Risks
While Adventus Films (the parent company of Martingale LLC) has been around a while and has collaborated in a key position on over 25 narrative films, it has only been at the helm of 2, both of which are still in stages of post-production and have yet to see their day in the market. Both of which are on track for completion and/or distribution by 2018. This means that, while we have helped other production companies find success in profiting from film production, we have yet to do it as the key production company on a film.
Competition from other movies in our genre, in the market, at the time of this movie's release, is always a risk. Especially considering this production's low budget which doesn't allow for A-list actors, there's considerable competition with those movies with similar genres with more recognizable actors that could earn more attention from audiences and distributors. This ultimately comes down to good timing with what distributors want in their library and a great marketing campaign.
We cannot predict the economic success of any movie because the revenue derived from the distribution of a film (which does not necessarily directly correlate with the production or distribution costs incurred) depends primarily upon its acceptance by the public, which cannot be accurately predicted. The economic success of a film also depends on the public’s acceptance of competing series and films, the availability of alternative forms of entertainment and leisure-time activities, general economic conditions and other tangible and intangible factors, all of which can change and cannot be predicted. We cannot guarantee that the film will be profitable.
Investors have no voting rights. They will have no right to participate in the business or affairs of Martingale LLC. The Financing Agreement does not contain any affirmative or negative covenants relating to the operation of the business or otherwise. Martingale LLC does not have any voting agreements in place for Revenue Participation Rights participants. Martingale LLC does not have any shareholder/equity holder agreements in place. Investors under no circumstances shall have the right to rescind, terminate or enjoin the exploitation of the movie or interfere with any rights granted to, any distributor or licensee under any agreement entered into by Martingale LLC. As between Martingale LLC and the investor, all business and creative decisions with regard to the movie shall be made solely by Martingale LLC.
If the film fails for any reason, is never produced or is abandoned, investors will not receive any return on their investment and will lose all of their investment amount. The revenue participation rights only provide a right to share in the revenues of “Martingale”. Accordingly, investors should be aware that their investment is not diversified and totally dependent upon the success of a single film. The film might not be made due to unforeseen circumstances such as a loss of key personnel, industry strike, weather, natural disaster, illness of cast or other key personnel.
Labor laws for actors, or strike by actors' unions may affect our ability to complete "Martingale". Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime pay, healthcare reform and the implementation of the Patient Protection and Affordable Care Act, unemployment tax rates, workers’ compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, increased tax reporting and tax payment, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.
The film might not sell enough securities in this offering to meet its operating needs and fulfill its plans, in which case the Company might need to reduce sales & marketing, operations, or other expenses. Even if the film raises the entire round successfully, we may need to raise more capital in the future in order to continue. Even if we do make successful offering(s) in the future, the terms of that offering might result in your investment in the company being worth less because of the terms of future investment rounds.
As the film has not yet secured a full cast or distribution, it is possible that it will not be able to secure either of those things and will never be produced.
Ask a Question