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Part I—Item 1A—Risk Factorsdiversion of resources, could effectively prevent us from using important technology and could havea material adverse effect on our business, financial condition, results of operations or cash flows.Third-party technology licenses may not continue to be available to us in the future.In addition to our proprietary technology, we also rely on certain technology that we licensefrom third parties, including software that we use with our proprietary software. We cannot provideany assurances that these third-party technology licenses will continue to be available to us oncommercially reasonable terms or at all or that the technology licenses will not result in intellectualproperty infringement claims by third parties. The loss of or inability to maintain any of thesetechnology licenses could result in delays in project releases until equivalent technology is identified,licensed and integrated to complete a given project. Any such delays or failures in project releasescould materially adversely affect our business, financial condition or results of operations.Others may assert intellectual property infringement claims against us.One of the risks of the CG animated film production business is the possibility of claims that ourprojects and production techniques misappropriate or infringe the intellectual property rights of thirdparties with respect to their technology, software, previously developed films, stories, characters,copyrights, trademarks, other entertainment or intellectual property. We have received, and are likelyto receive in the future, claims of infringement of other parties’ proprietary rights. For many of theproperties in the recently acquired Classic Media library, because of the age of such properties therights to exploit the properties in newer forms of media may be ambiguous or may be split with otherrightsholders. There can be no assurance that infringement or misappropriation claims (or ourbusiness partners’ claims for indemnification resulting from such claims) will not be asserted orprosecuted against us, or that any assertions or prosecutions will not materially adversely affect ourbusiness, financial condition or results of operations. Regardless of the validity or the success of suchclaims, we could incur significant costs and diversion of resources with respect to the defensethereof, which could have a material adverse effect on our business, financial condition or results ofoperations. If any claims or actions are asserted against us, we may seek to obtain a license of a thirdparty’sintellectual property rights. We cannot provide any assurances, however, that under suchcircumstances a license would be available on reasonable terms or at all.We may incur significant write-offs if our feature films and other projects do not perform wellenough to recoup production, marketing and distribution costs.We are required to amortize capitalized production costs over the expected revenue streams aswe recognize revenue from the associated films or other projects. The amount of production coststhat will be amortized each quarter depends on how much future revenue we expect to receive fromeach project. Unamortized production costs are evaluated for impairment each reporting period on aproject-by-project basis. If estimated remaining revenue is not sufficient to recover the unamortizedproduction costs, the unamortized production costs will be written down to fair value. In any givenquarter, if we lower our previous forecast with respect to total anticipated revenue from anyindividual feature film or other project, we may be required to accelerate amortization or recordimpairment charges with respect to the unamortized costs. For instance, in the quarter ended27