Wonderfilm Media Corporation
(TSXV: WNDR) (OTC: WDRFF)
Wonderfilm Media Corporation’s (TSXV: WNDR) (OTC: WDRFF) main business is the worldwide production of high-quality feature films and episodic television. The Wonderﬁlm team includes Hollywood veterans who have packaged, produced and delivered several profitable recent films, including “BlacKkKlansman,” “Get Out” and “The Hurt Locker.” Having these individuals on the Wonderfilm team demonstrates the company’s proven access to Academy Award-quality films and upside.
Management Team with Proven Track Records
Kirk Shaw: Over 240 movies and seven television series to his credit. Headed up Canada’s largest independent film and television production company, attaining $100 million revenue two years straight with 8% EBITDA.
Dan Grodnik: Founded Mass Hysteria Entertainment, a publicly traded company, and became its chairman/CEO. Produced over 50 feature films, including “Bobby,” the 2006 Robert Kennedy biographic film.
Shaun Redick & Yvette Yates: $300 million+ USD total production budgets to date with a combined 175 award wins/355 nominations, including 10 Oscar nominations. In 2017 and 2018, they produced two of the most successful Hollywood films of those years: “Get Out” ($255 million USD gross revenue) and “BlacKkKlansman” ($100 million USD gross revenue). Scheduled to produce two to three films per year for Wonderfilm, with the first release slated for October 2020. Committed to the 4% challenge to give more women and women of color the opportunity to direct.
Jeff Bowler: 2017 Emmy Award-winning producer. Vice president of acquisitions and production for The Exchange, one of the top film sales and finance companies in the world. Bowler is the executive for Wonderfilm Global distribution.
Bret Saxon: Through his company, TMP Inc., Saxon created M&A deals worth over US$750 million across 113 countries. Produced several feature films and made-for-television movies, including Wonderfilm’s 2019 movie “Zombie Tidal Wave” for NBC/Universal’s SYFY.
17-Title Movie Slate — Greenlit
Wonderfilm currently has 17 films greenlit with combined budgets totaling $58 million. Wonderfilm production stars include: John Travolta, Nicolas Cage, Guy Pearce, Ryan Phillippe and Anne Heche, to name a few.
Some of the company’s most notable greenlit projects include the horror film “Amityville 1974,” slated for theatrical release in October 2020, and the action film “Inside Game” starring Tyrese Gibson, which will be released to theaters in fall 2020.
The company is also actively developing a number of other new IP projects, including a dramatic biographic feature titled “Life and Times of Steve McQueen,” a film adaptation of the bestselling novel “Merchant of Death” and a television series headed by “CSI: Crime Scene Investigation” creator Anthony Zuiker.
- $20 million in deferred revenue expected in early 2020.
- Well-positioned to realize $100 million in revenue by 2021.
- Company is undervalued by a factor of 23, with a market cap of $5.2 million and a share price around $0.13, as of Oct. 14, 2019.
- Creator and co-founder Kirk Shaw has a film production profitability rate of 90%.
- Affiliated with top Hollywood executives, producers and actors.
- 7 productions greenlit, $58 million total budgets.
- Risk-averse production process results in predictable and consistent revenue streams.
- Soaring content demand from streaming providers is fueling industry growth. According to PwC, global media and entertainment market is expected to grow from $1.9 trillion in 2017 to $2.4 trillion in 2022, a five-year CAGR of 4.4%.
- Recent formation of film and television sales and distribution joint venture, Wonderfilm Global, is expected to generate significant incremental revenue.
- Strong relationships throughout industry enable cost-effective production budgets to come together.
- Management team comprised of industry insiders with proven track records.
Potential for Breakout Success
Note: Potential breakout films are not factored into company’s revenue projections.
Base Hits and Home Runs
Recent Industry Breakout Films Include:
Recent Wonderfilm Releases
Wonderfilm Global Distribution
Wonderfilm acquired 51% ownership in the joint venture structure and immediately began attaching its own productions to Wonderfilm Global. The joint venture represents a significant opportunity for Wonderfilm, changing how the company does business.
The intention behind Wonderfilm Global is to keep distribution margins in-house that previously went to other companies. Since most Wonderfilm movies are relatively low-risk and easy to sell because they feature desirable cast and genre, third-party distribution companies were previously earning approximately 10%, plus expenses, on Wonderfilm movies without any level of risk. Now, revenue is generated through presales of Wonderﬁlm projects and, at times, third-party films. The average Wonderﬁlm movie is pre-sold for $5million, garnering $500,000 to $750,000 per sale as a commission. These commissions now stay in-house with Wonderﬁlm Global, and the company expects to sell 10 to 12 third-party films between fall 2019 and fall 2020, generating roughly $6 million in commission income.
A further revenue source is generated from theatrical sales through a 50/50 upside split once the minimum sales threshold is met.
Wonderﬁlm Global has offices in Vancouver, Beverly Hills, London, Ireland, Seoul and China.
Wonderfilm Business Model
Return Before a Film is Delivered: Producer fee line items are included in each production budget. These range from $50,000 to $500,000, depending on the total budget, and are paid to Wonderfilm most commonly on the first day of principle photography.
Distribution: Wonderfilm Global charges sales and distribution fees within each production budget to cover its presale costs.
Note: Wonderfilm’s productions are all structured to minimize risk by matching budget to funds available.
Return After a Film is Delivered: Unsold presale territories are countries or territories left off of a film’s presale list, either for strategic reasons or because the broadcaster/distributor is waiting to see the completed film. These outside-the-budget distribution sales become Wonderfilm profit centers.
$50 Million Wonderfilm Production Fund (WPF):
Wonderfilm is in the process of raising $50 million to establish a Wonderfilm Production Fund (WPF). WPF is designed to consolidate traditional production financing models into a single diversified, asset-backed debt instrument.
The WPF is a highly specialized investment vehicle with noncorrelated market returns normally reserved for institutional banks and specialty lenders, and it would pay 8% interest directly from each Wonderfilm movie or series budget and not from corporate funds. These same interest payments are already added to each production budget, as the company currently closes a separate financing for every film. The WPF would significantly streamline Wonderfilm’s production rate, adding revenue more quickly and broadening the yearly production slate.
For fund investors, the WPF is a dedicated production-financing vehicle designed to offer a risk-moderated approach to investing in film finance. The managed process provides structure and reassurance that are normally experienced only when working with an institutional lender that has a dedicated staff and resources.
All projects being financed are for Wonderfilm productions, with the fund collateral fully secured by receivables, including presale contracts, government incentives, or a guarantee from Wonderfilm for any unsecured amounts as may be permitted.