Investment Proposal
March 16th, 2009 - USA Today

“More people are going to the movies, and due to the economic conditions, the
audience has g...
February 17th, 2009 - The Wall Street Journal

“For the year, revenues continue to soar, with revenue at $1.44 billion, up...
January 24th, 2009 - The New York Times

“Suddenly Hollywood Seems a Conservative Investment”

“Wall Street, real estate, ...
An Investment in a Growing Industry
According to the Motion Picture Association of America, worldwide box office has
reache...
Providing Transparency to Investors

Studios are known for being guilty of little transparency with regard to reporting
ne...
Advantages to the Studio Alternative


Commercial, mainstream movies with a high production value can be made for
about 30...
Susanne Bohnet, Chief Executive Officer


Susanne Bohnet was previously heading the U.S office of Equity Pictures (Equity
P...
Ms. Bohnet actively consults for various domestic and international financing and
film entities and equity groups. Some of...
SOME OF OUR CURRENT FILMS
A-List Hollywood Talent


All films will have at least one major A-list talent attached, which will offset equity
risk by p...
COMPANY MEN
                                     Drama
                               In Production Now
                  ...
ONLY LIVING BOY
                               Drama/Comedy
                         Production Start: August 2009
       ...
VERDIGRIS
                                 Political Thriller
                            Production Start: July 2009
    ...
CLOCK TOWER
                               Suspense/Thriller
                           Production Start: July 2009
      ...
THE COURIER
                                    Thriller
                         Production Start: August 2009
          ...
Film Financing
Film Financing

Film financing has traditionally been an investment vehicle open to a select few,
but today is increasingly...
Production Funding


Commercial, mainstream movies with a high production value can be made for
about 30-50% less than a s...
Production Funding Recoupment


• Serafini’s investors recoup 120% of their initial equity investment,
   before any talent...
Film Financing - Sources of Recoupment

   Transaction fees.
   Backend participation, in perpetuity.
   Sale of negative....
Susanne Bohnet
  8265 Sunset Blvd., Suite 104
    Los Angeles, CA 90046
        (323) 650-5033
s.bohnet@serafinipictures.com
Financial Model
This financial model is based on the following assumptions:

• Production only fund/investments-overall amount: USD $25 M
•...
Fund Summary                                         NOTE: Only items highlighted in YELLOW should be changed
$ Thousands ...
Total Projects Model
                                 NOTE: Only items highlighted in YELLOW should be changed
$ Thousands...
Production Fund Cash flows for Multiple Investments over ONE year
                                       NOTE: Only items ...
Year 2                                                                                                                    ...
Typical Production Funding Cash Flows for Each Investment
                                         NOTE: Only items highli...
Single Film Cash Flows
                                                     NOTE: Only items highlighted in YELLOW should ...
25 M Marketing V2
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25 M Marketing V2

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  • 25 M Marketing V2

    1. 1. Investment Proposal
    2. 2. March 16th, 2009 - USA Today “More people are going to the movies, and due to the economic conditions, the audience has gotten a lot older - it has really broadened out. The 12% rise in year- to-date receipts and 15% jump in attendance appears to be from new viewers.”
    3. 3. February 17th, 2009 - The Wall Street Journal “For the year, revenues continue to soar, with revenue at $1.44 billion, up 22%, through the same point in 2008. Factoring in 2009’s higher ticket prices, movie attendance is running 20% higher than last year’s.” “Hollywood seems up-stoppable right now. With this notion of the recession helping the box office, people want to go to the movies to just have fun and escape.”
    4. 4. January 24th, 2009 - The New York Times “Suddenly Hollywood Seems a Conservative Investment” “Wall Street, real estate, the art market - all those supposedly stable investment areas - are now such a mess that Hollywood is one of the safer places you can park money. Although the movie business has been hurt along with nearly every other industry, it’s proving far more resilient to recession than most.”
    5. 5. An Investment in a Growing Industry According to the Motion Picture Association of America, worldwide box office has reached another all-time high, with $28.1 billion in 2008, compared to $26.7 billion in 2007, a 5.2% increase. The demand for filmed entertainment and digital media is growing, even during times of recession.
    6. 6. Providing Transparency to Investors Studios are known for being guilty of little transparency with regard to reporting net profits to single producers and are notorious for having significant overhead expenses that eat away at, or eliminate net profits. Serafini breaks this mold by implementing a straight-forward, fee-based business model, providing transparent accounting and resulting in higher returns for investors.
    7. 7. Advantages to the Studio Alternative Commercial, mainstream movies with a high production value can be made for about 30-50% less than a standard studio film, by tapping into the lower overhead and lower fees across the board for experienced independent filmmakers.
    8. 8. Susanne Bohnet, Chief Executive Officer Susanne Bohnet was previously heading the U.S office of Equity Pictures (Equity Pictures has been the second largest film fund in Germany) where she initiated strategic partnerships with U.S producers, negotiated deals with financiers and talent, oversaw production and handled the day to day operations on behalf of the company. During her time with Equity Pictures, the company’s annual investments grew from USD $30 million in 2002 to USD $100 million in 2004. Ms. Bohnet worked with Equity Pictures on films with budgets between USD $2 million and USD $55 million. Prior to managing funds with Equity Pictures Ms. Bohnet was S.V.P of Cinemedia KG, for whom she created a presence in the US. Cinemedia is a German company, which was very active in acquiring film rights for the German market as well as investing equity capital into major U.S. films. “What Women Want” staring Mel Gibson and Helen Hunt, became, under the guidance of Ms. Bohnet, the company’s most successful Hollywood endeavor generating well over USD $300 million of box office and ancillary revenue.
    9. 9. Ms. Bohnet actively consults for various domestic and international financing and film entities and equity groups. Some of the films in which Susanne has been or is currently involved in, as Producer, Executive Producer, or financial arranger are: * “GODPARENTS” (2009) * “WAR MONKEYS” (2009) starring Jessica Alba * “THE ONLY LIVING BOY IN NEW YORK” (2009) starring Zack Efron * “CLOCK TOWER” (2009) starring Evan Rachel Wood * “NEW YORK I LOVE YOU” (2008) starring Scarlett Johanssen, Natalie Portman * “FLASHBACKS OF A FOOL” (2008) starring Daniel Craig * “HOSTAGE” (2005) starring Bruce Willis * “MATADOR” (2005) starring Pierce Brosnan * “CHUMSCRUBBER” (2005) starring Glen Close, Ralph Fiennes * “EULOGY” (2004) starring Ray Romano, Kelly Preston * “RELATIVE STRANGERS” (2006) with Danny de Vito, Neve Campbell, Ron Livingston * “MOZART AND THE WHALE” (2005) starring Josh Hartnett, Radha Mitchell * “TODAY YOU DIE” (2005) starring Steven Segal * “ELVIS HAS LEFT THE BUILDING” (2004) starring Kim Basinger * “WHAT WOMEN WANT” (2000) starring Mel Gibson Ms. Bohnet holds a master’s Degree in Media Economics from the Cologne Media Academy, and a BA in Film, from her studies at the Tisch School of Film in New York City and University of Communication in Dortmund, Germany.
    10. 10. SOME OF OUR CURRENT FILMS
    11. 11. A-List Hollywood Talent All films will have at least one major A-list talent attached, which will offset equity risk by predicting international appeal.
    12. 12. COMPANY MEN Drama In Production Now Budget: $15M Starring Ben Affleck, Tommy Lee Jones Kevin Costner and Maria Bello. Turmoil in the executive ranks of a Fortune 500 company. A middle-aged executive feels the financial and domestic impacts of his company’s recent decision to downsize.
    13. 13. ONLY LIVING BOY Drama/Comedy Production Start: August 2009 Budget: $10M Starring Zac Efron and Kevin Kline In discussion with Malin Akerman and Jessica Alba Adrift in New York City, a recent college graduate’s life is upended by his father’s attempt to control and define what is right for his future.
    14. 14. VERDIGRIS Political Thriller Production Start: July 2009 Budget: $7.5M Starring Pierce Brosnan. Private investigator Cooper is hired to dig up dirt on a mayoral candidate in post- Katrina New Orleans, but things go wrong as Cooper becomes a scapegoat and then orchestrates an elaborate operation of revenge.
    15. 15. CLOCK TOWER Suspense/Thriller Production Start: July 2009 Budget: $15M Starring Evan Rachel Wood. Upon receiving news of her mother’s strange disappearance, a teenage girls returns to the family lodge only to discover a shocking supernatural family secret.
    16. 16. THE COURIER Thriller Production Start: August 2009 Budget: $12M Starring Adrian Brody All he has to do is deliver a case. Thing only thing that is in his way is everyone.
    17. 17. Film Financing
    18. 18. Film Financing Film financing has traditionally been an investment vehicle open to a select few, but today is increasingly open to all investment sectors, including small and medium sized firms. With the current trend for financing and distributing mainstream, commercial films moving away from the major studios, high net- worth individuals, hedge funds, private equity films and asset managers alike, are now being presented with more viable avenues to make alternative investments in the ever-growing film industry.
    19. 19. Production Funding Commercial, mainstream movies with a high production value can be made for about 30-50% less than a standard studio film, by tapping into the lower overhead and lower fees across the board for experienced independent filmmakers. Established producers often can raise up to 50-70% of the total production budget for a film from senior debt (primarily secured by contractual sales and collateral), in combination with various soft money deals. The remaining equity contribution (typically 30-50% of the production budget) must come from an investor.
    20. 20. Production Funding Recoupment • Serafini’s investors recoup 120% of their initial equity investment, before any talent participation. • Serafini’s investors recoup backend participation of 20-50% of all net profits from the film, in perpetuity. • Serafini Releasing plans to fund 4-6 Hollywood films and 2-3 Arab cross-over films per year. • Typical payback period is 18-24 months. • An average investment amount for an independently financed film ranges from $2-10 mil.
    21. 21. Film Financing - Sources of Recoupment Transaction fees. Backend participation, in perpetuity. Sale of negative. Domestic box-office performance. Foreign territories sales. Merchandising participation. Soundtrack profits. Tax credit repayments.
    22. 22. Susanne Bohnet 8265 Sunset Blvd., Suite 104 Los Angeles, CA 90046 (323) 650-5033 s.bohnet@serafinipictures.com
    23. 23. Financial Model
    24. 24. This financial model is based on the following assumptions: • Production only fund/investments-overall amount: USD $25 M •5 films per year for first 3 years •Average investment per film - $4 mm •Average film budget - $20 mm •Fund closed after 5 years •Management fee per year - 2.5%
    25. 25. Fund Summary NOTE: Only items highlighted in YELLOW should be changed $ Thousands Year 1 Total Equity Contribution ($ Thousands) $ 25,000 $ Thousands Year 1 Year 2 Year 3 Year 4 Year 5 Total Project CFs: Funding Cash Flows ($17,000) $3,814 $15,900 $32,900 $12,086 $47,700 Annual Dividend Payment 6% ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($7,500) GP Management Fee 2.5% ($625) ($625) ($625) ($625) ($625) ($3,125) Investment Cash Flow ($19,125) $1,689 $13,775 $30,775 $9,961 $37,075 Cash Beg. Of Year $ 25,000 $5,875 $7,564 $21,339 $52,114 Investment Cash Flow ($19,125) $1,689 $13,775 $30,775 $9,961 Cash at Year End (Net of Dividend Payment) $ 5,875 $ 7,564 $ 21,339 $ 52,114 $ 62,075 Accrued Profits (Net of Dividend payment) ($19,125) ($17,436) ($3,661) $27,114 $37,075 Fund IRR (yr 1-5) 47.6% Annual distribution of profits/Cash to investors *Final year includes original Fund capital distributed as profit. *certain % of profit balance over $10 million distributed each year Annual Profit $0 $0 $0 $27,114 $9,961 $37,075 Profits available for Distribution 80% $0 $0 $0 $13,691 $23,384 $37,075 Accumulated Profit Balance at Year end $0 $0 $0 $13,423 $0 *certain% of principal balance distributed each year Accumulated and Available Principal $0 $0 $0 $25,000 $25,000 Principal available for Distribution 90% $0 $0 $0 $22,500 $2,500 $25,000 Accumulated Principal Balance at Year end $0 $0 $0 $2,500 $0 Totals General Partner Profit Share 30.0% $0 $0 $0 $5,457 $7,465 $12,923 Fund Investor Share Profit share 70.0% $0 $0 $0 $8,234 $15,919 $24,153 Annual Dividend Payment $1,500 $1,500 $1,500 $1,500 $1,500 $7,500 Invested Capital $ (25,000) $0 $0 $22,500 $2,500 $25,000 Total CF ($23,500) $1,500 $1,500 $32,234 $19,919 $56,653 Investor IRR (yr 1-7) = 30.3% ROI = 227% $69,575 Potential Film Revenue downside Scenario Revenue downside Potential 30.0% General Partner Profit Share 30.0% $0 $0 $0 $3,820 $5,226 $9,046 Fund Investor Share Profit share 70.0% $0 $0 $0 $5,764 $11,143 $16,907 Annual Dividend Payment $1,500 $1,500 $1,500 $1,500 $1,500 $7,500 Invested Capital $ (25,000) $ - $ - $ 22,500 $ 2,500 $25,000 Total CF ($23,500) $1,500 $1,500 $29,764 $15,143 $49,407 Investor IRR (yr 1-7) = 25.2% ROI = 198% $58,453
    26. 26. Total Projects Model NOTE: Only items highlighted in YELLOW should be changed $ Thousands Production Fund $ 20,000 Fund Expenses (Legal, setup,…) $ 1,875 Total Investment Amount $ 21,875 USD Thousands Year 1 Year 2 Year 3 Year 4 Year 5 Investments (20,000) (20,000) (20,000) - - Repayments - 15,152 20,000 20,000 4,848 Income 3,000 8,662 15,900 12,900 7,238 Cash at Begin of Period 21,875 4,875 8,689 24,589 57,489 Cash at End of Period 4,875 8,689 24,589 57,489 69,575 Change in Cash (17,000) 3,814 15,900 32,900 12,086 Funding Production Fund (20,000) (20,000) (20,000) - - Repayment Production Fund - 15,152 20,000 20,000 4,848 Income Production Fund 3,000 8,662 15,900 12,900 7,238
    27. 27. Production Fund Cash flows for Multiple Investments over ONE year NOTE: Only items highlighted in YELLOW should be changed $ Thousands Production Fund $ 20,000 Target Production Investment / Film $4,000 Year 1 USD Thousands Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 M Investments (4,000) - (4,000) - (4,000) - (4,000) - (4,000) - - - - - - - Repayments - - - - - - - - - - - - - - - - Income 600 - 600 - 600 - 600 - 600 - - - - - - - Cash at Begin of Period 20,000 16,600 16,600 13,200 13,200 9,800 9,800 6,400 6,400 3,000 3,000 3,000 3,000 3,000 3,000 3,000 Cash at End of Period 16,600 16,600 13,200 13,200 9,800 9,800 6,400 6,400 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 Change in Cash 16,600 - (3,400) - (3,400) - (3,400) - (3,400) - - - - - - - FUNDING Y/N Film 1 (4,000) - - - - - - - - - - - - - - - Film 2 (4,000) - - - - - - - - - - - - - Film 3 (4,000) - - - - - - - - - - - Film 4 1 (4,000) - - - - - - - - - Film 5 1 (4,000) - - - - - - - Film 6 - - - - - - - - - - - - Film 7 - - - - - - - - - - Film 8 - - - - - - - - Film 9 - - - - - - Film 10 - - - - - - - Total Funded (4,000) - (4,000) - (4,000) - (4,000) - (4,000) - - - - - - - Annual Totals (20,000) REPAYMENT Film 1 - - - - - - - - - - - - - - - - Film 2 - - - - - - - - - - - - - - Film 3 - - - - - - - - - - - - Film 4 1 - - - - - - - - - - Film 5 1 - - - - - - - - Film 6 - - - - - - - - - - - - Film 7 - - - - - - - - - - Film 8 - - - - - - - - Film 9 - - - - - - Film 10 - - - - - - - Repayments - - - - - - - - - - - - - - - - Annual Totals - NET LOAN OUTSTANDING (4,000) (4,000) (8,000) (8,000) (12,000) (12,000) (16,000) (16,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) (20,000) INCOME Film 1 600 - - - - - - - - - - - - - - - Film 2 600 - - - - - - - - - - - - - Film 3 600 - - - - - - - - - - - Film 4 1 600 - - - - - - - - - Film 5 1 600 - - - - - - - Film 6 - - - - - - - - - - - - Film 7 - - - - - - - - - - Film 8 - - - - - - - - Film 9 - - - - - - Film 10 - - - - - - - Income 600 - 600 - 600 - 600 - 600 - - - - - - - Annual Totals 3,000
    28. 28. Year 2 Year 3 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 - - - - - - - - - - - - - - - - - - - - - 3,152 848 3,152 848 3,152 848 3,152 848 3,152 848 - - - - - - - - - - - 817 362 1,179 724 1,518 1,062 1,518 1,062 1,518 1,062 701 701 339 339 - - - - 3,000 3,000 6,152 7,817 11,331 13,358 17,234 19,599 23,814 26,179 30,394 32,759 33,822 34,522 35,223 35,561 35,900 35,900 35,900 35,900 3,000 6,152 7,817 11,331 13,358 17,234 19,599 23,814 26,179 30,394 32,759 33,822 34,522 35,223 35,561 35,900 35,900 35,900 35,900 35,900 - 3,152 1,665 3,514 2,027 3,876 2,366 4,214 2,366 4,214 2,366 1,062 701 701 339 339 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,152 848 - - - - - - - - 3,152 848 - - - - - - - - - - 3,152 848 - - - - - - - - - - - - 3,152 848 - - - - - - - - - - - - - - 3,152 848 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,152 848 3,152 848 3,152 848 3,152 848 3,152 848 - - - - - - - - - 15,152 4,848 (20,000) (16,848) (16,000) (12,848) (12,000) (8,848) (8,000) (4,848) (4,000) (848) - - - - - - - - - - - - 817 362 362 362 339 339 - - - - 817 362 362 362 339 339 - - - - - - 817 362 362 362 339 339 - - - - - - - - 817 362 362 362 339 339 - - - - - - - - - - 817 362 362 362 339 339 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 817 362 1,179 724 1,518 1,062 1,518 1,062 1,518 1,062 701 701 339 339 - - - - 5,662 7,238
    29. 29. Typical Production Funding Cash Flows for Each Investment NOTE: Only items highlighted in YELLOW should be changed Year 1 Year 2 USD Thousands Month 1 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Film Budget $ 20,000 Production funds per Film 20% $ 4,000 Production funds provided 4,000 Production funds repaid - - - - - - - (3,152) (848) - - - - - Net Production funds Outstanding 4,000 4,000 4,000 4,000 4,000 4,000 4,000 848 - - - - - - Income Upfront Fee 15% $ 600 600 Priority Recoupment 15% $ 600 - - - - - - - - 600 - - - - - Producer Fee 0% $ - - Profit Participation 10% $ 1,980 - - - - - - - - 217 362 362 362 339 339 Total Income $ 3,180 600 - - - - - - - 817 362 362 362 339 339 Gross Profit $ 3,180 Average loan outstanding 2,869 Gross Return 111% NPV 10% $ 2,762
    30. 30. Single Film Cash Flows NOTE: Only items highlighted in YELLOW should be changed USD Thousands # Month 1 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Film Budget 20,000 P&A Budget 80% 16,000 Financing Structure Soft Money 30% 6,000 Bank: Presales 30% 6,000 Gap 20% 4,000 Production Funding (Serafini) 20% 4,000 Total Financing 100% 20,000 REVENUES Domestic B.O. 20,000 Theater Participation 50% (10,000) Balance of B.O. revenue 10,000 Less: Distribution Fee 0% - Net Box Office Revenues 10,000 3,333 3,333 3,333 Home Video/DVD Retail 180% 36,000 HV/DVD Wholesale 100% 36,000 HV/DVD Expenses 35% (12,600) Returns and discounts 10% (3,600) Distribution Fee 15% (5,400) Net Video/DVD Revenues 72% 14,400 1,872 1,728 1,584 1,584 1,584 1,584 1,584 1,440 1,440 HV/DVD yearly Sales Ratio 100% 13% 12% 11% 11% 11% 11% 11% 10% 10% New (Internet) Media 50% 10,000 Distribution Fee 12% (1,200) Net New Media Revenues 44% 8,800 1,144 1,056 968 968 968 968 968 880 880 New Media yearly Sales Ratio 100% 13% 12% 11% 11% 11% 11% 11% 10% 10% Pay TV/Free TV 40% 8,000 Distribution Fee 20% (1,600) Net TV Revenues 6,400 1,067 1,067 1,067 1,067 1,067 1,067 Foreign Sales 70% 14,000 3,500 3,500 3,500 3,500 Total Revenues 53,600 - - 3,333 3,333 6,833 6,516 6,284 6,052 3,619 3,619 3,619 3,619 3,387 3,387 Recoup Investments P&A Repayment (16,000) - - (3,333) (3,333) (6,833) (2,500) - - - - - - - - P&A Priority payment 20.0% (3,200) - - - - - (3,200) - - - - - - - - Loans Repayment Bank - Presales (6,000) - - - - - (816) (5,184) - - - - - - - Gap (4,000) - - - - - - (1,100) (2,900) - - - - - - Production Funding (4,000) - - - - - - - (3,152) (848) - - - - - Production Fund Priority payment 15.0% (600) - - - - - - - - (600) - - - - - Net Income 19,800 - - - - - - - - 2,171 3,619 3,619 3,619 3,387 3,387 Accumulated Net Income - - - - - - - - 2,171 5,789 9,408 13,027 16,413 19,800 Priority profit Participation Production Fund Preference 10% 1,980 - - - - - - - - 217 362 362 362 339 339

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