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Overall Performance The $ 2,867,283 decrease in total assets is due primarily to a$2,693,528 decrease in tax credits receivable. Operating activities provided cash of $365,241 in the first quarterof 2012 compared to requiring cash of $3,859,536 in the firstquarter of 2011. This improvement is due to changes in non-cashworking capital which provided cash of $956,550 in 2012 compared torequiring cash of $4,480,842 in 2011. Financing activities usedcash of $113,761 in 2012 compared to providing cash of $1,479,489in 2011 as $534,652 of capital lease payments were incurred whilethe amount drawn on the production loan credit facilities increasedby only $420,891. Investing activities used cash of $235,622 in thefirst quarter compared to providing cash of $2,264,323 in 2011. In2012 $237,622 was spent on additions to investment in film andtelevision and property, plant and equipment compared to $145,970in 2011; however, in the first quarter of 2011 cash distributionsof $1,320,000, a revenue target earn-out of $590,293 and repaymentof a $500,000 note receivable were received in relation to theinvestment in Base 10. The investment in Base 10 was disposed of atthe end of 2011; therefore, no cash flows were received in relationto this investment in 2012. Earnings from continuing operations decreased $1,549,861 from$575,925 in the first quarter of 2011 to a loss of $973,936 in2012. The decrease is primarily due to a 59% increase in operatingcosts with only a 21% increase in revenue. A more detailed analysisof the other components of earnings from continuing operations isprovided below under the title Results of Operations. Results of Operations Three months ended March 31, 2012 compared to 2011 Revenue Revenue increased by $908,104 to $5,181,227 in the first quarter of2012 from $4,273,123 in the first quarter of 2011. The increase inrevenue was due primarily to increased production on the featurefilm Escape from Planet Earth , resulting in a $1,191,131 increase in revenue from $1,235,075 inthe first quarter of 2011 to $2,426,206 in 2012. This increase wassomewhat offset by a $450,107 decrease in other feature filmrevenue as no other feature films were ongoing during the firstquarter of 2012. Revenue from production of DVD's and other special projectsincreased $255,223 from $2,495,310 in the first quarter of 2011 to$2,750,533 in the first quarter of 2012, while motion capturerevenue decreased by $85,723 from $90,823 in 2011 to $5,100 in2012. Operating expenses Operating expenses increased by $1,982,764 to $5,355,363 in thefirst quarter of 2012 compared to $3,372,599 in 2011. Operatingexpenses are net of tax credits of $2,907,204 compared to$3,163,346 in the first quarter of 2011; the decrease in taxcredits of $256,143 is due to $652,000 of tax credits received inthe first quarter of 2011 as a result of a successful applicationfor production tax credits relating to productions from periodsthat were previously thought to be unavailable. Employee compensation costs increased $1,603,324 in 2012 from$5,145,855 in 2011 to $6,749,179 in 2012. This was primarily due toincreased employee costs related to production of the feature film Escape from Planet Earth . In addition, severance costs of $550,000 were recorded inrelation to a formal termination plan that was implemented in theperiod as part of management's overall cost reduction measures.Rainmaker had 91 full-time regular employees and 209 term employeesat March 31, 2012 compared to 95 full-time and 175 term employeesat March 31, 2011 and to 97 full-time and 239 term employees atDecember 31, 2011. The remainder of the increase in operating expenses in 2012 islargely due to a $62,700 increase in equipment rental, a $37,500increase in user licenses, a $54,100 increase in system maintenanceand a $46,000 increase in staff benefits; these increases wereexpected given the stage of completion of the feature film Escape from Planet Earth and the increase in head count over the same period in the prioryear. These increases were somewhat offset by a $53,981 decrease intravel costs and a $57,381 decrease in rent and occupancy costs asa result of subletting excess space. Depreciation and amortization of property, plant and equipment Depreciation and amortization of property, plant and equipmentdecreased $141,308 in 2012 to $363,395 as compared to $504,703 in2011 due to decreasing carrying value of the assets from 2011 to2012. General and administration expense General and administration expenses increased $116,452 to $331,148in 2012 from $214,696 in the first quarter of 2011. This increaseis due to a $34,700 increase in business advisory fees, a $58,000increase in bank fees and a $53,258 decrease in foreign exchangegain, offset by a $48,400 decrease in legal fees. Interest expense Total interest expense increased $39,459 in 2012 to $129,040primarily due to the increase in the amount drawn on the productionloans from $3,472,715 at March 31, 2011 to $6,670,037 at March 31,2012. Equity earnings and gain on sale of Base 10 Rainmaker's 30% interest in Base 10 Group Inc. was reported on anequity basis until it was disposed of in December 2011. Gain on sale of discontinued operations The gain on sale of discontinued operations for the first quarterof 2012 was $15,645 compared to $43,500 in 2011. This representsthe use of available service credits from Deluxe. Earnings for the quarter Earnings for the first quarter of 2012 decreased $1,577,716 to aloss of $958,291 compared to earnings of $619,425 in the firstquarter of 2011. Other Rainmaker Entertainment Inc. is one of Canada's largest producersof computer generated animation for all media. The studio iscurrently in production on its first feature film Escape from Planet Earth which will be distributed by The Weinstein Company in February2013. It is also producing several DVD films for Mattel anddeveloping its own properties. Rainmaker is currently representedby Hollywood management firm, Circle of Confusion. For moreinformation, go to. Rainmaker Entertainment Inc. Darren Battersby (604) 714-2600 (604) 714-5990 (FAX). The e-commerce company in China offers quality products such as China Diamond Reciprocating Saw Blade , Diamond Saw Blade Manufacturer, and more. For more , please visit Diamond Scroll Saw Blade today!
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