INDIEVEST, INC.

Risk Factors

The risk factors listed below are not intended to be an exhaustive listing of all risk factors for any particular feature film production or project. A complete listing of risk factors for an investment opportunity in a particular feature film production or project will be included in the particular production or project’s private placement memorandum.

CERTAIN INVESTMENT CONSIDERATIONS

Investment in any feature film projects (“Productions”) discussed herein is highly speculative and involves a high degree of risk. Presented below are certain factors that potential investors should consider with respect to an investment in IndieVest, Inc. (the “Company”) or any entity created for the purpose of developing and producing a Production (a “Production Entity”). Participation in any of these investment opportunities involves various risks relating to, among other things, the nature of the film industry and entertainment productions. Investment is suitable only for persons or entities with the financial capability of making and holding long-term investments and of sustaining the loss of a portion or all of their investment. In addition to the risk factors set forth below, risks and uncertainties not presently known or that are currently deemed immaterial may also impair the business, financial condition or operating results of the Company.

COMPANY AND PRODUCTION ENTITY-SPECIFIC RISKS

New Venture

The Company was formed on June 17, 2004, and therefore has minimal financial records and/or operating history. The Company’s future prospects must be weighed against the risks and difficulties frequently encountered by companies in the early stages of a business enterprise. The Company cannot provide any assurances that it will be successful in addressing these risks or achieving its objectives.

No Assurance of Return

The development and production of Productions involves a high degree of risk. Many organizations operated by persons of competence, ability and integrity have been unable to make, manage and realize a return on investments in Productions. There is no assurance that the Company or any particular Production Entity will be able to generate returns for its investors. The past investment performance of the Company, any Production Entity, or its principals (the “Principals”) is not necessarily indicative of the Company’s future results.

No Guaranteed Cash Distribution

The date that distributions to the Members will actually commence, or their subsequent timing or amount, cannot be accurately predicted. There is no guarantee that such distribution will, in fact, be made or, whether they will be made when anticipated.

Leverage

A Production Entity may utilize a leveraged capital structure to finance its film, in which case the lender would be entitled to cash flow generated by such investments prior to the investors receiving any distributions or investment returns. Although the use of leverage may enhance returns and increase the Production budget, it may also increase the risk that actual returns may be lower than targeted and that losses of capital may occur. Rising interest rates, downturns in the economy and other factors may adversely affect the ability of a Production Entity to successfully utilize leveraged financing and may also adversely affect the financial performance of the Production Entity.

No Protection Under the Investment Company Act

In reliance upon a statutory exemption for privately offered securities by entities that would otherwise be deemed to be “investment companies,” the Company has not registered as an investment company under the Investment Company Act of 1940 (as amended, the “40 Act”). Among other things, the 40 Act generally requires investment companies to have a minimum of forty percent (40%) independent directors and regulates the relationship between the investment adviser and the investment company. Such protections, and others afforded by the 40 Act, will not be applicable to the Company and the Members.

No Protection Under the Investment Adviser’s Act

The Company will not register as an investment adviser under the Investment Adviser’s Act of 1940 (as amended, the “Adviser’s Act”) in reliance upon an exemption therefrom. The Adviser’s Act contains many provisions designed to protect clients of investment advisers, including, among other things, restrictions on the charging by registered investment advisors of performance-based compensation. Such protection, and others afforded by the Adviser’s Act, will not be applicable to the Company and the Members.

Impact of State and Federal Securities Laws

Offerings to invest in Productions have not been registered under the Securities Act in reliance upon Rule 506 of Regulation D promulgated by the SEC pursuant to § 4(2) of the Securities Act; and reliance will also be made on apparently available exemptions from securities registration under the “blue sky” laws of states in which the investments are offered and sold. There is no assurance that any investment in a Production presently qualifies or will continue to qualify under exemptive provisions. If suits for rescission are bought under the Securities Act and successfully concluded for failure to register any offer of investment in the Productions, or for acts or omissions constituting offenses under the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or applicable state securities laws, both the capital and assets of the Company and the Production Entities could be adversely affected, thus jeopardizing the ability of the Company or the Production Entity to operate successfully. Each investor should consult its own legal counsel.

Tax Risks

Although the Company expects some Productions (those primarily produced in the United States) to qualify for an immediate deduction of production costs, based on the statutory language of Internal Revenue Code Section 181 and relevant legislative history, any particular Production may not be able to meet all requirements for qualifying for that benefit, and the deduction may not ultimately prove to be allowable, because of unforeseen cost overruns and other contingencies. Moreover, IRS rules, regulations and administrative guidance to be issued in the future, but with possible retroactive effect, may include requirements for qualification that the SPE will not be able to meet.

Loss pass-through’s to investors may be wholly or partially disallowed on audit of the Company’s or a Production Entities information tax returns, under procedures that will be binding on all investors. Depending on facts and circumstances not yet ascertainable, an IRS auditor may determine that one or more of the Production Entities does not meet all the requirements of the tax law, or that Production’s investors did not have a realistic likelihood of economic profit, apart from tax savings. No assurance can be given that such an adverse determination, if made, would be altered by reason of appellate and judicial proceedings, although the Company believes that such a determination would be erroneous assuming that its business plan is carried out in practice.

Other limitations on the deductibility of losses may affect particular categories of investors, including the at-risk rules and passive activity loss rules. Future IRS rulings may also require the Company and/or the Production Entities to file full disclosures of facts relating to the Productions and/or the Production Entities and the investors to the IRS. Investors may be required to make extensive disclosures relating to the Company on their own tax returns, or face substantial penalties under both federal and state tax laws. Any taxable income generated by a Production would subject investors to liability for tax under the pass-through rules applicable to a Production, even if a Production is unable to make any cash distributions to investors for the years in which such income is produced. Individual investors would be required to pay tax on their gains from a sale, up to the amount of their share of the Section 181 deductions taken by the Company or a Production through the applicable Production Entity, at ordinary income rates rather than those applicable to long-term capital gains.

AN INVESTMENT IN ANY PROSPECTIVE EQUITY OFFERING WILL INVOLVE MATERIAL FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES, MANY OF WHICH MAY VARY DUE TO THE UNIQUE CIRCUMSTANCES OF EACH PROSPECTIVE INVESTOR. IN VIEW OF THE COMPLEXITIES OF THE FEDERAL, STATE AND LOCAL INCOME TAX LAWS AND THE PRESENCE OF SIGNIFICANT TAX CONSEQUENCES ASSOCIATED WITH AN INVESTMENT IN ANY PROSPECTIVE EQUITY OFFERING, PRIOR TO INVESTING, EACH PROSPECTIVE INVESTOR IS STRONGLY URGED TO CONSULT WITH, AND MUST RELY ON THE ADVICE OF, HIS, HER OR ITS OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE AND LOCAL TAX IMPLICATIONS OF SUCH AN INVESTMENT AND THE PURCHASE, HOLDING AND SALE OF THE UNITS.

Foreign Investors

Prospective investors that are foreign persons that invest directly in a Production generally will be subject to federal income tax each year on their distributive share of the taxable income of a Production that is deemed to be “effectively connected” with a U.S. trade or business as if they were U.S. citizens or residents, regardless of whether the Production Entity makes any cash distributions. It is expected that at least a significant portion of taxable income will be deemed “effectively connected.” Foreign investors generally will be personally liable to a Production Entity with respect to any withholding tax not satisfied out of their share of any distributions by the Production Entity.

Prevention of Money Laundering

The Uniting and Strengthening America By Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), signed into law on and effective as of October 26, 2001, requires that financial institutions establish and maintain compliance programs to guard against money laundering activities. The USA PATRIOT Act requires the Secretary of the U.S. Treasury to prescribe regulations in connection with anti-money laundering policies of financial institutions. The Financial Crimes Enforcement Network (“FinCEN”), an agency of the U.S. Treasury, has announced that it is likely that such regulations would subject certain pooled investment vehicles to enact anti-money laundering policies. It is possible that legislation or regulations could be promulgated that would require the Company and/or a Production Entity, in connection with the establishment of anti-money laundering procedures, to share information with governmental authorities with respect to the Members. The Company and each Production Entity reserves the right to request such information as is necessary to verify the identity of a Member and the source of the payment of subscription monies, or as is necessary to comply with any customer identification programs required by FinCEN and/or the Securities and Exchange Commission. In the event of delay or failure by the applicant to produce any information required for verification purposes, the subscription monies relating thereto may be refused.

INDUSTRY-SPECIFIC RISKS

Inherent Variability in the Production Process

The process of producing and distributing films is inherently unpredictable. The Members may not have consistent access to quality creative material from which to select Productions for purposes of development production or investment. The writers hired to write screenplays for Productions may create material that is not sufficiently entertaining or dramatically compelling. There may be difficulty in securing the participation of appropriate talent and suitable shooting locations. Some Productions may be more difficult to finance than others. There may be contract disputes with the actors, writers, producers, etc. All of these factors could affect the ability to produce Productions on schedule and on budget, and therefore to see any proceeds from the exploitation of such Productions.

Dependence on Labor Unions

Many of the individuals who will be involved in the production of the Productions will be members of a union. Union decisions, including the decision to strike, can greatly impact the production of a Production. Correspondingly, the ability to complete any Production on time and on budget will be influenced by union decisions.

Production Cost Over-Runs

Any of the Productions may incur production over-runs making a particular project unprofitable or difficult to complete. While it is anticipated that a completion guaranty will be obtained in order to secure the completion and delivery of a Production in accordance with a pre-approved budget and production schedule, it cannot be guaranteed that such a completion guaranty will be in place for each Production. Without a completion guaranty, there is a much greater risk to the potential recoupment of investments in a Production.

Production May Be Prematurely Abandoned

The development, production or distribution of a Production may be abandoned at any stage if further expenditures do not appear commercially feasible, with the resulting loss of some or all of the funds previously expended on the development, production or distribution of the Production.

Rising Costs to Produce and Distribute Productions

The cost of producing and marketing Productions has continued to increase. This increase in costs has not been accompanied by a proportional increase in box office revenues. In the future, producers may have to generate even greater box office returns relative to the costs of its Productions to ensure profits.

The Productions May Not Be Successful

The size of the monetary distributions, if any, made to the Members will be based upon the commercial success of the Productions. It is to be expected that the more successful the Production, the greater the amount of any potential distributions. However, this ultimately will depend on a large variety of factors including the growth of worldwide DVD and ancillary revenues, such as video-on-demand, thereafter. Such factors are outside the control of the Company.

Members Last In Line

A Production typically goes from the producer to the distributor who in turn may send it to territorial sub-distributors, who send it to theatrical exhibitors. The box office receipts generated by a Production travel this same route in reverse. The exhibitor takes a cut and sends the balance to the sub-distributor who takes a cut and sends the balance to the distributor, who takes a cut and sends the balance to the producer. The problem for the investors with this system is that such investors, who have had their money at risk for the longest time, are at the tail end of the box office receipts chain. Thus, if a Member or the Company, in negotiating an investment or distribution deal, has to rely heavily on a participation in some defined level of a Production’s revenue stream, revenues to the Member-investors are likely to be the last in line to benefit from such a revenue stream, if any.

A Competitive Marketplace

Motion picture production and distribution is highly speculative, inherently risky and unpredictable. Each Production is an individual work and there can be no assurance of the economic success of any Production since the revenues derived depends primarily upon its acceptance by the public, which cannot be predicted. The commercial success of a Production also depends upon the quality and acceptance of competing properties released in the marketplace at or near the same tune, the availability of all forms of entertainment and leisure activities, general economic conditions, and other tangible and intangible factors. The entertainment industry in general and the motion picture industry in particular are continuing to undergo significant changes, primarily due to technological developments. It is impossible to predict the overall effect of these changes on the potential revenue from and profitability of any Productions.

New entertainment products and services are continually being introduced to the marketplace. Video games, music, film, television, and sports programming all compete for the attention of consumers. Although the overall share of leisure time dedicated to viewing films has remained constant over the past few years, there is no guarantee that this will continue over time or even the medium/short term.

The performance of the Productions will be particularly affected by films released in the marketplace by competing companies. The Company would have no control over what films these companies release, when they release them, how they market them, or how much they spend on marketing them.

The reaction of critics and the general audience to a Production will be unpredictable. Any film’s success is heavily depends on positive “word-of-mouth.” The health of the economy, current events and changing consumer tastes could all affect the “word-of-mouth.”

Impact of Technological Change and Film Piracy

The film and television industries are currently experiencing a great degree of technological change including the development and use of digital film and online file sharing technologies. While some technologies, such as the DVD, have increased industry revenues, the effect of recent developments on the industry is still unknown. Film piracy remains a major area of concern in the film industry, and these new technologies could contribute to the problem.

Piracy is currently concentrated primarily in areas outside of North America including Asia, South America, the former Soviet Union, and other Eastern European countries; however, no assurances can be made that piracy will not spread to other areas of the world as new technology is developed. A number of organizations are attempting to take control of the problem. Trade embargoes and restrictions have been used to encourage particular countries to institute and enforce strict copyright laws. However, these actions have produced mixed results and there is no assurance that future actions will satisfactorily resolve the matter.

Long Term Project

The production and distribution of a Production involves the passage of a significant amount of time. Pre-production on a Production may extend for several months or more. Principal photography may extend for several weeks or more. Post-production may extend from several months or more. Distribution and exhibition of films generally and of a Production in particular may continue for years before profits may be generated, if at all.

POTENTIAL CONFLICTS OF INTEREST

Affiliated Transactions

The Company, its Members and/or the principals of either may be engaged by a Producer or any affiliate thereof to render services in connection with a Production. Any fees or profit participations payable to any of the foregoing for such services may reduce the returns received by the Members.

Conflicting Interests among Members

The Members may include persons or entities organized in various jurisdictions who may have conflicting investment, tax and other interests with respect to their investment in certain Productions. The conflicting interests of individual Members may relate to or arise from, among other things, the nature of investments, the structuring of the acquisition of investments and the timing of the disposition of investments. Such structuring of investments may result in different after tax returns being realized by different Members. As a consequence, conflicts of interest may arise in connection with decisions to be made by the Company, including, without limitation, with respect to the nature or structuring of investments that may be more beneficial for one Member than for another Member, especially with respect to a Member’s individual tax situation.

Legal Counsel

Greenberg Traurig, LLP has been engaged to act as special counsel to the Company in connection with the Company’s organization. Greenberg Traurig, LLP has not and will not be engaged to represent or protect the interests of prospective investors or the Members. The Members and prospective investors should consult with and rely upon their own counsel concerning investments in Productions, including, without limitation, tax consequences to them and other issues relating to any investment in Productions.