The hardest part of building a startup isn’t coming up with a great idea, it’s creating the path that turns that idea into reality.

If you’re familiar with Legion M you probably know that we’ve been involved with over a dozen movies in our short history. And if you are familiar with our plans (which you can read in detail in our SEC filings), you know that we look at each project as a stepping stone that moves us forward to bigger and better things. This is the way startups work. You start with nothing and build a path - step by step - that gets you where you need to go.

We believe we’ve hit a significant inflection point with our two newest projects – William Shatner: You Can Call Me Bill and My Dead Friend Zoe (starring Sonequa Martin-Green, Natalie Morales, Ed Harris and Morgan Freeman). To understand the significance of these projects, it’s worth revisiting the path we’ve taken to get to this point.

STEP 1. BUYING A SEAT AT THE TABLE

Legion M’s earliest projects (and many of the projects since then) are ones in which we helped finance or release films by making cash investments. Colossal, Field Guide to Evil, and Mandy are some early examples - Nandor Fodor and the Talking Mongoose is one of the most recent. The terms we get in these deals have progressively gotten better over time as our Legion has grown and our negotiating power has increased. That said, all of these projects have a pretty simple risk/reward proposition: We write a check to invest and if the film does well we can make money, but if the film does poorly we can lose money (up to our entire investment).

Win or lose, the financial impact of these projects is fairly low – especially at the level of investment Legion M has made. For example, if we invest $100K in a project and are lucky enough to double our money, we’ve only made $100K in profit – about enough to cover 1 month worth of operating expenses for a company of our size. Conversely, if we lose our entire investment, we’re only out 1 month of operating expenses.

If we were to scale the size of our investments (which we don’t plan to), the financial risk/reward of these type of projects could become meaningful. However, at the level we’ve invested to date, the primary value of these projects is not their economics, but their ability to open doors to new partners, “level up” the company, and grow the size of our community.

In the beginning, these were the only deals available to Legion M. Since then, we’ve used this model strategically when we've found opportunities we believe make sense for Legion M (e.g. working with Simon Pegg!).

STEP 2. EARNING A SEAT AT THE TABLE

As the size of our community grew and we were able to demonstrate its effectiveness, we started to get opportunities that allowed us to make “in-kind investments.” This model allows us to earn a stake in the film’s upside simply by spending time and resources to promote the project, without the need to invest any cash in the film. Bad Samaritan and Save Yourselves! are two prime examples of this business model.

This is obviously a much more advantageous position – we have upside if the film does well, but if the film does poorly we don’t have any cash at stake. Given that many of the activities we use to promote a project are the exact same activities we use to promote Legion M (e.g attending comic cons, digital marketing, etc), we feel this is a very efficient way for us to get involved with projects.

That said, just like the previous model, our upside for these sorts of projects is fairly limited – if a film succeeds we can make money, but even if it were to become a big hit it our ROI is capped.

STEP 3. GETTING PAID TO SIT AT THE TABLE

As Legion M continued to grow, we soon found that there were partners willing to pay us – either in the form of marketing fees (e.g. Tolkien) or producers fees (e.g. The Man In the White Van) to be involved with a project.

This is obviously a much more advantageous position than the previous models. We’re getting paid for our time, and in cases like The Man In The White Van where we own a significant piece of the backend, we have a chance to make real money if the film is successful.

That said, projects like The Man In The White Van are controlled by 3rd parties who own all the rights. As owners of the film, they control all the decisions and collect all the revenue. If a movie makes enough money they will share our percentage with us, but if it doesn’t reach a certain threshold the only money we’ll ever receive are the producer’s fees from the production budget.

STEP 4. OWNING THE TABLE!

Our two newest films – William Shatner: You Can Call Me Bill and My Dead Friend Zoe (starring Sonequa Martin-Green, Natalie Morales, Ed Harris and Morgan Freeman), represent a fundamental change in Legion M’s position.

Unlike every previous project, these films are entirely produced and controlled by Legion M. We set them up, we financed them (with the help of the community), and we produced them. In exchange for this we earn producers fees AND have a substantial stake in the backend just as we do with The Man In The White Van.

The difference is, as the rightsholder, Legion M controls all the major decisions – everything from casting to distribution. In addition, every dollar in revenue these films generate (net of fees and commissions taken from upstream partners like distributors and sales agents) comes to Legion M. It’s the reverse of our position in other projects – rather than waiting in line to receive our share (if any) of the revenue, we’re the ones responsible for collecting all the revenue and divvying it up amongst all the stakeholders.

This has potential to dramatically increase Legion M’s revenues. For example, if My Dead Friend Zoe is able to earn its budget back, this ONE project could exceed the amount of revenue (over $4MM) earned by the company over the last 7 years.

And if a film like this goes on to become a bona fide hit…it has potential to yield millions or even tens of millions of dollars in revenue and profit for Legion M. A single hit could potentially alter the financial trajectory of the company.

QUALITY SWINGS AT QUALITY PITCHES

Now that Legion M has gotten to the point where we can take some real swings for the fences, that’s what we plan to do. Hollywood is a “hit driven business” which means it's almost impossible to know in advance what movies will succeed. Who would have guessed that Barbie would become one of the biggest movies of all-time, while studio tentpoles like Mission Impossible, The Flash, and Indiana Jones would be out-grossed at the US Box Office by a small independent film called Sound of Freedom?

The way to succeed in a hit-driven business is to take quality swings at quality pitches. Because of Legion M’s structure (the fact that we’re owned by fans) we believe we can tilt the playing field slightly to our advantage. If we can take enough quality swings, we believe it’s only a matter of time until we get a hit.

WHERE DO WE GO FROM HERE?

It’s taken a massive amount of hard work and perseverance over the past 7 years to start from nothing and get to where we are today. That said, we’re not done yet. Not even close.

To date, Legion M has raised less than $20MM from investors, which means our entire existence costs less than the first 15 minutes of a Marvel movie. And while we’ve come a long way, we’re still operating in the realm of low budget (by Hollywood standards) independent film, which is not a particularly lucrative ecosystem. Since producers’ fees are typically a percentage of the production budget, if we can continue to step up and produce larger budget films, the increase in producers fees could be enough to push Legion M into the black.

That said, the entertainment industry is in a massive state of upheaval, which can create opportunities for nimble and innovative companies like Legion M. So while our primary focus is still on growth — the larger we get the more powerful we become — we’re always keeping an eye out for new opportunities that will allow Legion M to level up to the next stage of our development.

Onward and Upward!

**Investments in movie and companies Legion M are speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment.

**This update contains forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to the company’s management. When used in this report, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements, which constitute forward looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the company’s actual results to differ materially from those contained in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.