The Vertical 3D Page Managing Director and Special Counsel for the Company

Home , Bob Berney, Classic Cinemas, Harkins Theatres, Malco Theatres, Megaplex Theatres, Muvico Theaters

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PLEASE RETURN TO: BOB CARMICHAEL PRODUCER/DIRECTOR DENALI PRODUCTIONS, INC. 1004 ARAPAHOE AVE STUDIO ONE BOULDER, CO 80302 303 955 7065

www.bobcarmichael.com

Richard S. Luskin, Esq. Attorney and Counselor at Law Box 684143 Park City, Utah 84068 Ph: 310 463 6614 Table of Contents

Goal...... 4 Introduction...... 4 Exhibition of The Vertical .3D...... 5 A Smart Downturn Investment...... 8 Production Team ...... 10 Section 1. FilmProfit® Report:The Vertical 3D Distribution Strategy...... 13 A. Distribution Strategy Overview...... 15 B. 3D and “Event” Screenings...... 15 C. Conventional Theater 3D Release...... 16 D. Giant Screen Release...... 17 Section 2. FilmProfit® Report: Target Distributors...... 18 A. Fox Searchlight...... 19 B. Sony Pictures Classics...... 19 C. Focus Features...... 20 D. National Geographic Cinema Ventures...... 20 E. Bob Berney...... 21 Section 3. Festivals, DVD, and Television Strategies...... 22 A. The Sales Team...... 22 B. Getting into a Top Tier Film Festival...... 22 Section 3. Table A: Calendar of 2010 Top Film Festivals and Markets Worldwide...... 23 C. Selling the Film...... 23 D. Adding Value for Buyers...... 23 E. Finding the Right Distributor...... 24 F. Territories and Markets, How Distribution Works...... 24 G. 3D on TV...... 24 H. Monetize Remaining Markets...... 25 Section 4. FilmProfit® Report: Comparable Pictures – Return on Investment (ROI)...... 26 A. FilmProfit® ROI Report...... 27 B. Hand-Processed Data...... 27 C. Proprietary Calculations...... 27 Section 4. Table A: Comparable Movie ROI Overview DOMESTIC...... 28 Section 4. Table B: Comparable Movie ROI Overview FOREIGN...... 28 Section 4. Table C: Notes to Accompany Film Profit® ROI Report...... 29 Section 5. Budget Summary for The Vertical 3D...... 29 Section 5. Table A: The Vertical 3D Budget ...... 30 Section 6. Worldwide Revenue Distribution Timeline Scenario...... 31 Section 6. Table A: Typical Revenue Timeline...... 31 Section 7. FilmProfit® Report: Projections of Potential Income Thefor Vertical 3D...... 32 Section 7. Table A: Projections of Potential Income...... 33 Section 7. Table B: Notes to Accompany Potential Income Report...... 34 Section 7. Table C: Summarized Flow of Funds...... 37 Section 8. Overview of Business Strategy...... 38 Section 10. Addendum: Bob Carmichael Resume...... 40 Section 10. Addendum: REAL D – Digital 3D Experience Provider...... 42 SectionThe Vertical 10. Addendum:3D Page FX Guide – The Art of Digital 3D Stereoscopic Film...... 43 Goal

Producer/Director Bob Carmichael and Denali Productions seek a handful of visionary investors to join with them to make a groundbreaking film experience –The Vertical 3D.

Introduction by Producer/Director Bob Carmichael:

My desire to create this film stems from a career spent pioneering the process of filmmaking in the world of climbing. My first reaction to seeing the Pace/Cameron Fusion 3D system and its projected images sent chills up my back as I realized I was watching a brand new medium that would allow me, finally, to convey the sport of climbing in all its glory and grit.

The new world of 3D unlocks the door, allowing the audience to feel the thrill of going over the edge of a cliff and experience the realm of the vertical world. Given my broad range of experience in documentary, commercial, and feature films, I have a unique background that will allow me to create a film that transcends the niche of adventure films and expand to the stage of worldwide general audience appeal.

The Vertical 3D is a series of fascinating stories about people seeking to overcome convention, self- doubt, and achieve literally lofty goals. I believe these challenges will resonate powerfully with the challenges we are facing in our own lives and as a society.

The Vertical 3D will take the viewer’s breath away by immersing them in the lives of real climbers who are challenging themselves in ways most would never consider. This movie is about exploring the limits of human potential, and as impossibly daring as their quests appear to be, these climbers are seekers who are striving to align themselves with the natural world and open themselves up to new levels of awareness.

Climbing is arguably the most international of activities, and virtually every country has a segment of its population who climb, hike, and adventure, or wish they could. There exists a global fascination with these activities because they are a fusion of sport and existential human exploration. Many people suffer from acrophobia and The Vertical 3D will be an exhilarating litmus test. Full of heart-stopping suspense, it is a film that will sweep people from their seats onto edge of the abyss and will give new definition to the phrase “armchair adventure.” There is a wide demographic for this film, especially the 18-35 year old market, as many of the climbers in our film will be in that age range. Moreover, the film will be G rated and will appeal to anyone with a thirst for adventure and revelation. It promises to be great family entertainment.

Because of its unique projection requirements and subject matter, this is a film that will be a theatrical necessity and, as with other 3D movies, will elicit a premium price. The Vertical 3D will provide an entirely new form of REAL action and suspense at a fraction of the cost of production of other 3D films.

Given current global environmental awareness, this film seeks to forge a powerful and direct communication between the viewer and nature. With a focus on the beauty of our planet, The Vertical 3D is a call to the simplicity and wonder that is cost-free in nature. The experience is like being taken on a first climb and, inevitably, the response is exhilaration and triumph.

The Vertical 3D Page The Vertical 3D will be an experience that will stay with one long after one has left the theater and may finally answer the age-old question of why people climb. While The Vertical 3D is abundant with daring, it will also be written to provide relief from the drama by using our super-athlete/comedian host Timmy O’Neil. Using his rapier wit, Timmy will add pacing and needed levity to the film. O’Neil, who has taken his paraplegic brother up the flanks of El Capitan three times, is a fascinating modern adventurer. His comedy is informed by his elite status as a world-class climber, kayaker, slack-liner, and parkour practitioner. Timmy O’Neil is sure to be a perfect companion to our cast of stellar climbers, and will inject the film with his unique humor.

It is my sincere belief that the many film projects I have done thus far have led me to and prepared me for the creation of The Vertical 3D. Call it a destiny that I passionately want to achieve. I want to bring this picture to life because I sincerely believe that this film in 3D High Definition will draw the audience into a new dimension of experience.

Bob Carmichael Producer/Director Boulder, CO

Exhibition ofThe Vertical 3D:

The motion picture industry is poised for a 3D revolution and The Vertical 3D will be in the vanguard of this new exhibition medium. The timing for its release could not be more propitious.

A number of renowned filmmakers and studios are focusing their vision and energy on this new generation of 3D technology pioneered by director James Cameron and his company’s, Pace/Cameron Fusion 3D System, lead. This new 3D process features a revolutionary High Definition capture package that weighs less than thirty-five pounds. Utilizing new, easy to wear polarized glasses, this remarkable new technology produces an image that is simply “eye popping” to view, and enables the user to engage with an object or a situation in a way never before experienced. Cameron is using this high definition and digital projection technology to capture and produce his much anticipated 3D film Avatars, a Sci-Fi space epic. It is projected that by the year 2009, when his $200 million dollar film is scheduled to debut, there will be 5,000 plus theaters worldwide equipped to project high definition 3D, and content will be at a premium. In addition, IMAX is poised to participate in the 3D revolution by installing the necessary digital equipment in both new and existing theaters. IMAX plans to have a total of 360 screens worldwide within the next 2 years. With its relatively low budget and profoundly engaging subject matter,The Vertical 3D is perfectly timed to capitalize on this new entertainment demand.

James Cameron, who directed Titanic and created the Terminator series, known for his groundbreaking visuals and for being ahead of the curve in technological achievement, commented in the July 2008 Directors Guild Quarterly, “The movie has the capability to have a transportive effect on the audience and I think that if, coming out of the theater, they associate 3D with that experience, then they’ll think of 3D in a different way: less gimmicky, more a natural tool of filmmaking, and a thing that might make them get out of their house and go to a movie theater. I think we need that.” Cameron reportedly intends to release Avatar exclusively in 3D. Premiere magazine’s Glenn Kenny commented, “There’s no one else in Hollywood who can have this kind of impact on the theater business and, as a result of his stature, Cameron single-handedly is going to force thousands of theaters in the United States and the

The Vertical 3D Page rest of world to install the necessary upgrades to exhibit 3D films. He’s got the clout, and he’s got the mojo to do it. Everybody is going to want his next film.” Cameron, addressing the National Association of Broadcasters, proclaimed that his new 3D technology “can get people off their butts and away from their portable devices and get people back in the theaters.” In the July 2008 issue of Videography magazine, contributing editor Peter Caranicas stated, “Hollywood is betting on stereoscopic digital projection to save it from the perils of audience drift in the Internet age.”

The new 3D technology in the hands of a great director like Cameron will showcase the format’s sense of immersion and realism. He won’t be resorting to cheap thrill visual effects like the 3D films of the 1950s, either. The Vertical 3D will be employing the same aesthetic, as we intend to use the latest evolution of Pace/Cameron Fusion’s 3D camera system.

The head of Jim Cameron’s 3D company had this to say about The Vertical 3D:

“The Vertical 3D is perfectly suited to showcase the new generation of 3D technology. The fact is that not many of us will EVER actually physically climb mountains, but the combination of adventure seeking and award-winning producer/director Bob Carmichael and our state of the art 3D cameras allow world-wide audiences to experience climbing and the mountain environment in a completely new and immersive light. Visually, all of us share a fear of heights and these 3D cameras will insure that this spine-tingling experience will be a completely unique armchair adventure. We look forward to a creative partnership with Bob Carmichael/Denali Productions to bring this death-defying and exciting story to life. We believe The Vertical 3D has the potential to redefine adventure filmmaking.”

Vince Pace Founder/President Pace/Cameron Fusion 3D System

Throughout the film industry, there exists a clear need to differentiate movie going from movie watching. In Wired Magazine (4/14/08), Betsy Schiffman points out in an article entitled Movie Industry Doubles Down on 3D that there are many economic and aesthetic reasons to explain this push to 3D. One of the fundamental facts of recent box office history is that although receipts have steadily grown, the number of tickets sold has not. With home theaters, movie-on-demand, and portable video players, moviegoers have fewer reasons to actually “go” to a movie. The solution from the studios is to raise ticket prices and ramp up production of movies. From a studio’s point of view, the financial lure of 3D is twofold: the technology can’t presently be replicated in home theaters (yet) and figures have shown moviegoers are willing to pay a premium for 3D films. Top filmmakers and studios alike have pledged their allegiance to 3D. Disney and Pixar have announced that it will release all of its films in 3D, and George Lucas is working on remastering the entire Star Wars series in 3D. Additionally,Variety reports that directors Steven Spielberg, Robert Zemeckis, Tim Burton, and Peter Jackson all have 3D projects in the works.

Unlike 3D films of the 1950’s, this new version of 3D pictures won’t blur and won’t cause headaches. In basic terms, a 3D film is shot in two frames, one for the right eye and one for the left eye. The projector buffers the left and right streams and projects them in alternation at 144 frames per second, using a “triple flash” technique that shows each frame three times to smooth out the picture. The RealD 3D System does require theaters to install a special silver screen to maintain the polarization of the image. There is nothing gimmicky about this new process, and it is well worth a visit to the Los Angeles screening room of the Pace/Cameron Fusion to put on the comfortable, polarized glasses in order to experience this new visual medium.

The Vertical 3D Page 3D is poised to improve theater attendance and box office grosses. The average ticket price for “Hannah Montana & Miley Cyrus: Best of Both Worlds,” a 74 minute 3D concert film, was $15 (Hannah Montana grossed over $65 million domestically). By contrast, the average 2D movie ticket is about $7, according to the National Association of Theater Owners. As with the Hannah Montana film, The Vertical 3D offers a “best seat in the house” experience of an event. This underscores the uniqueness of our film. Many of us have experienced a concert, but very few of us have experienced the incredible exhilaration of modern climbing.

As demonstrated in the recent IMAX film, Everest IMAX, climbing has shown that it does well when it is treated with original and cutting-edge technology. Everest IMAX climbed into Variety’s Top-20 box office charts as soon as it was released, grossing more than $127 million (worldwide) to date. With higher box office receipts than many mainstream Hollywood movies, this film proves there is a vast audience who is fascinated with the world of climbing.

“We didn’t set out to make such a powerful movie. What makes all of us associated with the project so pleased is that it is NOT a climber’s movie — people from all walks of life, of all ages, find much to enjoy in that film. What more can you ask?”

David Breashears Co-Producer of Everest IMAX

Everest IMAX has completely transformed an industry and made international stars of its featured climber, Ed Viesturs, and its filmmaker, David Breashears. In the world of literature, author Jon Krakauer’s book, Into Thin Air, remained on the New York Times bestseller list for an astounding 56 weeks. Additionally, in August of 2008, the Times ran a front-page story entitled, “Chaos on the Mountain That Invites Death”, detailing the recent tragedies that befell several international teams on K2 (the second highest mountain on Earth). With this extensive interest in the world of climbing, combined with the new 3D technology, The Vertical 3D is certain to draw a worldwide audience.

The Vertical 3D Page New York Times - Arts By MICHAEL CIEPLY and BROOKS BARNES Published: February 28, 2009

In Downturn, Americans Flock to the Movies

Even as the economy teeters, Hollywood has been startled by a box-office surge with little modern precedent.

LOS ANGELES — Hollywood could get used to this recession thing.

While much of the economy is teetering between bust and bailout, the movie industry has been startled by a box-office surge that has little precedent in the modern era. Suddenly it seems as if everyone is going to the movies, with ticket sales this year up 17.5 percent, to $1.7 billion, according to Media by Numbers, a box-office tracking company.

And it is not just because ticket prices are higher. Attendance has also jumped, by nearly 16 percent. If that pace continues through the year, it would amount to the biggest box-office surge in at least two decades. Americans, for the moment, just want to hide in a very dark place, said Martin Kaplan, the director of the Norman Lear Center for the study of entertainment and society at the University of Southern California.

“It’s not rocket science,” he said. “People want to forget their troubles, and they want to be with other people.”Helping feed the surge is the mix of movies, which have been more audience-friendly in recent months as the studios have tried to adjust after the lackluster sales of more somber and serious films.

As she stood in line at the 18-screen Bridge theater complex here on Thursday to buy weekend tickets for “Jonas Brothers: The 3D Concert Experience,” Angel Hernandez was not thinking much about escaping reality. Instead, Ms. Hernandez, a Los Angeles parking lot attendant and mother of four young girls, was focused on one very specific reality: her wallet.

Even with the movie carrying a premium price of $15 because of its 3-D effects — children’s tickets typically run $9 at the Bridge — Ms. Hernandez saw the experience as a bargain. “Spending hundreds of dollars to take them to Disneyland is ridiculous right now,” she said. “For $60 and some candy money I can still be a good mom and give them a little fun.”

A lot of parents may have been thinking the same thing Friday, as “Jonas Brothers” sold out more than 800 theaters, according to MovieTickets.com, and was expected to sell a powerful $25 million or more in tickets.Other movies kept up their blistering sales pace, too, including “Tyler Perry’s Madea Goes to Jail,” about a gun-toting grandma. Even “Taken,” a relatively low-cost thriller starring Liam Neeson, is barreling past the $100 million mark this weekend.

Historically speaking, the old saw that movies do well in hard times is not precisely true. The last time Hollywood enjoyed a double-digit jump in attendance was 1989, when the unemployment rate was at a comfortable 5.4 percent and the Gothic tone of that year’s big hit, “Batman,” seemed mostly the stuff of fantasy. That year, the number of moviegoers shot up 16.4 percent, according to Box Office Mojo, a box- office reporting service.

The Vertical 3D Page In 1982, theater attendance jumped 10.1 percent to about 1.18 billion (the top seller was “E.T.: The Extra-Terrestrial”) as unemployment rose sharply past 10 percent. Then admissions fell nearly 12 percent, an unusually sharp drop, in 1985 (the “Back to the Future” year), as the economy picked up — suggesting that theater owners have sometimes found fortunes in times of distress, and distress in good times.

Academic research on the matter is scant. One often-quoted scholarly study by Michelle Pautz, of Elon University, was published by the journal Issues in Political Economy in 2002. Over all, it said, the portion of the American population that attended movies on a weekly basis dropped from around 65 percent in 1930 to about 10 percent in the 1960s, and pretty much stayed there.

The film industry appears to have had a hand in its recent good luck. Over the last year or two, studios have released movies that are happier, scarier or just less depressing than what came before. After poor results for a spate of serious dramas built around the Middle East (“The Kingdom,” “Lions for Lambs,” “Rendition”), Hollywood got back to comedies like “Paul Blart: Mall Cop,” a review-proof lark about an overstuffed security guard. “A bunch of movies have come along that don’t make you think too much,” said Marc Abraham, a producer whose next film is a remake of “The Thing.”

Certainly exhibitors are looking for a profit lift in the downturn. A new report from Global Media Intelligence on Friday predicted that the fortunes of movie theater operators like Regal Entertainment and Cinemark Holdings would be “increasingly favorable against a backdrop of highly negative economic news.”

Cinematic quality has little to do with it. The recent crop of Oscar nominees has fared poorly, for the most part, at the box office. Lighter fare has drawn the crowds. “It would take a very generous person to call these pictures anything other than middle-of-the-road, at best,” said Roger Smith, the executive editor of Global Media Intelligence.

The box-office surge started just before Christmas with the comedy “Marley & Me,” in which Jennifer Aniston was upstaged by a dog. And it has continued, weekend by weekend, with little sign of let- up, analysts say. “Watchmen,” a dark superhero film, opens March 6 and is expected to do megawatt business. It is to be followed by “Monsters vs. Aliens,” a 3-D behemoth from DreamWorks Animation that analysts expect to have the biggest March opening ever for a nonsequel.

Movie theaters are already adding 3 a.m. screenings for “Watchmen” next week, and advance sales by online ticket companies like Fandango and MovieTickets.com have been strong. “Fandango is experiencing the best first quarter in its history for ticket sales,” said Rick Butler, its chief operating officer. “I see no signs of a drop-off.”

The Vertical 3D Page Production Team

Producer/Director: Veteran producer/director/cameraman, Bob Carmichael, has created breathtaking action and scenic footage in a wide variety of difficult environments. He has earned both an Emmy Award and an Academy Award Nomination for his work in documentary sports. Carmichael created the first televised rock climbing film on CBS Sports, the first all-women climbing film, the first film on extreme skiing, and introduced competitive climbing to the US market with his Snowbird International Climbing Championships (also on CBS sports). Throughout his career, Carmichael has been instrumental in presenting mountaineering and climbing to the pubic. With over forty climbing-related projects to his credit, Carmichael has pioneered many of the cinematography techniques used today on vertical terrain. He has filmed the top climbing areas in the United States, the Canadian Rockies, and the European Alps, and his rigging crews are on the cutting edge of vertical shooting techniques. In addition, Carmichael is a skilled motion picture, commercial, documentary, and 2nd unit feature director with a variety of credits that include: Disney, Paramount, Orion, 60 Minutes, 20/20, the History Channel, Ford Motor Co., Merrill Lynch, Adidas, Reebok, Nautica, Kawasaki, and the U.S. Marines Corps. Bob also directed a special project for the Daytona Speedway’s exhibition theater, a 70mm, 48 frame projection film on NASCAR racing about the Daytona 500. A complete listing of his credits is included in the addendum. Carmichael is a member of the Directors Guild of America, as well as the International Cinematographers Guild. He is represented by Maureen Toth at the Geller Agency in Los Angeles. • bobcarmichael.com

Line Producer: Doug Millington is an experienced producer who has been working with Bob Carmichael and Denali Productions, Inc. for fifteen years. He has produced projects in twenty countries, and his professional experience includes large format films, commercials, network television, documentaries, theme park attractions, and non‐broadcast productions. Doug is uniquely qualified as a producer specializing in mountain climbing environments. His production credits include: ABC, CBC, CBS, Disney, ESPN, Lorimar, National Geographic Channel, OLN, The WB, Iwerks Entertainment, Anheuser Busch, AT&T, Burger King, Chrysler, Coke USA, Coors-Molson, Busch Gardens, Ford, GM, Hasbro, IBM, Kawasaki, Microsoft, Merrill Lynch, Miller-Boyett, Sea-World, Six Flags, United States Marine Corps, United States Park Service, Qwest, Yamaha, and many others.

Entertainment Attorney/LLC Managing Director: Richard S. Luskin is Director of Legal Affairs for Black Diamond Equipment, Ltd. (one of the most recognized worldwide manufacturers of climbing and adventure equipment) with a concurrent practice in Los Angeles that is primarily entertainment industry related. He was personal counsel to Frank Wells (former President of the Walt Disney Company and one of the original Seven Summiters) for six years. Prior to working for Mr. Wells, Mr. Luskin practiced with a large law firm in San Francisco specializing in business affairs. Richard has represented a variety of adventurers in their film projects, including David Breashears in the making of Everest for IMAX. He will be instrumental in negotiating the distribution deal for The Vertical 3D. Richard is active as a board member of the Access Fund and as a lobbyist for the Outdoor Industry. He graduated from the UC Berkeley School of Law after a decade of working on the ski patrol and as a national park climbing ranger and river guide.

Director of Photography: Although Bob Carmichael is an accomplished cinematographer, he will collaborate with an additional cinematographer to shoot The Vertical 3D. Two excellent climbers and extremely accomplished commercial shooters who are on our short list are Rob Sweeney (who is presently shooting Entourage for HBO) and Kevin Ward (who shot Dust To Glory). Our list also includes: Mike Eley (Touching the Void), Michael Brown (who recently shot 3D IMAX on Return to Everest), and Jeremy Hewson (The Beckoning Silence). We will also employ a 3D consultant during the pre-visualizing and production phases of our project.

The Vertical 3D Page 10 Music: Jesse Carmichael, keyboardist with the Pop/Rock band Maroon 5 (2005 Grammy winner for Best New Artist) will compose an original score for The Vertical 3D. Maroon 5’s debut album, Songs About Jane (released in June 2002) enjoyed major chart success and received gold, platinum, and even triple platinum awards in many countries around the world. Maroon 5 was voted the #2 rock band in the world behind U2 in 2005. It Won’t Be Soon Before Long, their second studio album, was released in 2007 and debuted at number one on the U.S. Billboard 200, selling 429,484 copies in its first week. Additionally in that year, Maroon 5 was the single most downloaded group on iTunes worldwide. Jesse, one of group’s founding members, is known worldwide as a writer, keyboardist, and guitar virtuoso. Carmichael and Maroon 5 are represented by Jordan Feldstein at Career Artists. • Maroon5.com

Editor: Brad Wetmore is Director of Editorial and Senior Editor for Radium, where he manages seven editors and support staff in Los Angeles, San Francisco, and Dallas. Brad is considered one of the most resourceful and creative storytelling editors working today. His high-impact commercial work, combined with his background in long form editing, uniquely qualify him to cut the series of dramatic short stories that are at the heart of The Vertical 3D. Starting his career in Los Angeles, Brad has since worked all over the globe perfecting his craft. He was an integral part of launching brand campaigns for Apple Computer and Jack-In-The-Box. His experience in projects for the automobile industry has sent him from LA to Detroit and Tokyo, editing for GM, Dodge, Mitsubishi, KIA, Infiniti, and Nissan. In New York, Wetmore worked on successful campaigns for NASDAQ, Dunkin’ Donuts, and the launch of Verizon. His history as a studio musician and GM/Executive Producer of Elias Associates in LA further his mastery of blending picture with music. In the area of long form work, Brad’s credits include: music videos for Smokey Robinson and Randy Travis, a History Channel documentary (The Hugh Herr Story), gaming cinematics for the video game industry, The Da Vinci Code motion picture, and essential editorial work for Reel FX Creative Studios on the animated feature Everyone’s Hero. Brad also worked as the editor for director Bob Carmichael’s 70mm film, The Daytona 500, which was shot using a crew comprised of 24 35mm cameras. He recently finished a music video with director Carmichael for Maroon 5 that is being used by Amnesty International for membership and fundraising through the Maroon 5 and Amnesty web sites.

Assistant Director: As an Assistant Director, Kevin Donald brings a keen perspective on what can be accomplished in the realm of the vertical, and more specifically, how long it will take. Donald brings four decades of elite climbing experience to this project, and his first-hand knowledge of the mountain environment allows him to design logistically efficient, cost effective, and safety minded paths to capture the director’s vision. Kevin and Bob Carmichael have worked together extensively on many assignments with challenging terrain. Some of Kevin’s film credits include: Cliff Hanger (as 1st unit mountain safety), the 3D IMAX film Wings of Courage (with Jean-Jacques Annaud), and The Daytona 500, a 70mm film (which had 24 35mm cameras to coordinate). His commercial credits include: AT&T, Ford, Budweiser, Chrysler, Nike, Sprite, Pepsi, Coke, Coors, US West, Mountain Dew, Sunkist, Adidas, Chevrolet, and Bud Light. Donald is a member of the Directors Guild of America.

Technical Rigging: Mike Weis is regarded as one of the premier aerial riggers in the world. Bob Carmichael and Weis have worked together since the 1970’s on several climbing documentary projects, pioneering many of the techniques used today for vertical environments. Mike worked with Carmichael as head rigger for the opening credits of Star Trek V, as well as for several commercial climbing projects including a television spot for Merrill Lynch and a spot for a Japanese company filmed at Les Calanques in Southern France. He was Climbing Coordinator for Cliff Hanger, Safety Coordinator on K2, and mountain rigger coordinator on Vertical Limit. His aerial rigging has taken him onto many mainstream Hollywood films including: Spider-Man, Batman & Robin, Apocalypto, Live Free or Die Hard, and 3:10 to Yuma. The aerial rigging and mechanical knowledge that Mike Weis brings to The Vertical 3D will insure that our camera work will maximize the 3D experience for our audience.

The Vertical 3D Page 11 Safety Officer: Paul Sibley will be responsible for the safety practice and protocol on the sets of The Vertical 3D. Sibley brings decades of climbing experience and top-flight construction and rigging skills to each film project he undertakes. Paul was the original rigger on The Naked Edge rock climbing film, directed by Bob Carmichael, which many people feel pioneered the adventure film genre in America. He was a Safety Rigger on Star Trek V, K2, Medicine Man, and Cliff Hanger, and has rigged on documentaries for National Geographic, and commercials for Coors, Right Guard, Merrill Lynch, Grape Nuts, and many others. For the International Climbing Championships at Snowbird and the Berkley World Climbing Championships, Paul was head rigger and responsible for wall construction. He holds the International Guide Certificate from the AMGA and was on of their first board of directors. Sibley has worked for Exum, Jackson Hole Mountain Guides, and the Colorado Mountain School, and served as the Director of International Alpine School in Eldorado Springs and was the Winter Course Director for Colorado Outward Bound. Paul has guided extensively through North and South America and throughout Europe.

The Vertical 3D Page 12 Section 1. FilmProfit® Report:The Vertical 3D Distribution Strategy

We have commissioned FilmProfit® to provide an analysis of The Vertical 3D from the standpoints of Distribution Strategy, Target Distributors, Comparable Pictures-Return on Investment (ROI) and, lastly, Projections of Potential Profit. FilmProfit® is a recognized entertainment analysis and business planning firm that has been providing guidance and services to filmed media, television, and convergence producers, distributors, and financiers since 1987.

All Rights Reserved. No part of this book, or the business plan, or marketing data contained herein may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, scanning, recording, emailing, or by any information storage and retrieval system now known or hereafter invented without permission in writing from the copyright holder.

Recipients of this document agree that all of the information contained herein is of a proprietary nature to the company. Each recipient agrees to treat it in a confidential manner.

Prospective investors are not to construe the contents of this document as investment, legal, or tax advice from either the company or any of the preparers. Any prospective investor should consult with professional investment advisors, and gain professional legal and tax advice.

Each potential investor specifically understands and agrees that any estimates, projections, revenue models, forecasts, or assumptions are by definition uncertain and, thus, possibly unreliable. Any party considering a transaction with the company agrees to look solely to its own due diligence.

The revenue models contained in this document are based on certain assumptions of fact, are presented for illustrative purposes only, and do not represent a forecast of the anticipated results of the company’s operations. Potential investors must recognize that the projections are only estimates, are not guaranteed, and should not be relied upon by any investor in connection with the company. No independent audit or review of the financial projections or assumptions has been performed.

The Vertical 3D Page 13 Distribution Strategy An Analysis

CONFIDENTIAL

DENALI PRODUCTIONS The Vertical 3D

August 7, 2008

PO Box 14128 Portland OR 97293-0128 310 593 4616 [email protected] www.filmprofit.com

The Vertical 3D Page 14 FilmProfit® The Vertical 3D Distribution Strategy Report

A. Distribution Strategy Overview The audience delivery options for The Vertical 3D are naturally more varied than for a conventionally produced general market film. Over the past several years, a sea change has transpired in theatrical exhibition that enables a film likeThe Vertical 3D to achieve a multi-tiered approach to its distribution strategy. These include:

• Specialty “Event-Style” 3D Screenings, including Giant Screen release, with potential premium pricing • 3D screenings in conventional theaters (please see discussion of 3D exhibition growth below) • 2D screenings in conventional theaters • 3D and 2D home consumption, in both HD and conventional resolution

B. 3D and “Event” Screenings In March 2007, The Hollywood Reporter published an analysis of the re-birth of 3D production in the movie business entitled: Biz Loves Depth Of 3D Potential. This article quotes Jeffrey Katzenberg speaking to Wall Street analysts during a Bank of America conference: “Every major studio is working on big- budget 3D movie releases, and the technology will be a boon to studios and exhibitors alike.” Katzenberg went on to say, “Moviegoers will gladly pay up to a 50% premium to watch 3D films in a theater….” He noted that the exhibition industry hasn’t used variable pricing strategies to boost its fortunes nearly to the extent that other industries have.

Michael Campbell, Chairman and CEO of Regal Entertainment has said, “Box office results from the few 3D movies Regal has shown, plus other data, indicates that audiences prefer 3D movies over traditional ones by a 2-to-1 margin.”

As Mark Cuban of 2929 Entertainment stated, “The industry [meaning primarily theatrical exhibition and DVD release] can satiate its need to maximize profits through differential pricing by differentiating on time after release.” The upshot of Mr. Cuban’s argument is that earlier and event-type screenings can utilize premium pricing (sometimes as high as $50) as well as timing of market windows (theatrical, VOD, DVD, Cable, etc.) as part of a strategy to maximize profits for the film.

When the Walt Disney Company re-released Fantasia earlier this decade, it even went so far as to set up its own highly successful screening venues, even to the point of building a temporary “tent” theater in Los Angeles when a suitable venue at the level they desired was not available.

With all of this in mind, the producers can anticipate audiences embracing 3D and specialized event screenings and incorporating differentiated special pricing. ForThe Vertical 3D, there are two elements that can inform the strategy:

• The industry (and industry analysis) points to a healthy interest in 3D as a delivery that has strong market potential. • 3D can be married with special event screenings and even special event pricing for a strong market punch.

The Vertical 3D Page 15 FilmProfit® The Vertical 3D Distribution Strategy Report

This strategy can be utilized in conjunction with existing special events, for example: outdoor and sports shows, conventions, the X Games, and in special screenings set up as stand alone presentations.

C. Conventional Theater 3D Release By 2009, it is anticipated that over 4,000 movie screens in North America will be outfitted with the technology to show 3D films. A wide release of a major film encompasses anywhere from 2,500 to 4,000 screening locations.

According to the National Association of Theater Owners (NATO), Disney’s 3D concert feature, Hannah Montana/Miley Cyrus: Best of Both Worlds, set box office records over the Feb. 1, 2008 weekend. Its $29.1 million take was the highest ever for a Super Bowl weekend, for a 3D film, and for a film opening in less than 1,000 (683 total) venues.

“We believe that 3D has the potential to meaningfully boost growth, by allowing theaters to offer a new visual experience that will drive incremental attendance and price hikes,” said JP Morgan analyst, Barton Crockett, in a September report. He estimated 3D movies can draw 10 percent more viewers than 2D equivalents, and each person would be willing to pay about $3.50 more per ticket in 2009. That means $300 million to $400 million in additional earnings for theater companies – about a fifth of the total box-office take by 2011. Crockett predicted that the number of 3D-equipped screens should jump to 7,000 by 2010. Source: CNET’s news.com

As 3D cinema is coming into its own, The Vertical 3D is going to arrive on the format’s upswing. 3D cinema is anticipated to be one of the largest components of increased movie attendance. The screens will be in conventional theater multiplexes and run by the traditional exhibition companies (see partial list, below). Therefore, the distribution to these theaters will be in the hands of traditional distributors. 3D cinemas are being built and retrofitted by virtually all of the major and independent theater circuits including: • AccessIT’s Pavilion Digital Showcase Theatre • AMC Theatres • Celebration Cinema • Century Theatres • Cineplex Galaxy LP • Classic Cinemas • Crown Theatres, LLC • Dickinson Theatres/Midwest Cinema Group • Harkins Theatres • Kerasotes ShowPlace Theatres, LLC • Loews Cineplex Entertainment • Malco Theatres, Inc. • Mann Theatres • MegaPlex Theatres, Inc. • MJR THEATRES • Muvico Theaters • National Amusements • Premiere Theaters, LLC • Rave Motion Picture Theaters • Regal Entertainment Group • Santikos Theatres

The Vertical 3D Page 16 FilmProfit® The Vertical 3D Distribution Strategy Report

Select screens at the following Mexican theater chains will be equipped with 3D Cinema systems: • CINEMEX • Cinépolis • MMCinemas Source: DCinematoday.com

D. Giant Screen Release The third key leg of release for The Vertical 3D is the potential of Giant Screen (also known as Large Format) release. Giant Screen release is a natural extension for the audience appeal of The Vertical 3D. It has been utilized by other films that were not originally produced for the format or the style of theater, including films as diverse as The Polar Express, and Charlie and The Chocolate Factory. The routes by which films show up on giant screens include: • A film produced by an organization that is specifically focused on a particular venue or series of venues dedicated to Large Format exhibition. Increasingly, Giant Screens are opening up as part of a multiplex of conventional screens, such as the Sony Metreon in San Francisco, CA. Often, these projects have a destination (such as the Grand Canyon), an educational message, or a museum focus. Giant Screen films are usually purpose-built for these venues. They are produced on 65mm or 70mm stock (roughly four times the film-stock size and resolution of most 35mm theatrical films). Since the growth of Giant Screen installations in conventional cinemas, more and more films are coming from outside the educational and documentary realm. • A film that is produced at a high resolution and in 3D for the same venues. Giant Screen producers and exhibitors have been innovators in 3D production and exhibition. Currently in 3D giant screen release are Dolphins and Whales 3D: Tribes of the Ocean, and U2 3D • A film that is produced for conventional release and is also released to Giant Screens to maximize the audience penetration, as well as to encourage second and even third viewings for those fans who would love it. Examples of this include: giant screen releases of Night At The Museum, 300, Star Wars: Attack of the Clones, Apollo 13, Fantasia 2000, The Matrix, Harry Potter and The Order of the Phoenix, Spiderman 3, I Am Legend, and The Spiderwick Chronicles.

The Giant Screen release business is generally highly specialized and focused, and includes a select group of distributors who have access to these theaters and can book films on a regular basis. Key entities of this practice include: IMAX (many think of all giant screen theaters as IMAX theaters), museums, and non-profit organizations (such as National Geographic) that are often seeking to meet a specific mission statement with a particular film. Additionally, a very small group of producers, like MacGillivray Freeman, have staked out Giant Screen production and distribution for their own films, as have the studios of The Walt Disney Company (The Lion King, Beauty and the Beast, and Treasure Planet) and Sony Picture Classics (Thrill Ride: The Science of Fun, which has been playing since 1997).

The Vertical 3D Page 17 Section 2. FilmProfit® Report: Target Distributors

We have commissioned FilmProfit® to survey the current distributor marketplace and target key companies as potential distributors of The Vertical 3D.

Target Distributors An Analysis

CONFIDENTIAL

DENALI PRODUCTIONS The Vertical 3D

August 7, 2008

PO Box 14128 Portland OR 97293-0128 310 593 4616 [email protected] www.filmprofit.com

The Vertical 3D Page 18 FilmProfit® The Vertical 3D Target Distributors Report

A. Fox Searchlight Fox Searchlight, a subsidiary of 20th Century Fox (itself a subsidiary of News Corp) hit pay dirt with this year’s Oscar winning Juno, which has reached $143M at the domestic box office. In addition, Once, an Irish musical acquired at the Sundance Film Festival, has reached a remarkable $9.44M at the box office (impressive, considering the $150,000 cost to make it). Along with last year’s Oscar winning films, The Last King of Scotland and Little Miss Sunshine, Fox Searchlight has continued to release high quality, high- grossing films. Upcoming films include Choke, an adaptation of Chuck Palahniuk’s (author of Fight Club) acclaimed book of the same name, and Young at Heart, a fictionalized story based on the senior citizen chorus that performs covers of classic rock and pop songs.

Fox Searchlight has a strong history of marketing hits. Using discipline in their approach to gaining an audience for a film, they are primarily focused on art house and art house crossover films, such asThe Darjeeling Limited and Little Miss Sunshine. In that regard, they could place the film in nearly any theater necessary, traditional and art house, and facilitate a targeted marketing plan that reaches out to different audiences to build a successful conventional 3D release of the film. They have also recently reformatted and reprintedNight At The Museum, and delivered it into Giant Screen release in conjunction with IMAX Corporation.

Key Executives: President: Claudia Lewis Phone: 310-369-4402 President: Peter Rice Phone: 310-369-4402 Acquisitions: Tony Safford 310-369-4402

B. Sony Pictures Classics Sony Pictures Classics (SPC), releasing both English language and international art house fare, has several successful films currently in release, including from Germany:The Lives of Others (which won an Oscar for best foreign language film),Friends With Money, and Volver. Comparable to The Vertical 3D is their 2001 release, Winged Migration, and the large format (Giant Screen) documentary short, Thrill Ride: The Science of Fun. SPC was also involved in the giant screen releases of the 3D IMAX releases Wings Of Courage: Across The Sea of Time and Cirque du Soleil: Journey of Man.

Sony Pictures Large Format was “Formed in August 1994 as a new division within Sony Pictures Classics. SPC Large Format was created to produce, acquire, and distribute Large Format films (IMAX, Iwerks, Showscan) for Sony.” Source: Sony

Sony Pictures Classics has success in both conventional theatrical releases (which gives them access to all of the conventional 3D screens), as well as developing a successful giant screen arm (primarily, but not solely, with IMAX) which handled a series of films with worldwide large format release. Although SPC has not utilized the idea of differentially priced “Event” screenings, they have the ability to market films that take special handling, and they have the relationships and access to gain Giant Screen bookings.

Key Executives: President: Michael Barker, Phone: 212-833-8833 President: Tom Bernard, Phone: 212-833-8833 Acquisitions: Dylan Leiner, Phone: 212-833-8833

The Vertical 3D Page 19 FilmProfit® The Vertical 3D Target Distributors Report

C. Focus Features Originally called Universal Focus, this “art” distributor is a subsidiary of Universal, and has built a reputation primarily for high quality projects. Some of its current releases include Dan in Real Life and the Oscar winning Atonement, which have made $47.6M and $49.4M at the box office, respectively. Other jewels in Focus Feature’s crown include Brokeback Mountain, The Constant Gardener, and Pride and Prejudice. Their 2007 releases Into the Wild and Eastern Promise were nominated for Oscars in 2008. Future releases are planned from directors Steven Soderbergh, and Joel and Ethan Coen.

Focus Features has a sterling reputation for quality film releases and has access to any art house or conventional theater in the country. Additionally, Focus has demonstrated a unique ability to move a film that does not have a three-word synopsis into the culture and into the minds of moviegoers; however, when it comes understanding differentiated release strategies, there is presently no evidence to suggest that Focus has experience in the viability of executing this approach. In that regard, they may be a considered a second-tiered approach to distribution.

Key Executives: President: Adrienne Bowles Phone: 818-777-1000 President: Andrew Karpen Phone: 212-539-4000 Director of Acquisitions: Dylan Wilcox Phone: 818-777-1000

D. National Geographic Giant Screen Films The widely known National Geographic Society (NGS) has been producing and releasing large format films for quite some time. They most recently releasedU2 3D, a 3D documentary of U2’s “Vertigo” Tour. Having appeared on nearly 700 screens at its widest release, the film is showing not only on Giant Screens, but was also presented and is still showing on a number of 3D screens.

Other titles released out of NGS Giant-Screen Films are:To Be An Astronaut, The Eruption of Mount St. Helens, Maximum Velocity, The French Precision Flying Team, and Wired to Win: Surviving the Tour de France.

Although there are other Giant Screen film companies that have collaborated with IMAX in their distribution, there are fewGiant Screens in the world that are not accessible by NGS, provided that the content meets the mission of the managers of the screen. For example, a screen in the Grand Canyon could be a viable venue for The Vertical 3D (unless the idea of free rockclimbing is frowned upon!).

According to their own material, National Geographic Cinema Ventures (NGCV) is part of National Geographic Ventures (NGV), a wholly owned subsidiary of the National Geographic Society, which is one of the world’s largest nonprofit scientific and educational organizations. Founded in 1888 to “increase and diffuse geographic knowledge,” National Geographic works to inspire people to care about the planet. Building on its global reputation for remarkable visuals and compelling stories, NGCV produces original 2D and 3D productions for the world’s largest screens. NGCV also retains distribution rights to one of the most extensive film libraries in the Giant Screen industry.

Key Executives: President: Lisa Truitt, Phone: 203-661-5678 President of Distribution, Mark Katz

The Vertical 3D Page 20 FilmProfit® The Vertical 3D Target Distributors Report

E. Bob Berney Working independently as a marketing executive and booker for hire, as well as doing a stint as president of Picturehouse Entertainment, Bob Berney has overseen the release and marketing of a string of seminal independent titles including: Memento, Y Tu Mamá También, My Big Fat Greek Wedding, Monster, Whale Rider, and The Passion of The Christ. Though he was typically an independent for hire on these films, and though all are worthy films, Mr. Berney’s work was, without a doubt, the largest factor in these films being considered seminal and becoming a part of our culture. Whether he remains independent or moves into a position at an independent distributor, his skills and talents would be a valuable asset to The Vertical 3D.

The Vertical 3D Page 21 Section 3. Festivals, DVD, and Television Strategies

In a distribution strategy, one must determine who the audience is and create innovative ways of marketing to them. Additionally, it is important to maintain relationships with film festivals and sales agents, and to thoroughly understand distributors’ methods of operation and buying cycles. Our strategy will be multi-faceted and sharply focused. For example, our sales representative will be developing relationships with distributors, in advance of the festivals. We have included funds in our budget to market, promote, and attend several top tier film festivals. Additionally, we plan to specifically target the age demographic for climbing and adventure films.

A. The Sales Team A publicist works to make sure that a film and its filmmakers receive as much press as possible. Distributors take careful note of how much “buzz” a film and its team generate. Our publicist (hired specifically to promote the film at festivals) will build a campaign aimed at establishing a strong awareness and anticipation for the release of this unique film. Press begets press, so by the time The Vertical 3D hits theaters, there is sure to be enthusiastic expectation.

Another major role in the process is the producer’s representative. Producer’s reps have relationships with virtually all of the distributors and carry the influence to get them into the theater. A producer’s rep is contracted specifically to represent a film at festivals and, because it is such a specialized role, there are only a handful of producer’s reps in the independent film world (and even fewer in the adventure film world). Their reputations are based on their track record for delivering quality projects that sell.

Negotiating the deal with the distributor will be an entertainment attorney specializing in film sales: Richard S. Luskin, Esq.

B. Getting Into a Top Tier Film Festival Cannes, Toronto, and Sundance are the most important film festivals in the world in terms of acquisitions. All serious buyers attend these festivals looking for product, and with them, the attention of the media.

Films acquired at these festivals make headlines internationally. Toronto and Cannes are film festivals that are organized markets, whereas Sundance is a film festival with a highly publicized informal market. Stories abound about bidding wars and sales that have taken place in dark theater aisles before the end- credits have rolled. Distributors love film festivals because they can instantly see how an audience and the critics respond to a movie. Filmmakers love festivals because all of the distributors are there to see their movie for the first time, together. This gives sellers the best shot at a good deal because festivals typically elicit dynamic bidding.

As we plan to submit to these important events, the following is a sample calendar with a partial list of the top tier worldwide festivals where we feel The Vertical 3D would be well received by audiences and purchased by distributors.

The Vertical 3D Page 22 Section 3. Table A: Calendar of 2010 Top Film Festivals and Markets Worldwide

May: Cannes Film Festival Tribeca Film Festival Seattle International Film Festival

June: Independent Film Project/LA Film Festival

August: Edinburgh Independent Film Festival

September: Toronto International Film Festival Deauville Festival of American Film Telluride International Film Festival

October: New York Film Festival MIFED – Italy

November: American Film Institute Film Festival American Film Market

January 2011: Sundance Film Festival

February 2011: Berlin International Film Festival

March 2011: South by Southwest Film Festival

C. Selling the Film Selling a film at a festival has become an extremely specialized process. A sale often happens immediately after a first screening and it takes a team of experienced professionals to orchestrate the process properly. Getting into a major festival immediately attracts distributor interest, and buyers will request a copy of the film prior to a festival screening. Pre-screening a film is rarely a good idea. It is preferable to have buyers see a film for the first time, together, all at once, with an enthusiastic audience and without interruptions. Our experienced sales team will be positioned to get the best distributor and the most lucrative deal for The Vertical 3D.

D. Adding Value for Buyers In addition to joining forces with a high-profile sales team, there are a number of things a creative producing team can do proactively to create awareness for a film before it hits the marketplace. The filmmakers behind the crossover indie sensation, Blair Witch Project, launched a provocative, clever website before their film was even completed. The site suggested that their fictional film about the disappearance of a group of friends in the haunted woods of Massachusetts was actually a documentary about a real occurrence. By the time the filmmakers hit the streets of Park City for their Sundance premiere, Blair Witch Project was the only thing festival attendees were talking about. We plan to implement a similar buzz-generating strategy to highlight our distinctive film.

The Vertical 3D Page 23 E. Finding the Right Distributor We are seeking a distributor who is open to our “Event” film concept and to the new genreThe Vertical 3D represents. The producers have developed relationships with influential members of the distribution community and will seek out the distributor that will understand and optimize the available markets for this film. It is worth noting that a big part of what makes independent films exciting to audiences and buyers alike is the discovery of new ideas and new talent. The Vertical 3Dprovides a visionary new idea in film and its implementation by the director.

F. Territories and Markets: How Distribution Works US distributors typically divide the world into two major territories: domestic and foreign (some distributors also divide foreign into several specific, smaller territories). Within each territory, there are four primary markets:

• Theatrical and Giant Screen • Pay/Cable Television • Home Video (Blu-ray, DVD) • Free Television

With this country's obsession with box office reports, the predominant market is domestic theatrical. It is based on these numbers that a film's performance in all other markets is projected and measured. Though different distributors acquire territories, markets within the same territory are rarely split up. Generally, a distributor will acquire the rights to all markets within a specific territory. The release of a film in the domestic theatrical market marks the beginning of a distributor's opportunities for that film. The distributor knows that, even though not everyone will see the film theatrically, establishing awareness and interest in a film is valuable for future markets such as the DVD release. In a recent New York Times article about the DVD boom, Endeavor talent agent, Josh Lessher (who represents directors Walter Salles, Paul Thomas Anderson, and David O. Russell) notes, “Nowadays, the movies are commercials for the DVD’s.” New York Times, 4/12/04

G. 3D on TV Wade Holden, a movie industry analyst, stated: “By 2009, VHS will be virtually extinct and high-definition DVD revenue should grow to more than $2.6 billion as the format war works itself out. By 2015, VHS will be history and high-definition DVD will be the major-market shareholder with $18.3 billion in revenue.”

This year, total DVD revenue is expected to top $22.2 billion, compared to $23.2 billion in 2007. With this overall shift in the industry, as well as the embrace by the movie-going public of visionary directors in a way we haven’t seen since the 1970’s, The Vertical 3D arrives at the crossroads where the demand for innovative films is rapidly rising and the opportunity to invest is prime.

3D on TV and DVD is currently being developed by many major component and television set manufacturers. Stereoscopic displays are currently being tested that can be watched without special glasses. The innovative new company, 3ALITY, has developed proprietary autostereoscopic hardware, which enables the viewer to see 3D more comfortably, more conveniently, and with higher quality than ever before. George Lucas, who is an industry leader in technological innovation, is currently in development with a Star Wars television series that will be presented in 3D.

The Vertical 3D Page 24 With the introduction of new color displays and high definition images, 3D promises to be the next revolution in visual technology. 3D television offers users an infinitely richer and more entertaining viewing experience. As a 3D DVD, our film will be a timely addition to movie consumer’s home libraries across the globe. Texas Instruments’ DLP chip has just been installed in 500,000 new 3D ready televisions to allow stereoscopic broadcast. Personalized polarized viewing glasses will follow this new wave of home entertainment.

H. Monetize Remaining Markets Once the film has completed its theatrical run in a market, a strategy designed to capitalize on revenue in the remaining markets is executed. This usually begins with cable and satellite dish pay-per-view and video on demand, and sometimes is combined with military, airline, and hotel markets. Next, there might be a release on a major pay cable station, such as HBO, after the theatrical release (timely, so interest in the film hasn’t waned, but not too soon as to compromise its value in other markets). At some point, a DVD release will be scheduled. The DVD release can rival the theatrical release, and can involve a new advertising campaign to re-introduce the film and revitalize interest in it. Finally, the film is released over a period of several years on basic cable, broadcast, and syndicated TV.

The Vertical 3D Page 25 Section 4: FilmProfit® Report: Comparable Pictures – Return on Investment (ROI)

For comparison purposes, we have selected five films to be analyzed in depth by FilmProfit® to show a deep analysis of revenue streams leading to a Return on Investment (ROI). These films are Winged Migration, An Inconvenient Truth, March of the Penguins, Fahrenheit 9/11, and Everest IMAX. All these documentary feature films were highly acclaimed and broke new ground in terms of content, appeal to the public, and relevance. They became must-see EVENT films. It is our estimation thatThe Vertical 3D will join their ranks.

Comparable Pictures – ROI Report

CONFIDENTIAL

Prepared for DENALI PRODUCTIONS The Vertical 3D

August 7, 2008

PO Box 14128 Portland OR 97293-0128 310 593 4616 [email protected] www.filmprofit.com

The Vertical 3D Page 26 FilmProfit® Comparable Pictures - ROI Report

A. FilmProfit® ROI Report In the third and fourth quarters of the year 2001, Big Horse Incorporated, parent company of FilmProfit®, completed an initial survey of 1,000 films released in the years 1994 through 1998, all of which were budgeted from $0 to $40 million. The framework of this study was that it would analyze an exhaustive range of data collected from the key film business reporting institutions, including AC Neilsen/EDI, Exhibitor Relations, Variety Magazine, Hollywood Reporter, and Video Software Dealers Association, among others. In all, more than a dozen different sets of data were exhaustively analyzed, typically with five or more overlapping reports in the key areas, such as budget, prints and ads costs, box office performance, home video performance, foreign box office, etc. The development of this database is ongoing, and is pushing forward through the years 2005 and 2006 and beyond.

B. Hand-Processed Data Further, Big Horse Incorporated has taken all of this available data and independently studied the years of release, and the financing and releasing entities, and then placed the films within the careers of the director, actors, and producers in order to make judgments of the nearest actual estimates for each key cost and performance number. The results of this study are a series of statistics on each film, including budget, prints and ads cost, box office, home video units and income, domestic ancillaries, Domestic ROI, foreign income, library value, distribution fees, and Global ROI. These statistics are the Big Horse Incorporated Estimates of Performance, also known as FilmProfit® ROI.

C. Proprietary Calculations Included in the FilmProfit ROI is a proprietary set of calculations which the company has developed and refined over the last several years. These proprietary calculations analyze known performances and, from these known performances, project domestic and foreign ancillary markets, including cable television, free television, military, prisons, and ships at sea, etc., for the domestic market, and all markets as a basket for overseas.

The attached sheets of performance on individual films are our best estimates of the costs, performances, and Return on Investment based on all costs in, all income in, and fees subtracted.

All $ figures shown are in millions US.

The Vertical 3D Page 27 FilmProfit® Comparable Pictures - ROI Report

Section 4. Table A: Comparable Movie ROI Overview DOMESTIC All $ figures shown are in millions US

The March of the Inconvenient Penguins Winged Migration Fahrenheit 9/11 Everest FilmProfit® Report Truth, An aka Emperor’s Journey, The Warner Distributor SPC Paramount Independent Lions Gate/IFC Miramax Release Date Apr-03 May-06 Jun-05 Jun-04 Mar-98

Maximum Screens 202 587 2,506 2004 57 Release (Whole Number) Domestic Domestic Opening Gross $0.03 $0.58 $0.22 $39.09 $0.00

Budget $26.50 $1.50 $6.00 $6.00 $8.00

Prints & Ads $3.73 $2.10 $26.94 $21.01 $16.13 Costs Total Costs $30.23 $3.60 $32.94 $27.01 $24.13

Box Office Gross $10.76 $24.15 $77.44 $119.11 $76.45

Rentals $5.27 $11.83 $37.94 $58.37 $37.46

Video Units (1000’s) 142 0 0 950 1,762

DVD Units (1000’s) 350 1810 3,500 6800 230

Video Revenue $10.24 $26.60 $54.29 $118.30 $21.37 Domestic Income Domestic Domestic Ancillaries $4.02 $9.14 $23.13 $29.63 $22.84

Domestic ROI 42% 860% 228% 497% 220%

Section 4. Table B: Comparable Movie ROI Overview FOREIGN All $ figures shown are in millions US

The March of An Inconvenient Winged Migration the Penguins aka Fahrenheit 9/11 Everest FilmProfit® Report Truth Emperor’s Journey

Foreign Box Office $21.20 $24.30 $55.20 $100.50 $30.48

Foreign Rentals $8.91 $10.21 $23.18 $42.21 $12.80

Foreign Home Video $3.59 $4.11 $14.84 $24.27 $10.68

Foreign Ancillaries $11.63 $13.32 $19.71 $31.66 $19.15

Int’l Revenue $24.12 $27.64 $57.73 $98.14 $42.63

Total Global Revenue $43.65 $75.21 $173.09 $304.43 $124.30

Distribution Fees $15.28 $26.32 $60.58 $106.55 $43.50

Income After Dist. Fees $28.37 $48.89 $112.51 $197.88 $80.79 Foreign Income and Global ROI Income Foreign Library Value $1.42 $2.44 $10.00 $10.00 $4.04

Global ROI 99% 1427% 372% 770% 352%

The Vertical 3D Page 28 FilmProfit® Comparable Pictures - ROI Report

Section 4. Table C: Notes to Accompany FilmProfit® ROI Report All $ figures shown are in millions US Notes to Accompany FilmProfit® ROI Report Distributor Release Date Maximum Screens Opening Gross * Films released after the date shown at the left are not considered to have found their way through all avail- 06/19/05 able delivery and reporting systems; therefore, reports on films of this type are to be considered premature,

Domestic Release Domestic while still indicative of the potential trends of performance. Commensurately, films released before 1990 can have gaps in reported performance figures. An estimation of the film’s negative costs, deduced through a process of vetting a number of published budget Budget citations, and examining the film’s producers, actors, director, and shooting style.

Prints & Ads An estimation of the film’s prints and ads cost, based upon published citations in addition to consideration of Costs the releasing format, number of screens, and the film’s box office performance. Total Costs Sum of the above. Box Office Gross The estimated domestic box office gross of the film, based upon many box office citations. Rentals Industry standard for rentals is 50% of box office. An estimation drawn from a number of reports on video performance, in addition to consideration of box office performance. ‘Units’ includes wholesale, as well as revenue share units sold, where applicable. Since Video/DVD Units (1000’s) 2004, the scale has tipped to nearly 100% of home video units sold being DVDs. With pricing of DVD’s set for sales directly to consumers, the numbers of units shipped have, in general, climbed dramatically. ** NOTE: Several films in this study have only recently been released and begun gathering the first inklings of Video Revenue their home video performance. As such, there may certainly come to be more home video income than currently represented. A proprietary calculation that estimates all domestic markets other than box office and home video, including pay cable, video on demand, broadcast and syndication, basic cable, military and airlines, among others. The calcula-

Domestic Income Domestic Dom. Ancillaries tion is driven by box office performance. Domestic return on investment. All domestic distributor income (minus industry standard distribution fees of 35%) divided by total costs (production budget plus prints and ads). FilmProfit® ROI is not intended to show Domestic ROI actual or specific return on investment to the producers of any individual film, it is intended to illustrate the general classification of profitability of a film, or of a group of films. Foreign Box Office Rentals are estimated based on an aggregate of reports from across the world. Big Horse Incorporated uses an average 35% repatriation rate from foreign box office, after prints and ads- ex Foreign Rentals penses. Individual locales vary. China, as a rare example, averages 15% of box office repatriated to the distributor. A proprietary calculation that estimates the performance of foreign home video. The calculation is driven by Foreign Home Video box office performance. A proprietary calculation that estimates all foreign markets other than box office and home video, but primar- Foreign Ancillaries ily weighted to tv. It would include terrestrial, satellite, and broadcast, among others. The calculation is driven by box office performance. A proprietary calculation that estimates all foreign income markets, including box office, television, and home vid- Int’l Revenue eo. The calculation is based upon a factor of global markets, and driven by domestic box office gross and rentals. All global income to the producer, including domestic rentals, domestic home video, domestic ancillaries, and Total Global Revenue international income. Distribution Fees 35%, a figure set in accordance with conservative industry standards, not for favorability to producers. Income After Dist. Fees All domestic income plus all international income, minus 35% Distribution Fees. The residual value of a film after it has been distributed through all of the primary markets. This includes global re-licensing and sales to markets not previously online or available. The value is a factor of Income Foreign Income and Global ROI Income Foreign Library Value After Fees, determined through a proprietary calculation which estimates the factor based upon domestic box office gross. The formula is driven by published reports of library sales, but is conservatively derived. Global return on investment is arrived at by adding together Income After Distribution Fees and Library Value, and then dividing that result by the total costs (production budget plus prints and ads), thereby arriving at the Global ROI ROI. FilmProfit® ROI is not intended to show actual or specific return on investment to the producers of any individual film, it is intended to illustrate the general classification of profitability of a film, or of a group of films.

The Vertical 3D Page 29 Section 5. Budget Summary for The Vertical 3D

Often referred to as the “negative cost” of making a film, the budget (see Section 5. Table A) is the total cost estimated to produce the high definition digital files ofThe Vertical 3D, from which positive distribution prints and digital projection files will be created.

This budget covers all out-of-pocket expenses for production and post-production, a limited amount of development costs, as well as costs to get the film to market, including festival entry fees, marketing aids, and printing press kit materials.

Additionally, production and clearance legal fees, and complete insurance coverage, is included. Our full liability “production package” insurance coverage protects the company from losses and schedule delays related to camera and equipment damage, production vehicle damage, damage to original camera digital files by the post houses, and bad weather.

Despite Hollywood “runaway train” budget horror stories, our experienced producing team has a solid track record of bringing projects in on, or under, budget. Our budget has been thoroughly analyzed and is coupled to a shooting schedule. Bob Carmichael and Denali Productions have a proven track record of production delivery and budget accuracy. 3D requires exacting budgeting guidelines and anticipation of logistics regarding the camera department needs. It is noteworthy that our budget includes a line item for a completion bond. This bond guarantees that (1) a motion picture will be completed; (2) subject to certain conditions, limitations, and exclusions, all costs of production have been paid or will be paid when due; and (3) certain physical film, sound, and documentary items that conform to certain predetermined technical and non-technical specifications will be made and delivered to distributors who have agreed to make a payment if those items are timely delivered.

Section 5. Table A:The Vertical 3D Budget

Development 100,000 Editing 266,729 Story & Other Rights 160,330 Post Production Sound 150,000 Producer’s Unit 880,468 Music 520,000 Titles 100,000 Director’s Unit 616,240 Optical/3D Elements 1,005,250 Talent 336,331 TOTAL POST PRODUCTION 2,041,979 A-T-L Travel/Living 2,414,600 TOTAL ABOVE-THE-LINE 4,507,969 Insurance 250,000 Legal Expenses 125,000 Production Staff 720,375 Publicity 450,000 Camera Operations 2,125,833 TOTAL OTHER 825,000 Grip Operations 1,491,975 Completions Bond (3%) 396,510 Production Sound 198,688 Contingency (10%) 1,321,701 Set Operations 291,777 Overhead (0.6%) 64,776 Location Department 225,500 Total Above-The-Line 4,507,969 Transportation Department 213,416 Total Below-The-Line 8,709,043 Second Unit Aerials 574,500 Total Above- and Below-The-Line 13,217,012 TOTAL PRODUCTION 5,842,064 GRAND TOTAL $15,000,000

The Vertical 3D Page 30 Section 6. Worldwide Revenue Distribution Timeline Scenario

A theatrical release strategy is determined by the distributor, and is based on a series of variables, such as season, current filmgoer trends, competitive film releases, and pre-existing distributor/exhibitor deals. Typically, a distributor prefers to release the film as soon as possible to capitalize on film festival buzz. Usually this happens within six months and often, during this period, the distributor will place the film in strategic festivals and have special promotional screenings to capitalize on the free publicity and to further energize word of mouth.

Once a film is released theatrically, it will begin to generate revenue and will continue to generate notable revenue for about five years or more. The details of this five-year cycle are shown next in Section 6. Table A illustrates a typical timeline of the revenue flow back to the producers from all markets and territories. For the purposes of the timeline, the chart assumes The Vertical 3D will be acquired in late 2010, and released in the US, theatrically, in early 2011.

Section 6. Table A: Typical Revenue Timeline

year One: 90% of domestic box office 40% of foreign box office 80% of home video and DVD royalties (purchase and rental)

year Two: 10% of domestic box office 50% of foreign box office 8% of home video and DVD royalties (purchase and rental)

year Three: 10% of foreign box office 6% of home video and DVD royalties (purchase and rental) 65% of pay and cable license fees

year Four: 4% of home video and DVD royalties (purchase and rental) 25% of pay and cable license fees

year Five: 2% of home video and DVD royalties (purchase and rental) 10% of pay and cable license fees

The Vertical 3D Page 31 Section 7. FilmProfit Report®: Projections of Potential Income Thefor Vertical 3D

The following spreadsheet estimates three revenue scenarios for the potential income generated byThe Vertical 3D: Low, Expected, and Better:

Projections of Potential Income

CONFIDENTIAL

Prepared for DENALI PRODUCTIONS The Vertical 3D

August 4, 2008

PO Box 14128 Portland OR 97293-0128 310 593 4616 [email protected] www.filmprofit.com

The Vertical 3D Page 32 FilmProfit® Projections of Potential Income for The Vertical 3D

Section 7. Table A: Projections of Potential Income The Vertical 3D 1 Negative Cost $15,000,000 Scenarios Low Expected Better US Theatrical Sales 2 US Box Office Gross $29,000,000 $52,000,000 $94,000,000 3 Less Exhibitor Share $15,370,000 $27,560,000 $49,820,000 4 Gross Film Rentals $13,630,000 $24,440,000 $44,180,000 5 Less Distributor Fee $4,770,500 $8,554,000 $15,463,000 6 Less Prints/Advertising $12,250,000 $21,000,000 $33,500,000 7 US Theatrical Net Proceeds -$3,390,500 -$5,114,000 -$4,783,000 US Aftermarket Sales Low Expected Better 8 Pay Cable Revenue $1,885,000 $3,380,000 $6,110,000 9 Network TV Revenue $0 $0 $0 10 Merchandising/Music/Spinoffs $100,250 $220,250 $540,750 11 PPV/VOD/Non-theatrical Venues $1,685,523 $2,986,455 $5,398,591 12 US Ancillary Gross Proceeds $3,670,773 $6,586,705 $12,049,341 13 Less Distribution/Licensing Fee $1,101,232 $1,976,011 $3,614,802 DVD Units 2,100,000 2,700,000 4,700,000 14 Home Video Market $30,397,500 $39,082,500 $68,032,500 15 Less Distribution/Licensing Fee $24,318,000 $31,266,000 $54,426,000 16 US Market Net Proceeds $5,258,541 $7,313,193 $17,258,039 Foreign Markets Low Expected Better 17 Foreign Box Office $21,000,000 $37,000,000 $72,000,000 18 Foreign Rentals After P&A $5,880,000 $10,360,000 $20,160,000 19 Foreign Home Video $7,700,000 $14,500,000 $23,950,000 20 Foreign Ancillaries $3,876,000 $6,700,000 $11,210,000 21 Aggregate Foreign Markets $17,456,000 $31,560,000 $55,320,000 22 Less Distribution/Licensing/Fees $6,109,600 $11,046,000 $35,958,000 23 Overseas Net Proceeds $11,346,400 $20,514,000 $35,958,000 24 Worldwide Gross Profit $16,604,941 $27,827,193 $53,216,039 25 Less Interest/Dues $515,648 $1,473,281 $1,410,141 26 Total Income to Producers $16,089,292 $26,353,912 $51,805,898 27 Less Negative Cost/Residuals $15,402,232 $15,658,848 $16,295,147 28 Total Gross Profit to Producers $687,060 $10,695,064 $35,510,751 29 ROI to Producers 104% 168% 318%

The Vertical 3D Page 33 FilmProfit® Projections of Potential Income for The Vertical 3D Section 7. Table B: Notes to Accompany Potential Income Report The term of these scenarios is THREE YEARS 1 Negative Cost Total Cost estimated to produce the negative of the film, from which positive distribution prints will be struck. SCENARIOS US Theatrical Sales 2 US Box Office Gross By 2009, reasonable estimates are that there will be 4,000 3D theaters in North America. Some estimates have reached as high as 5,000. 4,000 screens would be considered a blockbuster- style wide release, and likely wider than the release of The Vertical 3D. There has been a movement toward certain films as events, including highly specialized and exclusive showings with specialized ticket pricing. The producers of The Vertical 3D intend to pursue any and all of these options as methodologies for extracting the inherent value from the film. Recent 3D screenings have carried a $3 surcharge on the conventional ticket price. In 2007 the average ticket price was $6.88. This would make the average 3D ticket price $9.88, or nearly 50% higher. With the theaters stating that this higher price is for 3D glasses, we anticipate it is more than that. If this $3 were allocated in thirds to the theater, the distributor, and to the manufac- turer, we would increase box office to the distributor by approximately 25%. Our estimates here are in the range of 15% or less. Several films were studied which have comparative values in any of the following categories: story, shooting style, budget, production values, distribution methodology, target audience, etc., to the anticipated production of: The Vertical 3D. Anticipated rating forThe Vertical 3D: G Films examined included: Winged Migration, An Inconvenient Truth, The March of the Penguins, Fahrenheit 9/11, Everest IMAX One of the projects above, Everest, was shot for and released to Giant Screens (many think of these as IMAX), Winged Migration, shot in 35MM, was released to both conventional and Giant Screens. The Vertical 3D is anticipated to deploy to conventional 3D screens primarily, while also deploying to certain Giant Screens around the world. While some Giant Screen titles have a relatively short theatrical life, like general dramatic films, most have extended lives on the Giant Screen circuit. Winged Migration, however, played on US screens for 8 months, instead of the average 3 months or less of blockbuster films, which often “play” for just weeks before running out of steam with the audiences. Everest was tracked for more than 3 years through convenional sources, and is still playing ten years later in venues around the globe. 3 Less Exhibitor Share 53% of the box office, industry standard calculation for independent distributors.

The Vertical 3D Page 34 FilmProfit® Projections of Potential Income for The Vertical 3D US Aftermarket Sales 4 Gross Film Rentals 47% of the box office, industry standard calculation for independent distributors. 5 Less Distributor Fee 35% According to standard industry deals, not negotiated for favorability to producers. 6 Less Prints/Advertising It should be noted that increased performance typically requires increased screen counts and performance on those screens, all of which requires an increase in these expenditures. 7 US Theatrical Net Proceeds Sum of the Above 8 Pay Cable Revenue Based on standard contractual patterns, with varying performance levels of the box office providing fees as percentages of the theatrical income. 9 Network TV Revenue This model goes out 36 months, typically prior to network television revenue windows, but not prior to network deal negotiations, where they might be applicable. 10 Merchandising/Music 8.5% On films which have significant elements, such as a high-profile soundtrack, or established or rising music stars, or spin-off collectible characters, this market gains Low Sales, in $ Millions $2.6 significance. The royalty rate we use is shown at the top left, and the total retail sales of merchandise and music in millions are shown at left. The producer’s son, Jesse Carmichael, is a founding member of Maroon 5, one of Expected Sales, in $ Millions $5.9 the hottest rock bands around, having achieved platinum sales of their 2007 album, It Won’t Be Soon Before Long, and quadruple platinum sales of their previous album Better Sales, in $ Millions $14.4 Songs About Jane. Jesse is anticipated to compose the soundtrack for the motion picture. The unit sales projections are: 200,000; 450,000; and 1,100,000. 11 PPV/VOD/Non-theatrical Venues Typically, at higher performance levels, this market begins to have significant value to the producers. It includes video on demand and internet video on demand, a fast emerging growth market; Airlines; Military Installations,; Schools; College Campuses; Ships at Sea; and the like. By the end of 2007, it has been estimated that more than 500,000 DLP TV displays had been sold to consumers. These units are wide-screen and have 3D chips inside, capable of displaying 3D content like Vertical 3D in all its glory. At the end of 2007, there were an estimated 68 million VOD- capable television homes, spending each an average of $15 for the year on A La Carte (on demand) programming. As cable, Telco, and Internet deployment and speeds quicken, this market will grow more than 40% by 2010, and more than 80% by 2012. All of the markets outlined as Non-theatrical Venues above are considered in the scenarios. 12 US Ancillary Gross Proceeds Sum of the above

The Vertical 3D Page 35 FilmProfit® Projections of Potential Income for The Vertical 3D 13 Less Distribution/Licensing Fee 30% According to standard industry deals, not negotiated for extra favorability to producers. 14 Home Video Market Calculated to reasonably accord with the films mentioned in the study above, and taking into account the explosive growth experienced by DVD. The majority of The Vertical 3D units anticipated to be sold would be delivered in 2D. 15 Less Distribution/Licensing Fee 80% Home Video contracts have typically been based on a royalty participation deal. The royalty usually offered is 20%, effectively tantamount to a 80% distribution fee. The fee we use is to the left. 16 US Market Net Proceeds Sum of the Above

Foreign Markets 17 Foreign Box Office 18 Foreign Rentals After P&A Distributor Income after split of box office with Exhibitors. Anticipated to be after Marketing (Prints & Ads or P&A) costs in each region, but before worldwide distribution fees. 19 Foreign Home Video In the recent past, foreign DVD sales have started to catch up with North American growth, and home video value has surpassed television value, on average. 20 Foreign Ancillaries The greatest single portion of foreign ancillaries had, until the worldwide rise of DVD, tended to be television. Recent marketplace shifts have made this component a smaller component of the overall pie, largely due to this increase in DVD. 21 Aggregate Foreign Markets Sum of the Above 22 Less Distribution/Licensing Fee 35% Without specific deal parameters in place, the distribution fee is set at the number to the left. It could be lower. 23 Overseas Net Proceeds After distribution fees 24 Worldwide Gross Profit Sum of the Above 25 Less Interest/Dues 6% The interest shown is a simple interest calculation against the prints and ads spend. Using an anticipation of LIBOR 1 year + 25% of LIBOR 1 year, and calculated with the estimated time to pay off debts such as prints and ads, etc. and a modest deduction to account for distributor’s association dues pertinent to the picture.

The Vertical 3D Page 36 FilmProfit® Projections of Potential Income for The Vertical 3D 26 Total Income to Producers Worldwide Gross Profit after deduction of interest charges. 27 Less Negative Cost/Residuals 2.5% This is the entire negative cost. Residuals are calculated at the percentage rate shown at the left. There are no Participations calculated in these scenarios. 28 Total Gross Profit to Producers All income in after subtracting all expenses, including Negative Cost. 29 ROI to Producers Amount, as a percentage, earned on a company’s total outlay for production, derived by dividing total outlay into earnings after studio interest, but before bank interest, taxes, and depreciation and amortization. These projections are guided by analyzing the performance necessary to amortize the investment in full light of the comparable pictures guidance. In this regard, the projections are also a business planning tool to aid the producing team in fine-tuning their approach to negotiations, and determining proactive strategies as individual contracts come on line.

Section 7. Table C: Summarized Flow of Funds Scenario Low Expected Better Domestic Box Office $29,000,000 $52,000,000 $94,000,000 Domestic Income $47,698,273 $70,109,205 $124,261,841 Distribution Fees and Marketing Costs $42,439,732 $62,796,011 $107,003,802 Foreign Income $17,456,000 $31,560,000 $55,320,000 Foreign Distribution Fees and Deductions $6,109,600 $11,046,000 $19,362,000 Less Interest/Dues $515,648 $1,473,281 $1,410,141 Producer’s Income $16,089,292 $26,353,912 $51,805,898

Low Scenario Low Scenario Low Scenario Low Scenario Expected Scenario Better Scenario

$14.54 $14.54 $14.54

$39.55 $39.55 $39.55

Global Fees and Costs Producer's Income Global Fees and Costs Producer's Income Global Fees and Costs Producer's Income

Expected Expected Expected Scenario Scenario Copyright Scenario 2008, filmprofit, llc PO Box14128 portland, or 97293-0128, 310 593 4616 Entirety Copyright © 1996-2008, FilmProfit, LLC, All Rights Reserved. 8/7/2008 Box 14128 Portland, OR 97293-0128, 310 593 4616 $23.40 $23.40 $23.40 The Vertical 3D Page 37

$66.75 $66.75 $66.75

Global Fees and Costs Producer's Income Global Fees and Costs Producer's Income Global Fees and Costs Producer's Income

Better Better Better Scenario Scenario Scenario

$44.18 $44.18 $44.18

$113.21 $113.21 $113.21

Global Fees and Costs Producer's Income Global Fees and Costs Producer's Income Global Fees and Costs Producer's Income

The following summary provides an overview of the proposed operating agreement for the LLC to be formed which will produce and distribute The Vertical 3D.

Managers: LLC, Managing Directors: Robert Carmichael, (residing in Boulder, Colorado) and Richard S. Luskin, Esq., (residing in Park City, Utah).

Company: A Colorado Limited Liability Company composed of a handful of members.

State and Date of Organization: The Company will be formed as a Colorado Limited Liability Company by the filing of its Articles of Organization with the Colorado Secretary of State.

Company Term: The Company will continue as set forth in the Operating Agreement.

Objective of the Company: The objective of the Company is to produce, own, and exploit a feature-length 3D motion picture currently entitled,The “ Vertical 3D” (the “Motion Picture”) in order to provide Distributions to the Members in excess of their Capital Contributions, a substantial portion of which may initially be sheltered from the imposition of income tax. There is no assurance that this objective will be attained.

Production Agreements: Any deferred payments are expected to be paid after the Members receive a return of their Capital Contributions; however, there is no assurance that deferred payments may not be paid by the Company prior thereto. There may be payments, to one or more featured actors and others, of percentages of Company gross receipts from the Motion Picture. These items will be charged at not more than their standard rates within the motion picture industry. The amounts of deferred payments, if any, are unknown.

Exploitation of the Motion Picture: Managers shall attempt to enter agreements with third parties on a best efforts basis in order to exploit the Picture. There can be no assurance that the Company will enter into any other agreement to exploit (or arrange for others to exploit) the Motion Picture, or, if the Company does, that the Company and the Members will derive a profit (see “PROPOSED COMPANY OPERATIONS - Exploitation of the Motion Picture”).

Compensation and Fees to the Managers: The Managers will manage and control the affairs of the Company (see “MANAGEMENT,” below). The Managers will receive from the Company: (i) For the management services that the Managers will render for the Company during the period following the Closing Date, the Managers shall act on a gratis basis. For services rendered as Director of the Motion Picture, Robert “Bob” Carmichael will receive a fee of $150,000.00, payable upon the commencement of principal photography. For services rendered as Producer of the Motion Picture, Richard Luskin, Esq., a Manager, will receive a fee of $45,000, payable upon the commencement of principal photography. He may defer all or any part of this fee, and elect how and when this fee will be paid to him, including the Company’s issuance of a Membership Interest in lieu of cash payment. In the event that the Company issues a Membership interest in lieu of payment, this circumstance will in no way affect or dilute any other member’s equity interest in the Picture.

Risks: An investment in the LLC is speculative and involves substantial risks, including the risk of loss of the entire amount of an investment in the LLC by a Member. The risks of an investment in the Company include, without limitation, the death or disability of a Manager, a featured actor, a producer, or another key production person, the preparation of a suitable screenplay, securing the services of desirable featured actors and production personnel, obtaining suitable production financing, the lack of a completion bond to guarantee completion of the Motion Picture, completing the production of the Motion Picture within budget, the appeal of the Motion Picture to its potential audience, and the financial success of the Motion Picture and its ancillary rights.

The Vertical 3D Page 38 Management of the Company: The Managers will manage and control the affairs of the Company (see ”MANAGEMENT,” above).

Capitalization: The minimum aggregate amount of $15,000,000.00 or the maximum aggregate investment amount of (see “ESTIMATED USE OF PROCEEDS,” below).

Allocation of Tax Benefits & Distributions: All items of income, gains, losses, deductions, credits, and distributions of the Company will be allocated one hundred percent (100%) to the Members and zero percent (0%) percent to the Managers until the Members, receive a return of their Capital Contributions. All items described above shall be allocated 50% to the Members and the remaining 50% to the Managers (which shall be distributed to third parties and key personnel involved in the production of the Picture) until such time that net profits reach a total of five million dollars ($5,000.000). Thereafter, all items described above shall be allocated 60% to the Members and the remaining 40% to the Managers until such time that net profits reach a total of ten million dollars ($10,000.000). Thereafter all items described above shall be allocated 70% to the Members and the remaining 30% to the Managers until such time that net profits reach a total of fifteen million dollars ($15,000.000). Thereafter all items described above shall be allocated 80% to the Members and the remaining 20% to the Managers for all net profits in excess of this sum. These items will be allocated among the Members in proportion to their respective Pro Rata Shares. If, and to the extent, a Manager invests additional funds in Units, the Manager will become a Member as well as a Manager and will receive, in addition to his or her share of Distributions as the Manager, his or her proportionate share of the Members’ share of distributions. Such allocation will not dilute or affect the equity share of any other member.

Tax Ruling: The Managers will not apply for a tax ruling from the Internal Revenue Service (the “Service”) that the Company will be taxed as a partnership and not as an association taxable as a corporation for federal income tax purposes, and will rely on an opinion of counsel regarding such status. The opinion will be subject to a number of conditions and will not be binding upon the Service (see “RISK FACTORS” and “FEDERAL INCOME TAX CONSEQUENCES,” below).

Federal Income Tax Consequences: The Company is not organized to provide tax benefits and an investment in the Company is not a suitable investment for Investors seeking the benefits of a “tax shelter.” The production costs of the Motion Picture will be deducted in proportion to net revenues received by the Company during the period of the exploitation of the Motion Picture. In view of the complexity of the tax aspects of this Offering, and the fact that certain of the tax aspects of this Offering will not be the same for all Investors, prospective Investors are strongly advised to consult their own tax advisors with specific reference to their own tax situation before investing in the Company.

Sales Commission: The Company will pay sales commissions of up to ten percent (10%) of the purchase price of Units to authorized agents on any Units sold by them. Said sales commissions shall not exceed 10% and will require a written agreement between the Managers and an authorized agent. Managers will use authorized sales agents on a need basis and will first attempt to sell units without an authorized sales agent.

Assessments: There will be no assessments.

Costs of Offering: The Company will pay the costs to organize the Company, including fees to its counsel and costs to comply with federal and state regulatory laws.

Operating Agreement: The Operating agreement will be available to all investors in the LLC.

Associated Professionals: Special Counsel for the Company: Law Offices of Richard S. Luskin, Esq., PO Box 684143 - Park City, Utah 84068

The Vertical 3D Page 39 1.

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Bob Carmichael Producer/Director/Cameraman Carmichael brings high energy visuals to each project he undertakes. Experienced in documentary, commercial, and feature film production. Winner of Emmy for Outstanding Achievement in Sports Programming and nominated for an Academy Award. International directing and shooting experience. Operating Cameraman. Storytelling documentary director. Specialist in extreme sports, adventure sports and stunt work. Accomplished still photographer.

MOTION PICTURES: “First Wives Club” Paramount/Ezra Zwerdlow/Scott Rudin 2nd Unit Cameraman “Queen’s Logic” New Visions/Taylor Hackford 2nd Unit Cameraman “Star Trek V” Paramount/Harve Bennet/Ralph Winter 2nd Unit Director/Cameraman “Navy SEALs” Orion/Bernie Williams 2nd Unit Director/Operating DP “Hunt for Red October” Paramount Aerial Operator “Love Don’t Cost a Thing” Alcon Entertainment 2nd Unit Director/DP/Operator “Friday Night Lights” Ron Howard 2nd Unit Operator “Rumble” Paramount/MTV 2nd Unit Operator “When in Rome” Walt Disney Pictures 2nd Unit Operator

SPECIAL VENUE FILMS: “Daytona 500” 70mm - 24 Cameras Dream Quest/Iwerks/NASCAR Director “Legend River” - High Def Dream Quest/Point of View Film Director of Photography “LA Summer Olympics” Bud Greenspan Official Olympic Film Director/Cameraman “No Hire Boundaries” 16:9 Intranet Film - 9th HouseNetwork Director Narrative film “Japan Tour” - Maroon 5 Career Artist Management Director/Camera - PhotoGRAPHICvideo™

TELEVISION: “Double Jeopardy” Movie Showtime Networks 2nd Unit Director/Cameraman “Ice Climbing” National Geographic Explorer Producer/Director/Cameraman “Big Wave Surfing” National Geographic Explorer Producer/Director/Cameraman “Killer Bees” National Geographic Explorer Director of Photography “The Ultimate Challenge” Fox Television 2nd Unit Director “Survival of the Fittest” Fox Television Director/Cameraman “One Day in the Life of America” WQED Director/Cameraman “60 Minutes” CBS Director of Photography “20/20” ABC Director of Photography “Sarajevo Winter Olympics” Official Olympic Film Director of Photography “Lake Placid Winter Olympics” ABC Director of Photography “Mountain People - Nepal” Maryland Public Television Director/Director of Photography "Mini-Dragons" Pacific Rim Maryland Public Television Director/Director of Photography "McGyver" Pilot Paramount Pictures 2nd Unit Operator "When Blood Runs Cold" History Channel Four Hours Co-Director/Cameraman

SPORTS DOCUMENTARIES:

NFL Films CBS/NBC Sports Staff Director/Editor/Cameraman “Cloud Walker” BBC Alaskan Expedition Co-Director/Director of Photography “Castleton Tower Climb” ABC Sports - Live Telecast Director of Photography "Devil's Tower Climb" ABC Sports - Live Telecast On Climb Photography “Int’l Climbing Championships” CBS Sports Event Producer/Director of Photography “Gravity Games" NBC Sports Director/Cameraman Olympic Profiles - Cuba NBC Sports Director of Photography 2.

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Bob Carmichael Producer/Director/Cameraman

COMMERCIALS: (partial list)

Sea-Doo ”1999 Boat Line” Harris Drury Cohen Director/Cameraman Merrill Lynch/“Monument Valley” Bozell Worldwide Director/Cameraman Mild Seven/”Free Climb” Dentsu Japan Director/Cameraman Ford/1998 Product Line Package J. Walter Thompson Director/Operator Cadillac/“SST” on Stars & Stripes McCann Erickson (Detroit) Director/Cameraman Kawasaki/”Water Pistol” Bozell Director/Cameraman Planet Reebok/International Campaign Chiat Day Director/Cameraman Addidas/“Men’s Cologne” York Communications Director/Cameraman US Marine Corps/“Landing” & “Assault” J. Walter Thompson Director/Cameraman Bayer Asprin Lintas Director/Cameraman Sprite/International Campaign McCann Erickson (LA) Director/Cameraman Molsen Lite/”Mountain Climbing” Lintas-Campbell-Ewald Director/Cameraman Bally’s/”Women Climbers” Hal Riney Director/Cameraman Walt Disney World/“Splash Mountain” Campaign Director/Cameraman SeaWorld/GSD&M Campaign Director/Cameraman Remington Park Raceway Ackerman/McQueen Director/Cameraman Hawaii Tourism Inter-Island Campaign Director/Cameraman Virgin Island Tourism Campaign Director/Cameraman Mexico Tourism/“Sun Films” Campaign Director/Cameraman DreamQuest Images Special Venue Films/Commercials Staff Director Busch Gardens Appollo’s Chariot DDB Needham Director/Cameraman Burger Kings Kids Ammirati NYC Director Outdoor Life Network Promos for Road & Mt. Bike OLN Director/Cameraman Six Flags Wescam Aerials 7 Parks Ackerman/McQueen Director Paramount Parks Paramount/Blacklight Photography Director Nautica /Dennis Conners Promo for Nautica on Stars & Stripes Director/Cameraman Six Flags International Aerial Wescam GDR, Belgium, Holland Director Oklahoma Tourism Ackerman/McQueen Director AT&T Broadband Elma Garcia Films Director of Photography EA Sports/John Madden Playstation Ordiorne, Wilde, Narraway + Partners Director of Photography Zales “Be Brilliant” Richard Group, Dallas, TX Director/Cameraman Hansaplast Sport Band Aid Beiersdorf AG Hamburg Director of Photography

AWARDS: “Football In America” Emmy Award • Outstanding Achievement in Sports Programming “Fall Line” Academy Award Nomination • Live Action Short • Producer/Director/DP “If There Is A Mountain”/HBO Picture won Cable Ace Award • Director of Photography

Union Affiliations: DGA and IATSE Local 600 Camera Guild - D.P.

Denali Productions, Inc. 1004 Arapahoe Ave · Studio One · CO · 310 739.0650 · 303 955.7065 · [email protected] bobcarmichael.com From: REAL D - Digital 3D experience provider http://www.reald.com/index.php/pages/what_is_reald

About Us RealD 3D is the global leader in 3D. We bring you the world’s leading 3D movie experience- RealD Cinema- and provide revolutionary new ways of seeing entertainment. RealD brings the third dimension to life and creates stunning 3D that is as real as the world around us and as mind-blowing as the imaginations of today’s greatest filmmakers.

This is not the 3D of years or decades ago, but a next-generation digital technology - bright, clear images which immerse the viewer in a realistic and powerful experience. In a RealD 3D theater you are seeing unparalleled visuals based upon 3D science used by NASA and others.

Because RealD 3D is digital 3D, it is easy on the eyes and every seat in the house is a great seat. Images not only come straight at you - the depth and clarity of the RealD experience pulls you into the movie.

With RealD 3D, you truly enter a new dimension.

FAQ How does RealD 3D work? Think of 3D movies as two separate movies - instead of shooting one frame, cameras capture two frames- one for your left eye, and one for your right.RealD’s technology enables both streams of images to be projected from a digital cinema projector. In a RealD theater, you’ll also wear a pair of special polarized glasses that prevent the right eye from seeing the left eye movie, and vice versa. Your brain then combines the two images into a seamless 3D experience.

How is RealD 3D different from the “old” 3D? If you’re thinking of those red-and-blue colored glasses, it’s completely different. Because RealD is a digital technology, the two images (right eye and left eye) can be perfectly calibrated, creating an ultra-realistic image that doesn’t give you headaches or eyestrain.

Are there going to be a lot of 3D movies in the near future? Yes! There are over thirty movies already planned for release in the next two years, and more to come. Leading filmmakers including Jim Cameron, Steven Spielberg, Peter Jackson, Robert Zemeckis, and Tim Burton are all making 3D films.

How many RealD theaters are there? To date, RealD’s 3D cinema technologies reach over 1200 movie screens worldwide. 98% of digital 3D theaters are RealD theaters. If you’ve seen a 3D movie in the past few years, chances are you’ve seen it on a RealD screen. In the next year, RealD-equipped screens will more than double. You can find a RealD 3D theater near you from any page on this website!

So what about those 3D glasses? Right now it isn’t possible to have a great 3D movie experience without glasses. RealD’s 3D glasses are uniquely light- weight and comfortable - you will forget you’re wearing them. They even look cool- or so we’ve been told! You’ll get a new pair of glasses every time you visit a RealD theater - and you can even keep them as a souvenir. And, of course, they’re recyclable.

Can I wear the glasses over my prescription glasses? Absolutely. RealD glasses are specially made not only to fit everyone comfortably, but also to fit over prescription frames.

Can I use RealD glasses at home? Right now, the RealD glasses only work in the movies.

What if I am colorblind? Can I see RealD 3D? Yes- because RealD uses polarized light technology, most forms of colorblindness will not affect your ability to see RealD 3D at all.

What else does RealD do? 3D is all we do. However, RealD 3D goes beyond cinema. RealD is a leader in professional 3D applications through its RealD Pro/StereoGraphics brand.™ RealD Pro/StereoGraphics has been pioneering stereoscopic 3D technologies for over twenty years; our technologies are used by government agencies (including NASA), universities, movie studios, and many other industries.

Can I see RealD 3D in my home, on a TV or a game console? Here at RealD, we believe that all visual media will one day be seen in 3D. As the global leader in 3D, we’ll continue to invent and innovate. Stay tuned. Art of Digital 3D Stereoscopic Film Posted on Mar 25, 2008 by Mike Seymour

From U2 to Hanna Montana. From Beowulf to Journey to the Center of the Earth. 3D is hot once again. One of the strongest trends in visual effects films today is stereoscopic capture, post production and projection. Technology is catching up just when theatre owners are looking for ways to hold and appeal to a media saturated audience. We explore the theory and practice of digital 3D stereo imaging.

Introduction

Stereoscopic cinema failed in the 1950’s & 1980’s when the mechanical and photochemical variables were too great and maintaining alignment was impossible. However, digital acquisition, post-production, and projection permit one to craft images with far greater precision, managing to avoid the eyestrain and headaches that plagued earlier attempts. Earlier systems, if very precisely aligned, could work well. But many times, films were exhibited with alignment flaws and lead to the audiences literally feeling sick.

For a while, IMAX and theme park theaters became one of the only places to see 3D films. Exhibitions such as James Cameron’s Terminator 2 3D, shot in 65mm stereo, proved popular with audiences. The box office of IMAX films was healthy, withInto the Deep grossing $71.3M, Space Station $95.1M and T-Rex 3D $98.1M. But on the whole, regular cinemas did not embrace 3D due in part to the cost of having specialized projectors and the lack of good films to justify this expenditure. There were exceptions such asSpy Kids 3D, which grossed $190M, but these films relied in many cases on only having some and not all scenes in 3D. Spy Kids 3D used an older style “anaglyph” technique -- simply different coloured gels for the left and right eye to produce the 3D effect.

3D is regaining popularity due to newly acquired digital control. “The main reason why stereo cinema is likely to work this time around is because we have unprecedented control over the precise alignment of the left and right images,” explains VFX supervisor and 3D workflow expert Tim Baier. This is coupled with dramatically improved digital projectors that can now run at frame rates high enough to ‘flash’ both stereo images from the same projector using a fast moving polarizer or glass. Combined with newer technology in glasses, all these things help produce much better 3D effects.

This article is only concerned with the latest wave of Digital Cinema 3D stereo production and post-production. Since it is this last wave of interested that seems to have been able to reach a level of quality and technical control to produce technically correct films. Audiences appear to agree, following on the heels of the U2 3D film this year, which swept Sundance, andHannah Montana 3D, which opened Super Bowl weekend and grossed $31.1M in 683 theaters. This is a record for any movie on Super Bowl weekend and to date, it has grossed $62M, a record for any 3D movie or for any concert movie. This compares to a $27.5M opening weekend for Beowulf on 3,153 2D and 3D screens. U2 3D was produced by 3eality productions with an amazingly impressive 3D stereo OB van live switching style setup. The film’s stereography is extremely impressive, but interestingly U2 3D performed very poorly at the Still Image from U2 3D box office, indicating that 3D in and of itself is by no means a guarantee of success.

Several major feature films are in production, including James Cameron’s newest epic,Avatar, and Journey to the Center of the Earth which is to be released July 11th. In the area of animated films the market is moving even faster. On the heels of the 3D Meet the Robinsons, Pixar announced several new 3D releases over the next several years. In addition to next year’s new UP (Pete Docter & Bob Peterson co-directing), Toy Story 1-3D, Toy Story 2-3D, and Toy Story 3-3D, will be released in 2009/2010 with the dates staggered. These will be using REAL D projection technology, which one Pixar insider referred to “technology that appears to becoming the standard for digital stereoscopic projection”. Interestingly Disney is also planning a sequel to Tron in 3D for 2011, and Joseph Kosinski is in talks to direct. This week’s fxpodcast : Tim Baier

In this week’s fxpodcast we talk to Tim Baier, a vfx supervisor and 3D researcher. Baier’s career started as a broadcast camera op, moving to tv post production, linear tape, avid, senior henry, senior inferno. The year 2000 he moved to features working at places such as Mill Film, MPC, Weta, Animal Logic, Fuel International, Rising Sun Pictures, Photon, Meteor and others, before switching to doing full time 3D stereo production.

In an endeavor to identify the critical stereo issues and explore the creative opportunities, Baier spent almost three years on an R&D project that culminated with the launch of a presentation about the fascinating 1.7 billion year old geology of Arkaroola Wilderness Sanctuary and the Flinders Ranges. “From records of ice ages, Still image from Baier's 3D Flinders Range Stereo meteor impacts and orbital speed of the moon to the very first documentary animal life on Earth, South Australia has a window into deep time and a treasure of global significance” explains Baier. Using DSLRs to shoot time-lapse, stop-motion, and stills, Tim acquired imagery at 4.3k RAW format and then post produced this for a 2k projection master. “My project about the Flinders Ranges geology, received an exceptionally enthusiastic response” he explains in the podcast.

To acquire some of the footage, Baier piloted an ultra-light and photographed with a stills camera. By altering the distance between the cameras, people’s sense of scale can be manipulated to enlarge or miniaturize a scene (discussed further, below). An ultra-light aircraft and hyper-stereo techniques were used to depict aerial landscapes with more depth than would have been possible if just taken from on- board a single plane. Baier found that he could fly in a straight line and photograph at 90 degrees from the craft.

By using only two stills he effectively obtained a stereo pair, separated by vast interoccular distances. These were then re-aligned in post-production and could be animated for Baier shot from an Ultra light breathtaking “hyper-stereo” shots. Baier also went the other way and reduced the distance between the lenses to an amount less than human vision and then used this “hypo-stereo” technique to ‘gigantify’ subjects like lizards, flowers, and crystals. If hyper-stereo makes the large seem like a miniature, the reverse occurs with small distances between the lenses and small objects seem enormous when projected.

3D Theory

When we view the world we get two different images into each of our eyes. This difference is defined by the different positions of the two eyes. This distance is normally 65mm for men, 63mm for women, and clearly less for kids who have an average distance of about 51mm. If we average this data we can call it 64mm, which is generally assumed as the average. This distance between one’s eyes is called the average human interoccular distance and without it we have no stereo 3D effect.

To get the world to look correct digitally, we also need to film a scene with our lenses about 64mm apart. If we place our cameras a larger distance apart then the resulting 3D effect - while still just as vivid - can produce a sensation in the final viewer that makes them perceive the scene as being smaller than normal scale. In Normal cameras cannot be close enough to match 64mm extreme cases, mountain ranges can look like miniature sets, since interoccular one is getting a much greater difference between the point of view of each eye than we would normally. This is simply because the eyes are much further apart. Our brain - not used to seeing much variation of wide, and vast distance scenes, but still seeing correctly in stereo - assumes the whole scene must be much closer and hence we believe what we are looking at is a set or miniature.

It is this desire to get the lenses a head’s width apart that results in complex camera rigs involving mirrors and odd 90 degree mounts. As a standard example, the closest you can normally place two RED One cameras together is about twice that (125mm) due to the housing, lens covers and cabling. Without additional distance between the cameras -- “Hyper-stereo” as it is sometimes known, with its very wide interaxials -- most people loose much of the perceived stereo relief when the subject is more than the 12-15 feet from the cameras. While it is possible to convert 2D images shot with a single normal lens into a pair of left and right eye images, this is an extremely labour intensive process and has only been successfully attempted a few times, normally on specialist films such asNightmare before Christmas. George Lucas is reported to be investigating and experimenting with a Star Wars 3D conversion. One of the approaches to doing this is to take each discreet object in the shot and map that vision on to a 3D shape to create a new 3D scene that can be then ‘filmed’ with a second camera. This becomes much harder with live action, so much so that remastering live action films in stereo is unlikely to ever be a major source of 3D movies.

It is much easier to achieve artificial stereo with fully animated 3D footage, as a second camera can be placed in virtual space a nominal constant distance from the original camera. In fact, programs such as renderman have this built in so that the second camera’s render, if done at the same time as the primary camera, will not even take as long to render as the first camera. On average, this second render would add only a 10-15% overhead compared to rendering just one camera, according to Peter Moxom of Pixar.

Our eyes do a lot more than just act as static cameras; they focus, they zoom, and they independently converge on a single point to help estimate distance. Interestingly, according to Baier, “your eyes take very little notice of the angle that your eyes are pointing as this is an automatic process, just as focus is also an automatic process. So convergence does not in of itself give you distance,” but you do know when you need to do major convergence adjustment from close to far or vice versa.

Actually, Baier is correct for a cinema experience, but at closer distances the disparity between focus and convergence can be a big issue for the brain, a major factor influencing head worn stereo viewing helmets. But at normal screen distances it is this virtual independence of focus and convergence that allow us to focus on the movie screen 40 feet in front of us, but simultaneously converge our eyes to make two offset images appear as one 3D image in a movie theatre.

Solving the problem of achieving dual and equal focus and convergence has lead to cutting edge research into Wavefront display technology. Lens pixels are adjusted individually using electro magnetic force — a new technology that we may see in several years time. A new patent application from Apple, for example, details how to implement a 3D stereoscopic display or “auto-stereoscopic” systems that don’t require the viewer to be wearing special glasses or goggles. (source: macrumours.com/freepatentsonline.com)

To make 3D work in a cinema today we need to find a way to project two images, and control only one of these each being seen by each eye. If we do this correctly, the viewer gets the very convincing illusion of depth - both in front and behind the plane of the theatre screen. This universally requires some type of glasses to be worn by the audience.

If we aim two laser dots at the centre of the screen and measure the horizontal offset of that laser on the screen as a percentage of the screen. The dot at the centre of the screen is 0% (horizontal parallel) and your eyes are converging at the distance the screen is from the viewer. In other words, if the dots are sitting on top of each other in the middle of the screen, we assume the dot is where the screen is (in fake/perceived 3D space). Let’s use two lasers and assume there is some sort of polarized laser system, so only one eye sees one laser and the other eye sees the other laser. If you want something to appear beyond the screen then we define that as a positive parallax % so the left image moves to the left and the right image moves to the right, the extreme case of that is the stars in the sky - If you look at an object effective infinitely far away - your eyes are parallel. With 3D cinema we do not want to go much beyond that since that does not happen in nature. You can only push most people three degrees beyond straight parallel.

If we move the screen to the left and the right we get negative screen parallax and become ‘cross-eyed’. We may ‘think’ we are focusing on something standing in front of the screen our actual eyes are still individually focusing on the real cinema screen - which of course has not moved. This phenomena of focusing at the distance of the screen while converging our eyes to look at something ‘in front’ of the screen does not seem to upset anyone. In effect we are tricking ourselves, with the apparent 3D defined by convergence or ‘cross-eyed-ness’. Going the other way, in real life objects an infinite distance away should have our eyes pointed in parallel to each other. We can actually ‘read’ images with divergency. Most experts agree that up to 3 - 4% divergent imagery still works, but as we have no real world case of need to diverge our eyes, excessive divergence can lead to audience headaches. So we need to pay attention to managing convergence and divergence or risk making the audience sick.

A rule of thumb: A left eye image moved right - the image object appears closer. Right over left - it appears further away.

Modern digital systems go to great lengths to avoid creating the poor stereo effects which in earlier analogue stereo systems lead to the audience literally feeling sick. One such example is an incorrect vertical disparity as this never happens in nature; the images need to be vertically balanced and aligned. Other problems include rapid and constantly shifting convergence points for the eye to adjust to, poorly colour matched left and right eye images, weave and float, image misalignment and many others. It is the hope of the current industry that since these new films can be fully digitally captured, post-produced, and projected that these effects can be minimized, controlled or removed. Parallel vs Convergent

While most of the industry agrees strongly over most of the science involved in 3D imaging, there is one remarkably important point that divides the community: Should the two primary cameras, when set correctly at 64mm apart, look straight ahead or point in slightly towards each other? This may seem like a fundamental question, and to some the answer appears at first glance to be obvious. Our eyes converge so logically shouldn’t the cameras?

It turns out both approaches work and that if both cameras look straight ahead or are in parallel, you can easily adjust the resulting images in post. A simple left and right shift on one of the cameras will overlap the images and produce a stereo effect. Prior to the advent of DI and fully digital manipulation of film, the point was A simple parallel camera rig moot, as one needed to align the images as best one could in camera. Still, this central point seems to divide the industry. Key leading industry projects such as those of James Cameron use converging rigs, while still others adamantly point out technical issues that theoretically adversely effect convergent cameras.

The two arguments are as follows:

For Convergency This is how 3D was developed and perhaps most importantly how human eyes work. Clearly convergent cameras work, films such asTitanic Secrets of the Deep and many others have produced beautiful and highly effective material using cameras that converge on set. Most feature films in production and recently finished have been shot with convergent rigs. But as we discuss later, calibrating such rigs is not trivial.

Against Convergency (ie. Use Parallel Cameras) The counter argument is that with digital post convergence is not necessary. Furthermore, if one points two cameras towards a point along the center line of the cameras, then each image would appear to be correct at the center but they would keystone relative to each other at the sides. Now if all the points on a plane are the same then there would be no perception of depth. If there is no perception of depth, all points would match between the left eye and the right eye. If each of the left and right images are key-stoned, then the center seems to be at the same depth. However, the edges don’t have their left and right most points in the same place and thus they should read as either in front of or behind the screen. But they want to be on the same plane as the screen, so all we want to do is film with parallel cameras and then shift the images left and right.

The debate is more than academic as the decision needs to be made on set and is not easily fully corrected in postproduction.

Filming

The complexity of filming 3D is centered around two key aspects. The first and most obvious is that there is a two camera rig and, depending on the cameras, there is a need get them close enough together to have the lenses 64mm apart. Two cameras side by side would be bulky enough, but once one adds in a complex system of angled mirrors or prisms the rigs can become even more cumbersome. Adding to the complexity is the need for the focus, zoom and f-stop on both cameras to be calibrated and match each other. The system is no longer easily moveable on set and the grips job increases dramatically. The second issue is the need to control the convergence of the camera. This requires a special rig and, much like pulling focus, the rig needs to have a dedicated operator who is controlling the convergence during a take which contains complex action.

Perhaps the most famous maker of 3D filmmaking rigs is Vince Pace, President & CEO of Pace 3D Technologies. Pace, currently providing rigs and expertise on a number of projects including Final Destination 4, is best known for his work with film maker James Cameron. Cameron’s rigs are called fusion and use a beamsplitter, but Pace and Lightstorm (Cameron’s Company) have worked with a huge variety of possible configurations. Pace currently has 20 complete 3D rigs set up for a variety of cameras from Sony CineAlta 950s to RED and Silicon Imaging Cameras. Pace was Executive Producer on Hanna Montana 3D and is now working on Cameron’s next big budget feature Avatar, which is 3D with extensive motion capture.

Pace and his team have perfected the exacting requirements of building a rig that can not only accurately control convergence but be fully calibrated. In basic terms, calibrating a rig takes so long (up to 5 hours per lens setup) that zoom lenses are mainly used. To operate the cameras successfully the zoom need to be calibrated, aligned, and then locked for combined motorized operation. Each rig needs to not only adjust the focus and convergence in sync but also are generally adjustable in their interoccular shooting distance as well. The entire rig must also work seamlessly to allow the convergence to be adjusted during shot in much the same way as one normally pulls focus. On set, the crew expands to include a configuration team doing calibration on secondary rigs, ready to swap out as the director changes lens. The primary camera crew is also extended to include a convergence puller, making the team a three person crew: camera operator, focus puller and convergence puller.

In most rigs, one eye is deemed the primary eye. For instance, the right eye might be primary and the left eye is the secondary eye, which is filmed at a correct interoccular distance by virtue of mirrors or a beam splitter. The same rig that was used in the live concert setting of U23 D was also used on Journey to the Center of the Earth, a drama feature film. In both cases the cameras ‘pulled’ convergence. U2 3D

Iconics camera is able to work without a beam splitter as the lenses allow for them to be naturally close enough, but some film makers prefer to work with larger cameras and more traditional lenses. Interestingly, most productions are not using PL mounts but B4, which actually is a positive as many film makers like a larger depth of field than traditional 35mm when filming stereoscopically.

Sports film makers and broadcasters are also interested in 3D. Fox Sports Network Southwest and the Dallas Mavericks provided a look into the future of sports television on March 25 when they teamed with PACE to produce the first-ever NBA regular-season game live in 3D HD. This was secured through PACE Fusion 3D and was the third ever live sporting event presented in the innovative format. The game will be beamed across Dallas via satellite into Mavericks owner Mark Cuban’s Magnolia Theatre, where an invitation-only audience will watch through special 3D glasses using Sony’s SXRD 3D Projection System on an 18x42-foot screen.

Post-production

There is both and art and science to the world of 3D digital post, as stereography expert Lenny Lipton commented on his blog. “All of the major animation studios that produce computer generated images have physicists and imaging specialists who are attempting to produce a computer world that can be rendered with remarkable real- world fidelity or with controlled departures from the real world, to produce a beautiful visual effect. The people who create this content - the animators, background artists and other specialists - for the most part deal with content creation on an intuitive level. They aren’t doing calculations, but they are using computers. They need to be able to do what they do as any creative artist does, using on intuition to work the medium.” Lipton literally wrote the book on stereography and is now a leading player in the world of digital 3D projection (see below).

A simple way to understand 3D is to place an image on the screen. If an image in the scene is to look like it is exactly where the physical screen is in the theatre, then there would be no difference between there left and right eye and there is no horizontal offset. Of course, in real life you would have had to have filmed a flat wall or billboard poster so that the content of the projected scene is itself flat and has no depth. If ouy film a real scene you can never get all the points to sit on top of each other as in a normal scene. Shot with two cameras - everything is offset differently within the scene. A car in the distance is just a small amount different for each eye , but for a person close to camera in the same shot the left and right eye have a large difference. But if you filmed a poster on the wall - all the image could be made to overlap and align - and if you did that the audience would see that poster as being in the same place in 3D space as the projection screen.

Horizontal displacement is proportional to ‘parallax’, or the 3D effect. Thus, if we move one of the eyes left or right we can make the image move in front of behind the screen. Of course, if we move the image left or right you will have a gap. Think of the 3D world in the cinema as two viewing pyramids -- one from each eye. This is called the left and right frustum.

When you film a scene with parallel cameras or if you move the left eye to the side to increase the 3D effect, there is clearly a bit on one side that is not covered by both frustums. In the same way, if you moved a background plate you’d end up with a black strip in 2D along one edge. It turns out that in 3D there is no black edge, simply a section of the screen without information for both eyes: the left eye may have some image there but the right eye does not. This gap can be cropped out in post, but it turns out that it goes virtually unnoticeable in 3D stereo. A large missing slice at edge of frame of one eye which visible when viewed without glasses is not noticeable when watching with glasses.

Post production falls into several categories:

Colour Adjustment As a starting place, the left eye needs to match the right eye in basic grade. Most often a beam splitter or a mirror will colour the image slightly, typically in the shadows. Both eyes need to be balanced exactly and this is an area of research to provide automated tools for perfect left and right eye matching. Colour Grading Once the two eyes are balanced, the pair of eyes can be graded. Systems need to either automatically apply a matching grade to each eye instantly or the project can not be graded in stereo and the colourist risks getting head aches. Often times only one eye is graded at a time and then the grade is applied on top of the offset grade mentioned above. For example there is a hot key in Scratch to transfer a grade from one eye to the other, but you can not grade in stereo.

Stereo Adjustments The first adjustment is matching the left and right eye vertically. Even if you tilt your head, your eyes always remain fixed relative to each other so all shots need to be checked for vertical alignment.

Even if the on-set team very accurately pulled convergence, edits can change orders and sometimes scenes need to be re-converged, which is primarily a horizontal adjustment. Also, while a shot may itself be technically perfect it may not cut well in terms of convergence with the shot following or preceding it. Convergence can be tapered to ease into edit and avoid annoying convergence jumps.

As one does not want an audience’s eyes to have to move too much between near and far objects rapidly, Tim Baier has a graph from a python script based on a database he uses to track his shots graphically during the edit. The graph shows the near and far objects in scenes and if they jump too much, he can ease eye strain by feathering the disparity of the convergence and divergence to bring them close to each other either side of a cut. This is also based upon the content of the scene and the subject point where the audience is most likely to be looking.

Creative Stereo Effects Having solved technical problems the director may still grade the convergence per shot for dramatic or comic effect.

Flares and Light Plays One thing that does not film well in stereo are lens flares and light plays. As a lens flare is so positionally based, even the modest interoccular difference of 64mm can make the flares not match eye to eye.

Effects in Stereo Simple tasks such as roto and paint are much more complex in 3D. Left and right eye roto must match very accurately. It is not possible to just copy and paste between eyes - due to the change in perspective so fine detail roto work needs pains taking attention to detail.

Special passes While Real- D is very popular with audiences and gaining acceptance, the silver screen used in the process can cause a ghosting highlight from one eye to the other that reads like a second offset limit. To solve this, a “ghost- busting’ pass is done for the REAL D version, which mathematically subtracts the bright highlights of the primary eye from the secondary eye. This cancels out the effect, but leaves the left eye with strangely dark hot spots. For this and reasons of stereoscopic adjustment and minor softening from beam splitters/mirrors, the untreated primary eye is used as the standard DVD or TV version.

Compositing in 3D Space While there is nothing stopping 2D techniques from being applied in 3D, special consideration must be given to compositing at the right depth. It is easily possible to create 3D objects that have the incorrect stereo placement in the scene when composited with 3D live action. For example, a 3D car could be composited so that the car reads as if it is in front of the talent but the perspective of it and size would have it behind the talent in 3D space. The same thing happens with green screen layering. Special attention needs to be given to both layer priority and 3D stereo priority.

When tracking scenes it can be advisable on fixed relationship cameras to have one track for the primary eye and then offset the second camera based on the known interoccular distance and convergence to track the second camera. If the convergence is dynamic during the shot or the convergence is not known, dual stereo tracks will be required for both eyes.

Cost Even for animated films - the cheapest to make in stereo - there are real costs that can run into sizable amounts for a stereo version. DreamWorks Animation SKG Chief Executive Jeffrey Katzenberg said at Show West last month that Monsters vs. Aliens (releasing March 27, 2009 ) in 3D was estimated to have cost an additional $15 million to make the film in the 3D format. He was confident that enough theaters would be ready to show the film that the studio would recoup the additional cost. Spotlight: Jeff Olm, Stereo Colourist

We spoke to Jeff Olm, Stereo Colorist from Journey to the Center of the Earth. fxg: When you are grading in 3D what systems to you use?

Olm: Scratch, for over two years now, on material that provided from sony 950’s on the Fusion rig and RED footage from a Paradise effects Rig - on another project. fxg: Do you have an opinion of shooting stereo with parallel cameras or converged? Journey to the Center of the Earth July 11th Olm: Converged allows you to make more creative choices on set with the director, it does require an additional operator but it allow you to direct the viewers attention in a more dramatic fashion. Parallel is a very safe way to shoot and it is a faster way to shoot, but all your decisions do need to be made in post. Most of todays concert and dramatic projects are shooting with converged rigs. fxg: What are the main mistakes that causes eye strain and how well do digital tools allow you to remove those?

Olm: Anything that causes a headache is the result of vertical misalignment and/or excessive convergence, ... anything that hurts the viewer is just wrong. In a DI situation I use Scratch - the ability to view and make real time pan and scan adjustment is a great tool to resolve these issues. fxg: How much does balancing the colour of the left and right eye exactly to each other matter? There must always be some differences - no matter how careful one is on set?

Olm: If you are wearing glasses it is very hard to know what is wrong , but you can tell something is wrong, normally this is the left eye that has been affected by the beam splitter, - but it is very hard to know that just by looking at the screen - often times it is the black levels on the left eye. The other issue is lens flares and rotation of the flares in extreme highlights - differences between the eye views can cause eye strain and confuses the viewer where they should be looking. With the Scratch system I felt we really able to minimize the viewer fatigue for the viewer and really enhance the experience for the audience. fxg: When you grade do you grade one eye and just apply a LUT or grade to the other or do you grade in stereo?

Olm: In the current version of Scratch you can only grade one eye at a time, and they gave me a hot key to apply the right eye grade to the left eye and immediately preview the shot in real time. fxg: Which projection systems do you think are most effective today - away from IMAX ?

Olm: I would say in my opinion the Dolby gives a great image in stereo but the glasses can be too expensive. REAL D seems to be really gaining in popularity - and this is key. I think REAL D will continue to grow as they have cheaper glasses and so it is easier for the theaters to provide glasses to the audience. The REAL D system provides a great rich experience for the audience. They have a new REAL D XL system they unveiled to exhibitors at a screening at ShoWest that can project a spectacular 3D image on a 60 ft. screen, and based on feedback from the exhibitors screening at ShoWest of Journey To The Center of the Earth 3D everyone was very impressed with color, and clarity of the images. fxg: In general terms, do you believe the DOP should aim for a compressed depth of field as they do in normal mono, or given the 3D nature of the experience, should the focus be broader allowing audiences to ‘look around’ the screen more.

Olm: Personally I like an infinite depth of field, I like the image of the F950, F23, Jeff Olm next joins the team on and the appearance of infinite depth field, it is a more hyper real feeling but it is Monsters vs Aliens also being done in completely different from the classic look from a 35mm camera. 3D fxg: What are the greatest post challenges facing 3D production.

Olm: Large amount of data, management and organization of the data, and real time review of visual effects and offline work in progress that come off say a 2D AVID system - all are areas that present challenges. The other thing is just the image processing, image enhancement, etc all take twice as long as you have twice the data. Post Gear

Quantel Pablo Quantel’s paint system is legendary for good reason and Pablo inherits a wealth of visual effects tools, such as great keyers and image warping/corner pinning tools plus a very well tested audio system. Quantel’s Pablo was used on Hanna Montana. Quantel is slower than some system due to rendering times.

Disney’s Hannah Montana 3D was the first live action feature produced using Quantel’s Pablo 4K with the Stereoscopic 3D option. The film, directed by Bruce Hendricks, was also produced in record time. Shot in Salt Lake City in late October, the concert film was in theaters a mere 11 weeks later. That allowed Disney to capitalize on the intense interest in the Hannah Montana/Miley Cyrus live concert tour. Completing an ordinary feature film in less than three months would have been a tall order, but, given the technological hurdles, to do so with a 3D movie was extraordinary. Color grading and conforming was completed at FotoKem using a pair of Pablo 4Ks, each with the stereoscopic 3D-D option, in DI Theaters set up specifically for 3D work.

Scratch from Assimilate Scratch was used on both U2 3D and Journey to the Center of the Earth. The program is the only one to be able to natively work with Red’s R3D files and, through excellent use of the GPU, is extremely fast to grade. Its major shortcoming is its lack of robust audio tools. Clip-based audio is not yet possible, but in the area of 3D alone its XML basis makes it an extremely strong and very cost effective program. Journey to the Center of the Earth utilized four Scratch systems, doing on-set work, EDL conform and XML workflow in addition to stereo colour correction.

Speedgrade SpeedGrade DI 2007 offers a raft of new features and enhancements including the new DualStream stereoscopic module and support for live playback and grading of “RAW” files which offer better image quality at one third the size of standard RGB formats.

Nuke One of the first compositing packages to embrace 3D is NUKE 5.0. The Foundry has laid the groundwork for efficient multi-view compositing in Nuke 5 and is now concentrating R&D efforts on creating unique tools to further support 3D stereoscopic workflow. They will preview their work in this area during the upcoming NAB trade show, including premiering its Furnace 4 image-processing tools for Nuke.

Nuke 5 is already creating a major buzz, with Animal Logic adopting it for their workflow moving forward. Others are equally as impressed, including Daniel Smith who was Stereoscopic Supervisor for Spy Kids 3D (then at Cafe FX) and has completed numerous other large stereoscopic projects. “Nuke 5 stereoscopic Stereoscopic support in the new Nuke 5 features are a godsend for visual effects,” he says. “It simplifies work flow and optimizes how fast you can visualize the 3D stereo space for the greatest impact on the final shot”.

Nuke 5.0 not only has tools for viewing left and right images, but colour corrections and even paint can be applied to both left and right eye simultaneously (or also separately). While working, one can view the composite in anaglyph format to quickly and easily preview the 3D effect and also render anaglyphs into an OpenEXR file. However, more important considering today’s technology, you have the ability to both read and write multi- channel OpenEXR sequences which contain both left and right eye images. This can greatly simplify workflow in a stereoscopic compositing environment. “It’s a perfect marriage with Nuke’s multi-channel workflow and we’re really happy that the Foundry are embracing a stereo workflow like they are!” , commented Erik Winquist, compositing supervisor, Weta Digital. Weta are large Nuke users. Projection

According the New York Times (13/03/08), “the biggest brake on the 3D rollout has been the slow expansion of digital projection systems, which are steadily replacing film projectors at multiplexes nationwide. So far, just 4,600 out of about 37,000 movie screens have been converted to digital. Studios have been subsidizing the conversions, which cost theaters about $75,000 for each auditorium, with “virtual print fees” approximating their savings from not having to print and ship hundreds of film reels for each release. But Michael Karagosian, a technology consultant to the National Association of Theater Owners, said film companies like Kodak and Agfa had responded to the threat of digital cinema by lowering their prices for film prints, reducing studios’ appetite for big digital subsidies.

The article went on to point out that “Even with the subsidies, theater owners have to pay about 1.7 times as much for digital systems over time as they do for projectors, because of high maintenance costs and short equipment life spans, Mr. Karagosian said. Film projectors, by contrast, are much like Cadillacs in Cuba, kept humming for decades with cheap replacement parts”. There are several systems in widespread use but, according to the New York Times, REAL D controls about 97% of screens.

Jeffrey Katzenberg recently presented a sneak preview of the studio’s Monsters vs. Aliens along with a special 3D clip of DreamWorks’s 2D summer filmKung Fu Panda. The clips were shown at the Paris Las Vegas Theatre Des Arts on a 60-foot screen utilizing REAL D XL with a single DLP projector. The nearly 2,000 convention-goers at the event were impressed with the depth, clarity, and color of the 3D visuals. Katzenberg said “the proprietary tools and techniques that we’ve developed as a part of our 3D initiative and the use of REAL D’s groundbreaking XL technology together allowed us to project onto the silver screen 3D images with unprecedented clarity during Tuesday’s ShoWest presentation.” (marketsaw.blogspot.com)

New Line Cinema and REAL D also screened the summer tentpole Journey to the Center of the Earth 3D at the Theatre Des Arts, in REAL D 3D utilizing REAL D XL. New Line Cinema President of Domestic Distribution David Tuckerman said “We were thrilled to screen Journey in its entirety in REAL D 3D to ShoWest attendees. The film looked great on the extra-large screen - bright, sharp, and colorful- and the audience was blown away.”

“REAL D to date has installed about 1200 systems worldwide,” according to Joshua Greer, President and Co-Founder of REAL D. “Of those, approximately 900 systems are in the US at about 680 locations. The remaining 300 or so are deployed in 24 other countries. We are under contract right now for another 600 systems in Europe, but we have to wait for the 2D roll-out before we can install,” Greer related to noted 3D producer Phil Streather (via CML).

Earlier systems required two projectors, which lead to very unreliable results and thus a poor audience experience. Lenny Lipton, who SMPTE describes as the father of electronic stereoscopic display technology, invented the Z-Screen which is the basis of the single projector REAL D system. The Z-Screen sits in front of a DLP digital projector and a modulator switches the characteristics of polarized light at high speed. The Z-Screen is made up of a linear polarizer and two pi-cels in the optical path. The pi-cells switch on and off to create left and right handled circularly polarized light in sync with the left and right eye images, according to Lipton in the November SMPTE Journal. An uninstalled REAL D Z-Screen The system requires a silver screen to be used in the cinema and the audience to wear polarizing glasses. The cost of the glasses is cheaper in the REAL D system than in others, a possible significant factor in the systems adoption. This produces a vastly better and more stable result than the old anaglyph solution of two coloured lenses. The last major film to use the anaglyph system wasSpy Kids 3D. “Spy Kids 3D was the biggest released 3D film in the last 25 years,” says Smith. “It had to play on 3000 screens and doing anaglyphic was the only option at that time. Even now you only have about 800 screens in the US for REAL D and IMAX release. There should be more in the next 2 years almost 4000 are being planned. At that time 3D was very risky and no theater owner was going to pony up the money to switch over for one film.” The other prime system is the Dolby system, which is still based on colour and technically an anaglyph. But it is a vastly more accurate system than the older style anaglyph system and as such the term is not normally used in relation to the Dolby system. The Dolby system is actually A wavelength selection problem.

Nearly all theaters use the digital micro mirror (DMD) system by Texas Instruments, which is used in the major projectors made by Christie, Barco and NEC-Ballantyne. Lenny Lipton summed it up, once again from his blog. “None of this would have been possible without DLP projection which is the invention of Larry Hornbeck, who I just had the pleasure of meeting at the SPIE Stereoscopic Displays and Applications Conference in San Jose,” says Lipton. “Larry asked me for my autograph, so I asked him for his. As you can see, his autograph is on the back of a pair of paper 3D eyewear, which is entirely appropriate.”

Digital projection systems are going to expand under a new agreement to almost 14,000 movie screens within the next year. Reuters reported recently that a line of credit has been established for $1.1 billion. The screens in the new deal will be owned by Regal Entertainment, Cinemark, and AMC Entertainment and can be upgraded to REAL D 3D movies. In the report, Michael Lewis, chairman of REAL D projection systems, noted that “3D is the big game changer and the compelling reason for doing digital cinema.” The loans will be repaid by a per movie fee, in lieu of the normal distribution charge, as digital cinemas require no expensive prints or physical distribution of them.

It should be pointed out that prior to REAL D most 3D work was done for IMAX on 70mm film. However, IMAX has announced a partnership with Texas Instruments where “they will phase in digital over the next two years, and maybe even faster,” according to Nancy Fares, TI’s business manager for its DLP cinema products group. “Just one day moviegoers will show up to a theater and the movie will look a lot better.” For IMAX, crossing over to digital is about more than just delivering what the company claims will be superior picture - it’s about saving a whole lot of money. Because IMAX movies are shot on 70mm film, they require expensive specialized cameras to shoot and expensive specialized projectors to display. “Since everybody else uses 35 mm film, the volume is not very large and there’s no economics behind it,” says Fares. In fact, with an all-digital IMAX, Fares predicts that 70mm film will be completely dead within five years. (Popular Mechanics.com)

Summary

We give the last word to Lipton who sums up the state of the industry well:

“Digital technology–content creation, post-production, and projection–has enabled the stereoscopic medium to become a part of the filmmaking armamentarium; not only to provide beautiful projection but to provide a dependable product, free from the mistakes of the past, that I don’t want to dwell on because they’re such a bummer. But today’s modern 3D digital projection is free from fatigue and eyestrain, and can now allow content creators to do their best to discover the art of this new medium. We’re going to see several years of experimentation and discovery, and at the end of that time the stereoscopic medium will be on a firm foundation. Creative people will never stop creating, but we will reach a plateau where many of the creative and production technical processes become routinized. Oddly enough, the reintroduction of the stereoscopic cinema comes down to turning that which had been more or less a laboratory experiment into a routine.”

More information

An excellent source of discussion on 3D imaging can be found on the CML list at http://www.cinematography.net/. This professional email discussion group was extremely helpful in the writing of this article.

Lenny Lipton’s blog is at http://lennylipton.wordpress.com/.

Daniel Smith’s blog is at http://www.danimation.com/blog.

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