For Daniel Myrick, co-director of THE BLAIR WITCH PROJECT, bringing his filmmaking dream to life was almost as terrifying as his movie, which could be the most frightening American horror film of the last decade.

"Sometimes, I think that's when all the best things really happen-when you've got nothing left to lose," says Myrick, 35, who conceived the film with his partner, Eduardo Sanchez. "You're trying to hang onto the dream, but as each year clicks by, you're like, 'I need to start deciding what the f**k I'm gonna do for the rest of my life.' I had a pretty good career [as an editor/director for commercials, videos, and industrial films] laid out in front of me if I wanted that. I could have carved a niche as an editor or I could kiss the paycheck goodbye and go out and try to do it on my own terms. That's the decision we all made."

 "We" are Myrick, Sanchez, producer Gregg Hale, and two other partners who founded Haxan Films together as a sort of filmmaking collective. "We kissed our normal day jobs goodbye, got a couple of jobs to pay the bills for a little while, and took what credit cards and outside money we could raise and threw it into BLAIR," Myrick recalls. "It really was a last hurrah for us: 'This BLAIR thing is as edgy and independent as it can get, but if it doesn't pan out or pay off, we have to start deciding on going back to commercial work, designing webpages, or whatever.' Fortunately, BLAIR seems to be hitting all the right chords at this stage."

Or unfortunately, if you are one of the rattled audience members who makes it through Myrick and Sanchez's ultra-low budget creepfest. The basic premise behind THE BLAIR WITCH PROJECT goes like this: In October of 1994, three student filmmakers arrive in the town of Burkittsville to make a documentary on the legend of a witch who supposedly haunts the nearby woods and has been responsible for gruesome deaths and disappearances over the last 200 years. After interviewing some locals, the threesome head into the forest and promptly vanish, never to be seen again. A year later, a bag containing their footage is found, and that edited footage, "given" to Haxan Films by one of the victim's mothers, makes up the entirety of THE BLAIR WITCH PROJECT. What's unique about the film is what you don't see: An entire history of the Blair Woods Witch, along with an investigation into the students' disappearance, are hinted at in the film but more fully developed on its website (www.blairwitch.com) and a Sci-Fi Channel special that airs on July 12, two days before the film opens. More importantly, the Haxan team create a realistic, increasingly unsettling, and finally, outright horrifying tale without showing the audience a single supernatural image or utilizing one special effect. There's no postmodern commentary from the characters, no cast members from PARTY OF FIVE or DAWSON'S CREEK, no CGI creatures spouting one-liners; just a rising tide of nerve-jangling suspense that preys on one's fears of the dark, strange sounds, and being lost to maximum effect, leaving the viewer genuinely shaken. "The timing is good for BLAIR," says Myrick. "A lot of people are getting over the old SCREAM formula. These films are touted to be horror movies and scary, but they're not really scaring people. We just wanted to scare people, and I think maybe that's what it took-for us to dig down deep and really be on the edge ourselves."

 The production team literally did live on the edge. To make the film, they sent cast members Heather Donahue, Joshua Leonard, and Michael Williams (who use their real names) into the woodlands near Montgomery County, Maryland, where the Cuban-born Sanchez grew up, for eight days. The trio was given camera and sound equipment, taught how to use it, and left on their own. Using only instructions and food left strategically in the woods by the directors, the actors actually did shoot the movie themselves, while the crew created the harrowing world of the Blair Witch around them. "It was an experiment, and like any experiment, there's an element of chance, luck and risk," admits Myrick. "It could have turned out to be moronic; it could have been a comedy. We really weren't sure. We just went on instinct and how we thought it was gonna happen." Ironically, despite creating such an authentically scary movie, Myrick and Sanchez don't consider themselves "horror filmmakers." "All the guys at Haxan have 40 or 50 projects that we have in certain phases of development, and they're all completely different," says Sanchez, 30, who met Myrick when the two were film students at the University of Central Florida.

"We have everything from children's films to science fiction to action films to goofball comedies. To come out and say we're gonna do another horror film that's gonna scare you as much as BLAIR is ridiculous. I mean, we might be able to do that later in our careers, but we're probably not gonna be able to do that again." In fact, Artisan Entertainment, the indie studio that picked up BLAIR for reportedly $1 million (the film allegedly cost somewhere between $15,000 and $30,000 to make), has asked Haxan to consider developing a sequel, although the studio also has first-look options on other Haxan projects.