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JRBren
10-18-2004, 04:34 AM
I've completed a 50 minute murder mystery MOV telefilm and now wish to remake this same MOV with greater production value including a 'name' attached. This requires funding. Any suggestions for using a Regulation D 504 offering to raise $200-$800K? What would an attorney charge for the legal work?

Cole Blackburn
10-18-2004, 09:02 AM
JR.
Couple of things.
One, you can't be a public company and do a D-504.
As for how to go about doing a D-504, Charter Financial
Network in New Jersey does a lot of them. They have
tried to streamline the process so more businesses can
use it. Another thing. You have to be a going concern.
In other words, your company has to be in business
doing your core business. Charter has put together
a team of accountants/attorneys who keep their fees
between $7,500 and $10,000 which is great considering
some attorneys charge upwards of $100,000 for the
legal work.
My two cents.
Cole

theturnaround
10-18-2004, 10:58 AM
JR--

In my experience, a 504D is a public offering for the sale of unregistered securities. A private company becomes public via a 504; a public company can do a 504 annually.

The paperwork for a 504D is relatively simple, but there are concerns, both on a federal level and a state level which you must know for the state in which the investor resides. It becomes a more complicated process. 504 stock is unrestricted, but without a listing on an exchange (pinksheets, anyone?) the liquidity of the issue is in question.

Cole is referencing so called "blank check" companies. In this environment, it is very difficult to get a blank check company (read: movie) up and listed on an exchange b/c it has no financials, no ongoing business, etc. It is little more than a biz plan. People can cite historical instances where this has worked, but recent changes by NASD have made this an uphill battle. You can reverse merge with a "shell" company, but this is cost prohibitive (50k on the low end and up).

This is all just in my personal opinion, it is not legal advice. You really need to research the 504D (up to one million) and its brethren (505/506, RSTK stock but more money) and consult an actual securities attorney, rather than a guy with an opinion like me.
Best,
theturnaround

Hairy Lime
10-18-2004, 11:13 AM
You might be safer obtaining financing for something in that budget range by setting up a limited partnership. This helps you avoid the SEC, but the catch is that you've got to get people you meet personally to invest in the film. You can't advertise or write letters to friends of friends or it becomes a public offering. Most states have limits on how many limited partners can invest in a single partnership, but I believe in California the number is around 30. If you settled on a $500,000 budget, you'd need about $17,000 per investor. If you could swing it for $200,000, you'd need less than $7,000 per investor. You'd be surprised how many people are willing to give up that much money just to be able to say that they're in the movie business.

An excellent discussion of financing options is available in Independent Feature Film Production: A Complete Guide from Concept Through Distribution (http://www.amazon.com/exec/obidos/tg/detail/-/0312181175/qid=1098119497/sr=8-1/ref=sr_8_xs_ap_i1_xgl14/102-5061286-0110555?v=glance&s=books&n=507846) by Gregory Goodell.