Priosn Codes Prospectus

8/3/2019 Priosn Codes Prospectus

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evaluate the purchase of interest in this motion picture production or have retainedthe services of a representative bearing such knowledge.


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Table of Contents

Section 1: Description of Business

Confidentiality Agreement

Executive Summary

Global Industry Overview

Domestic Industry Overview

Investment Principal

Revenue Flow

Return on Investment

Marketing Strategy

The Risk

Section 2: The Motion Picture The Black Prince

Synopsis

Section 3: Production Summary

Budget Assumptions

Budget Summary

Timetable

Section 4: Biographies

Key Creative personnel

Conclusion


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Section 1:Description of Business


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Confidentiality Agreement

The undersigned reader acknowledges that the information provided by Prison CodesProductionsin this business plan is confidential. Therefore, the undersigned readeragrees not to disclose any of such information without the express written permission

of Prison Codes Productions.

It is hereby acknowledged by the undersigned that the information to be furnished inthis business plan is in all respects confidential in nature (other than suchinformation which is already in the public domain through other means) and that anydisclosure or use of same by the undersigned may cause serious harm or damage toPrison Codes Productions.

This business plan is confidential, and all potential investors receiving this businessplan agree not to circulate copies there of.

Signature

_________________________________

Print Name

_________________________________

Date

_________________________________.


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Executive Summary

Prison Codes Productions (the Company) is an independent film productioncompany which is in the process of being formed as a PTY limited, incorporatedunder the laws of the Republic of South Africa, for the sole purpose of producing afeature length motion picture with the working title Prison Codes (the Project).

Set in the notorious Pollsmoor Maximum Security prison, that once housed NelsonMandela, Prison Codes is the feature film adaptation of prolific playwright BoebieHamzas seminal stage play. It is an in-depth exploration into the world of theferocious Numbers prison gangs.

The Company will manage the project through the various phases, includingdevelopment, pre-production, production, principal photography andpostproduction. After we have produced the Movie, we intend to license thedistribution rights for the local and worldwide exhibition of the Movie to one or moreestablished Distribution Company. We expect the Movie to generate revenue frommultiple sources, including theatrical exhibition, television syndication and DVDrental and retail.

The purpose of this prospectus is to garner the serious interest of private, public andcorporate investors in financing this venture. In turn, this prospectus is meant onlyfor accredited investors and private donors who can invest a minimum of at leastR650 000 (1% of the total budget or more) of their capital. Investment in this motionpicture may be made only through a direct arrangement with the producers named inthis document.

Global Industry Overview

Worldwide spend on filmed entertainment is around $65 billion a year, of which thedistributors' share is about $35 billion. Total revenues are split almost equallybetween the North American market and the Rest of the World. The industry hasdoubled in size in the last 8 years - an annual growth rate of almost 10%. Few, if any,major businesses can boast such continued growth over this period. Video and DVDhave contributed significantly to the growth levels. DVD has itself seen a tenfold risein the last 3 years.

Theatrical (ie. cinema) revenues only account for about 25% of the total revenues,with video (including DVD) taking about 40%; television accounting for 28% andancillary revenues the final 7%.

The average negative cost for an American studio film is now more than $50m with afurther $30m spent on marketing. In South Africa the average cost negative cost for amedium budget film is around R30m.

The South African box office figures topped R390 million ($46.2 million) in 2008.The top-grossing foreign release for 2008 was "Mamma Mia!" which brought in $2.9million (R25 million) and the top-grossing domestic release for 2008 was "Mr. Bones2" which brought in $4 million (R34.1 million), becoming the Highest Grossing Filmin South African thus far by earning R33 062 468 in less than two months, which isfaster than Titanic took to reach this figure. It also beat other foreign Blockbusterssuch as Harry Potter and Lord of the Rings. This is testament to the fact that SouthAfrican audiences have a demand and appetite for authenticity.


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Investment Principal

The methods of financing film projects are as diverse as the film projects themselves,and the most common ways are; debt or equity financing. This Project will use acombination of both as the Company is seeking an investment of R6 million in capitalto fund the corporate setup, development, pre-production and production of theProject, marketing and distribution and to cover a years worth of general corporateexpenses.

The Company proposes to secure all of its funding through a government loan fromthe IDC's Media and Motion Pictures SBU, and through a securities offering that willbe offered exclusively to accredited private investors who will receive a PrivatePlacement Memorandum / PPM outlining the business plan, the nature and structureof the investment, and the potential risks and rewards involved.

The Project is structured to make use of numerous Subsidies and Incentives availablespecifically to film productions such as; the South African Governments ProductionRebate scheme provided by the Department of Trade and Industry (DTI) which willprovide a rebate of 35% for the first R6 million, and 25% for the remainder of theproduction expenditure; the South African Revenue Services (SARS) feature film taxrebate which allows for deduction of the production cost of a film to the film ownerthrough Section 24F of the Income Tax Act; as well as various other Subsidies andIncentives from the U.K and Canada which are available through Co-productionagreements with companies in those countries.

The shares being offered will have no voting rights, giving producers of the Projectcomplete control over the film's production.

Additional Below the line investment will be secured through product placement

sponsorship deals and production support from facilities and services providers aswell as through Deferrals from key above the line creative and technical talent.

Additional marketing, promotions and distribution costs are expected to be raisedthrough agreement with brand sponsors as well as the film's eventual distributors.

Revenue Flow

Monies paid back to the investors and producers will come from the universalexploitation of the project. The main revenue streams, or windows of exploitation forfilmed entertainment are:

a) Theatrical exhibition: 0 - 6 Monthsb) Home Video & DVD: 6 - 15 Monthsc) Pay TV: 18 - 30 Monthsd) Free TV: 30 + Monthse) Ancillary revenue stream such as airlines, ferries, oil rigs and Merchandising

from soundtracks, books, computer games and major brand relationships.

Theatrical Box Office revenues are those sums collected at the box office windowfrom movie ticket sales throughout selected geographical regions. In South Africatickets generally cost up to R30 and there are approximately 700 screens whichexhibit feature length movies.

Home Video & DVD Revenue is generated from the sale and rental of Videos andDVDs. In South Africa Videos and DVDs retail for approximately R150 and are rented


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for about R20. The local industry generates approximately R900 million annually.Home Video & DVD revenues are often calculated at about 215% of revenuegenerated at Theatrical Box Offices.

TV Revenue includes the licensing to satellite and Pay-Per-View channels and iscalculated as a percentage of Theatrical Box Office revenue. At present Satellite orCable revenues are estimated to amount to about 20% of Theatrical Box Officerevenues. TV revenues also include Syndication licenses sold to Free TV Networksand thousands of State and independently owned TV stations. Syndication typicallygenerates about 50% to 200% of Theatrical Box Office revenues over the long term.

Total revenue are the aggregate gross sums collected from all media and territories,also known as the worldwide market, without any deductions for exhibition fees,distribution fees or expenses.

Other revenue sources that can be factored in include income flows from ancillaryrights such as music and publishing

Distribution Strategy

A brief description of the various markets or venues in which the Project may beexploited is as follows:

(a) Theatrical Distribution: Theatrical distribution of motion pictures involves themanufacture of release prints from the original print, the promotion of the motionpicture through advertising and publicity campaigns and the licensing and booking ofthe motion picture to theatrical exhibitors. Expenditures on these last mentionedactivities are substantial and generally (but not always) have a direct relationship tothe effect on revenues realized from the theatrical release of the motion picture.

Motion pictures that are made available for a theatrical release are generallydistributed by releasing agents and provide for a percentage of gross revenue to covertheatre-operating expenses with a split of rental payments thereafter between thedistributor and the exhibitor. Under agreements with theatrical exhibitors, anexhibitor of the motion picture will pay license fees to the distributor on a percentageor flat rental basis. Under a percentage arrangement, the exhibitor will pay apercentage of box office receipts and under a flat rental arrangement; the exhibitorwill pay a flat fee without regard to box office receipts. Generally, agreements fortheatrical release of a motion picture provide for a larger percentage of box officereceipts to be paid during the earlier weeks of distribution of the motion picture and asmaller percentage of box office receipts in later weeks. Such percentage to be paid to

the distributor and the theatre exhibitor is determined by negotiation and generallyvaries between 10% to over 50% of the box office receipts. Many factors are involvedin the negotiation of such percentages including the perceived potential success of themotion picture, the number of theatres being licensed and the location of thetheatres.

The most common type of theatrical distribution deal looks like this:The Net Deal: The distributor retains a fee of up to 50%, then recoups the P&A(prints and advertising) spend and any advance that was given to the producer, plusinterest, before paying the balance to the next person in the chain (sales agent or theproducer). The share of Box Office paid by cinemas to the distributor varies frombetween 30 35% in the UK, 45 55% in the US and 35 45% throughout the rest of

the world (the exhibitor keeps the rest).


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(b)Video/DVD Distribution: The digital videodisc market has continued to expandrapidly in recent years, especially for feature films which have been exposed totheatrical exhibition. This market can, by itself, recoup all or a significant portion ofthe cost of production and distribution and generates a substantial portion of thefilms overall profits. The most significant aspect of this market is rentals and retailfor in-home viewing. There are various video/DVD distribution deals the mostcommon being Rental where the distributor pays royalty to producer/financier/agentof 35 45% and Retail where the distributor pays royalty to theproducer/financier/agent of 12 20%.

(c) Television. This market area is subdivided into: free network television; pay andcable television markets; and syndicated television market, the most significant ofwhich is the free network television market.

Distribution agreements made with major free television and subscription networksgenerally provide for a lump sum fee. The license fee paid to the distributor usuallydepends on the film's box office performance. The distributor takes a fee of between25 50% in the US and 20 40% in the rest of the world, with the balance going tothe producer/financier/agent.

The television Syndication market is comprised of a number of independentstations which have formed associations for the purpose of acquiring programmingand may include some free network television stations. Motion pictures are generallyonly distributed in these markets after having completed stipulated license periodswith pay television, cable television and/or free television networks. Revenues fromthis source can therefore be received for extended periods of time after a motionpictures initial theatrical exhibition or other release. The Syndication TV networkretains 40 50% of the viewers fee, recoups the distributor's advance and pays anybalance to the distributor. The distributor then retains around 25 35% in

commission and remits the balance to the producer/financier/agent.

(d)Internet distribution . New technology continues to offer unprecedenteddistribution opportunities. In addition to providing easy access to detailedinformation about films the Internet has quickly become a significant and convenientavenue for the promotion of new theatrical releases and the retail of DVD releases.

The technical and economic advantages of digitization and online distribution faroutweigh any potential copyright piracy issues and combined with the much-improved DVD projection, giant plasma screens, and surround-sound homeentertainment systems are allowing new ways to bring the cinematic experience intoother public and private places.

(e)Ancillaries. Films that achieve wide releases often market a compilation of themusic used in the film. In some cases sales of digital and compact disks havegenerated significant additional revenue for the film. These are sold throughconventional music vendors.

(f) Government Tax Credits. The incentive offers a 35% cash rebate paid to theinvestors on the cost of film production for the first R6-million ($745 000) spent and25% for the remainder of production expenditure.


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Return on Investment

Investors in the project shall receive Deferred Points, as well as an AssociateProducer Credit. Recoupment will be on a pro rata pari passu basis. Investors will beentitled to recoup all of their investment from first revenues before payment ofdeferments or profits. Investors will be allowed to recoup 110% or more of theirinvestment in order to compensate them for loss of interest and inflation. Profits willbe declared after payment of debts, investor recoupment and payment of deferments.Profits will be split 50/50 between the producer(s) and the investors. Thus, investorswho provide 100% of the financing are entitled to 50% of the profits. From theproducer's half of net profits any third-party profit participants (e.g., the writer,director and stars) will be paid.

Marketing Strategy

The motion picture industry is highly competitive; with much of a films successbeing directly related to the skill of the distributors marketing strategy. In thisregards The Company intends to retain the services of a professional sales agent tonegotiate pre-sale and licensing agreements with distributors and broadcasters.The Company also intends to maximise the Projects potential by acquiring additionalfunding to supplement the distributors advertising and publicity efforts. This fundingwill come from brand sponsorships and will also maximize The Companysbargaining power in distribution negotiations. The distribution negotiations havealready begun during the development stage. These strategies are intended tomaximise the film potential profits.

The Risk

As is the case with all motion picture and film interests, purchase of these interests

entails a high degree of risk as filmmaking is generally a long, hard and oftenexhausting process. Though fraught with risk and difficulties, it can also be anextremely rewarding experience both artistically and financially. Investors shouldalso be aware that the budget levels may not match with the sales the film is able togenerate and it could take a while to recoup the investment.


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Section 2:The Motion Picture:

Prison Codes


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Genre

Prison Drama

Synopsis

Prison Codes is the screenplay adaptation of playwright, Boebie Hamzas seminalstage play. Set mostly within the confines of the notorious Maximum Security prison,that once housed Nobel laurite Nelson Mandela, Prison Codes is a brutallypowerful, South African crime epic that delves deep into the nightmarish andcomplex underworld of the ferocious fraternity of the notorious Numbers prisongangs.

Told through tears and laughter by an avuncular warder, it is the tragic story of DavidAdonis, a hard-working newlywed whose life changes drastically when a selfless act ofgallantry lands him in prison for a crime he did not commit.

Wanting nothing more than to get out and return to his young wife and new bornbaby, Davie finds a mentor and friendship in his cellmate, Psycho, a cunning andmanipulative ne'er-do-well lifer whose knowledge of prison politics saves Davie fromcertain gang violence.

Eventually forced, on pain of death to join the gangs by Psycho, David is graduallytransformed from wary innocent to tough-nut as he ascends through the violenthierarchy of the Numbers Gangs. In the process an abrupt metamorphosis happensas he begins to question his own nature as he slowly loses not only himself, but thosehe has been trying to protect.

Prison Codes is a modern South African crime epic that strains against the bars of the

conventional prison-gangster genre. The movie explores the complexities of thesubversive numbers gang system, decoding their language and culture and exposesthe face of humanity in these inhumane self-perpetuating universities of crime.

Filled with a rich mythology that is infused with a complex ideological meaning, ofvalour and resistance. Prison Codes delves deep into the desperate existence ofextreme savagery that is prison.

END.


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Section 3:Production Summary


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Budget Assumptions

The budget for the motion picture has been estimated to be in the region ofR6million. This is considered a modest budget for a South African feature film of thisscale and depth. A budget of this size will enable the producers to leverage the DTIsFilm Production Incentive which offers a 35% rebate on production expenditure forthe first R6million spent and to hire the very best acting and technical talent availablewhile creating a product of international standard and excellence.

We are aiming for exceptional production value and our philosophy is to spendeverything on the screen. With the current global economic crisis in full swing thebottom line is that shooting a film on a big budget, especially in South Africa whichhas many other pressing social needs, is a huge luxury and uneconomical.

The current industry trend is to be pragmatic and shoot on a conservative or modestbudget, the idea being to minimise the risk as much as possible while creating asustainable business model where money is recouped primarily from local box officereceipts and DVD sales, thus instilling confidence in investors for further filmprojects.

Some recent modest to low budget theatrically released films include: Bakgat, Poenais Koning, White Wedding, Jerusalema, Confessions of a Gambler, Big Fellows,uMalusi, Discreet and many more.

Technology has also opened the arena up for low budget filmmaking. With the adventof affordable High Definition cameras, a high quality aesthetic can be achieved at afraction of what it used to cost to shoot on 35mm film.

Budget summary

We intend to use the proceeds we receive from this offering to pay for corporate setupand development expenses, to finance production of the Movie, and to cover a yearsworth of general corporate expenses.

An outline illustrating how the net proceeds raised will be allocated shall be providedon request as this amount is dependent on a completed script.

Timetable

Development: 2 months

Pre-production: 1 month

Production: 2 months

Post production: 2 months

Theatrical release: 2011


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Section 4:Biographies


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Key Creative personnel

Executive Producer: Boebie Hamza

Boebie Hamza has been involved in the entertainmentindustry for the past seventeenyears. He is a true writer in every sense of the word having written and producednumerous stage plays including NOU VERSTAAN N MAN, which ran for six yearswith more than 1 500performances nationally and performed in English,Afrikaans,Zulu, Xhosa, Sotho and Sign Language. LETS HAVE A BALL, a production written incollaboration with Farouk Valley Omar which was commissioned by the then mayorof Cape Town,Theresa Solomons. JUKEBOX a full scale musical production thatreceived rave reviews.

Boebie has also been involved in television and was the first person of colour toperform on the Mnet programme, Its a funny country as a stand-up comedian.Boebie also acted in and cast directed the SABC 2 movie, Scooter Riders and heproduced the soundtrack for the Jive TV commercial.

Boebie also has radio experience having written and produced over one hundred andfiftyradio commercials and his voice can still be heard on numerous advertisements.

Boebie has also presented programmes on Radio 786namely Sports Desk and Reviewof the Arts as well as being a Free lance Journalist for Die Son and the DailyVoice.

Boebie has also written the following songs: Lilly Dance, Funkwith me,Trapped, Madiba Jive and ahost of original songs for his various theatre pieces.Boebie also worked on Love sees no colour a song for World Peace.

Boebie is the current Chairman of the Queens Park FootballClub. He is a founding

member of the Western CapeMusicians Association, an organisation aimed at

looking after the well being of musicians in the WesternCape.

Producer: Tumiso Tsukudu

Tumiso Tsukudu is a talented and visionary writer and producers with over a decadeof experience in various aspects of the film and TV industry.

Tumiso has developed, produced, directed, written screenplays and consulted on awide range of television shows, commercials and films.

Most notably, Tumiso co-created and produced the cult favourite and multi SAFTA

award nominated sketch comedy show, The Pure Monate Show. Other accoladesinclude a 2008 African Movie Academy Award for best documentary for Do YouBelieve in Magic, co-produced with US based Production Company Daniel RothProductions.

Tumisos recent production credits include co-writing and developing Urbo, TheAdventures of Pax Afrika, South Africas first locally produced cartoon series. Tumisoalso served as the head writer and supervising producer on the groundbreaking andcontroversial Z-News, a satirical comedy show pilot helmed by infamous SouthAfrican political cartoonist Zapiro.

Tumiso brings to the project a wealth of knowledge and experience in all creative,

technical and administrative aspects of the film making process.


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Director: Teboho Mahlatsi

Teboho Mahlatsi (writer/director, executive producer). Teboho is the co-creator anddirector of the South African television phenomenon, Yizo Yizo, a drama series thatgarnered the highest television ratings in the history of the South African television.It achieved cult status and was debated in parliament. The series has won awardsthroughout the world, including the Cinema Tout Ecrand Award in Geneva for BestInternational Series and has been selected for screening at the New York African FilmFestival, the Berlin Film Festival and the Walker Art Museum in Minneapolis. In1999, Teboho wrote and directed the short film Portrait of a Young Man Drowning,which won the Silver Lion at the Venice Film Festival.

Tebohos latest project is a short film Meokgo and the Stickfighter commissioned byNew Crowned Hope Festival. In 2006, the film opened Corto Cortissimo, the sectiondedicated to short films at the prestigious 63rd Venice International Film Festivalwhere Teboho was selected as president of the short film jury. He is a creator andexecutive producer of a 52-part soap series, Zone 14 for SABC 1 and a 26-part Pan-African drama series, Jacobs Cross for M-net.

Teboho has achieved great success within South Africa as a commercials director,winning a Silver Lourie and a D&AD nomination for his recent work and has directedover 30 commercials.

This will be Tebohos first full length feature film and as one of South Africas hottestfilmmakers he has undertaken to imbue this movie with a fresh, unique and creativeartistic spirit.


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Conclusion

As world attention focuses on South Africa for the 2010 World Cup, we as SouthAfricans are provided with a phenomenal and unique opportunity to demystifynegative stereotypes and tell our own stories while also maximising return on themovie as the country is inundated with thousands of foreign visitors.

Prison Codes is a harsh but realistic look at the realities of life in South Africanprisons and will be part of the nations definable and long legacy of crime based genrefilms from Mapantsula through to Yizo! Yizo!, Tsotsi and Jerusalema. In this regardsPrison Codes is destined for great critical and artistic success.

We thank you for your expressed interest and we hope to secure a valuablepartnership with you.

Regards,

The Producers

Contact Details:

Tumiso T. TsukuduMobile: +27 827 113 823Email: [email protected]

Boebie HamzaMobile: +27 834832098Email:

Priosn Codes Prospectus

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