provided by (used in) investing activities.... 1,493,450 (339,607) 1,275,119 (8,480) (5,312)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the sale of Senior Notes............. 270,000 270,000
Net repayment of debt relating to finance subsidiary
lending activities................................... (187,217)
Purchase of treasury stock............................. (616,815)
Note payable in settlement of Generale Bank
complaint............................................ 275,000
Net proceeds from private placement sale of common
stock................................................ 375,000
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing activities.... 270,000 -- (804,032) 650,000 270,000
Net increase (decrease) in cash.......................... 419,480 (1,402,578) (2,192,893) (383,711) 834,849
Cash at beginning of period.............................. 43,491 1,446,069 3,638,962 462,971 43,491
--------- --------- --------- --------- ---------
Cash at end of period.................................... $ 462,971 $ 43,491 $1,446,069 $ 79,260 $ 878,340
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for--
Interest............................................. $ 10,778 $ 19,498 $ 20,260 $ 42,870 $ 10,778
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income taxes......................................... $ 0 $ 3,200 $ 11,196 $ 0 $ 0
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
NON CASH INVESTING AND FINANCING ACTIVITIES:
Dividend of shares of Global Intellicom, Inc........... $(507,114)
---------
---------
Receipt of film assets in settlement of loans
receivable from ATC II, Inc.......................... 393,588
---------
---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

A) PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries and majority owned or controlled joint ventures.
All significant intercompany accounts have been eliminated.

In March 1989, the Company entered into a joint venture pursuant to which
the Company and a non-affiliated entity co-financed and co-produced a theatrical
motion picture entitled "Q&A", in which the Company had a 50.01% ownership
interest. In March 1990, the Company entered into two 50% joint ventures (in
which the Company exercised contractual control) with the same entity to acquire
the foreign distribution rights of and distribute two motion pictures, "Switch"
and "Guilty By Suspicion". In December 1991, the Company entered into a 50%
joint venture (in which the Company exercised control) with the same entity to
acquire the foreign distribution rights of and to distribute the motion picture
"This Boy's Life". The assets, liabilities, revenues and expenses of the joint
ventures have been included in the consolidated financial statements of the
Company. Minority interests in operations and in net assets in these joint
ventures have been included in film costs and due to producers and participants
in the consolidated statements of operations and of financial condition,
respectively. In January 1996, the Company sold its interests in the joint
ventures (See Note 4).

Certain reclassifications have been made to prior year amounts to conform to
the current year presentation.

B) REVENUE RECOGNITION:

Revenues from foreign theatrical, home video, television and pay television
licensing contracts are recognized when the film is available for exhibition by
the licensee and when certain other conditions are met. Revenues from domestic
theatrical distribution of films are recognized as the films are exhibited.

Virtually all of the Company's revenues for the fiscal year ended June 30,
1996 and approximately 62% of the revenues for the fiscal year ended June 30,
1995, were from foreign distribution rights. For fiscal 1996, approximately
50.2% of revenues were derived from one picture. One picture accounted for
approximately 28.3 % of revenues for the year ended June 30, 1995. For the year
ended June 30, 1994, four movies, all of which were produced by HBO, accounted
for 23.5%, 21.3%, 19.3% and 16.8% of revenues.

C) FUNDS HELD IN JOINT VENTURE ACCOUNTS:

Funds held in joint venture accounts represent cash in accounts which
require signatures of both joint venture partners for withdrawals. Sufficient
balances are maintained in the accounts to cover estimated obligations for
residuals and profit participations relating to motion pictures produced under
the joint ventures.

D) FILM COSTS:

Film costs include (1) cost of production, (2) investment in distribution
rights, (3) marketing and distribution expenses, and (4) development costs. Film
costs are amortized, and estimated residual and participation costs are accrued,
on an individual film basis in the ratio that the current year's gross film
revenues bear to management's estimate of total ultimate gross film revenues
from all sources.

F-7
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Film costs are stated at the lower of cost or estimated net realizable value
on an individual film basis. Ultimate revenue and cost forecasts for films are
periodically reviewed by management and revised when warranted by changing
conditions. When estimates of total revenues and costs indicate that a film will
result in an ultimate loss, additional amortization is provided to fully
recognize such loss.

E) PROPERTY AND EQUIPMENT:

Depreciation of property and equipment is provided by the straight-line
method over their estimated useful lives of up to eight years.

Maintenance and repairs are expensed as incurred. The cost of renewals and
betterments are capitalized. When assets are sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts, and any
resultant gain or loss is included in current year operations.

F) EARNINGS (LOSS) PER SHARE:

Earnings (loss) per share are computed using the weighted average number of
common shares outstanding during the respective periods, adjusted for the
dilutive effect, if any, of outstanding stock options and warrants. On March 6,
1996, the Board of Directors announced a one-for-six reverse stock split (the
"Reverse Stock Split") which became effective on March 18, 1996. For comparative
purposes, the number of weighted average common shares outstanding and loss per
share reported in the accompanying consolidated statements of operations, and
share data included in the notes to the consolidated financial statements, have
been adjusted to reflect the effect of the Reverse Stock Split for all periods
presented.

G) USE OF ESTIMATES:

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in financial
statements. Actual results could differ from those estimates.

H) FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying value of cash, accounts receivable, accounts payable and
accrued expenses approximates fair value because of their short-term maturity.

I) IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS:

In March 1995, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121"). This
Statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles to be disposed of and goodwill related
to those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. FAS 121 is effective for financial
statements for fiscal years beginning after December 15, 1995. The Company will
apply this Statement beginning in fiscal 1997. The adoption of FAS 121 is not
expected to have a material effect on the financial statements of the Company.

In October 1995, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards No. 123 "Accounting for Stock Based
Compensation ("FAS 123"). This statement establishes methods of accounting for
stock-based compensation plans. FAS 123 is effective for fiscal years beginning

F-8
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
after December 15, 1995. The Company expects to continue to apply Accounting
Principles Board Opinion 25 for measurement of stock compensation and will
provide the disclosure required by FAS 123 beginning in fiscal 1997. The
adoption of FAS 123 is not expected to have a material effect on the financial
statements of the Company.

J) The accompanying balance sheet at March 31, 1997, the statements of
operations and of cash flows for the nine months ended March 31, 1996 and 1997,
and the statement of shareholders' equity(deficit) for the nine months ended
March 31, 1997 are unaudited. In the opinion of management, these statements
have been prepared on the same basis as the audited financial statements and
include all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the results of the interim period. The
Company's results of operations and cash flows for the interim periods are not
necessarily indicative of the results to be expected for any other interim
period or the full year. The data disclosed in these notes to financial
statements at such date and for such periods are also unaudited.

2. CHANGE IN MANAGEMENT CONTROL:

In January 1995, a group of shareholders of the Company (the "CECO
Shareholders Committee") launched an effort to change the senior management and
Board of Directors of the Company.

Pursuant to a settlement agreement (the "Settlement Agreement") dated as of
March 31, 1995, among the members of the CECO Shareholders Committee, the
Company, the Company's subsidiary, Odyssey Entertainment Ltd. ("Odyssey"),
Global Intellicom, Inc. and each of the directors of the Company at the time of
signing, a change in the entire Board of Directors occurred on April 12, 1995.

3. RESULTS OF OPERATIONS AND MANAGEMENT'S PLANS:

The Company's continued existence is dependent upon its ability to resolve
its liquidity problems. The Company must achieve and sustain a profitable level
of operations with positive cash flows and must continue to obtain financing
adequate to meet its ongoing operation requirements.

Operations for the year ended June 30, 1996 resulted in a loss primarily due
to a loss of approximately $3.3 million on the sale of the Company's interest in
joint ventures relating to four theatrical motion pictures, and due to
insufficient revenues to offset normal expenses.

Since the change in management control in April 1995, new management has
embarked on a program to reverse the unfavorable results by significantly
reducing overhead, taking steps to recapitalize the Company, and acquiring
rights to existing film libraries and new pictures in development or pre-
production.

Overhead has been significantly reduced by closing the New York office and
by making significant reductions in personnel related costs.

In January 1996, the Company entered into an agreement to sell its interest
in joint ventures relating to four theatrical motion pictures pursuant to which
it received net proceeds of $1,500,000 (See Note 4).

F-9
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. RESULTS OF OPERATIONS AND MANAGEMENT'S PLANS: (CONTINUED)
In August 1996, the Company entered into an agreement, pursuant to which the
Company agreed to grant subdistribution rights in, and to sell other
distribution rights to, certain films in the Company's film library. In exchange
for these rights, the Company will receive a total cash consideration of
$1,075,000, payable $500,000 on closing, $275,000 six months after closing, and
$300,000 eighteen months after the closing. In addition, the Company will retain
a continuing right to receive revenues from certain of the films, valued by
management at a minimum of approximately $150,000. Additionally, the purchaser
will provide the Company with a $500,000 revolving line of credit to be secured
by accounts receivable and other contractual rights acquired by the Company. As
part of the transaction, the Company will grant 100,000 stock options,
exercisable over a three year period at the bid price of the Company's common
stock in effect on August 5, 1996 ($.625). The transaction closed on October 7,
1996 (See Note 15).

In September 1996, the Company entered into an agreement with an
unaffiliated third party for the purchase of 1 million shares of the Company's
common stock in consideration for $750,000 cash and warrants to purchase up to 2
million shares of common stock (See Note 15).

During fiscal 1996, the Company acquired rights in twenty one films,
including eleven completed films, nine of which were disposed of in accordance
with the August 1996 agreement discussed above, and ten new films, which will be
available for distribution in 1997. Additionally, the Company has entered into
certain "first-look" and "second-look" agreements with film producers with
respect to new film projects. The amount that the Company has expended with
regards to these pictures is minimal. Generally the films that the company
represents are financed by the producers of the film, through independent bank
financing, utilizing the license agreements generated by the Company as
collateral for production loans. The Company has assumed no financial obligation
with respect to these pictures as of this date, except for commitments for
writing services in the amount of $40,000 of which $20,000 has already been
paid.

4. SALE OF JOINT VENTURE ASSETS:

As of January 2, 1996, the Company entered into an agreement (the
"Agreement") with Regency International Pictures, B.V., its joint venture
partner, to sell its interest in the related joint ventures through which it
held approximately 50% ownership interests in four theatrical motion pictures,
entitled "Q&A," "Switch", "Guilty By Suspicion" and "This Boy's Life." The joint
venture is defined as the distribution agreements related to the aforementioned
four motion pictures. Individual agreements were created to finance, produce and
distribute each picture and to share in revenues generated from the exploitation
of them. Joint venture pictures were accounted for in the same manner as any
other picture that the Company distributed. Pursuant to the Agreement, the
Company received $1,500,000 in exchange for all of its interest in the net
assets and obligations of the joint ventures. In addition, the Company retained
a contingent interest in certain receivables, not to exceed $212,500, and a
contingent interest in future revenues from the pictures.

Results of operations for the fiscal year ended June 30, 1996 reflect
write-downs of approximately $3,262,000 in the carrying value of the Company's
interest in the films as a result of the consummation of the transaction.

5. INVESTMENT IN GLOBAL INTELLICOM, INC.:

On December 8, 1994, the Company acquired 3,300,000 shares of Global
Intellicom, Inc. ("Global") and subsidiaries, a Nevada corporation, for
$1,000,000, representing 66% of Global's 5,000,000 outstanding

F-10
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT IN GLOBAL INTELLICOM, INC.: (CONTINUED)
shares of common stock. Simultaneously and pursuant to a contract of sale
entered into by Tech Acquisition Corp. ("Tech") (a wholly-owned subsidiary of
Global) on October 28, 1994, Global purchased certain net assets of AMCOM
Business Centers Corp.("AMCOM") (a Pennsylvania corporation) subject to certain
liabilities and obligations. On December 8, 1994 Tech changed its name to AMCOM
Business Centers Corp.

AMCOM is a wholesale distributor of computer hardware and related products
and serves customers throughout the United States.

The total purchase price of the net assets of AMCOM was $5,280,000,
$2,224,000 of which was paid to the sellers at closing. The balance of the
purchase price of $3,056,000 is payable by Global in installments equal to 1% of
gross sales effective January 1, 1994 (as defined by agreement) in quarterly
installments through December 1995 and monthly thereafter until the obligation
is satisfied. In addition, Global agreed to reimburse AMCOM stockholders for all
income taxes incurred by them with respect to their distributive share of
AMCOM's taxable income for the period January 1, 1994 through the closing date.

During the quarter ended March 31, 1995, the then Board of Directors of the
Company declared a dividend to its shareholders consisting of 1,700,000 shares
of the common stock of Global, and also delivered 522,641 shares of Global
common stock to its former outside counsel in payment of outstanding legal fees.
Further, as of March 31, 1995 the then Board of Directors entered into the
Settlement Agreement with the CECO Shareholder Committee which, among other
things, provided for the sale of the Company's remaining interests in Global to
persons affiliated with the prior Board. The sale closed on April 12, 1995.

6. DISCONTINUED OPERATIONS:

For the quarter ended December 31, 1994, the Company's investment in Global
was accounted for as a purchase. However, due to the subsequent sale of all of
the Company's interest in Global, the accompanying consolidated financial
statements have been reclassified to reflect the investment in Global as a
discontinued operation.

In March 1994, the Company discontinued the operations of its finance
subsidiary, ComEnt Funding Corp. Accordingly, the consolidated financial
statements have been reclassified to reflect ComEnt Funding as a discontinued
operation for all periods presented. The loss from discontinued operations for
the year ended June 30, 1994 included $368,971 of amortization expense related
to the capitalized costs incurred in connection with the formation of ComEnt
Funding Corp. The remaining assets of ComEnt Funding, comprised primarily of
loans receivable aggregating $393,588 as of June 30, 1994, were written off and
included in discontinued operations in fiscal 1995.

F-11
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. FILM COSTS:

Film costs are comprised of the following:

<TABLE>
<CAPTION>
JUNE 30,
---------------------------
COMPONENT 1996 1995
- ----------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Films released, at cost.......................................... $ 2,750,000 $ 47,320,463
Less accumulated amortization.................................... 1,798,290 36,744,600
------------ -------------
951,710 10,575,863
------------ -------------
Projects in development.......................................... 49,258 80,000
------------ -------------
Total film costs................................................. $ 1,000,968 $ 10,655,863
------------ -------------
------------ -------------
</TABLE>

Based on the Company's estimates of gross revenues as of June 30, 1996,
approximately 60%--70% of unamortized film costs applicable to released and/or
distributable films will be amortized during the three years ending June 30,
1999; approximately 70%--80% will be amortized during the five year period
ending June 30, 2001.

The terms under which the Company licenses films to subdistributors in
foreign markets generally provide for the exploitation of the films in all
media, including theatrical exhibition, video and all forms of television, for a
period of 5 to 7 years; however, the Company may sell rights for certain media
separately. In general, films are first exhibited theatrically for a period of 4
to 6 months, after which they become available for distribution in the home
video markets. The films become available for exhibition on pay or free
television after approximately 18 to 24 months from the initial theatrical
release. After the initial term of the license with the subdistributor, the
rights revert back to the Company which may then relicense the rights for
distribution in the territory.

8. DISPOSITION OF SUBSIDIARY:

On June 30, 1991, the Company sold all of the issued and outstanding shares
(the "Shares") of its wholly-owned subsidiary, Double Helix to GNG Industries of
New York, Inc. ("GNG"). The Shares were sold to GNG in exchange for a secured,
negotiable promissory note, in the principal amount of $3,600,000. The Note was
recorded on the books of the Company at $3,243,868, which was the value of the
underlying collateral on the books of Double Helix at June 30, 1991.

In April 1993, Double Helix's lending bank sold its outstanding loan
receivable from Double Helix to Carnegie Film Group, Inc. ("Carnegie"). The
Company advanced $350,000 to Carnegie in connection with the transaction. The
loan was senior to the indebtedness of GNG to the Company. In April 1993,
Carnegie foreclosed on the loan and acquired all of the assets of Double Helix.

In September 1993, all of the outstanding shares of Carnegie were acquired
by ATC II, Inc. ("ATC"), a publicly traded company. Simultaneously, the Company
agreed to exchange the Note for 1,000,000 common shares (25,000 after giving
effect to a subsequent 1 for 40 reverse stock split) of ATC and $4,000,000
principal amount of 4% cumulative convertible preferred stock, convertible into
common shares at $1.30 per share. In October 1993, the Company loaned Carnegie
an additional $150,000.

Carnegie defaulted on the $350,000 and the $150,000 loans, and notices of
default and foreclosure were sent in March and April 1994. In May 1994, the
Company filed legal action against ATC, Carnegie and others. In September 1994,
the Company and ATC entered into a settlement agreement whereby ATC

F-12
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. DISPOSITION OF SUBSIDIARY: (CONTINUED)
agreed to effect the transfer of Carnegie assets pledged as collateral. The
settlement also included a restructuring of ATC whereby ATC effected a 1 for 40
reverse stock split and issued the Company 900,000 shares, par value $.01 per
share, of Series B convertible preferred stock paying a 7% cumulative dividend
quarterly, in exchange for the $4,000,000 principal amount of 4% cumulative
convertible preferred stock previously held by the Company. Each share of the
Series B preferred stock is convertible into one share of ATC common stock. The
Company retained the 25,000 shares of ATC common stock in its possession.

Due to a decline in the market value of the common shares and due to the
deterioration of the business of ATC, the Company recorded a provision for loss
on its investment in the amount of $3,363,829 in the year ended June 30, 1994.

9. INCOME TAXES:

Following is a reconciliation of the statutory federal tax rate, as it
applies to the loss from continuing operations, to the effective rates for the
years ended June 30:

<TABLE>
<CAPTION>
1996 1995 1994
AMOUNT % AMOUNT % AMOUNT %
------------- --------- ------------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Federal tax (benefit) at statutory rates.... $ (1,686,000) (34.0) $ (2,329,000) (34.0) $ (2,475,000) (34.0)
Valuation allowance......................... 1,686,000 34.0 2,329,000 34.0 2,296,000 31.5
------------- --------- ------------- --------- ------------- ---------
Total..................................... $ -- (--) $ -- (--) $ (179,000) (2.5)
------------- --------- ------------- --------- ------------- ---------
------------- --------- ------------- --------- ------------- ---------
</TABLE>

The tax provision is reflected at the effective annual tax rate for the year
and consists of:

<TABLE>
<CAPTION>
1996 1995 1994
----------- ------------ -----------
<S> <C> <C> <C>
Federal benefit........................................................... $ (--) $ (--) $ (179,000)
State provision........................................................... (--) -- --
----------- ------------ -----------
$ (--) $ (--) $ (179,000)
----------- ------------ -----------
----------- ------------ -----------
</TABLE>

At June 30, 1996, the Company had a federal net operating loss carry
forward, for tax purposes, of approximately $27,000,000, expiring through 2011.
The utilization of approximately $4,900,000 of these losses in future periods is
estimated by the Company to be limited to approximately $350,000 per year (the
"annual earnout limitation").

Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, which establishes accounting and reporting standards for the effects of
income taxes that result from an enterprise's activities during the current and
preceding years became effective for the Company for its fiscal year ended June
30, 1994. The cumulative effect of adopting SFAS 109 was immaterial and was
recorded in the first quarter of fiscal 1994.

F-13
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. NOTES AND LOANS PAYABLE:

Notes and loans payable as of June 30, 1996 and 1995 include $179,000
principal amount of 6% Convertible Subordinated Debentures, due 1997.

In April 1995, the Company issued a note in the principal amount of $70,000
to its outside legal counsel for legal services performed. The note was
repayable in October 1995, together with interest at the rate of 7%. In February
1996 the note holder agreed to extend the due date to December 31, 1996. In
connection with the extension, the Company granted warrants to purchase 16,667
shares of the Company's common stock at an exercise price of $1.88 per share,
exercisable over a three year period. The amount of the note will be reduced, as
of December 31, 1996, by one-half of the amount by which the average closing
price of the stock, for the ten most recent trading days, exceeds the exercise
price of the warrants.

In August and October 1995, the Company received net proceeds of $219,250
and $50,750, respectively, from the private placement of an aggregate of
$312,500 principal amount of 12% Senior Unsecured Promissory Notes (the
"Notes"). The Notes are repayable with interest on the earlier of (a) the
closing of a public offering of the Company's equity securities from which the
Company receives gross proceeds of at least $10,000,000, or (b) one year from
the issuance date. The Company also granted to the purchasers of the Notes an
aggregate of 26,042 warrants (the "Warrants"), 20,833 of which are exercisable
at $2.83 per share and 5,209 of which are exercisable at $2.37 per share. Each
of the Warrants is exercisable at any time beginning one year after the date of
issuance and expiring four years after the date of issuance.

The Notes and interest were not repaid as scheduled. In August 1996, the
Company sent letters to all Note holders requesting extension of the due date to
December 15, 1997. In exchange, the Note holders were offered two alternative
proposals. In the first proposal, existing warrants will be exchanged, subject
to the Company's registration statements becoming effective, for registered
shares of the Company's common stock in an amount equal to 20% of the principal
amount of the Note, with shares valued at $ .75 per share.
Alternatively, Note holders can exchange their Notes, subject to the Company's
registration statements becoming effective, for registered shares of the
Company's common stock in an amount equal to 150% of the principal amount of the
Note, with shares valued at the price at the effective date of the registration.
In both proposals the interest on the Notes will be paid when due. As of October
10, 1996, the Company had received elections from Note holders representing
$212,500 principal amount of Notes, of which $162,500 elected the first
proposal. Accordingly, the maturity date of those notes have been extended to
December 15, 1997. Note holders representing $50,000 principal elected the
second proposal to exchange their notes for shares of the Company's common
stock. The remaining notes for $100,000 have not been paid on their respective
due dates, although the Company have not yet received any indication from those
noteholders that they will not consider one of the two alternative proposals
offered. The Company has paid current interest on all of the notes through the
first anniversary date of the respective notes.

11. COMMITMENTS AND CONTINGENCIES:

LEASE COMMITMENTS:

The Company presently leases office space in Los Angeles pursuant to an
operating lease expiring in May 1998, which provides for monthly rental payments
of $5,301. Minimum payments under the lease aggregate $63,612 and $58,311 for
the fiscal years ending June 30, 1997 and 1998, respectively.

F-14
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
The Company is party to a lease at 800 Third Avenue, New York, New York
10022, which will terminate in 1997. The Company vacated such office space
during the year ended June 30, 1995. In September 1995 the landlord filed an
action against the Company (see "Litigation"). Rent expense for the years ended
June 30, 1996, 1995 and 1994 was $38,772, $297,287 and $489,559, respectively.

The Company has entered into various agreements for the distribution of new
pictures. Generally, the films that the Company represent are financed by the
producers of the film, through independent or bank financing, utilizing the
license agreements generated by the Company as collateral for production loans.
The Company has assumed no financial obligations with respect to these pictures
as of this date, except for commitments for writing services in the amount of
$40,000, of which $20,000 has already been paid.

LITIGATION:

On December 20, 1990, a suit was filed against the Company seeking the
payment of $300,000 for certain investment banking services allegedly provided.
In October 1991, the Court granted a judgment in favor of the plaintiff. The
judgment is stayed pending the determination of an action brought by the Company
against the plaintiff described below. The Company has posted a
non-collateralized bond pending the results of an appeal. In a separate action,
the Company filed a complaint against the plaintiff claiming that services
alleged to have been performed were never performed and demanding the return of
funds and securities paid by the Company. In October 1994, the plaintiff filed a
voluntary bankruptcy petition under Chapter 11 of the United States Code.
Consequently, the Company's action has been automatically stayed. The Company
has filed a proof of claim.

On or about September 11, 1992, Joseph Duignan brought an action in the
Superior Court of New Jersey, Mercer County, entitled Joseph Duignan v. Double
Helix Films Limited Partnership No. 1, L.P. Double Helix Films, Inc., Cinecom
International Films, Film Gallery, Inc., Stan Wakefield, Jerry Silva, Arthur
Altarac and Anthony Tavone (MER-L-4262-92). Jerry Silva, the only defendant who
was served, is former Vice Chairman of the Board of Directors of the Company.
Mr. Silva has demanded that the Company indemnify him against any expenses,
judgments, and amounts paid in settlement of the action. The Company contends
that it is not required to indemnify Mr. Silva because he breached his fiduciary
duties to the Company.

Mr. Duignan claims that he invested $75,000 to acquire a partnership
interest in Double Helix Films Limited Partnership No. 1 and that Mr. Silva
forged or caused to be forged his signature on a Subscription Agreement dated
July 28, 1986. The Complaint alleges claims for rescission, unjust enrichment
(against Double Helix), conversion, fraud, breach of contract, breach of
fiduciary duty and breach of covenants of good faith and fair dealing (against
Mr. Silva and Double Helix). Mr. Duignan seeks to recover compensatory damages,
including but not limited to, his alleged $75,000 investment, punitive damages
and attorney's fees. Mr. Silva has answered the Complaint.

On December 30, 1994, an individual, who allegedly served as President of
Double Helix Films from about July 1991 until about March 1993, filed action
against the Company, Norman Muller, a former Chairman and CEO of the Company,
and others in which he alleges among other things breach of an oral agreement to
pay him $152,000 (which he allegedly advanced for the benefit of Double Helix)
and to give him 19.5% ownership interest in its corporate successors. He also
alleges a claim for intentional infliction

F-15
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
of emotional distress against Mr. Muller. He seeks to recover unspecified
compensatory, punitive, exemplary and emotional distress damages. The trial date
has been set for February 1997. Mr. Muller has demanded that the Company
indemnify him against any expenses, judgements and amounts paid in settlement.
The Company contends that it is not required to provide indemnification.

In another matter, the alleged former President of Double Helix, filed a
cross complaint in August 1995 against the Company, Double Helix and Norman
Muller in which he seeks indemnification, apportionment of fault and declaratory
relief in connection with another action in which he was named as a defendant.
In addition to compensatory damages, he seeks punitive and exemplary damages,
emotional distress damages and attorney's fees. The Company has answered the
cross-complaint, and a trial date has been set for February 1997.

On or about May 15, 1995, Credit Lyonnais Bank Nederland N.V. and Cinecom
Entertainment Group, Inc. filed a complaint against the Company's subsidiary,
Odyssey Distributors, Ltd. They allege that Odyssey collected but failed to
remit to them assigned distribution proceeds in the amount of $566,283.33 from
the foreign distribution of two pictures. The complaint alleges claims for
breach of contract and breach of fiduciary duty and seeks damages in excess of
$566,283, attorney's fees, an accounting, a temporary restraining order and a
preliminary injunction. In June 1995, the Court denied plaintiffs an attachment
and stayed the action pending arbitration in New York. In September, 1996 the
Court dismissed the Complaint. No arbitration has yet been commenced in this
action.

In August 1995, G.P. Productions, Inc. ("GP") and Greenwich Subject Films,
Inc. ("Greenwich") commenced an action entitled G.P. Productions, Inc., and
Greenwich Studios, Inc. v. Double Helix Films, Inc., Communications and
Entertainment, Inc., Krishna Shaw, Gerald Muller and Norman Muller in the United
States District Court, Southern District of Florida (Case No. 95-1188). Mr.
Muller has demanded that the Company indemnify him against any expenses,
judgements and amounts paid in settlement of the action. The Company contends
that, by virtue of Mr. Muller's breaches of fiduciary duty and violation of his
obligations to the Company, it is not required to provide indemnification.

GP and Greenwich allege that they are the exclusive owners of the films "The
Gallery" and "South Beach". They assert claims for copyright infringement,
unfair competition, breach of contract, accounting, conversion, civil theft,
conspiracy and fraudulent conveyance. The Complaint demands a recall of the
films, an attachment, preliminary and permanent injunctive relief, an
accounting, and unspecified compensatory, punitive and treble damages. The
Company has made a motion to dismiss the action for lack of personal
jurisdiction and lack of venue. The motion is pending.

In September 1995, the agent for the landlord for the premises in New York
City previously occupied by the Company filed a Summons and Verified Complaint
against the Company. The plaintiff alleges that it is due $66,694 from the
Company (plus interest) for rent allegedly owed during the period from April
through September, 1995. The Company vacated the premises on April 12, 1995.
Summary judgment was awarded to the plaintiff and a judgment was entered for
$74,142 in May, 1996. The Company has a motion pending for reconsideration of
the matter on the grounds that the landlord wrongfully refused to consider and
accept a subtenant for the balance of the term of the lease. In July, 1996, the
landlord commenced a second action for $121,000 for rent allegedly owed during
the period from October 1995 through July 1996.

F-16
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
The Company has not yet filed an Answer in this action and is seeking an
extension of time in which to answer pending the resolution of its motion for
reconsideration in the prior action.

In October 1995, Canon Financial Services filed a complaint, in which it
claims that it is due $47,499.83, plus damages, pursuant to a lease agreement.
The Company has filed an Answer in this action and plaintiff has made a motion
for summary judgment which is being defended by the Company.

In January 1996, a former director brought an action against the Company on
a promissory note in the amount of $25,000. The plaintiff obtained a summary
judgment but has not yet moved to enforce it. The Company is considering whether
or not it has a claim for indemnification against former management in
connection with the issuance of the note..

In January 1996, an action was filed against the Company in which the
plaintiff seeks damages in the amount of $33,849.98 for legal services rendered.
The complaint was served on the Company in April 1996. The Company has filed an
answer in this action and an arbitration hearing has been scheduled for October
1996.

In March 1996, an action was filed against the Company in which the
plaintiff claims that she is due $17,920.49 pursuant to a promissory note
previously issued to her. The Company has filed a cross-claim seeking offsets
against the amount due and other damages.

On or about March 25, 1996, a class action complaint was filed against the
Company. The complaint seeks damages in connection with the Company's treatment
in its financial statements of the disposition of its subsidiary, Double Helix
Films, Inc., in June 1991. The complaint seeks unspecified damages on behalf of
all persons who purchased shares of the Company's common stock from and after
June 1992. The complaint was served on the Company in July 1996. The Company
made a motion to dismiss the action and a hearing has been scheduled for October
1996. The Company's former Chairman has demanded that the Company indemnify him
against any expenses, judgments and amounts paid in settlement of the
litigation. The Company contends that it is not required to provide such
indemnification.

The Company was advised on October 10, 1996 that Film Bridge International,
Inc. filed a Complaint against the Company in a Los Angeles court on September
18, 1996 seeking declaratory relief with respect to the Joint Venture. The
Company is in the process of seeking restraining orders establishing its rights
in the Joint Venture. The Company has not yet been served in this action.

In The Private Lessons Partnership v. Carnegie Film Group, Inc., Monogram
Pictures Corp., Filmways Entertainment Corp., ATC, Inc., Krishnah Shah, Lonnie
Romati, Gerald Muller, Jerry Minsky and Does 1-100 (California Superior Court,
Los Angeles County, Case No. BC091840), the plaintiff asserted claims for breach
of oral contract, fraud in the inducement and fraudulent conveyance against Mr.
Shah, seeking damages in the amount of $315,000, plus further unspecified
compensatory damages and punitive damages. In August 1995, Mr. Shah filed a
cross-complaint against the Company, Double Helix Films and Norman Muller for
indemnification, apportionment of fault and declaratory relief. In addition to
compensatory damages, he seeks punitive and exemplary damages, emotional
distress damages and attorney's fees. The Company has answered the
cross-complaint and a trial has been scheduled for February 1997.

F-17
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
Management believes that the outcome of aforementioned matters and all other
outstanding litigation will not, after consideration of reserves, have a
materially adverse impact on the financial condition or results of operations of
the Company.

12. SHAREHOLDERS' EQUITY:

On March 6, 1996 the Board of Directors of the Company approved a
one-for-six reverse stock split of the outstanding shares of the Company's
Common Stock (the "Common Stock"). The Reverse Stock Split was effective as of
March 18, 1996 (the "Record Date"). On the Record Date, each six shares of the
Company's then outstanding Common Stock (the "Old Common Stock") were
automatically converted into one share of the new Common Stock, par value $.01
per share (the "New Common Stock").

No fractional shares of New Common Stock were issued. Rather, holders of Old
Common Stock who are entitled to receive fractional shares of New Common Stock
will be rounded up to the nearest whole share of New Common Stock.

The Reverse Stock Split resulted in a net reduction of 11,408,973 in the
number on Common Shares outstanding, including 1,995 shares issuable due to the
rounding up of fractional shares.

Except for the number of shares of Common Stock outstanding after the
Reverse Stock Split, the Old Common Stock and the New Common Stock are
identical.

On February 14, 1995, the then Board of Directors of the Company declared a
dividend payable to holders of record on February 24, 1995 ("the Dividend Record
Date") of the Company's common stock and Class A stock. The dividend consisted
of 1,700,000 shares of common stock, $.01 par value per share, of Global that
were owned by the Company. Holders of the Company's common stock and Class A
stock received .1233 and .0786 shares, respectively, of Global common stock for
each share of the Company's stock. The dividend was recorded as a reduction of
capital in excess of par value.

The shares of Global common stock were distributed to an escrow agent on the
Dividend Record Date pending registration of the shares. The Securities and
Exchange Commission declared Global's registration statement effective as of
September 1, 1995 and, accordingly, the escrow agent was authorized to
distribute the dividend shares.

Communications and Entertainment Corp. was originally formed to consummate
the mergers of Double Helix Films, Inc. ("Double Helix") and Odyssey
Entertainment Ltd. pursuant to the Agreement and Plan of Merger dated September
22, 1989 ("the Merger Agreement"). On September 6, 1990 the shareholders of
Double Helix and Odyssey approved the Merger Agreement. Pursuant to the terms of
the Merger Agreement, each share of common stock of Odyssey was convertible into
one share of Class A stock of the Company and each share of Double Helix common
stock was convertible into one share of the Company's common stock. Prior
management's instructions to the transfer agent required that any shares of
Odyssey or Double Helix outstanding at the time of the Merger not tendered to
the Company's transfer agent for exchange by March 31, 1995 should be canceled.
Accordingly, 86,790 shares of the Class A stock and 10,496 shares of the common
stock reserved for exchange were canceled. The par value of the shares canceled,
of $5,837, was transferred to capital in excess of par. Current management is
investigating the basis for prior management's instructions to the transfer
agent.

F-18
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SHAREHOLDERS' EQUITY: (CONTINUED)
Additionally, in accordance with the Company's charter, all outstanding
shares of the Company's Class A stock, automatically converted, on March 31,
1995, into shares of the Company's common stock at a rate of .6375 shares of
common stock for each share of Class A stock.

The Company's outstanding 6% Convertible Subordinated Debentures are
convertible into common stock at a price of $75 per share. As of June 30, 1996,
Debentures in the aggregate principal amount of $179,000 can be converted into
an aggregate of 1,522 shares of common stock.

In September 1992, the former Board of Directors approved a stock buyback
program, authorizing the purchase of as many as three million shares of the
Company's common stock from time to time in the open market. Through June 30,
1994, the Company had purchased 162,833 shares with an aggregate cost of
$1,881,801. During the year ended June 30, 1994, the former Board of Directors
authorized the retirement and cancellation of all shares purchased under the
buyback program.

13. STOCK OPTIONS AND WARRANTS:

The number of options and warrants, and exercise prices in the following
paragraphs have been restated to give effect to a 1 for 6 Reverse Stock Split in
March 1996.

The Company has an Incentive Stock Option Plan (The "Option Plan") for its
key employees providing for the granting of options to acquire common stock. The
maximum number of shares of common stock subject to the Option Plan is 75,000,
plus 5% of any increase in the number of issued shares after the effective date
of the Merger, excluding any increase due to stock awards to key employees or as
result of the conversion of Class A stock. The price for the shares covered by
each option will not be less than 100% of the fair market value at the date of
grant (110% for holders of more than 10% of the company's common stock). Options
granted expire ten years from the date of grant (five years for holders of more
than 10% of the Company's common stock).

A summary of options under the plan is as follows:

<TABLE>
<CAPTION>
SHARES EXERCISE PRICE
--------- ---------------
<S> <C> <C>
Outstanding, June 30, 1993*........................................................... 63,250 $ 5.04--$15.54
Granted............................................................................... 19,167 $ 9.00--$13.86
Canceled.............................................................................. (22,917) $ 9.00--$15.36
---------
Outstanding, June 30, 1994*........................................................... 59,500 $ 5.04--$15.54
Canceled.............................................................................. (59,500) $ 5.04--$15.54
---------
Outstanding, June 30, 1995............................................................ -0-
---------
Outstanding, June 30, 1996............................................................ -0-
---------
</TABLE>

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

* All exercisable.

The Company issued an aggregate of 134,854 warrants to the purchasers of
common stock of the Company sold in private placements during fiscal 1992. The
exercise prices range from $18.00 to $25.50 per share. 21,024 of such warrants
were exercised during 1992 at $18.00 per share. During the years ended

F-19
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. STOCK OPTIONS AND WARRANTS: (CONTINUED)
June 30, 1995, 1994 and 1993, 58,652, 53,500 and 608 warrants, exercisable at
$25.50, $18.00 and 18.00 per share, respectively, expired, unexercised. The
balance of the warrants, exercisable at $18.00 per share, expired unexercised in
July 1996.

An additional 70,833 warrants and options were granted during the year ended
June 30, 1992 to outside consultants for services in connection with private
placements. The exercise prices range from $12.00 to $25.50 per share. 8,333 of
such options were exercised in 1992 at $12.00 per share. 4,167 options,
exercisable at $16.50 per share, expired, unexercised, during fiscal 1993. The
balance expired, unexercised, during fiscal 1995.

In fiscal 1992, the Board of Directors approved the grant of options, to
purchase 6,000 shares to the outside directors of the Company, for their
services as directors, at an exercise price of $18.96 per share. An additional
6,000 options were granted during fiscal 1993 to the outside directors, at an
exercise price of $10.08. The options to the directors have not yet been issued.

During the year ended June 30, 1993, 8,333 options were granted outside of
the plan, at an exercise price of $9.00, to an officer in connection with an
employment agreement. Such options expired during fiscal 1995. Additionally,
1,667 options were granted, at an exercise price of $9.00, to a director of the
Company for services rendered. Such options were exercisable as of June 30,
1996.

During fiscal 1993, warrants to purchase 12,500 shares were also granted to
outside consultants, for services rendered, at an exercise price of $13.14 per
share. Warrants to purchase 70,833 shares were granted to outside consultants
for services rendered during fiscal 1994, at exercise prices ranging from $7.50
to $21.00. 66,667 of such warrants, exercisable at $9.00 to $21.00 per share,
expired unexercised during fiscal 1996. The balance of the warrants, were
exercisable at June 30, 1996, at a price of $7.50 per share.

In April 1995, following the change in management control, the Board of
Directors authorized the issuance of 8,333 options to each of five new Directors
and 16,667 options to the president of the Company. The Board also authorized
the issuance of a total of 10,000 options to two outside consultants for
services in connection with the proxy contest. All such warrants are exercisable
for a four year period commencing October 13, 1995 at $3.92 per share.

In August and October 1995, the Company issued an aggregate of 26,041
warrants to purchasers of 12% Senior Unsecured Notes sold in private placement.
The exercises prices ranged from $2.37 to $2.83 per share. None of such warrants
were exercisable as of June 30, 1996. In connection with the private placement,
the Company also issued 33,333 warrants to its outside counsel in consideration
for legal services performed, exercisable during the three year period
commencing one year from the date of issuance, at a price per share of $2.83.

During the year ended June 30, 1996, 769,167 warrants were granted outside
of the Plan to officers and directors, at exercise prices ranging from $1.50 to
$2.83. All such warrants were exercisable as of June 30, 1996.

During fiscal 1996, the Company also granted 16,667 warrants, at an exercise
price of $1.88 per share, to its outside counsel in connection with the
extension of a note. Additionally, warrants to purchase

F-20
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. STOCK OPTIONS AND WARRANTS: (CONTINUED)
167,500 shares were granted to consultants for services rendered during fiscal
1996, at exercise prices ranging from $.76 to $1.88 per share. All such warrants
were exercisable as of June 30, 1996.

14. RELATED PARTY TRANSACTIONS:

During the years ended June 30, 1994, the Company paid Dorian Industries,
Inc. ("Dorian") $20,833 in consideration of consulting services rendered by N.
Norman Muller, the former Chairman and Chief Executive Office of the Company,
who is a consultant to Dorian.

The firm of Goodkind, Labaton, Rudoff & Sucharow, of which David A. Mortman,
a former Director of the Company was a member, received legal fees from the
Company of $195,000 for the fiscal year ended June 30, 1995. Additionally, it
received an aggregate of 522,641 shares of common stock of Global Intellicom,
Inc., a subsidiary of the Company, valued at $155,905, in consideration of the
cancellation of outstanding legal fees.

The firm of David A. Mortman, P.C. and its predecessor firm, of which David
A. Mortman, a Director of the Company was a member, received legal fees from the
Company of $16,585 and $387,987 during the fiscal years ended June 30, 1995 and
1994, respectively.

15. SUBSEQUENT EVENTS:

In August 1996, the Company entered into an agreement, pursuant to which the
Company agreed to grant certain subdistribution rights in and to sell other
distribution rights to, certain films in the Company's film library. In exchange
for these rights, the Company will receive a total cash consideration of
$1,075,000, payable $500,000 on closing, $275,000 six months after closing, and
$300,000 eighteen months after closing. In addition, the Company will retain a
continuing right to receive revenues from certain of the films, valued by
management at a minimum of approximately $150,000. Additionally, the purchaser
will provide the Company with $500,000 revolving line of credit to be secured by
accounts receivable and other contractual rights acquired by the Company. As
part of the transaction, the Company will grant 100,000

F-21
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. SUBSEQUENT EVENTS: (CONTINUED)
stock options, exercisable over a three year period at the bid price of the
Company's common stock in effect on August 5, 1996 ($.625). The transaction
closed on October 7, 1996.

On September 25, 1996, the Company entered into an agreement with an
unaffiliated third party for the purchase of 1,000,000 shares of the Company's
common stock in consideration of $750,000, or $.75 per share, payable all cash
at closing. In addition, the investor will receive 1,000,000 class A warrants
and 1,000,000 class B warrants, each set of warrants being exercisable over a
three year period for the purchase of 1,000,000 shares of common stock at the
respective exercise prices of $.75 and $1.00 per share. The closing of the
transaction is contingent upon (i) shareholder approval of an amendment to the
Company's Articles of Incorporation authorizing an increase in the number of
authorized shares of the Company, and (ii) the effectiveness of a registration
statement filed by the Company on behalf of the investor with respect to the
shares purchased and the shares underlying the warrants. The investor will pay
the first $50,000 of such registration costs.

In September, 1996, the Company reached a verbal understanding with
Paramount, pursuant to which the Company believes that Paramount will agree to
cancel the Company's contractual guarantee of $2.7 million in full, in exchange
for which the Company agreed to (i) relinquish all further distribution rights
to "Wuthering Heights"; (ii) assign to Paramount all of its rights in any
outstanding distribution agreements for the film, and any receivables to be
generated therefrom; and (iii) guarantee that Paramount will collect a total of
$500,000 in sales revenue from existing distribution agreements no later than
January 15, 1997. The Company anticipates that existing license agreements will
yield at least $450,000 in revenue prior to January 15, 1997 (of which the
Company would have been entitled to retain approximately 20% thereof in
commissions), thereby minimizing the Company's exposure under the guarantee to
Paramount.

16. UNAUDITED NOTES TO INTERIM QUARTERLY FINANCIAL STATEMENTS AND OTHER
UNAUDITED NOTES:

a) SALE OF COMMON STOCK:

On February 26, 1997, the Company issued 500,000 shares of Common Stock to
Equity Investors for an aggregate consideration of $375,000. It also granted
warrants to purchase 500,000 shares of Common Stock

F-22
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. UNAUDITED NOTES TO INTERIM QUARTERLY FINANCIAL STATEMENTS AND OTHER
UNAUDITED NOTES: (CONTINUED)

at an exercise price of $1.06 per share to these Equity Investors. The Common
Stock and warrants were issued in reliance on Regulation S under the Securities
Act.

b) -- FAIR VALUE OF FINANCIAL INSTRUMENTS:

NOTE RECEIVABLE

The carrying amount approximates fair value because of the short maturity of
this instrument.

NOTES AND LOANS PAYABLE

The Company was unable to determine a reasonable estimate of the fair value of
Notes and Loans Payable without incurring excessive costs due to the nature of
these liabilities and due to the financial condition of the Company at this
time.

c) -- SUBSEQUENT EVENTS

Following the purchaser's indication of an unwillingness to consummate this
transaction, the parties reached a settlement in principle in June 1997,
pursuant to which the purchaser agreed to purchase 66,667 shares of common stock
of the company for $50,000, or $.75 per share.

d) -- LITIGATION

On September 18, 1996, Film Bridge International, Inc. ("Film Bridge") filed a
complaint in Los Angeles County Superior Court, entitled "Film Bridge
International v. Communications and Entertainment Corp., and Does 1 through 50,
Inclusive," contending that the Company had breached the terms of an alleged
joint venture agreement between the parties regarding the distribution rights to
certain films. On December 19, 1996, the Company filed a cross-complaint against
Film Bridge alleging that, since the end of June, 1996, Film Bridge had failed
to furnish the Company with a proper accounting of its revenues and expenses in
connection with the sale to foreign licensees of various films in which the
company had an interest and had failed to make payment of at least $450,000 to
the Company for monies due and owing to the Company from the foreign sales of
such films. An agreement was reached between the parties in May, 1997, as a
result of which the Company received $336,000 of the monies being held by Film
Bridge, with the balance being retained by Film Bridge as sales commissions and
in full settlement of the litigation.

On or about March 25, 1996, a class action complaint was filed in Los
Angeles Superior Court entitled "Dennis Blewitt v. Norman Muller, Jerry Minsky,
Dorian Industries, Inc. and Communications and Entertainment Corp." The
complaint seeks damages in connection with the Company's treatment in its
financial statements of the disposition of its Double Helix subsidiary in June,
1991. The complaint seeks unspecified damages on behalf of all persons who
purchased shares of the Company's common stock from and after June 1992. A
second action, alleging substantially similar grounds, was filed in December
1996 in Federal court in the United States District Court for the Southern
District of California under the caption

F-23
<PAGE>
ODYSSEY PICTURES CORPORATION
(FORMERLY KNOWN AS)
COMMUNICATIONS AND ENTERTAINMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. UNAUDITED NOTES TO INTERIM QUARTERLY FINANCIAL STATEMENTS AND OTHER
UNAUDITED NOTES: (CONTINUED)

heading of "Diana Pfannebecker v. N. Norman Muller, Communications and
Entertainment Corp., Jay Behling, Jeffrey S. Konvitz, Tom Smith, Jerry Silva,
David Mortman, Price Waterhouse & Co., Todman & Co., and Renato Tomacruz."
Following the filing of the second action, the first action was dismissed by
stipulation in May 1997. The Company has filed a motion to dismiss the complaint
in the second action and a hearing on the motion has been scheduled for July 21,
1997. Messrs. Muller, Smith and Mortman, former directors of the Company, have
asserted claims for indemnification against the Company. The Company has advised
the claimants that it will not provide such indemnification, based on their
wrongful actions and failure to comply with various obligations to the Company.

On or about January 23, 1996, an action was filed in the Los Angeles
Superior Court entitled "Greenberg, Glusker, Fields, Claman & Machtinger v.
Odyssey Distributors, Ltd., Odyssey Entertainment Ltd. and Communications and
Entertainment Corporation," in which the plaintiff seeks damages in the amount
of $33,849.98 for legal services rendered to the Company and its subsidiaries.
The parties have reached a tentative settlement in the matter, pursuant to which
the Company will pay $7,000 to plaintiff, deliver 40,000 freely tradeable shares
of the Company's Common Stock to plaintiff, and deliver an additional cash
amount to the extent that the aggregate market value of the shares on the date
of delivery is less than $40,000. The settlement is contingent on the Company's
ability to deliver fully registered shares to plaintiff on or before August 15,
1997.

The Company has also reached tentative settlements in the matters entitled
"Joseph P. Day Realty Corp. v. Communications and Entertainment Corp.," pursuant
to which plaintiff (as landlord) was seeking damages in connection with a lease
for premises formerly occupied by the Company at 800 Third Avenue in New York
City. The plaintiff had secured a judgment for $74,142 representing a portion of
the lease term and had commenced a second action seeking additional damages for
the period from October, 1995 through July, 1996. Pursuant to the settlement
agreement, the Company will be required to deliver 177,500 shares of the
Company's Common Stock to each of the landlord and its agent in full settlement
of the actions, provided the shares are fully registered and delivered prior to
August 15, 1997.

In the proceeding entitled "In the Private Lessons Partnership v. Carnegie
Film Group, Inc., Monogram Pictures Corp., Filmways Entertainment Corp., ATC,
Inc., Krishnah Shah, Lonnie Romati, Gerald Muller, Jerry Minsky and Does 1-100,"
a cross complaint filed by Mr. Shah against the Company in August, 1995 has been
dismissed.

e) DEFAULTS UPON SENIOR SECURITIES

In August and October of 1995, the Company concluded a private placement
pursuant to which it issued unsecured promissory notes to unaffiliated investors
in the aggregate amount of $312,500. The notes were due in one year but were not
paid on their respective due dates on August 28 and October 3, 1996. The Company
has made alternative proposals to the noteholders, one of which involves the
exchange of notes for registered shares of the Company in an amount equal to
150% of the principal amount of the notes, with shares valued either at $.75 per
share or the market value on the date of delivery of the shares. Noteholders
representing $262,500 in notes have accepted this proposal (with all but a
$50,000 noteholder electing to value their shares at $.75 per share), subject to
the delivery of fully registered shares. The remaining note for $50,000 (held by
a single noteholder) has not been paid and remains in default.

F-24
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

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

TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 10
Price Range of Common Stock............................................... 11
Dividend Policy........................................................... 12
Determination of Offering Price........................................... 12
Capitalization............................................................ 13
Dilution.................................................................. 13
Selected Consolidated Financial Data...................................... 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 15
Business.................................................................. 20
Legal Proceedings......................................................... 28
Management................................................................ 32
Certain Relationships and Related Transactions............................ 39
Principal Stockholders.................................................... 40
Selling Stockholders...................................................... 41
Plan of Distribution...................................................... 41
Description of Securities................................................. 42
Shares Eligible for Future Sale........................................... 44
Legal Matters............................................................. 45
Experts................................................................... 45
Interest of Named Experts and Counsel..................................... 46
Additional Information.................................................... 46
Index to Financial Statements............................................. F-1
</TABLE>

4,456,637 SHARES OF
COMMON STOCK
($.01 PAR VALUE)

ODYSSEY PICTURES CORPORATION

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

PROSPECTUS

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

, 1997

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table itemizes the expenses anticipated to be incurred by
Odyssey Pictures Corporation (the "Company" or "Odyssey"), in connection with
the issuance and distribution of the securities being registered. All the
amounts shown are estimates except the Securities and Exchange Commission
registration filing fee. The first $50,000 of such expenses will be paid by
certain Selling Stockholders, and the balance will be paid by the Company.

<TABLE>
<S> <C>
Registration Fee.................................................. $ 1,125
Legal Fees and Expenses........................................... 75,000*
Blue Sky Fees & Expenses.......................................... 10,000*
Accounting Fees................................................... 15,000*
Printing Costs.................................................... 20,000*
Miscellaneous..................................................... 5,000*
---------
$ 126,125*
</TABLE>

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

* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 78.751(1) of the Nevada Revised Statutes provides that a Nevada
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise, against expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.

Section 78.751(2) provides that a Nevada corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.

Section 78.751 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (1) and (2) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith, including
attorney's fees; that a Nevada corporation may advance (or pay as incurred) any
expenses incurred by an officer or director of the corporation in defending a
civil or criminal action, upon receipt of an undertaking by such officer or
director to repay any amounts so advanced if it is ultimately determined by a
court that the officer or director was not entitled to indemnification by the
corporation; that indemnification provided for by Section 78.751 shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled (except that

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<PAGE>
indemnification may not be made if a final adjudication establishes that the
acts in question involved intentional misconduct, fraud or knowing violations of
law); and that the corporation may purchase and maintain insurance on behalf of
a director or officer of the corporation against any liability asserted against
him or incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Nevada law.

The Company's Articles of Incorporation provide for indemnification of the
Company's officers and directors to the fullest extent permitted by law. The
Company's Articles of Incorporation also permit the Board of Directors to
authorize the Company to purchase and maintain insurance against any liability
asserted against any director, officer, employee or agent of the Company arising
out of his capacity as such. The Company does not maintain any such liability
insurance at the present time.

Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers, or controlling persons of the Company pursuant
to the Company's Articles of Incorporation, its By-Laws and the Nevada Revised
Statutes, the Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in such Act and is
therefore unenforceable.

As permitted by the Nevada Revised Statutes, the Company's Articles of
Incorporation provide that directors of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for acts or omissions not
in good faith or which involve intentional misconduct, fraud or a knowing
violation of law, or (ii) under certain sections of Nevada law relating to
prohibited dividends or distributions. As a result of this provision, the
Company and its stockholders may be unable to obtain monetary damages from a
director for breach of his or her duty of care to the Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since January 1, 1994, the Company has issued the following unregistered
securities:

COMMON STOCK:

(a) In consideration of services rendered to the Company, and in
consideration of the cancellation of deferred compensation notes, the Company
issued the following shares of Common Stock to each of Stephen R. Greenwald, Ira
N. Smith and Lawrence I. Schneider on the dates and in consideration of the
amounts indicated: (i) on June 10, 1996, the Company issued to each of the
foregoing 83,120 Shares of Common Stock upon conversion of a note representing
deferred compensation (including interest) in the amount of $62,339.86; (ii) on
June 30, 1996, the Company issued to each of the foregoing 19,231 Shares of
Common Stock upon conversion of a note representing deferred compensation (no
interest applicable) in the amount of $15,000; and (iii) on September 30, 1996,
the Company issued to each of the foregoing 26,316 Shares of Common Stock upon
conversion of a note representing deferred compensation (no interest applicable)
in the amount of $15,000.

(b) On October 4, 1996, the Company issued 10,000 Shares of Common Stock to
Howard J. Kerker in consideration of services rendered to the Company.

(c) On March 6, 1996, the Company issued 333,334 shares of Common Stock to
its wholly owned subsidiary, Odyssey Distributors, Ltd. in consideration of the
transfer of certain distribution rights to the Company.

(d) On February 26, 1997, the Company issued 500,000 shares of Common Stock
to the Equity Investors for an aggregate consideration of $375,000 in reliance
on Regulation S under the Securities Act.

(e) On February 26, 1997, the Company issued 26,000 shares of Common Stock
to Corporate Imaging in consideration of services rendered to the Company.

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<PAGE>

(f) On February 26, 1997, the Company issued 7,500 shares of Common Stock to
Lloyd Trufelman in consideration of services rendered to the Company.

(g) On the effective date of this Registration Statement, the Company will
issue (i) 595,455 shares of Common Stock to Exchanging Noteholders in
cancellation of 12% notes in the aggregate face amount of $262,500, (ii) 120,000
shares of Common Stock to Olshan Grundman in cancellation of a promissory note
in the face amount of $70,000, (iii) 66,667 shares of Common Stock to David A.
Somerstein, (iv) 40,000 shares of Common Stock to Greenberg, Glusker, Fields,
Claman & Machtinger, and (v) 177,500 shares of Common Stock to the attorneys for
each of 800 Third Avenue Associates and Joseph P. Day Realty Corp.

NOTES:

In April, 1997, the Company borrowed an aggregate of $100,000 from the
following directors of the Company: Stephen R. Greenwald ($50,000), Lawrence I.
Schneider ($25,000) and Robert E. Miller, Jr. ($25,000). The Company issued
demand promissory notes to the lenders in the amounts indicated, each note
bearing interest at the rate of 9.25% per annum. In June, 1997, the Company
borrowed an additional $25,000 from Aaron Richard Golub, an unaffiliated party,
on the same terms as the loans made by Messrs, Greenwald, Schneider & Miller.

WARRANTS:

During the 1994 calendar year, the Company granted warrants to purchase
4,167 shares of Common Stock at an exercise price of $7.50 per share to H.L.
Lanzet. During the 1995 calendar year, the Company granted warrants to purchase
an aggregate of 223,540 shares of Common Stock at exercise prices ranging from
$2.37 per share to $3.91 per share, to the following persons: Lawrence
Schneider, Henry Schneider, Patrick Haynes, Russell T. Stern, Jr., Robert E.
Miller, Jr., Shane O'Neil, Robert Hesse, Jeffry Konvitz, Olshan Grundman Frome &
Rosensweig, Jay Behling, Ira N. Smith, Stephen R. Greenwald, and the Unit
Purchasers. During the 1996 calendar year, the Company granted warrants to
purchase an aggregate of 1,385,833 shares of Common Stock at exercise prices
ranging from $.625 per share to $2.83 per share, to the following persons: G&H
Media, Ltd. (Stephen R. Greenwald), Ira N. Smith, Lawrence Schneider, Olshan
Grundman Frome & Rosensweig, Global Capital Resources (Lawrence Schneider),
Robert E. Miller, Jr., Howard Kerker, Josh Grode, Cerberus Group (Shane O'Neil),
Film Bridge International, Inc., Trylon Communications, Inc., Wayne Koby,
Kinnevik Media, Ltd., Andrea Miller, Marvin Grossman, Brenda Reiss, Leonard
Machtinger and Franz Afman.

In addition, in December, 1996, the Company lowered the exercise price on
the following warrants to $1.00 per share: 8,333 warrants to Robert Miller at an
original exercise price of $3.91 per share; 33,333 warrants to Robert Miller at
an original exercise price of $2.83 per share; 25,000 warrants to Robert Miller
at an original exercise price of $1.87 per share; 8,333 warrants to Lawrence
Schneider at an original exercise price of $3.91 per share; 16,667 warrants to
each of Lawrence Schneider, G & H Media, Ltd. and

II-3
<PAGE>
Ira Smith at an original exercise price of $2.83 per share; and 200,000 warrants
to each of Lawrence Schneider, G & H Media, Ltd. and Ira Smith at an original
exercise price of $1.87 per share.

In February, 1997, the Company granted warrants to purchase 125,000 shares
of Common Stock at an exercise price of $1.06 per share to each of the following
four persons: Johann Schotte, A Hero from Zero N.V., Gold Leaf Pictures Belgium
bvba, and Chardonnay Enterprises, Ltd. The warrants were issued pursuant to
Regulation S of the Securities Act.

In April and June, 1997, the Company granted an aggregate of 125,000
warrants to purchase shares of Common Stock at an exercise price of $1.00 per
share to the following persons: G & H Media, Ltd. (an affiliate of Stephen R.
Greenwald), Lawrence I. Schneider, Robert E. Miller, Jr., and Aaron Richard
Golub.

Except as otherwise indicated, all of the securities described in this
Section 15 were offered and sold in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act, relative to sales
made by an issuer not involving a public offering.

ITEM 16. EXHIBITS

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<PAGE>

<TABLE>
<C> <S>
4.17 Form of Promissory Note issued to G & H Media, Ltd. on April 29, 1997.(10)
5.1 Opinion of Howard J. Kerker, P.C.(9)
10.1 1989 Long Term Incentive Plan(1)
10.2 Agreement of Settlement and Release, dated October 2, 1995, by and between Home Box
Office, Inc. and Odyssey(5)
10.3 Private Placement Memorandum used in connection with 1995 Private Placement (the
"1995 Private Placement Memorandum")(5)
10.4 Supplement to the 1995 Private Placement Memorandum(5)
10.5 Supplement No. 2 to the 1995 Private Placement Memorandum(5)
10.6 Supplement No. 3 to the 1995 Private Placement Memorandum(5)
10.7 Settlement Agreement, dated as of March 31, 1995, by and between the Company,
Odyssey, Global Intellicom, Inc., N. Norman Muller, Thomas W. Smith, David Mortman,
Robert Ferraro, the CECO Shareholders Committee, Lawrence Schneider, Robert E.
Miller, Henry Schneider, Robert Hesse, Shane O'Neil, Patrick Haynes, Russell T.
Stern, Jr., Thurston Group, Inc., The Insight Fund, L.P. and Lois Muller(3)
10.8 Memorandum of Agreement, dated as of August 24, 1995 between the Company and Multipix
Communications, Inc.(4)
10.9 Termination Agreement, dated as of January 2, 1996, between Regency International
Pictures, B.V. and Odyssey Distributors B.V.(6)
10.10 Employment Agreement dated October 1, 1995, between the Company and Stephen R.
Greenwald(6)
10.11 Employment Agreement dated October 1, 1995, between the Company and Lawrence I.
Schneider(6)
10.12 Employment Agreement dated October 1, 1995, between the Company and Ira N. Smith (6)
10.13 Agreement, dated March 6, 1996, between Communications and Entertainment Corp. and
its wholly-owned subsidiary, Odyssey Distributors, Ltd.(7)
10.14 Severance and Consulting Agreement, dated March 26, 1996, between the Company and
Shane O'Neil, and related modifying agreement dated March 28, 1996(7)
10.15 Management Agreement between the Company and Stephen R. Greenwald, dated March 6,
1996, superseding the Employment Agreement dated October 1, 1995(8)
10.16 Management Agreement between the Company and Lawrence I. Schneider, dated March 6,
1996, superseding the Employment Agreement dated October 1, 1995(8)
10.17 Management Agreement between the Company and Ira N. Smith, dated March 6, 1996,
superseding the Employment Agreement dated October 1, 1995(8)
10.18 Addendum to Management Agreements of Messrs. Schneider, Greenwald and Smith(8)
10.19 Joint Venture Letter between the Company and Film Bridge International, Inc., dated
March 11, 1996(8)
10.20 Lease for office premises at 1875 Century Park East, Suite 2130, Los Angeles,
California, dated May 9, 1996(8)
10.21 Agreement dated August 29, 1996, between the Company and Kinnevik Media Properties,
Ltd.(8)
10.22 Agreement dated September 6, 1996 between the Company and Mr. David Somerstein(8)
10.23 Settlement Agreement and Release between Paramount Pictures Corporation and Odyssey
Distributors, Ltd. (a wholly owned subsidiary of the Company), and Guarantee
Agreement of the Company, each dated as of September 26, 1996(9)
10.24 Form of Settlement Agreement with Generale Bank Nederland, N.V., dated as of December
18, 1996(9)
21.1 Subsidiaries of the Registrant(3)
23.1 Consent of Howard J. Kerker, P.C. (included in opinion filed as Exhibit 5.1).(9)
</TABLE>

II-5

<PAGE>

<TABLE>
<C> <S>
23.2 Consent of Price Waterhouse LLP(11)
</TABLE>

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

(1) Incorporated herein by reference to the Company's Registration Statement on
Form S-4, File No. 33-34627.

(2) Incorporated herein by reference to the Company's Registration Statement on
Form S-1, File No. 33-43371.

(3) Incorporated herein by reference to the Company's Current Report on Form 8-K
filed April 12, 1995, File No. 0-18954.

(4) Incorporated herein by reference to the Company's Current Report on Form 8-K
filed August 30, 1995, File No. 0-18954.

(5) Incorporated herein by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1995, File No. 0-18954.

(6) Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1995, File No. 0-18954.

(7) Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, File No. 0-18954.

(8) Incorporated herein by reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1996, File No. 0-18954.

(9) Previously filed.

(10) Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File No. 0-18954.

(11) To be filed by amendment.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

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

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

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

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

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities

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<PAGE>
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

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

(4) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its 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 Act and will be governed by the final
adjudication of such issue.

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<PAGE>
SIGNATURES

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

ODYSSEY PICTURES CORPORATION

BY: /S/ STEPHEN R. GREENWALD
-----------------------------------------
Stephen R. Greenwald,
CHIEF EXECUTIVE OFFICER
DATED: JULY 2, 1997

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

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

Chief Executive Officer;
/s/ STEPHEN R. GREENWALD Co-Chairman in the Office
- ------------------------------ of Chairman; Director 7/2/97
Stephen R. Greenwald (Principal Executive
Officer)

Exec. Vice-President &
/s/ MARVIN GROSSMAN Chief Financial Officer
- ------------------------------ (Principal Financial and 7/2/97
Marvin Grossman Accounting Officer)

/s/ IRA N. SMITH President; Co-Chairman in
- ------------------------------ the Office of Chairman; 7/2/97
Ira N. Smith Director

/s/ LAWRENCE I. SCHNEIDER Co-Chairman in the Office
- ------------------------------ of Chairman; Director 7/2/97
Lawrence I. Schneider

/s/ ROBERT E. MILLER, JR. Director
- ------------------------------ 7/2/97
Robert E. Miller, Jr.

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<PAGE>
EXHIBIT INDEX

<TABLE>
<C> <S>
3.1 Articles of Incorporation, as amended through June 30, 1995(1)
3.2 Amendments to Articles of Incorporation filed in March and June, 1996(8)
3.3 Amendment to Articles of Incorporation filed in January, 1997(9)
3.4 By-laws(1)
4.1 Indenture between Odyssey and Continental Stock Transfer and Trust Company
("Continental") dated as of July 15, 1987(1)
4.2 Form of Supplemental Indenture between Continental and the Company(1)
4.3 Form of Common Stock Certificate(1)
4.4 Form of options granted of officers, directors and 5% stockholders(2)
4.5 Form of Warrant issued to purchasers parties to the 1995 Private Placement completed
September 30, 1995(5)
4.6 Form of 12% Unsecured Promissory Note issued to purchasers parties to the 1995
Private Placement completed September 30, 1995(5)
4.7 Form of Stock Option Agreement by and between the Company and officers and directors
of the Company, for stock options issued in April 1995(5)
4.8 General form of Common Stock Purchase Warrant by and between the Company and
officers, directors, employees and consultants of the Company(8)
4.9 Common Stock Purchase Warrant, dated March 6, 1996, between the Company and G & H
Media, Ltd. (assignee of Stephen R. Greenwald)(7)
4.10 Common Stock Purchase Warrant, dated March 6, 1996, between the Company and Lawrence
I. Schneider(7)
4.11 Common Stock Purchase Warrant, dated March 6, 1996, between the Company and Ira N.
Smith(7)
4.12 Form of Common Stock Purchase Warrant, dated December 2, 1996, between the Company
and each of G & H Media, Ltd., Lawrence I. Schneider and Ira N. Smith(9)
4.13 Form of Common Stock Purchase Warrant issued to each of Johann Schotte, A Hero from
Zero N.V., Gold Leaf Pictures Belgium bvba, and Chardonnay Enterprises, Ltd., on
February 26, 1997.(10)
4.14 Form of Common Stock Purchase Warrant issued to each of Lawrence I. Schneider, Robert
E. Miller, Jr. and Aaron Richard Golub, on April 29, April 29 and June 16, 1997,
respectively.(10)
4.15 Form of Common Stock Purchase Warrant issued to G & H Media, Ltd. on April 29,
1997(10)
4.16 Form of Promissory Note issued to each of Lawrence I. Schneider, Robert E. Miller,
Jr. and Aaron Richard Golub, on April 29, April 29 and June 16, 1997,
respectively.(10)
4.17 Form of Promissory Note issued to G & H Media, Ltd. on April 29, 1997.(10)
5.1 Opinion of Howard J. Kerker, P.C.(9)
10.1 1989 Long Term Incentive Plan(1)
10.2 Agreement of Settlement and Release, dated October 2, 1995, by and between Home Box
Office, Inc. and Odyssey(5)
10.3 Private Placement Memorandum used in connection with 1995 Private Placement (the
"1995 Private Placement Memorandum")(5)
10.4 Supplement to the 1995 Private Placement Memorandum(5)
10.5 Supplement No. 2 to the 1995 Private Placement Memorandum(5)
10.6 Supplement No. 3 to the 1995 Private Placement Memorandum(5)
10.7 Settlement Agreement, dated as of March 31, 1995, by and between the Company,
Odyssey, Global Intellicom, Inc., N. Norman Muller, Thomas W. Smith, David Mortman,
Robert Ferraro, the CECO Shareholders Committee, Lawrence Schneider, Robert E.
Miller, Henry Schneider, Robert Hesse, Shane O'Neil, Patrick Haynes, Russell T.
Stern, Jr., Thurston Group, Inc., The Insight Fund, L.P. and Lois Muller(3)
10.8 Memorandum of Agreement, dated as of August 24, 1995 between the Company and Multipix
Communications, Inc.(4)
10.9 Termination Agreement, dated as of January 2, 1996, between Regency International
Pictures, B.V. and Odyssey Distributors B.V.(6)
10.10 Employment Agreement dated October 1, 1995, between the Company and Stephen R.
Greenwald(6)
</TABLE>

<PAGE>

<TABLE>
<C> <S>
10.11 Employment Agreement dated October 1, 1995, between the Company and Lawrence I.
Schneider(6)
10.12 Employment Agreement dated October 1, 1995, between the Company and Ira N. Smith (6)
10.13 Agreement, dated March 6, 1996, between Communications and Entertainment Corp. and
its wholly-owned subsidiary, Odyssey Distributors, Ltd.(7)
10.14 Severance and Consulting Agreement, dated March 26, 1996, between the Company and
Shane O'Neil, and related modifying agreement dated March 28, 1996(7)
10.15 Management Agreement between the Company and Stephen R. Greenwald, dated March 6,
1996, superseding the Employment Agreement dated October 1, 1995(8)
10.16 Management Agreement between the Company and Lawrence I. Schneider, dated March 6,
1996, superseding the Employment Agreement dated October 1, 1995(8)
10.17 Management Agreement between the Company and Ira N. Smith, dated March 6, 1996,
superseding the Employment Agreement dated October 1, 1995(8)
10.18 Addendum to Management Agreements of Messrs. Schneider, Greenwald and Smith(8)
10.19 Joint Venture Letter between the Company and Film Bridge International, Inc., dated
March 11, 1996(8)
10.20 Lease for office premises at 1875 Century Park East, Suite 2130, Los Angeles,
California, dated May 9, 1996(8)
10.21 Agreement dated August 29, 1996, between the Company and Kinnevik Media Properties,
Ltd.(8)
10.22 Agreement dated September 6, 1996 between the Company and Mr. David Somerstein(8)
10.23 Settlement Agreement and Release between Paramount Pictures Corporation and Odyssey
Distributors, Ltd. (a wholly owned subsidiary of the Company), and Guarantee
Agreement of the Company, each dated as of September 26, 1996(9)
10.24 Form of Settlement Agreement with Generale Bank Nederland, N.V., dated as of December
18, 1996(9)
21.1 Subsidiaries of the Registrant(3)
23.1 Consent of Howard J. Kerker, P.C. (included in opinion filed as Exhibit 5.1).(9)
23.2 Consent of Price Waterhouse LLP(11)
</TABLE>