Business Plan Renaissance Studio, Ltd. “The Future Of Film Making & Investment” Please direct inquiries about this document to: Donald G. Skipper - CEO Renaissance Studio, Ltd. Email: [email protected] Website: www.RenaissanceStudio.org Phone: USA - 972-239-2497 © Copyright 2016 – Donald G. Skipper Confidential & Proprietary - All rights reserved NOTICES THIS BUSINESS PLAN CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION REGARDING THE BUSINESS OF RENAISSANCE STUDIO, LTD. (“RSL”). THIS BUSINESS PLAN IS SUBMITTED TO YOU FOR YOUR CONFIDENTIAL USE IN CONNECTION WITH THE EVALUATION OF A POTENTIAL INVESTMENT IN THE COMPANY AND MAY NOT BE REPRODUCED IN WHOLE OR IN PART OR USED FOR ANY OTHER PURPOSE. ANY DISTRIBUTION OF THIS BUSINESS PLAN EXCEPT TO WHOM THIS BUSINESS PLAN IS ADDRESSED IS UNAUTHORIZED WITHOUT THE PRIOR WRITTEN CONSENT OF RSL. THIS BUSINESS PLAN IS FOR INFORMATIONAL PURPOSES ONLY AND SHALL IN NO EVENT BE DEEMED TO BE AN OFFER OR A SOLICITATION TO ANY PERSON TO PURCHASE SECURITIES IN RSL. AN OFFER OF SECURITIES IN RSL OR ITS AFFILIATES SHALL ONLY BE MADE PURSUANT TO A PRIVATE PLACEMENT MEMORANDUM OR SECURITIES PURCHASE AGREEMENT IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL SECURITIES LAWS. THIS BUSINESS PLAN INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE ANTICIPATED FUTURE PERFORMANCE OF RSL. ACTUAL RESULTS COULD DIFFER MATERIALLY. NO ASSURANCES CAN BE GIVEN THAT THE STATED RESULTS WILL BE ACHIEVED. Highly Confidential & Proprietary © Copyright 2016 - Donald G. Skipper 2 Table Of Contents Page 1. Executive Summary 4 2. Business Plan Overview 36 3. “Hollywood” Reality Check 53 4. Concept Evaluation, Screenwriting & Development 61 5. RSL Movies in Development 78 6. The Movie Market Opportunity 86 7. The Market Entry Premise 88 8. Movie Industry Overview 92 9. The Existing Movie Investment Profile 98 10. Large Independent Producer Performance Review 109 11. Why Invest In Movies? 112 12. RSL Financial Projection Summary 118 13. Investment Risks & Considerations 120 14. Business Plan Execution & Movie Production 124 15. Distribution, Marketing & Advertising 127 16. How Movie Distribution Works 136 17. Capital Funding Alternatives 137 18. “Revelations” Concept & Investment Summary 140 19. “Revelations” Production Execution Example 146 20. “Revelations” Release Schedule Example 147 21. RSL Management & Business Plan Execution Profile 148 22. Movie Classifications Data 151 23. Exhibit #1 - Executive Profiles 153 24. Exhibit #2 – STX Entertainment - New Studio Template Example 159 Highly Confidential & Proprietary © Copyright 2016 - Donald G. Skipper 3 Executive Summary Renaissance Studio, Ltd. (“RSL”) is a virtual movie studio that has invested many years in a comprehensive analysis of the motion picture industry and the development of the means to exploit its vulnerabilities and the irrationality of the public equity market valuation metrics to earn extraordinary risk adjusted returns on equity (“ROE”). This extensive R&D process has produced a digital age business model, a 160 page business plan, advanced content evaluation metrics and state of the art screenwriting methodologies. These tools have been employed to create an initial inventory of 14 cost effective, high concept movie projects that are designed to launch up to 10 sustainable film franchises that skillfully target the viewing preferences of broad spectrum international demographics. The above elements represent a sound foundation for a new movie studio that will project a compelling IPO profile in year 4 that will deliver a risk adjusted Alpha above 10,000 in year 5. Full due diligence on RSL will confirm the strong plausibility of achieving this outcome. The Exploitation Opportunities The RSL value proposition is grounded in two lucrative exploitation opportunities: • Global Movie Market Dysfunction Everyone is familiar with the recurring frustration of wanting to go to a movie, checking the listings and finding nothing that inspires them to go to the theater. This reality is an exploitation opportunity. • No industry displays a greater disconnect between product features and consumer preferences. • The industry systematically ignores the viewing preferences of over 80% of the global market: • The over 40 demographic makes up half the market and it is almost completely disregarded. • Females make over 60% of the ticket buying choices but they have very few options that target their preferences. • Over 70% of the movies that reach theaters have almost no international market resonance potential even though over 80% of the global move markets are outside of North America. • There are very few movies for the 80%+ of people who are not attracted to shallow story telling, one dimensional characters and gratuitous action, violence, depravity, horror and computer generated imagery that dominate modern cinema. • The persistent dearth of inspiring movie content is the reason that 90% of movie goers in North America see only 2 movies in theaters on average each year. This is not a demand problem. It is a dearth of quality supply issue that exists because of flawed methodologies and incestuous business practices that exclude premium movie content from sources outside the movie industry “bubble” that focuses on industry expectations rather than consumer preferences. Highly Confidential & Proprietary © Copyright 2016 - Donald G. Skipper 4 • Over 85% of movies lose money for production equity investors because they are poorly conceived to achieve strong global market acceptance. The above realities are the result of flawed business practices and content evaluation and screenwriting methodologies that pervade the industry. RSL has developed effective methodologies to exploit this dysfunction. • Highly Irrational Valuation Metrics In The Equity Markets The public equity markets for the motion picture industry are offering highly irrational price/earnings ratios in the 100x to 300x range. Please see the links below for Lions Gate (“LGF”) and Netflix (“NFLX”): https://finance.yahoo.com/quote/LGF?p=LGF https://finance.yahoo.com/quote/NFLX?p=NFLX A price/earnings multiple in the 100x to 300x range is very illogical but that is the reality of the current public equity market in the motion picture industry. This situation represents an exceptional exploitation opportunity for anyone who can create a compelling IPO profile. RSL is designed to exploit this irrationality. The above realities represent a sensational investment opportunity for visionary entrepreneurs and insightful investors who are more inspired by maximizing their risk adjusted ROEs than fealty to flawed and/or timid investment parameters of the capital markets and the faulty business practices of the movie industry. The RSL corporate goal is to raise $50 million of primary equity capital and convert it into $5 billion+ of IPO proceeds in 5 years. Full due diligence on RSL will confirm the plausibility of achieving this goal. Background An enormous amount of time and thought has been invested in the creation of the RSL value proposition because a going concern movie studio that is grounded in effective business practices, methodologies and strategies will deliver exceptional risk adjusted ROEs of almost any investment alternative. This assertion is not a theory. It is supported by the incredible increase in the market cap of Lions Gate Entertainment (“LGF”) that occurred between January of 2012 and October 2013 that is visible in the chart at the link below: https://finance.yahoo.com/echarts?s=LGF+Interactive - {"range":"5y","allowChartStacking":true} Please consider the following data points: [Intentionally left blank for chart formatting purposes] Highly Confidential & Proprietary © Copyright 2016 - Donald G. Skipper 5 The Lions Gate Equity Performance Template Description LGF Stock Price LGF Market Cap January 2012 $ 9 $1.1 billion October 2013 $ 37 $5.5 billion Change + $ 28 + $4.4 billion % Change + 411% The above $4.4 billion increase in market value was achieved largely on the strength of earnings from a single film franchise, “The Hunger Games”. This performance inspired the creation of RSL to exploit this opportunity by launching a going concern movie studio that would project a compelling IPO profile that could exploit the irrationality of LGF price/earnings multiples that have ranged between 30x to 300x in 2016. (See below) https://finance.yahoo.com/q?s=lgf LGF is not a “one off” equity market anomaly. The link below to the Netflix (“NFLX”) profile illustrates that exceptional P/E multiples are not unusual for independent filmmakers and distributors in the motion picture industry: https://finance.yahoo.com/quote/NFLX?p=NFLX LGF and NFLX are the best available public equity market references because all of the other major movie studios are relatively small subsidiaries of major conglomerates. The link below summarizes the recent acquisition of Legendary Entertainment by Dalian Wanda for a 30x P/E multiple: http://nebula.wsimg.com/3079e1f2a9b3d928639e6a90dc6f2dee?AccessKeyId=9E533268DA51246EF35 E&disposition=0&alloworigin=1 While the concept of exploiting the irrationality of public equity market valuation metrics makes sense for people who are focused on maximizing risk adjusted ROEs, it is not a concept that resonates within the irrational conventional wisdom of the capital markets. The intrinsic merit of the strategy gets lost in formulaic concerns about venture capital, start ups, set in stone investment parameters that ignore risk adjusted ROI potential and the poor earnings