A House Divided - Business Overview

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S T A T E & C A B R IL L O P R O D U C T IO N S , IN C . | A L L R IG H T S
R ES ER V ED
@ 2014 Elder Pictures, LLC

A House Divided
Legal Notice
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THIS BUSINESS PLAN PROPOSAL DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION TO ANYONE.
PROSPECTIVE FINANCING PARTIES SHOULD NOT CONSTRUE THE CONTENTS OF
THIS BUSINESS PLAN PROPOSAL AS LEGAL, INVESTMENT OR TAX ADVICE. EACH
FINANCING PARTY SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANTS, AND
OTHER ADVISORS AS TO THE LEGAL, TAX, ECONOMIC AND RELATED ASPECTS
OF PROVIDING FINANCING TO THE COMPANY AND AS TO THE SUITABILITY OF
SUCH INVESTMENT.
THIS BUSINESS PLAN PROPOSAL INCLUDES CERTAIN STATEMENTS, ESTIMATES
AND PROJ ECTIONS PROVIDED BY THE COMPANY WITH RESPECT TO THE
ANTICIPATED FUTURE PERFORMANCE OF THE COMPANY. SUCH STATEMENTS,
ESTIMATES AND PROJ ECTIONS REFLECT VARIOUS ASSUMPTIONS MADE BY THE
MANAGEMENT OF THE COMPANY CONCERNING ANTICIPATED RESULTS, BE
INCOMPLETE OR INACCURATE AND MAY BE AFFECTED BY THE OCCURRENCE OF
UNANTICIPATED EVENTS AND CIRCUMSTANCES. CONSEQUENTLY, ACTUAL
RESULTS ACHIEVED MAY VARY MATERIALLY AND FOR THE LOWER OR THE
HIGHER FROM THOSE PROJ ECTED.


A House Divided
Table of Contents
Executive Summary.................................................................................................4
Our Vision ..............................................................................................................5
Synopsis ..................................................................................................................6
Story Points ............................................................................................................8
Production Team ....................................................................................................9
Attached Director.................................................................................................11
Target Role of Helene...........................................................................................13
Target Role of Greg ..............................................................................................14
Target role of Max Lyons ......................................................................................15
Target Role of Ben Lyons......................................................................................16
Target Role of Emma............................................................................................17
Comparison Films ................................................................................................18
Comparable P&L Model #1.................................................................................19
Comparable P&L Model #2.................................................................................20
Marketing .............................................................................................................21
Target Distribution ..............................................................................................22
Appendix A: Term Sheet ......................................................................................23
Appendix B: Investment ROI ..............................................................................24
Appendix C: Development Breakdown ...............................................................25
Appendix D: Financing Scenario #1 ....................................................................26
Appendix F: Projected Proﬁt & Loss Model .......................................................28
Appendix G: Film Distribution Window ............................................................29
Appendix H: Illinois Tax Credit Document........................................................30
Appendix I: SECTION 181 - Federal Tax Incentive ...........................................32
CONTACT INFORMATION ...........................................................................33
Risk Factors ..........................................................................................................34

Elder Pictures
Daniel Elder
Daniel@Elderpictures.com
847.722.1333

A House Divided
Executive Summary
THE COMPANY:
A HOUSE DIVIDED LLC., will be formed under its parent company, ELDER PICTURES,
LLC.. for the purposes of financing and producing the motion picture currently entitled A
HOUSE DIVIDED (the “Motion Picture”).
•

Brent Huff, a respected and successful director with 5 completed features is attached to
direct “A House Divided.”

•

There exists a potential for a tremendous ROI within a two-year period, due to foreign
sales, domestic theatrical revenues, and DVD / VOD sales.

•

We have strong interest from the top sales agency which handles the distribution of
movies, PREFERRED CONTENT.

•

We are in talks with GARY SINESE (Forrest Gump, Apollo 13) about playing the lead in
the Motion Picture.

•

The Motion Picture is a medium sized budget feature length drama/suspense, screenplay
written by JOSHUA S. HOWES.

•

The Motion Picture will be produced by ELDER PICTURES, LLC.

•

The Company plans to be in Production by FALL 2014.

•

INDEPENDENT TAX CREDIT SECTION 181 - US Federal Government gives a
100% tax write-off on all investment into film up to $15 million.


A House Divided
Our Vision
We are inviting indie aficionados and savvy financiers to get in on the
ground floor of this pathbreaking film. At the heart of the project is
the one thing everyone in Hollywood is looking for and desperately
wants: a compelling, life-changing original screenplay.
The brainchild of Joshua Howes, “A HOUSE DIVIDED” portrays a
young writer who moves back home with his parents only to see his
little brother inherit millions from a long-lost family friend,
prompting him to uncover secrets that lead to shocking acts of love
and violence. Like “The Brothers McMullen” did for Ed Burns or “In
the Bedroom” for Todd Field, “A HOUSE DIVIDED” is poised to
make Howes a break-out star.
It is currently being shopped to talent like Emile Hirsch who want to
seize a truly great role and burnish their reputations. Our behind-thescenes production team combines the passion of two young
producers whose last film premiered at Cannes with the wisdom of a
grizzled vet whose latest work was nominated for two Emmys. We are
perfectly suited to deliver this film to market, where it will be the
“Winter’s Bone”-type sensation of 2013 and earn significant return
on its investment. Be a part of the next great indie crossover hit.


A House Divided
Synopsis
In one fateful day, young writer Max Lyons burns all his bridges in New
York—gets evicted from his apartment, attacks his boss with a croquet
mallet, and spends his last dollar on subway fare. His only option: to
move back home with his parents in the leafy Midwestern suburbs, where
he clashes with his artistic mother, Helene, and blustery father, Greg,
who dote on his carefree little brother, Ben. His only pick-me-up is his
old crush Emma, the girl next door who still thinks he’s a hotshot success
in New York.
Things seem set for a tense, hot, romantic summer—UNTIL a long-lost
family friend, Mr. Marechal, suddenly dies… and leaves a $30 million
fortune only to Max’s brother, Ben.
At first Max tries to make light, celebrating with Ben and romancing
Emma on the family sailboat. But soon jealousy gets under his skin—his
parents are sucking up to Ben; he finds out his father’s business is failing;
and worst of all, Emma “accidentally” kisses Ben, before switching her
affections to him. The tension culminates in an explosive family
argument about why Max was left out and what Ben will do when he
comes into the money.
Angry and isolated, Max decides to investigate his parents’ relationship to
Mr. Marechal, enlisting the help the person who knows them best—the
young Ukrainian housekeeper, Nadia. As Max and Nadia dig into old
photos and documents, and Max questions his parents, he finds himself
falling for Nadia, a lit student who is much more than she seems.
First Max and Nadia discover a new secret—Ben is hiding an affair with
Oscar, the gawky neighbor kid. Spooked by Max’s knowledge, Ben breaks
it off with Oscar, who’s devastated. Then Ben plunges into dating Emma,
despite how it’s killing Max. Meanwhile, alliances in the family shift daily.
Angry at being lied to, Helene influences Ben not to trust his father.


A House Divided
Seeing Nadia’s effect on Max, Greg tries to fire her only to be overruled by
Ben—the new master in the house.
At the end of the summer, the Lyons go up to Mr. Marechal’s mansion.
Out hunting, Max finds his rifle pointed at Ben’s back, but resists the
urge in disgust. Ben tells Emma he loves her, and she secretly ditches her
birth control. Then—Max finds sure evidence that Helene and Mr.
Marechal were lovers. He tries to tell Ben, but his brother knocks him off
the family sailboat rather than listen.
That night Max spills the family’s secrets in the open. At a topsy-turvy
dinner, he announcing that Mr. Marechal is Ben’s father and throws the
evidence on the table. Ben attacks Max before Greg confirms it’s true,
leaving Ben devastated. Ben flees home with Emma, and Max and Nadia
follow, stealing Greg’s prized Jaguar. That night, Ben and Emma make
love tenderly, while Max and Nadia make love for the first time, and Greg
forces himself on Helene in a cold, awful scene. In the morning, the
doorbell at home rings—it’s Oscar. Ben answers. Oscar raises a rifle from
the shed. BANG.
After Ben’s funeral, Max and Nadia leave together in the stolen Jag. Greg
and Helene discover that only Ben or his descendants can inherit the
money—at which point Emma reveals she’s pregnant. She and her baby
inherit the fortune. Helene leaves Greg, with Emma’s help, to pursue her
dream of art school in Greece. Greg is left alone and bankrupt. Finally,
Max wakes up in a motel in Iowa to find Nadia has taken off without
him. In the last scene, we see him alone amid the corn, hitchhiking to a
new life somewhere.


A House Divided
Story Points
•

We see “A House Divided” as an award-winning film that will
generate critical acclaim and appeal to a wide audience.

•

It’s a story about how money gets in the way of true relationships,
prompting us to give in to the seven deadly sins that tear us apart.

•

The plot is full of drama, suspense, mystery, and action, with a
shocking twist--all the ingredients of a compelling film.

•

The story asks the question “What if ?” which will leave audiences
buzzing. What if I’d done something differently--would she still
love me? Would he still be alive? Would everything be different?

•

At its core it’s a film about love, family, respect, and relationships.

•

Regardless of who we are, we all experience the emotions of greed,
lust, envy, wrath, gluttony, sloth, and pride, at some point in our
lives--everyone can relate to this film.

•

This story needs to be told, especially in today’s tough times, to
show that no matter how rough life gets or what differences tear
us apart, we can always overcome them and face the future with
hope for a brighter day.


A House Divided
Production Team
George Elder
Producer
George served as President and Executive Producer of Luminair Film Productions, Inc. George has over 30 years of
production experience as Producer/Director in corporate video work, television production, documentary and
feature films. His recent credits include the award-winning, “Encounter in the Third Dimension,” which has grossed
$40 million to date, award winning, internationally distributed feature film “Boxboarders!,” which grossed $2
million to date on a $500,000 budget. and the Telly Classic award-winning production of a feature-length
documentary film on the music of Edith Piaf distributed by Lionsgate and Producer on a feature length film “You
May Not Kiss the Bride.” George currently serves as Executive Producer of “Mexico: One Plate at a Time with Rick
Bayless,” which has been nominated for two Emmy Awards in 2014.

Daniel Elder
Producer
Born and raised in Chicago, Il, Daniel, a Co-Founder and Award winning Producer at Elder Pictures, has associate
produced more than 700 hours of television, docs, commercials, music videos, and an internationally distributed
feature film. Daniel recently finished a short, “Your Own is Your Own,” that was an official selection at the 2014
Cannes Film Festival, the Indian International Film Festival, and others. Before that, Daniel was an associate
producer on “Mexico: One Plate at a Time” which is up for two Emmy nominations and on the award winning
comedy “Boxboarders,” which has done $2 million in receipts since its release.


A House Divided
Production Team
Jordan Foley
Consulting Producer
Foley produced The Open Road, which was written and directed by Michael Meredith, starring Jeff Bridges, Justin
Timberlake, Mary Steenburgen, Kate Mara and Harry Dean Stanton, which was released theatrically in August
2009 by Anchor Bay Entertainment. He Co-Produced Puncture, directed by Adam Kassen and Mark Kassen,
starring Chris Evans, which premiered at the 2011 TriBeCa Film Festival and was released theatrically by Millenium
Films in September 2011. Jordan will be producing a feature with Chris Evans this summer titled “Mantivities,”
with Waterstone Productions.

Sean Maurer
Executive Producer
Born in NYC to Broadway Director/Producer/Writer Michael Maurer and actress Jane Maurer, Sean was raised in
Santa Barabara. He began acting at a young age, before becoming a partner in a Hollywood boutique agency
representing actors and writers for 8 years. In 2009, Sean formed State & Cabrillo Productions, focused exclusively
on the development and packaging of feature films including the thriller JUST PLAY DEAD by acclaimed
screenwriter Dan Gordon based on a novel of the same title, the feature and graphic novel THE STUDY, and the
bio-pic of the deceased original RED HOT CHILI PEPPER lead guitarist THE HILLEL SLOVAK STORY by
James Slovak.
Sean is a partner in S+C Management and Productions, representing actors, writers and directors, where he also
produces. Recent productions include THE WESTSIDERS, an award winning surfing documentary by director
Josh Pomer currently in pre-production for the scripted feature adaptation; EXIT 91 SUMMERLAND, a horror
film based on a real urban legend currently in post-production; and MY LEFT HAND MAN by director Antonia
Bogdanovich, a gritty shortfilm playing the present international independent film festival circuit, named Best Short
of the New Jersey Film Fest 2012, nominated for Best Short 2012 at the International Memphis Film and Music
Festival, as well as Best Short of the Madrid International Film Festival 2012.


A House Divided
Attached Director

Brent Huff has directed eight feature films in the last decade, following a distinguished career as an actor and writer.
His latest film, the hard-hitting documentary “Chasing Beauty,” which reveals the dark side of the modeling
industry, was distributed by MTV and peaked at #1 on iTunes, ahead of contemporaneous films such as “Lincoln,”
“Life of Pi,” “Zero Dark Thirty,” and “Argo.” His previous feature films were the courtroom drama “Last
Will” (2012), starring Academy Award winner Tatum O’Neal, Academy Award nominee Tom Berenger, and James
Brolin; and the noir thriller “Cat City” (2009), a fragmented tale of corruption and murder starring Rebecca
Pidgeon and Brian Dennehy, which earned accolades at the Palm Springs, Rhode Island, Stony Brook, Methodfest,
St. Louis, and Prince Edward Island International Film Festivals and was distributed by Showtime.
Huff works in both short and feature formats. His recent short films include “Hero” (2012), an uplifting drama
which won Best Film awards at the Brooklyn, Pan Pacific, Cottonwood, Family and Enfogue festivals; and
“Helpless” (2011), a disturbing portrayal of an accident told from multiple perspectives, which won Best Overall
Film at the San Diego Indie Fest and the Jury Award at the Riverside International Film Festival.
Additional highlights from Huff’s feature film directing career include “Serbian Scars” (2009), a political thriller
starring Michael Madsen, shot on location in Serbia; “Treasure Raiders” (2006), starring David Carradine, one of
the most expensive productions ever mounted in Russia, praised for its stunning cinematography and action
choreography; and “100 Mile Rule” (2003), a dark comedy starring Maria Bello, Jake Weber, and Michael McKean,
a festival favorite at Fort Lauderdale, Santa Barbara, Palm Springs, Taos Talking Pictures, Nashville, Newport Beach,
the USA Film Festival in Dallas, and the closing night film at the Cinequest Film Festival. “Welcome to
Paradise” (2007), starring Brian Dennehy and Crysal Bernard, a gripping drama about a small-town female
evangelist, had its theatrical release in 2007 and has enjoyed great success in the DVD market.


A House Divided
DIRECTOR BIO (CON’T)
Huff’s most recent project was the documentary, “Behind the Orange Curtain” (2013), an expose of the prescription
drug abuse epidemic, which has so far won Best Film at the Metropolitan Film Festival, sold out four screenings at
the Newport Beach Film Festival, and was recently picked up for distribution by Filmbuff.
His next project is to direct the family drama “A House Divided,” a tale of an unexpected inheritance that splits two
brothers and awakens the seven deadly sins within a family.
While many directors begin their careers in commercial and music videos, Huff comes from an acting and
storytelling background. Since age 15, he starred in more than 50 films. Thus, in addition to his knack for visual
flair, crisp pacing, beautiful images, and expressive musical choices, Huff specializes in drawing spectacular
performances from actors—the heart of the director’s craft.

Joshua S. Howes
Writer
Joshua just earned his MFA in Fiction & Screenwriting from Columbia University, where he was invited
to teach before he even finished his degree. His script for “A House Divided” won a national Golden
Brad in Screenwriting. His previous screenplay, for the short film “Jackson Parish” (dir. Edward
McDonald, 2009), won Best Screenplay at the NYU-Tisch First Run Film Festival and was shown on
television. His first short story was published this year in the nation’s most prestigious literary journal,
Ploughshares, which has since brought out more of his fiction. His fiction also won the Bocock-Guerard
Prize for Fiction at Stanford University. As a journalist, he has published more than a hundred stories
and reviews in the Chicago Tribune, Baltimore Sun, and Newsday, among others. In the last year he has
sold two feature scripts, “The Last Cowboy” and “Two Terrorists Meet,” but “A House Divided” is his
passion project.


A House Divided
The management team of the Company has already begun to pursue A-List talent to
attach the Picture to make it a more viable project for distributors. Please note that NO
TALENT IS ATTACHED at this juncture; however, we will approach the following:

Target Role of Helene

Julianne Moore

Laura Linney

Catherine Keener

A House Divided
Target Role of Greg

Gary Sinise

Tim Robbins

Kevin Costner

A House Divided
Target role of Max Lyons

Paul Dano

Elijah Woods

Kieran Culkin

A House Divided
Target Role of Ben Lyons

Hunter Parrish

Max Irons

Sebastian Stan

A House Divided
Target Role of Emma

Elizabeth Olsen

Imogen Poots

Analeigh Tipton

A House Divided
Comparison Films
In a suburban family, an unexpected inheritance awakens the seven deadly sins.
A HOUSE DIVIDED is a story about a young writer who moves back with his parents only to see his little brother
inherit millions from a long-lost family friend, his jealousy prompts him to uncover shocking secrets that lead to
surprising acts of love and violence.

Film

Distribution

Est. Budget

U.S Box
Oﬃce
Gross

Martha Marcy May
Marlene (2011)

FOX Searchlight

$2,500,000

$2,981,038

$3,531,038

Beginners (2011)

Focus Features

$3,200,000

$5,776,314

$14,311,701

City Island (2009)

Anchor Bay Films

$6,000,000

$6,670,712

$7,875,862

Garden State (2004)

Fox Searchlight

$2,500,000

$26,782,316

$35,825,316

In The Bedroom (2001)

Miramax

$1,700,000

$35,930,604

$43,430,604

American Beauty (1999)

Dreamworks

$15,000,000

$130,096,601

$356,296,601

The Virgin Suicides (1999)

Paramount
Classics

$6,000,000

$4,859,475

$10,409,377

Happiness (1998)

Good Machine

$2,000,000

$2,746,453

$2,746,453

Beautiful Girls (1996)

Miramax Films

$2,000,000

$10,597,759

$10,597,759

Ordinary People (1980)

Paramount
Pictures

$6,000,000

$54,766,923

$54,766,923


Worldwide
Box Oﬃce
Gross

A House Divided
Comparable P&L Model #1
P&L MODEL ($000's)
Fee (%)
Negative Costs of the Film

Low Case
$3,200

Production Rebate (Tax Incentive + PreSales)

$960

Domestic Theatrical Sales
Domestic Box Office Gross

$5,800

Gross Film Rentals (Distributors Gross)
Distributer Fee & Other Costs

43%

$2,470

17.5%

($430)

Prints & Advertising

($3,000)

Domestic Theatrical NET Proceeds

($960)

Domestic Aftermarket Sales
DVD Market

$2,900

Marketing and Distribution Costs

33%

($957)

Pay-Per View/Video On-Demand

12.5%

$730

Pay Cable Revenue

$2,500

Network TV Revenue

10%

Domestic Syndication

$145

Merchandising/Music/New Media

Total Estimated IRR
100% + 157%

Distribution Licensing Fee

$580

1%
17.5%

$60
($1,210)

Domestic Aftermarket NET Produceeds

$4,748

Total Domestic NET Distribution

$3,788

Foreign Markets
Sales & Overages
Fees & Costs

$8,700
10%

($870)

Overseas NET Proceeds

$7,830

Worldwide NET Income

$12,578

Negative Costs (Films Budget repaid to Investors)

($3,200)

20% Preferred Return Rate

($640)

Total A BEGINNERS NET Profits

Nash Information Services: The
Numbers - Movie Box Office Data,
Film Stars, Idle Speculation

$8,738

50% Investor Profits

$4,369

50% Creative Profits

$4,369

BEGINNERS ROI


137%

A House Divided
Comparable P&L Model #2
P&L MODEL ($000's)
Fee (%) Low Case

$6,000

Production Rebate (Tax Incentive + Pre-Sales)

$1,800


$6,700
43%

$2,850

17.5%

($500)


($3,000)


($650)

DVD Market

$3,350


33%


12.5%

Pay Cable Revenue
Network TV Revenue


$840
$2,500

10%


Total Estimated IRR
100% + 23%

($1,106)

$670
$168

1%
17.5%

$70
($1,330)


$5,162


$4,512

Foreign Markets
Sales & Overages
Fees & Costs

$1,340
10%

($134)


$1,206


$7,518


Nash Information Services: The
Numbers - Movie Box Ofﬁce Data,
Film Stars, Idle Speculation

($6,000)
($1,200)

Total A BEGINNERS NET Proﬁts

$318


$159


$159

BEGINNERS ROI


3%

A House Divided
Marketing
The management team of the Company plans to take the Motion Picture to the major ﬁlm
festivals as the target for the ﬁlm, we see “A House Divided” as an award winning
project.


A House Divided
Target Distribution
Concurrent to attaching a director and/or the lead cast the production team will seek a
distribution deal with one of the following distributors:


A House Divided
Appendix A: Term Sheet

Target Production Launch Production will begin in the Fall of 2014
Location Chicago & Evanston, IL.
Timing

The Picture will be completed by the third quarter
of 2014

Production Budget Budget will be held at $1,590,000

Full Equity Investment: $1,500,000
Equity Needed Cash Flow Tax Credit to Equity: $1,300,000
Debt to Equity: $900,000
Investment

Co-Finance Arrangement: $500,000 Minimum
Full Finance Arrangement: $1,000,000 Minimum

Print and Advertising $150,000 - $200,000
P&A Budgets (This is the amount the Production Company will
put up in lieu of a distribution agreement.)
The Company will have approval rights on all
creative and business decisions including but not
limited to:
Approval Rights

• Budget
• Chain of Title (copyright)
• Lead Actors
• Director
• Final Cut
• Distribution


A House Divided
Appendix B: Investment ROI
The Company has adopted strict financial protocols to ensure prudent
use of funds and to maximize Investment Partner returns. The Company’s
total cash flows are used first to repay the production equity, and then
flow through the profit waterfall at a 100% split. Investment Partners
receive 100% of all returns until 120% of the initial investment has been
recovered. The other 10% will go to the Company to support they’re
efforts to recoup all revenue generated by the picture. Of the remaining
net profits, Investment Partners receive 50% and the Company receives
50%. In addition, the Picture that the Company intends to produce will
earn ancillary revenue (i.e. video-on-demand, syndicated and cable TV,
merchandising) at similar levels of feature films costing up to ten times
more. When the film becomes successful in the marketplace, all proceeds
from the film paid to the LLC, after deduction of the fees and expenses
owed to distributors and sales agents from worldwide gross receipts for
all media will be paid out as follows:
• Each investor shall recoup, on a pari passu basis with all other
investors, one hundred and twenty percent (120%) of said investor’s
contributed funds. By way of example, if an individual’s investment is
$50,000, he/she would recoup $60,000 prior to payments to any
other party, except for other equity investors;
• After the Picture’s budget (or 120% of the final Picture budget) has
been allocated to the equity investors any outstanding residuals and/
or deferred payments will be distributed; and,
• Following these distributions, further proceeds will be split, with
50% going to the investors and 50% going to the Company and any
other profit participants (talent with back-end participation), in
perpetuity.


A House Divided
Appendix C: Development Breakdown
The Picture will be need phases in financing that will come in forms
of equity, soft money (Tax Credits & Tax Allowances, Coproductions, Government-backed Loan Support, Subsidies,
Negotiated Service Discounts & Barter, Box-office Rebates/Tax
Support) and forms of mezzanine, gap and debt financing.
Typical Film Development Scenario (US $000)
Development Costs
$90
(During Development)
Casting Director Cost
$18
20%
Director Fee Costs
$27
30%
Overhead Costs
$40.50
45%
Business & Legal
$4.50
5%
Total Development
$90
100%

• Summarizes the costs associated with the development fees that’ll
be used with the Picture.
• The Development funds can be rolled into the picture as an
equity investment or as a loan investment to help subsidize the
development of the property.
To maximize return on investment (ROI) for all general and limited
partners, Distribution relationships and Foreign pre-sales will be
utilized to mitigate the film’s downside risks.


A House Divided
Appendix D: Financing Scenario #1
To maximize return on investment (ROI) for all general and limited partners, Distribution
relationships and Foreign pre-sales will be utilized to mitigate the film’s downside risks. Case
study
A House Film Financing Plan (US $000)
Budget of Production Costs

$1,590
Amount

Debt Loans Against Int’l Pre-Sales and Estimates
•

CoMerica, Union Bank, & OneWest Bank to finance Loan

•

32.0%
25.6%

$557

35.0%

$534.24

33.6%

$80

5.0%

$445

Cash flow tax Credit

$509
$407.04

Production Subsidy Loan (Illinois Tax Credit - Appendix H)

% of
Budget

28.0%

Mezzanine Financing

Donated Property, Equipment, Boats (Secured Donations)
•

All locations for “A House Divided” are secured for free as an investment
into the Motion Picture.

Equity Piece (120% ROI)
•

Equity with Cash Flowing Tax Credit / Debt

$649

40.8%

•

Co-Finance Relationships (50% / 50%) (120%)

$223

14.0%

•

Development Loan (5% of $1.8million) (120% ROI)

$80

5.0%

$1,590

100%

Total Production Cost

• The adjacent table portrays the typical capital structure of a film. Including the production
incentives, this strategy should limit equity used to 25%.
• The Company will not green-light a film unless it reaches the threshold of 70% in foreign
sales estimates and soft-monies.
• The investment proceeds will be used to purchase, build, develop, acquire, and finance the
equipment, facilities, and working capital to meet the company’s monthly and yearly
overhead. This will also include the retention of corporate and industry specialists.
• When the production process begins, the funds will be used fund all the above-the-line
and below-the-line costs associated with the film. Everything from writer, director, cast
and crew through to delivery of the master prints to distributers.
• Marketing, film festivals, and Prints & Advertising (P&A) are all part of moving the
product, our film. We need to make sure we have enough funds to successfully push the
film to any festival, markets, and all distributers (foreign and domestic). This is the most
important step to recouping the investment.


A House Divided
Appendix E: Financing Scenario #2
To maximize return on investment (ROI) for all general and limited partners, Distribution
relationships and Foreign pre-sales will be utilized to mitigate the film’s downside risks. Case
study
Just Play Dead Film Financing Plan (US $000)
Budget of Production Costs

$1,590
Amount

Donated Property, Equipment, Boats (Secured Donations)
•

30.0%
24.0%

$80

5.0%

$1,034

Cash flow tax Credit

$477
$381.60

Production Subsidy Loan (Illinois Tax Credit - Appendix H)

% of
Budget

65.0%

All locations for “A House Divided” are secured for free as an investment
into the Motion Picture.

Equity Piece (120% ROI)
•

Co-Finance Relationships (50% / 50%) (120%)

$517

32.5%

•

Development Loan (5% of $1.8million) (120% ROI)

$80

5.0%

$1,590

100%

Total Production Cost

• The adjacent table portrays the typical capital structure of a film. Including the production
incentives, this strategy should limit equity used to 25%.
• The Company will not green-light a film unless it reaches the threshold of 70% in foreign
sales estimates and soft-monies.
• We can cash flow any part of the investment with a international sales agent, the equity
investment would allow for the Company to go straight equity and cash flow the Tax
Credit and debt after the production to retain more Cash on hand by not taking a loan out
and debt financing the film.


A House Divided
Appendix F: Projected Profit & Loss Model
P&L MODEL ($000's)
Rate
Production Rebate

Low Case
$1,590
$509

Base Case
$1,590
$509

High Case
$1,590
$509

Breakout
$1,590
$509


$2,050

$3,000

$7,500

$15,000

$870

$1,280

$3,190

$6,380

($150)

($220)

($560)

($1,120)


($3,000)

($6,000)

($12,500)

($15,000)


($2,280)

($4,940)

($9,870)

($9,740)

$615

$1,200

$3,000

$6,750

($203)

($396)

($990)

($2,228)

$260

$380

$940

$1,880

$2,500

$5,000

$10,000

$10,000

$210

$300

$750

$1,500

$53

$75

$188

$375

$0

$0

$3

$25

($640)

($1,220)

($2,600)

($3,590)

$2,795

$5,339

$11,290

$14,713

$515

$399

$1,420

$4,973

$1,025

$1,500

$1,875

$3,750

($103)

($150)

($188)

($375)


$923

$1,350

$1,688

$3,375


$1,946

$2,258

$3,616

$8,856

($1,590)

($1,590)

($1,590)

($1,590)

($318)

($318)

($318)

($318)

Total A HOUSE DIVDED NET Proﬁts

$38

$350

$1,708

$6,948


$19

$175

$854

$3,474


$19

$175

$854

$3,474

A HOUSE DIVIDED ROI

1%

11%

54%

219%


43%


17.5%

DVD Market

33%


12.5%

Pay Cable Revenue
Network TV Revenue

10%


17.5%

Foreign Markets
Sales & Overages
Fees & Costs

10%



A House Divided
Appendix G: Film Distribution Window

THEATRICAL

HOME ENTERTAINMENT

PPV / VOD

PAY TV

FREE TV

LIBRARY (FREE / HV)

Theatrical
Gross box office receipts are shared - studio and theater
•
owners.
Domestically, distributor’s % of box office receipts is 45%
•
- 55%.
Internationally, distributor’s % of box office receipts is
•
40%-50%.
Home Entertainment (continues in perpetuity i.e. library)
Distribution in the home video/DVD market occurs via a
•
rental or sell-through strategy.
Rental strategy:
•
- Sales to retailers at a wholesale price or based on a
revenue sharing
- Number of video units shipped to retailers is highly
correlated to domestic box office performance
- High growth with Redbox and Netflix providing low
cost rental options
Sell-through strategy:
•
- Most significant contributor of Studio revenues,
modest pressure due to transition to rental, partially
mitigated by growth high margin digital sales and
premium priced Blu-ray
Approx. 90 MM domestic households will be “DVD
•
capable” in 2009.
Video On Demand (VOD)
High margin digital rental option is growing at a
•
20%annual CAGR
Studio usually takes between 60% - 70% of VOD
•
transaction
Pay and Free Television ( continues in perpetuity i.e library)
Television licensing sequence:
•
- Pay television (HBO, Showtime and Pay-Per-View)
- Network broadcast television (NBC, CBS, ABC, Fox)
- Local broadcast (“syndication”) or basic cable network
License fees for pay television and broadcast are based
•
on the film’s domestic theatrical performance.
Library – revenues generated in free tv and home
๏
video, assumed to be equate on a npv basis to
approx 7% of first 10 years revenues excluding
theatrical.


A House Divided
Appendix H: Illinois Tax Credit Document
This is what the Company estimates on a high-end that we will see returned to the the Company before,
during or after the Production of the Picture. If we decide to use the tax-credit to monetize the value of the
credit, we can receive around 80¢ on the $1 for the tax credit, if we decide to use it during the production,
we can receive between 85¢ to 95¢ on the dollar or we can keep the credit and monetize its value after the
completion of the film and receive its full value as a tax credit towards the Picture and begin to start paying
back our investors at this point.
Tax Credit Certificate/Transfer
30% of the qualified Illinois Production Spending.
30% credit on Illinois salaries up to $100,000 per worker.
Tax credit can be carried forward 5 years from when originally issued by IFO.
The yearly sunset provision has been removed so the IL Film Services Tax Credit does not
expire.
• Applicants will receive an additional 15% tax credit on salaries of individuals (making at least
$1,000 in total wages) that live in an economically disadvantaged area (at least 10%
unemployment).e transferred
•
•
•
•


March 23, 2012

Daniel Elder
Elder Pictures, LLC

Dear Mr. Elder,
The Illinois Film Office a division within the Illinois Department of Commerce and Economic
Opportunity has reviewed your budget for the film project entitled A House Divided.
Based on the budgetary information provided, A House Divided can anticipate an Illinois Film
Tax Credit in the approximate amount of Five Hundred Eighty Eight Thousand Dollars
($588,000).
Please note that this letter does not guarantee the issuance of a final Tax Credit Certificate.
Issuance of the Final Tax Credit Certificate is contingent upon meeting all of the rules and
regulations of the Film Services Tax Credit and the approval of the Director of the Department
of Commerce and Economic Opportunity.

Sincerely,

Cesar Lopez
Manager, Illinois Film Production Tax Credit
Illinois Film Office


A House Divided
Appendix I: SECTION 181 - Federal Tax Incentive
SECTION 181: You’ve heard of farming subsidies. A few years back savvy film lobbyists created
subsidies for the film industry. As they outlined the dangers of runaway film production to Canada,
Eastern Europe and Australia, Congress passed legislation that resulted in Section 181 of the IRS Tax
Code.
Put simply, Section 181 states that investment in a motion picture shot in the US is 100% tax
deductable for the investor in the same year invested.
Under Section 181 an investor may deduct the money which is invested in a film or television
production from his or her passive income earned in the same year.
If the investor is actively involved in the operation of the production, he or she may deduct the
amount of investment from all active income earned in the same year. Productions with budgets
below $15,000,000 (up to $20,000,000) which have at least seventy-five percent 75% of its
production completed within the United States qualify under Section 181. Investors can be either
individuals or businesses.
• Here are some Investor broad strokes for the Section 181 Tax Deduction:
-100% of the motion picture costs are deductible in the same year of investment.
- 75% of the motion picture must be shot in the US to qualify for Section 181.
- There is a 15 to 20 million dollar budget cap.
- There is no minimum film production budget cost.
- TV pilots, TV episodes (up to 44), short films, music videos and feature films all qualify for
Section 181.
- Section 181 can be applied to active income or passive income.
- Investors can be either individuals or businesses.
- Section 181 is retroactive.
- There is no expectation for film distribution or film completion.
- The motion picture’s corporation issues Schedule K-1’s to the investors so they can take
advantage of Section 181.
WHAT IT MEANS FOR INVESTORS:
Tax rebates and incentives for money spent on film or television production within a particular
state combined with the benefits of Section 181 allow an investor (working with cooperative
film producers) to greatly minimize his or her risk on what would ordinarily be considered a
risky investment. For example, if a tax payer is in the thirty-five percent (35%) tax bracket and
a qualifying film is shot in Michigan which has a tax credit up to forty percent (40%), an
investor will be eligible to recapture seventy five percent (75%) of their investment in a
qualifying production. This recapture can be realized before the film is released and/or makes
its first dollar. In today’s economy this type of investment assurance is hard to come by.


A House Divided
CONTACT INFORMATION

WEBSITE: http://www.elderpictures.com
Daniel Elder
847.722.133
Daniel@Elderpictures.com

George Elder
312498.4555
George@Elderpictures.com
Thank you for taking a read, if you have any
questions, please contact George or Daniel for
more information.


A House Divided
Risk Factors

An Investment in the Pictures involves a high degree of risk and should be considered only by
persons who can afford the loss of their entire investment. In addition to the other
information contained in the Agreement, prospective participants should carefully consider
the following risk factors before investing in the Pictures. There are significant risks involved
in the development, financing, production, and exploitation of a motion picture, and the
motion picture business is highly competitive. Success is largely dependent on public taste
which is both unpredictable and subject to change. Accordingly, the commercial potential of
the Pictures cannot be accurately predicted. Furthermore, many motion pictures do not
recover their development, production and exploitation costs from traditional streams of
distribution alone and may never generate proceeds payable to investors, even after
exploitation in other markets and media.


A House Divided - Business Overview

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