Finally back from Cannes and London. We ran into some technical difficulties which precluded us from sending any further updates while we were travelling.

This was our most productive Cannes in a number of years. While the market was slow with very few deals announced at Cannes, we were very busy. The biggest news from Cannes overall may well be that independent domestic films now must realize most of their revenue from domestic sales, rather than from international sales as had been the case previously.

Buyers are looking for quality and attractive elements that will help them sell a particular title in their territory, and most of the product available did not deliver the quality or the required elements, which include at least some recognizable cast members. Even those titles that were selling, and they were few and far between, were commanding far less sales figures than in previous years in what was truly a buyers market.

As a result, budgets have to be very low, or high enough to attract major talent. Those films that are produced in the middle ranges can find it difficult, if not impossible, to garner any sales. This continues to cause consolidation at both ends of the market, and while there may be a lot of titles still waiting to be sold, the demand for new content that meets the buyers requirements continues to rise, and this creates significant opportunity for companies like Camelot that are positioned to produce and deliver that content.

During Cannes, we met with buyers, distributors, financial entities and filmmakers from around the world. We had very productive co-production meetings with a number of countries where we plan to produce some of our slates. We have enlisted expert assistance from various territories who will be guiding us as we work through the various complex packaging, production, distribution and deliverable requirements that will allow us to commence production. While here in the US we continue to embrace the digital revolution, most foreign territories are moving a lot slower, making it more imperative than ever to fully understand what they need and how they want it delivered.

We have decided, based upon the result of our meetings in Cannes and London, to set up our first international production hub in the UK. We have begun the process of determining who will head up our operations in the UK. The UK has an established production infrastructure in place, which will allow us to move rapidly on our first European production slate.

Here in the US, we are continuing to move forward with plans for our first domestic production slate under Camelot Films. This slate is in addition to previously discussed features being produced under Camelot Features. We hope to be ready to announce where the slate will be produced following upcoming meetings with various states.

The process of identifying and securing intellectual properties continues. We had several meetings in Cannes with filmmakers which we hope will result in our being able to acquire several more projects this year. We also have identified several potential acquisitions of completed films and will be working with their respective sales agents going forward.

On the financing front, we are preparing our S-1 registration statement in anticipation of securing the funding necessary to complete our initial slates here in the US and in the UK. Along with our attorneys, accountants, auditors and advisers, we are looking at solutions to the current stock price issue and what structure will work best as we move forward. We are reviewing all suggestions that have been made and continue to be made as we continue to move forward in implementing our business model.

In both Cannes and London we had extensive meetings with two companies that we are currently negotiating to acquire. As a result of these meetings, we anticipate being able to make formal announcements in the near future. We will be meeting with our investment banking team in early June and hopefully we will come away from those meetings with deal structures that will work for both sides.