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BSS ENTERTAINMENT LLC

FOR INFORMATION ONLY
This memorandum is a business plan. It is not an offering for sale of any securities of the company. It is for your confidential use only and may not be reproduced, sold, or redistributed without the prior approval of BSS Entertainment LLC.

EXECUTIVE SUMMARY

Overview
BSS Entertainment is a digital video production company that has been formed for the purpose of acquiring, developing, and creating high-concept, low budget movies and special-interest projects for profit. Our principal genre is that of science-fiction, horror, and action-adventure. By utilizing powerful, new digital equipment, we are able to produce content that competes with projects that have considerably higher budgets. We also intend to exploit appropriate ancillary markets such as clothing, comic books, graphic novels, posters, and toys through the licensing of our product.

The Product
BSS Entertainment currently has three projects in production.

The Industry
According to Video Business Magazine, sales of DVDs and VHS tapes in 2002 totaled $12.1 billion dollars. Of that, $1.3 billion was for product from small studios and small distributors. Rentals of DVDs and VHS tapes in 2002 totaled $8.2 billion dollars. Of that, almost $500 million dollars was for product from small studios. Total sales and rentals were $20.3 billion dollars. That is just the direct-to-consumer market via retail and movie-rental stores domestically. Additional monies can be realized in the sale and licensing of exhibition and broadcast rights to the television and cable markets. There’s more to be made through all of these outlets in the foreign markets.International markets are gaining even greater strength than they had before. Independent films have been steadily gaining market share since the 1990s.

The Market
As stated earlier, our primary focus will be on the science-fiction/horror/action market. This genre lends itself to low-budget movie-making. It is a durable genre, and has been around for decades and shows no signs of abatement. This is a popular genre in the rental and retail markets, as well as the cable television markets (USA Network, Sci-Fi Channel, TNN, etc.). Even premium cable outlets like Showtime, the Movie Channel, HBO and Cinemax have been showing very low budget features (“Play-mate of the Apes”, “Battle Queen 2020”) late at night.

Our primary target audience is between the ages of 17 and 35. Fans of these genre films are hungry for “chills and thrills”, and we plan to deliver those. Our projects include a band of demon hunters, a fearsome samurai sorcerer, alien invaders , throngs of zombies, and good-looking women.

One thing this genre tends to produce is the cherished franchise. Franchises are valued because each successive movie has a built-in audience. Some high-level examples are Star Wars, the Matrix, and the X-Men. Lower level franchises include the John Carpenter Halloween movies, Freddy Krueger, Candyman, and, more recently, the low-budget Scarecrow. This can lead to various lucrative ancillary markets as well. Many of our projects have that potential.

Distribution
BSS Entertainment will seek distribution by independent distribution companies with proven ability to handle low-budget genre films. We will contact individually some of these distributors. In addition, we will take the films to markets and film festivals where appropriate.

The foreign markets have become more profitable for genre films in recent years. As our reputation for high-quality science-fiction/horror/action films grows, both domestic and foreign markets will be anxious to buy our product. BSS Entertainment expects to have increasing leverage over the next few years in negotiating deals.

Investment Opportunity and Financial Highlights
See our offering booklet for complete details.

THE COMPANY
BSS Entertainment LLC is a privately owned North Carolina Limited Liability Corporation that was established on December 11, 2002. Our principal purpose and business is to create motion pictures for the direct-to-video/DVD market. The Company plans to develop and produce quality low-budget science-fiction/horror/action films.

The objectives of BSS Entertainment are as follows:
1. To produce quality films for the ever-popular science-fiction/horror/action market.
2. To make genre films that will be exploitable to a mass audience.
3. To produce an increasing number of films in each successive year (see attached chart).
4. To develop scripts with outside writers.
5. To distribute our films through independent distribution companies.

There is a need and a hunger for the science-fiction/horror/action genre. The fans of this genre cannot get enough. Witness the growth of the “high-concept film” in recent years. Pop culture is the rule of the day. Monsters, comic book heroes, special-effects, and extreme action are the accepted norms.

We can produce exciting films starting as low as $100,000 without sacrificing quality. We will utilize the power of the digital filmmaking revolution in order to achieve this. By shooting digitally, our costs will be significantly lower. Editing and compositing will be done digitally on computer. Special-effects and animation will also be created digitally. Expensive-looking effects can be created relatively quickly and cost-effectively.

Management and Organization
The management team of the Company has over 45 years experience in entertainment.

The Management Team
At the core of BSS Entertainment are the three founders who bring to the company successful entrepreneurial experience, promotion, art direction, special effects and general expertise in digital motion picture production. Collectively, these three individuals have over 45 years experience in their respective fields. Additionally, the core team is complemented by a networked support group of consultants, performers, and technicians.

DENNIS J. BRECKNER
CFO/Director of Operations
EXPERIENCE:
President/Director of Operations: Present - 1994
BIC Products - Concord, NC
Responsibilities:
• Guiding operations of company.
• Final decisions on departmental issues (Accounting/Sales/Etc.).

Owner/Director of Operations: 1994 -1997
The Walking Center - Culver City, CA
Responsibilities:
• Operations of company included: Marketing, Sales, Accounting, Service Center, and Retail Store Outlets.
• Final decisions on all department issues.

Owner/ Chief Financial Officer: 1990 -1994
Vos/Bek Holdings - Calabasas, CA
Responsibilities:
• All financial aspects of the company.
• Real Estate/Land Acquisition/Commercial Real Estate Loans
• Responsible for Trust accounts, Company accounts, making sure that
all accounts were reconciled after each transaction and at month/year end.

President:
Tri-World Entertainment - Woodland Hills, CA
Responsibilities: 1981 - 1990
• Executive Producer
• Producer
• Producing Low Budget Films & How-To-Do Videos

Dennis has been involved in the entertainment business sense 1981 when he went to Los Angeles and started Tri-World Entertainment. This company produced several low budget films and how- to-do video's. He also enjoyed a 15 year acting career and worked in many network episodic shows in guest starring roles, and also was a regular on a night time show called "Bare Essence".

Dennis went to the University of Miami on a football scholarship and played football there 4 years and earned a degree in Marketing & Finance. After graduating in 1976 he was drafted by the Chicago Bears and played there 4 years and went on to the Kansas City Chiefs and then on to the Cleveland Browns where he finished his career.

Dennis's goal of starting another entertainment company has come to fruition. With his added experience in the fields of company operations and finance, his strengths will add to the success of BSS Entertainment LLC.

DARYL SLATON
Vice President of Visual Effects, Design, Promotion, and Content Development

Daryl Slaton directed his creative energies toward art and film when he was in his early teens. Active in theater groups, creating movie posters, stop-motion films, and scripts were a passion for him. He studied art in college and moved into the world of corporate design and presentation shortly afterwards.

In 1985, Daryl became a designer with Belk Stores Services, the corporate headquarters for the retailing giant. After creating art by hand for a few years, he quickly embraced the new digital technologies becoming the first designer in the company to use a computer to create art and presentations.

Daryl accepted a position in 1994 with The Whitley Group, a multimedia company. There he created presentations, cartoon characters, and animations for many large corporations. His first big project was a trade show presentation for AT&T. With only four weeks till show time at COMDEX in Las Vegas, Daryl adapted an existing character into an animation format. He also was tasked with making the character leap from screen to screen on a large-format nine monitor system. The show was a success and won a regional award. Two years later, Daryl became the art director for the company.

In 1998, The Whitley Group became part of iXL, a large multimedia company that eventually had offices around the world. Continuing in his role as art director and designer, Daryl's client list included General Electric, Microsoft, IBM, Ford Motors, AT&T, Volvo, NationsBank, BellSouth, Lucent Technologies, Nortel, Komatsu, Unysis, J. Walter Thompson, and others.

In 2000, Daryl became a freelance designer. Working with ad agencies and other specialists, he has been creating art, illustration, design, animation, and websites for clients such as Purina, State Farm, Staubach Properties, LS3P, Elberson Senger Shuler, KPMG, Cigna, and others.

Daryl continued to develop his technological skills with new software, including 3D and digital film compositing applications. Daryl is a fan of the fantastic: science-fiction movies, fantasy art, comic books. After attending a major Science-Fiction/Fantasy convention in 2001, Daryl realized that it was time to move into digital filmmaking. BSS Entertainment was formed as a result.

DEREK SLATON
Vice President of Production and Content Development

Derek Slaton grew up playing video games. He was particularly fond of the immersive role-playing games. This served two purposes. He perceived digital technologies as something natural, and he saw the potentials of these digital technologies combined with dramatic storytelling.

In his late teens, Derek became a collector and fan of fantastic action-oriented movies, many from foreign markets. Some of his favorites were the over-the-top Hong Kong battle royales and the horror films from Italy and Japan (the Japanese horror films are becoming worldwide hits now). He decided that he would like to write and direct movies like these, so he began to write screenplays. As a result, he has several completed.

For the past five years, he has developed his digital video skills by working as a video editor and freelance cameraman. He has edited over 130 episodes of the Fox 18 School Sports Show and the Salem Baptist Church Show for Fox 18 and the INSP Cable Network.

His freelance work has been for The Metrolina Entrepreneurial Council, The Charlotte Post, the Charlotte YMCA, The Land Center, Comedy Zone, sculptor John Hair, North Carolina Department of Transportation, attorney Terry Duncan, and numerous live events and multi-camera shoots.

Derek continues to study the film techniques of genre masters while developing his own. His first feature-length film will combine science fiction, horror, action, and high-end digital special effects.

Employees
Initially, there will be no other permanent employees. Other employees (actors, writers, production crew, etc.) will be on a freelance basis as needed for the individual film projects. Their expense will be included in each film’s budget.

FILM PROJECTS
BSS Entertainment currently has three projects in production.

The Alien War Chronicles
This is an action-packed feature-length horror movie. After Earth is invaded, a group of alien hunters armed with guns, swords, and kung-fu track down the invaders. The team battles karate zombies, three-foot tall computer-generated monsters, and fierce alien warriors. Special-effects enhance the action. This over-the-top effort will appeal to our core audience.

League of Devils
This a completely computer-generated animated movie. A hybrid of two-dimensional superhero cartoons and movies like “Final Fantasy” and “Ice Age”, this has an action-oriented horror theme. Set in a future-retro inspired world, a battle-hardened man of iron must wage war against supernatural horrors. This animation has a dark tone like the Tim Burton live-action “Batman” movies. This effort should be embraced by superhero, horror, comicbook, animation, and anime fans.

Purgatory: The Show
This is a special-interest video production. Filmed at the Purgatory performance events over several months, it focuses on the burgeoning Goth scene. Young adults in often revealing costumes cavort to hard-driving music in a permissive atmosphere. Bizarre stage shows, VIP rooms, side-venues featuring Dr. Spankenstein and scantily-clad dancers, and vendors of vampire-fangs, flogging devices, and revealing leather wear round out the activities. This product should appeal to the Goth crowd as well as curiosity seekers and voyeurs.

INDUSTRY OVERVIEW
The motion picture industry consists of two principal activities: production and distribution. Production involves the development, financing, and making of motion pictures; distribution involves the advertising, publicizing,licensing, promotion, and physical reproduction, delivery, and exhibition of completed motion pictures. The following is a simplified overview of a complex process for the purpose of describing how the business work regarding the direct-to-video/DVD/television market.

Motion Picture Production
Until recent years, the major studios all maintained extensive production facilities. With significant overhead expenses and the rise of the unions and guilds, film budgets began to rise. Studios released fewer pictures but expected greater grosses per film. As a consequence, smaller production entities, the independents, arose. Films are typically defined by the source of their financing; even though some of these production entities are public companies, much of their production financing comes through the studio system.

At a studio, a film begins in one of two ways. Someone inside the company might develop a “concept” (one or two lines of an idea), or a known writer might make the well-known “30-second pitch” and secure a deal. On the other hand, an agent might bring the script by a new writer to the attention of the studio. Scriptwriters are hired, cast sought, and directors and producers assigned. Then the film is put into development.

Development begins when the studio options or purchases a literary property, usually a script or a book. The nature of the deal depends on who is involved in it. During development, the studio hires writers to adapt the book into a screenplay, reworks the original, determines a budget, and even starts casting.

The next step is preproduction, the period before principal photography when commitments are sought for talent, the director and crew are hired, and contracts are finalized and signed. producers try to have all contracts in place befor filming begins. The filming of a motion picture is called principal photography. It takes from 8 to 12 weeks, although major cast members may not be used for the entire period. Once the production has gotten to this stage, it is unlikely that a studio will shut it down. Even if the picture goes over the budget, the studio will usually find a way to complete it.

During the post-production period that follows principal photography, the film is edited and synchronized with music and dialogue. In certain cases, special effects are added. The post-production period used to require six to nine months. With recent technological developments, however, this time has been cut drastically for some films. This statement is certainly true for BSS Entertainment productions.

Theatrical Exhibition
The exhibitor pays a percentage of the picture’s box office receipts (called “rentals” to the studio or distributor. The size of the percentage depends on the distributor’s strength and the exhibitor’s desire to show the film. BSS Entertainment does not anticipate any wide spread theatrical distribution at this time.

Non-theatrical Exhibition
Feature films also receive considerable revenue from non-theatrical sources. Beyond domestic and foreign film rentals, these include the direct-to-video/DVD sales and rentals, cable networks, pay-per-view, and network television. New technologies may be another source of revenue in the future.

As the film industry has gone through evolutionary changes, so has the non-theatrical segment. The home video market is huge. According to Video Business Magazine, sales of DVDs and VHS tapes in 2002 totaled $12.1 billion dollars. Of that, $1.3 billion was for product from small studios and small distributors.

Rentals of DVDs and VHS tapes in 2002 totaled $8.2 billion dollars. Of that, almost $500 million dollars was for product from small studios.

Total sales and rentals were $20.3 billion dollars. That is just the direct-to-consumer market via retail and movie-rental stores domestically.

Many video store renters are looking for fresh “chills & thrills”. The science-fiction & horror genre is a strong component. For example, newly-formed Redrum Entertainment recently released the horror film "Maniacts". According to Video Business magazine and Redrum press releases, 50,000 rental units have been sold. The cost to video stores is $24.95 per DVD and & $89.95 per video tape. Figuring a 50-50 mix of DVDs and video tapes, that equates to roughly $2,850,000. That is just from rental units. There will be more units meant for sale at traditional retail outlets.

Additional monies can be realized in the sale and licensing of exhibition and broadcast rights to the television and cable markets. With the continuing expansion of cable networks, there is a growing need for content. As the number of cable markets grow, there is greater competition for the audience. Therefore, an inexpensive production can be of great value.

There’s more to be made through all of these outlets in the foreign markets.
International markets are gaining even greater strength than they had before. Independent films have been steadily gaining market share since the 1990s.

THE MARKET
An independent film goes through the same process from development and preproduction , production and post-production as a studio film. In this case, however, development and preproduction may involve only one or two people. And the entrepreneur, whether producer or director, maintains control over the final product.

An independent company is one that finds its production financing outside of the studios. It may be distributed by a studio, but negative cost has been found from other studios. Many of the large production companies started with the success of a single film. New Line achieved prominence with the "Nightmare on Elm Street" series. Full Moon Pictures has built upon small success after success.

The smaller production company usually raises money for one film at a time, although there may be other films in different phases of development. Many companies are owned or controlled by the creative person, such a s a writer, director, or producer. These independents make low-budget pictures, usually in the $50,000 to $5 million range.

In the past few years, there has been a resurgence of independent filmmaking. Independent distributors are growing in size and number. The specialty film market has also been growing. All across the United States are individual, independently owned theaters that maintain their own mailing lists of faithful moviegoers. Often, a film made for $500,000 or less can earn back its costs from these regulars alone. until recently, the independently owned theaters were thought of exclusively as the home of the offbeat and unique film.

The primary focus of BSS Entertainment will be on the science-fiction/horror/action market. This genre lends itself to low-budget movie-making. It is a durable genre, and has been around for decades and shows no signs of abatement. This is a popular genre in the rental and retail markets, as well as the cable television markets (USA Network, Sci-Fi Channel, TNN, etc.). Even premium cable outlets like Showtime, the Movie Channel, HBO and Cinemax have been showing very low budget features (Play-mate of the Apes, Battle Queen 2020) late at night.

Our primary target audience is between the ages of 17 and 35. Fans of these genre films are hungry for “chills and thrills”, and we plan to deliver those. Our projects include a band of demon hunters, a fearsome samurai sorcerer, alien invaders, throngs of zombies, and good-looking women.

Another area of focus is the non-juvenille animation market. As reported in June 2003, cable TV’s Cartoon Network's Adult Swim block (shown at night) is winning the 12-24 male demographic group against all other programming in its time slot, cable or broadcast.  The series of “adult” themed cartoons feature Japanese anime programs like "Cowboy Bebop", which features hard-drinking, cigarette smoking outer space bounty hunters. Ratings have been improving since Cartoon Network started featuring the Adult Swim block five nights a week and the Adult Swim programming is now beating Jay Leno by 18%, David Letterman by 28%, Conan O’brien by 26%, and the other competition by greater margins in that demo. While “adult” themed (that is, non-cutesy) animation has been strong overseas for years, it is now finding an enormous audience in the United States. We plan to capitalize upon this trend with computer-animated features like “League of Devils”.

While we will produce high-quality films, our initial efforts will be “high-concept”, easily defined escapism that will be enjoyed by a mass market.

One thing this genre tends to produce is the cherished franchise. Franchises are valued because each successive movie has a built-in audience. Some high-level examples are Star Wars, the Matrix, and the X-Men. Lower level franchises include the John Carpenter Halloween movies, Freddy Krueger, Candyman, and, more recently, Scarecrow. York Entertainment’s Scarecrow is a low-budget horror movie. It’s quality is run-of-the mill, but it features an effective-looking monster. Investors at the American Film Market expo were so impressed with the creature (a guy in monstrous scarecrow makeup) that they financed two sequels. The first sequel will feature genre name actor.

Movie franchises can lead to various lucrative ancillary markets as well. Many of our projects have that potential.

Competitive Advantages
BSS Entertainment has several advantages.

The company is run by people who are devoted to producing high-quality cost-effective movies. Their devotion to quality will create low-budget films with much higher values on the screen that their budgets would dictate.

Dennis J. Breckner has over 20 years experience as an actor, producer, and a business man. He maintains a number of entertainment industry contacts and friends.

Daryl Slaton has over 18 years experience in creating computer-generated imagery, illustration, animation, character design, and presentation.

Derek Slaton has over 5 years experience in video production and has studied the low-budget stylized film genre extensively. He also has ties to the music industry that enables us to bring cutting-edge bands into our productions.

One of the biggest strengths of BSS Entertainment is that we are utilizing the new digital technologies. We use high-end digital video cameras, and we edit our footage using professional-grade software. We shoot on a digital medium that has the look of film. This eliminates the cost of working with actual 35mm film. We create our special-effects and animations on computer. Because of this, we are able to produce movies that look expensive, but that are relatively inexpensive to produce. We can create computer-generated images such as background landscapes, huge monsters, small monsters, and digital stuntmen, gunfire and explosions. Using digital video and computer graphics allows us to produce movies efficiently and at a low cost.

And, recently, specialized computer-generated actors and imagery have largely been accepted by Hollywood and the consumer. The characters of Spider Man and the Green Goblin were frequently digital, as was Daredevil and the Hulk. So, our timing is right.

Smaller distributors love promotions that are provided to them. To that end, we promote our company on a professionally designed website at www.bssentertainment.com. Here we feature information, production shots, art, and posters of our current and upcoming projects. We also create our own professionally designed packaging art and movie posters. This makes us even more desirable to distributors since it less work for them.

DISTRIBUTION
Most of the marketing strategies commonly employed by the independent distributors will be used to BSS Entertainment’s films. The actual marketing of the films is the distributor’s job. It involves the representation of the film in terms of genre, the placement of advertisements in various media, the selection of a sales approach for exhibitors and foreign buyers, and the “hype” (word of mouth, promotional events, alliances with special interest groups, etc.) All of these factors contribute to a film’s success.

We will seek distribution with independent (though not necessarily small) distributors that specialize in our genre. We feel that independent distributors often have the knowledge and patience to give special care to genre films. For genre films with smaller budgets and lesser (or no) names, they often have an expertise that the studios lack. In addition, by focusing their marketing and promotional efforts on a handful of primary markets, these companies are able to keep their costs relatively low.

Since we are aiming at the direct-to-DVD/video market, we do not have to enter the highly competitive market of theatrical releasing. In that arena, timing of your release is critical. All too often, a film will have a strong box-office on its opening weekend only to see a tremendous drop-off in ticket sales the following week when the next “blockbuster” opens. This is known as “sizzle and fizzle”. Our products will have a much longer shelf life in the rental and sell-through market.

The domestic territory is defined as both the United States and Canada combined. Many of the independent distributors consider the United States and Canada to be one package. Domestic rights refer not only to theatrical distribution but to all other media such as DVD, video, cable, pay-per-view, and broadcast television.

In terms of foreign sales, there are U.S. based distributors who specialize in the rest of the world. These companies deal with networks of subdistributors in various countries.

There is no typical distribution deal. The distribution company will take as much as it can get. It is BSS Entertainment’s job to give away as little as possible. Based on industry averages, we have estimated a distributor fee of 34% of the total revenue. This percentage applies only to the revenues generated by the distributor’s deals; if that company is only making foreign sales, then it takes a percentage of only foreign revenues. How much the distribution company wants depends on its participation in the entire film package. The greater the up-front expense that the company must assume, the greater the percentage of incoming revenues it will seek.

In acquiring a project, the distributor looks at the following elements, among others:
• interesting story concept
• genre
• ability of the cast members to attract audiences or buyers on their names alone
• name tie-in from another medium; for example a comic book or Internet exposure
• special audience segment for the type, or genre, of film
• existing promotional materials: posters, websites, package art

A mix of elements is necessary to selling a film. The distributor, and in turn the exhibitor (in this case the video stores), must see something in the film that they can promote to their customers. Our films will be of an easily categorized genre that is both easy to identify and market. Sometimes a distributor has a film that they do not know how (or to whom) to market. That will not be the case with our productions.

FINANCING
The financial projections for BSS Entertainment LLC assume a conservative level of success for each film project. Many factors affect the success of any film project. A film’s commercial appeal is the single most significant factor in determining its financial success. This is closely followed in importance by the agreement that the production company has with its film distributors.

To help protect BSS Entertainment and the company’s investors from losses, BSS Entertainment will endeavor to secure presale, distribution, and other financial agreements. Given that this company is new, an agreement will be entered into only if it is perceived to benefit all equity investors.

THE FINANCING PLAN
This section contains BSS Entertainment’s projections.

Section I

Projects

BSS Entertainment, LLC (From here on will be referred to as "The Company") will be in the business of producing two types of Projects, low budget Films and Niche Market video.

A. Definitions

Films: Feature length (90 minutes) films that are in the sci-fi, horror, and action genre. They have a budget range of $100,000 to $150,000 each.

Niche Video: A 60-75 minute video that has no central story, but rather is a documentary style video. These videos have a much smaller, but very loyal, fan base. Examples being a cooking show, concert, etc. They have an average budget of $25,000

Sci-Fi: Science Fiction.

CGI: Computer Generated Images. In basic terms though, Computer special effects.

B. Overview of Projects by Year

Year 1: 2 Films, 2 Niche Videos

Year 2: 3 Films, 3 Niche Videos

Year 3: 4 Films, 4 Niche Videos

C. Specific Films for Year 1

(note: These are planned at this time and are subject to change)

Alien War Chronicles: A sci-fi/action film that will be heavy on CGI. The film takes place in the near future in which the world is under siege from alien invaders. The story follows the exploits of a small band of heavily armed resistance fighters who are given the task of retrieving a package deep within enemy territory. Within the package contains the secrets of the alien invaders, and may hold Earth's final hope. The scope of the film is similar to a World War II film, in that you get the feeling there is something much larger going on, but the story mainly focuses in on a small platoon of fighters.

Autumn Twilight Presents: A collection of horror shorts that will be hosted by an Elvira like character. This film will be similar to Tales from the Crypt or the Twilight Zone.

War of the Dead: Flesh hungry zombies are in abundance in this horror/action extravaganza. When a mysterious group known as the Cult of the Dead releases a toxin among the public, they create an army of the undead that kills anything within their grasp. A small band of survivors try to escape the nightmare, but can anyone survive the horror that is the War of the Dead.

C. Specific Niche Videos for Year 1

(note: These are planned at this time and are subject to change)

Purgatory: A "live" video aimed at the gothic and industrial music crowd. The video will be a collection of performances by Autumn Twilight, genre bands, as well as highlights from a fetish fashion show.

Cooking with Beefcake: A cooking show aimed at women and the gay community. The chefs are Body Builders who are wearing aprons and not much else.

League of Devils: An animated project aimed at both anime fans as well as the horror and sci-fi crowd.

Section II

Distribution of Capital

All of the purchases made by BSS Entertainment, LLC will fall under two categories, Company expenses and Project expenses.

Definitions.

Company expenses: Purchases made by the Company for the Company. Common items that fall under this section are rent on office space, salaries, and equipment purchases. (A more compete breakdown of purchases can be found later on in this section)

Project expenses: Purchases made by the Company for specific projects. Common items that fall under this section are props, actors, and location fees. (A more complete breakdown as well as a sample Project expense report can be found later on in this section.)

Sample Project Budget

The following section contains a Sample Budget for a typical project. Because every project is different, a lot of the items on the budget will change from project to project.

Section III

Film Project Life Cycle

This section contains a sample life cycle for a film project, from pre-production to completion.

4 weeks - Beginning of pre-production. Script is reviewed and a Second draft is written, casting begins at end of four week cycle. Any special effects tests will begin during this time.

2 weeks - Casting is completed and rehearsals begin. Behind the camera crew is filled. Third draft of the script is done. Any practical effects <monster construction, prop building, etc> begin to be built.

4 weeks - Final rewrite of script is completed at beginning of this stage. Cast continues rehearsal, fight choreography begins. Shooting schedule is made, locations are secured, and all necessary permits are obtained.

6-8 weeks - Principal photography.

8-12 weeks - Post Production. All editing, computer enhanced effects, and mastering are done.

Total: 24 - 30 weeks from Pre-Production to completion.

Section IV

Generating Revenue

The video and DVD market in 2002 was a 20 billion dollar industry, and that was just from sales and rentals. This does not take into account TV, international, or any ancillary products such as T-shirts or soundtracks. As home entertainment equipment becomes better and the number of cable and satellite stations increase, the demand for content will also continue to increase.

Main Revenue outlets:

VHS/DVD

TV

International release

Theatrical

Secondary Revenue outlets:

Merchandise: T-shirts, Posters, Action figures, etc.

Internet content: exclusive scenes, short projects, etc.

Future sources of Revenue:

As our catalog of films grows, more avenues will be opened. Special editions of already released films, complete with extra content or a directors cut of the film. The packaging of two older films and releasing as a double feature is becoming commonplace. There is also the potential for more revenue down the road, when there is a change in format standard (such as VHS to DVD).

FAQs

1. How can you produce multiple films in a year with a six month production schedule?

With the inclusion of Producers and other outside help, we will be able to stagger the production schedule of each project. For example, if we have four movies coming out in a given year, pre-production on film one will be followed in two months by the pre-production on film two, and so on. This is also how we will be able to produce so much content with so little equipment, as when one production is finishing up shooting, another project is ready and waiting to ramp up production.

2. As the investor, how will I make money?

As an investor, when you put money into BSS Entertainment, you are purchasing a percentage of the company. At the end of the fiscal period, profits will be figured and dispersed between the company, and the stock holders, which includes both investors and the managing members.?

3. How much of a return do you expect for each film?

Every distribution deal is different. However, after speaking with a number of distribution companies, we have determined that the average return on a low budget project can be anywhere from $700,000 - $1.2 million. When you take into account that the cost to produce these films are in the $75,000 to $100,000 range (like the films Horrorvision and Vatos), the profit margin is quite high.

Glossary for Projections

Ad/Promo - Money spent on advertising and promotion of the projects and the company as a whole.

Ancillary - Money brought in by licensing, T-shirts, toys, etc.

Contingency - Money in reserve for hiring, equipment purchases, and budget overruns.

Domestic Sales - Money brought in by film sales in USA.

Fixed Costs - Money spent on salaries, rent, equipment purchases, etc.

International Sal s - Money brought in by film sales to foreign markets.

Project Costs - Money spent on individual projects.This includes actors fees, crew costs, props, etc.

Re-releases - Money brought in by the repackaging and reselling of older films in our library.