Vancouver: The stock market may be drawing sad faces for most entertainment companies, but that hasn’t dissuaded Delaney and Friends Cartoon Productions of Vancouver from going public.

Delaney, an 18-year veteran of 2D animation, has signed a letter of agreement to merge with two unproven companies – 3D animation company Brainchild Studios and digital gaming company Furious Entertainment, both of Vancouver.

As part of the merger, the three companies will become divisions of SecondSun Entertainment, which plans to go public through a reverse takeover of a Canadian Venture Exchange shell company.

As a multimedia company, SecondSun will offer 2D and 3D animation and focus on the development, financing and production of animated TV series, direct-to-video features, TV commercials, special effects, movies and interactive games.

‘We are looking forward to producing some really cutting-edge concepts using a wide range of new technology, combined with the tried-and-true principles of great storytelling and appealing characters,’ says Chris Delaney, president and creative director of the new company. ‘Delaney and Friends has done some excellent work over the years, and now with this merger we can take things to the next level.’

According to Delaney, shares valued at $0.40 to $0.50 each will begin trading as early as May, regulators willing.

‘We’re counter-flow people,’ says Delaney, when reminded of the poor showing of public entertainment companies, especially in the past two years.

‘Entertainment stocks are down, but everything is down. The whole market has been shaken down and I think it’s at the bottom.’

He is convinced that brokers and analysts need to better understand the cycles of entertainment companies – that distribution revenue fluctuations, for instance, make quarterly reporting problematic markers of corporate success.

‘I also think that companies like Mainframe are undervalued,’ says Delaney. ‘Their share prices don’t reflect what they do.’

On March 12, Mainframe Entertainment shares closed at $0.43 on the Toronto Stock Exchange.

As the senior company in the deal, Delaney will claim most of the shares and control of SecondSun. Each of the divisions will operate with the present names to maintain brand consistency.

Delaney says that he wants some liquidity in his ownership stake in Delaney and going public allows that to happen. And, he adds, the entertainment business trends are forcing smaller companies to have more financial resources.

There may be more channels to sell to, but licence fees are going down and there are fewer straight service production deals.

‘We have to be able to bring something to the table,’ says Delaney, referring to business negotiations.

SecondSun plans to raise an initial $3 million through a public offering and a private placement for operating capital.

According to the company, SecondSun has immediate plans to produce the 26-episode teen/young adult animated TV series The Bottle Imp, a 2D and 3D show in development with Teletoon. It also plans to produce five direct-to-video features budgeted in the $3-million range each. Also planned are a new 3D animated preschool series called Bumblz and two interactive computer games for Furious Entertainment called Hateful Chris and Cratered.

Previously, Delaney and Friends produced Christopher the Christmas Tree, The Littlest Angel, The Legend of the Candy Cane and Nilus the Sandman.

-www.delaneyandfriends.com

-www.brainchildstudios.com

-www.furiousentertainment.com