Exhibit
10.1


 


SUBSCRIPTION
AGREEMENT


RIVULET
MEDIA, INC.


 


Rivulet
Media, Inc.


1206
E. Warner Rd, Suite 101-I


Gilbert,
Arizona 85296





Attn:
Michael Witherill


 


Re:
Purchase of Rivulet Media, Inc. Series A Convertible Promissory Notes


 


Gentlemen:


 


The
undersigned (“Purchaser”) hereby subscribes to purchase the amount of Series A convertible promissory notes (“Notes”)
of Rivulet Media, Inc., a Delaware corporation (the “Company”), set forth on the signature page hereof, with a minimum
investment of $25,000. The Notes are convertible into shares of common stock of the Company (“Shares”) at the option
of the Purchaser at a conversion price of $0.80 per Share and, should the closing price of the Shares as reflected on the OTC
Market reach $1.20 or higher, shall automatically convert into the number of Shares that results by dividing the outstanding principal
amount and all accrued but unpaid interest by $0.80. This subscription may be rejected by the Company in its sole discretion.


 


Such
purchase of Notes is subject to the terms and conditions set forth in the Risk Factors attached as Exhibit A and in the
Company’s reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended. Such purchase of Notes and, following conversion, the Shares, is also subject to the following paragraphs.


 


1.       Purchase.
Subject to the terms and conditions hereof, Purchaser hereby irrevocably agrees to purchase the amount of Notes set forth on the
signature page hereof and tenders herewith the consideration set forth on the signature page hereof. Payment in full by cash,
certified check, or wire transfer accompanies the delivery of this Subscription Agreement.


 


2.       Representations
and Warranties. Purchaser hereby makes the following representations and warranties to the Company and Purchaser agrees to
indemnify, hold harmless, and pay all judgments of and claims against the Company from any liability or injury, including, but
not limited to, that arising under federal or state securities laws, incurred as a result of any misrepresentation herein or any
warranties not performed by Purchaser.


 


  (a)         Purchaser
is the sole and true party in interest and is not purchasing for the benefit of any other person.


 


  (b)         Purchaser
has read, analyzed, and is familiar with the Risk Factors attached as Exhibit A, this Subscription Agreement, and the Investor
Suitability Questionnaire and has retained copies of all such documents. Purchaser has had an opportunity to discuss the business
plans of the Company with Company management and has had an opportunity to ask questions and received satisfactory responses from
management with respect to the Company.


 


  (c)         Purchaser
has read, analyzed, and is familiar with the section of this Subscription Agreement entitled “Investor
Suitability Questionnaire” and Purchaser hereby warrants that Purchaser either [CHECK ALL THAT APPLY]:


 


o       is
an Accredited Investor, as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”),
and all liabilities necessary to make a verification of net worth have been disclosed to the person completing the Accredited
Investor Verification, if any;



    1


     


    

o       alone
or with a purchaser representative(s) has such knowledge and experience in financial and business matters that he or she is capable
of evaluating the merits and risks of the prospective investment; or


 


o       is
not a “U.S. person” as that term is defined under Regulation S promulgated under the 1933 Act.


 


  (d)         Purchaser
understands that all books, records, and documents of the Company relating to this investment have been and remain available for
inspection by Purchaser upon reasonable notice. Purchaser confirms that all documents requested by Purchaser have been made available,
and that Purchaser has been supplied with all of the additional information concerning this investment that has been requested.
In making a decision to purchase the Notes, Purchaser has relied exclusively upon information provided in the Risk Factors attached
as Exhibit A and its own independent investigation of the Company’s books, records, and documents.


 


  (e)         Purchaser
is aware that an investment in the Notes is highly speculative and subject to substantial risks, including those risks set forth
in the Risk Factors attached as Exhibit A. Purchaser is capable of bearing the high degree of economic risk and burdens
of this venture, including, but not limited to, the possibility of the complete loss of all funds invested, the loss of any anticipated
tax benefits, the lack of a public market, the unavailability of redemption for the Shares, and limited transferability of the
Notes and Shares that may make the liquidation of this investment impossible for the indefinite future.


 


  (f)          The
offer to sell the Notes was directly communicated to Purchaser by the Company, or through a person acting on its behalf, in such
a manner that Purchaser was able to ask questions of and receive answers from the Company concerning the terms and conditions
of this transaction. At no time was Purchaser presented with or solicited by or through any article, notice, or other communication
published in any newspaper or other leaflet, public promotional meeting, television, radio, or other broadcast or transmittal
advertisement or any other form of general advertising.


 


  (g)         Purchaser,
if a corporation, partnership, trust, or other entity, is authorized and duly empowered to purchase and hold the Notes and, following
conversion, the Shares, has its principal place of business at the address set forth on the signature page and has not been formed
for the specific purpose of purchasing the Notes.


 


  (h)         The
Notes are being purchased solely for Purchaser’s own account for investment and are not being purchased with a view to the
resale, distribution, subdivision, or fractionalization thereof.


 


  (i)          Purchaser
understands that the Notes have not been registered under the Act or any state securities laws in reliance upon exemptions from
registration for non-public offerings. Purchaser understands that the Notes or any interest therein may not be, and agrees that
the Notes or any interest therein, will not be, resold or otherwise disposed of by Purchaser unless the Notes are subsequently
registered under the Act and under appropriate state securities laws or unless the Company receives an opinion of counsel satisfactory
to it that an exemption from registration is available.


 


  (j)          Purchaser
has been informed of and understands the following:


 


(1)       There
are substantial restrictions on the transferability of the Notes and Shares under the Act; and



    2


     


    

(2)
       No federal or state agency has made any finding or determination as to the fairness
of the Notes for public investment nor any recommendation or endorsement of the Notes.


 


  (k)         None
of the following information has ever been represented, guaranteed, or warranted to Purchaser expressly or by implication, by
any broker, the Company, or agents or employees of the foregoing, or by any other person:


 


(1)        The
approximate or exact length of time that Purchaser will be required to hold the Notes;


 


(2)
       The percentage of profit and/or amount of or type of consideration, profit or loss to
be realized, if any, as a result of an investment in the Notes; or


 


(3)
       That the past performance or experience of the Company, or associates, agents, affiliates,
or employees of the Company or any other person, will in any way indicate or predict economic results in connection with the purchase
of the Notes.


 


  (l)          The
information set forth in the Investor Suitability Questionnaire and executed by Purchaser is true, correct and complete.


 


  (m)         Purchaser
has not distributed this Subscription Agreement to anyone, no other person has used the Subscription Agreement, and Purchaser
has made no copies of the Subscription Agreement.


 


  (n)         Purchaser
hereby agrees to indemnify the Company, its officers, its directors, persons who participated in the preparation of this Subscription
Agreement, and any person participating in the offering and hold them harmless from and against any and all liability, damage,
cost (including legal fees and court costs) and expense incurred on account of or arising out of:


 


(1)       Any
inaccuracy in the declarations, representations, and warranties set forth herein;


 


(2)       The
disposition of any of the Notes by Purchaser contrary to the foregoing declarations, representations, and warranties; and


 


(3)
      Any action, suit, or proceeding based upon (i) the claim that said declarations, representations,
or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company; (ii) the disposition
of any of the Notes; or (iii) the breach by Purchaser of any part of this Subscription Agreement.


 


  (o)         If
Purchaser is a corporation, partnership, limited liability company, trust, or other entity and the Purchaser is not an employee
benefit plan as defined under ERISA (an “Employee Benefit Plan”), “Benefit Plan Investors,” as that term
is defined in the regulations promulgated under ERISA, own less than twenty-five percent (25%) of the value of each class of equity
interests in the Purchaser (excluding from the computation interests of any individual or entity with discretionary authority
or control over the assets of the Purchaser). If Purchaser is such an entity and at any time twenty-five percent (25%) or more
of such value is or comes to be held by Benefit Plan Investors (a “25% Purchaser”), Purchaser shall immediately notify
the Company in writing that Purchaser has become a 25% Purchaser. If Purchaser is or becomes a 25% Purchaser or an Employee Benefit
Plan, Purchaser understands and agrees that (i) its subscription may be reduced by the Company (in any manner that the Company
considers appropriate) to an amount that, when aggregated with all other Benefit Plan Investor participation in the Company, such
participation in the Company is less than twenty-five percent (25%), and (ii) notwithstanding anything in this Agreement or in
the Company Agreement to the contrary, the Company shall have the right to require Purchaser to withdraw any or all of its investment
at any time or from time to time, if in the exclusive discretion of the Company, such withdrawal is advisable to limit participation
by Benefit Plan Investors in the Company to less than twenty-five percent (25%). If Purchaser is an Employee Benefit Plan or a
25% Purchaser, the person signing this Agreement on behalf of Purchaser also makes the representations and warranties attached
hereto.



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  (p)         If
Purchaser is a qualified plan (including a Keogh plan or an Individual Retirement Account) or is otherwise a Benefit Plan Investor,
to the best of Purchaser’s knowledge, neither the Company nor any affiliate (i) has investment discretion with respect to
the assets being used to purchase the Notes, (ii) regularly gives individualized investment advice which serves as the primary
basis for the investment decisions made with respect to such assets, or (iii) is otherwise a fiduciary with respect to such assets.


 


  (q)         Either
(i) no part of the assets to be used to purchase the Notes constitutes assets of any employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to Title I of ERISA or Section 4975 of the Code, or (ii) part of the assets to be used to purchase
the Notes constitutes assets of one or more employee benefit plans subject to Title I of ERISA or Section 4975 of the Code and
such purchase is eligible for coverage under one or more statutory or administrative exemptions from the prohibited transaction
rules of ERISA and the Code.


 


  (r)          Neither
Purchaser nor, to its knowledge after making due inquiry, any person or entity controlled by Purchaser, or if Purchaser is other
than a natural person, any person or entity controlled by, controlling or under common control with Purchaser nor any person having
a beneficial interest in Purchaser:


 


(1)       is
a person or entity listed in Executive Order No. 13224 (September 23, 2001) issued by the President of the United States (Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), any related
enabling legislation or any other similar Executive Orders (collectively, the “Executive Order”), or if Purchaser
is other than a natural person, is a person or entity listed in the Annex to Section 1(b), (c) or (d) of the Executive Order;


 


(2)       is
named on the List of Specially Designated Nationals and Blocked Persons (the “SDN List”) maintained by the U.S. Office
of Foreign Asset Control (“OFAC”), Department of the Treasury, and/or on any other similar list (“Other Lists”)
maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation (collectively, “OFAC Laws and Regulations”);


 


(3)
      is a “Designated National” as defined in the Cuban Assets Control Regulations,
31 C.F.R. Part 515 (“Cuban Designated Nationals”) (the SDN List, the Other Lists and Cuban Designated Nationals are
referred to in this Agreement, collectively, as the “Lists”);


 


(4)       is
a foreign shell bank or is otherwise a bank with no physical presence in any country, e.g., no place of business at a fixed address
in a country in which it is authorized to do business with full time employees and records and which is subject to inspection
by its licensing authority; or


 


(5)       is
(i) a current or former senior official in the executive, legislative, administrative, military, or judicial branch of a foreign
government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign
government-owned commercial enterprise, (ii) a corporation, business or other entity that has been formed by, or for the benefit
of, any such individual (iii) an immediate family member of any such individual, or (iv) a person who is widely and publicly known
(or is actually known by Purchaser) to maintain a close personal relationship with any such individual (collectively, an “SFPF”).



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  (s)         Neither
Purchaser nor, to its knowledge after making due inquiry, any holder of a beneficial interest in it (i) is under investigation
by any governmental authority for, or has been charged with or convicted of, money laundering (18 U.S.C. §§ 1956 and
1957), drug trafficking, terrorist-related activities, or other money laundering predicate crimes or a violation of the Bank Secrecy
Bank (“BSA”) laws (31 U.S.C. § 5311 et seq.) and regulations, (ii) has been assessed civil penalties under these
or related laws, or (iii) has had its funds seized or forfeited in an action under these or related laws.


 


  (t)          The
funds invested by Purchaser in the Notes are derived from legal sources. If Purchaser is other than a natural person, Purchaser
has taken, and will continue to take, reasonable measures appropriate to the circumstances, with respect to each of its stockholders,
members, partners or other investors (collectively, “Entity Investors”) in Purchaser, to assure that funds invested
in it by such Entity Investors are derived from legal sources and that these measures will be in accordance with all applicable
BSA laws, regulations and government guidance on BSA compliance and on the prevention and detection of money laundering violations
under 18 U.S.C. §§ 1956 and 1957) (collectively, “Anti-Money Laundering Laws”).


 


  (u)         If
Purchaser is a financial institution or financial intermediary, Purchaser has taken, and will continue to take, reasonable steps,
consistent with industry practice for comparable organizations and in any event as required by law, to ensure that it is and shall
be in compliance with all current and future Anti-Money Laundering Laws, and laws, regulations, and government guidance for the
prevention of terrorism, terrorist financing and drug trafficking.


 


  (v)         Purchaser
agrees to provide the Company, promptly upon request, all information that the Company reasonably deems necessary or appropriate
to comply with applicable U.S. anti-money laundering and anti-terrorist laws and regulations and OFAC Laws and Regulations. Purchaser
consents to the disclosure to U.S. regulators and law enforcement authorities by the Company and its affiliates and agents of
such information about Purchaser that the Company reasonably deems necessary or appropriate to comply with applicable U.S. anti-money
laundering and anti-terrorist laws and regulations and OFAC Laws and Regulations.


 


  (w)         If
Purchaser is a financial institution or financial intermediary, Purchaser agrees to adopt and maintain adequate policies, procedures
and controls to ensure that it is, and that each holder of any beneficial interest in it is, in compliance with all OFAC Laws
and Regulations, Executive Orders and related government guidance (such OFAC policies, procedures and controls are collectively
referred to as “Purchaser OFAC Policies”). Purchaser further agrees to make its Purchaser OFAC Policies and the respective
policies, procedures and controls for persons or entities becoming and being Entity Investors in Purchaser (such policies, procedures
and controls are collectively referred to as “Entity Investor OFAC Policies”), together with the information collected
thereby concerning Purchaser and such Entity Investors, available to the Company for its review and inspection from time to time
during normal business hours and upon reasonable prior notice, and Purchaser agrees to deliver copies of the same to the Company
from time to time upon request. The Company will keep Purchaser OFAC Policies and the Entity Investor OFAC Policies, and the information
collected thereby, confidential subject to customary exceptions for legal process, auditors, regulators or as otherwise reasonably
required by the Company for enforcement of its rights and/or in connection with reasonable business use for holding and dealing
with its assets and investments.



    5


     


    

  (x)         If
Purchaser is other than a natural person and if Purchaser OFAC Policies and the Entity Investor OFAC Policies referred to in subparagraph
5(w) above, and the measures referred to in subparagraph 5(w) above to assure that Purchaser’s and each Entity Investor’s
funds are derived from legal sources, shall not provide, in the reasonable determination of the Company, adequate means to assure
that persons or entities that are listed on any of the Lists, or that are designated persons under any of the Executive Orders,
or whose funds are not derived from legal sources, are excluded from becoming or being Entity Investors in Purchaser, the Company
shall notify Purchaser of its determination. If such policies, procedures and controls, as applicable, and such measures are not
modified to the satisfaction of the Company within 30 days following notice to Purchaser of the Company’s determination,
Purchaser acknowledges that the Company, in addition to all of their other rights and remedies, may declare that a breach of this
Agreement exists with respect to Purchaser.


 


  (y)         Purchaser
acknowledges and agrees that if, following its investment in the Company, the Company reasonably believes that Purchaser has breached
its representations and warranties or its agreements set forth in this Agreement, or a breach of this Agreement otherwise has
been declared to exist with respect to Purchaser, the Company has the right or may be obligated to freeze the investment to prohibit
additional investments, to segregate the assets constituting the investment in accordance with applicable OFAC Laws and Regulations,
to decline any redemption requests, or to redeem Purchaser’s investment. Purchaser further acknowledges that it will have
no claim against the Company, or any of its respective affiliates, officers, directors, shareholders, employees and agents for
any form of damages as a result of any of the foregoing actions.


 


  (z)         If
Purchaser is other than a natural person, Purchaser shall require each person that proposes to acquire any interest in Purchaser
to sign an agreement with such representations, warranties, and covenants substantially in the form of paragraph 2 of this Agreement
and to deliver the same to Purchaser.


 


Purchaser
agrees to notify the Company promptly if there is any change with respect to the representations provided in this paragraph 2.
The foregoing representations and warranties of Purchaser are complete, true, and accurate as of the date of this Agreement and
shall survive delivery of this Agreement to the Company for all purposes. If any of such representations and warranties shall
not be true and accurate in any respect following the execution and delivery of this Agreement, Purchaser shall give prompt written
notice of such fact to the Company, specifying which representations and warranties are not true and accurate and the reasons
therefor.


 


3.       Setoff.
Notwithstanding the provisions of the last preceding section or the enforceability thereof, the undersigned hereby grants to the
Company the right to setoff against any amounts payable by the Company to the undersigned, for whatever reason, of any and all
damages, costs, and expenses (including, but not limited to, reasonable attorneys’ fees) which are incurred on account of
or arising out of any of the items referred to in clauses (1) through (3) of Section 2(n).


 


		4.	Restrictions
                                         on Transferability of Notes and Shares and Compliance with the Securities Act.



 


(a)       Restrictions
on Transferability. Purchaser acknowledges that neither the Notes nor the Shares have been registered under the Act or any
state blue sky laws, and that the transferability of an interest in the Notes or Shares is restricted by applicable federal and
state securities laws.



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(b)       Restrictive
Legend. The certificate representing the Notes or Shares, if any, and any other securities issued in respect thereto upon
any distribution, recapitalization, merger, consolidation or similar event, are expected (unless otherwise permitted by the provisions
of this Section or by applicable law) to be stamped or otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SECURITIES MAY BE SOLD OR TRANSFERRED ONLY IF THE SECURITIES ARE REGISTERED UNDER THE ACT OR THE COMPANY RECEIVES AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.


 


5.       Transferability
of Subscription Agreement. Purchaser agrees not to transfer or assign the obligations or duties contained in this Subscription
Agreement or any of Purchaser’s interest herein.


 


6.       Regulation
D and Regulation S. Notwithstanding anything herein to the contrary, every person or entity who, in addition to or in lieu
of Purchaser, is deemed to be a purchaser pursuant to Regulation D or Regulation S promulgated under the Act or otherwise, does
hereby make and join in the making of all the covenants, representations, and warranties made by Purchaser.


 


7.       Acceptance.
Execution and delivery of this Subscription Agreement and tender of the payment referenced in Section 1 above shall constitute
Purchaser’s irrevocable offer to purchase the amount of Notes indicated, which offer may be accepted or rejected by the
Company in its discretion for any cause or for no cause. Acceptance of this offer by the Company shall be indicated by the execution
hereof by the Company.


 


8.       Binding
Agreement. Purchaser agrees that Purchaser may not cancel, terminate, or revoke this Subscription Agreement or any agreement
Purchaser makes hereunder, and that this Subscription Agreement shall survive upon the death or disability of Purchaser and shall
be binding upon and inure to the benefit of the heirs, successors, assigns, executors, administrators, guardians, conservators,
or personal representatives of Purchaser.


 


9.       Incorporation
by Reference. The statement of the amount of Notes subscribed and related information set forth on the signature page are
incorporated as integral terms of this Subscription Agreement.


 


10.     Notices.
Notices and other communications under this Subscription Agreement shall be in writing and shall be deemed delivered when received
or, if by U.S. mail, when deposited in a regularly maintained receptacle, by Certified First Class Mail, postage prepaid, addressed:


 


  (a)       if
to Purchaser, at the address shown on the signature page hereof unless the Purchaser has advised the Company, in writing, of a
different address as to which notices shall be sent under this Subscription Agreement; and


 


  (b)       if
to the Company, at the address first above stated, to the attention of the CFO or to such other address or to the attention of
other such officer, as the Company shall have furnished to Purchaser.


 


11.     Legal
Counsel. Purchaser has had the opportunity to consider the terms of this Subscription Agreement and the executive summary
with Purchaser’s legal counsel and has either obtained the advice of legal counsel in connection with Purchaser’s
execution hereof or does hereby expressly waive its right to seek such legal counsel in connection with this transaction and furthermore
has relied on its legal advisor to provide advice as to the tax consequences to Purchaser upon making the purchase.



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12.     Miscellaneous.
This Subscription Agreement and the documents and agreements referenced herein embody the entire agreement and understanding between
the Company and the other parties hereto and supersede all prior agreements and understandings relating to the subject matter
hereof. It is the intent of the parties hereto that all questions with respect to the construction and interpretation of this
Subscription Agreement and the rights and liabilities of the parties hereto shall be determined in accordance with the laws of
the State of Delaware, without regard to principles of conflicts of laws thereof that would call for the application of the substantive
law of any jurisdiction other than the State of Delaware. Each of the parties hereto irrevocably and unconditionally agrees (i) to
be subject to the jurisdiction of the courts of the State of Arizona, (ii) that service of process may be made on such party
by prepaid certified mail with a validated proof of mailing receipt constituting evidence of valid service, and (iii) that
service made pursuant to clause (ii) above shall have the same legal force and effect as if serviced upon such party personally
within the State of Arizona. The headings in this Subscription Agreement are for purposes of reference only and shall not limit
or otherwise affect the meaning hereof. This Subscription Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.


 


13.     Subscription
Payments. All subscription payments should be made payable to “Rivulet Media, Inc.” in the amount of Notes
purchased (minimum investment of $25,000). All funds received will be transferred into the Company’s checking account at
any time following acceptance by the Company. We are offering the Notes until the earliest of (i) December 31, 2020; (ii) the
date on which an aggregate of $900,000 of Notes have been sold; or (iii) termination by the Board of Directors of the Company.


 


[Remainder
of Page Intentionally Left Blank]




    8


     


    

IN
WITNESS WHEREOF, Purchaser has executed this Subscription Agreement on the date set forth on the signature page.


 


Purchaser
desires to take title in the Notes as follows (check one):


 


	______	(a)	Individual
    (one signature required on page 10);
	 	 	 
	______	(b)	Husband
    and Wife as community property (one signature is required on page 10 if interest is held in one name, i.e., managing spouse;
    two signatures are required on page 10 if interest is held in both names);
	 	 	 
	______	(c)	Joint
    Tenants with rights of survivorship (both parties must sign on page 10);
	 	 	 
	______	(d)	Tenants
    in Common (both parties must sign on page 10);
	 	 	 
	______	(e)	Trust
    (trustee(s) must sign on page 11);
	 	 	 
	______	(f)	Partnership
    or Limited Liability Company (general partners(s), manager(s), or authorized member(s) must sign on page 12);
	 	 	 
	______	(g)	Corporation
    (authorized officer must sign on page 14);
	 	 	 
	______	(h)	Employee
    Benefit Plan (authorized officer must sign on page 15);
	 	 	 
	______	(i)	Individual
    Retirement Account (authorized party must sign on page 15);
	 	 	 
	______	(j)	Keogh
    Plan (authorized party must sign on page 15);
	 	 	 
	______	(k)	Other
    Tax-Exempt Entities (authorized parties must sign on page 15).


 


The
exact name(s) under which title to the Notes is to be taken is as follows:


 


	 
	 
	 


 


(Please
print)




    9


     


    

SUBSCRIPTION
AGREEMENT


SIGNATURE
PAGE


FOR
INDIVIDUAL PURCHASERS,


JOINT
TENANTS, AND TENANTS IN COMMON


 


	Dollar
    Amount of Notes Subscribed:	$	 


 


	Investor
    #1	 	Investor
    #2
	 	 	 
	Signature	 	Signature
	 	 	 
	Social
    Security Number	 	Social
    Security Number
	 	 	 
	Print
    or Type Name	 	Print
    or Type Name
	 	 	 
	Residence
    Address	 	Residence
    Address
	 	 	 
	 	 	 
	 	 	 


 


Individual
Acknowledgment


 


	State
    of  __________________	)
	 	) ss:
	County
    of _________________	)


 


On
this ___ day of ______________, 20__, ________________________ and ___________________ personally appeared before me and
swore to be the person(s) whose name is subscribed to the within instrument and acknowledged to me that he/she/they executed the
same, and that the same is true to the best of his/her/their knowledge, information, and belief.


 


	SEAL	 
	 	Notary
    Public in and for Said County and State


 


	My
    Commission expires: 	 


 


Subscription
accepted:


 


Rivulet
Media, Inc.


 


	By: 	 
	 	Michael
    Witherill, President




    10


     


    

SUBSCRIPTION
AGREEMENT


SIGNATURE
PAGE


FOR
TRUST PURCHASERS


 


	Dollar Amount of Notes Subscribed:	$ 	 


 


	Executed
    at ______________________________________, 	 


 


	this
    ______________ day of  ____________________________________________, ____________________________________________________.


 


	 
	Name of Trust (Please print or type)
	 
	Name of Trustee (Please print or type)
	 
	Date
    Trust was formed:  	 


 


	By: 	
	 	Trustee’s
    signature 


 


	Taxpayer
    Identification Number: 	 


 


	Trustee’s
    Address: 	 
	 	 
	 	 


 


	Attention: 	 


 


ACKNOWLEDGMENT
IF SUBSCRIBER IS A TRUST


 


	STATE
    OF __________________	)
	 	) ss:
	COUNTY
    OF _________________	)


 


On
the ____ day of ___________________, 20__ personally appeared before me, __________________, who being duly sworn
did say that he/she is the trustee of the ___________________________, a trust, and that said instrument was signed in behalf
of said trust by authority of the applicable trust instrument and he/she acknowledged to me that said trust executed the same.


 


	SEAL	 
	 	Notary
    Public in and for Said County and State


 


	My
    Commission expires: 	 


 


Subscription
accepted:


 


Rivulet
Media, Inc.


 


	By: 	 
	 	Michael
    Witherill, President




    11


     


    

SUBSCRIPTION
AGREEMENT


SIGNATURE
PAGE


FOR
PARTNERSHIP AND LIMITED LIABILITY COMPANY PURCHASERS


 





	Dollar Amount of Notes Subscribed:	$ 	 


 


	Executed
    at ______________________________________, 	 


 


	this
    ______________ day of  ____________________________________________, ____________________________________________________.



	 
	Name
    of Partnership or Limited Liability Company (Please print or type)


 


	By: 	 
	 	Signature
    of General Partner, Manager, or authorized Member


 


	 	 (Print
    or Type Name)


 


	By: 	 
	 	Signature
    of additional General Partner, Manager, or authorized Member (if required by Partnership Agreement or Limited Liability Company
    Agreement)


 


	 	 (Print
    or Type Name)


 


	By: 	 
	 	Signature
    of additional General Partner, Manager, or authorized Member (if required by Partnership Agreement or Limited Liability Company
    Agreement)


 


	 	 (Print
    or Type Name)


 


	Taxpayer
    Identification Number: 	 


 


	Business
    Mailing Address: 	 
	 	 
	 	 


 


	Attention: 	 




    12


     


    

ACKNOWLEDGMENT
IF SUBSCRIBER IS A PARTNERSHIP


OR
LIMITED LIABILITY COMPANY


 





	STATE
    OF __________________	)
	 	) ss:
	COUNTY
    OF _________________	)


 


On
the___ day of ____________________, 20__, personally appeared before me, _________________ and ______________________
who being duly sworn (or affirmed) did say that he/she/they are the ___________________________ of the partnership/limited liability
company that executed the within instrument and such instrument was signed by him/her/them on behalf of said partnership/limited
liability company and acknowledged to me that said partnership/limited liability company executed the same.


 


	SEAL	 
	 	Notary
    Public in and for Said County and State


 


	My
    Commission expires:  	 


 


Subscription
accepted:


 


Rivulet
Media, Inc.


 


	By:  	 
	 	Michael
    Witherill, President




    13


     


    

SUBSCRIPTION
AGREEMENT


SIGNATURE
PAGE


FOR
CORPORATE PURCHASERS


 





	Dollar Amount of Notes Subscribed:	$ 	 


 


	Executed
    at ______________________________________, 	 


 


	this
    ______________ day of  ____________________________________________, ____________________________________________________.



 


	Name
    of Corporation (Please print or type)


 


	By: 	 
	 	Signature
    of authorized agent


 


	Title: 	 


 


	Taxpayer
    Identification Number:  	 


 


	Address
    of Principal Corporate Offices: 	 
	 	 
	 	 


 


	Mailing
    Address: 	 


 


	(if
    different) 	 


 


	Attention: 	 


 


ACKNOWLEDGMENT
IF PURCHASER IS A CORPORATION


 





	STATE
    OF __________________	)
	 	) ss:
	COUNTY
    OF _________________	)



 


On
the _____ day of ___________________________, 20__, personally appeared before me, ___________________________ who being duly
sworn (or affirmed) did say that he/she is the ___________________________ of ___________________________, and that said instrument
was signed by him on behalf of said Corporation by authority of its bylaws (or of a resolution of its board of directors, as the
case may be), and he/she acknowledged to me that said corporation executed the same.


 


	SEAL	 
	 	Notary
    Public in and for Said County and State


 


	My
    Commission expires: 	 


 


Subscription
accepted:


 


Rivulet
Media, Inc.


 


	By: 	 
	 	Michael
    Witherill, President






    14


     


    

SUBSCRIPTION
AGREEMENT


SIGNATURE
PAGE IF PURCHASER IS AN


EMPLOYEE
BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT, KEOGH


PLAN,
OR OTHER ENTITY


 








	Dollar Amount of Notes Subscribed:	$ 	 


 


	Executed
    at ______________________________________, 	 


 


	this
    ______________ day of  ____________________________________________, ____________________________________________________.



 


	Name
    of Entity (Please print or type)


 


	By:  	 
	 	Signature
    of authorized agent
	 	 
	 	Title


 


	Taxpayer
    Identification Number: 	 


 


	Address
    of Principal Offices: 	 


 


	Mailing
    Business Address: 	 
	 	 


 


	Attention: 	 


 


ACKNOWLEDGMENT
IF PURCHASER IS AN


EMPLOYEE
BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT, KEOGH


PLAN
OR OTHER ENTITY


 





	STATE
    OF __________________	)
	 	) ss:
	COUNTY
    OF _________________	)


 


On
the _____ day of ________________, 20__, personally appeared before me, ___________________ of ______________________,
and that said instrument was signed by him/her on behalf of said entity, and he/she acknowledged to me that said entity executed
the same.


 


	SEAL	 
	 	Notary
    Public in and for Said County and State


 


	My
    Commission expires: 	 


 


Subscription
accepted:


 


Rivulet
Media, Inc.


 


	By: 	 
	 	Michael
    Witherill, President




    15


     


    

RIVULET
MEDIA, INC.


INVESTOR
SUITABILITY QUESTIONNAIRE


______________________


ALL
INFORMATION FURNISHED IN THIS


QUESTIONNAIRE
WILL BE TREATED CONFIDENTIALLY


 


Rivulet
Media, Inc. (the “Company”) will use the responses to this questionnaire to qualify prospective investors for purposes
of federal and state securities laws. Please complete, sign, date and return (facsimile or scan acceptable)
one copy of this questionnaire as soon as possible to the Company.


 


Your
answers will be kept confidential at all times. However, by signing this questionnaire, you agree that the Company may present
this questionnaire to such parties as it deems appropriate to establish the availability of exemptions from registration under
state and federal security laws.


 


NOTE:
Individual investors should complete the questionnaire beginning with Part I on this page while non-individual investors such
as corporations, partnerships, trusts and other entities should complete the questionnaire beginning with Part II on page 4.


 


I.
INDIVIDUAL INVESTORS: 


 


(Investors
other than natural persons (for example, corporations, limited liability companies,

partnerships and trusts) should turn to Part II on page 4)


 


1.       Amount
of Investment


 


	Please indicate the amount of your proposed investment: 	 




 


2.       Personal


 


	Name: 	 
	 	(EXACT
    NAME UNDER WHICH TITLE TO NOTES SHOULD BE TAKEN)


 


	Residence
    Address: 	 


 


	City,
    State Zip: 	 


 


	Home
    Telephone: 	 


 


	Home
    Facsimile: 	 


 


	Email
    Address: 	 


 


	Date of Birth: 	 


 


3.       Business


 


	Occupation: 	 


 


	Number of Years: 	 


 


	Present Employer: 	 


 


	Position/Title: 	 


 


	Business Address: 	 


 


	City,
    State Zip: 	 


 


	Business Telephone: 	 


 


	Business
    Facsimile: 	 




    1


     


    

4.       Residence
Information


 


(a)      Set
forth in the space provided below the state(s) in which you have maintained your principal residence during the past three years
and the dates during which you resided in each state.


	 
	 


 


(b)      Are
you registered to vote in, or do you have a driver’s license issued by, or do you maintain a residence in any other state?
If yes, in which state(s)?


	 


 


5.       Income


 


(a)      Do
you reasonably expect either your own income from all sources during the current year to exceed $200,000 or the
joint income of you and your spouse (if married) from all sources during the current year to exceed $300,000?


 


	o Yes	o No


 


If
no, please specify amount: _______________


 


(b)     What
percentage of your income as shown above is anticipated to be derived from sources other than salary?


	 


 


(c)     Was
either your yearly income from all sources during each of the last two years in excess of $200,000 or was the joint
income of you and your spouse (if married) from all sources during each of such years in excess of $300,000?


 


	o Yes	o No


 


If
no, please specify amount for:


 


Last
Year: ________________


 


Year
Before Last: ________________


 


6.       Net
Worth


 


Will
your net worth as of the date you purchase the securities offered, together with the net worth of your spouse, be in excess of
$1,000,000? (Note that “net worth” includes all of the assets owned by you and your spouse in excess of total liabilities,
excluding the fair market value of your principal residence from assets but including as a liability any debt on your principal
residence that is in excess of the fair market value.)


 


	o Yes	o No


 


If
not, please specify amount: __________________


 


7.       Education


 


Please
describe your educational background and degrees obtained, if any.


	 
	 





    2


     


    

8.       Affiliation


 


If
you have any pre-existing personal or business relationship with the Company or any of its officers, directors or controlling
persons, please describe the nature and duration of such relationship.


	 
	 
	 
	 


 


9.       Business
and Financial Experience


 


(a)     Please
describe in reasonable detail the nature and extent of your business, financial and investment experience which you believe gives
you the capacity to evaluate the merits and risks of the proposed investment and the capacity to protect your interests.


	 
	 
	 
	 


 


(b)     Are
you purchasing the securities offered for your own account and for investment purposes only?


 


	o Yes	o No


 


If
no, please state for whom you are investing and/or the reason for investing.


	 
	 


 


10.     Financial
Advisors


 


In
evaluating this investment, will you use the services of any of the following advisors? (If so, please identify, providing address
and telephone number.)


 


	Accountant: 
    	 
	 	 
	 	 


 


	Attorney: 	 
	 	 
	 	 


 


	Other: 	 
	 	 
	 	 


 


PLEASE
TURN TO PART III ON PAGE 6 AND SIGN AND DATE THIS QUESTIONNAIRE




    3


     


    

II.
NON-INDIVIDUAL INVESTORS:*


 


(Please
answer Part II only if the purchase is proposed to be


undertaken
by a corporation, partnership, trust or other entity)


 


*       If
the investment will be made by more than one affiliated entity, please complete a copy of this questionnaire for EACH
entity.


 


1.       Identification


 


	Name: 	 
	 	(EXACT
    NAME UNDER WHICH TITLE TO NOTES SHOULD BE TAKEN)


 


	Address
    of Principal Place of Business: 	 


 


	City,
    State Zip: 	 


 


	Jurisdiction
    of Formation or Incorporation: 	 


 


	Type
    of Entity (corporation, partnership, trust, etc.): 	 


 


	Contact
    Person: 	 


 


	Telephone
    Number: 	 


 


	Facsimile
    Number: 	 


 


	Internet
    Address: 	 


 


Was
entity formed for the purpose of this investment?


 


	o Yes	o No


 


If
the answer is YES, then ALL shareholders, partners or other equity owners must answer Part I of this Questionnaire.
If the above answer is no, please continue completing this form.


 


2.       Amount
Of Investment


 


	Please
    indicate the amount of your proposed investment: $ 	 


 


	State
    the investing entity’s net worth at the time the securities will be purchased: $ 	 


 


3.       Business


 


Please
check the appropriate box to indicate which of the following accurately describes the nature of the business conducted by the
investing entity:


 


o      a
corporation, organization described in Section 501(c)(3) of the Internal Revenue Code, a Massachusetts or similar business
trust or a partnership, in each case, not formed for the purpose of this investment, with total assets in excess of $5,000,000;


 


o      private
business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (a U.S. venture capital fund
which invests primarily through private placements in non-publicly traded securities and makes available (either directly or through
co-investors) to the portfolio companies significant guidance concerning management, operations or business objectives);


 


o      a
Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;


 


o      an
investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act;



    4


     


    

o      a
bank as defined in Section 3(a)(2) or a savings and loan association or other institution defined in Section 3(a)(5)(A)
of the Securities Act of 1933 acting in either an individual or fiduciary capacity;


 


o      an
insurance company as defined in Section 2(13) of the Securities Act of 1933;


 


o      an
employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 whose investment
decision is made by a fiduciary which is either a bank, savings and loan association, insurance company, or registered investment
advisor, or whose total assets exceed $5,000,000, or, if a self-directed plan, a plan whose investment decisions are made solely
by persons who are accredited investors;


 


o      an
entity not located in the U.S. and whose equity owners are neither U.S. citizens nor U.S. residents;


 


o      a
trust with total assets in excess of $5,000,000 whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of the Securities Act of 1933.


 


o      Other.
Describe (and ALL shareholders, partners or other equity owners must answer Part I of this Questionnaire):


 


	 
	 


 


4.       Investment
Experience


 


Please
provide information detailing the business, financial and investment experience of the entity and investment manager of such entity.


	 
	 
	 
	 


 


[Signature
Page Follows]



    5


     


    

III.
SIGNATURE


 


The
above information is true and correct in all material respects and the undersigned recognizes that the Company and its counsel
are relying on the truth and accuracy of such information in reliance on the exemption contained in Subsection 4(2) of the
Securities Act of 1933, as amended, and Regulation D promulgated thereunder. The undersigned agrees to notify the Company
promptly of any changes in the foregoing information which may occur prior to the investment.


 


Executed at ___________________, on
_________________, 20__.


 


 


	 	(Signature)
	 	 
	 	 
	 	(Name)
	 	 
	 	 
	 	(Title
    if signing on behalf of an entity)




    6


     


    

ADDITIONAL
REPRESENTATIONS AND WARRANTIES OF 


25%
PERSONS AND EMPLOYEE BENEFIT PLANS


 


1.       If
Purchaser is an Employee Benefit Plan, such person is either a named fiduciary of the Employee Benefit Plan (as defined in Section
402(a)(2) of ERISA) or an investment manager of the Employee Benefit Plan (as defined in Section 3(38) of ERISA) with full authority
under the terms of the Employee Benefit Plan and full authority from all Employee Benefit Plan beneficiaries, if required, to
cause the Employee Benefit Plan to invest in the Company. Such investment has been duly approved by all other named fiduciaries
whose approval is required, if any, and is not prohibited or restricted by any provisions of the Employee Benefit Plan or of any
related instrument.


 


2.       Such
person has independently determined that the investment by the Employee Benefit Plan or 25% Purchaser in the Company satisfies
all requirements of Section 404(a)(1) of ERISA, specifically including the “prudent man” standards of Section 404(a)(1)(B)
and the “diversification” standard of Section 404(a)(1)(C), and will not be prohibited under any of the provisions
of Section 406 of ERISA or Section 4975(c)(1) of the Code. Such person has requested and received all information from the Company
that such person, after due inquiry, considered relevant to such determinations. In determining that the requirements of Section
404(a)(1) are satisfied, such person has taken into account the risk of a loss of the Employee Benefit Plan’s or 25% Purchaser’s
investment and that an investment in the Company will be relatively illiquid, and funds so invested will not be readily available
for the payment of employee benefits. Taking into account these factors, and all other factors relating to the Company, the undersigned
has concluded that investment in the Company constitutes an appropriate part of the Employee Benefit Plan’s or 25% Purchaser’s
overall investment program.


 


3.       Such
person will notify the Company, in writing, of (A) any termination, merger or consolidation of the Employee Benefit Plan or the
25% Purchaser, (B) any amendment to any such Employee Benefit Plan or any related instrument that materially affects the authority
of any named fiduciary or investment manager to authorize plan investments, and (C) any alteration in the identity of any named
fiduciary or investment manager, including such person, who has the authority to approve plan investments.


 


4.       The
Company and its affiliates do not render any investment advice on a regular basis pursuant to a mutual understanding, arrangement
or agreement, written or otherwise, between the Employee Benefit Plan or any Employee Benefit Plan investing in the 25% Purchaser
and any of such parties who will act in regard to the Company and none of such parties renders any investment advice to any such
Employee Benefit Plan that furnishes a primary basis for investment decisions with respect to assets of any such Employee Benefit
Plan.


 


5.       Purchaser
agrees to notify the Company within thirty (30) days if any of the foregoing representations are no longer true. If the Company
or any officer, director, employee or agent of the Company is ever held to be a fiduciary, it is agreed that, in accordance with
Sections 405(b)(1), 405(c)(2), and 405(d) of ERISA, the fiduciary responsibilities of that person shall be limited to such person’s
duties in administering the business of the Company, and such person shall not be responsible for any other duties with respect
to any Employee Benefit Plan or any Employee Benefit Plan investing in the 25% Purchaser (specifically including evaluating the
initial or continued appropriateness of any such Employee Benefit Plan’s investment in the Company under Section 404(a)(1)
of ERISA).




    7


     


    



EXHIBIT
A


RISK
FACTORS


 


There
are investment considerations and significant risks associated with purchasing and holding the Notes and, following conversion,
the Shares of Rivulet Media, Inc. (the “Company,” “we,” or “us”), including without limitation
those discussed below. Each prospective investor should carefully consider the possibility that its entire investment may be lost.
Each prospective investor should thoroughly and carefully evaluate these investment considerations and risk factors, preferably
with the advice of counsel. There can be no assurance that the Company will achieve positive investment returns. The risks and
uncertainties described below are not the only risks facing the Company and additional risks and uncertainties may also harm its
business. 


 


These
risk factors include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Exchange Act. You can identify forward-looking statements by the words “expects,” “projects,” “believes,”
“anticipates,” “intends,” “plans,” “predicts,” “estimates,” and similar
expressions. The forward-looking statements are based on management’s current expectations, estimates, and projections.
Readers are cautioned not to place undue reliance on any forward-looking statements as they speak only of the Company’s
views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.


 


The
Company is subject to the informational requirements of the Securities Exchange Act of 1934, and in accordance therewith files
reports, proxy statements, and other information including annual, quarterly, and current reports on Forms 10-K, 10-Q, and 8-K
with the Securities and Exchange Commission (the “Commission”). Reports and other information filed by the Company
can be inspected and copied at the public reference facilities maintained at the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549. Copies of such material can be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site on the Internet
(http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the Commission through the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
Readers are encouraged to review such filings for additional information about the Company. 


 


The
Company is subject to various risks that may materially harm its business, financial condition, and results of operations. The
risks and uncertainties described below, while inclusive of all risks we believe to be material at this time, may not be the only
ones. If any of these risks or uncertainties actually occurs, the Company’s business, financial condition or operating results
could be materially harmed. Except for historical information, the information contained in these risk factors and in our SEC
reports are “forward looking” statements about our expected future business and performance. Our actual operating
results and financial performance may prove to be very different from what we might have predicted as of the date of this registration
statement.


 


General
risks related to our business


 


We
will need to raise significant additional capital. The Company will need substantial capital to make and produce motion pictures
currently in development or production. The Company has not established any external sources of liquidity with financial institutions
or other unrelated third parties. The Company does not anticipate that it will in the future establish any external sources of
financing. As the Company has no sources of financing other than this offering, the Company may not have enough funds to continue
its operations, and in that event would need to raise additional capital from other sources sooner than expected.



    8


     


    


We
will need to raise substantial additional cash to operate our subsidiary, Rivulet Films, Inc. We may be unable to raise additional
capital on commercially acceptable terms, if at all, and if we raise capital through additional equity financing, existing stockholders,
will have their ownership interests diluted. Our failure to generate adequate funds from operations or from additional sources
would harm our business.


 


        The
Company is largely controlled by two stockholders, and thus other stockholders have limited oversight of the Board of Directors;
officer salaries are significant. Two stockholders, Klusman Family Holdings and Debbie Rasmussen (wife of Mike Witherill),
hold a majority or near-majority of our Shares. As a result, other stockholders will largely be unable to exercise any direct
management or control functions with respect to the Company’s operations. The Board of Directors is elected by the stockholders,
and has discretion over a wide variety of decisions. Since a majority or near-majority of shares are held by two stockholders,
other stockholders may have little if any ability to influence the election of directors. As officer salaries are determined entirely
by the Board of Directors, there is no assurance they will reflect market rates of similarly situated companies. Aaron Klusman,
our CEO, and Mike Witherill, our president, will each be paid $360,000 per year, so a significant portion of the proceeds of this
offering will be used to pay such salaries.


 


We
rely heavily on our management to become profitable. The Company is subject to all the substantial risks inherent in the commencement
of a new business enterprise. We anticipate that our expenses will increase in the foreseeable future. These efforts may prove
more expensive than we currently anticipate and we may not succeed in increasing our revenues sufficiently to offset these higher
expenses. There can be no assurance that we will be profitable in the future.


 


Although
our President has substantial business experience in the motion picture industry, our CEO has no experience in the motion picture
industry and thus there can be no assurance that he will be successful in managing the Company and implementing our business plan.
The likelihood of the Company’s success must be considered in light of the problems, expenses, difficulties, complications,
and delays frequently encountered in connection with the startup of new businesses and the environment in which the Company operates.


 


As
a result of our limited operating history, our plan for growth, and the competitive nature of the markets in which we plan to
compete, we cannot accurately predict the Company’s future revenue, capital requirements, and operating expenses. We may
be unable to adjust spending in a timely manner to compensate for any unexpected shortfall in revenue. Our operating expenses
may increase significantly. To the extent that these expenses precede or are not rapidly followed by a corresponding increase
in revenue or additional sources of financing, our business, operating results, and financial condition may be materially and
adversely affected.


 


If
we acquire, combine with or invest in other businesses, we will face certain risks inherent in such transactions. We have
in the past considered and will continue, from time to time, to consider, opportunistic strategic transactions, which could involve
acquisitions, combinations or dispositions of businesses or assets, or strategic alliances or joint ventures with companies engaged
in businesses that are similar or complementary to ours. Any such strategic combination could be material, be difficult to implement,
disrupt our business or change our business profile significantly. Any future strategic transaction could involve numerous risks,
including:


 


	 	●	potential
    disruption of our ongoing business and distraction of management;




    9


     


    


	 	●	potential
    loss of actors, actresses, or other person from our productions;
	 	 	 




	 	●	difficulty
    integrating the acquired businesses or segregating assets to be disposed of;
	 	 	 





	 	●	exposure
    to unknown and/or contingent or other liabilities, including litigation arising in connection with the acquisition, disposition,
    and/or against any businesses we may acquire;
	 	 	 





	 	●	reputational
    or other damages to our business as a result of a failure to consummate such a transaction; and
	 	 	 





	 	●	changing
    our business profile in ways that could have unintended consequences.


 


If
we enter into significant strategic transactions in the future, related accounting charges may affect our financial condition
and results of operations, particularly in the case of any acquisitions. In addition, the financing of any significant acquisition
may result in changes in our capital structure, including the incurrence of additional indebtedness. Conversely, any material
disposition could reduce our indebtedness or require the amendment or refinancing of our outstanding indebtedness or a portion
thereof. We may not be successful in addressing these risks or any other problems encountered in connection with any strategic
transactions. We cannot be sure that if we make any future acquisitions, investments, strategic alliances, or joint ventures or
enter into any business combination that they will be completed in a timely manner, or at all, that they will be structured or
financed in a way that will enhance our creditworthiness or that they will meet our strategic objectives or otherwise be successful.
We also may not be successful in implementing appropriate operational, financial, and management systems and controls to achieve
the benefits expected to result from these transactions. Failure to effectively manage any of these transactions could result
in material increases in costs or reductions in expected revenues, or both. In addition, if any new business in which we invest
or which we attempt to develop does not progress as planned, we may not recover the funds and resources we have expended and this
could have a negative impact on our businesses or our company as a whole.


 


The
recent novel coronavirus (COVID-19) outbreak could materially adversely affect our financial condition and results of operations.
If the COVID-19 pandemic continues for an undetermined period, it may have a material adverse effect on our business. For example,
as long as COVID-19 pandemic continues, we will have a limited ability to produce any films or television programs. The spread
of COVID-19 may cause us to modify our business practices, and we may take further actions as may be required by government authorities
or that we determine are in the best interests of our employees and our business. There is no certainty that such measures will
be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.


 


These
and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results, and
financial condition. In addition, quarantines, stay-at-home, executive and similar government orders, or the perception that such
orders, shutdowns, or other restrictions on the conduct of business operations could occur, could severely affect the motion picture
industry and audience behavior, or our ability to produce our film and television productions.


 


The
spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the potential economic
impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has significantly
disrupted global financial markets, and may limit our ability to access capital, which could in the future negatively affect our
liquidity. A recession or market correction resulting from the spread of COVID-19 could materially affect our business and the
value of our Shares.


 


The
ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change. We do not yet
know the full extent of potential delays or impacts on our business or the global economy as a whole. However, the effects could
have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.



    10


     


    


Motion
Picture and Television Industry Risks


 


Our
business requires a substantial investment of capital. The production, acquisition, and distribution of motion pictures and
television programs requires a significant amount of capital. A significant amount of time may elapse between the Company’s
expenditure of funds and the receipt of revenues from its motion pictures or television programs. This time lapse may require
the Company to fund a significant portion of its capital requirements from its financing sources. Although the Company intends
to reduce the risks of its production exposure through financial contributions from distributors, tax credit programs, government
and industry programs, other studios and co-financiers and other sources, the Company cannot be sure that it will be able to successfully
implement these arrangements or that it will not be subject to substantial financial risks relating to the production, acquisition,
completion, and release of future motion pictures and television programs. In addition, if the Company increases (through internal
growth or acquisition) its production slate or its production budgets, the Company may be required to increase overhead and/or
make larger up-front payments to talent and, consequently, bear greater financial risks. Any of the foregoing could have a material
adverse effect on the Company’s business, financial condition, operating results, liquidity, and prospects.


 


The
costs of producing and marketing feature films is high and may increase in the future, and the uncertainties inherent in their
production could result in the expenditure of significant amounts on films that are abandoned or significantly delayed. Films
are expensive to produce. The production, completion, and distribution of feature films is subject to a number of uncertainties,
including delays and increased expenditures due to creative problems, technical difficulties, talent availability, accidents,
natural disasters, or other events beyond the Company’s control. Because of these uncertainties, the projected costs of
a feature film at the time it is set for production may increase, the date of completion may be substantially delayed or the film
may be abandoned due to the exigencies of production. In extreme cases, a film in production may be abandoned or significantly
modified (including as a result of creative changes) after substantial amounts have been spent, causing the write-off of expenses
incurred with respect to the film.


 


The
costs of producing and marketing feature films generally increase from year to year, which may make it more difficult for the
Company’s films to generate a profit or compete against other films. Revenues may not be sufficient to offset an increase
in the cost of motion picture production and marketing, which could have a material adverse effect on the Company’s business,
financial condition, operating results, liquidity, and prospects.


 


Budget
overruns may adversely affect the Company’s business. While the Company’s business model requires that it be efficient
in the production of its motion pictures, actual motion picture production costs may exceed their budgets. The production, completion,
and distribution of motion pictures can be subject to a number of uncertainties, including delays and increased expenditures due
to disruptions or events beyond the Company’s control. As a result, if a motion picture incurs substantial budget overruns,
the Company may have to seek additional financing from outside sources to complete production or fund the overrun itself. The
Company cannot make assurances regarding the availability of such financing or on terms acceptable to the Company, nor can the
Company be sure that it will recoup these costs. Increased costs incurred with respect to a particular film may result in any
such film not being ready for release at the intended time and the postponement to a potentially less favorable date, all of which
could cause a decline in box office performance, and, thus, the overall financial success of such film. Budget overruns could
also prevent a picture from being completed or released. Any of the foregoing could have a material adverse effect on the Company’s
business, financial condition, operating results, liquidity, and prospects.



    11


     


    


Limitations
on control of joint ventures may adversely impact Company operations. The Company may hold interests in certain businesses
as a joint venture or in partnership with non-affiliated third parties. As a result of such arrangements, the Company may be unable
to control the operations, strategies and financial decisions of such joint venture or partnership entities which could, in turn,
result in limitations on the Company’s ability to implement strategies that the Company may favor and may limit the Company’s
ability to transfer its interests. Consequently, any losses experienced by these entities could adversely impact the Company’s
results of operations and the value of the Company’s investment.


 


The
Company’s success depends on external factors in the motion picture industry.


 


The
Company’s success depends on the commercial success of motion pictures, which is unpredictable. Generally, the popularity
of the Company’s motion pictures depends on many factors, including the critical acclaim they receive, the format of their
initial release (for example, theatrical or direct-to-video), their actors and other key talent, their genre and their specific
subject matter, audience reaction, the quality and acceptance of motion pictures that its competitors release into the marketplace
at or near the same time, critical reviews, the availability of alternative forms of entertainment and leisure activities, general
economic conditions and other tangible and intangible factors, many of which the Company does not control and all of which may
change. The Company cannot predict the future effects of these factors with certainty. In addition, because a motion picture’s
performance in ancillary markets, such as home video and pay and free television, is often directly related to its box office
performance or television ratings, poor box office results ratings may negatively affect future revenue streams. The Company’s
success will depend on the experience and judgment of the Company’s management to select and develop new investment and
production opportunities. The Company cannot make assurances that the Company’s motion pictures will obtain favorable reviews
or ratings or that the Company’s motion pictures will perform well at the box office or in ancillary markets. The failure
to achieve any of the foregoing could have a material adverse effect on the Company’s business, financial condition, operating
results, liquidity, and prospects.


 


A
variety of uncontrollable events may reduce demand for the Company’s entertainment products or otherwise adversely affect
the Company’s business. Demand for Company products is highly dependent on the general environment for entertainment
and other leisure activities. The environment for these activities can be significantly adversely affected in the U.S. or worldwide
as a result of a variety of factors beyond the Company’s control, including pandemics or epidemics, terrorist activities,
military actions, adverse weather conditions, natural disasters, or other health concerns. Such events could have a material adverse
effect on the Company’s business and results of operations. Similarly, an outbreak of a particular infectious disease such
as Covid-19 could negatively affect the public’s willingness to see the Company’s films in theaters. Finally, the
ongoing effects of global climate change could adversely affect the Company’s business. Various proposals have been discussed
at the federal and state level to limit the carbon emissions of business enterprises, which if enacted could result in an increase
in the Company’s costs of operations. The effects of climate change could also have unpredictable effects on consumer motion
picture attendance patterns.


 


Changes
in the United States, global or regional economic conditions could adversely affect the Company’s results of operations
and financial condition. The global economy experienced a significant contraction in the past. Any future decrease in economic
activity in the U.S. or in other regions of the world in which the Company does business could significantly and adversely affect
its results of operations and financial condition in a number of ways. Any decline in economic conditions may reduce the performance
of the Company’s theatrical releases, thereby reducing the Company’s revenues and earnings. Further, bankruptcies
or similar events by theater chains, other participants in the Company’s distribution chain or other sources of revenue
may cause the Company to incur bad debt expense at levels higher than historically experienced or otherwise cause the Company’s
revenues to decrease. In periods of generally increasing prices, or of increased price levels in a particular sector such as the
energy sector, the Company may experience a shift in consumer demand away from the entertainment products the Company offers,
which could also adversely affect the Company’s revenues and, at the same time, increase the Company’s costs.



    12


     


    


Licensed
distributors’ failure to promote the Company’s programs may adversely affect the Company’s business. The
Company generally does not control the timing and manner in which the Company’s licensed distributors distribute the Company’s
motion pictures; their decisions regarding the timing of release and promotional support are important in determining success.
Any decision by those distributors not to distribute or promote one of the Company’s motion pictures or to promote the Company’s
competitors’ motion pictures to a greater extent than they promote ours could have a material adverse effect on the Company’s
business, financial condition, operating results, liquidity and prospects.


 


The
Company could be adversely affected by strikes or other union job actions. The Company is directly or indirectly dependent
upon highly specialized union members who are essential to the production of motion pictures. A strike by, or a lockout of, one
or more of the unions that provide personnel essential to the production of motion pictures could delay or halt the Company’s
production activities, or could cause a delay or interruption in our release of new motion pictures, which could have a material
adverse effect on our business, financial condition, operating results, liquidity, and prospects.


 


The
Company’s success is primarily dependent on audience acceptance of its films, which is extremely difficult to predict and,
therefore, inherently risky. The Company cannot predict the economic success of any of the Company’s motion pictures
because the revenue derived from the distribution of a motion picture (which does not necessarily directly correlate with the
production or distribution costs incurred) depends primarily upon its acceptance by the public, which cannot be accurately predicted.
The economic success of a motion picture also depends upon the public’s acceptance of competing films, the availability
of alternative forms of entertainment and leisure-time activities, general economic conditions, and other tangible and intangible
factors, all of which can change and cannot be predicted with certainty.


 


The
economic success of a motion picture is largely determined by the Company’s ability to produce content and develop stories
that appeal to a broad audience and by the effective marketing of the motion picture. The theatrical performance of a film is
a key factor in predicting revenue from post-theatrical markets. If the Company is unable to accurately judge audience acceptance
of the Company’s film content or to have the film effectively marketed, the commercial success of the film will be in doubt,
which could result in costs not being recouped or anticipated profits not being realized. Moreover, the Company cannot be sure
that any particular feature film will generate enough revenue to offset its distribution, fulfillment services and marketing costs,
in which case the Company would not receive any revenues for such film from its distributors.


 


The
Company’s business is currently substantially dependent upon the success of a limited number of film releases each year
and the unexpected delay or commercial failure of any one of them could have a material adverse effect on the Company’s
financial results and cash flows. The Company generally expects to release one or two feature films per year. The unexpected
delay in release or commercial failure of just one of these films could have a significant adverse impact on the Company’s
results of operations and cash flows in both the year of release and in the future. Historically, feature films that are successful
in the domestic theatrical market are generally also successful in the international theatrical, home entertainment and television
markets, although each film is different and there is no way to guarantee such results. If the Company’s films fail to achieve
domestic box office success, their international box office and home entertainment success and the Company’s business, results
of operations and financial condition could be adversely affected. Further, the Company can make no assurances that the historical
correlation between domestic box office results and international box office and home entertainment results will continue in the
future. In fact, over the last several years domestic theatrical results and foreign theatrical results have become less directly
correlated than in the past.



    13


     


    


The
Company faces substantial competition in all aspects of its business. Motion picture and television production and distribution
are highly competitive businesses. The Company faces competition from companies within the entertainment business and from alternative
forms of leisure entertainment, such as travel, sporting events, outdoor recreation, video games, the internet and other cultural
and computer-related activities. The Company competes with the major studios, numerous independent motion picture production companies,
television networks, pay television systems and digital media platforms for the acquisition of literary and film properties, the
services of performing artists, directors, producers and other creative and technical personnel and production financing, all
of which are essential to the success of the Company’s entertainment businesses. In addition, the Company’s motion
pictures compete for audience acceptance and exhibition outlets with motion pictures produced and distributed by other companies.


 


As
a result, the success of any of the Company’s motion pictures is dependent not only on the quality and acceptance of a particular
film, but also on the quality and acceptance of other competing motion pictures released into the marketplace at or near the same
time. Given such competition, the Company operates with a different business model than many others. The Company typically emphasizes
a lower cost structure, risk mitigation, reliance on financial partnerships and innovative financial strategies. The Company’s
cost structures are designed to utilize the Company’s flexibility and agility as well as the entrepreneurial spirit of the
Company’s employees, partners and affiliates, in order to provide creative entertainment content to serve diverse audiences
worldwide.


 


The
Company is smaller and less diversified than many of its competitors. Unlike the Company, an independent distributor and producer,
most of the major U.S. studios are part of large diversified corporate groups with a variety of other operations, including television
networks and cable channels that can provide both the means of distributing their products and stable sources of earnings that
may allow them to better offset fluctuations in the financial performance of their motion picture operations. In addition, the
major studios have more resources with which to compete for ideas, storylines and scripts created by third parties as well as
for actors, directors and other personnel required for production. The resources of the major studios may also give them an advantage
in acquiring other businesses or assets, including film libraries, that the Company might also be interested in acquiring.


 


The
motion picture industry is highly competitive and at times may create an oversupply of motion pictures in the market. The
number of motion pictures released by the Company’s competitors, particularly the major studios, may create an oversupply
of product in the market, reduce the Company’s share of box office receipts and make it more difficult for the Company’s
films to succeed commercially. The limited supply of motion picture screens compounds this product oversupply problem. Oversupply
may become most pronounced during peak release times, such as school holidays and national holidays, when theater attendance is
expected to be highest. As a result of changes in the theatrical exhibition industry, including reorganizations and consolidations,
and major studio releases occupying more screens, the number of screens available to the Company when the Company wants to release
a picture may decrease. If the number of motion picture screens decreases, box office receipts, and the correlating future revenue
streams, such as from home entertainment and pay and free television, of the Company’s motion pictures may also decrease.
Although the Company seeks to release its films during peak release times, the Company cannot guarantee that it will be able to
release all of its films during those times and, therefore, may miss potentially higher gross box-office receipts. In addition,
a substantial majority of the motion picture screens in the U.S. typically are committed at any one time to only 10 to 15 films
distributed nationally by major studio distributors. If the Company’s competitors were to increase the number of films available
for distribution and the number of exhibition screens remained unchanged, it could be more difficult for the Company to release
its films during optimal release periods. Moreover, the Company cannot guarantee that the Company can release all of its films
when they are otherwise scheduled due to production or other delays, or a change in the schedule of a major studio. Any such change
could adversely impact a film’s financial performance. In addition, if the Company cannot change the Company’s schedule
after such a change by a major studio because the Company is too close to the release date, the major studio’s release and
its typically larger promotion budget may adversely impact the financial performance of the Company’s films.



    14


     


    


Other
risks in the motion picture industry


 


The
Company must successfully respond to rapid technological changes and alternative forms of delivery or storage to remain competitive.
The entertainment industry in general continues to undergo significant developments as advances in technologies and new methods
of product delivery and storage, or certain changes in consumer behavior driven by these developments, emerge. Consumers are spending
an increasing amount of time on the internet and on mobile devices, and are increasingly viewing content on a time-delayed or
on-demand basis from the internet, on their televisions and on handheld or portable devices. If the Company cannot successfully
exploit these and other emerging technologies, it could have a material adverse effect on the Company’s business, financial
condition, operating results, liquidity and prospects.


 


Global
economic turmoil and regional economic conditions in the U.S. could adversely affect the Company’s business. Global
economic turmoil may cause a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default
and bankruptcy, levels of intervention from the U.S. federal government and other foreign governments, decreased consumer confidence,
overall slower economic activity and extreme volatility in credit, equity and fixed income markets. Currently, due to the onset
of COVID-19, we understand that the world economy is experiencing a severe recession. The decrease in economic activity in the
U.S. and in other regions of the world in which the Company does business could adversely affect demand for the Company’s
films, thus reducing the Company’s revenues and earnings. A continued decline in economic conditions could reduce performance
of the Company’s theatrical releases. In addition, an increase in price levels generally, could result in a shift in consumer
demand away from the entertainment the Company offers, which could also adversely affect the Company’s revenues and, at
the same time, increase the Company’s costs. Moreover, financial institution failures may cause the Company to incur increased
expenses or make it more difficult to finance any future acquisitions, or engage in other financing activities. The Company cannot
predict the timing or the duration of any downturn in the economy and the Company is not immune to the effects of general worldwide
economic conditions.


 


The
Company’s operating results can fluctuate significantly. The Company expects significant fluctuations in the Company’s
future quarterly and annual operating results because of a variety of factors, including the following:


 


	 	●	the
    potential varying levels of success of the Company’s feature films;
	 	 	 





	 	●	the
    timing of the domestic and international theatrical releases and home entertainment release of the Company’s feature
    films;
	 	 	 





	 	●	the
    Company’s distribution arrangements with the Company’s distributors permit the Company’s distributors to
    collect distribution fees and to recoup distribution costs, including print and advertising costs, and cause the Company to
    recognize significantly less revenue and expenses from a film in the period of a film’s initial theatrical release than
    the Company otherwise would absent these agreements; and



    15


     


    


	 	●	the
    timing of development expenses and varying levels of success of the Company’s new business ventures.


 


The
Company may incur significant write-offs if its feature films and other projects do not perform well enough to recoup production,
marketing and distribution costs. The Company is required to amortize capitalized production costs over the expected revenue
streams as the Company recognizes revenue from the associated films or other projects. The amount of production costs that will
be amortized each quarter depends on, among other things, how much future revenue the Company expected to receive from each project.
Unamortized production costs are evaluated for impairment each reporting period on a project-by-project basis. If estimated remaining
revenue is not sufficient to recover the unamortized production costs, the unamortized production costs will be written down to
fair value. In any given quarter, if the Company lowers its previous forecast with respect to total anticipated revenue from any
individual feature film or other project, the Company may be required to accelerate amortization or record impairment charges
with respect to the unamortized costs, even if the Company has previously recorded impairment charges for such film or other project.
Such accelerated amortization or impairment charges would adversely impact the Company’s business, operating results and
financial condition.


 


Business
interruptions could adversely affect the Company’s operations. The Company’s operations are vulnerable to outages
and interruptions due to fire, floods, power loss, telecommunications failures and similar events beyond the Company’s control.
A long-term power outage could disrupt the Company’s operations. Prices for electricity have in the past risen dramatically
and may increase in the future. An increase in prices would increase the Company’s operating costs, which could in turn
adversely affect the Company’s profitability. There can be no assurance that insurance procured by the Company for completion
of its motion pictures will be sufficient to compensate the Company for losses that may occur or that such insurance may continue
to be available on affordable terms. Any losses or damages incurred by the Company could have a material adverse effect on the
Company’s business and results of operations.


 


The
Company faces risks from doing business internationally. The Company intends to contract with distributors that distribute
motion picture and television productions outside the U.S. through various output agreement and third party licensees, and derives
revenues from these sources. At the present time, no such distribution agreements are in place. However, when international distribution
contracts are entered into, the Company’s business will be subject to certain risks inherent in international business,
many of which are beyond the Company’s control. These risks include:


 


	 	●	laws
    and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and
    withholding taxes, and changes in these laws;
	 	 	 





	 	●	changes
    in local regulatory requirements, including restrictions on content; differing cultural tastes and attitudes;
	 	 	 





	 	●	differing
    degrees of protection for intellectual property;
	 	 	 





	 	●	financial
    instability and increased market concentration of buyers in foreign television markets;
	 	 	 





	 	●	the
    instability of foreign economies and governments;
	 	 	 





	 	●	fluctuating
    foreign exchange rates;
	 	 	 





	 	●	the
    spread of communicable diseases in such jurisdictions, which may impact business in such jurisdictions; and
	 	 	 





	 	●	war
    and acts of terrorism.




    16


     


    


Events
or developments related to these and other risks associated with international trade could adversely affect the Company’s
revenues from non-U.S. sources, which could have a material adverse effect on the Company’s business, financial condition,
operating results, liquidity and prospects.


 


The
seasonality of the Company’s businesses could exacerbate negative impacts on its operations. The Company’s business
will normally be subject to seasonal variations based on the timing of theatrical motion picture and home entertainment releases.
Release dates are determined by several factors, including timing of vacation and holiday periods and competition in the market.
Also, revenues in the Company’s consumer products business will be influenced by both seasonal consumer purchasing behavior
and the timing of theatrical releases and generally peak in the fiscal quarter of a film’s theatrical release. Accordingly,
if a short-term negative impact on the Company’s business occurs during a time of high seasonal demand (such as natural
disaster or a terrorist attack during the time of one of the Company’s theatrical or home entertainment releases), the effect
could have a disproportionate effect on the Company’s results for the year.


 


The
Company’s success depends on a CEO and certain key employees. The Company success will depend to a significant extent
on the connections, reputation, expertise and performance of primarily its CEO, its President, and, to a lesser extent on its
Vice-President of Development and its production and creative personnel. The Company does not currently have any “key person”
life insurance policies on its CEO, President, or any of its employees. The Company has not entered into employment agreements
with its CEO, President, or top executive officers and production executives and they can therefore leave the Company at any time
without obligation. In addition, competition for the limited number of business, production and creative personnel necessary to
create and distribute the Company’s entertainment content is intense and may grow in the future. The Company’s inability
to retain or successfully replace, where necessary, its CEO, President, and other key employees could have a material adverse
effect on the Company’s business, financial condition, operating results, liquidity and prospects. Also, the CEO, President,
and other officers are not required to devote their full time to the Company and may have conflicting time commitments to other
entities in the same industry.


 


To
be successful, the Company needs to attract and retain qualified personnel. The Company’s success continues to depend
to a significant extent on its ability to identify, attract, hire, train and retain qualified professional, creative, technical
and managerial personnel. Competition for the caliber of talent required to produce and distribute Company motion pictures continues
to increase. The Company cannot be sure that it will be successful in identifying, attracting, hiring, training and retaining
such personnel in the future. If the Company was unable to hire, assimilate and retain qualified personnel in the future, such
inability would have a material adverse effect on the Company’s business, financial condition, operating results, liquidity
and prospects.


 


Intellectual
property risks and risks of litigation and other liability 


 


Protecting
and defending against intellectual property claims may have a material adverse effect on the Company’s business. Our
future ability to compete will depend, in part, upon successful protection of the Company’s intellectual property. The Company
will attempt to protect proprietary and intellectual property rights to the Company’s productions through available copyright
laws and licensing and distribution arrangements with reputable international companies in specific territories and media for
limited durations. Despite these precautions, existing copyright laws afford only limited practical protection in certain countries
where the Company’s motion pictures are distributed. As a result, it may be possible for unauthorized third parties to copy
and distribute the Company’s productions or certain portions or applications of the Company’s intended productions,
which could have a material adverse effect on the Company’s business, financial condition, operating results, liquidity
and prospects.



    17


     


    


Litigation
may also be necessary to enforce the Company’s intellectual property rights or to determine the validity and scope of the
proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation, infringement or invalidity
claims could result in substantial costs and the diversion of resources and could have a material adverse effect on the Company’s
business, financial condition, operating results, liquidity and prospects. The Company cannot be sure that infringement or invalidity
claims will not materially adversely affect the Company’s business, financial condition, operating results, liquidity and
prospects.


  


Copyright
protection is a serious problem in the home entertainment distribution industry because of the ease with which DVDs and Blu-ray
discs may be duplicated. Video piracy continues to be prevalent across the entertainment industry. The Company may take legal
actions to enforce copyright protection when necessary.


 


The
Company’s more successful and popular film products may experience higher levels of infringing activity, particularly around
key release dates. Alleged infringers may claim that their products are permitted under fair use or similar doctrines, that they
are entitled to compensatory or punitive damages because the Company’s efforts to protect its intellectual property rights
are illegal or improper, and that the Company’s significant intellectual property are invalid. Such claims, even if meritless,
may result in adverse publicity or costly litigation. The Company intends to vigorously defend the Company’s copyrights
from infringing products and activity, which can result in litigation. The Company may receive unfavorable preliminary or interim
rulings in the course of litigation, and there can be no assurance that a favorable final outcome will be obtained in all cases.
Regardless of the validity or the success of the assertion of any such claims, The Company could incur significant costs and diversion
of resources in enforcing the Company’s intellectual property rights or in defending against such claims, which could have
a material adverse effect on the Company’s business, financial condition, operating results, liquidity and prospects.


 


Others
may assert intellectual property infringement claims against the Company. One of the risks of the motion picture business
is the possibility that others may claim that the Company’s productions and production techniques misappropriate or infringe
the intellectual property rights of third parties with respect to their previously developed films, series, stories, characters,
other entertainment or intellectual property. Irrespective of the validity or the successful assertion of such claims, the Company
could incur significant costs and diversion of resources in defending against them, which could have a material adverse effect
on the Company’s business, financial condition, operating results, liquidity and prospects.


 


The
Company’s business involves risks of liability claims for media content, which could adversely affect its business, results
of operations and financial condition. As a distributor of media content, the Company may face potential liability for:


 


	 	●	defamation;
	 	 	 





	 	●	invasion
    of privacy;
	 	 	 





	 	●	negligence;
	 	 	 





	 	●	copyright
    infringement (as discussed above); and
	 	 	 





	 	●	other
    claims based on the nature and content of the materials distributed.


 


These
types of claims have been brought, sometimes successfully, against producers and distributors of media content. Any imposition
of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on the
Company’s business, financial condition, operating results, liquidity and prospects.



    18


     


    


Piracy
of motion pictures may reduce the gross receipts from the exploitation of the Company’s films. Motion picture piracy
is extensive in many parts of the world, including South America, Asia, and certain Eastern European countries, and is made easier
by technological advances and the conversion of motion pictures into digital formats. This trend facilitates the creation, transmission
and sharing of high quality unauthorized copies of motion pictures in theatrical release on DVDs, Blu-ray discs, from pay-per-view
through set-top boxes and other devices and through unlicensed broadcasts on free television and the internet. The proliferation
of unauthorized copies of these products will likely have an adverse effect on the Company’s business, because these products
reduce the revenue the Company receives from the Company’s productions. Additionally, in order to contain this problem,
the Company may have to implement elaborate and costly security and anti-piracy measures, which could result in significant expenses
and losses of revenue. The Company cannot be sure that even the highest levels of security and anti-piracy measures will prevent
piracy.


 


In
particular, unauthorized copying and piracy are prevalent in countries outside of the U.S., Canada and Western Europe, whose legal
systems may make it difficult for the Company to enforce intellectual property rights. While the U.S. government has publicly
considered implementing trade sanctions against specific countries that, in its opinion, do not make appropriate efforts to prevent
copyright infringements of U.S. produced motion pictures, there can be no assurance that any such sanctions will be enacted or,
if enacted, will be effective. In addition, if enacted, such sanctions could impact the amount of revenue that the Company realizes
from the international exploitation of motion pictures. If no embargoes or sanctions are enacted, or if other measures are not
taken, the Company may lose revenue as a result of motion picture piracy.


 


The
increased consumer acceptance of entertainment content delivered electronically and consumer acquisition of the hardware and software
for facilitating electronic delivery may also lead to greater public acceptance of unauthorized content. The Company’s distributors
will be substantially responsible for enforcing the Company’s intellectual property rights with respect to all of the Company’s
films subject to the Company’s distribution agreements and are required to maintain security and anti-piracy measures consistent
with the highest levels each maintains for its own motion pictures in each territory in the world. Other than the remedies the
Company has in such agreements, the Company has no way of requiring its distributors to take any anti-piracy actions, and the
Company’s distributors’ failure to take such actions may result in the Company having to undertake such measures itself,
which could result in significant expenses and losses of indeterminate amounts of revenue. Even if applied, there can be no assurance
that the highest levels of security and anti-piracy measures will prevent piracy.


 


Music
Industry Risks


 


The
recorded music industry has been declining and may continue to decline, which may adversely affect our prospects and our results
of operations. The recorded music industry has experienced negative growth rates on a global basis since 1999 and the worldwide
recorded music market has contracted considerably. Illegal downloading of music, CD piracy, industrial piracy, economic recession,
bankruptcies of record wholesalers and retailers, and growing competition for consumer discretionary spending and retail shelf
space may have all contributed to the decline in the recorded music industry. Additionally, the period of growth in recorded music
sales driven by the introduction and penetration of the CD format has long ended. While CD sales still generate a significant
portion of the recorded music revenues globally, CD sales continue to decline industry-wide and we expect that trend to continue.
However, new formats for selling recorded music product have been created, including the legal downloading and streaming of digital
music and revenue streams from these new channels have emerged. These new digital revenue streams are important as they are partially
offsetting declines in physical sales and represent a growing area of the business. However, the industry continues to be negatively
impacted as a result of ongoing digital piracy and the transition from physical to digital sales in the recorded music business.
While it is believed within the recorded music industry that growth in digital revenues will re-establish a growth pattern for
recorded music sales, the timing of the recovery cannot be established with accuracy nor can it be determined how these changes
will affect individual markets. A declining recorded music industry is also likely to have a negative impact on the music publishing
business. Digital downloads remain a key revenue stream for the recorded music industry, and there has been ample growth in the
streaming category, resulting in the latter’s increasing contribution to overall industry digital revenues.



    19


     


    


There
may be downward pressure on our pricing and our profit margins and reductions in shelf space. There are a variety of factors
that could cause us to reduce our prices and reduce our profit margins. They are, among others, the negotiating leverage of mass
merchandisers, big-box retailers and distributors of digital music, the increased costs of doing business with mass merchandisers
and big-box retailers as a result of complying with operating procedures that are unique to their needs and any changes in costs
or profit margins associated with new digital business, including the impact of ad-supported music services, some of which may
be able to avail themselves of “safe harbor” defenses against copyright infringement actions under copyright laws.
In addition, we will be dependent on a small number of leading digital music services, which allows them to significantly influence
the prices we can charge in connection with the distribution of digital music. Over the course of the last decade, U.S. mass-market
and other stores’ share of U.S. physical music sales has continued to grow. While we cannot predict how future competition
will impact music retailers, as the music industry continues to transform it is possible that the share of music sales by a small
number of leading mass-market retailers such as Wal-Mart and Target and digital music services such as Apple’s iTunes and
Google Play will continue to grow, which could further increase their negotiating leverage and put pressure on profit margins.


 


Our
prospects and financial results may be adversely affected if we fail to identify, sign, and retain artists and songwriters and
by the existence or absence of superstar releases and by local economic conditions in the countries in which we operate. We
are dependent on identifying, signing, and retaining recording artists with long-term potential, whose debut albums are well received
on release, whose subsequent albums are anticipated by consumers and whose music will continue to generate sales for years to
come. The competition among record companies for such talent is intense. Competition among record companies to sell records is
also intense. We are also dependent on signing and retaining songwriters who will write the hit songs of today and the classics
of tomorrow. Our competitive position is dependent on our ability to attract and develop artists whose work can achieve a high
degree of public acceptance. Our financial results may be adversely affected if we are unable to identify, sign, and retain such
artists under terms that are economically attractive to us. Our financial results may also be affected by the existence or absence
of superstar artist releases during a particular period. Some music industry observers believe that the number of superstar acts
with long-term appeal, both in terms of catalog sales and future releases, has declined in recent years. Additionally, our financial
results are generally affected by the worldwide economic and retail environment.


 


We
may have difficulty addressing the threats to our business associated with home copying and digital downloading. The combined
effect of the decreasing cost of electronic and computer equipment and related technology such as CD burners and the conversion
of music into digital formats have made it easier for consumers to obtain and create unauthorized copies of recordings in the
form of, for example, “burned” CDs and MP3 files. A significant number of Internet users globally access unauthorized
digital sites/services on desktop-based devices on a regular basis. In addition, while growth of music-enabled mobile consumers
offers distinct opportunities for music companies such as ours, it also opens the market up to risks from behaviors such as “sideloading”
and mobile app-based downloading of unauthorized content and illegitimate user-created ringtones. A substantial portion of our
revenue will come from the sale of audio products that are potentially subject to unauthorized consumer copying and widespread
digital dissemination without an economic return to us. The impact of digital piracy on legitimate music sales is hard to quantify
but we believe that illegal filesharing has a substantial negative impact on music sales.



    20


     


    


Organized
industrial piracy may lead to decreased sales. The global organized commercial pirate trade is a significant threat to content
industries, including the music sector. A 2011 study by Frontier Economics cited by IFPI, estimates that digitally pirated music,
motion pictures and software is valued at $30 billion to $75 billion and IFPI’s 2014 Digital Music Report valued advertising
revenues generated by piracy sites at $227 million. In addition, a 2010 economic study conducted by Tera Consultants in Europe
found that if left unabated, digital piracy could result in an estimated loss of 240 billion Euros in retail revenues for the
creative industries—including music—in Europe over the period from 2008 to 2015. Unauthorized copies and piracy have
contributed to the decrease in the volume of legitimate sales. They will have an adverse effect on our business.


 


We
will be substantially dependent on a limited number of digital music services, in particular Apple’s iTunes Music Store,
for the online sale of our music recordings and they are able to significantly influence the pricing structure for online music
stores. We will derive an increasing portion of our revenues from sales of music through digital distribution channels. We
are currently dependent on a small number of leading digital music services that sell consumers digital music. Currently, the
largest U.S. online music store, iTunes, typically charges U.S. consumers prices ranging from $0.69 to $1.29 per single-track
download. We have limited ability to increase our wholesale prices to digital service providers for digital downloads as Apple’s
iTunes controls 65%-75% of the legitimate digital music track download business in the United States according to third-party
estimates. If Apple’s iTunes were to adopt a lower pricing model or if there were structural changes to other download pricing
models, we may receive substantially less per download for our music, which could cause a material reduction in our revenues,
unless it is offset by a corresponding increase in the number of downloads. Additionally, Apple’s iTunes and other digital
music services at present accept and make available for sale all the recordings that we and other distributors deliver to them.
However, if digital music services in the future decide to limit the types or amount of music they will accept from music-based
content owners like us, our revenues could be significantly reduced.


 


We
may be unable to compete successfully in the highly competitive markets in which we operate and we may suffer reduced profits
as a result. The industries in which we operate are highly competitive, have experienced ongoing consolidation among major
music companies, are based on consumer preferences and are rapidly changing. Additionally, they require substantial human and
capital resources. We compete with other recorded music companies and music publishers to identify and sign new recording artists
and songwriters who subsequently achieve long-term success and to renew agreements with established artists and songwriters. In
addition, our competitors may from time to time increase the amounts they spend to lure, or to market and promote, recording artists
and songwriters or reduce the prices of their products in an effort to expand market share. We may lose business if we are unable
to sign successful recording artists or songwriters or to match the prices of the products offered by our competitors. Our music
publishing business competes not only with other music publishing companies, but also with songwriters who publish their own works.
Our business is to a large extent dependent on technological developments, including access to and selection and viability of
new technologies, and is subject to potential pressure from competitors as a result of their technological developments. For example,
our recorded music business may be further adversely affected by technological developments that facilitate the piracy of music,
by an inability to enforce our intellectual property rights in digital environments, and by a failure to develop successful business
models applicable to a digital environment. Our business also faces competition from other forms of entertainment and leisure
activities, such as cable and satellite television, motion pictures and videogames in physical and digital formats.



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A
significant portion of our music publishing revenues is subject to rate regulation either by government entities or by local third-party
collection societies throughout the world and rates on other income streams may be set by governmental proceedings, which may
limit our profitability. Mechanical royalties and performance royalties are the two largest sources of income to our music
publishing business and mechanical royalties are a significant expense to our recorded music business. In the United States, mechanical
royalty rates are set pursuant to an administrative rate-setting process under the U.S. Copyright Act, unless rates are determined
through voluntary industry negotiations, and performance royalty rates are set by performing rights societies and subject to challenge
by performing rights licensees. Mechanical royalties are paid at a rate of 9.1 cents per song per unit in the United States for
physical formats (e.g., CDs and vinyl albums) and permanent digital downloads (recordings in excess of five minutes attract a
higher rate) and 24 cents for ringtones. Outside the United States, mechanical and performance royalty rates are typically negotiated
on an industry-wide basis. In most territories outside the United States, mechanical royalties are based on a percentage of wholesale
prices for physical product and based on a percentage of consumer prices for digital products. The mechanical and performance
royalty rates set pursuant to such processes may adversely affect us by limiting our ability to increase the profitability of
our music publishing business. If the mechanical royalty rates are set too high it may also adversely affect us by limiting our
ability to increase the profitability of our recorded music business. In addition, rates our recorded music business receives
in the United States for, among other sources of income and potential income, webcasting and satellite radio are set by an administrative
process under the U.S. Copyright Act unless rates are determined through voluntary industry negotiations. Any reduction in the
rates would adversely affect our recorded music business. It is important as sales shift from physical to diversified distribution
channels that we receive fair value for all of the uses of our intellectual property as our business model now depends upon multiple
revenue streams from multiple sources. If the rates for recorded music income sources that are established through legally prescribed
rate-setting processes are set too low, it could have a material adverse impact on our recorded music business or our business
prospects.


 


We
face a potential loss of titles to the extent that our recording artists have a right to recapture rights in their recordings
under the U.S. Copyright Act. The U.S. Copyright Act provides authors (or their heirs) a right to terminate U.S. licenses
or assignments of rights in their copyrighted works in certain circumstances. This right does not apply to works that are “works
made for hire.” Since the effective date of U.S. federal copyright protection for sound recordings (February 15, 1972),
virtually all of our agreements with recording artists provide that such recording artists render services under a work-made-for-hire
relationship. A termination right exists under the U.S. Copyright Act for U.S. rights in musical compositions that are not “works
made for hire.” If any of our commercially available sound recordings were determined not to be “works made for hire,”
then the recording artists (or their heirs) could have the right to terminate the U.S. federal copyright rights they granted to
us, generally during a five-year period starting at the end of 35 years from the date of release of a recording under a post-1977
license or assignment (or, in the case of a pre-1978 grant in a pre-1978 recording, generally during a five-year period starting
at the end of 56 years from the date of copyright). A termination of U.S. federal copyright rights could have an adverse effect
on our business. From time to time, authors (or their heirs) have the opportunity to terminate our U.S. rights in musical compositions.


 


Risks
related to the offering


 


The
Company needs to raise additional capital to repay the Notes as scheduled. Currently, the Company does not have sufficient
funds to repay the Notes within 90 days of issuance and will need to raise additional capital in order to repay the Notes. The
Company has not established any external sources of liquidity with financial institutions or other unrelated third parties. If
the Company in unable raise the needed additional capital, we will be unable to repay some or all of the Notes and you could lose
your entire investment.



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Tax
consequences not determined. The Company has not sought a tax opinion as to the impact on converting to the Shares at a conversion
price below the market price of the Shares. No independent arms’ length valuation was sought and so the value of the additional
services being provided for the Shares and the tax ramification of receipt of those Shares have not been determined. Therefore,
Purchaser must rely on his own tax counsel to determine the tax consequence of this investment.


 


There
is no minimum and escrow of funds. There is no requirement that we raise any minimum amount of funds in this Offering.
There will be no escrow of funds received from investors. We can use all proceeds raised immediately. We will seek to raise
any additional needed capital through other private offerings of equity and debt securities, collaborative arrangements, strategic
alliances, and equity and debt financings or from other sources. We may be unable to raise any needed additional capital on commercially
acceptable terms, if at all, and if we raise capital through additional equity financing, existing stockholders, including purchasers
in this Offering, may have their ownership interests diluted.


 


There
is substantial influence by existing stockholders. Our CEO and President will be able to effectively control matters requiring
the approval by stockholders of the Company, even if the Offering is fully subscribed. This concentration of ownership by management
may also have the effect of delaying or preventing a change in control of the Company.


 


There
is a risk of substantial dilution from future offerings, acquisitions, and conversions of debt to equity. Investors should
be aware that management of the Company has determined that additional funds should be raised through an additional private offering.
If a future offering is on terms more favorable than this Offering, purchasers will experience dilution and may be in a junior
position to those who hold either debt or preferred equity. Also, future creditors who convert their debt to equity will dilute
investors and planned acquisitions will also dilute investors.


 


This
is a private offering with no regulatory agency review. The Company has not registered this Offering under the Securities
Act of 1933 (“1933 Act”), as amended, in reliance on the exemptive provisions of Section 4(2) of the 1933 Act
and Regulation D promulgated by the SEC. The Company also has relied on apparently available exemptions from securities qualification
requirements under applicable state securities laws. There can be no assurance that the Offering currently qualifies or will continue
to qualify under one or more of such exemptive provisions due to, among other things, the adequacy of disclosure and the manner
of distribution, the existence of similar offerings in the past or in the future, or the retroactive change of any securities
law or regulation. If, and to the extent that, claims or suits for rescission are brought and successfully concluded for failure
to register this Offering or other offerings or for acts or omissions constituting offenses under the 1933 Act or applicable state
securities laws, the Company could suffer material adverse effects, jeopardizing its ability to operate, even if the Company ultimately
prevails in its defense.


 


There
are substantial restrictions on transfer of the Notes and, following conversion, the Shares. Investors should be fully aware
of the long-term nature of their investment in the Company. Each investor will be required to represent that it is purchasing
the Notes for its own account, for investment purposes and not with a view toward resale or distribution of any Shares. The Notes
and, following conversion, the Shares are not readily transferable and any transfer must comply with federal and state securities
laws. Any certificates evidencing the Shares will bear a legend indicating that their transferability is restricted.


 


Our
use of proceeds is not detailed. Use of proceeds from this Offering will vary solely at the discretion of management. Prospective
investors must rely on the ability of the Company to identify and make business decisions consistent with the Company’s
objectives. Investors will not have the opportunity to personally evaluate the relevant economic, financial, and other information
which will be utilized by the Company’s management in deciding how and when to spend the proceeds from the sale of the Notes.



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The
offering price was determined arbitrarily. The conversion price of the Shares was arbitrarily determined by the Board of Directors
and may bear no relationship to the assets, book value, earning potential or net worth of the Company, or be based on any recognized
criteria of value or formula. No independent opinion on or review of the fairness of the terms under which the Shares are being
offered has been obtained. Prospective investors must rely on the disclosures set forth in these Risk Factors and the Summary,
and on their own business and investment experience as the basis for their decision to purchase the Notes.


 


We
do not intend to declare any dividends on our Shares. We do not anticipate paying any dividends to our stockholders for the
foreseeable future on our Shares. Investors seeking cash dividends should not purchase the Shares. Any determination to pay dividends
in the future will be made at the discretion of our Board of Directors and will depend on our results of operations, financial
conditions, contractual restrictions, restrictions imposed by applicable law and other factors our Board deems relevant.


 


We
have agreed to indemnify our officers and directors. The Company’s Certificate of Incorporation provides to directors
and officers indemnification to the full extent provided by law, and provides that, to the extent permitted by Delaware law, a
director will not be personally liable for monetary damages to the Company or its stockholders for breach of his or her fiduciary
duty as a director, except for liability for certain actions that may not be limited under Delaware law. These indemnification
provisions may limit the ability of stockholders to seek recourse against our officers and directors.


 


Lack
of separate counsel. Legal counsel for the Company does not represent the interests of the investors in connection with any
offering of Notes or Shares and such counsel disclaims any fiduciary or attorney-client relationship with the investors. The Company
has been represented by Gallagher & Kennedy, P.A. solely with respect to securities matters. No independent legal due diligence
has been conducted by the Company on behalf of any investors with respect to this Offering. Investors are encouraged to engage
independent legal counsel at their expense to advise them with respect to this Offering and review of any information provided
by the Company.


 


If
our stock price fluctuates, you could lose a significant part of your investment. The price of our Shares may be influenced
by many factors, some of which are beyond our control, including those described above and the following: 


 


		●	changes
in financial estimates by analysts;
	 	 	 



		●	announcements
by us or our competitors of significant contracts, productions, acquisitions, joint ventures or capital commitments;
	 	 	 



		●	variations
in quarterly operating results;
	 	 	 



		●	general
economic conditions;
	 	 	 



		●	terrorist
acts;
	 	 	 



		●	future
sales of our Shares; and
	 	 	 



		●	investor
perception of the Company, the filmmaking industry and the other businesses that we operate in the future.



 


There
is a limited trading market for the Shares. Although our stock is publicly traded, the trading market is limited. As a result,
any broker/dealer that makes a market in our stock or other person that buys or sells our stock could have a significant influence
over its price at any given time. We cannot assure our stockholders that a market for our stock will be sustained.



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Our
reporting obligations as a public company are costly. Operating a public company involves substantial costs to comply with
reporting obligations under federal securities laws which are continuing to increase as provisions of the Sarbanes Oxley-Act of
2002 (“Sarbanes-Oxley Act”) are implemented. We may not reach sufficient size to justify our public reporting
status. If we were forced to become a private company, then our stockholders may lose their ability to sell their shares and there
would be substantial costs associated with becoming a private company.


 


Our
Shares are likely to be “penny stock.” In general, “penny stock” includes securities of companies
which are not listed on the principal stock exchanges and have a bid price in the market of less than $5.00; and companies with
net tangible assets of less than $2 million ($5 million if the issuer has been in continuous operation for less than three years),
or which has recorded revenues of less than $6 million in the last three years. As it will likely be “penny stock”
if listed, our stock therefore may be subject to the Rule 15g-9 promulgated under the 1934 Act, which imposes additional sales
practice requirements on broker-dealers which sell such securities to persons other than established customers and “accredited
investors” (generally, individuals with net worth in excess of $1 million or annual incomes exceeding $200,000, or $300,000
together with their spouses, or individuals who are the officers or directors of the issuer of the securities). For transactions
covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s
written consent to the transaction prior to sale. Consequently, this rule may adversely affect the ability of broker-dealers to
sell our stock, and therefore may adversely affect our stockholders’ ability to sell the stock in the public market.


 


Resale
of our Shares will be restricted even though we are a public company. The securities to be issued will be “restricted
securities,” as that term is defined in Rule 144 promulgated under the 1933 Act, and may not be sold or transferred without
an effective registration statement under the 1933 Act, or pursuant to an exemption from registration under the Securities Act,
the availability of which is to be established to the satisfaction of the Company. These amendments may reduce the ability of
the Company’s stockholders to sell any shares held in the Company.


 


The
requirements of being a public company may strain our resources, divert management’s attention and affect our ability to
attract and retain qualified board stockholders. As a public company, we are subject to the reporting requirements of the
1934 Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protections Act, the listing requirements of
our exchange or other market listing our Shares, and other applicable securities rules and regulations. Compliance with these
rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming
or costly and increase demand on our systems and resources. The 1934 Act requires, among other things, that we file annual, quarterly
and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that
we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and,
if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard,
significant resources and management oversight may be required. As a result, management’s attention may be diverted from
other business concerns, which could harm our business and operating results. We may need to hire more employees in the future
to meet these requirements, which will increase our costs and expenses.



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In
addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty
for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws,
regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result,
their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure
and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment
may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating
activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities
intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings
against us and our business may be harmed.


 


We
also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director
and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain
coverage. These factors could also make it more difficult for us to attract and retain qualified stockholders of our board of
directors, particularly to serve any committees, and qualified executive officers.


 


As
a result of disclosure of information in filings required of a public company, our business and financial condition will become
more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If
such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation
or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of
our management and harm our business and operating results.


 


As
a result of being a reporting company, we are obligated to develop and maintain proper and effective internal controls over financial
reporting. As a public company, we are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by
management on, among other things, the effectiveness of our internal control over financial reporting each fiscal year. This assessment
will need to include disclosure of any material weaknesses identified by our management in our internal control over financial
reporting.


 


We
may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and
testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable
to assert that our internal controls are effective.


 


If
we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in
the accuracy and completeness of our financial reports, which would cause the price of our Shares to decline.



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