INTRODUCTION AND CERTAIN CAUTIONARY STATEMENTS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this annual report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under ''Risk Factors'' and elsewhere in this annual report on Form 10-K.

OVERVIEW

We are an entertainment and interactive media group. We seek to be at the forefront of the convergence of entertainment content with social media, online communities and digital technology. We produce feature films and other content and develop and maintain websites, including online communities, primarily geared towards young adults, 18-34. Our fully interactive online communities include ''LiveMansion.com'' (http://www.livemansion.com/), ''AudioStreet.net'' (http://www.audiostreet.net/) and ''MixStreet.net'' (http://www.mixstreet.net/). Our feature film productions include ''Beer League,'' starring Artie Lange; ''National Lampoon's TV the Movie,'' starring Steve O and Wee Man of ''Jackass'' fame; and ''National Lampoon's Pledge This,'' starring Paris Hilton. Our services also include website design, development, hosting, advertising and media placement.

Reportable Segments

As of January 1, 2007, the Company has two reportable segments related to entertainment: content and distribution. The entertainment content segment activities consist of development and production of digital and filmed content for global distribution to all media platforms including the internet. The entertainment distribution segment includes our activities related to the development and maintenance of websites, online communities and technology platforms that allow users to electronically create and publish content, including video, share that content with others and/or connect with others based upon common interests. In 2008, the Company introduced Ckrush Social, a marketing agency, to assist brands to communicate effectively with consumers through social media applications. In prior years the Company was also a promoter of professional boxers and boxing events which was a separate segment for financial reporting purposes.

Critical Accounting Policies

The accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (''US GAAP''). The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and all available information. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. US GAAP requires us to make estimates and judgments in several areas, including those related to recording various accruals, income taxes, the useful lives of long-lived assets, such as property and equipment and intangible assets, and potential losses from contingencies and litigation. We believe the policies discussed below are the most critical to our consolidated financial statements because they are affected significantly by management's judgments, assumptions and estimates.

Revenue Recognition

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                  •                 Revenues from the sale or licensing of films
                                    are recognized upon meeting all recognition
                                    requirements of Statement of Position (SOP)
                                    00-2 ''Accounting by Producers or Distributors
                                    of Films''. Revenue from sales to distributors
                                    is recognized when access to the feature has
                                    been granted or delivery has occurred, as
                                    required under the sales contract, and the
                                    right to exploit the feature film has
                                    commenced.

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                  •                 Revenue related to website development
                                    activities is recognized as services are
                                    provided. Therefore the consolidated financial
                                    statements take into account the revenue
                                    earned to date on contracts not yet completed
                                    as estimated by management. Advertising and
                                    hosting revenues are recognized ratably over
                                    the period benefited.

Website Development Expenses

Our websites are comprised of various features, which contribute to the site's overall functionality. We will capitalize costs incurred for the production of computer software that generates the functionality once technological feasibility is established and it is determined that such costs should be recoverable against future revenues. Website development costs incurred prior to the determination that the product is technologically feasible, as well as maintenance costs for established products, are expensed as incurred. As of December 31, 2007, we have not capitalized any costs incurred for website development, except for amounts allocated to websites in connection with the acquisition in 2007.

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards (''SFAS'') No. 144, ''Accounting for the Impairment or Disposal of Long-Lived Assets'', we continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. An impairment loss is recognized when expected cash flows are less than the assets' carrying value. Accordingly, when indicators of impairment are present, we evaluate the carrying value of such assets in relation to the operating performance and future discounted cash flows of the underlying business. Our policy is to record an impairment loss when it is determined that the carrying amount of the asset may not be recoverable.

Intangible Assets

As a creator and distributor of entertainment copyrights, we have a significant and growing number of intangible assets, including video and television libraries, trademarks and contractual relationships. In accordance with accounting principles generally accepted in the United States of America, the Company does not recognize the fair value of internally generated intangible assets. Costs incurred to

create and produce a copyrighted product, are either expensed as incurred, or capitalized as tangible assets, as in the case of inventoriable product costs. However, accounting recognition is not given to any increasing asset value that may be associated with the collection of the underlying copyrighted material. In connection with the 2007 acquisition, we allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values and the balance was allocated to goodwill.

Amortizable intangibles are being amortized over their estimated useful lives ranging from 3 to 10 years, utilizing the straight-line method.

Income Taxes

We utilize the asset and liability method to account for income taxes whereby deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to temporary differences between the financial reporting basis of existing assets and liabilities and their respective tax losses. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered and settled.

At December 31, 2007 and 2006, we provided a 100% valuation allowance for the deferred tax assets, because the ultimate realizations of those assets are uncertain. Utilization of net operating loss carry-forwards are subject to a substantial annual limitation due to the ''change in ownership'' provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss carry-forwards before utilization.

YEAR ENDED DECEMBER 31, 2007 VERSUS YEAR ENDED DECEMBER 31, 2006

The following represents a comparison of segment operating results for the years
ended December 31, 2007 and 2006

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                  [[Image Removed]] [[Image Removed]]                                                                                                                                                                                           Year ended December 31,
                  [[Image Removed]] [[Image Removed]]                                                                                        2007                                                                                         [[Image Removed]] [[Image Removed]]                                                                                        2006
Net revenues      [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                   [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                   [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                   [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                   [[Image Removed]]
Entertainment -   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
content                                                                                 $           750,366 [[Image Removed]]                                                       [[Image Removed]]              69.0 %                                                                                       $         1,646,278 [[Image Removed]]                                                       [[Image Removed]]             100.0 %
Entertainment -   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
distribution                                                            [[Image Removed]]           337,109 [[Image Removed]]                                                       [[Image Removed]]              31.0 [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]
                  [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]         1,087,475 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]             100.0 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]         1,646,278 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]             100.0 [[Image Removed]]
Cost of revenues  [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
and other costs                                                         [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]
Entertainment -   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
content                                                                 [[Image Removed]]           838,249 [[Image Removed]]                                                       [[Image Removed]]              77.1 [[Image Removed]]                                                       [[Image Removed]]         3,230,643 [[Image Removed]]                                                       [[Image Removed]]             196.2 [[Image Removed]]
Entertainment -   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
distribution                                                            [[Image Removed]]           586,201 [[Image Removed]]                                                       [[Image Removed]]              53.9 [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]
Sports            [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                   [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]                   [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]           (66,227 )                 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]              (4.0 )
                  [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]         1,424,450 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]               131 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]         3,164,416 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]]               192 [[Image Removed]]
Segment           [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
profit/(loss)                                                           [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]
Entertainment -   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
content                                                                 [[Image Removed]]           (87,883 )                                                                       [[Image Removed]]              (8.1 )                                                                       [[Image Removed]]        (1,584,365 )                                                                       [[Image Removed]]             (96.2 )
Entertainment -   [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]                                                       [[Image Removed]] [[Image Removed]] [[Image Removed]]
distribution                                                            [[Image Removed]]          (249,092 )                                                                       [[Image Removed]]             (22.9 )                                                                       [[Image Removed]]                   [[Image Removed]]                                                       [[Image Removed]]                   [[Image Removed]]

Net revenues decreased by $559,000 to $1.1 million for the year ended December 31, 2007 from $1.6 million in the prior year.

The decrease in net revenues was principally the result of lower net revenues earned in the entertainment content segment from the release of ''TV: the Movie'' in DVD format for the home marketplace, in 2007, as compared to the net revenues in 2006 from the theatrical release of ''Beer League''. The entertainment distribution segment operations begin in 2007 principally as a result of the acquisition of Trisoft in January 2007.

Entertainment content segment cost of revenues and other relate to the production costs for filmed products ($937,000 - 2007 and $3.1 million - 2006) related impairment charges of ($233,000 - 2007 and $915,000 - 2006) and depreciation and amortization (20,000 - 2007 and $29,000 - 2006), net of allocation of losses to minority interests of $119,000 (2007) and $843,000
(2006). The net decrease in these costs reflects the charge for the allocation of film costs based upon the film forecast method and impairment charges based upon management's estimates of the net realization value of our investment in film projects. The 2007 impairment charge was related to ''TV: the Movie'' released in 2007 while the impairment charge in 2006 related to both ''Beer League'' released in 2006 and ''TV: the Movie''. Entertainment distribution segment cost of revenues of $586,000, in 2007, relate to costs related to servicing third-party customers of our web development staff as well as development costs for our own websites including depreciation and amortization of the assets including intangibles related to the business acquired in 2007. Cost of revenues and other for boxing events in 2006 principally includes the gain from the sale of exclusive promotion agreements.

Our segment operating loss decreased $1.2 million to $337,000 in 2007 from a loss of $1.5 million for the prior year. The decrease in the segment operating loss is principally attributable to the lower production cost of the motion picture feature released in 2007 versus the cost of the production released in 2006, net of costs attributable to the newly established entertainment distribution segment in 2007.

Non-segment items

Corporate and unallocated shared expenses decreased by $5.4 million, to $7.2 million for the year ended December 31, 2007, from $12.6 million in the prior year. The decrease was attributable to the decrease in non-cash compensation charges of $4.8 million as a result of the issuances of stock options to the new management team and new Board of Directors, as well as the implementation of FASB 123 (R), in 2006, a significant portion being immediately vested. The balance of the decrease is principally the result of decrease in professional fees related to our compliance with our settlement agreement with the SEC.

Interest and financing costs decreased by $55,000 to $466,000, in 2007, from $521,000 in the prior year. This decrease is primarily attributable to the lower level of interest bearing indebtedness during the current year.

Other income consists of a gain from the reduction in recorded obligations of $445,000 (2007) and $1.3 million (2006) which reflect amounts not enforceable against us as a result of the passage of time; minority interest credit of $119,000 (2007) and $843,000 (2006) from the allocation of losses to the investors in our film fund; and a gain from the change in fair value of derivative liability of $668,000 (2007) and $119,000 (2006) related to the requirement to treat certain of our outstanding securities as liabilities in accordance with Emerging Issues Task Force Issue 00-19 until January 2007, as a result of the stockholder approval of the increase in authorized number of common shares, when the liability was reclassified to equity. Other income in 2006 also includes gains associated with termination of obligations to related parties including our former President. These transactions represented the
(i) liquidation of $3.3 million of liabilities through the issuance of 80,000 shares of common stock, warrants to purchase 750,000 shares and cash payments aggregating $400,000 and (ii) liquidation of certain indebtedness to our former President through the assignment to the former President of certain portions of our boxing film library and a consulting role related to the promotion of a boxer, among other matters.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements for the fiscal year ended December 31, 2007. Additionally, we review our relationships with other entities to identify whether it is the primary beneficiary of a variable interest entity. If the determination is made that we are the primary beneficiary, then the entity is consolidated in accordance with Financial Accounting Standards Board (''FASB'') Interpretation No. (''FIN'') 46, ''Consolidation of Variable Interest Entities''. Investments in which we exercise significant influence, but do not control, are accounted for using the equity method of accounting. Investments in which there is no significant influence are accounted for using the cost method of accounting.

LIQUIDITY AND CAPITAL RESOURCES

We have incurred net losses of $6.6 million and $11.8 million during the years ended December 31, 2007 and 2006, respectively. Our obligations under notes and loans are principally past due their original terms or due on demand, and, in addition, we may not be in compliance with certain of our trade debt as well as our past settlements including legal judgments. Thus, we may not be able to met demands by these creditors to be in compliance with the terms and pay the amounts past due. Further, we had a stockholders' deficiency of $10.8 million at December 30, 2007.

Historically, we have successfully obtained external financing through short-term borrowings and private placements of equity and convertible debt and thus, we hope to pay these creditors in the ordinary course of our business activities and/or remedy possible defaults through additional borrowings, conversion of existing debt to equity, ownership contributions, and/or renegotiation of existing terms and conditions of certain of its obligations. However, if our creditors are unwilling to continue to refrain from demanding compliance to payment terms for our indebtedness, it may significantly impede our ability to raise additional funds and/or to conduct normal business operations. While officers of the Company have provided loans to the Company in the past we have no commitments from them to do so in the future.

We are also taking actions to address liquidity in the following ways:

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                  •                 continuing to negotiate with existing
                                    creditors to convert their indebtedness into
                                    equity and/or accept reductions in the amount
                                    due in return for cash payments;

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                  •                 developing additional sources of debt and
                                    equity financing to satisfy our current
                                    operating requirements;

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                  •                 entering into new initiatives to develop and
                                    acquire additional internet websites in order
                                    to deliver unique viewers for commercial
                                    purposes as well as promote our knowledge of
                                    social media as a separate service;

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• produce and distribute film properties as well as other entertainment projects; and

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• pursuing production partnerships and joint ventures to fund projects.

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available . . .