Do you plan to produce all the films yourself?

Yes, The movie Section intends to act as a producer on all films that the company works on. The company may also collaborate with other financiers and/or producers on certain projects who may function as co-producers.

Where will the money to produce the films be sourced from?

Most of the capital raised through this campaign will finance the development and production of original feature films. The company will partner with other production companies, studios, or financiers who will co-invest in a particular project when needed. 

One of the reasons we are so excited to have MCT as part of The movie Section team is their deep experience in film financing. They will help provide additional capital at the project level for many of our films. This will help the company not only produce and finance more films overall but also appropriately mitigate our risk on any single project.

There may also be certain projects on which The movie Section is simply a producer on a film entirely financed by another studio. These types of projects carry zero investment risk and would provide the company with additional revenues through producer fees and profit participation. 

How many films do you expect to release per year?

Once we are fully up and running, our plan is to release between two and four films a year to start and ramp up from there.

When do you expect the first film to be released?

We anticipate our first film moving into production during the Summer of 2025, which would put us on track for a release in late 2025 or early 2027. As the project nears completion, we'll evaluate release date options and target a date that gives it the best chance to succeed.

How does Iconic distribute movies?

Iconic Events Releasing is an experienced theatrical distribution company. They specialize in bringing thrilling, cutting-edge filmed and live entertainment to fans in movie theaters across North America and beyond. As a service provider, Iconic offers marketing and distribution for full-run releases in over 2,500 theaters. They have built the capabilities to put films into theaters without the bureaucracy of many large multinational studios. With
Iconic, The movie Section can distribute directly to the fans without interference and with much more favorable economics.

How will the proceeds be used?

We intend to allocate the proceeds in the following manner:

• 47% for Film, TV, Podcast Development and Production

• 14% Operations and Admin 

• 12% Personnel and Team Overhead

• 10% Other Investment Activities

• 5% Brand and Marketing

• 7% Closing Costs

• 5% Intermediary Fees

What IP will Eli be bringing to the project?

Eli has been involved in a wide range of projects over his twenty-plus year career – as director, writer, producer and actor. While his attachment and level of control over the IP varies across these projects, the intention going forward is to bring as many of these projects as possible into The movie Section.

The truly exciting part of building The movie Section will be the new IP that we will create, which will be fully controlled by the company.

How are net profits from the films calculated?

Investors own shares of The movie Section and participate in profits from the individual films we release. The company will share the profits on film projects pro-rata across all shareholders. This provision applies to all films - both self-financed projects and producer-for-hire projects. The profits will be calculated at the project level, not the company level. We will do an annual distribution of these profits for the first 5 years.
Here are two illustrative examples of how that would work:

1. The movie Section fully finances a $3M film and distributes it ourselves with Iconic in the US, spending $1M on marketing the film and selling foreign rights to international distributors. Film generates $10M in Net Revenue for the company over the first 5 years, while other talent profit participation costs are $1M. The profit definition for our films is all revenues worldwide across all windows, including ancillaries, like merchandise and soundtrack revenue ($10M) minus the production costs, distribution costs, and talent participation. ($3M + $1M + $1M =
$5M). $10M - $5M = $5M in Net Profits. Then, 10% of that, or $500,000, is distributed to all shareholders pro-rata as it comes in over the 5 years. The balance will be reinvested into the next film or project.

2. A major studio is fully financing a $10M film and distributing it themselves worldwide. The movie Section is simply the film's producer and is able to negotiate 20% Net Profits on the backend (according to the studio waterfall, which would be defined in our underlying agreement with the studio). The film does well, and The movie Section receives $1M from its profit participation. When received, the company will distribute $100,000 pro-rata to all shareholders. The balance will be reinvested into the next film or project.

The movie Section will always retain the right to issue additional discretionary dividends. We want to strike a nice balance between rewarding shareholders and reinvesting and growing the company into a real studio with a large library that sets it up for a sale/exit to a major studio or other buyer. The profit share would only apply to
films, not the other businesses, though we expect film to make up the vast majority of the company's revenue and profit.

How will the net profits be distributed?

Profits will be distributed directly to each shareholder’s Republic wallet.

When do you expect to distribute the net profits?

For the first five years, we will distribute profits annually within the first four months of the following calendar year.

When will secondary trading become available?

The movie Section intends to enable secondary trading 12 - 18 months after launch. The company will work to optimize the timing of the secondary listing for investors, taking into consideration current market conditions and the company’s near-term business objectives.

Where will secondary trading occur?

It will occur on Republic’s SEC-regulated securities trading platform.

What tax documents will investors be issued?

Investors will receive a 1099 issued by the Company.

What is tokenization?

Tokenization refers to the digitization of real-world assets where a token represents the direct or indirect ownership stake of the asset. Put differently, it is the process of converting rights to an asset into a digital token recorded on a blockchain, where a token is a proxy or a means of representing an indirect, direct, or similar interest in a particular asset.

What are Security Instruction Tokens (“SITs”), and how do they relate to the offerings?

SITs are Blockchain-based ERC-1404 tokens that provide an additional method for investors to provide a notification directing Brassica to transfer their Participation Interests. 

• SITs are not intended to be a digital representation of the Participation Interests.

• For more information on SITs, please review the respective offering documents.

Will SITs be issued/distributed to investors?

• The movie Section intends to mint and distribute SITs on the blockchain network.

• If distributed, SITs will be distributed on a 1:1 basis with the Participation Interests. (i.e., if an investor has 200 Participation Interests, they can receive 200 Tokens)

Are there additional risks associated with SITs?

Please review the offering documents for a comprehensive review of the risks associated with the SITs. Please review the offering documents for a comprehensive review of the risks associated with the SITs. Risks include, without limitation:

• SITs have not yet been minted.

• The regulatory regime governing blockchain technologies, cryptocurrencies, and coins, including the SITs, is uncertain, and new regulations or policies may materially adversely affect the value of the Revenue Participation Agreement.

• US federal and state agencies have begun to regulate the use and operation of blockchain networks and assets. If a government or quasi-governmental agency exerts regulatory authority over a blockchain network or asset, the SITs may be materially and adversely affected.

• Investors may lack information to monitor their purchases.

• The application of distributed ledger technology is novel and untested and may contain inherent flaws or limitations.

• Several external factors outside of the Company may influence the price of the Revenue Participation Agreement.

• A disruption of the Internet or the Ethereum Network would affect the ability to transfer Revenue Participation Agreement via SITs.

• SITs do not have inherent value absent the Revenue Participation Agreement.

• Because SITs may be based on a blockchain, any malfunction, breakdown, or abandonment of the underlying protocol may result in the loss of or inability to transfer SITs.

• Advances in cryptography or technical advances, such as the development of quantum computing, could present risks by undermining or vitiating the cryptographic consensus mechanism that underpins the underlying protocol.

• Legislatures and regulatory agencies could impose requirements that limit or prohibit the use and/or functionality of current and/or future cryptographic protocols, which could adversely impact the ability to transfer the SITs.

• If and when there is a trading venue for SITs if and when they are minted, distributed, and no longer locked up, it could be insufficient. Further, the SIT trading venues (if any) will be subject, like all exchanges and alternative trading systems, to security failures or other operational issues; such events could result in a reduction in SIT prices.

What are possible limitations for SIT holders?

SITs do not directly embody the full spectrum of rights typically associated with Revenue Participation Agreement securities as they are merely a tool of transfer.

What is a custodian, and what is a custodial account?

A custodian is a qualified third-party entity that acts as a legal holder of securities. An investor will open a custodial account with the qualified custodian, which is used to hold investments, namely the securities in a company. A custodial account allows you to name a beneficiary and accept payments such as dividend distributions or cash payouts. Custodial accounts are not managed or held by Republic; instead, they are managed by the custodian who works with the issuer raising on the platform. The custodian of this offering is BitGo Trust Company.

Why use a custodial account?

Companies will utilize a custodian to ensure that all securities they offer in their campaign are in one place. This structure means if a liquidity event or any other material event regarding the securities occurs, the company can look to the custodian to service the securities rather than each individual investor.

For investors, utilizing a custodian safeguards their investment, or security interest, with a qualified financial institution. Having a custodial account allows for easier transfers and creates additional layers of protection for your securities. For companies, it can increase efficiency by reducing their cap table management costs and creating a single-line item, making future funding rounds easier. 

Will I have to set up a custodial account? What is the process?

Yes, since the company is utilizing a custodian, all investors in the offering will be required to create a custodial account with BitGo Trust Company and enter into an omnibus nominee agreement.

The custodial account creation process is hosted in our investment checkout system, meaning you will commit your investment and establish your account with BitGo all at once. You will be automatically prompted to review and sign certain custodial documents with BitGo during investment checkout. In addition, you may be asked to provide certain information to verify your identity. Once completed, you will receive an email confirming your investment commitment. 

Why would a company use a custodian like BitGo?

Companies will utilize a custodian to ensure that all securities they offer in their campaign are in one place. This structure means that if a liquidity event or any other material event regarding the securities occurs, the company can look to the custodian to service the securities rather than each individual investor.

For investors, utilizing a custodian safeguards their investment, or security interest, with a qualified financial institution. Having a custodial account allows for easier transfers and creates additional layers of protection for your securities. For companies, it can increase efficiency by reducing their cap table management costs and creating a single-line item, making future funding rounds easier. 

Which countries are not permitted to open a Custody Account with BitGo?

Syria

Korea (North)

Iran

Cuba

Japan

Spain

Qatar

Isreal

Turks and Caicos Islands

Saint Kitts and Nevis

Venezuela

Montserrat

Jamaica

Haiti

Guadeloupe

Grenada

Costa Rica

France

Bonaire

Bermuda

Anguilla

Indonesia

El Salvador

Italy

Belgium

Vermont (US)

Arkansas (US)

Does opening a custodial account with BitGo Trust Company cost me anything?

Right now, there are no costs for investors to open a custodial account. Custodial accounts sometimes have a low annual cost to maintain; however, such costs are covered for the investor in this offering.

My custody account is being manually reviewed. What should I do?

Please contact our team at investors@republic.co with any further questions related to your custodial account with Bitgo.

I have further questions regarding Bitgo and/or my custodial account, who can I contact?

Please contact our team at investors@republic.co with any further questions related to your custodial account with Bitgo.