Sounds ridiculous. Is it the same if you wanted to raise $50k for a coffee shop? There has to be a better way.
One thing you could do is have them buy points in the film, instead of LLC shares outright. The points get paid out after the film earns 125% of its production budget back. The point structure would be defined in a deal memo that both parties sign.
Also, since films are incredibly speculative, you could simply ask them to use the money to guarantee a loan that you take out. You are on the hook for the loan if the film doesn't make any money, but it's comparable to paying off a graduate degree or something like that.
Taking the "coffee shop" analogy further, if you started a coffee shop you would have informal discussions first with close friends and family - and out of those discussions hopefully a few partners would emerge. They would be your LLC members when you create the LLC - not "investors" that you are approaching cold.
Big Disclaimer - I am not a lawyer & don't really know anything about specific securities laws in New York State. I do know that I can't pay my parking tickets by phone and that the state of New York (well at least the city) does its best to make everything a complete pain in the *##
Last edited by filmscheduling; 09-12-2005 at 09:49 PM.