Investment in the film industry is highly speculative and inherently risky. There can be no assurance of the economic success of any motion picture since the revenues derived from the production and distribution of a motion picture depend primarily upon its acceptance by the public, which cannot be predicted. The commercial success of a motion picture also depends upon the quality and acceptance of other competing films released into the marketplace at or near the same time, general economic actors, and other tangible and intangible factors, all of which can change and cannot be predicted with certainty.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
The entertainment industry in general, and the motion picture industry in particular, are continuing to undergo significant changes, primarily due to technological developments. Although these developments have resulted in the availability of alternative and competing forms of leisure time entertainment, such technological developments have also resulted in the creation of additional revenue sources through licensing of rights to such new media, and potentially could lead to future reductions in the costs of producing and distributing motion pictures. In addition, the theatrical success of a motion picture remains a crucial factor in generating revenues in other ancillary media such as but not limited to DVD's and television. Due to the rapid growth of technology, shifting consumer tastes, and the popularity and availability of other forms of entertainment, it is impossible to predict the overall effect these factors will have on the potential revenue from and profitability of feature-length motion pictures.
The Company itself is in the organizational stage and is subject to all the risks incident to the creation and development of a new business, including the absence of a history of operations and minimal net worth. In order to prosper, the success of Eve Fund 1, dba "Eve Studios", will depend partly upon the ability of management to produce a film of exceptional quality at a lower cost, which can compete in appeal with higher-budgeted films of the same genre. In order to minimize this risk, management plans to participate as much as possible throughout the process and will aim to mitigate financial risks where possible. Fulfilling this goal depends on the timing of investor financing, the ability to obtain distribution contracts with satisfactory terms, and the continued participation of the current management.
Because a film’s production budget is expected to be significantly smaller than that of a typical films, the Company may not obtain a completion bond for all films. If the Company does not obtain a completion bond, the Company will be at risk that films, once begun, may not be completed. Without a completion bond, if a film goes over budget, no assurance can be given that the Company will be able to procure sufficient funds to complete film or if it does procure such funds, that it will be able to do so on terms that are advantageous to the Company. If a film is not completed, it will have virtually no monetary value.
The Company may enter into distribution agreements with third parties to distribute films domestically and internationally. These agreements generally provide that the distributor pay a fee up-front, and then are entitled to share in the profits of the content. Such an arrangement would reduce the amount of profits to the Company from all films.
Christopher Parker, Denise Smith, and Gregory Parker are part time officers. This may result in diminished time being committed to Eve Studios and potentially impact company performance.