Filmmaking / Directing : CROWD FUNDING update from previous discussion. by Georgia Hilton

Looking to raise money for your film project? Take a quick read. What’s the difference between a Film Project Business Plan and a Film Project Securities Disclosure Document? A business plan provides an overview of the project and can be used to raise money from Active Investors. A Securities document provides a legal document meeting the federal Securities and Exchange Commission as well as state securities regulatory authorities requirements to raise capital from active and passive investors. These two documents do have a lot of similarities and have a number of overlapping areas. If you are trying to raise money from investors to create and complete a film project which one do you use and when do you use it? Actually it’s pretty easy to determine… Active Investor - Film Project Business Plan can be used alone. Passive Investor - You must utilize a securities document with your Business plan. A bit more information: A film project business plan is a written statement that describes and analyzes your movie project. It provides detailed projections about both the future of the film business as a whole and the potential Return on Investment (ROI) based on research and data about your film project and how it fits within the film business data. It will include information such as project status, background and detailed information. It normally includes key personnel involved and their background, the information regarding the script and ownership, budget and funds usage, and project specifications, delivery data, and information regarding sales, marketing and distribution. A BIG note is: Your business plan is not an investment vehicle. You cannot sell shares and people cannot invest in your film project business plan. If you do intend to utilize your business plan to actually raise money, you must use it in a proper manner and must be combined with an appropriate investment vehicle. You CAN use your business plan to raise money from one or two private investors. You CANNOT use it stand alone to raise money from passive investors. An active investor is someone who will become actively involved in producing or making your film project. It’s easy to understand if you have an active investor because they will have knowledge of and experience in the film industry that is relevant to your project and be actively involved in helping on a day to day basis. A passive investor, is, well… everyone else. This is an important because it represents the difference between a non-securities offering and a securities offering. Anytime you raise money from one or more passive investors, you are, by default, selling a security, it doesn’t matter what you call it.. You are seeking funding from passive investors, if they have little or no knowledge of film making and are not involved in the project decisions. Your decision to raise money from active and/or passive investors has implications and consequences. If you are chase money from one or more passive investors, you are required by law to provide those investors with a properly prepared securities disclosure document, prior to their investment. What does this mean to a filmmaker raising money using Crowd Funding ? That’s up in the air. Right now you’re probably under the proverbial RADAR, but… The SEC is in fact reviewing crowd funding and how it may impact and be impacted by the SEC and it’s federal and state regulations. A number of states have already instituted crowd funding regulations and the SEC is busy sorting out how they will be dealing with it. Here’s a link to give you some ida as to what’s happening: http://www.sec.gov/rules/proposed/2013/33-9470.pdf Many states are authorizing exemptions for Crowd funding. This allows people to raise money through crowd funding sites from PASSIVE INVESTORS legally without going through the Securities Exchange and dealing with creation of a Securities Document and coping with federal regulations. Here's a brilliant link that talks about the issues of crowd funding in general. A MUST READ to understand the issues... http://www.slate.com/articles/business/moneybox/2014/06/sec_and_equity_c... Another good read on crowd funding: http://www.thedeal.com/content/regulatory/states-make-own-crowdfunding-r... Also be aware, some issues come into play with cross-state boundaries... IE: If you start a funding campaign in Florida and someone pledges to your project from Kansas... which state laws are in effect? Sometimes Both. Even though you are probably going to be flying under the RADAR....be aware of the issues. Most other States HAVE NOT enacted any exemptions, so legally, you are walking on thin ice. But best of luck and note: I AM NOT AN ATTORNEY - Talk to an attorney to fully understand the implications to your crowd funding efforts... or (Blatant sales pitch here) - I'm just a producer who knows her stuff who is available for hire onto your project or as a consultant to your project.... (Blatant sales pitch completed) Note: at some point the SEC is going to step into this and things will probably change. Here are some of the present STATE regulations documents and/or information: Michigan: in effect. http://www.legislature.mi.gov/documents/2013-2014/publicact/htm/2013-PA-... Wisconsin: in effect. http://docs.legis.wisconsin.gov/2013/related/acts/52 Georgia: in effect. http://rules.sos.state.ga.us/docs/590/4/2/08.pdf Kansas: in effect. https://s3.amazonaws.com/wac6web/docs/Office+of+the+Kansas+Securities+Co... Maine: in effect. http://www.mainelegislature.org/legis/bills/display_ps.asp?ld=1512&PID=1... Alabama: in effect. http://legiscan.com/AL/bill/SB44/2014 New jersey: In legislation as of this posting http://legiscan.com/NJ/bill/S712/2014 North Carolina: In legislation as of this posting http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H680v2.pdf Washington State: In legislation as of this posting http://apps.leg.wa.gov/documents/billdocs/2013-14/Pdf/Bills/House%20Bill... Indiana: in effect. http://www.in.gov/sos/securities/files/IC_23-19-2-2_(July_2014).pdf Florida: In legislation as of this posting info on the legislation: http://www.crowdfundinsider.com/2014/03/33630-legislation-authorizing-in...