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Global Universal Film Funds recently launched “Global Universal Film Fund I, LLC” to provide investment capital to fund the production of a “slate” of multiple feature films. The capital raised will be released “as needed” to produce each film. Sales estimates and other distribution incentives for each film will be obtained by Global Universal in advance of commencing film production. The concept of producing back-to-back films will result in certain economies of scale and reduction of duplicate overhead, as well as providing our financial partners and investors with the safety of cross-collateralizing investment risk over many films instead of just one. Investment in the Film Fund is available solely to Accredited Investors, by PROSPECTUS ONLY! If you are an Accredited Investor and have an interest in investing in our movies via the Film Fund, please contact us and request information.

Global Universal Film Fund I was formed to avail itself of multiple film financing opportunities, which include utilizing funding strategies involving state and country film tax incentives and filming rebates, film distribution guarantees and leveraging its growing film library.

A January 25, 2009 ‘New York Times’ article headline read: “Suddenly, Hollywood Seems a Conservative Investment”. For film investors, does this mean the risk is gone from making films? Not quite. However, the film industry is proving much more resilient than Wall Street, the real estate market and the art world; all of those "supposedly" stable investment areas. Savvy Los Angeles film production companies like Global Universal manages their investment risk through a variety of routes: pre-selling films to foreign film distributors, casting commercially tested actors, taking advantage of a multitude of government film tax incentives; thus effectively reducing a substantial portion of the risk in financing its films.

Typically, a foreign governmental entity providing tax credits (e.g., Canada, France, etc.) will receive a return from sales of the film within that particular country only. In the U.S., there is no such return, as the individual States provide the film tax incentives, but such tax incentives generally require most of the budget to be spent in such State. Tax incentives are usually pledged directly to a bank to obtain a production loan that is used to cover a significant portion of production expenditures in making a film.

Additionally, any financial accommodations extended by the film’s distributor will be pledged for a production loan. After the production financing has been repaid by tax incentives and any distributor advances, the distributor will receive a return of its investment from the first sale of rights to the film. Global Universal is then uniquely positioned to realize uncapped returns, without corresponding investment risk, from the sale of rights to the film after the film distributor is reimbursed. Global Universal will endeavor to retain all or a portion of the asset constituting the ownership of the film on its books, thereby building a valuable Film Library that will create long-term shareholder value and facilitate future financing of the Company’s films.

Example of how GLOBAL UNIVERSAL limits the downside risk...

The feature film, “Blue Seduction”, starring Billy Zane and Estella Warren, was produced by Global Universal Pictures in the Province of New Brunswick, Canada, where the Company utilized both Canadian tax incentives and a minimum guaranteed sales amount from a distributor to obtain bank financing for nearly 75% of the production costs of the film. Neither the tax credit amounts, nor the minimum amount guaranteed by the distributor (pledged for production financing) have to be repaid by the Company. The balance of the film’s cost was arranged by the Company through deferments and it’s own investment. This balance of the film’s cost (roughly 25%) was collateralized by the sale of film rights, after distribution guarantees and selling expenses.

Global Universal Entertainment will produce films in any one of several States, which offer 30% to 35% or more, of the amount actually spent on producing a film in such State, in the form of tax credits or rebates. Again, these tax items will be monetized for a production loan to make the film. To complete the financing, the Company will seek a combination of advances or guarantees from a distributor, possible pre-sales from one or two territories, private investor commitments and deferments of a portion of certain production costs.

These financing strategies help provide a high degree of confidence that the investment at risk in Global Universal films will achieve a return even if the gross film sales are less than “break-even.” This means that smaller films should have a better chance of realizing a profit even if produced for direct-to-video/DVD releases, driven by increasing consumer demand for streaming, pay & cable TV, satellite and digital sales. If a Global Universal film warrants a theatrical release, then the upside potential will obviously be even greater.

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