AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1999

REGISTRATION NUMBER 333-83217
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1

FORM SB-2
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

TEAM COMMUNICATIONS GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

CALIFORNIA 3652 95-5419215
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)

TEAM COMMUNICATIONS GROUP, INC.
12300 WILSHIRE BOULEVARD, SUITE 400
LOS ANGELES, CALIFORNIA 90025
(310) 442-3500
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES.)

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

COPIES TO:

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

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

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

CALCULATION OF REGISTRATION FEE

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- --------------------------------------------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------
Common Stock(1)................................. 1,206,541 $6.25 $7,540,881 $2,096.36
Common Stock (3)................................ 302,715 $6.25 $1,891,969 $0
Common Stock Underlying Warrants(3)............. 298,441 $6.25 $1,865,256 $0
Common Stock Underlying Warrants(3)............. 173,870 $6.25 $1,086,688 $0
Common Stock Underlying Warrants(3)............. 20,000 $6.25 $125,000 $0
Common Stock Underlying Warrants(2)............. 131,000 $6.25 $818,750 $227.61
Common Stock Underlying Warrants(2)............. 85,000 $6.25 $531,250 $147.69
Common Stock Underlying Warrants(2)............. 200,000 $6.25 $1,250,000 $347.50
Common Stock Underlying Warrants(3)............. 150,000 $7.43 $1,114,500 $0
Common Stock Underlying Convertible
Debentures(1)................................. 981,125 $6.25 $6,132,031 $1,704.70
-------------- ------------------- ------------------- --------------
TOTAL(4)........................................ 3,548,692 $22,356,324 $4,523.86
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(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee.
(2) Estimated pursuant to Rule 457(g) solely for the purpose of calculating the
registration fee.
(3) These shares of common stock were previously registered on Form SB-2
Registration Statement, File Number 333-26307. No filing fee is included
with respect to such shares.

(4) $4,523.86 was previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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2

3,548,692 SHARES

TEAM COMMUNICATIONS GROUP, INC.
COMMON STOCK

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

This prospectus relates to an aggregate of 3,548,692 shares of our common
stock which were previously issued to the shareholders listed in this prospectus
(the "Selling Shareholders"), or issuable to the Selling Shareholders pursuant
to convertible debentures (the "Debentures") or outstanding warrants (the "1999
Warrants") to purchase our common stock. Such shares of common stock are being
offered for the accounts of the Selling Shareholders on The NASDAQ SmallCap
Market at the then prevailing prices, or in negotiated transactions. We will not
receive any proceeds from the sale of the shares of common stock being
registered, but will receive the proceeds from the exercise of the Warrants.
This prospectus also covers 795,026 shares previously registered by us, 199,748
of which were issued pursuant to a convertible promissory note, 102,967 of which
were issued upon exercise of warrants, and 492,311 of which may be issued upon
the exercise of certain previously issued warrants (the "Prior Warrants"). The
1999 Warrants and the Prior Warrants are sometimes hereinafter referred to as
the "Warrants".

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

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 7.

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

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

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

The date of this prospectus is December , 1999.

PROSPECTUS SUMMARY

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

THE COMPANY

We develop, produce and distribute a variety of television programming,
including dramatic and reality-based series, specials and made-for-television
movies for exploitation in the domestic and international television markets. We
derive substantially all of our revenues from the exploitation of our originally
produced programs and product acquired from others.

Our production activities are focused on programming produced for United
States cable and network television channels such as The Discovery Channel, The
Family Channel, Showtime Networks and USA Network. We have received a firm
commitment, subject to certain financing considerations, from Discovery's Animal
Planet for the initial production of 13 one-hour drama episodes of "The Call of
the Wild," based on Jack London's classic novel. The series began production in
November 1999 with our Canadian production partner. Delivery is expected to take
place from December 1999 through February 2000. We are also developing and
producing "Destination: Style" for Discovery's Travel Channel, "Conversations
with Remarkable People" for the Wisdom Network (a new US basic cable network),
and "Robin Leach's Wildlife Styles." In March 1999, our co-production of 22
episodes of Total Recall 2070, a television series based on the hit movie "Total
Recall," began to air on Showtime Networks. We, along with Alliance Atlantis,
our co-financing partner, have extended the period of time pursuant to which
Showtime Networks must make a decision to order a second season. We are
currently negotiating with Alliance Atlantis to produce a second season either
for Showtime Networks, or directly for first run syndication.

We have also completed production of a series of 48 half-hour episodes
entitled "Amazing Tails," a reality based series focusing on extraordinary pets,
which has been financed in conjunction with Friskies Pet Foods, a division of
Nestles Food, and advertising leader The Interpublic Group of Companies. All
episodes of Amazing Tales have been produced and delivered, and the series is
currently airing on Discovery's Animal Planet. In addition, we co-developed and
co-produced a reality based five-day per week ("strip") syndicated series,
called "Strange Universe," with United/Chris-Craft television stations and
Rysher Entertainment. This series, which aired on United/Chris-Craft stations,
involved the production of 130 episodes over its two, thirteen week commitments.

We maintain a development and production department which develops and
produces movies-of-the-week, drama and reality-based series for exhibition on
network television, cable or ad hoc networks of independent stations which
sometimes form to air special programming. We also currently have distribution
rights to over 2,500 hours of family, dramatic and reality-based series and
specials, and films.

RECENT EVENTS AND OUTLOOK

On November 29, 1999, we completed the sale of 6,150,000 shares of our
common stock, 150,000 shares of which were sold by and for the account of a
selling shareholder, in an underwritten offering on the German Neuer Markt (the
"German Offering"). The German Offering was underwritten by Gontard & MetallBank
AG and a group of associated underwriters. The offering price was $6.21 per
share. The net proceeds to us were approximately $32,416,000 after deducting
underwriting fees and estimated offering expenses. Approximately $9,400,000 of
the net proceeds has been used to repay all of our outstanding indebtedness, net
any discounts. This prospectus also relates to the 6,150,000 shares of our
common stock sold in the German Offering.

We are currently in discussions with a number of distribution and
production companies regarding possible business combinations. As of October 1,
1999, we completed the purchase of Dandelion Distribution Ltd., a 20 year old
United Kingdom ("UK") based television production and distribution company, for
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$5,000,000 in cash and common stock. Dandelion Distribution Ltd., has over 2,000
hours of television programming in its library.

We continue to fulfill the increased demand for programming by implementing
our growth strategies, including strategic acquisitions of production and
distribution companies in the U.S. and Europe, acquisition of programming
libraries and development and production of our original television programming
for the domestic and international markets.

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

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THE OFFERING

SHARES OFFERED

Common Stock offered hereby... 3,548,692 shares

Common Stock to be outstanding
after the offering............ 13,456,264 shares(1)(2)(3)(4)

Use of Proceeds............... General corporate purposes, including working
capital(5). See "Use of Proceeds."
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(1) Assumes conversion of the Debentures and the exercise of the Warrants.

(2) Does not include any shares of common stock reserved for issuance under the
1999 Stock Option, Deferred Stock and Restricted Stock Plan.

(3) Includes 180,000 shares which have been issued, but not delivered, in
connection with the acquisition of the Film Libraries, Inc.'s library. See
"Business -- Distribution, Acquisitions and Significant Licenses."

(4) We will receive no proceeds from the sale of the common stock offered
hereby. We will receive $2,259,513 from the exercise of the Warrants, if all
the Warrants are exercised.

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SUMMARY OF FINANCIAL INFORMATION

FOR THE NINE MONTHS ENDED FOR THE FOR THE
----------------------------- YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
------------- ------------- ------------ ------------
(UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $13,273,300 $9,466,800 $13,581,900 $6,875,600
Cost of revenues............................................ 6,056,300 5,884,500 9,076,000 2,355,300
----------- ---------- ----------- ----------
Gross profit................................................ 7,217,000 3,582,300 4,505,900 4,520,300
General and administrative expenses......................... 3,771,700 2,234,100 3,274,000 3,244,900
----------- ---------- ----------- ----------
Net income from operations.................................. 3,445,300 1,348,200 1,231,900 1,275,400
Interest expense............................................ 477,900 768,400 902,600 1,040,100
Interest income............................................. 87,300 136,000 202,900 211,800
----------- ---------- ----------- ----------
Net income before income taxes.............................. 3,054,700 715,800 532,200 447,100
Provision for income taxes.................................. 1,149,900 60,500 57,500 --
Extraordinary loss from early extinguishment of debt........ 431,900 -- 69,500 --
----------- ---------- ----------- ----------
Net income.................................................. $ 1,472,900 $ 655,300 $ 405,200 $ 447,100
=========== ========== =========== ==========
Net income per common share basic(1)........................ $ .35 $ .43 $ .22 $ .40
=========== ========== =========== ==========
Weighted average number of shares outstanding basic(1)...... 4,198,176 1,506,672 1,833,340 1,131,344
=========== ========== =========== ==========
Net income per common share diluted(1)...................... $ .29 $ .30 $ .17 $ .25
=========== ========== =========== ==========
Weighted average number of shares outstanding diluted(1).... 4,986,711 2,197,128 2,434,017 1,821,800
=========== ========== =========== ==========

SEPTEMBER 30, 1999
-----------------------------------------------
AS FURTHER
ACTUAL AS ADJUSTED(2) ADJUSTED(3)
----------- -------------- --------------

BALANCE SHEET DATA:
Liquidity capital (deficit)(4).............................. $(1,137,500) $31,278,500 $33,538,013
Total assets................................................ 35,117,700 62,125,300 64,384,813
Notes payable............................................... 4,387,200 -- --
Line of credit.............................................. 697,000 -- --
Accrued interest............................................ 324,200 -- --
Retained earnings........................................... 1,293,500 1,293,500 1,293,500
Shareholders' equity........................................ 17,441,300 49,857,300 52,116,813

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

(2) The "As Adjusted" column reflects: (i) net proceeds of approximately
$32,416,000 from the German Offering; and (ii) the repayment of all
outstanding indebtedness.

(3) The "As Further Adjusted" column reflects the adjustments described in (2)
above and the use of the estimated net proceeds of $2,259,513 from the
exercise of the Warrants.

(4) Represents (i) cash and cash equivalents plus accounts receivables (net),
and the amount due from officer, less (ii) accounts payable, accrued
expenses and other liabilities, deferred revenue, accrued participations,
notes payable (due within one year), line of credit, and accrued interest.

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RISK FACTORS

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

GOING CONCERN ASSUMPTION.

Although in November 1999, we raised approximately $32,416,000 in the
German Offering and have approximately $31,278,500 in liquidity capital,
contained in the independent accountants' report included in our financial
statements for each of the fiscal years since our formation, and included in the
footnotes to the unaudited financial statements for the nine months ended
September 30, 1999, is an explanatory paragraph indicating that our financial
condition raises substantial doubt as to our ability to continue as a going
concern. There can be no assurance that future financial statements will not
include a similar explanatory paragraph if we are unable to raise enough money
or generate sufficient cash flow from operations to cover the cost of running
our business. The existence of such an explanatory paragraph may have a material
adverse effect on our relationship with third parties who are concerned about
our ability to complete projects that we are contractually required to develop
or produce, and could also negatively impact our ability to complete future
financings.

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

We were incorporated in February 1995, and have a limited operating
history. Although we have generated profitable operations during each of the
fiscal years ended December 31, 1998, 1997 and 1996, and for the nine months
ended September 30, 1999, we have experienced a negative cash flow from
operations during such periods. We can not assure you that we will continue to
be profitable in the foreseeable future or that we will be able to generate
positive cash flow from our operations. Our business plan is subject to all the
risks associated with starting a new business, including operating losses. In
addition, we will be subject to certain factors affecting the entertainment
industry generally, such as:

- sensitivity to general economic conditions;

- critical acceptance of our products; and

- intense competition.

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

LIQUIDITY DEFICIT.

As of September 30, 1999, we had retained earnings of $1,293,500 and a
liquidity deficit of ($1,137,500). Liquidity deficit is defined as:

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

- accounts payable, accrued expenses and other liabilities, deferred
revenue, accrued participations, notes payable (due within one year),
line of credit and accrued interest.

See "Risk Factors -- Need for additional capital, dilution and no assurance
of future financings," "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and Note
12 of Notes to Consolidated Financial Statements.

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

As of September 30, 1999, we had $10,936,700 in receivables. As of December
31, 1998, we had receivables of $4,736,700, of which $3,200,000 has been
collected as of September 30, 1999. Of our $10,936,700 in receivables,
approximately $9,100,000, or 83% is due within the next twelve months. To cover
the possibility that one or more of our customers could fail to pay monies due
to us, we currently maintain an allowance for doubtful accounts of approximately
$837,000. If we are required to make an additional allowance for these
receivables, our results of operations and financial condition in future periods
could be adversely affected.

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As of September 30, 1999, receivables from three customers represented
approximately 88% of our trade receivable balance. These customers are Stellar
Group (13%), Renown Pictures Ltd (26%), and String of Pearls PLC (49%). All of
these customers are current with respect to their obligations to us. Although
all of these entities are privately held companies, we believe that each of the
licensees are reasonable credit risks. However, the failure to pay the amounts
owed by any of these entities could lead to the write-off of the applicable
receivable. Such a write-off would have a material adverse impact on our
results.

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

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

To address our capital needs, on November 29, 1999 we completed the sale of
6,150,000 shares of our common stock, 150,000 shares of which were sold by and
for the account of a selling shareholder, in an underwritten offering on the
German Neuer Markt (the "German Offering"). The German Offering was underwritten
by Gontard & MetallBank AG and a group of associated underwriters. The offering
price was $6.21 per share. The net proceeds to us were approximately $32,416,000
after deducting underwriting fees and estimated offering expenses. Approximately
$9,400,000 of the net proceeds has been used to repay all of our outstanding
indebtedness, net of discounts, leaving us with a cash balance of approximately
$23 million. See "Management's Discussion and Analysis -- Liquidity and Capital
Resources" for a discussion of our prior debt.

In an effort to preserve cash resources, we have issued common stock and
warrants to financial consultants rather than hire internal staff. To the extent
option grants are below the current market price, we must record this as an
additional expense in our general and administrative expense, even though no
cost has been expended. These transactions are dilutive to existing
shareholders.

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

OUR DEPENDENCE ON EMERGING MARKETS AND ON FOREIGN SALES; FOREIGN EXCHANGE RISKS.

A considerable portion of our revenues are, and for the foreseeable future
will most likely be, derived from the sale or license of our products to
recently established U.S. broadcasters, cable networks and syndicators such as:

- The Discovery Channel;

- Discovery's Animal Planet;

- The Learning Channel;

- The Travel Channel;

- The Fox Family Channel;

- the WB Network; and

- Showtime Network.

In addition to these, a portion of our revenues are dependent on sales to
licensees and distributors in foreign markets, including South and Latin America
and, to an increasing extent, Europe. Collecting receivables from these
customers is subject to the risks associated with doing business with foreign
companies including rapid changes in the political and economic climates of such
countries and limitations on the transferability of monies out of such
countries. If we become involved in a long term dispute over how our

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product is being distributed in a foreign country, or are forced to initiate
collection activities to enforce the terms of a license or distribution
agreement, the profitability of any particular product may be adversely
effected.

As of September 30, 1999, substantially all of our receivables are trade
receivables from entities domiciled outside the U.S. These receivables, totaling
$10,936,700, represent 100% of all trade receivables and 31% of our total
assets. Any difficulty or delay in the collection of these receivables or any
write-off of such receivables could have a material adverse effect on our
financial condition or results of operations. See "Risk Factors -- Our reliance
on certain customers and our allowances for possible uncollectible receivables."
Changes in international economic conditions may impact our future sales and
collections.

Our international operations expose us to risks associated with currency
fluctuations. Insofar as our international revenues are denominated in foreign
currencies, an appreciation of the U.S. dollar relative to these foreign
currencies could adversely affect our results of operations. To the extent that
our international revenues are denominated in U.S. dollars, an appreciation of
the U.S. dollar increases the price of our products in foreign countries and may
cause our customers and potential customers difficulties in paying U.S. dollar
amounts due to us or may keep them from licensing our products.

The operating expenses of our subsidiaries Team Entertainment Germany GmbH
and Team Dandelion Ltd., will be incurred in Deutsche Marks and British Pounds,
respectively. The value of the Deutsche Mark is tied to the value of the Euro.
Appreciation of the Euro or the British Pound relative to the U.S. dollar could
adversely affect our results of operations. Even when foreign currency expenses
substantially offset revenues in the same currency, profits may be diminished
when reported in U.S. dollars. Due to the constantly changing currency exposures
and the volatility of currency exchange rates, we could experience currency
losses in the future, and we cannot predict the effect of the exchange rate
fluctuations upon our future results of operations. To date, we have not engaged
in any foreign exchange hedging transactions to limit our exposure to the above-
described risks. If any of the risks associated with international operations
materialize, our business, financial condition and results of operations could
be materially adversely impacted.

BUSINESS COMBINATIONS AND ACQUISITIONS.

We are currently in discussions with a number of distribution and
production companies regarding possible business combinations. No assurance can
be given that any such acquisitions will be consummated, even though we may
incur substantial costs related to such acquisitions. Even if such acquisitions
are consummated, there can be no assurance that we will manage to successfully
integrate and manage the acquired businesses.

As of October 1, 1999, we completed the purchase of Dandelion Distribution
Ltd., a UK based production and distribution company for $2,500,000 in cash and
386,847 shares of common stock. We may also be required to pay up to an
additional $250,000 if the shares of our common stock delivered as part of the
purchase price do not have a market value of at least $3,000,000 on October 1,
2001. See "Business -- Global Strategy." Even though the acquisition has been
completed, there can be no assurance that we will be successful in timely
integrating Dandelion into our operations or that they will remain profitable.
The failure to successfully integrate Dandelion or a lack of profitability of
Dandelion could have a material adverse impact on our financial condition and
results of operations.

On November 20, 1999, we entered into 3 agreements with Cologne o Gemini
Filmproduktion GmbH ("Gemini"). Under the first agreement, we have agreed,
subject to the satisfactory completion of due diligence and the execution of a
definitive agreement, to purchase 5 percent of Gemini for approximately
$1,365,000, with the right to purchase an additional 5 percent through December
21, 2000. The second agreement is for the establishment of a development
financing deal for the production of movies-of-the-week, miniseries and dramatic
series specifically designed for the international marketplace. The third
agreement is for the financing of a made-for-television movie entitled Twenty:
Thirteen. No assurance can be given that the transactions with Gemini will be
consummated or that if consummated that they will be profitable for us.

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COMPETITION.

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

- the rights to literary properties;

- the services of creative and technical personnel;

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

- favorable arrangements for the distribution of completed films and
television projects.

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

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

There can be no assurance that once we commit to produce a series which has
been licensed to a network, that the network will order and broadcast enough
episodes so that we can syndicate the series in the U.S. Typically, there needs
to be at least 65 episodes of a series produced in order to "strip" or syndicate
the series in the daily re-run market. Networks can generally cancel a series at
stated intervals and, accordingly, do not commit in advance to exhibit a series
for more than a limited period. If a series is canceled before the minimum
number of shows necessary to syndicate or "strip" have been produced, there is
the risk that the production costs of the project will not be fully recovered.
Similar risks apply for a series produced for a non-network medium. See
"Business -- Operations" for a discussion of the financing of series.

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

FLUCTUATIONS IN OPERATING RESULTS.

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

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

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expenses, and our margins will typically be higher. With respect to sales of our
own product, rather than recording a participation expense, we record as an
expense the amortization of our acquisition or production costs, which
amortization is typically recognized over several financial reporting periods.
Sales of older product owned by us, where acquisition or production costs may be
substantially or fully amortized, will have significantly higher margins than
initial sales on newer product where the sales potential of the product has not
been tested and we are incurring significant production costs.

DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS AND RISK OF INFRINGEMENT OF THIRD
PARTY INTELLECTUAL PROPERTY RIGHTS.

Our business depends upon the protection of the intellectual property
rights that we have to our film properties. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and exploit our products. Monitoring unauthorized use of our products is
difficult, and we cannot be certain that the steps we have taken will prevent
unauthorized use of our film properties, particularly in foreign countries where
the laws may not protect our proprietary rights as fully as in the U.S. and
Europe. If we cannot manage to obtain the copyrights of attractive film
properties, our business, financial condition and results of operations will be
adversely affected.

In recent years, there has been significant litigation in the U.S.
involving intellectual property rights. We may become party to litigation in the
future to protect our intellectual property rights or as a result of the alleged
infringement of other's intellectual property. These claims and any resulting
lawsuits could subject us to significant liability and invalidation of our
property rights. Such litigation could also force us to take measures harmful to
our operations, such as to stop selling certain products or to obtain a license
from the owner of infringed intellectual property. Any such infringement claims,
with or without merit, could be time-consuming to defend, result in costly
litigation, divert management's attention and materially adversely affect our
financial condition and results of operations.

THE SPECULATIVE NATURE OF THE ENTERTAINMENT BUSINESS.

Substantially all of our revenues are derived from the production and
distribution of television series and made-for-television movies. The
entertainment industry in general, and the development, production and
distribution of television programs, in particular, is highly speculative and
involves a substantial degree of risk. Since each project is an individual
artistic work and its commercial success is primarily determined by audience
reaction, which is volatile and unpredictable, there can be no assurance that
any entertainment property will make money. Even if a production is a critical
or artistic success, there is no assurance that it will be profitable. In
particular, to the extent that our product caters to the tastes of television
audiences in the U.S., our results may be affected by the inability to attract
audiences in our newly addressed markets, especially Europe. If we are unable to
attract productions which compete effectively in the global marketplace, our
financial condition and results of operations could be materially adversely
effected.

THE ABILITY TO MANAGE OUR GROWTH.

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

WE DEPEND ON OUR KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY.

Our success depends largely upon the skills, experience and performance of
our executive officers and key employees. Our founder and Chief Executive
Officer, Mr. Drew S. Levin, is of particular importance to our U.S. operations.
In addition, we have recently managed to retain certain key personnel in Germany
and the United Kingdom to oversee our European operations. If we lose one or
more of our key employees without

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finding appropriate replacements or if we fail to attract and retain highly
skilled personnel, our financial condition and results of operations could be
materially adversely effected.

CAPITALIZATION OF DEVELOPMENT AND PRODUCTION COSTS.

Included in our assets as of September 30, 1999 and December 31, 1998 are
television program costs of approximately $2,242,000 and $1,017,400,
respectively, which represent aggregate costs of projects for which we are
actively pursuing production commitments, but which have not been set for
principal photography. We intend, as required by accounting standards, to write
off the costs of all development projects when they are abandoned or, even if
still being developed, if they have not been set for principal photography
within three years of their initial development activity. In this regard we
wrote down our development costs in the series LoCoMoTioN by approximately
$450,000 in the second quarter of 1999.

Under generally accepted accounting principals, we are required to
capitalize the costs of production. The costs of production are amortized over
the estimated revenue life of the product. Therefore, the success of our
programming, and the aggregate amount of sales with respect thereto, will affect
the amortization rate applicable to such productions. If our actual results are
less than projected, management will be required to revise sales estimates
downward, and accelerate the amortization of capitalized production costs.

PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS.

Certain provisions of our Articles of Incorporation and Bylaws and certain
other contractual provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire control of us. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of our common stock.
Certain of these provisions allow us to issue preferred stock with rights senior
to those of the common stock without any further vote or action by the
shareholders, and impose various procedural and other requirements which could
make it more difficult for shareholders to affect certain corporate actions.
These provisions could also have the effect of delaying or preventing a change
in control. The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to the holders of our common
stock or could adversely affect the rights and powers, including voting rights,
of the holders of our common stock. Such issuance could have the effect of
decreasing the market price of our common stock.

VOLATILITY OF SHARE PRICE; LACK OF ACTIVE TRADING MARKET.

Our common stock has been listed on The NASDAQ SmallCap Market since July
29, 1998 and on the Frankfurt Stock Exchange's Neuer Markt since November 29,
1999.

The market prices for securities of companies with limited operating
history, including us, have historically been highly volatile both on The NASDAQ
SmallCap Market and the Frankfurt Stock Exchange's Neuer Markt. Significant
volatility in the market price of our common stock may arise due to factors such
as:

- our developing business;

- a continued negative cash flow;

- relatively low price per share;

- relatively low public float;

- variations in quarterly operating results;

- general trends in the entertainment industry;

- the number of holders of our common stock; and

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

As long as there is only a limited public market for our common stock, the
sale of a significant number of shares of our common stock at any particular
time could be difficult to achieve at the market prices prevailing

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immediately before such shares are offered, and could cause a severe decline in
the price of our common stock.

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

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

SHARES ELIGIBLE FOR ADDITIONAL SALE AND EXERCISE OF REGISTRATION RIGHTS.

Sale of substantial amounts of our common stock, the issuance of
substantial amounts of warrants and options granting the right to receive shares
of our common stock or the prospect of such sales or issuances, respectively,
could materially adversely affect the market price of our common stock. With the
completion of the German Offering, we have outstanding approximately 12,979,138
shares of common stock, and approximately 3,117,384 shares of common stock are
issuable upon exercise of outstanding warrants and options. Of these shares,
approximately 1,921,304 shares are restricted shares under the Securities Act of
1933. We filed a registration statement on Form S-8 under the Securities Act of
1933 to register the sale of approximately 1,100,000 shares of our common stock
reserved for issuance under our 1999 Stock Option, Deferred Stock and Restricted
Stock Plan. Shares of our common stock issued upon exercise of options are
available for sale in the public market, subject in some cases to volume and
other limitations.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements relate to future events or our future financial
performance. We use words such as "may," "will," "should," "estimates,"
"predicts," "anticipates," "believes," "plans," "expects," "future," "intends,"
"potential" and similar expressions to identify forward-looking statements.
These statements are only predictions. Actual events or results may differ
materially. In evaluating these statements, you should specifically consider
various factors, including the risks described above and in other parts of this
prospectus.

Although we believe that the expectations reflecting the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. In
addition, these forward-looking statements apply only as of the date of this
prospectus. We are under no duty to update any of the forward-looking statements
after the date of this prospectus or to conform such statements to actual
results or to changes in our expectations.

USE OF PROCEEDS

We will not receive any portion of the proceeds from the sale of common
stock to be sold in this offering. We may receive net proceeds of up to
approximately $2,259,513 from the exercise of the Warrants. Management currently
anticipates that any such proceeds will be utilized for working capital and for
other general corporate purposes.

DIVIDEND POLICY

We have never declared or paid cash dividends. We intend to retain and use
any future earnings for the development and expansion of our business and do not
anticipate paying any cash dividends in the foreseeable future.

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SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated statement of operations data for the years ended
December 31, 1998, December 31, 1997 and December 31, 1996 are derived from our
Consolidated Financial Statements included elsewhere in this prospectus that
have been audited by Stonefield Josephson, Inc., as indicated in their
respective reports which are also included elsewhere in this prospectus. The
selected consolidated financial data for the nine months ended September 30,
1999 and 1998 have been derived from the unaudited consolidated financial
statements of the Company, included elsewhere in this prospectus, which, in the
opinion of management, have been prepared on the same basis as the audited
financial statements and includes all normal and required adjustments necessary
for fair presentation. The results for the nine months ended September 30, 1999
are not necessarily indicative of future results. Such selected consolidated
financial data should be read in conjunction with those Consolidated Financial
Statements and the Notes thereto.

FOR THE NINE MONTHS ENDED FOR THE FOR THE
------------------------------ YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
------------- -------------- ------------ ------------
(UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Revenues............................................... $13,273,300 $9,466,800 $13,581,900 $6,875,600
Cost of revenues....................................... 6,056,300 5,884,500 9,076,000 2,355,300
----------- ---------- ----------- ----------
Gross profit........................................... 7,217,000 3,582,300 4,505,900 4,520,300
General and administrative expenses.................... 3,771,700 2,234,100 3,274,000 3,244,900
----------- ---------- ----------- ----------
Net income from operations............................. 3,445,300 1,348,200 1,231,900 1,275,400
Interest expense....................................... 477,900 768,400 902,600 1,040,100
Interest income........................................ 87,300 136,000 202,900 211,800
----------- ---------- ----------- ----------
Net income before income taxes......................... 3,054,700 715,800 532,200 447,100
Provision for income taxes............................. 1,149,900 60,500 57,500 --
Extraordinary loss from early extinguishment of debt... 431,900 -- 69,500 --
----------- ---------- ----------- ----------
Net income............................................. $ 1,472,900 $ 655,300 $ 405,200 $ 447,100
=========== ========== =========== ==========
Net income per common share basic(1)................... $ .35 $ .43 $ .22 $ .40
=========== ========== =========== ==========
Weighted average number of shares outstanding
basic(1)............................................. 4,198,176 1,506,672 1,833,340 1,131,344
=========== ========== =========== ==========
Net income per common share diluted(1)................. $ .29 $ .30 $ .17 $ .25
=========== ========== =========== ==========
Weighted average number of shares outstanding
diluted(1)........................................... 4,986,711 2,197,128 2,434,017 1,821,800
=========== ========== =========== ==========

SEPTEMBER 30, 1999
-----------------------------------------------
AS FURTHER
ACTUAL AS ADJUSTED(2) ADJUSTED(3)
----------- -------------- --------------

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

(2) The "As Adjusted" column reflects: (i) net proceeds of approximately
$32,416,000 from the German Offering; and (ii) the repayment of all
outstanding indebtedness.

(3) The "As Further Adjusted" column reflects the adjustments described in (2)
above and the use of the estimated net proceeds of $2,259,513 from the
exercise of the Warrants.

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

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

OVERVIEW

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

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

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

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

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

Our trade receivables historically increase as revenue increases. We, in
accordance with SFAS No. 5, record an allowance for doubtful accounts based, in
part, on historical bad debt experience. In 1999, we have recorded $500,000 as a
provision for an allowance for doubtful accounts. In 1998, the Company recorded
$664,000 as a provision for an allowance for doubtful accounts. In 1997, the
Company recorded $1,115,600 as a provision for an allowance for doubtful
accounts. Typically, when we make a sale of a product, the purchaser of such
product agrees to a payment schedule, usually based upon a time table which is
either tied to

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

RESULTS OF OPERATIONS

The nine months ended September 30, 1999 versus the nine months ended
September 30, 1998.

For the nine months ended September 30, 1999, the Company reported net
income of approximately $1,472,900 on total revenues of approximately
$13,273,300 compared to net income of approximately $655,300 on total revenues
of approximately $9,466,800 for the same period ended September 30, 1998.
Revenue increased by 40 percent or $3,806,500 for the nine months ended
September 30, 1999 compared to 1998, primarily due to the sales of certain
broadcast rights of a library of twenty movie-of-the-week titles which the
Company acquired in June 1999.

Cost relating to revenues was $6,056,300 for the nine months ended
September 30, 1999 as compared to $5,884,500 for the nine months ended September
30, 1998. The costs relate to amortization of production or acquisition costs of
television programming for which revenue was recognized during the period. Gross
profit margin on sales of television programming for the nine months ended
September 30, 1999 was 54 percent compared to 38 percent for the same period in
1998. Included in cost of sales for 1999 is a charge of approximately $450,000
as the Company wrote off development costs incurred on a project which has been
in development since 1995. The higher gross profit margin for the nine months
ended September 30, 1999 was due to the Company selling television programming
acquired by the Company at attractive rates as opposed to selling programming
owned and produced by the Company in the nine months ended September 30, 1998.

General and administrative expenses were $3,771,700 for the nine months
ended September 30, 1999, as compared to $2,234,100 for the nine months ended
September 30, 1998. The $3,771,700 excludes $1,740,700 in general and
administrative expense that was capitalized to television programming costs, as
an allocation of costs related to production, in accordance with SFAS No. 53.
The increase in general and administrative expenses, prior to capitalizing
certain expenses, are a result of an increase in expenses for staff, primarily
for the Company's increased activities in production and development, an
increase in the accounts receivable allowance for doubtful accounts and certain
litigation costs. Also included in such costs are expenses associated with the
issuance of securities to financial consultants for services. The Company
believes that payments with these securities issuances are justifiable even
though dilutive to current shareholders as opposed to cash outlays.

Interest expense was $477,900 for the nine months ended September 30, 1999
as compared to $768,400 for the nine months ended September 30, 1998. The
decrease is due to the retirement of debt.

Receivables at September 30, 1999 were $10,936,700, all of which are from
entities domiciled outside the U.S. These receivables represent approximately 31
percent of the total assets of the Company. At September 30, 1999, 3 receivables
represented approximately 88 percent of our accounts receivable balance. As a
consequence of the Company's October 1999 acquisition of Dandelion Distribution
Ltd. (Dandelion), certain receivables resulting from sales made prior to the
acquisition are now considered due from related parties for financial reporting
purposes. In June 1999 the Company entered into a five year license agreement
for certain territories including the UK of 20 made-for-television movies with
Renown Pictures, Ltd., a UK company owned by Noel Cronin, formerly the owner of
Dandelion. At September 30, 1999 the receivable due from Renown was $2,900,000.
Subsequent to such date the Company received a payment of $725,000 per the terms
of the agreement. Noel Cronin is also a director of String of Pearls Plc. In
September 1999, the Company entered into a 10 year license agreement for certain
European territories including Germany, France and Italy, of 20
made-for-television movies with String of Pearls Plc. At September 30, 1999, the
receivable due from String of Pearls Plc was $5,375,000. Subsequent to such date
the Company received a payment of $290,000 per the terms of agreement. Noel
Cronin has personally guaranteed the obligation of String of Pearls. See "Risk
Factors -- Our reliance on certain customers and our allowance for possible
uncollectible
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17

receivable" and "Certain Relationships and Related Transactions." We have
established $837,000 as an allowance for doubtful accounts as of September 30,
1999. We believe the allowance for doubtful accounts is adequate and we have
adequate resources to collect our trade receivables.

Year ended December 31, 1998 versus year ended December 31, 1997.

Revenues for the year ended December 31, 1998 of $13,581,900 were comprised
of approximately $6,672,700 on sales and availability for Total Recall 2070
produced by us and Alliance Atlantis, approximately $2,755,300 for the sale of a
movie-of-the-week produced by us, "Earthquake in New York" to Fox Family
Channel, approximately $1,527,900 on sales for our reality based series "Amazing
Tails," approximately $882,000 on sales of satellite rights of the Australian
television series "Water Rats," and approximately $1,744,000 on sales of other
library product acquired by us. For the year ended December 31, 1998,
approximately 26 percent of revenues were attributable to sales to customers
outside North America, i.e. United States and Canada. Revenues of $6,875,600 for
the year ended December 31, 1997, were comprised of approximately $1,975,500 on
sales of our reality based series "Amazing Tails," approximately $1,250,000 on
sales of "Water Rats," approximately $2,460,000 on sales of movies acquired by
us and approximately $1,190,100 on sales of other reality based programming
acquired by us. For the year ended December 31, 1997, approximately 80 percent
of revenues were attributable to sales to customers outside North America.
Within the foreign market, allocations among the four principal geographic
regions in which we do business, Europe, Asia and Australia, South America and
Africa, vary from period to period. The variations in revenues relate to the
type of product being offered, as well as local economic trends and conditions,
and the emergence of multiple broadcasting channels in the applicable territory.
See Note 9 to the Consolidated Financial Statements for a breakdown of the
geographic distribution of sales of our product.

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

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

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

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

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

All $4,736,700 included in receivables as of December 31, 1998, are due
from entities domiciled outside the United States. These receivables represent
approximately 28 percent of our total assets. We have established $337,000 as an
allowance for doubtful accounts as of December 31, 1998. We believe the
allowance for doubtful accounts is adequate and we have adequate resources to
collect our trade receivables.
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18

LIQUIDITY AND CAPITAL RESOURCES

The entertainment industry is highly capital intensive. As of September 30,
1999, we had retained earnings of $1,293,500 and a liquidity deficit of
($1,137,500). Liquidity deficit is defined as:

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

- accounts payable, accrued expenses and other liabilities, deferred
revenue, accrued participations, notes payable (due within one year),
line of credit and accrued interest.

We continue to finance our operations from our own sales and production
activities, notes payables, lines of credit and loans from our shareholders.
Despite our public offering on July 29, 1998, our operations have been hurt by
ongoing capital shortages caused by a slowness in collecting receivables and the
inability to complete a long term banking relationship. Prior to the completion
of the German Offering we addressed our short term financing needs by raising
approximately $12,250,000 since July 1999. This amount includes:

- $350,000 pursuant to the sale to 3 investors of 12% debentures and
warrants to purchase up to 35,000 shares of our common stock;

- $1,200,000 pursuant to a secured loan from VMR;

- $4,000,000 pursuant to a loan from Hudson Investors, LLC, which matures
on November 30, 2002 and accrues interest at the rate of 12% per year.
Hudson Investors, LLC has the right to convert any outstanding balance on
its promissory note into equity after November 30, 1999. Hudson
Investors, LLC also received 340,000 warrants as part of the financing.
From the Hudson Investors, LLC loan, VMR was repaid $1,000,000 of its
loan; and

- $6,000,000 from Gontard & MetallBank AG, $2,000,000 from the sale of
500,000 shares of our common stock and $4,000,000 pursuant to a loan that
matures on the earlier of the completion of the German Offering or
December 31, 1999 and accrues interest at 10% per year. $2,500,000 of
these proceeds was used to fund the cash portion of the acquisition of
Dandelion and $200,000 was used to repay the remaining balance of the VMR
loan; and

- $700,000 from the sale of 175,000 shares of our common stock to Arbora
Vermogensverwaltungen AG, an existing shareholder.

On November 29, 1999, we completed the sale of 6,150,000 shares of our
common stock, 150,000 shares of which were sold by and for the account of a
selling shareholder, in the German Offering. The German Offering was
underwritten by Gontard & MetallBank AG and a group of associated underwriters.
The offering price was $6.21 per share. The net proceeds to us were
approximately $32,416,000 after deducting underwriting fees and estimated
offering expenses. Approximately $9,400,000 of the net proceeds has been used to
repay all of our outstanding indebtedness, net of discounts, leaving us with a
cash balance of approximately $23 million.

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

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19

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," effective for fiscal year beginning after
June 15, 2000. We anticipate that due to our limited use of derivative
instruments, the adoption of SFAS No. 133 will not have a material effect on our
financial statements.

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

YEAR 2000 COMPLIANCE

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

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BUSINESS

OVERVIEW

OUR HISTORY

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

Our production activities have focused on (i) programming produced for U.S.
cable and network television channels such as The Discovery Channel, The Family
Channel, Showtime Networks and USA Network, and (ii) "how-to" instructional
series, such as "Simply Style," a 60-episode series which debuted during the
third quarter of 1995 on The Learning Channel. We have received a firm
commitment, subject to certain financing considerations, from Discovery's Animal
Planet for the initial production of 13 one-hour drama episodes of "The Call of
the Wild," based on Jack London's classic novel. The series began production in
November 1999 with our Canadian production partner. Delivery is expected to take
place from December 1999 through February 2000. We are also developing and
producing "Destination Style" for Discovery's Travel Channel, "Conversations
With Remarkable People" for the Wisdom Network (a new U.S. basic cable network),
and "Robin Leach's Wildlife Styles," which we have agreed in principal to be
produced with Canada's Microtainment Productions.

In March 1999 our co-production of 22 episodes of a television series based
on the hit movie "Total Recall" (Total Recall 2070) began to air on Showtime
Networks. We, along with Alliance Atlantis, our co-financing partner, have
extended the period of time pursuant to which Showtime must make a decision to
order a second season. The Company is currently negotiating with Alliance
Atlantis to produce a second season for Showtime or first run syndication.

In addition, we co-developed and co-produced a reality-based five-day per
week ("strip") syndicated series, called "Strange Universe," with
United/Chris-Craft television stations and Rysher Entertainment. This series,
which aired on United/Chris-Craft stations, involved the production of 130
episodes over its two, thirteen week commitments. We have also completed
production of a series of 48 half-hour episodes entitled "Amazing Tails," a
reality-based series focusing on extraordinary pets, which has been financed in
conjunction with Friskies Pet Foods, a division of Nestles Food, and advertising
leader The Interpublic Group of Companies. All episodes of Amazing Tales have
been produced and delivered, and the series is currently airing on Discovery's
Animal Planet.

We maintain a development and production department which produces
movies-of-the-week, drama and reality-based series for exhibition on network
television, cable or ad hoc networks of independent stations in the U.S. market
which sometimes form to air series and special programming. This latter process
is known as "syndication." We also maintain an international sales force and
currently have distribution rights to over 2,500 hours of family, dramatic and
reality-based series and specials, and films. We are also developing a wide
variety of original family, dramatic, reality-based and children's programming.

GLOBAL STRATEGY

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

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

The European marketplace currently represents a substantial portion of our
total revenue. In the next 5 years, we anticipate this percentage to increase.
To fully capitalize on this rapidly expanding market, we have plans to grow
through internally generated development and production, international
co-productions, acquisitions and strategic investments and the establishment of
fully staffed European operations. We have agreed with the underwriters of the
German Offering that we will use a minimum of 40 percent of the net proceeds
from the German Offering to expand our European operations.

We have started a new company in Germany, Team Entertainment Germany GmbH.,
based in Munich, and have already funded it with $230,000. We anticipate another
$800,000 will be spent in the next 12 months for start-up expenses and the
securing of the personnel to manage it. Team Entertainment Germany GmbH., will
develop formats, as well as produce programming for both German speaking
territories and the rest of the world.

We also have plans to use Team Entertainment Germany GmbH., to acquire
other German production and distribution companies, and to partner with
established companies for original German language co-productions.

In furtherance of our European strategy, on October 1, 1999 we completed
the acquisition of Dandelion Distribution Ltd., for the sum of $2,500,000 in
cash and 386,847 shares of our common stock. We may also be required to pay up
to an additional $250,000 if the shares of our common stock delivered as part of
the purchase price do not have a market value of at least $3,000,000 on October
1, 2001. This London based production and distribution company, formed over 20
years ago, has a library in excess of 2,000 hours of programming. Noel Cronin,
the founder and Managing Director of Dandelion, will remain as Managing Director
of the newly renamed entity, Team Dandelion, Ltd.

Team Dandelion Ltd., will further strengthen our presence in the
international media arena, and provide us with a solid foundation to create
European community content programming and co-production opportunities. In
addition, Team Dandelion, Ltd. will serve as the base for all European sales
except those in German speaking territories.

On November 19, 1999, we entered into a letter of intent with Cologne o
Gemini Filmproduktion GmbH ("Gemini") to purchase, subject to completing due
diligence and the execution of a definitive agreement, 5 percent of the issued
and outstanding shares of Gemini. The purchase price of $2,500,000 Deutsche
Marks (approximately $1,365,000), and is payable one-half upon execution of the
long form acquisition agreement and one-half upon receipt by us of the shares we
are purchasing. We will also have an option, through December 21, 2000, to
purchase an additional 5 percent of the then issued and outstanding shares of
Gemini.

We have also entered into a separate venture with Gemini regarding the
financing of a made-for-television movie called Twenty: Thirteen. The budget
shall be no less than $2,000,000, with our contribution being $300,00, for which
we shall receive 15 percent of the profits in perpetuity. 50 percent of our
contribution is due and payable on or before December 15, 1999, with the
remaining 50 percent due and payable on or before January 10, 2000.

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

OPERATIONS

We currently have three principal operating groups: (i) development and
production; (ii) distribution; and (iii) licensing and merchandising.

PRODUCTION

The production of television programming involves:

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

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

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

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

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

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

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

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may invest amounts in excess of U.S. license fees in order to gain a global
audience acceptance for the series and to enhance the potential value of future
syndication rights.

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

We acquired the rights to produce a weekly dramatic television series based
on the motion picture "Total Recall," which generated over $320 million in
world-wide box office receipts in 1990. We entered into an agreement with
Alliance Atlantis, a leading Canadian production company, pursuant to which
Alliance Atlantis co-produced and co-financed the initial 22 episodes of the
series with us. The German rights have been licensed by Pro-Sieben, who is
acting as a co-producer of the series. We also entered into an agreement with
PolyGram Television (which was subsequently sold to Universal Pictures),
pursuant to which PolyGram co-financed and acquired U.S. television distribution
rights to the series. The agreement with PolyGram includes a 22 episode
commitment in exchange for a license fee and a percentage of the net profits of
the series. PolyGram sold the series, entitled Total Recall 2070, to the U.S.
pay television network, Showtime Network, where it debuted in March 1999. "First
run" domestic syndication is being handled by PolyGram for airing to begin in
January 2000. Miramax, which acquired the theatrical sequel rights to "Total
Recall," has also acquired worldwide (other than Canada, Japan and Spain) home
video rights to the series from us.

We, together with Alliance Atlantis, have agreed to extend the date
pursuant to which Showtime must elect to proceed with a second season, and are
currently providing interim financing so as to reserve production facilities and
retain the services of the appropriate actors. A second season is desirable as
Universal has sold 44 episodes (which would include a second season) in over 80%
of the U.S. television markets. No assurance can be given, however, that we will
be able to obtain financing for the second season, or if the decision is made to
proceed, that we will be able to hold the creative elements in place to
effectuate a second season. Moreover, if a second season is commenced, it will
not likely have a material impact on the Company's financial results for fiscal
1999. By co-producing the series with Alliance Atlantis, the series qualifies
for certain Canadian co-production and tax benefits. The proceeds from all
distribution of the series, after recoupment of production costs, will be
allocated 40% to us and 60% to Alliance. As part of the co-production agreement,
we are to assign our license agreements to the co-production and pay over to the
production account all deposits we have received to date.

We have also entered into agreements with the Fox Family Channel in the
U.S. for the production of two movies-of-the-week. The first, Earthquake in New
York is a story about an earthquake in New York City. The production was
financed by the Fox Family Channel. We have received our executive producing
fee. Earthquake in New York aired on the Fox Family Channel in October 1998, and
on ARD in Germany after that date. The second movie-of-the-week, Down Fall, is
about an avalanche at an exclusive ski resort. The script for Down Fall which
has already been written, was paid for by the Fox Family Channel. No additional
funds have been advanced by the Fox Family Channel for the Down Fall production
as of this date, although we expect this to occur by the end of 1999 so that
production can be completed for an early 2000 U.S. air date.

We have received a firm commitment from Discovery's Animal Planet for the
initial production of 13 one-hour episodes of The Call of the Wild, based on
Jack London's classic novel. The series began

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production in November 1999 with our Canadian production partner. We have agreed
to guaranty $1,000,000 of interim financing from a third party investor relative
to this financing, and the Company has received a commitment from Imperial Bank
for the permanent financing. Delivery of the series is expected to take place
from December 1999 through February 2000. The Company has entered into a letter
of intent with Scanbox Asia Pacific Limited ("Scanbox") pursuant to which
Scanbox has agreed to a distribution guarantee of $310,000 per episode in
exchange for distribution rights outside the U.S. The agreement is subject to
numerous conditions, and no assurance can be given that the Scanbox transaction
will be effected.

LIVE ACTION AND ANIMATED CHILDREN'S PROGRAMMING. To take advantage of what
we believe is a significant television market for children's programming, we
intend to develop and produce inventive and original shows, including both
animated series and live-action series.

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

We have an extensive slate of reality-based series which are currently
being sold in the international marketplace. Such programs include Strange
Universe, a 130 half-hour five day per week ("strip") syndicated series which
was produced in association with United/Chris-Craft television stations and
Rysher Entertainment. Amazing Tails, a weekly series of 48 half hours featuring
people and their pets, was initially financed by a presale for approximately
$1,441,700 to Interpublic for domestic distribution and broadcast.

We have sold, and are currently in production on, 26 half-hours of
Destination: Style, to Discovery's Travel Channel. Destination: Style offers a
cinema verite look at today's most exotic faces in the world's most exotic
places. From the runway show to the seductive magazine spread, each episode
takes a behind-the-scenes peek at some of today's most recognizable and
desirable international models, including a personal look at their emotions, how
they cope with the locales, the elements, the time clock, how they rest and how
they play. The series debuted in mid-October. Destination: Style is being
produced in association with Big Daddy Productions.

Additionally, we are producing for the Wisdom Network, on a per show basis,
Conversations with Remarkable People. Two one-hour primetime specials, one
featuring Father Thomas Keeting and the other Quincy Jones, have been completed.
A third primetime special with former Texas Governor Anne Richards is in
pre-production and will be completed by year-end.

We have an agreement in principle with Canada's Microtainment Productions,
to act as a co-producer with us, of 26 episodes of a series entitled Robin
Leach's Wildlife Styles. The primetime magazine focuses on the drama, mystery
and majesty of the animal kingdom. Robin Leach's Wildlife Styles travels the
world with well known celebrities bringing animal-loving viewers the most
dramatic, amazing and hilarious wildlife styles ever seen on television. The
series begins production shortly and is scheduled to broadcast worldwide by
spring of 2000.

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

DISTRIBUTION, ACQUISITIONS AND SIGNIFICANT LICENSES

An active part of our business is the presentation of our own product as
well as product acquired from third-party producers to the international
marketplace. Our current library includes over 2,500 hours of family, dramatic,
reality-based series and specials and films. With the rapid increase of networks
and channels, there

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is an expanding demand for top-quality programming. To access these markets, our
distribution personnel attend such major international trade shows as MIPCOM-TV,
MIP-TV and NATPE.

On June 25, 1999, we purchased from Film Libraries, Inc., a library of 28
made-for-television movies for a total purchase price of $2,200,000, $1,200,000
payable in cash and $1,000,000 payable in our common stock. Of the purchase
price, $200,000 in cash and $100,000 in our common stock are payable to 2
individuals as commissions.

As of the date hereof, the Company has accepted 20 of the 28 titles. Eight
of the titles have delivery deficiencies which have not yet been cured. The
Company is negotiating with the seller regarding a reduction of the purchase
price if these rights are ultimately undeliverable. If the price is reduced,
either the cash or common stock portion, or both, may be adjusted. As of the
date hereof, the Company has paid approximately $1,100,000 in respect of the
cash portion of the purchase price, and has issued but not yet delivered the
180,000 shares of our common stock which comprise the stock portion of the
purchase price.

On August 2, 1999, we purchased from DD Video, the worldwide rights outside
the UK of a library of approximately 11 television series (from 2 to 38 episodes
each) and 20 one hour documentary specials. The purchase price was $3,400,000;
$1,187,500 of which has been paid; $737,500 which is due by December 15, 1999;
$737,500 which is due by March 15, 2000 and $737,500 which is due by June 15,
2000.

We have acquired the rights for distribution in all Latin American
countries, including Mexico and Puerto Rico, of the one hour dramatic series
Water Rats, a high suspense police action drama set in Sydney, Australia (116
episodes delivered for the first four seasons), and the one hour dramatic series
Cover Story,which takes place on the set of a television entertainment magazine
program (26 episodes delivered). These shows were acquired from the Australian
production company Southern Star. To date, we have cumulative sales of
approximately $700,000 for Mexican broadcast television and pan-Latin American
satellite broadcast television with the majority of terrestrial broadcast rights
remaining available for sale.

We have also acquired Latin American home video and television distribution
rights to 78 hours of dramatic films from Beyond Distribution PTY Ltd., a
leading Australian production company. See "Business -- Legal Proceedings" for a
discussion regarding a lawsuit which has been filed by Beyond.

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

The acquisition of Dandelion Distribution Ltd., will enhance our
distribution capacity in England and Europe and enables us to offer over 2,500
hours of programming.

On June 28, 1999, we entered into a five year license for 20 of the
made-for-television-movies with Renown Pictures, Ltd., a UK based company. For
the license, we will receive $3,300,000, $400,000 of which was received in
August 1999 and $725,000 of which was received in October 1999, with the balance
due in three equal payments of $725,000 each on December 30, 1999, March 30,
2000 and June 30, 2000. See "Certain Relationships and Related Transactions" for
a discussion of the impact of the acquisition of Dandelion Distribution Ltd., on
the receivable from Renown Pictures, Ltd.

In September 1999, the Company entered into a 10 year license agreement for
certain European territories including Germany, France and Italy, of 20
made-for-television movies with String of Pearls Plc. At September 30, 1999, the
receivable due from String of Pearls Plc was $5,375,000. Subsequent to such date
the Company received a payment of $290,000 per the terms of agreement. Noel
Cronin, a shareholder of the Company, has personally guaranteed the payment of
the receivable from String of Pearls.

As of November 15, 1999, we also agreed to purchase worldwide distribution
rights (exclusive of the United Kingdom, France, Scandinavia, South Africa,
Spain and Benelux) from String of Pearls PLC, to six feature films for a
purchase price of $3,360,000. We will pay $336,000 on or about November 20, 1999
with 10 consecutive monthly payments of $280,000 commencing December 20, 1999
and a final payment of $229,000 by October 20, 2000. The term for the
acquisition is through October 31, 2009. To the extent that String of

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Pearls Plc fails to pay any amounts owed to us, we have the right to offset
against amounts owed to String of Pearls Plc.

LICENSING AND MERCHANDISING

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

COMPETITION

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

EMPLOYEES

We currently employ, including our newly acquired and formed European
operations, 19 full-time employees, eight of whom are members of senior
management. From time to time, as projects go into production, temporary
employees are also employed by us.

DIVIDENDS

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

DESCRIPTION OF PROPERTY

We currently lease office space at 12300 Wilshire Boulevard, Los Angeles,
California from an unaffiliated third party, pursuant to a 36 month lease that
began on May 15, 1995 and was extended for an additional 12 months. The lease
terminated on May 14, 1999; however, we continue to rent the space, which is
approximately 4,700 square feet, on a month to month basis, at a monthly rate of
$2.35 per square foot.

As of November 3, 1999, we have entered into a lease for approximately
11,000 square feet of office space at 11818 Wilshire Blvd., Los Angeles,
California from an unaffiliated third party. The lease is for a period of five
years which will commence upon the earlier of our occupancy of the premises or
February 15, 2000. The rent is initially $2.85 per square foot; gradually
increasing to $3.21 per square foot in the fifth lease year. It is estimated
that the cost of the build out for the new space will be approximately $800,000,
of which

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approximately 40 percent will be paid by the landlord. We believe that this new
office space will be adequate for our requirements over the term of the lease.
Additional space if necessary for growth or short term productions is available
throughout the Los Angeles area at commercially reasonable rates.

LEGAL PROCEEDINGS

In January 1999, we were served with a complaint in a matter styled Mel
Giniger & Associates vs. Team Communications Group, Inc. et al filed in the
Superior Court of the County of Los Angeles. In the complaint, the Plaintiff, an
individual who served as a sales agent for us, alleges that he is owed
commissions for sales of certain of our programming and that we have failed to
pay in full the amounts Plaintiff alleges are owed to him. The complaint seeks
damages for breach of contract, services rendered, account stated and for
payment of value for services rendered. We have filed an answer in this action,
and intend to vigorously defend ourselves. The Plaintiff recently obtained a
writ of attachment in the amount of $100,000 and we have posted a bond with the
Superior Court of the County of Los Angeles with respect to this obligation.

On October 24, 1999, the Company was served with a complaint from Beyond
Entertainment, the licensee of Water Rats Seasons I and II. The complaint, which
seeks an accounting and termination of the license agreement, seeks $3,000,000
in contractual damages and $6,000,000 for negligence and fraud. The Company
believes the complaint to be totally without merit and intends to vigorously
contest the matter.

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

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

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

NAME AGE POSITION
---- --- --------

Chairman of the Board of Directors and Chief Executive
Drew S. Levin.............. 46 Officer
Jonathan D. Shapiro........ 44 President, Chief Operating Officer and Director
Larry Friedricks........... 62 Co-President of Team International
Paula Fierman.............. 51 Co-President of Team International
Timothy A. Hill............ 33 Senior Vice President, Chief Financial Officer, Secretary
Eric Elias................. 44 Senior Vice President, Business and Legal Affairs
Declan O'Brien............. 34 Senior Vice President, Development
Jane Sparango.............. 37 Senior Vice President, Development and Production
W. Russell Barry(1)(2)..... 63 Director
Michael Jay
Solomon(1)(2)............ 61 Director

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

(2) Member of the Audit Committee

Drew S. Levin has been our President, Chief Executive Officer and Chairman
of the Board of since we were formed in 1995. With the hiring of Mr. Shapiro in
January 1999, Mr. Levin relinquished the title of President. From 1987 through
1994, Mr. Levin was President of DSL Productions, Inc. ("DSP"), a privately held
company that was sold to The Producer's Entertainment Group, Inc. ("TPEG") in
1994. Through February 1995, he continued to act as president of DSP, which
operated as a subsidiary of TPEG. Mr. Levin has produced and co-produced
hundreds of hours of programming, including "Future Quest," for which Mr. Levin
received an Emmy Award, "Hollywood Stuntmakers," "FX Masters" and "Forces
Beyond" for the Discovery Network. Mr. Levin has extensive experience in
international co-productions, including co-producing a domestic and
international version of "Top of the Pops" with the British Broadcasting Company
for the CBS television network and the Montreux Rock Festival for the Showtime
Network.

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

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

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System -- Via Digital. Mr. Solomon serves on the Boards of Directors of the
International Council of the National Academy of Television Arts and Sciences
and the New York University Stern School of Business.

W. Russell Barry has been a member of the Board of Directors since March
16, 1999. Mr. Barry has more than thirty years experience as a senior management
executive in broadcasting, television production, and worldwide distribution.
From 1961 to 1976, Mr. Barry worked for CBS and held various sales and
management positions including Vice President and General Manager of KNXT (CBS
owned station in Los Angeles). In 1976, he joined 20th Century Fox as Vice
President Network Sales and subsequently became President of 20th Century Fox
Television. Recruited in 1981 by Playboy Enterprises as President of their
production company, he negotiated a joint venture with Cablevision and launched
the Playboy Channel. From 1983 to 1986, he was President of Taft Entertainment
Television. In 1986, he was named President, and then in June of 1995, Chairman
of Turner Program Services, the television distribution company for Turner
Broadcasting. During those twelve years, his responsibilities included the
worldwide marketing and sales of CNN, the MGM library, Hanna Barbera and other
Turner programing. Currently, he is a partner in Bandit Films and consults for
several companies.

Larry Friedricks has recently been hired to be a Co-President of a to be
formed subsidiary of the Company, Team International. Before that, he has been a
consultant to the Company since March 1998. Mr. Friedricks co-founded PAULAR
Entertainment L.L.C. in July 1996, where he has served as consultant since such
date. PAULAR specializes in sales and marketing, both domestically and
internationally, to all forms of media. Before forming PAULAR Entertainment, Mr.
Friedricks served as Executive Vice President with Jones Entertainment Group
("JEG"), a division of Jones Intercable, where he was responsible for overseeing
world-wide marketing and distribution of their television product as well as
locating outside investment opportunities. He also supervised co-productions
with European partners. Mr. Friedricks was with the NASDAQ-traded Kushner-Locke
Company from 1991 to 1995 as President of the newly formed sales division.
Between 1982 and 1991, Mr. Friedricks was Executive Vice President of
AMEX-traded Fries Entertainment. Mr. Friedricks is married to Ms. Fierman.

Paula Fierman has also recently been hired to be the other Co-President of
Team International. Before that, she has been a consultant to the Company since
March 1998. From 1996 to November 1999, Ms. Fierman worked as a consultant with
PAULAR Entertainment, specialized in sales and marketing, both domestically and
internationally, to all forms of media. Before forming PAULAR Entertainment with
Larry Friedricks, Ms. Fierman served as Senior Vice President International with
Jones Entertainment Group ("JEG"), a division of Jones Intercable, where she was
responsible for marketing campaigns, public relations and promotion, as well as
direct sales of JEG television, home video and feature films worldwide. Prior to
JEG, Ms. Fierman served as Senior Vice President International at Kushner-Locke.
Between 1987 and 1991, Ms. Fierman was Senior Vice President International at
Fries Entertainment. Ms. Fierman is married to Mr. Friedricks.

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

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

Declan O'Brien has been Senior Vice President, Development since April 13,
1998. For the past 5 years, Mr. O'Brien has worked for several television and
motion picture companies located at The Walt Disney Company Studios. From 1996
to 1998, Mr. O'Brien served as Director of Development at Goldenring

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Productions. Prior to 1996, he was involved in production at Touchstone
Pictures. Mr. O'Brien holds a Bachelor of Arts degree from California State
University, Pomona, where he was graduated with honors.

Jane Sparango is Senior Vice President of Development and Production. Ms.
Sparango, who joined the Company in December 1998, manages the acquisition,
development and production of our reality-based and light entertainment
television series. In her seventeen-year career in broadcasting, Ms. Sparango
has produced over 550 hours of television. Before joining the Company, Ms.
Sparango was a producer on "Unsolved Mysteries" for CBS Television and
Cosgrove/Muerer Productions. Prior to that, Ms. Sparango produced "Zooventure",
a children's game show for the Discovery Network and Pearson/All American
Television. In 1988 she was appointed coordinating producer on the news magazine
program "Inside Edition" for King World Productions. Ms. Sparango worked on the
hit series "Lifestyles of the Rich and Famous" for over ten years at Television
Program Enterprises (TPE) in New York and was named producer in February
1990 -- a position she also held on another spin-off show -- "Runaway with the
Rich and Famous".

Our executive officer and directors can be reached at our principal
executive offices at 12300 Wilshire Boulevard, Suite 400, Los Angeles, CA 90025,
U.S.A.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

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

COMPENSATION OF DIRECTORS

Under the 1996 Directors Plan, which plan has been incorporated into the
1999 Stock Option, Deferred Stock and Restricted Stock Plan, Mr. Solomon and Mr.
Barry, who are non-employee directors, each received an option to purchase
30,000 shares of our common stock at the then effective exercise price of $2.50
per share and $2.00 per share, respectively. Non-employee directors received no
other compensation from the Company in fiscal year 1998.

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

Drew Levin. The Board of Directors approved, as of October 8, 1999, which
was subsequently amended as of October 29, 1999, a new 5 year employment
agreement with Mr. Levin (the "Levin Agreement") providing for his services as
Chairman of the Board of Directors and Chief Executive Officer. The Levin
Agreement, which is effective as of August 1, 1999, provides for the payment to
Mr. Levin of a base salary of $550,000 per year, with annual increases of 4% on
each anniversary date of the Levin Agreement (the "Annual Salary"). Mr. Levin is
to receive a one time bonus of $250,000, $100,000 of which was paid to him on
October 29, 1999, the remaining $150,000 to be paid on January 2, 2000. Mr.
Levin has also agreed to repay any outstanding loans he has from the Company
with the first to occur of his proceeds as a selling shareholder in the German
Offering or the remainder of his January 2, 2000 bonus. Mr. Levin will also
receive an annual bonus calculated for each fiscal year as follows: if we have
net pre-tax earnings of up to $2,000,000, Mr. Levin will receive 5% of such net
pre-tax earnings and if we have net pre-tax earnings of greater than $2,000,000,
Mr. Levin will receive 7.5% of such net pre-tax earnings. Mr. Levin will also
receive options to purchase an aggregate of 1,115,000 shares of our common stock
pursuant to the 1999 Stock Option, Deferred Stock and Restricted Stock Plan.
250,000 of such options were granted as of the date of the Levin Agreement,
vesting as of that date and are exercisable at $6.063 per share (the closing bid
price of our common stock on September 24, 1999, the last business date
preceding the date the Board of Directors initially considered Mr. Levin's
employment agreement). 865,000 of such options are to be granted on the date the
German Offering closed, vesting at the time of grant and are exercisable at the
market price of our common stock on the date the German Offering closed. All
options being granted to Mr. Levin have a 5 year term. Mr. Levin shall also
receive a monthly car allowance of $1,500.

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The Levin Agreement also provides that if Mr. Levin dies or becomes unable
to perform his duties, functions and responsibilities for a period of 3
consecutive months or shorter periods aggregating 4 months within any 12 month
period, the Company may terminate Mr. Levin, in which case Mr. Levin or his
beneficiary shall be entitled to receive all of Mr. Levin's base salary, accrued
share of bonus for that fiscal year and thereafter for an additional one year
period. If the Company were to terminate Mr. Levin without cause, Mr. Levin
would be entitled to receive (i) a lump sum payment equal to the Annual Salary,
as well as unpaid vacation pay, unreimbursed business expenses and any other
monies payable to Mr. Levin under any employee benefit plan; (ii) the right to
obtain a transfer of any life insurance policy existing for the benefit of Mr.
Levin; and (iii) 120% of the balance of the Annual Salary payable through the
end of term of the Levin Agreement, as due and scheduled under the Levin
Agreement as if Mr. Levin had not been terminated. If Mr. Levin is terminated
for cause, as defined in the Levin Agreement, Mr. Levin shall be entitled to
receive the amount of his Annual Salary accrued up to the date of termination,
his accrued bonus for that fiscal year, if any, and all fringe benefits which
have accrued up till that date.

Jonathan D. (Jody) Shapiro. We have entered into a new employment agreement
with Mr. Shapiro (the "Shapiro Agreement") providing for his services as
President and Chief Operating Officer, effective as of October 29, 1999. The
term of the Shapiro Agreement continues until December 31, 2000. Pursuant to the
terms of the Shapiro Agreement, Mr. Shapiro will be paid an annual salary of
$220,000 through December 31, 1999. Additionally, Mr. Shapiro has received a
bonus of $80,000 which was paid on October 29, 1999. Mr. Shapiro will also
receive an additional bonus of $170,000 upon completion of this offering. Mr.
Shapiro shall be paid a base salary of $350,000 for the calendar year 2000. At
any time after January 1, 2000, either we or Mr. Shapiro has the option of
converting the Shapiro Agreement into a non-exclusive consulting agreement. If
either party exercises such option, Mr. Shapiro shall be paid a lump sum of
$250,000, less any compensation received by Mr. Shapiro for such calendar year.
Mr. Shapiro has been granted 90,000 stock options at an exercise price of $1.65
per share, such options are fully vested.

Larry Friedricks. We have entered into an employment agreement with Larry
Friedricks (the "Friedricks Agreement") to serve as Co-President of Team
International, a to be formed wholly owned subsidiary of the Company dated as of
November 1, 1999. The term of the Friedricks Agreement is for 3 years,
commencing on November 15, 1999 and ending on December 31, 2002, subject to Mr.
Friedricks' right to terminate his employment upon 60 days prior written notice
should Mr. Drew Levin no longer be the Company's Chairman of the Board and Chief
Executive Officer. Mr. Friedricks is to be paid an annual salary of $220,000,
with 4 percent increases on each anniversary date of the Friedricks Agreement.
Mr. Friedricks shall be eligible to participate in all bonus and profit sharing
plans adopted by the Company. Mr. Friedricks is to be granted 60,000 stock
options at an exercise price equal to the average of the bid and asking price of
the Company's common stock on the date immediately preceding the date of the
Friedricks Agreement. The options vest as follows: 20,000 after the end of the
first year of employment; 20,000 after the end of the second year of employment;
and 20,000 after the end of the third year of employment. All options expire 90
days after the termination of Mr. Friedricks' employment with the Company.

Paula Fierman. We have entered into an employment agreement with Paula
Fierman (the "Fierman Agreement") to serve as Co-President of Team
International, a to be formed wholly owned subsidiary of the Company dated as of
November 15, 1999. The term of the Fierman Agreement is for 3 years, commencing
on November 15, 1999 and ending on December 31, 2002, subject to Ms. Fierman's
right to terminate her employment upon 60 days prior written notice should Mr.
Drew Levin no longer be the Company's Chairman of the Board and Chief Executive
Officer. Ms. Fierman is to be paid an annual salary of $180,000, with 4 percent
increases on each anniversary date of the Fierman Agreement. Ms. Fierman shall
be eligible to participate in all bonus and profit sharing plans adopted by the
Company. Ms. Fierman is to be granted 30,000 stock options at an exercise price
equal to the average of the bid and asking price of the Company's common stock
on the date immediately preceding the date of the Fierman Agreement. The options
vest as follows: 10,000 after the end of the first year of employment; 10,000
after the end of the second year of employment; and 10,000 after the end of the
third year of employment. All options expire 90 days after the termination of
Ms. Fierman's employment with the Company.

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Timothy A. Hill. We have entered into an employment agreement with Timothy
A. Hill (the "Hill Agreement") providing for his services as Senior Vice
President/Chief Financial Officer effective August 17, 1999. The term of the
Hill Agreement is for 2 years. Mr. Hill is to be paid a salary of $150,000 for
the first year and $175,000 for the second year. Mr. Hill shall be entitled to a
minimum annual bonus of $15,000. Mr. Hill is to be granted 40,000 stock options
at the exercise price equal to the price of our common stock on the grant date,
to vest equally on a monthly basis over the term of the Hill Agreement.

EXECUTIVE COMPENSATION

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

SUMMARY COMPENSATION TABLE

STOCK ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY BONUS OPTIONS COMPENSATION
------------------------------ ---- -------- -------- ------- ------------

Drew S. Levin(5)........................ 1998 $220,000 $145,000 $13,400(4)
Chairman of the Board 1997 $220,000 $145,000
and Chief Executive Officer 1996 $350,000 $ 45,000(2) (3)

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

(2) For the fiscal year ended December 31, 1996, Mr. Levin was entitled,
pursuant to the terms of his prior agreement, to a bonus equal to certain
producer's fees relating to the series Amazing Tails. During such period Mr.
Levin received $45,000 and, pursuant to the terms of his new employment
agreement (which became effective upon the closing of the public offering in
August 1998), has agreed to apply the balance of such accrued but unpaid
bonus ($175,000) to repay certain loans made to him by the Company. This
amount ($175,000) was reflected in Mr. Levin's compensation for fiscal 1998.
Mr. Levin will no longer receive production bonuses. The loan balance is
$179,400 as of the date hereof. Such amount is net of amounts owed to Mr.
Levin for accrued producer fees and the bonus effective April 1, 1998. See
"Certain Relationships and Related Transactions."

(3) Pursuant to the terms of Mr. Levin's prior employment agreement, Mr. Levin
was granted options to acquire 85,000 shares of our common stock at $5.50
per share, exercisable upon our initial public offering. These options are
fully vested.

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

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 7, 1999, certain information
regarding the ownership of common stock by:

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

- each of our directors;

- the Named Executive Officer; and

- all directors and executive officers as a group.

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SHARES OF COMMON
STOCK BENEFICIALLY
OWNED
NAME AND ADDRESSES OF ----------------------
BENEFICIAL OWNERS(1)(2) NUMBER PERCENTAGE
----------------------- --------- ----------

Drew S. Levin(3)............................................ 860,123 11.8%
Noel D. Cronin(4)........................................... 386,847 5.5%
Michael J. Solomon(5)....................................... 50,000 *
W. Russell Barry(6)......................................... 30,000 *
Jonathan D. Shapiro(7)...................................... 90,000 1.3%
All Officers and Directors as a group(8).................... 1,416,970 18.8%
Gontard & MetallBank AG..................................... 500,000 7.2%

- ---------------
* Less than 1% of the outstanding shares of Common Stock.

(1) Unless otherwise indicated, the address of each listed stockholder is c/o
Team Communications, Inc., 12300 Wilshire Boulevard, Suite 400, Los Angeles,
California 90025.

(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person
that are currently exercisable or will become exercisable within 60 days
after December 7, 1999, are deemed outstanding, while such shares are not
deemed outstanding for purposes of computing percentage ownership of any
other person. Unless otherwise indicated in the footnotes below, the persons
and entities named in the table have sole voting and investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.

The number and percentage of shares beneficially owned are based on the
aggregate of 12,979,138 shares of Common Stock outstanding.

(3) Includes options to acquire 85,000 shares of common stock at an exercise
price of $5.50 per share which the Company granted to Mr. Levin concurrently
with the execution of his prior employment agreement. Also includes options
to purchase 250,000 shares of common stock issued pursuant to Mr. Levin's
new employment agreement, which are exercisable at $6.063 per share. Does
not include options to purchase 865,000 shares which are issuable contingent
on the closing of the German Offering.

(4) Does not include an option to purchase 75,000 shares of common stock at an
exercise price of $6.063 per share, none of which have yet vested.

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

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

(7) Includes an option to purchase 90,000 shares of common stock at an exercise
price of $1.65 per share.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

Short Term Borrowings by Mr. Levin. The Company has currently due from
officer a balance of $170,400. The Company had due from officer balances of
$145,400, $195,500 and $11,300 at December 31, 1998, December 31, 1997 and
December 31, 1996, respectively, representing short-term interest free loans
made by the Company to Mr. Levin, less producer's fees earned for services on a
Company production. At December 31, 1998, December 31, 1997 and December 31,
1996, the amount of such loans owed by Mr. Levin to the Company (which also
represents the highest amount borrowed during such periods) was $145,400,
$195,500 and $11,300, respectively. As of September 30, 1999, the amount of such
loans is $170,400, with a majority of the disinterested members of the Board of
Directors having approved the additional $25,000 loan. Such amount is net of
amounts owed to Mr. Levin for accrued producer fees and bonus effective April 1,
1998. Borrowings by any officer of the Company require the approval of a
majority of

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the disinterested members of the Board. There is no interest being charged on
the amount Mr. Levin owes the Company and there is no interest accruing on the
producer fees previously owed by the Company to Mr. Levin. Mr. Levin has agreed
to repay the outstanding balance with the first to occur of his receipt of the
proceeds of the sale of his common stock offered pursuant to the German
offering, or the remainder of his January 2, 2000 bonus.

Mr. Levin has pledged 375,123 shares of the Company's common stock which he
owns to Gontard & MetallBank AG, the lead underwriter of the German Offering, as
collateral for a 1 year loan in the amount of $1,800,000, which loan bears
interest at 10% per year.

Transactions With Eric Elias. Mr. Elias, who serves as Senior Vice
President, Business and Legal Affairs, is paid through his private law firm. In
1997 Mr. Elias received approximately $125,000, including expense
reimbursements, for such legal services. In 1998, Mr. Elias received
approximately $170,000, including expense reimbursements, for such legal
services. On June 30, 1997, Mr. Elias was granted an option to purchase 12,500
shares of common stock at the Company's initial public offering price of $5.50
per share. On October 8, 1999, Mr. Elias was granted an option to purchase an
additional 50,000 shares of our common stock, exercisable at $6.25 per share.
Mr. Elias' option has a 5 year term and vests ratably on a monthly basis over a
2 year period.

Transactions With Renown Pictures, Ltd.; Transactions with Noel Cronin. As
of November 15, 1999, the Company was owed $2,220,000 in respect of a receivable
from Renown Pictures, Ltd., a United Kingdom corporation ("Renown"), pursuant to
the acquisition of a five year license for 20 movies-of-the-week. Prior to such
date, $1,125,000 had been paid by Renown. Renown is owned by Noel Cronin,
formerly the owner of 100% of the stock of Dandelion Distribution Ltd, which was
acquired by us in October 1999. Mr. Cronin currently owns 386,847 shares of the
Company's common stock (approximately 5%). So as to avoid any conflicts, Mr.
Cronin has assigned the rights to the programming and the obligation to pay the
balance of the receivable to Doljac Television Limited. Mr. Cronin, on behalf of
the Company, has retained the right to act as a subdistributor of the product
acquired by Renown.

In effectuating the acquisition of the 20 movies-of-the-week, Renown acted
on behalf of a group of investors (the "Investors") who treated the transaction
as a sale-leaseback through Renown, thus entitling them to certain tax
deductions under UK law. The Investors have confirmed that they will complete
all additional funding with Doljac so as to complete the acquisition.

Noel Cronin is also a director of String of Pearls Plc. In September 1999,
the Company entered into a 10 year license agreement for certain European
territories including Germany, France and Italy, of 20 made-for-television
movies with String of Pearls Plc. At September 30, 1999, the receivable due from
String of Pearls Plc was $5,375,000. Mr. Cronin has personally guaranteed the
obligation to pay the license fee from String of Pearls Plc to us. Subsequent to
such date the Company received a payment of $290,000 per the terms of agreement.

In August 1999, the Company acquired the "Victory 1" library from DD Video
for $3,400,000. Mr. Cronin sold DD Video to its current owners in April 1998.
Mr. Cronin is a director of DD Video, although he received no compensation,
either directly or indirectly, in respect of this action.

Transactions with Gontard & MetallBank. Gontard & MetallBank, the
underwriter of the German Offering, owns 500,000 shares of our outstanding
common stock. This represents 7.2% of our outstanding stock. These shares were
purchased at a price of $4.00, a discount of approximately $2.00 per share from
the then current market price. In connection with the German Offering, Gontard &
MetallBank received commissions and fees, including the reallowance for members
of the underwriting syndicate, of 10%.

Gontard & MetallBank has loaned Mr. Drew Levin $1,800,000 for a period of 1
year. The loan bears interest at 10% per year and is collateralized by a pledge
by Mr. Levin of 365,123 of the Company's common stock that he owns.

Transactions with Joseph Cayre. The Company was indebted to Joseph Cayre,
one of its original shareholders, in respect of loans made in April and August
1995 in the amount of $500,000 and $240,000,

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35

respectively. Interest on these loans accrued at the prime rate established by
Republic National Bank, New York, New York, plus 2% per year and 14% per year,
respectively. Mr. Cayre has waived the interest that accrued on these loans
prior to December 31, 1996. This interest expense, at fair value, was recorded
as either a corresponding credit to paid in capital (in fiscal 1996), or accrued
liabilities (in fiscal 1997 and in fiscal 1995), which will be offset against
paid in capital upon settlement of the obligations. Mr. Cayre's loans were
secured by Mr. Levin's shares and all of the assets of the Company. In February
1996, in connection with a prior restructuring of this indebtedness, Mr. Cayre
received options to purchase 48,743 shares of common stock at a price of $.43
per share, which options are exercisable at the time of the Company's initial
public offering.

Mr. Cayre and Mr. Levin agreed that as of the closing of the Company's
initial public offering, Mr. Cayre would receive payment of $250,000 in respect
of the amounts owed to him, and the remaining debt, if the Company's initial
public offering was consummated on or before July 30, 1998, would be extended
until thirteen months from the closing date of the Company's initial public
offering. Subject to the foregoing, Mr. Levin and Mr. Cayre also agreed to
restructure Mr. Cayre's investment in the Company. Mr. Cayre agreed that upon
the closing of the Company's initial public offering, Mr. Cayre's interest in
the Company would be reduced to 214,874 shares of the Company's Common Stock by
transferring to Mr. Levin 195,774 shares of the Company's common stock held by
Mr. Cayre. Mr. Cayre also entered into a consulting agreement with the Company
pursuant to which he was paid $260,000 for his consulting services to the
Company through September 30, 1998.

As of the date hereof, all indebtedness to Mr. Cayre has been repaid, and
the transfer of stock from Mr. Cayre to Mr. Levin was effectuated.

Transactions with Morris Wolfson and Others. In January 1996, the Company
entered into a transaction with AMAE Ventures, an affiliate of Mr. Morris
Wolfson, formerly a 5% shareholder of the Company, pursuant to which AMAE
Ventures acquired 4% of the Company's outstanding Common Stock and lent to the
Company the sum of $322,000, which amount was used by the Company for general
overhead purposes and bore interest at 12% per year. This note was due on the
earlier to occur of July 15, 1998 or the closing of the Company's initial public
offering, and was subject to certain anti-dilutive provisions. Interest on this
line accrued at 10% per year. The holder of such note had the right to convert
the principal amount into 3% of the Company's Common Stock on a fully diluted
basis through the completion of the Company's initial public offering, and has
in fact converted such note. An April 1996 loan by South Ferry #2 L.P., a
Delaware limited partnership (which may be deemed an affiliate of Mr. Wolfson),
in the principal amount of $500,000 was used for the pre-production of
"LoCoMoTioN." This loan bore interest at 10% per year and was due on the earlier
to occur of July 15, 1998 or upon the closing of the Company's initial public
offering. In connection with such loan, South Ferry #2 L.P. received 29,905
warrants exercisable at $.43 per share upon the closing of the Company's initial
public offering and a 5% net profit participation from the series. South Ferry
#2, L.P. is an entity controlled by Mr. Wolfson's brother and has an arms length
relationship with the Company. Finally, the Chana Sasha Foundation, an entity
controlled by Mr. Wolfson, extended the Company a $400,000 line of credit on a
secured basis in November 1996, which credit line has been used and subsequently
repaid by funds from the Company's operations. In addition, the Company issued
to Chana Sasha Foundation and others 6,408 shares of the Company's Common Stock
in consideration for such extension of credit.

The terms of AMAE Ventures' original agreement with the Company, as
indicated above, enabled such entity (or its investors) to receive up to an
additional 199,748 shares of Common Stock upon the completion of the Company's
initial public offering.

The July 1996 proceeds from the sale of the notes in the Total Recall
Financing were used to acquire the rights to produce a television series based
on "Total Recall." These notes, which were secured by the Company's underlying
rights to the "Total Recall" series, bore interest at 10% per year. In addition,
the holders of these notes received an aggregate of 53,403 shares of common
stock, warrants to acquire 21,361 shares of Common Stock at an exercise price of
$.43 upon the closing of the Company's initial public offering and a 15% net
profit participation in the Company's interest in the series. This loan was
repaid through an advance from Alliance Atlantis.

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As of the date hereof, all of the above described indebtedness has been
repaid.

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

STOCK OPTION PLANS

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

The 1999 Stock Plan increases the aggregate number of shares available for
the grant of options to an amount equal to 20% of then current outstanding
shares of our common stock, such figure to be adjusted as and when we increase
our outstanding shares of common stock. The initial number of shares shall be
approximately 1,100,000. The 1999 Stock Plan provides for the grant of qualified
incentive stock options ("ISOs") that meet the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended, stock options not so qualified
("NQSOs"), deferred stock and restricted stock awards ("Grants"). The 1999 Stock
Plan is administered by a committee of directors appointed by the Board of
Directors (the "Committee"). ISOs may be granted to our officers and key
employees or any of our subsidiaries. The exercise price for any ISO granted
under the 1999 Stock Plan may not be less than 100% (or 110% in the case of ISOs
granted to an employee who is deemed to own in excess of 10.0% of the
outstanding common stock) of the fair market value of the shares of common stock
at the time the option is granted. The exercise price for any NQSO granted under
the 1999 Stock Plan may not be less than 85.0% of the fair market value of the
shares of common stock at the time the option is granted. The purpose of the
1999 Stock Plan is to provide a means of performance-based compensation in order
to attract and retain qualified personnel and to provide an incentive to those
whose job performance affects us.

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

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

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

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

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

- in cash;

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

- by cancellation of indebtedness owed by us to the option holder;

- by a full recourse promissory note executed by the option holder; or

- by any combination of the foregoing.

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

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

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SELLING SHAREHOLDERS: PLAN OF DISTRIBUTION

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

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

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

SELLING SHAREHOLDERS SHARES OWNED
-------------------- ------------

Austin Vest Amstolt Blazms.................................. 212,960
Esquire Trade & Finance..................................... 296,647
Nesher Inc.................................................. 46,323
Amro International.......................................... 185,316
VMR Luxembourg, S.A......................................... 599,879
Alan Parnes................................................. 5,000
Arab International Trust Co................................. 10,000
Duck Partners, LP........................................... 20,000
Gary & Paula Wayton......................................... 10,000
Michael Rosenbaum........................................... 20,000
RMK Financial LLC........................................... 15,000
Robert Bain................................................. 20,000
Robert Frankel.............................................. 7,470
Roger Triemstra............................................. 10,000
Roland McAbee............................................... 6,400
Swan Alley (Nominees) Limited............................... 20,000
Van Moer Santerre & Cie..................................... 50,000
Mathew & Barbara Geisser.................................... 3,204
Central Scale Co............................................ 9,613
Vijaya Rani Rekhala/Vijay-Kumar Rekhala, M.D................ 6,408
United Congregation Mesorah................................. 6,408
Samuel F. Marinelli......................................... 3,204
Mildred J. Geiss............................................ 3,204
Jon G. Kastendieck.......................................... 6,408
Cooperative Holding Corporation............................. 12,817
Aaron Wolfson............................................... 110,458
Abraham Wolfson............................................. 104,049
Arielle Wolfson............................................. 6,408
Eli Levitin................................................. 25,730
Morris Wolfson Family Limited Partnership................... 106,185
Levpol...................................................... 6,408
Wellington Corporation, N.V................................. 4,272
Crescent Capital Company, LLC............................... 8,544
Arthur Steinberg IRA Rollover............................... 2,136
Robert Steinberg IRA Rollover............................... 2,136
Robert Sam Steinberg -- A Partnership....................... 2,136
Von Graffenried AG.......................................... 4,272
Third World Trust Company LTD............................... 4,272

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SELLING SHAREHOLDERS SHARES OWNED
-------------------- ------------

Alpha Ventures.............................................. 8,544
Tuch Family Trust........................................... 2,136
Alfred Ross................................................. 4,272
Fred Chanowski.............................................. 2,136
Allen Goodman............................................... 4,272
Felix D. Paige.............................................. 8,544
Andrew G. Rogal............................................. 4,272
Mark J. Levine.............................................. 2,136
Joseph Sullivan............................................. 4,272
Robert Gopen................................................ 2,136
Colony Financial Services................................... 2,136
John Carberry............................................... 2,136
Daniel & Thalia Federbush................................... 4,272
Michael S. Berlin, M.D...................................... 4,272
Phillip Tewel............................................... 29,191
Joe Cayre................................................... 263,617
South Ferry #2.............................................. 29,906
ACA Equities................................................ 14,668
D&M Investment Corp......................................... 48,419
Gilbert Karsenty............................................ 5,269
Chana Sasha................................................. 20,506
Affida Bank................................................. 60,950
Bill Nesmith................................................ 681
Mike Sposato................................................ 681
Bob Dorfman................................................. 2,349
Bristol Capital............................................. 20,934
Venture Management Consultants, LLC......................... 20,000
Infusion Capital............................................ 283,000
Marathon Consulting......................................... 80,000
Claudio Nessi............................................... 31,000
DMT Technologies............................................ 97,000
Premier Acquisition Corp.................................... 3,000
Davstar..................................................... 22,718
Century City Securities, Inc. .............................. 100,000
Robert Herskowitz........................................... 10,000
Chase Financing Ltd......................................... 121,000
Investor Resource Services.................................. 104,000
Program Power............................................... 1,000
National Securities Corporation............................. 150,000
-----------
Total....................................................... 3,548,692
===========

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The Selling Shareholders, or their pledgees, donees, transferees or other
successors in interest, may, from time to time, sell all or a portion of the
shares of our common stock at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such market prices or at
negotiated prices. The Selling Shareholders may offer their shares of our common
stock at various times in one or more of the following transactions:

- in the over-the-counter market;

- on any national securities exchange or market, if any, on which our
common stock may be listed at the time of sale;

- through block trades in which the 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;

- through purchases by a broker or dealer as principal and resale by such
broker or dealer for its account to this prospectus;

- in ordinary brokerage transactions and transactions in which the broker
solicits purchasers;

- through options, swaps or derivatives;

- in privately negotiated transactions;

- in transactions to cover short sales; and

- through a combination of any such methods of sale.

The Selling Shareholders may also sell their shares of our common stock in
accordance with Rule 144 under the Securities Act, rather than pursuant to this
prospectus.

The Selling Shareholders may sell their shares of our common stock directly
to purchasers or may use brokers, dealers, underwriters or agents to sell such
shares. In effecting sales, brokers and dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions, discounts or concessions from a Selling
Shareholder or, if any such broker-dealer acts as agent for the purchaser of
such shares, from a purchaser in amounts to be negotiated. Such compensation
may, but is not expected to, exceed that which is customary for the types of
transactions involved. Broker-dealers may agree with a Selling Shareholder to
sell a specified number of such shares at a stipulated price per share, and, to
the extent such broker-dealer is unable to do so acting as agent for a Selling
Shareholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the Selling Shareholders. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions, which may involve block transactions and sales to and
through other broker-dealers, including transactions of the nature described
above, in the over-the-counter market or otherwise at prices and on terms then
prevailing at the time of sale, at prices then related to the then-current
market price or in negotiated transactions. In connection with such resales,
broker-dealers may pay to or receive from the purchasers of such shares
commissions as described above.

The Selling Shareholders and any broker-dealers or agents that participate
with the Selling Shareholders in sales of their shares of our common stock may
be deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of such shares purchased
by them may be deemed to be underwriting commissions or discounts under the
Securities Act.

From time to time the Selling Shareholders may engage in short sales, short
sales against the box, puts and calls and other hedging transactions in our
securities, and may sell and deliver their shares of our common stock in
connection with such transactions or in settlement of securities loans. These
transactions may be entered into with broker-dealers or other financial
institutions. In addition, from time to time a Selling Shareholder may pledge
its shares pursuant to the margin provisions of its customer agreements with its
broker-dealer. Upon delivery of such shares or a default by a Selling
Shareholder, the broker-dealer or financial institution may offer and sell such
pledged shares from time to time.

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DESCRIPTION OF CAPITAL STOCK AND OTHER SECURITIES

COMMON STOCK

We are authorized to issue up to 40,000,000 shares of common stock, no par
value. As of December 7, 1999, there were 12,979,138 shares of common stock
outstanding which were held of record by 87 shareholders. Holders of common
stock are entitled to one vote for each share held of record on each matter
submitted to a vote of shareholders. There is cumulative voting for election of
directors. Subject to the prior rights of any series of preferred stock which
may from time to time be outstanding, if any, holders of common stock are
entitled to receive ratably, dividends when, as and if declared by the Board of
Directors out of funds legally available therefor and, upon the liquidation,
dissolution, or winding up of the Company, are entitled to share ratably in all
assets remaining after payment of liabilities and payment of accrued dividends
and liquidation preferences on the preferred stock, if any. Holders of common
stock have no preemptive rights and have no rights to convert their common stock
into any other securities. The outstanding shares of common stock are validly
authorized and issued, fully paid, and nonassessable.

PREFERRED STOCK

We are authorized to issue up to 10,000,000 shares of preferred stock. As
of December 7, 1999, there were no shares of preferred stock outstanding. The
preferred stock may be issued in one or more series, the terms of which may be
determined at the time of issuance by the Board of Directors, without further
action by shareholders and may include voting rights (including the right to
vote as a series on particular matters), preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund provisions.
We have no present plans for the issuance of shares of preferred stock. The
issuance of any preferred stock could adversely affect the rights of the holders
of common stock and therefore, reduce the value of the common stock. The ability
of the Board of Directors to issue preferred stock could also discourage, delay
or prevent a takeover. See "Risk Factors -- Preferred Stock; Possible
Anti-Takeover Effects of Certain Charter Provisions."

WARRANTS

At December 7, 1999, there were warrants outstanding to purchase a total of
1,307,384 shares of common stock. These warrants will remain outstanding after
the completion of this offering.

PRE-IPO WARRANTS

In connection with the issuance of prior secured notes, we have issued an
aggregate of 427,354 warrants, each warrant entitling the holder thereof to
acquire one share of common stock; 224,293 warrants are exercisable at an
exercise price equal to $0.43 per share, 29,191 warrants are exercisable at an
exercise price equal to $0.97 per share, 193,870 warrants are exercisable at
$0.97 per share, 20,000 warrants are exercisable at $2.45 and 10,000 warrants
are exercisable at $2.00, subject to adjustment as hereinafter provided. The
warrants may be exercised, at the option of the holder at any time. To date,
288,113 of such warrants have been exercised. Unless exercised during their
term, the right to exercise the warrants terminates on their expiration date.

CONSULTANT'S WARRANTS

Prior to 1998, we issued 147,924 warrants to other consultants and
investors in connection with prior financings. Of these warrants, 21,362 are
exercisable at $1.07 per share and 126,562 are exercisable at $0.43 per share,
all of which are currently exercisable. During 1998 and 1999, we granted
warrants to purchase our common stock to the following individuals and entities
for services provided to us: (i) 22,000 and 10,000 warrants, respectively, to
Mansion House International and Danny Chan, respectively, exercisable at $2.75
per share, (ii) 5,000 warrants to Hedblom Partners, exercisable at $3.50 per
share, (iii) 200,000 warrants to Glen Michael Financial; 100,000 exercisable at
$1.62 per share, 75,000 exercisable at $3.00 per share and 25,000 exercisable at
$3.25 per share, and (iv) 10,000 warrants to Ralph Olsen, exercisable at $2.00
per share. In

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addition, we granted (x) 121,000 and 10,000 warrants, respectively, to Chase
Financing Ltd., and Robert Herskowitz, respectively, exercisable at $1.62 per
share and (y) an aggregate of 20,000 warrants, 5,000 each to Investor Relations
Services, Aurora Holdings, Amber Capital and Affiliated Services, respectively,
exercisable at $2.45 per share, in connection with debt that was raised. Century
City Securities, Inc., was issued 100,000 warrants exercisable at $2.20 per
share, for consulting services.

NATIONAL SECURITIES CORPORATION'S WARRANT

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

POST-IPO BRIDGE WARRANTS

In connection with the sale of debentures made between January and March
1999, we also issued warrants to purchase 185,000 shares of common stock. The
warrants are exercisable at a price equal to 110% of the per share market value
as of the last trading day prior to the date of the issuance of the warrants.
The price is $2.16 per share for 85,000 of the warrants and $2.20 per share for
100,000 of the warrants.

In connection with the $350,000 bridge financing, we issued 35,000 warrants
which are exercisable at $7.61 per share. Finally, in connection with the
$4,000,000 bridge financing, we issued 340,000 warrants which are exercisable at
$7.00 per share which was subsequently reduced to $6.50 per share.

WARRANT TERMS

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

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

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

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

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

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

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

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

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

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

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

PRE-IPO BRIDGE NOTES

To finance our working capital needs, we have issued a series of bridge
notes. In February 1997, we commenced the placement of units consisting off
$50,000 principal amount of 10% Convertible Notes (the "February 1997 Notes")
and 10,000 common stock purchase warrants. We sold an aggregate of $969,350

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principal amount of the February 1997 Notes. The principal amount of, and
interest on, the February 1997 Notes were due and payable on our initial public
offering. The February 1997 Notes were convertible into shares of common stock
during the period commencing 60 days after the closing date and continuing
through the effective date of the initial public offering. The February 1999
Notes have been repaid in full.

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

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

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

Between March 1998 and May 1998, we arranged for short term loans (the
"Interim Financing") of an aggregate of $1,642,000. A majority of such loans
were made by present shareholders and their affiliates. These loans matured as
follows: (i) $642,000 on July 15, 1998; (ii) $235,000 on June 15, 1998; (iii)
$115,000 on November 15, 1998; (iv) $150,000 on March 16, 1999; (v) $250,000 on
April 1, 1999; and (vi) $250,000 on April 18, 1999. These loans, other than the
$642,000, $115,000 and $235,000 loans accrued interest at 12% per year. The
$235,000 loan included a $35,000 origination fee, and a $10,000 late fee as the
note was not paid at June 15, 1998. The note did not accrue interest. The
$642,000 loan had a fixed interest amount of $78,000 (which was due upon the
maturity of the loan) and included a $42,000 loan origination fee. The $115,000
loan included a $15,000 loan origination fee. All of these notes have been
repaid in full.

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

POST IPO SECURITIES PLACEMENTS

Between January and March 1999, the Company sold to 5 investors an
aggregate principal amount of $1,850,000 of 8% convertible debentures and
warrants to purchase up to 185,000 shares of common stock. The holders of these
debentures have converted their debentures into common stock. In June 1999, four
of the debenture holders purchased an additional 175,000 shares of common stock
for an aggregate of $700,000.

42
45

In July 1999, we arranged for a short term loan of $1,200,000 for
production and distribution activities. The loan matures on November 30, 1999
and accrues interest at 12% per year. If the loan is not repaid by November 30,
1999, the principal and all accrued and unpaid interest convert into shares of
our common stock at the lesser of 85% of the market price on the date of
issuance or 110% of the current market price when converted. This loan has been
repaid in full.

On July 29, 1999, the Company sold 64,800 shares of common stock to Arab
Commerce Bank for $162,000.

On August 5, 1995 we completed a $4,000,000 bridge financing with Hudson
Investors, LLC. The note matures on November 30, 2002 and accrues interest at
12% per year. All or part of the unpaid principal amount may be converted into
shares of common stock at the holder's option any time after November 30, 1999.
The conversion price is the lesser of 120% of the average per share market price
for five consecutive trading days prior to August 5, 1999 or 88% of the per
share market price for the three days with the lowest per share market price
during the twenty-five days prior to conversion. Connected with this financing,
we issued 340,000 warrants to purchase our common stock at 105% of the five-day
average closing price prior to the closing of the financing, which equals $6.50.
This note has been repaid with the proceeds of the German Offering.

On August 5, 1999, we sold 500,000 shares of common stock for $2,000,000 to
Gontard & MetallBank AG. On October 5, 1999 we completed a $4,000,000 bridge
financing with Gontard & MetallBank AG. Their note bears interest at 10% per
year and matures on the earlier of the completion of this offering or December
31, 1999. This note has been repaid with the proceeds of the German Offering.

On September 27, 1999, the Company, pursuant to court order, issued 30,000
shares of common stock to Venture Management Consultants, LLC.

On October 9, 1999 and October 15, 1999, respectively, the Company entered
into agreements regarding the sale of 10,000 shares of common stock to Ivonne
Altagracia Medrano Gongalez for $30,000 and 20,000 shares of common stock to
Cantor GbR for $60,000.

On October 18, 1999, we sold to Arbora Vermogensverwaltungen AG, 175,000
shares of common stock for $700,000.

On October 29, 1999, the Board of Directors approved the issuance to Ocean
Management of warrants to purchase 100,000 of common stock; 50,000 at an
exercise price of $3.50 per share and 50,000 at an exercise price of $4.00 per
share, for consulting services.

On December 1, 1999, we issued to Sal Russo warrants to purchase 75,000
shares of common stock; 25,000 at $1.88 per share, 25,000 at $2.50 per share and
25,000 at $3.00 per share.

TRANSFER AGENT

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

SHARES ELIGIBLE FOR FUTURE SALE

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

On December 7, 1999, we had 12,979,138 shares outstanding and have applied
to have such shares listed on The NASDAQ SmallCap Market. This amount does not
include shares which, in the future, may be issued under options or warrants.
Upon completion of this offering, assuming the issuance of 715,000 shares of our
common stock upon the exercise of the Warrants, we will have issued and
outstanding 13,694,138 shares
43
46

of common stock. The shares that have been registered are freely tradeable
without restriction under the Securities Act of 1933, unless purchased by
"affiliates" as that term is defined in Rule 144 under the Securities Act of
1933.

The remaining shares of common stock outstanding upon completion of the
offering, determined as if all outstanding warrants have been exercised, will be
held by approximately 10 holders and will be "restricted securities" as that
term is defined in Rule 144 as promulgated under the Securities Act ("Restricted
Stock"). Restricted Stock may be sold in the public market only if registered or
if qualified for an exemption from registration under Rule 144 or Rule 701 as
promulgated under the Securities Act, which rules are summarized below, or
pursuant to another exemption from registration. Sales of the Restricted Stock
in the public market, or the availability of such shares for sale, could
materially adversely affect the market price of the common stock. In general,
under Rule 144, beginning 90 days after the date of the final prospectus from
our initial public offering, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Stock for at least one year (including the
holding period of any prior owner other than an affiliate of the Company) would
be entitled to sell within any three month period a number of shares that does
not exceed the greater of (i) one percent of the number of shares of common
stock then outstanding or (ii) the average weekly trading volume of the common
stock during the four calendar weeks preceding the filing of notice of such
sale. Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of ours at any time during the three months preceding a sale, and who
has beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an affiliate of ours) is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Any employee, officer or director of or consultant to us who purchased his
or her shares of common stock pursuant to a written compensatory plan or
contract may be entitled to rely on the resale provisions of Rule 701. Rule 701
permits affiliates of ours to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144, as described above.
Rule 701 further provides that nonaffiliated shareholders may sell such shares
in reliance on Rule 144 without having to comply with the public information,
volume limitation or notice provisions of Rule 144. In both cases, a holder of
Rule 701 shares was required to wait until 90 days after the date of the final
prospectus from our initial public offering before selling his shares.

We have filed a registration statement on Form S-8 under the Securities Act
of 1933 covering shares of common stock reserved for issuance under the 1999
Stock Plan. Based on the number of shares reserved for issuance under the 1999
Stock Plan, such registration statement would cover approximately 1,100,000
shares. Such registration statement became effective upon filing. Accordingly,
shares registered under such registration statement will, subject to Rule 144
volume limitations applicable to our affiliates, be available for sale in the
open market, subject to vesting restrictions.

LEGAL MATTERS

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

EXPERTS

The consolidated financial statements as of December 31, 1998, 1997 and
1996 included in this prospectus have been so included in reliance on the report
of Stonefield Josephson, Inc., independent accountants, and are so included in
reliance upon their reports given on their authority as experts in auditing and
accounting.

44
47

ADDITIONAL INFORMATION

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

45
48

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF TEAM COMMUNICATIONS GROUP, INC.

PAGE
----

Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets at September 30, 1999
(unaudited), December 31, 1998, December 31, 1997 and
December 31, 1996........................................... F-3
Consolidated Statements of Income for the nine months ended
September 30, 1999 (unaudited) and for the nine months
ended September 30, 1998 (unaudited) and for the years
ended December 31, 1998, December 31, 1997 and December
31, 1996.................................................. F-4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 (unaudited) and for the nine
months ended September 30, 1998 (unaudited) and for the
years ended December 31, 1998, December 31, 1997 and
December 31, 1996......................................... F-5
Consolidated Statements of Cash Flows and Supplemental
Schedule of Non Cash Activities for the nine months ended
September 30, 1999 (unaudited) and for the nine months
ended September 30, 1998 (unaudited) and for the years
ended December 31, 1998, December 31, 1997 and December
31, 1996.................................................. F-6
Consolidated Statements of Shareholders' Equity (Deficit)
for the nine months ended September 30, 1999 (unaudited)
and for the years ended December 31, 1998, December 31,
1997 and December 31, 1996................................ F-7
Notes to Consolidated Financial Statements.................. F-8

F-1
49

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Team Communications Group, Inc.

We have audited the consolidated balance sheets of Team Communications
Group, Inc. and subsidiaries as of December 31, 1998, 1997 and 1996 and the
related consolidated statements of income, shareholders' equity and cash flows
for the three years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects financial position of Team
Communications Group, Inc. and subsidiaries at December 31, 1998, 1997 and 1996
and the consolidated results of its operations and its cash flows for the years
ended December 31, 1998, 1997, and 1996, in conformity with generally accepted
accounting principles.

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

/s/ STONEFIELD JOSEPHSON, INC.

STONEFIELD JOSEPHSON, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
April 15, 1999

F-2
50

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
------------- ------------- ------------ ------------
(UNAUDITED)

Cash and cash equivalents................... $ 2,173,200 $ 1,027,700 $ 174,400 214,300
Trade receivables, including $8,275,000 due
from related parties at September 30, 1999
less allowance for doubtful accounts of
$837,000, $337,000, $63,800 and $63,800,
respectively................................ 10,936,700 4,736,700 6,740,800 3,342,100
Television programming costs, less
accumulated amortization of $14,043,500,
$6,952,100, $2,846,600 and $1,599,700,
respectively.............................. 20,697,100 11,018,800 4,287,000 3,555,900
Due from officer............................ 170,400 145,400 195,500 11,300
Fixed assets, net........................... 55,200 16,400 29,000 42,100
Organizational costs and other assets....... 1,085,100 82,700 578,000 144,900
----------- ----------- ----------- ----------
Total Assets...................... $35,117,700 $17,027,700 $12,004,700 $7,310,600
=========== =========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued expenses and other
liabilities............................... $ 8,410,900 $ 1,679,400 $ 3,270,500 $1,220,200
Deferred revenue............................ 85,600 472,900 575,000 4,500
Accrued participations...................... 3,771,500 3,025,800 984,800 1,428,400
Line of credit -- Bank...................... 697,000 1,114,000 -- --
Notes payable............................... 4,387,200 2,305,000 4,889,600 3,762,900
Accrued interest............................ 324,200 530,900 898,300 242,000
Shareholder note payable.................... -- 500,000 740,000 740,000
----------- ----------- ----------- ----------
Total Liabilities................. 17,676,400 9,628,000 11,358,200 7,398,000
----------- ----------- ----------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 10,000,000
shares authorized; no shares issued and
outstanding............................ -- -- -- --
Common stock, no par value; 40,000,000
shares authorized; 5,983,757,
2,816,135, 1,131,344 and 1,131,344,
respectively, issued and outstanding... 1,000 1,000 1,000 1,000
Paid in capital........................... 16,146,800 7,612,700 1,230,100 943,300
Treasury Stock............................ -- (34,600) -- --
Retained Earnings (Accumulated Deficit)... 1,293,500 (179,400) (584,600) (1,031,700)
----------- ----------- ----------- ----------
Total shareholders' equity........ 17,441,300 7,399,700 646,500 (87,400)
----------- ----------- ----------- ----------
Total liabilities and
shareholders' equity............ $35,117,700 $17,027,700 $12,004,700 $7,310,600
=========== =========== =========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.
F-3
51

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE FOR THE
NINE MONTHS NINE MONTHS FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
------------- ------------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)

Revenues, including $8,675,000
for the nine months ended
September 30, 1999 as a result
of the Dandelion acquisition,
related parties, see Note 5.... $13,273,300 $9,466,800 $13,581,900 $6,875,600 $5,749,800
Cost of Revenues, including
$2,170,000 for the nine months
ended September 30, 1999
attributable to sales to related
parties, see Note 5.............. 6,056,300 5,884,500 9,076,000 2,355,300 2,895,900
General and administrative
expense........................ 3,771,700 2,234,100 3,274,000 3,244,900 2,323,800
----------- ---------- ----------- ---------- ----------
Earnings from operations......... 3,445,300 1,348,200 1,231,900 1,275,400 530,100
Interest expense................. 477,900 768,400 902,600 1,040,100 677,700
Interest income.................. 87,300 136,000 202,900 211,800 58,300
Other income -- -- 90,100
----------- ---------- ----------- ---------- ----------
Earnings before income taxes..... 3,054,700 715,800 532,200 447,100 800
Provision for income taxes, all
current........................ 1,149,900 60,500 57,500 -- --
----------- ---------- ----------- ---------- ----------
Earnings before extraordinary
item........................... $ 1,904,800 $ 655,300 $ 474,700 $ 447,100 $ 800
Extraordinary loss from early
extinguishment of debt......... 431,900 -- 69,500 -- --
----------- ---------- ----------- ---------- ----------
Net Earnings..................... $ 1,472,900 $ 655,300 $ 405,200 $ 447,100 $ 800
=========== ========== =========== ========== ==========
Basic earnings per common
share..........................
Earnings before extraordinary
item........................... $ 0.45 $ 0.43 $ 0.26 $ 0.40 $ --
Extraordinary (loss)............. (0.10) -- (0.04) -- --
----------- ---------- ----------- ---------- ----------
Net Earnings -- Basic............ $ 0.35 $ 0.43 $ 0.22 $ 0.40 $ --
=========== ========== =========== ========== ==========
Weighted average number of shares
outstanding basic.............. 4,198,176 1,506,672 1,833,340 1,131,344 1,131,344
=========== ========== =========== ========== ==========
Diluted earnings per share
Earnings before extraordinary
item........................... $ 0.38 $ 0.30 $ 0.20 $ 0.25 --
Extraordinary (loss)............. (0.09) -- (0.03) -- --
----------- ---------- ----------- ---------- ----------
Net Earnings -- Diluted.......... $ 0.29 $ 0.30 $ 0.17 $ 0.25 --
=========== ========== =========== ========== ==========
Weighted average number of shares
outstanding diluted............ 4,986,711 2,197,128 2,434,017 1,821,800 1,821,800
=========== ========== =========== ========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
52

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE FOR THE NINE FOR THE YEAR FOR THE YEAR FOR THE YEAR
MONTHS ENDED MONTHS ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
------------- ------------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)

OPERATING ACTIVITIES:
Net income........................................... $ 1,472,900 $ 655,300 $ 405,200 $ 447,100 $ 800
Adjustments to reconcile net income to cash used
for operating activities:
Depreciation and amortization.................. 10,200 10,200 12,600 13,100 15,600
Amortization of television programming costs... 6,056,300 1,205,600 8,980,300 1,455,000 1,100,800
Allowance for doubtful accounts................ 500,000 -- 664,000 1,115,600 63,800
Amortization of notes payable discount......... 30,800 131,000 -- 372,000 353,300
Changes in assets and liabilities:
Decrease (increase) in trade receivables....... (6,700,000) 393,000 1,340,100 (4,514,300) (3,352,900)
Additions to television programming costs...... (15,734,600) (6,515,400) (15,712,000) (2,186,200) (4,060,600)
Decrease (increase) in other assets............ (1,002,400) (1,131,400) 495,300 (433,100) (123,000)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities....... 6,731,500 (474,100) (1,553,700) 2,050,300 939,500
Increase (decrease) in deferred revenue........ (387,300) 197,900 (102,100) 570,500 (343,500)
Increase (decrease) in accrued
participations............................... 745,700 825,600 2,041,000 (443,600) 1,302,300
Increase (decrease) in accrued interest........ (206,700) (449,400) (367,400) 284,300 201,800
------------ ----------- ------------ ----------- ------------
Net cash used for operating activities....... (8,483,600) (5,151,700) (3,796,700) (1,269,300) (3,902,100)
------------ ----------- ------------ ----------- ------------
INVESTING ACTIVITIES:
Purchase of fixed assets........................... (49,000) -- -- -- (36,900)
Decrease (increase) in due from officer............ (25,000) 50,100 50,100 (184,100) 30,900
------------ ----------- ------------ ----------- ------------
Net cash provided (used) for investing
activities................................. (74,000) 50,100 50,100 (184,100) (6,000)
------------ ----------- ------------ ----------- ------------
FINANCING ACTIVITIES:
Proceeds from shareholder loan and notes payable... -- -- -- 1,423,500 --
Proceeds from issuance of note payable and
warrants......................................... 7,120,100 2,359,500 2,681,000 -- 4,747,00
Payments on bank line of credit.................... (417,000) -- -- -- --
Proceeds from bank line of credit.................. 1,114,000 -- --
Principal payment on loan due to shareholder....... (500,000) (240,000) (240,000) -- (10,000)
Purchase treasury stocks........................... -- -- (34,600) -- --
Sale treasury stocks............................... 34,600 -- -- -- --
Extraordinary charge for early retirement
of debt.......................................... 431,900 -- 69,500 -- --
Principal payment of notes payable................. (5,500,600) (4,065,300) (5,372,600) (10,000) (748,600)
Waiver of interest on loan due to shareholder...... -- -- -- -- 95,000
Issuance of common stock........................... 8,534,100 7,713,500 6,382,600 -- --
------------ ----------- ------------ ----------- ------------
Net cash provided by financing
activities................................. 9,703,100 5,767,700 4,599,900 1,413,500 4,083,400
------------ ----------- ------------ ----------- ------------
Net change in cash................................. 1,145,500 666,100 853,300 (39,900) 175,300
Cash at beginning of period........................ 1,027,700 174,400 174,400 214,300 39,000
------------ ----------- ------------ ----------- ------------
Cash at end of period.............................. $ 2,173,200 $ 840,500 $ 1,027,700 $ 174,400 $ 214,300
============ =========== ============ =========== ============
Supplemental disclosure of cash flow information:
Interest paid...................................... $ 175,200 $ 86,000 $ 1,270,000 $ -- $ 15,100
============ =========== ============ =========== ============
Income taxes paid.................................. $ 17,400 $ 19,000 $ 93,200 $ 26,300 $ 4,000
============ =========== ============ =========== ============

The accompanying notes are an integral part of these consolidated financial
statements.
F-5
53

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL SCHEDULE OF NON CASH ACTIVITIES

FOR THE FOR THE
NINE MONTHS NINE MONTHS FOR THE FOR THE FOR THE
ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
------------- ------------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)

Extinguishment of TPEG settlement
payable by assignment of the
treasury stock receivable....... -- -- -- 178,000 178,000
Issuance of warrants in
conjunction with notes payable.... -- -- 62,500 286,600 602,700
Issuance of shares in connection
with conversion of notes
payable......................... -- -- 53,600 -- --
Issuance of shares and warrants in
connection with services
provided to the Company......... 1,435,900 -- 58,000 -- 24,700
Issuance of shares in connection
with extinguishment of debt..... 2,299,600 -- 458,000 -- --
Transfer of shares by principal
shareholder to notes payable
holder.......................... -- -- -- -- 45,700
Issuance of shares in connection
with notes payable.............. -- -- -- -- 84,200

The accompanying notes are an integral part of these consolidated financial
statements.
F-6
54

TEAM COMMUNICATIONS GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

COMMON STOCK RETAINED
---------------------- EARNINGS
NUMBER PAID IN TREASURY ACCUMULATED/
OF SHARES PAR VALUE CAPITAL STOCK (DEFICIT)
---------- --------- ----------- -------- ------------

Balance at December 31, 1995........... $1,024,059 $1,000 $ -- $(87,000) $(1,032,500)
Transfer of shares by principal
shareholder to notes payable
holder............................... -- -- 45,700 -- --
Exchange of treasury stock receivable
with related party for extinguishment
of TPEG settlement payable........... -- -- 91,000 87,000 --
Issuance of shares in connection with
notes payable........................ 79,708 -- 84,200 -- --
Issuance of warrants in connection with
private placements................... -- -- 602,700 -- --
Issuance of shares in connection with
anti-dilution provisions of
convertible promissory note.......... 4,292 -- -- -- --
Issuance of shares in connection with
services provided to the Company..... 23,285 -- 24,700 -- --
Waiver of interest on loan due to
shareholder.......................... -- -- 95,000 -- --
Net income for year ended December 31,
1996................................. -- -- -- -- 800
---------- ------ ----------- -------- -----------
Balance at December 31, 1996........... 1,131,344 $1,000 $ 943,300 $ -- $(1,031,700)
Net Income for the Year
ended December 31, 1997.............. -- -- -- -- 447,100
Issuance of warrants in connection with
private placement.................... -- -- 286,800 -- --
---------- ------ ----------- -------- -----------
Balance at December 31, 1997........... 1,131,344 $1,000 $ 1,230,100 $ -- $ (584,600)
Net Income for the Year
ended December 31, 1998.............. -- -- -- -- 405,200
Issuance of shares in connection with
the initial public offering.......... 1,500,000 -- 5,744,700 -- --
Issuance of shares in connection with
the extinguishment of debt........... 188,974 -- 458,000 -- --
Purchase of Treasury Stock............. (17,000) -- -- (34,600) --
Issuance of debt with beneficial
conversion feature................... -- -- 66,100 -- --
Conversion of debt to equity........... -- -- 50,000 -- --
Issuance of warrants for services...... -- -- 58,000 -- --
Exercise of warrants................... 12,817 -- 5,800 -- --
---------- ------ ----------- -------- -----------
Balance at December 31, 1998........... 2,816,135 $1,000 $ 7,612,700 $(34,600) $ (179,400)
Net income for the nine months ended
September 30, 1999................... -- -- -- -- 1,472,900
Sale of Treasury Stock................. 17,000 -- -- 34,600 --
Issuance of shares in connection with
conversion of debt................... 1,219,974 -- 2,299,600
Issuance of stock for services......... 464,000 -- 1,032,400 -- --
Issuance of warrants -- services....... -- -- 403,500 -- --
Issuance of warrants -- debt........... -- -- 240,000 -- --
Issuance of debt with beneficial
conversion feature................... -- -- 730,000 -- --
Private placement of common stock...... 1,013,334 -- 3,465,300 -- --
Exercise of warrants................... 453,314 -- 363,300 -- --
---------- ------ ----------- -------- -----------
Balance at September 30, 1999.......... 5,983,757 $1,000 $16,146,800 $ -- $ 1,293,500
========== ====== =========== ======== ===========

The accompanying notes are an integral part of these consolidated financial
statements
F-7
55

TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- DESCRIPTION OF THE COMPANY:

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

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

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

Revenue Recognition

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

Sales to four major customers accounted for approximately 82% of the
Company's total operating revenue for the nine months ended September 30, 1999.
Sales to four major customers accounted for approximately 69% of the Company's
total operating revenue for the year ended December 31, 1998. Sales to four
major customers accounted for approximately 88% of the Company's total operating
revenue for the year ended December 31, 1997. Sales to six major customers
accounted for approximately 81% of the Company's total operating revenue for the
year ended December 31, 1996.

Cash

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

Included in cash and cash equivalents as of September 30, 1999 and December
31, 1998, is an $860,000 certificate of deposit. This certificate of deposit is
restricted as it secures the Company's revolving line of credit of $850,000 with
Mercantile National Bank.

Television Program Costs

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

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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the individual film forecast method whereby expense is recognized in the
proportion that current year revenues bear to an estimate of ultimate revenue.
Such estimates of ultimate revenue are prepared and reviewed by management, and
estimated losses, if any, are provided for in full. Development costs are
reviewed by management and charged to expense when abandoned or, even if still
being actively developed, if not set for principal photography within three
years of initial development activity.

During the nine months ended September 30, 1999, as the Company increased
its activities related to film cost production, overhead was capitalized in
accordance with SFAS No. 53 based upon estimates of production related
activities as a percentage of anticipated film cost expenditures during 1999.
Management reviews the overhead rate throughout the year and will adjust the
overhead rate on a quarterly basis, if necessary. During the nine months ended
September 30, 1999, overhead in the amount of approximately $1,740,700 was
capitalized to film production costs.

Fixed Assets

Fixed assets include office furnishings, fixtures and equipment. Office
furnishings, fixtures and equipment are depreciated over a useful life of five
years. All depreciation expense is calculated using Modified Accelerated Cost
Recovery System. Fixed assets are net of $55,500, $41,800, $30,000 and $16,700
in accumulated depreciation at September 30, 1999, December 31, 1998, December
31, 1997 and December 31, 1996, respectively.

Organizational Costs and Other Assets

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

Debt with Stock Purchase Warrants and Beneficial Conversion Features

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

Unclassified Balance Sheet

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

Financial Instruments

The carrying amounts of financial instruments including cash and cash
equivalents, short term accounts receivable, accounts payable, loans payable,
and deferred revenue approximated fair value as of September 30, 1999, December
31, 1998, December 31, 1997 and December 31, 1996, because of the relatively
short maturity of these instruments. The carrying value of long term accounts
receivable and notes payable approximated fair value as of September 30, 1999,
December 31, 1998, December 31, 1997 and December 31, 1996, because the
instruments are valued at the Company's effective borrowing rate.

F-9
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Use of Estimates

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

Common Stock

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

Concentration of Credit Risk

Three customers represented approximately 88% of the trade receivable
balance at September 30, 1999.

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

Five customers represented approximately 95% of the trade receivable
balance at December 31, 1997.

Included in Accounts Receivable as of September 30, 1999, is $900,000 which
is held as security by a third-party for certain programming rights acquired by
the Company. Upon collection of this receivable the amounts will be placed in
escrow and recorded as cash, although the cash will be restricted as to
withdrawal.

Net Earnings Per Common Share

For the nine months ended September 30, 1999 and the years ended December
31, 1998, December 31, 1997 and December 31, 1996, the per share data is based
on the weighted average number of common and common equivalent shares
outstanding. For 1997, per share data is calculated in accordance with Staff
Accounting Bulletin of the Securities and Exchange Commission (SAB) No. 98
whereby common stock, options or warrants to purchase common stock or other
potentially dilutive instruments issued for nominal consideration must be
reflected in basic and diluted per share calculations for all periods in a
manner similar to a stock split, even if anti-dilutive. Accordingly, in
computing basic earnings per share, nominal issuances of common stock are
reflected in a manner similar to a stock split or dividend. In computing diluted
earnings per share, nominal issuances of common stock and potential common stock
are reflected in a manner similar to a stock split or dividend.

A portion of convertible debt was not included in the calculation of
weighted average shares for the years ended December 31, 1997 and December 31,
1996, because the Chairman and CEO had personally guaranteed to the Company
that, on certain debt, he will assume any convertible debt where the debt holder
wishes to convert in exchange for his own personal shares. The total number of
shares that this convertible debt may convert into is approximately 199,748.

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

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

F-10
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year 2000 Compliance

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

New Accounting Pronouncements

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

Recent Pronouncements Effective Subsequent to 1998

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

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

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

Unaudited Interim Consolidated Financial Statement

In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of September 30, 1999, and the results of operations and cash flows
for the nine month period ended September 30, 1999 have been included. The
results of operations for the nine month period ended September 30, 1999, are
not necessarily indicative of the results to be expected for the full fiscal
year. For further information, refer to the financial statements and footnotes
thereto included in the Company's 10-KSB filed for the year ended December 31,
1998.

NOTE 3 -- TELEVISION PROGRAM COSTS:

Television program costs consist of the following:

SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
------------- ------------ ------------ ------------
(UNAUDITED)

In process and development............ $ 2,242,000 $ 1,017,400 $1,502,000 $1,977,000
Released, less accumulated
amortization.......................... 18,455,100 10,001,400 2,785,000 1,578,900
----------- ----------- ---------- ----------
Total television program
costs..................... $20,697,100 $11,018,800 $4,287,000 $3,555,900
=========== =========== ========== ==========

F-11
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Based on management's estimates of future gross revenue as of September 30,
1999, approximately 60% of the $20,697,100 in unamortized released television
program costs will be amortized during the three years ending September 30, 2002
and 80% will be amortized during the five years ending September 30, 2004.

NOTE 4 -- INCOME TAXES:

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

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

DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------ ------------ ------------

Statutory federal tax rate........................ 34% 34% 34%
State income tax provision........................ 3% 0% 0%
Benefits of operating loss carryforward........... (26)% (34)% (34)%
--- --- ---
Effective tax rate................................ 11% 0% 0%
=== === ===

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

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

DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------ ------------ ------------

Net operating loss (carryforward)................. $ 61,156 $ 184,605 $ 336,620
Valuation allowance............................... $(61,156) $(184,605) (336,620)
-------- --------- ---------
Net deferred tax asset.......................... $ -- $ -- $ --
-------- --------- ---------
Total current and deferred taxes payable.......... $ -- $ -- $ --
======== ========= =========

At December 31, 1998 and December 31, 1997, the Company has a federal net
operating loss carryforward of $180,000 and $542,958, respectively.

NOTE 5 -- RELATED PARTY TRANSACTIONS:

As a consequence of the Company's October 1999 acquisition of Dandelion
Distribution Ltd. (Dandelion), certain receivables resulting from sales made
prior to the acquisition are now considered due from related parties for
financial reporting purposes. In June 1999 the Company entered into a five year
license agreement for certain territories including the UK of 20
made-for-television movies with Renown Pictures, Ltd., a UK company owned by
Noel Cronin, formerly the owner of Dandelion. At September 30, 1999 the
receivable due from Renown was $2,900,000. Subsequent to such date the Company
received a payment of $725,000 per the terms of the agreement.

Noel Cronin is also a director of String of Pearls Plc. In September 1999,
the Company entered into a 10 year license agreement for certain European
territories including Germany, France and Italy, of 20 made-for-television
movies with String of Pearls Plc. At September 30, 1999, the receivable due from
String of Pearls Plc was $5,375,000. Mr. Cronin has personally guaranteed the
obligation of String of Pearls Plc. Subsequent to such date the Company received
a payment of $290,000 per the terms of agreement.

F-12
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The due from officer balance of $170,400, $145,400 and $195,500 at
September 30, 1999, December 31, 1998 and December 31, 1997, represents payments
made by the Company on behalf of and short-term interest free loans made to the
Chairman and CEO, less producer's fees earned by the Chairman and CEO for
services on a company production.

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

SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
------------- ------------ ------------ ------------
(UNAUDITED)

Promissory note:
14% secured promissory note due July
15, 1998(i)............................ $-- $ -- $240,000 $240,000
12% secured promissory note due
August 31, 1999(ii)............... -- 500,000 500,000 500,000
--- -------- -------- --------
$-- $500,000 $740,000 $740,000
=== ======== ======== ========

(i) In August 1995, the Company entered into a $250,000 promissory
note with a shareholder. The note accrues interest at 12% through November
1, 1995 and at 14% thereafter. The note and all unpaid interest are due
July 15, 1998, as amended. The note is secured by all of the President and
principal shareholder's shares and the assets of the Company. The
shareholder has waived all accrued interest relating to this note totaling
$79,000 through March 31, 1998. This interest expense, at fair value, was
recorded as either a corresponding credit to paid-in capital (1996) or
accrued liabilities (1997) which will be offset against paid-in capital
upon settlement of the obligations. The Company issued 48,743 warrants
exercisable at $0.43 in connection with the extension of the maturity date
of the loan to July 1, 1996. This promissory note was paid in full in
August 1998.

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

NOTE 6 -- COMMITMENTS AND CONTINGENCIES:

In January 1999, the Company was served with a complaint in a matter styled
Mel Giniger & Associates vs. Team Communications Group, Inc. et al. filed in the
Superior Court of the County of Los Angeles. In the complaint, the Plaintiff, an
individual who served as a sales agent for the Company, alleges that he is owed
commissions for sales of certain of the Company's programming and that the
Company has failed to pay in full the amounts Plaintiff alleges are owed to him.
The complaint seeks damages for breach of contract, services rendered, account
stated and for payment of value for services rendered. The Company has filed an
answer in this action and intends to vigorously defend itself. The Plaintiff
recently obtained a writ of attachment in the amount of $100,000 and we have
posted a bond with the Superior Court of the County of Los Angeles with respect
to this obligation.

On October 24, 1999, the Company was served with a complaint from Beyond
Entertainment, the licensee of Water Rats Seasons I & II. The complaint, which
seeks an accounting and termination of the license agreement, seeks $3,000,000
in contractual damages and $6,000,000 for negligence and fraud. The Company
believes the complaint to be totally without merit and intends to vigorously
contest the matter.

At this time, the outcome of any of the above matters cannot be determined
by the Company with any certainty. The Company is subject to the above mentioned
litigation and other various claims and lawsuits in

F-13
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the ordinary course of business. In the opinion of management, the ultimate
resolution of these matters will not have a material adverse effect on the
Company's financial condition, results of operations or cash flows.

The Company leases office space and certain office equipment. The total
lease expense was $93,450, $78,000, $118,400, 96,300 and $113,700, respectively,
for the periods ended September 30, 1999, September 30, 1998, December 31, 1998,
December 31, 1997 and December 31, 1996, respectively. The various operating
leases to which the Company is presently subject require minimum lease payments
for the years ending December 31, as follows:

1999....................................................... 54,700
2000....................................................... 6,400
2001....................................................... 6,400
2002....................................................... 6,400
2003....................................................... 5,800
-------
$79,700
=======

NOTE 7 -- LINE OF CREDIT -- BANK

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

As of September 30, 1999, December 31, 1998, December 31, 1997 and December
31, 1996, the outstanding balance of the line credit was $697,000, $1,114,000,
$0 and $0, respectively.

F-14
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8 -- NOTE PAYABLE:

Notes payable consists of the following:

SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
------------- ------------ ------------ ------------
(UNAUDITED)

Private placements:
12% secured notes due
August 1999(i)......... $ -- $ 225,000 $ 900,000 $ 900,000
10% secured convertible
notes due August
1999(ii)............... -- 296,000 839,000 657,000
10% secured notes due
August 1999(iii)....... 75,000 80,000 788,700 --
Promissory notes:
10% secured promissory
note due August
1999(iv)............... 125,000 250,000 500,000 500,000
11% unsecured promissory
note past due(v)....... 124,900 124,900 124,900 134,900
12% secured note due April
1999, past due(vi)..... -- 150,000 -- --
12% secured note due March
1999, past due(vii).... 150,000 150,000 -- --
12% secured note due April
1999(viii)............. -- 350,000 -- --
18% secured note past
due(ix)................ -- 115,000 -- --
12% secured note due
January 2000(x)........ 100,000 284,100 -- --
16% secured note due
August 1999(xi)........ -- 30,000 -- --
10% secured note due March
1999, past due(xii).... -- 250,000 -- --
12% secured notes due
November 1999(xiii).... 350,000 -- -- --
12% convertible secured
promissory note due
July 1998(xiv)......... -- -- 322,000 322,000
8% secured note due July
1998(xv)............... -- -- 300,000 239,900
10% secured note due July
1998(xvi).............. -- -- 150,000 124,100
10% secured note due July
1998(xvii)............. -- -- 650,000 --
12% secured note due July
1998(xviii)............ -- -- 315,000 --
10% secured promissory
note due June
1997(xix).............. -- -- -- 885,000
12% secured convertible
note due November
1999(xx)............... 200,000 -- -- --
12% secured convertible
note due November
2002(xxi).............. 3,262,300 -- -- --
---------- ---------- ---------- ----------
$4,387,200 $2,305,000 $4,889,600 $3,762,900
========== ========== ========== ==========

F-15
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

On January 30, 1999, the Company sold $850,000 principal amount of 8%
convertible debentures and 85,000 warrants. On March 16, 1999, the Company sold
$500,000 principal amount of 8% convertible debentures and 50,000 warrants.
These convertible debentures have the same terms for conversion. The conversion
price for each debenture will be the lesser of a) 90% of the average per share
market value for five consecutive days prior to the Initial Closing date or b)
85% of the per share market value for the trading day having the lowest per
share market value during the five trading days prior to the conversion date. If
not otherwise converted, the debentures mature on January 27, 2002, and March
15, 2002, respectively. These beneficial conversion features are included in
additional paid in capital. The related discount is amortized over the life of
the note using the effective interest method. Debentures representing $850,000
principal amount were converted to equity in May 1999. The Company recognized a
$248,200 extraordinary loss as a result of the conversion of these notes. The
extraordinary loss consisted of the write-off of the associated debt discount.

On April 7, 1999, the Company sold an additional $500,000 principal amount
of 8% convertible debentures and 50,000 warrants. These debentures have the same
terms as described above and mature, unless converted prior, on March 30, 2002.

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

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

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

The notes are convertible at their principal amount into common stock
of the Company at any time one year after the initial public offering, July
29, 1998, through maturity at the conversion price of $5.00 per share
subject to adjustment in certain circumstances. Each warrant entitles the
holder to buy one
F-16
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TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

share of common stock at an exercise price of $0.43. The warrants are
exercisable commencing two business days following the effective date of
the registration statement relating to an initial public offering, July 29,
1998, and terminating on July 29, 2001. As of December 31, 1996, the
Company raised $975,000 and issued 83,308 warrants. Principal and interest
were due no later than July 15, 1998 and $679,000 was redeemed at the
initial public offering. The remainder of the noteholders extended the
maturity date to August 1999. The accrued interest balance was $108,500 at
December 31, 1998. The notes are secured by substantially all of the assets
of the Company. The carrying amount and fair value of the notes and
associated warrants were determined by the market rate, approximately 25%,
for a financial instrument of this risk. The notes were discounted at this
market rate. The value of the warrants amounted to $381,928 and is included
in paid in capital. These notes were repaid in August 1999 (unaudited).

(iii) During January 1997, the Company participated in a third private
placement offering. The Company sold 19.4 units to the following investors:
Alan Parness, Arab International Trust Co., Duck Partners, LP, Gary and
Paula Wayton, Michael Rosenbaum, RMK Financial LLC, Robert Bain, Robert
Frankel, Roger Triemstra, Roland McAbee, Swan Alley Limited, and Van Moer
Santerr & Cie. Each unit consisted of a $50,000 senior note payable with
interest of 10% per annum, payable at six month intervals, and 10,000
Common Stock Purchase warrants. In 1998 $889,000 was repaid. The maturity
date of the notes is August 1999. Each warrant entitles the holder to buy
one share of common stock at an exercise price of $0.97. The warrants are
exercisable commencing two business days following the effective date of
the registration statement relating to an initial public offering and
terminating on the third anniversary of that date. As of September 30,
1997, the Company raised $969,000 and issued 193,870 warrants. The accrued
interest balance was $41,100 at December 31, 1998. The notes are secured by
substantially all of the assets of the Company. The carrying amount and
fair value of the notes and associated warrants were determined by the
market rate, approximately 25%, for a financial instrument of this risk.
The notes were discounted at this market rate. The value of the warrants
amounted to $286,797 and is included in paid-in capital.

(iv) In April 1996, the Company entered into a $500,000 promissory
note with South Ferry #2, L.P., an outside investor, to finance a
television program. The note accrues interest at 10% per annum and is due
on August 20, 1999, as amended. At the initial public offering, $250,000
was repaid. The accrued interest balance was $124,200 at December 31, 1998.
The note is secured by certain assets and rights associated with the
television program. There were 29,906 warrants (exercisable at $0.43 per
warrant) issued in connection with this note. The fair value of the note
was estimated using discounted cash flow methods based on the Company's
borrowing rates, approximately 25%, for similar types of borrowing
arrangements with comparable terms and maturities. In August 1999, the
Company repaid $125,000 of the principal and extended the remaining
$125,000 to November 23, 1999 (unaudited).

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

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

F-17
65
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

(ix) In May 1998, the Company obtained a loan in the amount of
$115,000 from the High Bridge Fund. The loan includes a $15,000 loan
origination fee and begins to accrue interest at 18% per year if the loan
goes into default. At December 31, 1998, the accrued interest was $2,000.
The loan was repaid in August 1999 (unaudited).

(x) In May and June 1998, the Company arranged with nine parties for
$375,000 of long term loans. The loans mature January 2000. Of the
$375,000, there are two loan origination fees, one for $8,000 and one for
$8,500. Two notes are convertible at their principal and interest amount
into common stock of the Company at any time through maturity at the
conversion price of 50% of the current per share market value. One note is
convertible at its principal and interest amount into common stock of the
Company at the conversion price of 75% of the current per share market
value. These conversion features were valued at $62,500 and included in
paid in capital. The resulting discount on the notes payable is amortized
over the life of the note using the effective interest method. At December
31, 1998, $284,100 principal amount remained outstanding. The loans accrue
interest at 12% per annum. As of December 31, 1998, there was accrued
interest of $22,700. This loan was repaid in full in July 1999 (unaudited).

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

(xii) On December 29, 1998, the Company arranged a loan for $250,000.
The loan accrues interest at 10% per annum. The loan matured on March 31,
1999. This note has been paid in full in August 1999 (unaudited).

(xiii) In May, June and July 1999, the Company sold notes for
$350,000. These notes mature in November 1999 and bear an interest rate of
12% (unaudited).

(xiv) In January 1996, the Company entered into an agreement with AMAE
Ventures, an outside investor. The Company received $322,000 in exchange
for (i) a convertible secured promissory note, convertible into 3% of the
Company's outstanding stock on a fully diluted basis through an initial
public offering, and (ii) the transfer from the principal shareholder of 4%
of the Company's issued and outstanding stock on a fully diluted basis
through an initial public offering. The note accrues interest at 12% per
annum and is due July 15, 1998. The accrued interest balance was $121,000,
$93,000 and $36,200 at March 31, 1998, December 31, 1997 and December 31,
1996, respectively. The fair value of the note and carrying value and fair
value of the associated shares were determined by the market rate for a
financial instrument of this risk. This note was converted to equity in
August 1998.

(xv) In November 1996, the Company entered into a $300,000 promissory
note with Affida Bank. The note bears interest at 8% per annum, compounding
quarterly, and is due the sooner of an initial public Offering or July 15,
1998. The accrued interest balance was $34,200, $8,500, $27,700, and $2,800
at March 31, 1998, December 31, 1997 and December 31, 1996, respectively.
The note is secured by substantially all of the assets of the Company.
There were 25,634 Common Stock Purchase warrants issued in connection with
this note. Each warrant entitles the note holder to buy one share of common
stock at an exercise price of $.43. The warrants are currently exercisable
and terminate on the earlier to

F-18
66
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

occur of the third anniversary of the effective date of an initial public
offering or June 30, 2000. The note is secured by substantially all of the
assets of the Company. The carrying amount and fair value of the notes and
associated warrants were determined by the market rate, approximately 25%,
for a financial instrument of this risk. The notes were discounted at this
market rate. The value of the warrants amounted to $66,000 and is included
in paid in capital. This note was paid in full in August 1998.

(xvi) In December 1996, the Company entered into a $150,000 promissory
note with Phillip Tewel. The note bears interest at 10% per annum,
compounding quarterly, and was due the sooner of an initial public offering
or July 15, 1998. The accrued interest balance was $20,100, $16,050, and
$400 at March 31, 1998, December 31, 1997 and December 31, 1996,
respectively. The note is secured by substantially all of the assets of the
Company. There were 29,191 Common Stock Purchase warrants issued in
connection with this note. Each warrant entitles the note holder to buy one
share of common stock at an exercise price of $.43. The warrants are
currently exercisable and terminate on the earlier to occur of the third
anniversary of the effective date of an initial public offering or June 30,
2000. The note is secured by substantially all of the assets of the
Company. The carrying value of the warrants amounted to $26,500 and is
included in paid-in capital. This note was paid in full in August 1998.

(xvii) In June 1997, the Company entered into a $650,000 secured
promissory note with Alliance. The note bears interest at the prime rate
plus one per cent per annum from June 1996 and required payments such that
the note, as amended, would be repaid by July 15, 1998. As of March 31,
1998 and December 31, 1997 there was $50,800 and $34,500, respectively of
accrued interest. The note is secured by all the television rights and
interest owned with regards to the "Total Recall" project. This note was
paid in full in August 1998.

(xviii) In December 1997, the Company obtained a loan in the amount of
$315,000 from Venture Management Consultants LLC ("VMC"), which carries
interest at 12% per annum, and matures at the earlier of the closing of the
offering or July 15, 1998. As the loan was not repaid in full by February
15, 1998, the Company is required to pay VMC an additional $15,000.
Included in the principal balance is a $15,000 loan origination fee. As of
December 31, 1997 there was accrued interest of $2,000. As of March 31,
1998, $50,000 of the principal under this note has been repaid. The note is
secured substantially by all the assets of the Company. This note was paid
in full in August 1998.

(xix) In July 1996, the Company entered into a $1,200,000 promissory
note with 3 outside investors, ACA Equities, D&M Investments and Gilbert
Karsenty, to acquire the television rights to "Total Recall." The note
accrued interest at 10% per annum. As of March 31, 1998 and December 31,
1997, there had been $1,200,000 repaid in respect to this debt. As of
December 31, 1996 there had been $315,000 repaid in respect to this debt.
The accrued interest balance was $83,100 at March 31, 1998 and December 31,
1997 and $47,800 at December 31, 1996. There were 53,403 shares of common
stock issued in connection with the origination of this debt and 21,362
warrants (exercisable at $0.43 per warrant) were issued to extend the loan.
The outside investors are also entitled to 15% of any net profits earned
from the exploitation of these rights. The fair value of the notes was
estimated using discounted cash flow methods based on the Company's
borrowing rates, approximately 25%, for similar types of borrowing
arrangements with comparable terms and maturities. These notes were paid
off in 1997.

(xx) In July 1999, we arranged for a short term loan of $1,200,000 for
production and distribution activities. The loan matures on November 30,
1999 and accrues interest at 12% per year. If the loan is not repaid by
November 30, 1999, the principal and all accrued and unpaid interest
convert into shares of our common stock at the lesser of 85% of the market
price on the date of issuance or 110% of the current market price when
converted. As of November 10, 1999 we have repaid the full $1,200,000 of
this note (unaudited).

(xxi) On August 5, 1999, the Company completed a $4,000,000 financing
in anticipation of the Company's public offering in Germany this fall. The
Note bears interest at 12% per annum and matures
F-19
67
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

November 30, 2002. The Note is subordinate to any of the Company's bank
financing or senior debt. All or part of the unpaid principal amount may be
converted into shares of Common Stock at the holder's option any time after
November 30, 1999. The conversion price is the lesser of 120% of the
average per share market price for five consecutive trading days prior to
August 5, 1999 or 88% of the per share market price for the three days with
the lowest per share market price during the twenty-five days prior to
conversion. Connected with this financing, the Company sold 340,000
warrants to purchase Team common stock at $6.50, which is 105% of the
five-day average closing price prior to the closing of the financing
(unaudited).

NOTE 9 -- GEOGRAPHIC INFORMATION:

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

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

SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
------------- ------------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)

North America............. $ 3,504,400 $6,336,900 $ 9,844,500 $1,483,600 $2,221,900
Europe.................... 8,675,000 -- -- 307,100 1,332,900
South America............. 645,900 1,705,000 1,351,800 3,798,900 732,400
Asia...................... 448,000 1,424,900 1,412,900 136,000 1,306,500
Australia and Africa...... -- -- 972,700 1,250,000 156,100
----------- ---------- ----------- ---------- ----------
Total..................... $13,273,300 $9,466,800 $13,581,900 $6,975,600 $5,749,800
=========== ========== =========== ========== ==========

NOTE 10 -- STOCK OPTION PLANS:

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

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

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

F-20
68
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A summary of the Key Employee Plan as of and for the periods December 31,
1998, December 31, 1997 and December 31, 1996, is presented below:

WEIGHTED AVERAGE
KEY EMPLOYEE PLAN SHARES EXERCISED PRICE
----------------- ------- ----------------

Outstanding as of January 1, 1996.................... -- $ --
Granted.............................................. 35,000 1.14
Exercised.......................................... -- --
Forfeited/Expired.................................. -- --
-------
Outstanding as of December 31, 1998, December 31,
1997 and December 31, 1996......................... 35,000
=======
Weighted-average fair value of options outstanding... $ 1.14
=======

The following table summarizes information about options outstanding at
December 31, 1998, 1997 and 1996:

SHARES EXERCISABLE AT
DECEMBER 31, 1998,
DECEMBER 31, 1997, DATE
TOTAL SHARES EXERCISE PRICE AND DECEMBER 31, 1996 OPTIONS EXPIRE
------------ -------------- --------------------- --------------

30,000 $1.00 10,000 July 1, 2006
5,000 $2.00 5,000 June 6, 2006
------ ------
35,000 15,000
====== ======

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

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

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

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

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

The aggregate number of shares of Common Stock that may be granted under
the 1996 Employee Plan is 180,000. The Employee Plan provides for the authority
by the Employee Plan Committee to grant ISO's to any key employee of the Company
or any affiliate of the Company and to determine the terms and conditions

F-21
69
TEAM COMMUNICATIONS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

of each grant, including without limitation, the number of shares subject to
each ISO. The ISO exercise price will also be determined by the Committee and
will not be less than the fair market value of the Common Stock on the date of
grant. The exercise price will not be less than 110% of such fair market value
and the exercise period will not exceed five years if the participant was the
holder of more than 10% of the Company's outstanding voting securities.

NOTE 11 -- SUBSEQUENT EVENTS (UNAUDITED):

On October 1, 1999, the Company completed the purchase of Dandelion
Distribution Ltd., a 20 year old United Kingdom based television production and
distribution company, for $2,500,000 in cash and 386,847 shares of the Company's
common stock for an aggregate value of $5,000,000. The Company may also be
required to pay an additional $250,000 if the shares of common stock delivered
as part of the purchase price do not have a market value of at least $3,000,000
on October 1, 2001.

On October 5, 1999, the Company completed a $4,000,000 financing with
Gontard & MetallBank AG. The Note bears interest at 10% per annum and matures on
the earlier of the completion of this offering or December 31, 1999.

NOTE 12 -- GOING CONCERN:

The Company's financial statements for the nine months ended September 30,
1999 and 1998 and the years ended December 31, 1998, December 31, 1997 and
December 31, 1996, have been prepared on a going concern basis which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company expects to incur
substantial expenditures to produce television programs and/or acquire
distribution rights to television programs produced by third parties. The
Company's working capital plus limited revenue from the licensing of its current
inventory of television programs will not be sufficient to fund the Company's
ongoing operations, including completing projects that the Company is
contractually required to develop or produce.

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

F-22
70

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

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

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................... 1
Risk Factors.......................... 5
Use of Proceeds....................... 11
Dividend Policy....................... 11
Selected Consolidated Financial
Data................................ 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 13
Business.............................. 18
Management............................ 26
Security Ownership of Certain
Beneficial Owners and Management.... 30
Certain Relationships and Related
Transactions........................ 31
Selling Shareholders.................. 36
Description of Securities............. 38
Shares Eligible for Future Sale....... 42
Legal Matters......................... 43
Experts............................... 43
Additional Information................ 44
Index to Consolidated Financial
Statements.......................... F-1

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

DECEMBER 7, 1999

- ------------------------------------------------------
- ------------------------------------------------------
71

PART II

EXHIBITS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

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

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

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

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

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

SEC registration fee........................................ $
NASDAQ filing fee (estimate)................................
Printing and engraving expenses (estimate)..................
Legal fees and expenses (estimate)..........................
Accounting fees and expenses (estimate).....................
Miscellaneous...............................................
-----------
Total............................................. $
===========

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

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

II-1
72

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

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

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

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

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

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

II-2
73

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

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

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

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

11. In May, June and July 1998, the Company arranged for loans from 10
parties of an aggregate of $715,000 for specific production financing. The notes
pursuant to such loans were sold to the following investors: Charles E. and Ada
M. Miller Trust, Donald E. Stuck and Phyllis T. Stuck, Ryo & Jean S. Komae
Marital Trust U/A dated 11/14/91, Claudio Nessi, Carter Family Trust, MacAlister
Credit Trust U/A/D 11/25/88, Miyamoto Investment, Dr. Richard Bardowell, Sandel
Products and Chase Financing, Ltd.

12. Between September 1998 and January 1999 we issued 483,000 shares of our
common stock to the following individuals and entities: (i) 59,000 shares to
Delbert Reedy pursuant to the conversion of a certain promissory note, dated May
29, 1998, in the amount of Fifty Thousand Dollars ($50,000); (ii) 59,000 shares
to the Carter Family Trust, pursuant to the conversion of a certain promissory
note, dated May 29, 1998, in the amount of Fifty Thousand Dollars ($50,000);
(iii) 31,000 shares to Claudio Nessi pursuant to a certain promissory note,
dated June 18, 1998, in the amount of Fifty Thousand Dollars ($50,000); (iv)
1,000 shares for Dr. Michael Berlin in connection with certain accommodations
made by Dr. Michael Berlin; and (v) 80,000 shares to Marathon Consulting, Inc.,
30,000 of which were issued in connection with a consulting agreement dated May
1, 1999, and 50,000 of which were assigned by an affiliate, Investor Relations
Services, Inc., who had the right to receive such shares pursuant to a
consulting agreement dated as of November 17, 1998 and (vi) 283,000 shares to
Infusion Capital Investment Corporation, in connection with a consulting
agreement, dated as of November 17, 1998.

13. During 1998, we granted warrants to purchase our common stock to the
following individuals and entities for services provided to us: (i) 22,000 and
10,000 warrants, respectively, to Mansion House International and Danny Chan,
respectively, exercisable at $2.75 per share, (ii) 5,000 warrants to Hedblom
Partners, exercisable at $3.50 per share, (iii) 200,000 warrants to Glen Michael
Financial; 100,000 exercisable at $1.62 per share, 75,000 exercisable at $3.00
per share and 25,000 exercisable at $3.25 per share, and (iv) 10,000 warrants to
Ralph Olsen, exercisable at $2.00 per share. In addition, we granted (x) 121,000
and 10,000 warrants, respectively, to Chase Financial Limited and Robert
Herskowitz, respectively, exercisable at $1.62 per share and (y) an aggregate of
20,000 warrants, 5,000 each to Investor Relations Services, Aurora Holdings,
Amber Capital and Affiliated Services, respectively, in connection with debt
that was raised.

14. In January and March 1999, the Company sold to the following 5
investors: Austinvest Anstalt Balzers, Esquire Trade & Finance Inc., Amro
International, S.A., Nesher Inc., and VMR Luxembourg, S.A., 1,850,000 of 8%
convertible debentures and warrants to purchase up to 185,000 shares of common
stock. The

II-3
74

holders of $1,000,000 of the debentures have indicated they intend to convert
their debentures into common stock. All of the debentures are convertible into
shares of common stock at the option of the holder at any time after their
purchase. The conversion price for each debenture in effect on any conversion
date will be the lesser of (A) an amount equal to 90% of the average per share
market value for five consecutive trading days immediately prior to the initial
closing date or (B) an amount equal to 85% of the per share market value for the
trading day having the lowest per share market value during the five trading
days prior to the conversion date. Purchasers effect conversions by surrendering
the debentures to be converted to the Company, together with the form of
conversion notice attached thereto. If not otherwise converted, the debentures
mature three years from their original issue date. The warrants are exercisable
at an exercise price equal to 110% of the per share market value as of the last
trading day prior to the date of the issuance of the warrants. This price, which
is subject to adjustment in the event of certain dilutive events, was $1.96 and
$2.56, respectively, at the closing dates. The warrants expire three years after
their date of issuance. Pursuant to the terms of purchase agreements and the
related registration rights agreements, the Company is obligated to file a
registration statement with respect to the shares issuable upon conversion of
the debentures and the shares issuable upon exercise of the warrants within 75
days of the initial closing date.

As of October 6, 1999, the Company and VMR Luxembourg, S.A., entered into
an amendment (the "Amendment") to their Securities Purchase Agreements, dated as
of February 25, 1999 and March 31, 1999, to correct an error in those
agreements. Under those agreements the Company had issued warrants to purchase
an aggregate of 100,000 shares of the Company's common stock to VMR Luxembourg,
S.A., when in fact those warrants should have been issued to Century City
Securities, Inc. Pursuant to the Amendment, the warrants have now been properly
issued to Century City Securities, Inc.

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

15. In July 1999, the Company arranged for a short term loan from VMR
Luxembourg, S.A., of $1,200,000 for production and development.

16. In May and July 1999 we sold to three investors: Stellar Group Inc.,
Chun Sing Investment Limited and Dr. Michael Berlin, $350,000 of 12% debentures
and warrants to purchase up to 35,000 shares of common stock at $7.61 per share.

17. On June 30, 1999, we sold 57,000 shares of common stock to Anders
Ulegard for $114,000 and 112,534 shares of common stock to Van Moer Santerre &
Cie for $281,335.

18. On August 5, 1999, we sold to Hudson Investors, LLC, $4,000,000 of 12%
convertible debentures and warrants to purchase 340,000 shares of common stock
at $7.00 per share. Pursuant to an amendment, dated as of November 1, 1999, the
exercise price was reduced to $6.50.

19. On August 9, 1999, we sold 500,000 shares of common stock to Gontard &
MetallBank AG for $2,000,000.

20. On August 18, 1999, we issued to Program Power Entertainment and Swan
Alley Limited, respectively, 1,000 and 20,000 shares of common stock,
respectively, pursuant to the settlement of their respective lawsuits. Also on
August 18, 1999, we issued to Premier Acquisition Corp., and DMT Technologies,
Inc., respectively, 97,000 and 3,000 shares of common stock, respectively,
pursuant to the settlement of certain disputes they had with us. We also sold to
Investor Resource Services, Inc., 104,000 of common stock for $208,000.

21. On July 29, 1999, the Company sold 64,800 shares of common stock to
Arab Commerce Bank for $162,000.

22. On September 27, 1999, the Company, pursuant to court order, issued
30,000 shares to Venture Management Consultants LLC.

23. On September 29, 1999 we arranged for a $4,000,000 bridge loan from
Gontard & MetallBank AG.

II-4
75

24. On October 9, 1999 and October 15, 1999, respectively, the Company
entered into agreements regarding the sale of 10,000 shares of common stock to
Ivonne Altagracia Medrano Gongalez for $30,000 and 20,000 shares of common stock
to Cantor GbR for $60,000.

25. On October 18, 1999 , the Company sold 175,000 shares of common stock
to Arbora Vermogensverwaltungen AG for $700,000.

26. On October 29, 1999, the Board of Directors approved the issuance of
warrants to Ocean Marketing to purchase 100,000 of common stock; 50,000 at an
exercise price of $3.50 per share and 50,000 at an exercise price of $4.00 per
share, for consulting services.

27. On December 1, 1999, we issued to Sal Russo warrants to purchase 75,000
shares of common stock; 25,000 at $1.88 per share, 25,000 at $2.50 per share and
25,000 at $3.00 per share.

28. We have granted to Michael Jay Solomon and Seth Wellenson, 30,000
options to purchase common stock at an exercise price of $2.50 per share for
agreeing to serve as members of our Board of Directors. Mr. Wellenson's options
were cancelled when he resigned as a director. On March 9, 1999, W. Russell
Barry was granted 30,000 options to purchase common stock at an exercise price
of $2.00 per share for agreeing to serve as a member of the Board of Directors.

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

ITEM 27. (A) EXHIBITS

II-5
76

4.25 VMR Debenture, dated as of February 25, 1999(6)
4.26 VMR Warrant, dated as of February 25, 1999(6)
4.27 VMR Registration Rights Agreement, dated as of February 25, 1999(6)
4.28 Securities Purchase Agreement between the Company and VMR Luxembourg S.A., dated July 26, 1999(6)
4.29 VMR Debenture, dated as of July 26, 1999(6)
4.30 VMR Security Agreement, dated as of July 26, 1999(6)
4.31 VMR Registration Rights Agreement, dated as of July 26, 1999(6)
4.32 Securities Purchase Agreement between the Company and Hudson Investors LLC, dated as of August 5,
1999(6)
4.33 Hudson Investors LLC Registration Rights Agreement, dated as of August 5, 1999(6)
4.34 Hudson Investors LLC Debenture, dated as of August 5, 1999(6)
4.35 Hudson Investors LLC Warrant, dated as of August 5, 1999(6)
4.36 1999 Stock Option, Deferred Stock and Restricted Stock Plan(7)
4.37 Amendment No. 1 to VMR Securities Purchase Agreement dated as of October 6, 1999, amending the
February 25, 1999 Securities Purchase Agreement(12)
10.1 Agreement with Mel Giniger(1)
10.2 Agreement with Beyond Distribution PTY. Limited(1)
10.3 Interpublic Group of Companies Contract(1)
10.4 Employment Agreement, dated as of August 1, 1999, between the Company and Drew Levin as amended as
of October 29, 1999(9)
10.5 Lease between the Company and TCW, amended as of March 20, 1998(1)
10.6 Agreement with Alliance Production Ltd. re Total Recall(1)
10.7 Interpublic -- Team Co-financing Agreement(1)
10.8 Miramax Term Sheet(1)
10.9 Agreement with Leucadia Film Corp.(1)
10.10 Agreement with DD Video, dated August 2, 1999(9)
10.11 Dandelion Distribution Ltd., Share Purchase Agreement dated as of October 1, 1999(9)
10.12 Dandelion Distribution Ltd., Escrow Agreements dated as of October 1, 1999(12)
10.13 Employment Agreement, dated as of October 1, 1999, between Dandelion Distribution Ltd., and Noel
Cronin(9)
10.14 Employment Agreement, dated as of October 11, 1999, between Dandelion Distribution Ltd., and John
Clutton(9)
10.16 Agreement between the Company and Gontard & MetallBank AG re: secondary listing and public offering
of the Company's common stock in Germany(9)
10.18 Employment Agreement, dated as of August 17, 1999 between the Company and Timothy A. Hill(8)
10.19 Restated Employment Agreement dated as October 29, 1999, between the Company and Jonathan D.
Shapiro(9)
10.21 Investment Banking Agreement by and between the Company and Glen Michael Financial(8)
10.22 Consulting Agreement, dated November 17, 1999 between the Company, Investor Relations Services,
Inc., and Infusion Capital Investment Corporation(8)
10.23 Agreement with Film Libraries, Inc. dated June 25, 1999 and Agreement with Film Brokers, Inc., dated
June 25, 1999, re: commission for purchase(6)

II-6
77

10.24 Agreement with Renown Pictures, Ltd., dated as of June 28,
1999(6)
10.25 Financial Consulting Agreement, dated March 15, 1999,
between the Company and Century City Securities, Inc., and
Letter from Company dated July 29, 1999 re: payment under
Financial Consulting Agreement(8)
10.26 Form of Consultants' Warrant for Ralph Olson, Investor
Resource Services, Inc., Aurora Holdings, Inc., Affiliated
Services, Inc., Amber Capital, Inc., and Hedblom Partners,
Ltd.(8)
10.27 Consulting Agreement, dated May 3, 1999 between the Company
and Marathon Consulting Corporation(8)
10.28 Employment Agreement dated as of November 15, 1999, between
the Company and Paula Fierman(9)
10.29 Employment Agreement dated as of November 1, 1999, between
the Company and Larry Friedricks(9)
10.30 Lease between the Company and The Marcel George Family Trust
of September 2, 1982, dated November 3, 1999(9)
10.31 License Agreement with String of Pearls Plc, dated as of
September 10, 1999(9)
21 Subsidiaries of the Registrant(9)
23.1 Consent of experts and named counsel(11)
27 Financial Data Schedule(10)

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

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

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

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

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

(6) Incorporated by reference to the Registrant's Quarterly Report on Form
10-QB dated August 19, 1999.

(7) Incorporated by reference to the Registrant's Definitive Proxy Statement on
Form 14A dated May 28, 1999.

(8) Incorporated by reference to the Registrant's Registration Statement on
Form SB-2, File No. 333-83217, effective August 27, 1999.

(9) Incorporated by reference to the Registrant's Registration Statement on
Form SB-2, File No. 333-89323, effective November 23, 1999.

(10) Previously filed.

(11) Filed herewith.

(12)Incorporated by reference to the Registrant's Registration Statement on Form
SB-2, File No. 333-91283.

ITEM 28. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the California General Corporation Law, the Articles of
Incorporation of the registrant, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim of or indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by

II-7
78

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

The Registrant hereby undertakes that:

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

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

The registrant hereby undertakes:

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

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

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

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

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

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

II-8
79

SIGNATURES

In accordance with the requirement of the Securities Act of 1933, the
registrant certifies that it has reasonable ground to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Post-Effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Los Angeles, State of
California, on this 14th day of December, 1999.

TEAM COMMUNICATIONS GROUP, INC.

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

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.

SIGNATURE CAPACITY DATE
--------- -------- ----

/s/ DREW S. LEVIN Chairman of the Board and Chief December 14, 1999
- ------------------------------------ Executive Officer
Drew S. Levin

/s/ JONATHAN D. SHAPIRO President, Chief Operating Officer December 14, 1999
- ------------------------------------ and Director
Jonathan D. Shapiro

/s/ TIMOTHY A. HILL Senior Vice President, Chief December 14, 1999
- ------------------------------------ Financial Officer and Secretary
Timothy A. Hill

Director December 14, 1999
- ------------------------------------
Michael Jay Solomon

/s/ W. RUSSELL BARRY Director December 14, 1999
- ------------------------------------
W. Russell Barry

II-9
80

TEAM COMMUNICATIONS GROUP, INC.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1998
------------------------------------------------------------------
BALANCE ADDITIONS DEDUCTIONS BALANCE AT
AT BEGINNING CHARGED FROM OTHER END OF
DESCRIPTION OF YEAR TO INCOME RESERVE ADJUSTMENTS YEAR
----------- ------------ ---------- ----------- ----------- ----------

Deducted from accounts receivable for
doubtful accounts and returns.......... $63,800 $ 664,000 $ (390,800) $-- $337,000

1997
------------------------------------------------------------------

Deducted from accounts receivable for
doubtful accounts and returns.......... $63,800 $1,115,600 $(1,115,600) $-- $ 63,800

1996
------------------------------------------------------------------

Deducted from accounts receivable for
doubtful accounts and returns.......... $ -- $ 71,300 $ (7,500) $-- $ 63,800

S-1
81

EXHIBIT INDEX

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------

3.1 Amended and Restated Articles of Incorporation, as
amended(9)
3.2 By-laws of the Company(1)
4.1 Form of Warrant Agreement March 1996(1)
4.2 Form of Warrant Agreement May 1996(1)
4.3 Form of Warrant Agreement February 1997(1)
4.4 Gontard & MetallBank AG Promissory Note, dated as of
September 29, 1999(9)
4.11 Agreements re LoCoMoTioN Financing with South Ferry #2,
L.P.(1)
4.14 Form of Financial Advisory Agreement between National
Securities Corporation and the Company(1)
4.15 Specimen Certificate(1)
4.16 Form of National Securities Corporation's Warrant(1)
4.18 Form of Promissory Notes(1)
4.19 Securities Purchase Agreement between the Company and
Austinvest Anstalt Balzers; Esquire Trade & Finance Inc.;
Amro International, S.A. and Nesher Inc., dated as of March
19, 1999(3)
4.20 Form of Debenture re: Austinvest Anstalt Balzers, dated as
of March 19, 1999(3)
4.21 Form of Warrant re: Austinvest Anstalt Balzers, dated as of
March 19, 1999(3)
4.22 Form of Registration Rights Agreement between the Company
and Austinvest Anstalt Balzers; Esquire Trade & Finance
Inc.; Amro International, S.A. and Nesher Inc., dated as of
March 19, 1999(3)
4.23 Amendment to Securities Purchase Agreement with Austinvest
Anstalt Balzers; Esquire Trade & Finance Inc.; Amro
International, S.A. and Nesher Inc., dated June 28, 1999
(amends 4.19)(6)
4.24 Securities Purchase Agreement between the Company and VMR
Luxembourg, S.A., dated as of February 25, 1999(6)
4.25 VMR Debenture, dated as of February 25, 1999(6)
4.26 VMR Warrant, dated as of February 25, 1999(6)
4.27 VMR Registration Rights Agreement, dated as of February 25,
1999(6)
4.28 Securities Purchase Agreement between the Company and VMR
Luxembourg S.A., dated July 26, 1999(6)
4.29 VMR Debenture, dated as of July 26, 1999(6)
4.30 VMR Security Agreement, dated as of July 26, 1999(6)
4.31 VMR Registration Rights Agreement, dated as of July 26,
1999(6)
4.32 Securities Purchase Agreement between the Company and Hudson
Investors LLC, dated as of August 5, 1999(6)
4.33 Hudson Investors LLC Registration Rights Agreement, dated as
of August 5, 1999(6)
4.34 Hudson Investors LLC Debenture, dated as of August 5,
1999(6)
4.35 Hudson Investors LLC Warrant, dated as of August 5, 1999(6)

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------

4.36 1999 Stock Option, Deferred Stock and Restricted Stock
Plan(7)
4.37 Amendment No. 1 to VMR Securities Purchase Agreement dated
as of October 6, 1999, amending the February 25, 1999
Securities Purchase Agreement(12)
10.1 Agreement with Mel Giniger(1)
10.2 Agreement with Beyond Distribution PTY. Limited(1)
10.3 Interpublic Group of Companies Contract(1)
10.4 Employment Agreement, dated as of August 1, 1999, between
the Company and Drew Levin as amended as of October 29,
1999(9)
10.5 Lease between the Company and TCW, amended as of March 20,
1998(1)
10.6 Agreement with Alliance Production Ltd. re Total Recall(1)
10.7 Interpublic -- Team Co-financing Agreement(1)
10.8 Miramax Term Sheet(1)
10.9 Agreement with Leucadia Film Corp.(1)
10.10 Agreement with DD Video, dated August 2, 1999(9)
10.11 Dandelion Distribution Ltd., Share Purchase Agreement dated
as of October 1, 1999(9)
10.12 Dandelion Distribution Ltd., Escrow Agreements dated as of
October 1, 1999(12)
10.13 Employment Agreement, dated as of October 1, 1999, between
Dandelion Distribution Ltd., and Noel Cronin(9)
10.14 Employment Agreement, dated as of October 11, 1999, between
Dandelion Distribution Ltd., and John Clutton(9)
10.16 Agreement between the Company and Gontard & MetallBank AG
re: secondary listing and public offering of the Company's
common stock in Germany(9)
10.18 Employment Agreement, dated as of August 17, 1999 between
the Company and Timothy A. Hill(8)
10.19 Restated Employment Agreement dated as October 29, 1999,
between the Company and Jonathan D. Shapiro(9)
10.21 Investment Banking Agreement by and between the Company and
Glen Michael Financial(8)
10.22 Consulting Agreement, dated November 17, 1999 between the
Company, Investor Relations Services, Inc., and Infusion
Capital Investment Corporation(8)
10.23 Agreement with Film Libraries, Inc. dated June 25, 1999 and
Agreement with Film Brokers, Inc., dated June 25, 1999, re:
commission for purchase(6)
10.24 Agreement with Renown Pictures, Ltd., dated as of June 28,
1999(6)
10.25 Financial Consulting Agreement, dated March 15, 1999,
between the Company and Century City Securities, Inc., and
Letter from Company dated July 29, 1999 re: payment under
Financial Consulting Agreement(8)
10.26 Form of Consultants' Warrant for Ralph Olson, Investor
Resource Services, Inc., Aurora Holdings, Inc., Affiliated
Services, Inc., Amber Capital, Inc., and Hedblom Partners,
Ltd.(8)

SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------

10.27 Consulting Agreement, dated May 3, 1999 between the Company
and Marathon Consulting Corporation(8)
10.28 Employment Agreement dated as of November 15, 1999, between
the Company and Paula Fierman(9)
10.29 Employment Agreement dated as of November 1, 1999, between
the Company and Larry Friedricks(9)
10.30 Lease between the Company and The Marcel George Family Trust
of September 2, 1982, dated November 3, 1999(9)
10.31 License Agreement with String of Pearls Plc, dated as of
September 10, 1999(9)
21 Subsidiaries of the Registrant(9)
23.1 Consent of experts and named counsel(11)
27 Financial Data Schedule(10)