Animated cellular free phone wallpaper

Business Editors

HOLLYWOOD, Calif.--(BUSINESS WIRE)--Jan. 14, 2004

CinemaElectric, Inc. (OTCBB:CINM) CEO and founder James F. Robinson has provided the following open letter to all shareholders and the investment community outlining the Company's business and plans. CinemaElectric is a wireless services company and a leading provider of multimedia entertainment for mobile phones. The Company recently completed a merger with the former BRENEX Oil Company.

The Market for Mobile Multimedia and Value-Added Services

The telecom industry has invested heavily in high-speed wireless (cellular) networks, and in the sales and marketing of color multimedia mobile phones. These next-generation mobile phones are experiencing impressive growth in mature markets as users "trade up" to color terminals and add services like picture messaging and video downloads. In addition, developing territories such as Eastern Europe, India, and China, are adding first-time mobile subscribers in dramatic numbers, many of whom are starting out with multimedia-enabled phones.

These new mobile phones are important to mobile network operators (carriers) in that they facilitate the development of data sales growth to complement a mature voice communication business. Mobile phone manufacturers such as Nokia, Sony Ericsson, Panasonic, Seimens, Motorola, and Samsung, are betting heavily on consumers' migration to Multimedia Messaging Services (MMS) and color phones as the standard, in much the same way as color-screen PCs are the standard today.

Forrester Research predicted Multimedia Messaging Services (MMS) revenues of $2 billion in 2003 and $48 billion in 2006. These new graphics delivery systems allow users to enhance their text messages with graphics, animations, small video clips, and audio. Juniper Research has estimated that MMS revenues will reach $8.3 billion by 2004. $5.6 billion is expected to be generated by third-party content delivery of the kind of content the Company produces.

According to industry estimates, there are currently more than 1.3 billion mobile phone subscribers globally.

PocketCinema(TM) and CinemaElectric's Products and Services

The Company produces digital multimedia content that is to be distributed to a global audience of mobile consumers. The products allow users to personalize their phones and enable them to communicate via new technologies like MMS and Video Messaging. CinemaElectric has a significant library of formatted mobile multimedia, believed to be the industry's largest. Each month, more than 1200 content items are released for distribution to a global network of mobile operators, portals, and handset manufacturers.

These products range from downloadable digital motion pictures (PocketCinema(TM)) to animated MMS and screensavers, wallpaper, and applications that provide new multimedia "pushed" to the consumer. The Company currently offers its content in six lifestyle-branded "channels" as follows: PORTABLE HOLLYWOOD (celebrities), ACTION SPORTS (extreme sports), ELECTRIC CATWALK (fashion and style), POCKET GIRLS (models), MOVIE MESSAGES (electronic greetings), and WALLPAPERS AND SCREENSAVERS (customizing graphics).

The Company is currently in talks with several large entertainment brands and expects to make announcements soon regarding agreements to adapt and release these brands via CinemaElectric's global distribution network.

Business Model and Scalability

CinemaElectric product is currently sold via one of three business models: PER-DOWNLOAD, SUBSCRIPTION, and via MOBILE APPLICATIONS such as I-Mode(TM), JAVA(TM), Symbian(TM), or BREW(TM). Generally these models are operated on a revenue-share model or a flat fee-per-download model.

Retail prices paid per-download range from $1.50 (and more) in the U.K. to less than $0.15 in Southeast Asia. The median price is approx. $1.00 per download. CinemaElectric collects a portion of the retail price via revenue-share agreements with operators, manufacturers, and resellers.

A fourth revenue model, SPONSORED CONTENT, is expected to start in late 2004, especially in the U.S. In this model, the content is made available free to consumers, paid for by sponsors. Electronic mobile coupons are expected to be included in this model, to give added value to the consumer and the ability of the sponsor to track the results of the marketing campaign.

Scalability is easily accomplished by the digital nature of the company's product. One digital master is created, then formatted into sub-masters to fit specific terminals. The content is delivered to the distribution network via the Internet. After that, each digital copy is distributed without any additional manufacturing cost, no matter how many consumers buy the content. Digital content requires none of the usual costs associated with consumer products such as manufacturing, shipping, customs, warehousing, or loss and damage.

CinemaElectric's Global Distribution Network

CinemaElectric has built what is believed to be the mobile industry's largest multimedia distribution network. In Q1 2004, the Company's content and services are expected to be actively distributed in 5 continents and 36 countries (the U.S., Canada, Mexico, Brazil, the U.K., Ireland, Holland, Belgium, France, Germany, Denmark, Sweden, Norway, Finland, Latvia, Estonia, Lithuania, Czech Republic, Slovenia, Croatia, Italy, France, Spain, Portugal, Israel, Kuwait, India, Singapore, Philippines, Thailand, Malaysia, China, Hong Kong, Taiwan, Australia, and New Zealand). Operators expected to be offering CinemaElectric content in Q1 2004 include AT&T Wireless, mmO2, Sprint PCS, T-Mobile, Nextel, KPN, China Mobile, Orange, Vodafone, CSL Hong Kong, Telefonica Moviles, TIM, and many others. Many of these distributors first became active for the Company in Q4 2003.

CinemaElectric's distribution network includes the top operators, resellers, and manufacturers in the mobile industry, including Nokia (Global), Sony Ericsson (Europe), Mforma (Global), Jamba (Europe), Musiwave (Europe & Australia), Wireless Entertainment Services (Europe), Orange Gum (Asia), Sonera Zed (Europe and Asia), End2End (Europe), Buongiorno (Global), and others.

Proprietary Dense Media Format(TM) Production Process

CinemaElectric produces its own content specifically for mobile use. In some cases, pre-existing content is licensed for mobile adaptation and distribution. The product is optimized via CinemaElectric's exclusive Dense Media Format(TM) process. This process is patent-pending. The Dense Media Format(TM) process creates mobile multimedia at a modest cost and optimizes the content for maximum quality and customer value by adapting the color, intensity, contrast, frame rate, and other technological and aesthetic variables.

Revenue & Financial Plans

The Company is currently exploring the options for additional financing needed for operating expenses, marketing, and the acquisition of additional content brands.

The Company's first priority is to grow revenue and brand awareness via its existing library and distribution network, and to launch effective marketing efforts for its product.

The Company is receiving early revenue, with most of its major accounts becoming active in Q1 2004. In many cases operator delivery and billing systems are just becoming active. Nine distribution partners were active for the Company in Q3 2003 and nineteen are reporting for Q4 2003. Approximately twenty-six to thirty additional partners are expected to be active by the end of Q1 2004, including two of the industry's top manufacturers. The Company is currently preparing audited financial statements which it will publish soon.

The Company shall also actively pursue partnerships with other media and entertainment brands, leveraging its network, production process, and position in the industry to quickly bring publishing and media brands to mobile multimedia revenues. The Company has also identified Multimedia Application distribution and Sponsored Content distribution as priorities for growth in 2004.

For more information about CinemaElectric Inc., including competition and content samples, a Business Summary document is available for download. The document is available at: http://www.CinemaElectric.com/bizsum.pdf.

ABOUT CINEMA ELECTRIC: CinemaElectric is a wireless services company and creator of PocketCinema(TM) multimedia. The Hollywood-based studio produces downloadable video, applications, and graphics for a global audience. CinemaElectric was founded by filmmaker James F. Robinson in 1999 and is based at the Los Angeles Center Studio complex in Los Angeles. Website: http://www.CinemaElectric.com.

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