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Flower Street Docs

Two films to be produced by Adam Carolla & Nathan Adams

55%

Investors

92

Time to Invest

Security Offered

Revenue Share

Minimum Investment: $100

  • Two documentary films to be produced by award winning directors/producersi Adam Carolla and Nate Adams and executive producer Mike August

  • Early bird investor perk - additional 5% preferred return

  • Meme Gods - directed by Sean Flax and Bryan Black, with executive producer Cedric The Entertainer - will explore the cultural phenomenon of memes

  • When We Went MAD! - directed by Alan Bernstein - will examine the cultural significance and rise of MAD Magazine through interviews with artists, creators, and comedians

Executive Snapshot

With documentaries booming in popularity, many entertainment industry players have been drawn to the storytelling format.ii Flower Street Docs, headed by the award-winning team of Adam Carolla, Nate Adams, and Mike August, will be managing and helping fund the production of two documentaries: Meme Gods - an exploration of the history, growth, and cultural significance of memes – and When We Went MAD! – a deep dive into the backstory and comedic influence of Mad Magazine. Carolla, Adams, and August intend to leverage their long-standing history and experience in the entertainment industry to guide both films and help distribute them to a wide audience. Investors will receive 100% of adjusted gross proceeds from the film up to 115% of their investment (15% preferred return), and then 50% of any remaining adjusted gross proceeds up to a 150% return on their investment (50% max return).

Nate Adams

 

Adam Carolla

 

Mike August

 

Perks

Perks

*You are investing in Revenue Participation Rights in this offering. Perks are meant to be a thank you from the company for investing. The perks below, subject to Regulation CF investment limits, are not inclusive of lower dollar amount perks, except where otherwise noted.

Early bird investors who contribute to the first $250,000 of this Offering will receive an additional 5% preferred return distribution 

$200 - Digital Download of both Meme Gods and When We Went MAD! 

Any investor that contributes $200 or above will receive a digital download of both films.

$1,000 - Name in the end credits for both Meme Gods and When We Went MAD! as an investor. 

Any investor that contributes $1,000 will also receive a digital download of both films.

$2,500 – Meet the Meme Gods at a private event in New York City

$3,500 - Adam.the.creator will create a custom meme of the investor and will post on his social channels.

$5,000 - Tickets to the premier or a watch party in Los Angeles, California for both Meme Gods and When We Went MAD! with various celebrities, cast, and crew. Investors that invest $5,000 will also be able to choose one of the following:

  • Be able to conduct a meet and greet session with Sonny Side Up at the BrandFire offices in Times Square in New York City. 
  • Workout session with @tank.sinatra at his gym in New York.

$10,000 - Watch The Adam Carolla Show podcast in studio and meet Adam after it’s done recording

$15,000 – Investor is designated an Associate Producer for the documentary of their choosing: either Meme Gods or When We Went MAD! (Investor funds will still go towards funding both documentaries)

$25,000 – Investor is designated an Associate Producer for both Meme Gods and When We Went MAD!

$30,000 – Investor is designated an Executive Producer for the documentary of their choosing: either Meme Gods and When We Went MAD! (Investor funds will still go towards funding both documentaries)

$40,000 – Investor is designated an Executive Producer for both Meme Gods and When We Went MAD!

$50,000 - Visit the production studio and receive a tour hosted by Adam Carolla. Investor will also be designated an Executive Producer for both Meme Gods and When We Went MAD!

$75,000 – Investor will appear in Meme Gods film as an interview subject talking about memes. Investor will also be designated an Executive Producer for both Meme Gods and When We Went MAD!

$100,000 - Dinner with Adam Carolla and Cedric The Entertainer in Los Angeles, California for two guests. Investor will also receive Executive Producer credit for both Meme Gods and When We Went MAD!

** From 100% of earned adjusted gross proceeds. After 100% of the adjusted gross proceeds have been used to pay early bird investors and additional investors 120% and 115% of their initial investments, respectively, then 50% of any remaining adjusted gross proceeds will be used to pay early bird investors up to a 155% total return on their investment, and the additional investors will receive distributions up to a total return of 150% on their investment.

Overview

Opportunity

Streaming and mobile video have significantly grown as many consumers are turning away from traditional cable-tv packages. As of 2017, 55% of U.S. households were subscribed to paid streaming video services, with an average of three services per household. At $10 each per month, Deloitte estimates that total revenue generated by streaming services in the U.S. is $2.1 billion per year.iii U.S. consumers are also streaming more content than ever before, with nearly half streaming a video every day or weekly in 2017.iv

One of the most popular forms of content that consumers are streaming are documentaries. Streaming platforms have made these types of films more accessible to larger audiences, which has helped documentaries shed the stigma that they were only educational and not “date-night” movies. Consumer appetite has been so strong that in 2019, Netflix reportedly paid $10 million – a Sundance Film Festival documentary record - for the rights to a political documentary.v

Flower Street Docs, headed by Adam Carolla, is funding the production of two documentaries: Meme Gods and When We Went MAD!. Meme Gods, directed by Sean Flax and Bryan Black along with executive producer Cedric the Entertainer, will take a deep dive into the world of internet memes and explore their origins, and comedic and cultural significance. When We Went MAD!, directed by Alan Bernstein, explores the history and influence of Mad Magazine, one of the most influential humor publications in the U.S.

Producers

The Flower Street Docs executive team will work directly with both Meme Gods and When We Went Mad! in production and distribution of the films. The members of the team at Flower Street Docs are:

Adam Carolla

Producer and Manager of Flower Street Docs

Adam has held a variety of different positions in Hollywood including comedian, actor, radio personality, television host, and New York Times best-selling author.vi Adam is currently the host of The Adam Carolla Show, a popular podcast that held the Guinness Book of World Record for “Most Downloaded Podcast” ever in 2011.vii  In addition to his podcast and comedic work, Adam recently produced three feature length films: Road Hard, Winning: The Racing Life of Paul Newman and The 24 Hour War. He also has two more feature films – Uppity: The Willy T. Ribbs Story and Shelby American - that will be released later in 2019. On television, Adam has starred in shows like Catch a Contractor, The Man Show, and Crank Yankers. Adam started his entertainment career on the radio program Loveline with Dr. Drew Pinsky, which was then developed into a television show for MTV.

Nate Adams

Producer

Nate has over 20 years of experience in the entertainment industry working as a writer, director, and producer. Through his partnership with Adam Carolla, Nate has built Chassy Media, a production and distribution company that specializes in feature films, documentaries, comedy specials, branded content, and more. Nate recently produced and directed Adam Carolla’s first-ever comedy special Not Taco Bell Material, which is available on the Apple iTunes Store,viii Amazon Prime Video,ix and Google Play.x  His work at Chassy spearheading the distribution arm has led to the company launching the Chassy Channel on Pluto TV.xi Nate has also worked as a producer, director and 2nd unit director on films like Road Hard, Trading Paint, Winning: The Racing Life of Paul Newman, The 24 Hour War and more.

Mike August

Executive Producer

Mike has worked in the talent and entertainment industry for over 20 years, where he has worked with television, radio, film, podcast talent. He is currently the CFO of Carolla Digital – a podcast network company - and the Senior VP of Content Development at PodcastOne - a podcast network company founded by the founder of Westwood One. He is also the executive producer of The Adam Carolla Show, which is one of the most successful podcasts of all-time.xii Mike began his career as an agent at the William Morris Agency before moving to production of the Jimmy Kimmel Live show on ABC.

Film Description

Both Meme Gods and When We Went Mad! will feature present-day interviews, as well as news clips and television highlights throughout the films. The films will each have their own set of directors and executive producers, however, the Flower Street Docs team will manage distribution and final production of both films.  

Meme Gods Synopsis

Meme: “An amusing or interesting item (such as a captioned picture or video) or genre of items that is spread widely online, especially through social media.”xiii

Meme Gods is a film that takes the audience behind the curtain of the internet meme phenomenon through interviews with many digital media industry experts, comedians, actors, and meme creators.

Meme Gods’ overall aesthetic aims to reflect the social platforms that meme creators use by offering a unique and engaging graphics package. The film will use likes, comments, tags, stickers, smart phone frameworks, and more, to try and replicate the digital experience of being on a social media platform like Twitter or Instagram. Meme Gods will also use memes throughout the film to demonstrate the medium, and also to add artistic and visual humor, giving the audience a complete picture of the meme phenomenon.

Meme Gods will follow the lives of multiple meme creators, with a spotlight on George Resch (@tank.sinatra, as of May 2019 he has over 1.6 million Instagram followersxiv) as he details his day-to-day life as a meme creator. The film looks at how Resch has been able to parlay his social following into a career with advertisers, corporate partners like Bumble, and more. Meme Gods also shows interactions between fellow meme creators and the community that has formed both on the internet and in the physical world. The film concludes by predicting the future of memes with meme creators, celebrities, and digital media industry players weighing in on what the meme phenomenon means for social interactions, branding, comedy, and more.

Appearance List

Meme Gods will feature appearances from various celebrities, meme creators, digital media experts, and more, including:

  • Cedric the Entertainer (Actor, Director, Comedian, Producer)
  • Milla Jovovich (Model, Actress)
  • Mario Lopez (Actor, Television Host)
  • Gary Vaynerchuk (Entrepreneur, Author, Internet Personality)
  • George Resch @tank.sinatra (Social Media Influencer)
  • Tom Green (Actor, Comedian)

The directors and executive producers of Meme Gods are:

Bryan Black

Director

Bryan is a Creative Director with over 20 years of experience creating compelling campaigns for both traditional and new media. He spent nearly ten years at Deutsch Inc. leading the development of creative campaigns for a wide range of national and global brands. He is currently is a Partner and Creative Director at BrandFire, a New York-based creative agency whose clients include Coca-Cola, Pfizer, Allergan, MasterCard, RUN-DMC and more.xv Some of Bryan’s most recent personal creative content can be seen on his Instagram account @black_humorist.

Sean Flax

Director/Producer

Sean heads Endless Roots, his production company, which has a slate of television and film projects that he produces and manages. During his career, he has worked with brands and companies like BBC, Time Warner, Eurovision, NHK, and more. Prior to starting Endless Roots, Sean was the Head of Production at PROATHLETE TV, a media company that produces original and branded content and events starring pro athletes as lifestyle influencers.

Cedric The Entertainer

Executive Producer

Cedric has been in the entertainment industry for over 20 years as an actor, comedian, producer, director, and more. He has appeared in films like Barbershop (2002), Be Cool (2005), A Haunted House (2013), and many more. Cedric has also been a writer and producer on numerous films and television shows

When We Went MAD! Synopsis

When We Went Mad! takes a deep dive into MAD Magazine, the long running humor publication that has been at the forefront of U.S. comedy for over 65 years.xvii The documentary explores the rise of the magazine and the many editors, comedians, and writers behind its growth.

When We Went MAD! will include interviews with the magazine’s key players, including current and former artists, writers, and editors, and celebrities and comedians whose careers and lives were influenced by the magazine.

When We Went Mad! starts with the magazine’s beginnings as a strictly satirical comedy magazine and then focuses on the many cartoons and feature-length pieces that the magazine published related to major American events like presidential elections, awards shows, and more. The film will also explore the magazine’s organizational culture and some of the most influential leaders that shaped the company. The documentary concludes with commentary how Mad Magazine has adapted in an increasingly post-print media landscape and how it has continued to try to position itself as a pioneer in comedy.

When We Went Mad! includes interviews from various comedians, celebrities, and more, including:

  • Gilbert Gottfried (Actor, Comedian)
  • Weird Al Jankovic (Musician, Actor, Comedian)
  • Grant Geissman (Musician, Composer)
  • Al Jaffee (Comedian, Cartoonist)
  • Jay Kogen (Writer, Producer)
  • Bill Morrison (Comedian, Cartoonist)

When We Went MAD! Director

The director of When We Went MAD! is:

Alan Bernstein

Director

Alan is a director and writer with over 20 years of experience in the entertainment industry. During his career, he has worked on television series, documentaries, and films. Some of his more well-known projects that he has worked on include: One Half Gone (2002), Judicial Consent (1994), and Thank You for Not Smoking (1997). 

Use of Proceeds

Nearly all funding from this campaign will be used to create the deliverables required for global distribution of the films – which includes pre and post-production costs, creative fees, editing, equipment rental, crew labor, and more. A small portion of proceeds received will go towards marketing both films to potential buyers upon completion.

Minimum Raised

If the minimum amount ($50,000) is raised, nearly half of the proceeds will go towards post production costs (~48%). Approximately 15% of the use of proceeds will go towards filming expenses for both films. Pre-production and wrap-up costs (~10%) and creative fees for directors and producers (~10%) are the next two largest planned uses of funds from this raise. The remaining proceeds from this raise, which total less than 10% each, are planned to be used on equipment costs (~7%), insurance (~4%), marketing (~3%), and production company fees (~3%).

Maximum Raised

If the maximum ($1.07 million) is raised, proceeds will mainly be spent on post-production costs (~43%), which includes editing fees, audio mixing, color correction, digital formatting, and more. About 18% of the use of proceeds will be allocated towards filming expenses, which includes crew labor and incidental production costs. Approximately 13% of campaign funds will go towards creative fees for directors and producers. Pre-production and wrap up costs will total about 10% of use of proceeds. The remaining proceeds from this raise, which total less than 10% each, are planned to be used for production company fees (~7%), equipment costs (~4%), insurance (~3%), and marketing (~2%).

The company has discretion to alter the use of proceeds.

Marketing

Meme Gods intends to leverage interviewees’ and cast members’ social media followings to reach a wide audience of potential consumers. The film hopes to create the opportunity to connect with its primary demographic – 13- to 40-year-olds that are active on social media globally - by tapping into the social media followings of many of the featured interviewees.

When We Went Mad! intends to leverage the global MAD magazine brand to increase interest and discussion around the documentary. Once completed, the film intends to conduct interviews through media outlets like television, podcasts, and radio to further the conversation and build intrigue around the film.

Anticipated Distribution Schedule

Meme Gods

Flower Street Docs will initially release Meme Gods as a transactional release. This means that the film will be available for sale or rent digitally through platforms like the Apple iTunes Store, Amazon Video, Google Play Store, VUDU, and more. Flower Street will also utilize Chassy Media – the media company headed by Adam Carolla – to distribute the film digitally. In addition to the digital transactional release, Flower Street Docs will also sell DVDs and Blu Rays of Meme Gods. After approximately two months, the company intends to license the film to a streaming video-on-demand service like Netflix or HBO Go and also sell the film to airline companies for use in their in-flight entertainment systems.

 The anticipated distribution schedule for Meme Gods is as follows:

When We Went MAD!

For When We Went MAD!, Flower Street Docs intends to initially offer the movie as a transactional release through large platforms like the Apple iTunes Store, the Google Play store, and more. The company will also offer the film through Adam Carolla’s media company – Chassy Media. Flower Street Docs will also sell DVDs and Blu Ray of the film. During this transactional release phase, When We Went MAD! will only be available for rent or purchase. After the transactional release period – totaling approximately two months – Flower Street intends to license the film to a streaming video-on-demand service like Netflix or HBO GO and also intends to sell the film to airline companies for use in their in-flight entertainment systems.

The anticipated distribution schedule for When We Went MAD! is as follows:

Business Model

Transactional Release

Both documentaries intend to be sold through digital download and rental platforms, like the Apple iTunes, Google Play store. Flower Street Docs also intends to sell DVD and Blu Ray versions of the documentaries.

  • When a movie is rented or purchased on a digital download platform, Flower Street will receive approximately 50%-70% of the price paid.
  • Flower Street Docs intends to sell the DVD and Blu Ray versions for $14 and $17 retail price, respectively.

Streaming Video On-Demand

Both documentaries are looking to be sold to streaming services like Amazon Prime Video, Netflix, etc. A licensing deal to a streaming platform that grants that platform exclusive streaming rights to a film can range from approximately $200,000 to $1 million for two years.

Airlines

Both documentaries aim to be sold to various airline companies that will show the movie on their in-flight entertainment systems. Contract size is approximately $35,000 for these types of deals.

Notable Past Achievements

The executive team behind Flower Street Docs – Adam Carolla, Mike August, and Nate Adams – have won awards in a variety of different entertainment mediums. Here are some highlights:

Mind Over Matter

A young man born with Cerebral Palsy battles a paralyzed left hand, bullies and stereotypes about the disabled to defy the odds and make it as a rock and roll guitarist. This documentary film has won the following awards, among others:xix

  • “Best Documentary Feature” – 2018 Desert Rocks Film and Music Event
  • “Best Documentary Feature” – 2018 Sacramento Film and Music Festival
  • “Best Screenwriter” – Nate Adams, 2017 Doc LA Awards

The 24 Hour War

“In the early 1960s, Henry Ford II and Enzo Ferrari went to war on the battlefield of Le Mans. This epic battle saw drivers lose their lives, family dynasties nearly collapse and the development of a new race car that changed racing.”xx This documentary film won the following award:xxi

  • “Spirit of Michigan Award” – Nate Adams and Adam Carolla, 2017 Freep Film Festival

Winning: The Racing Life of Paul Newman

“The world knows Paul Newman as an Academy Award winning actor with a fifty-plus year career as one of the most prolific and revered actors in American Cinema. Yet few know the gasoline-fueled passion that became so important in this complex, multifaceted man’s makeup.”xxii This documentary film won the following award:xxiii

  • “Best Feature Video of the Year” – Adam Carolla, Nate Adams, Mike August 2015 Motor Press Guild Awards

Outside of films, Adam Carolla has written a New York Times best-selling book, Not Taco Bell Material.xxiv

The Flower Street team also has experience distributing entertainment content:

The media and entertainment company headed by Carolla, August, and Adams has a channel on Pluto TV, an internet-based TV platform.xxv

Industry

Industry and Market Analysis

In 2017, the global entertainment and media industry generated an estimated $1.9 trillion. PwC projects that industry revenues could grow at a compound annual growth rate (CAGR) of 4.4% to reach $2.4 trillion in 2022. Internet access is expected to continue increase revenues in the industry, with more businesses pushing their content to online channels.xxvi

Over-the-top (OTT) video is a term used for the delivery of content via the internet. This type of content doesn’t require users to subscribe to a traditional cable or satellite pay-tv service like Time Warner Cable.xxvii  The OTT video market is expected to significantly grow from 2018 to 2022, with PwC forecasting OTT video revenues eclipsing $50 billion in 2022. Emerging markets are driving OTT video services globally, with many consumers in these markets using their smartphones to access the content, as opposed to a traditional desktop or laptop computer. Netflix and Amazon are major players in the industry, with both companies spending significant amounts of money investing in original content. Additionally, Apple has entered the market with $1 billion invested in high-end original programming. PwC predicts that as the number of OTT services continues to grow, exclusive content will be one of the critical factors in attaining additional subscriptions and maintaining market share.xxviii

The OTT industry can be divided into several segments, including, but not limited to:

Subscription-based video-on-demand (SVOD)

The subscription-based video-on-demand (SVOD) market is becoming a popular OTT segment in part due to Netflix and Amazon Prime Video. These services offer unlimited access to their content libraries for a subscription fee – often paid monthly. The content can be streamed to various internet-connected devices and it does not require a TV subscription. Revenue in the SVOD segment is expected to reach $11.4 billion in the U.S. – which is also the largest market globally. By 2023, the U.S. market is forecasted to nearly reach $12.9 billion, growing at a CAGR of 3.1%. According to Statista, there is an estimated 125 million SVOD U.S. users as of 2019, a 1.2% year-over-year increase. In 2019, the estimated average revenue per SVOD user is $91.37.xxix


Transaction-based video-on-demand (TVOD)

Transaction-based video-on-demand (TVOD) services refer to when a consumer makes a one-time payment to access video content, like a consumer purchasing a movie for a pre-determined amount of time from the Apple iTunes store, or the Google Play store. Revenue in the TVOD segment is projected to reach $1.6 billion in the U.S. in 2019, making it the largest market globally. The TVOD market is forecasted to grow at a CAGR of 0.6% to reach 1.65 billion in U.S. revenue in 2023. In 2019, there are reportedly 85.7 million users who use a TVOD service with average revenue per user just over $18.80.xxx

Advertising-based video-on-demand (AVOD)

The advertising-based video-on-demand (AVOD) market is a less common business model for OTT companies compared to SVOD and TVOD, however, some companies are seeing success implementing it. AVOD models allow consumers to watch content for free, with advertisements interspersed throughout the video. YouTube has moved successful content offerings like Cobra Kai from its premium subscription service to its ad-supported AVOD platform. Roku has also seen significant benefits to implementing an AVOD business model. In 2019, Roku expects to surpass $1 billion in sales, mainly based on the strength its AVOD model. Some businesses see consumers potentially being overwhelmed by the number of subscriptions they have and see that segment of the market being too crowded.xxxi

Comparable Films

The following films are comparable to the Meme Gods documentary:

American Meme

American Meme is a documentary that follows the lives of social media influencers like Paris Hilton (@parishilton), Josh Ostrovsky (@thefatjewish), Brittany Furlan (@brittanyfurlan), Lola Tash (@mytherapistsays), and Kirill Bicutsky (@slutwhisperer). The documentary shows how these figures have created followings through social media posts, memes, and more. American Meme initially premiered at the Tribeca Film Festival in April 2018xxxii before launching on Netflix in December 2018.xxxiii You can view the trailer for American Meme here.

The Meme Machine: What Happens When the Internet Chooses You

Directed by Mat Hames, The Meme Machine: What Happens When the Internet Chooses You looks into the origins of memes and how they influence our digital culture. The documentary also explores how memes spread and interviews some of the most popular “human memes” like Ermahgerd Girl, Overly Attached Girlfriend, and Chocolate Rain Guy. The documentary was first released in 2016 and was produced by Rooster Teeth. The Meme Machine: What Happens When the Internet Chooses You is currently available to stream on the Rooster Teeth website.

Please Subscribe

Through a series of narrative vignettes, Please Subscribe gives a look at content creators and the phenomenon around online media. The documentary shows the journey of various creators and how they amassed the social following they have, how they’re trying to stay relevant in a growing and saturated market, and what the daily life of a content creator looks like. Please Subscribe’s cast includes MysteryGuitar Man, SeaNanners, The Will of DC, Wheezy Waiter, Mitchell Davis, and more.xxxiv The documentary was released in 2012 and is currently available on Apple iTunes Store,xxxv Google Play,xxxvi Vudu,xxxvii and Amazon Prime Video.xxxviii You can view the trailer for Please Subscribe here.

The following films are comparable to the When We Went Mad! documentary:

Drunk Stoned Brilliant Dead: The Story of National Lampoon

Directed by Douglas Tirola, Drunk Stoned Brilliant Dead: The Story of National Lampoon explores the rise of the National Lampoon magazine and how the magazine and its spin-offs effected comedy and humor in culture. The film includes archival footage of former National Lampoon staffers like John Belushi, Gilda Radner, and also interviews current entertainment figures like Judd Apatow, Kevin Bacon, John Goodman, and Billy Bob Thorton. The film was selected for the 2015 Sundance and Tribeca Film Festivals and can be streamed on Amazon Video, AT&T UVerse, DirectTV, Time Warner Cable, iTunes, Google Play, and more.xxxix You can view the trailer for Drunk Stoned Brilliant Dead: The Story of National Lampoon here.

Very Semi-Serious

Very Semi-Serious follows Bob Mankoff, a cartoon editor at the New Yorker, as he lifts the curtain on the process of selecting cartoons for the magazine. The film explores the past, present, and future state of cartoons and their effect on humor in popular culture. Very Semi-Serious won a 2016 Emmy Away for Outstanding Arts and Culture Programming and was nominated for Outstanding Documentary Editing. Directed by Leah Wolchok, the film was a selection for the 2015 Tribeca Film Festival, among other festivals.xl After its appearance at the Tribeca Film Festival, Very Semi-Serious was released on HBO in December 2015.xli The film is available for DVD purchase and it’s on streaming sites on Amazon and Google Play.xlii  You can view the trailer for Very Semi-Serious here.

Boy Howdy: The Story of Creem Magazine

Boy Howdy: The Story of Creem Magazine follows the rise of Creem Magazine in Detroit, Michigan. The documentary uses present-day interviews to commentate on the use of “permanently-adolescent-male” humor to become a significant part of rock and roll and 1970’s culture. The film was directed by Scott Crawford and premiered in March 2019 at the South by Southwest Festival in Austin, Texas.xliii You can view the trailer for Boy Howdy: The Story of Creem Magazine here.

Terms

Investment Terms

Security Type: Revenue Participation Rights

Round Size: Min: $50,000 Max: $1,070,000

Interest Rate: Per the Financing Agreement, investors ─ Financiers ─ (along with any others who purchase revenue participation rights in this offering, future offerings, or previous offerings ─ collectively, Additional Equity Financiers), will receive 100% of the Company’s adjusted gross proceeds up to the repayment amount of 115% of their investment, and 50% of any remaining adjusted gross proceeds thereafter, up to a 150% maximum repayment on their investment. Investors that contribute to the first $250,000 of the offering, (Early Bird Financiers) will receive 100% of the Company’s adjusted gross proceeds up to the repayment amount of 120% of their investment, and 50% of any remaining adjusted gross proceeds thereafter, up to 155% maximum repayment on their investment.

The Financing Agreement provides that Adjusted Gross Proceeds (as defined below) will be allocated as follows:

First, one hundred percent (100%) of Adjusted Gross Proceeds shall be paid to Financier, Early Bird Financier, and the Additional Equity Financiers on a pro rata (based on the ratio that their respective financing contributions bears to the aggregate of the Early Bird Financier Funds, Financier Funds, and the Additional Equity Funds) and pari passu basis until such time, if ever, as Early Bird Financiers have received an amount equal to one hundred twenty percent (120%) of Early Bird Financier Funds and the Financier has received an amount equal to one hundred fifteen percent (115%) of the Financier Funds and the Additional Equity Financiers have received an amount equal to one hundred fifteen percent (115%) of the Additional Equity Funds; and


Following such time, if ever, as the Early Bird Financiers have recouped an amount equal to one hundred twenty percent (120%) of the Early Bird financing contributions and the Finanacier and Additional Equity Financiers have recouped an amount equal to one hundred fifteen percent (115%) of the Additional Equity Funds, then any remaining Adjusted Gross Proceeds shall be referred to as “Net Proceeds”, and shall be paid as follows:

  • fifty percent (50%) to Producer (“Producer’s Net Proceeds”); and
  • fifty percent (50%) to the Purchasers and the Additional Equity Financiers on a pro rata (based on the ratio that their respective financing contributions bears to the aggregate of the Purchasers’ financing contributions, the Additional Equity Funds and the Filmmaker Funds) and pari passu basis.
  • After Early Bird Financiers are paid up to one hundred fifty five percent (155%) of Early Bird Financier Funds then they are entitled to no additional net proceeds.
  • After Financiers and Additional Equity Financiers are paid up to one hundred fifty percent (150%) of Financier and Additional Financier Funds then they are entitled to no additional net proceeds.
  • All third-party participations in Net Proceeds (other than those payable to Additional Financiers) shall be borne out of Producer’s share of Net Proceeds.

For purposes of the Financing Agreement, “Gross Proceeds” means any and all amounts, including nonrefundable advances, received by the Company from the exploitation of the documentaries Meme Gods and When We Went MAD! (the “films”) and all elements thereof and all rights therein, in any and all manner and media derived from distribution of the films, now known or hereafter devised, worldwide, and throughout the length of the copyright to the films. The following amounts are not included in Gross Proceeds:

  • The costs of deliverables paid by a distributor of the two films;
  • Any amounts used to fund production costs of the two films;
  • Any advance received from a record company in connection with a soundtrack album for the films shall be included in Gross Proceeds only to the extent that such advance is not used to pay music or other production costs; and
  • Tax credits or other tax incentives received in connection with the production of the films shall be included in Gross Proceeds only to the extent not used to repay financiers providing financing secured by such tax credits or incentives or used to directly fund production costs of the films.

The Financing Agreement defines “Adjusted Gross Proceeds” as Gross Proceeds remaining after deduction of the following:

  • Third party sales agent and producer representative fees and expenses;
  • Actual, third party, out of pocket amounts incurred by or on behalf of the films in connection with the sale, marketing, licensing, delivery, distribution and/or exploitation of the films;
  • Ongoing third-party accounting costs and expenses actually incurred by or on behalf of Producer in connection with the processing of payments to profit participants (including, without limitation, collection agent fees and expenses), and audit costs;
  • Actual, third party, out of pocket expenses incurred by or on behalf of Producer in connection with the ongoing ownership of the films (e.g., costs incurred in connection with the preservation and storage of negatives and master prints of the films and any expenses incurred in connection with the copyrighting of the films);
  • Actual, third party, out of pocket expenses incurred in connection with the existence and management of Producer (e.g., taxes, accounting fees, filing fees, etc.);
  • Any residual and/or pension, health and welfare payments paid to guilds or guild members in accordance with the agreements between Producer and the applicable guild with respect to the films (to the extent not assumed by the distributor(s) of the films);
  • Any amounts required to be withheld by law;
  • Payments pursuant to music licensing “step” deals which require additional payments based on the performance of the films;
  • Any actual, third party, out of pocket costs incurred by or on behalf of Producer or its affiliates in
    connection with enforcement of Producer’s rights in the films, including, without limitation, actual, direct, out-of-pocket accounting, legal and auditor fees and expenses;
  • Any amounts used to repay loans received in connection with the production of the films;
  • Any deferred compensation and bonuses (e.g., box office bonuses, award bonuses) or production costs payable to parties rendering services in connection with the films (to the extent not assumed by the distributor(s) of the films);
  • Any amounts paid to the completion guarantor of the films (if any) in repayment of sums advanced by such completion guarantor; and
  • Any reasonable reserve amounts, as determined by Producer in its good faith business judgment, required to cover anticipated future costs or liabilities, provided that such reserve amounts shall be liquidated every twelve (12) months.

The Company does not make any representation or warranty in the Financing Agreement as to the amount of Gross Proceeds, if any, the Company will receive from the exploitation of the films.

Please refer to the Financing Agreement and Form C for additional details on the terms of this investment.

Discussion

Endnotes

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