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The Assumptions that Affect the Bottom Line Return

In evaluating the financial potential for The Bend, the Producers have used a conservative and conventional approach based on industry standards:

Domestic Box Office reflects gross dollars of ticket sales before the exhibitor splits the total with distributor.

All funds flow from each revenue source (exhibitor) to distributor, who deducts his print and advertising expenses before distributing revenue to the production company.

Distribution fees are generally based on 25% of all distributor gross revenue, both domestic and foreign. This is a generally accepted estimate method used by industry analysts and trade publications. Distribution deals are based on negotiation.

A period of at least one-year form start of principal photography to delivery of finished film should be anticipated for this, or any other feature film. This period can vary, but accommodates most circumstances that can affect delivery.

The film's release date depends on finalization of distribution arrangements, which may occur either before or after the film has been completed, and is an unknown variable at this time. Thebudget, also known as the films “negative cost,” covers only the expenses that are needed to create the master print of the film with a relatively modest publicity budget. All marketing costs,or “distribution expenses,” which include copies of the master print, digital distributionconversions, and major advertising costs, are distributor costs and are normally recouped by the distribution company before monies are disbursed to the producers.

Production costs are projected to fall on the high side of estimates. This is done to minimize the likelihood of financial shortfall. If there are overage in funds available, these funds will be assessed to determine if best spent on marketing or if they will be returned to the investors.

The majority of revenues are traditionally realized within three years of the release date. Although the earning life of the film can be much longer (an accepted average is seven years), the Producers are assuming this trend will hold true for The Bend.

The Producers will seek an advance from distributors to cover the initial loan, allowing for an earlier payout. However, such a payment is not guaranteed.

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