MERKUR MARKET ADMISSION DOCUMENT

Transcription

1 WR ENTERTAINMENT ASA MERKUR MARKET ADMISSION DOCUMENT December 15, 2015 Merkur Market is a multilateral trading facility operated by Oslo Børs ASA. Merkur Market is subject to the rules in the Securities Trading Act and the Securities Trading Regulations that apply to such marketplaces. These rules apply to companies admitted to trading on Merkur Market, as do the marketplace s own rules, which are less comprehensive than the rules and regulations that apply to companies listed on Oslo Børs and Oslo Axess. Merkur Market is not a regulated market, and is therefore not subject to the Stock Exchange Act or to the Stock Exchange Regulations. Investors should take this into account when making investment decisions.

2 MERKUR MARKET ADMISSION DOCUMENT INDEX INDEX COMPANY DESCRIPTION 1. RISK FACTORS STATEMENTS INFORMATION CONCERNING THE SECURITIES BEING ADMITTED TO TRADING THE COMPANY AND ITS BUSINESS FOUNDER, BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES FINANCIAL INFORMATION CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL LEGAL MATTERS ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY OF TERMS WR ENTERTAINMENT ASA Page 2 of 34

3 MERKUR MARKET ADMISSION DOCUMENT 1. RISK FACTORS Investments in shares always entail a high degree of risk. Potential investors should give careful consideration to the specific factors listed below which describe certain risks inherent in any investment in securities. Each of the risks listed below and other risks and uncertainties described could, if they are realized, have a material negative effect on WR Entertainment ASA s ( the Company, WR ASA ) business, results of operations, financial position, or future operations, or result in a reduction in the value of the Company s shares of common stock. The risks described below are not listed in order of significance and are not the only risks faced by the Company. Additional risk factors not currently known or currently deemed immaterial may also affect company operations. The Company s business, financial condition, results of operations or future earnings could be materially adversely affected by any of these risks. The risk factors relate to the Company and its subsidiaries. While management will strive to attain the Company s performance objectives through its exercise of judgment and skill, there is no guarantee of a successful performance, or that a positive return will be achieved Risks related to the Company and its Business Limited Operating History The Company has a limited operating history and an investment in its shares involves significant risk. The Company s business has generated limited revenue during its initial years of development and growth, and can be considered subject to risks associated with development- level businesses, including the possibility that its business plan may not be successful. Dependence on Key Personnel, Employees and Ability to Recruit Skilled Personnel for Future Operations The future success of the Company depends to a significant extent on the continued services of its key personnel, in particular Jim Cardwell, Duane Eberlein, Tasmin Lucia- Khan and Ryan Wiik. There are currently no key man life insurance policies on the lives of Messrs. Jim Cardwell, Duane Eberlein and Tasmin Lucia- Khan and the loss of any of their services may have a material adverse effect on the Company. However, the Company plans to obtain a key man life insurance policy on the life of Ryan Wiik, the proceeds of which would be for the benefit of the Company. If the Company were to lose the services of any of its key personnel, it could have a material adverse effect on the overall performance and the value of its shares. In addition to Messrs. Cardwell, Eberlein, Lucia- Khan and Wiik, the Company s future success depends on its ability to attract and retain qualified personnel to develop and produce its films. If the Company is unable to attract and retain a sufficient number of qualified personnel, it could adversely affect the quality of its motion pictures which in turn could adversely affect their commercial success. Dependence on Motion Picture Performance The economic performance of any of the motion pictures produced by the Company cannot be assured, because the revenue derived from the distribution of a motion picture (which does not necessarily bear any correlation to the production or distribution costs incurred) depends primarily upon its acceptance by the public, which cannot be accurately predicted. The economic performance of a motion picture also depends upon the public s acceptance of competing films, the WR ENTERTAINMENT ASA Page 3 of 34

4 MERKUR MARKET ADMISSION DOCUMENT availability of alternative forms of entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, all of which can change and cannot be predicted with certainty. Revenues generated by the Company s films are therefore highly uncertain and speculative, and there can be no assurance that the Company s income will be sufficient to meet its operating expenses and debt obligations. Other Consumer Products Success in other sources of revenue is based on customer acceptance and the competence of the Company s marketing programs. There is no assurance that these sources of revenue will be sufficient to cover the Company s costs of operations. Growing Theatrical Motion Picture Production and Marketing Costs The costs of producing and marketing theatrical motion pictures require substantial capital. These costs have steadily increased and may increase in the future. This makes it more difficult for a theatrical motion picture to generate a profit or compete against other theatrical motion pictures. Historically, production costs and marketing costs have risen at a rate faster than increases in either domestic admissions to movie theatres or admission ticket prices. A continuation of this trend would leave the Company more dependent on other media, such as home video, television, international markets and new media for revenue. Strikes and Other Union Activity The Company could be adversely affected by strikes and other labor activity. Along with the major U.S. theatrical motion picture studios, the Company expects to employ members of the International Alliance of Theatrical and Stage Employees, (IATSE), in its production, and also expects to employ members of several unions and guilds. A strike or other action by one or more of these and/or other unions or guilds that provide personnel essential to the production of the Company s motion pictures could have a material adverse effect on the its business, financial condition and results of operations. International Markets The Company expects to derive revenue from overseas markets and will therefore be subject to risks inherent in the international production and distribution of films, all of which are generally beyond its control. These risks include: i. laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws; ii. differing cultural tastes and attitudes, including censorship laws and film rating regulations; iii. inconsistent degrees of protection for intellectual property and piracy; iv. financial instability and increased market concentration of buyers in foreign television markets, especially European pay television markets; v. the instability of foreign economies and governments; WR ENTERTAINMENT ASA Page 4 of 34

5 MERKUR MARKET ADMISSION DOCUMENT vi. fluctuating foreign exchange rates (for example, if the USD falls with respect to the currency of a foreign country in which the Company is conducting production activities, and the Company has not hedged against such a decrease, the price in USD of these production activities will rise proportionately); and vii. war, crime, natural disasters and acts of terrorism. Security The Company plans to produce and distribute motion pictures in parts of the world, which may be considered as unstable. The Company will retain first- rate security resources from service providers specialized in international security. There are always risks associated with travelling and working on location. Intellectual Property Infringement Claims One of the risks of the film production business is the possibility that others may claim that the Company s motion pictures, publications, and other products misappropriate or infringe their intellectual property rights with respect to films, stories, characters or other intellectual property. Any such claims may materially adversely affect the Company s business, financial condition or results of operations. Dependence on Distribution Partners and External Suppliers The Company intends to enter into distribution agreements with major motion picture studios, mini- major motion picture studios or other distributors to distribute its motion pictures. When the Company is able to consummate one or more such distribution agreements, the terms of these agreements may not be favorable to the Company and there can be no assurance that any of its distributors will perform under the terms of its distribution agreements. Either of these occurrences could have a material adverse effect on the Company s overall performance and the value of its shares. The Company will depend on distributors to account to it for receipts received as a result of the exploitation of its motion pictures. Although distribution agreements customarily give audit rights with respect to the applicable distributor s accounting, the exercise of such audit rights can be costly and are unlikely to mitigate the delayed receipt of amounts owed to the Company. Additionally, if any of the Company s distributors were to experience financial difficulty or file for bankruptcy, it could have a material adverse effect on the Company s overall performance and the value of its shares. The Company s operations also require reliance on third- party vendors and providers, and the Company is therefore dependent on the performance of and its relationships with these vendors and providers. Taxes and Fees WR ASA and its subsidiaries operate internationally and, as a consequence, the Company is subject to a variety of national tax laws, and is acting in accordance with management s interpretation of current tax laws, tax treaties and regulations in the countries where the Company operates. It cannot be warranted that the Company s interpretations of the applicable regulations and administrative practices are correct. In addition, r ules and practices are subject to change based on future governmental decisions, which may result in changes to tax policy. WR ENTERTAINMENT ASA Page 5 of 34

6 MERKUR MARKET ADMISSION DOCUMENT Piracy Piracy of theatrical motion pictures and other media products, including digital and Internet piracy, may decrease revenue received from the exploitation of the Company s products. Entertainment content piracy is extensive in many parts of the world and is made easier by technological advances and the conversion of theatrical motion pictures into digital formats, which facilitates the creation, transmission and sharing of high quality unauthorized copies of media products, on personal computers and DVDs, from Video on Demand through set top boxes and other devices and through unlicensed broadcasts on free TV and the Internet. The proliferation of unauthorized copies and piracy of these products has an adverse effect on the Company s business because these products reduce the revenue it receives from its legitimate products. Even when the highest level of security and preventative technologies are applied, there can be no assurance that such measures will prevent piracy. Unauthorized copying and distribution are prevalent throughout the world. The Motion Picture Association of America (MPAA) and other trade associations monitor the progress and efforts made by various countries to limit or prevent piracy. In the past, some of these trade associations have enacted voluntary embargoes on entertainment content exports to certain countries in order to pressure the governments of those countries to become more aggressive in preventing theatrical motion picture piracy. In addition, the U.S. government has publicly considered implementing trade sanctions against specific countries that, in the opinion of the U.S. government, do not make appropriate efforts to prevent copyright infringements of U.S. produced theatrical motion pictures. There can be no assurance, however, that voluntary industry embargoes or U.S. government trade sanctions will be enacted or, if enacted, be effective. If enacted, such actions may adversely impact the amount of revenue that the Company realizes from the international exploitation of theatrical motion pictures and other revenue sources. Reliance on Governmental Incentives and Tax Rebates WR ASA intends to obtain Incentives (including tax rebates) in order to finance a portion of the production costs of its motion pictures. Recently, certain states have reduced or eliminated the availability of their film incentive programs. If governmental regulations and laws relating to incentives change such that Incentives are reduced or are no longer available, the Company s ability to finance the costs of production of motion pictures may be adversely impacted. Currency Exchange Risk WR Films Entertainment Group, Inc. ( WR Inc. ), a subsidiary of WR ASA, is a US company operating and reporting transactions in USD. WR ASA is a Norwegian company operating and reporting transactions in NOK. For trade and transactions made in foreign currencies, a conversion risk arises. There are no guarantees that the operating results and financial position of WR Inc. and WR ASA will not be affected by future changes in exchange rates. Agreement Risk The Company s operations depend substantially on the integrity and security of its contracts and licenses. The rights and obligations under these contracts and licenses may be subject to interpretation and dispute according to US or international law and can be affected by circumstances beyond the Company s control. In the event of a dispute about the interpretation of these conditions it is not certain that the Company would be able to assert its rights, which in turn could have a material WR ENTERTAINMENT ASA Page 6 of 34

7 MERKUR MARKET ADMISSION DOCUMENT adverse effect on the Company. If the Company or any of its partners were considered to not to have fulfilled their obligations under their license agreements, the Company s rights under these agreements may be fully or partially eliminated. Financing May Not Be Available for the Company on Reasonable Terms The Company has long- term debt which falls due on receipt of adequate financing or by June 30, 2017, whichever is earlier. The Company will have to incur expenses in the future to carry on its operations. The industry in which WR operates requires substantial capital to develop and produce motion pictures. There can be no assurance that the funding required by the Company will be obtained, or that the Company will be successful in its efforts to arrange additional financing on satisfactory terms. Further, even if such funding is available, there is no assurance that it will be offered on reasonable terms. The inability of the Company to obtain sufficient capital for its operations could adversely affect the expected growth and development of the Company s business. Financing and Liquidity Risk Financing risk is defined as the difficulty encountered in obtaining adequate financing for operations, including high interest costs. Company management believes that the listing will give the Company increased financial and operational flexibility, and enhance the Company s financial position. Liquidity risk is the risk of the Company not being able to meet its financial obligations as they fall due. The Company is currently dependent upon continuing financial support from principal shareholders and outside financing. If the Company s current financing proves insufficient and if the financial support from these sources ends, the Company may be forced to suspend or cease operations, which would have a materially adverse effect on the Company s business, financial position and results of operations. Credit Risk In the ordinary course of business, the Company enters into contractual relationships with various parties. In the event these parties fail to meet their contractual obligations the failure may have a material adverse effect on the Company s business, financial condition, results of operations and prospects. Risks Relating to Conflict of Interest There are risks associated with conflict of interest where employees and/or board members may have personal interests which could create conflicts of interest with the Company. Such potential conflicts are outlined in the Conflict of Interest section of this Admission Document Risks related to the securities Price volatility of publicly traded securities The listed price of the shares of the Company may be volatile. Factors such as changes in the results of operations of the Company, negative publicity, changes in recommendations of securities analysts regarding the Company or in the global conditions of the financial or securities markets or in the sectors in which the Company operates could have a negative effect on the listed price of the Company shares. WR ENTERTAINMENT ASA Page 7 of 34

8 MERKUR MARKET ADMISSION DOCUMENT The securities markets in general, and also in Norway, are characterized by significant fluctuations in volume and market prices as a result of changes in overall or sector specific market sentiments. The market prices of securities will on an aggregated level be influenced by such shifts. The market price of securities shall therefore not only be expected to fluctuate as a result of a company s operating performance, underlying asset values and prospects. It is likely that the quoted market price, if any, for the shares in the Company will be subject to market trends generally, notwithstanding the financial and operational performance of the Company. There has been a limited trading market for the Company s shares, and a trading market that provides adequate liquidity may not develop Prior to the listing at Merkur Market there has been a limited market for the Company s capital stock. However, absent the Company trading its shares on the Merkur Market, the Company may not attain adequate liquidity. Outstanding warrants way lead to dilution The Company has issued warrants, which if exercised, will result in that the existing shareholders suffer a dilution of their shareholding. Issuance of new shares may also have a negative impact on the market price of the Company's shares. Fluctuations in the NOK currency may lead to currency losses for international investors The Company's shares, which will be listed on Merkur Market, are priced in NOK, and any future payments of dividends on the shares will be denominated in NOK. Accordingly, investors outside Norway are subject to adverse movements in the NOK against their local currency. Foreign shareholders may be restricted to participate in rights issues Under Norwegian law, existing shareholders will have pre- emptive rights to participate on the basis of their existing share ownership in the issuance of any new Shares for cash consideration, unless those rights are waived by a resolution of the shareholder at a general meeting or the shares are issued on the basis of an authorization to the board of directors under which the board may waive the pre- emptive rights. Shareholders in the United States, however, may be unable to exercise any such rights to subscribe for new Shares unless a registration statement under the U.S. Securities Act is in effect in respect of such rights and Shares or an exemption from the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions outside Norway may be similarly affected if the rights and the new shares being offered have not been registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws of any other jurisdiction outside Norway in respect of any such rights and Shares. To the extent that the Company s shareholders are not able to exercise their rights to subscribe for new Shares, their proportional interests in the Company will be reduced and they may be financially diluted. Investors may not be able to exercise their voting rights for Shares registered in a nominee account Beneficial owners of the Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote such Shares unless their ownership is re- registered in their names with the VPS prior to the Company s general meetings. The Company cannot guarantee that beneficial owners of the Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re- registration of their Shares or otherwise vote their Shares in the WR ENTERTAINMENT ASA Page 8 of 34

9 MERKUR MARKET ADMISSION DOCUMENT manner desired by such beneficial owners. Limitations in Norwegian law to bring an action against the Company The rights of holders of the Shares are governed by Norwegian law and by the Company's articles of association. These rights may differ from the rights of shareholders in other jurisdictions. In addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicted upon securities laws in jurisdictions other than Norway. Regulation S under the U.S. Securities Act may limit sale of the Company The Company's shares may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the U.S. Securities Act), nor may they be offered or sold in any other jurisdiction in which the registration of the shares is required but has not taken place, unless an exemption from the applicable registration requirement is available or the offer or sale of shares occurs in connection with a transaction that is not subject to these provisions. Credit for Norwegian withholding tax may not be available for international investors Dividends paid from a Norwegian limited liability company to foreign individual or corporate shareholders are currently subject to Norwegian withholding tax at a rate of 25 per cent unless the recipient qualifies for a reduced rate according to an applicable tax treaty or other specific regulations. The shareholder's home country may give credit for the Norwegian withholding tax imposed on the dividend. In accordance with the present administrative system in Norway, a distributing company will generally deduct withholding tax at the applicable rate when dividends are paid directly to an eligible foreign shareholder, based on information registered with the VPS. Dividends paid to foreign shareholders in respect of nominee registered shares are not eligible for reduced treaty withholding tax rate at the time of payment unless the nominee, by agreeing to provide certain information regarding beneficial ownership, has obtained approval for reduced treaty withholding tax rate from the Central Office for Foreign Tax Affairs. The withholding obligation lies with the company distributing the dividends and the Company assumes this obligation. Foreign shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments. WR ENTERTAINMENT ASA Page 9 of 34

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11 MERKUR MARKET ADMISSION DOCUMENT 3. INFORMATION CONCERNING THE SECURITIES BEING ADMITTED TO TRADING 3.1. General As of the date of this Admission Document, the Company's share capital is NOK 1,505,046 divided among 75,252,300 shares each having a par value of NOK All of the Company's shares are ordinary shares with ISIN (International Security Identification Number) NO The Company's shares have been issued in accordance with the provisions of the Norwegian Public Limited Liability Companies Act. The Company is not issuing any new securities in relation to the application for listing of its shares at Merkur Market and the Company's shares will therefore not be subject to allotment, pricing, stabilization, dilution, or lockup agreements for distribution sales. There are no restrictions on the free transferability of the securities. There are no mandatory takeover bids and/or squeeze- out and/or sell- out rules in relation to the securities, other than those provided for in the Public Limited Liability Companies Act. The Company will take responsibility for the withholding of taxes at the source if and when required by the laws of Norway and the United States Admission to trading and dealing arrangements It is estimated that the first day of trading of Company's shares on Merkur Market will be on or about 13 January The Company's shares will be trading under the ticker "[WRE- ME]". The Company's shares have not been admitted to listing or trading and the Company is currently not planning to apply for admission to listing or trading on any other stock exchange, regulated market or any marketplace other than Merkur Market. The registrar for the Company's shares is DNB Bank ASA, Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo, Norway. The Company has not entered into any underwriting agreements, stabilization agreements, market making agreements or similar agreements for trading of its shares on Merkur Market. WR ENTERTAINMENT ASA Page 11 of 34

12 MERKUR MARKET ADMISSION DOCUMENT 4. THE COMPANY AND ITS BUSINESS 4.1. Principal Activities The Company is a holding company which owns the California company WR Inc. WR Inc.'s operations are based in Los Angeles, California. WR Pictures, a division of WR Inc., has invested in the development of a portfolio of major motion pictures to be produced over an initial five- year production schedule. The Company has invested in rights acquisitions, script adaptation, screenplay development, film budgeting and scheduling, location scouting, concept art, photography, film screen tests, auditions and production planning for projects including a planned motion picture franchise based on the best- selling series of 83 Morgan Kane books. WR Publishing, a division of WR Inc., has converted and published approximately 100 Morgan Kane book titles in 3 languages, currently being sold on international ecommerce sites including itunes and amazon.com. The division is converting and preparing 700 additional book titles for ebook publishing, and plans to publish all book titles from the Louis Masterson library, including the Morgan Kane series of 83 titles, in at least 12 languages. The Company plans to capitalize on prevailing market opportunities by financing and producing motion pictures which it believes will find wide audience acceptance in North American and international markets. The Company plans to finance domestic print and advertising expenses ( P&A ) and a major studio has expressed interest in worldwide distribution of the Company s pictures. The Company plans to enter into a distribution agreement with a major studio for domestic distribution, which will also handle global sales. Further, to maximize profits for each film, the Company will own, control and exploit all applicable revenue streams, including ancillary rights, music rights, book publishing and video games Principal Markets Motion Pictures Distribution of a motion picture involves domestic and international licensing of the picture for: (i) theatrical exhibition; (ii) DVD and other home video entertainment formats; (iii) presentation on television, including pay- per- view, basic and premium Pay TV, network, or syndication or; (iv) marketing of other rights in the picture including underlying literary rights, which may include books; (v) exploitation of merchandising, tie- ins and soundtracks; (v) digital distribution and other forms of new and future media; and (vi) non- theatrical exhibition, which includes airlines, hotels and armed forces facilities. In general, the economic life of a motion picture consists of cycles, with a cycle being defined as a period of time over which a film runs through each distribution channel at least once. Currently, the first cycle typically extends for several years and generally consists of the sequential distribution of a film in: (a) the domestic and international theatrical markets; (b) the domestic home video, pay- per- view and video on demand markets; (c) the international home video market; (d) the domestic and international pay television markets; (e) the domestic and international broadcast television and basic cable markets; and (f) the domestic syndicated television market. A substantial portion of a film s ultimate revenues is generated in a film s initial distribution cycle. WR ENTERTAINMENT ASA Page 12 of 34

13 MERKUR MARKET ADMISSION DOCUMENT Notwithstanding the fact that the most significant portion of a film s revenue stream is derived from outside the domestic theatrical market, domestic theatrical revenue and total revenue have historically been closely correlated. This correlation is primarily driven by the export of the domestic theatrical audience acceptance of a film to all other markets and territories. To the extent a film is widely accepted and viewed in the theatrical market, it is likely to be widely viewed and purchased in the home video market and television markets. Additionally, worldwide pay and free television license fees are often contractually determined based on the level of domestic or the applicable territory s theatrical film rentals on a title- by- title basis. Motion pictures are generally made available for distribution in international theatrical markets subsequent to, or simultaneously with, domestic theatrical release. A. Theatrical Distribution and Marketing Theatrical distribution of a motion picture involves making and shipping of release prints (digital and otherwise), advertising the picture through marketing and publicity campaigns (e.g., trailers, television spots, newspaper ads and online placement) and the licensing of the motion picture to theatrical exhibitors. The successful theatrical exhibition of a film is influenced by a number of factors. To begin, the film s distributor (in conjunction with the producer) will determine optimal release dates and evaluate the strength of competing films expected to be in the market around the same time as the film s release. In general, release dates are chosen based on three factors the historical number of moviegoers for the weekend of release, the scheduled competition on that weekend and the nature of the particular film being released (including the creative talent involved, the genre and any seasonal factors inherent in the story). Historically, the ideal date to release a film is on a high- volume weekend, such as during the Christmas holiday season or a summer holiday such as the Fourth of July, with little competition for the same audience. Exhibitors and other film studios are notified of a film s expected release date up to one year in advance, although for major productions, the announcement can occur even earlier. If production is on schedule and the film is expected to be completed on schedule, exhibitors are invited to screenings of the film approximately one month prior to its release date. Based on the screenings, agreements are negotiated with both national theater chains and independently owned regional theaters. These arrangements generally provide for the exhibitor s payment to the distributor of a percentage of the box office receipts for the exhibition period, in some cases after deduction of the theater s overhead or a flat negotiated weekly amount. The distributor s percentage of box office receipts ( film rentals ) generally ranges from an effective rate of 35% to over 50%, depending upon the negotiated rates, the financial success of the motion picture at the box office and the number of weeks that it plays. Distributors carefully monitor theater gross receipts and ensure that exhibitors promptly pay all amounts due. The distributor then retains a distribution fee from the gross film rentals and recoups its costs incurred in distributing the film, which consist primarily of the cost of marketing and advertising and the cost of release prints for exhibition. The balance of film rentals, after deducting distribution fees and distribution costs recouped by the distributors, is then applied against any advance paid to the producer (or other rights owner) for the distribution rights (with interest thereon) and the balance is remitted to the producer (or other rights owner) of the film. The size and success of the advertising campaign can materially affect the revenue realized from the theatrical release of a motion picture. Similarly, the ability to exhibit motion pictures in the most popular theaters can improve film rentals. WR ENTERTAINMENT ASA Page 13 of 34

14 MERKUR MARKET ADMISSION DOCUMENT A distributor s costs in connection with marketing of a major motion picture include print, television and radio advertising campaigns, trailers, internet advertising and non- media costs such as production, creative and exhibitor services and market research. The largest single marketing cost for major studios is generally the cost of advertising a film on television. The costs incurred in connection with the distribution and marketing of a motion picture can vary significantly, depending on the number of screens on which it is exhibited, the target audience of the film and the geographic scope of its release. While marketing campaigns generally raise consumer awareness and ticket sales prior to and during the theatrical release of a feature film, the effects of a successful campaign can also significantly contribute to a film s success in home video and other markets. Films are typically released in theaters outside the United States either simultaneously or within three months following initial domestic theatrical release and in much the same manner. In recent years, however, distributors have begun to capitalize on global media saturation and are releasing films in many of the larger international territories simultaneously or within the first month following domestic release. International release patterns are dependent on local holidays and school schedules, as well as the timing of competitive releases. For the major distributors, the key international territories are Australia, China, France, Germany, Italy, Russia, Japan, the United Kingdom and Spain. Live- action films are generally dubbed in five or six local languages and subtitled in all other languages. B. Home Video Home video distribution involves the marketing, promotion and sale and/or lease of DVDs (including Blu- ray) to local, regional and national video retailers (e.g., kiosks, mass merchants and other outlets both bricks and mortar and online), which then sell or rent the home video products to consumers for private viewing. Major feature films are usually scheduled for release in the domestic home video market within three to six months after domestic theatrical release to capitalize on the residual awareness of theatrical advertising and publicity for the film. Internationally, the release dates can vary significantly, but is generally within 4 to 12 months following theatrical release, if not sooner. Video units may be sold or leased to wholesalers and retailers for either a fixed price or a percentage share of the rental revenue. Most titles are priced for sale to encourage direct purchase by consumers, referred to as sell- through, as compared to purchases by video rental stores which then rent the DVD to customers referred to as rental. After the initial DVD cycle, DVDs continue to be promoted and sold at reduced sell- through pricing. The DVD release of a feature film involves the manufacture of DVDs of the film and the distribution to numerous retail accounts, sometimes accompanied by an extensive marketing campaign. DVD expenses can vary substantially from film to film, based on how many units are replicated and on the distributor s judgment of an appropriate marketing spend. The marketing campaign may include television, radio and print advertising, along with in- store promotions and publicity events. The size of the marketing campaign can be substantially impacted by the time of year of the home video release, the competitive titles being released in the same period and the level of box office success of the film. As previously mentioned, the success of the home video release is largely dependent on the theatrical success of the film, the success of the film s marketing campaign, the choice of an optimal date to release the DVD and quality of distribution. WR ENTERTAINMENT ASA Page 14 of 34

15 MERKUR MARKET ADMISSION DOCUMENT C. Television Markets In general, films are distributed in television markets throughout the world either through output agreements or on a film- by- film basis. Output agreements generally involve a major film studio and a pay TV service agreeing that all eligible films produced by the film studio will be licensed to the service for a certain number of exhibitions during the license period. In addition, television networks, independent television networks and basic Pay TV services license television series, individual films and film packages (consisting of theatrically released feature films and made- for- television movies) pursuant to agreements with distributors or syndicators that allow a fixed or unlimited number of telecasts over a prescribed period of time for a specified cash license fee or for barter of advertising time. The license fees vary based on factors including the theatrical performance of a film, subscriber counts of pay cable services and/or theatrical admissions. D. Digital Distribution The motion picture industry and consumer electronics industry continue to invest significant resources in the development of online digital platforms for distribution for films and the promotion thereof, such as Hulu, YouTube, itunes and Netflix. Although no model for consistent and significant profitability has yet emerged, the Company expects that these distribution platforms will proliferate and grow to be profitable film distribution channels. E. Other Markets Motion pictures can generate revenues through such derivative products as soundtrack albums, musical works from film music, theme park attractions, ice shows, musicals, dramatic productions, licensing rights to manufacture and distribute video and board games, figures, clothing and similar commercial articles derived from characters or other elements from a motion picture Book publishing After careful study of the potential for the book business, and the initial success of the Morgan Kane ebook titles in Norway published by WR Publishing, the Company recognizes that an international book launch may benefit the feature film franchise, and create additional recurring revenue for the Company. English- Speaking Territories (USA, Canada, Australia, New Zealand, UK, India and more) When Morgan Kane book sales meet expectations, i.e., becoming best- sellers on Amazon.com, the largest online ebook seller in the U.S., WR Publishing will expand internationally to meet the increasing demand driven by the international theatrical release of Morgan Kane. Over the past years, WR management has tailored the Company s business plan to exploit Morgan Kane ebook sales in the U.S., working with strategic partners who are on the cutting edge of the rapidly growing ebook market. WR also expects to achieve best- seller results on other e- commerce platforms, including itunes ibookstore. The Spanish Language Market (U.S., Latin America, Cuba, the Philippines, Spain) The Spanish- speaking ebook market is in a period of rapid growth, and there is a large void in the supply of ebook titles. The Company plans to exploit this market opportunity for ebooks in all major Spanish- speaking countries. WR ENTERTAINMENT ASA Page 15 of 34

16 MERKUR MARKET ADMISSION DOCUMENT The Nordic Territories (Norway, Sweden, Denmark, Finland and Iceland) During a nine- month period in 2012, WR Publishing made all 15 new Morgan Kane ebook titles a best- seller on itunes Norway. To date, WR Publishing has released the entire series of 83 Morgan Kane titles as ebooks in Norwegian. All international and US activities for the Morgan Kane brand are likely to enhance and activate the Nordic market to create increased Morgan Kane awareness and readership. The Rest of Europe (France, Germany, Holland, Poland and Italy) WR Publishing also plans to re- publish the Morgan Kane titles in countries where the books have sold well historically. Future Markets (China and the Far East) The Company has identified China and other Asian countries as important markets for the Morgan Kane books. The Company has relationships with leading entertainment companies and publishing houses that have expressed interest to partner in translating WR s book library and support it with go- to- market strategies in those markets Important events in the development of the Company s business: WR Entertainment ASA, a Norwegian company, was incorporated as WR Entertainment AS in January 2015 to acquire WR Inc., a California US corporation founded in September 2009, including its assets and intellectual property rights, including the book library which is controlled by the publishing division of WR Inc., WR Publishing. WR Inc. s motion picture operations are controlled by the motion pictures division, WR Pictures, organized to produce commercially viable feature length motion pictures WR Inc. was incorporated in Beverly Hills, California on September 16th One month later a letter of intent was signed to purchase the Morgan Kane motion picture production rights and most other applicable rights. Senior level entertainment executives joined WR Inc. including the former President of Warner Home Video, Jim Cardwell, and financial executive Duane Eberlein, previously with Caesars World, Inc., a former NYSE company, owner/operator of Caesars resorts in, Las Vegas and Tahoe in Nevada, and Atlantic City in New Jersey. Several industry veterans were elected to serve on the WR Inc. board of directors, including the former EVP and former Chief Technology Officer of IBM and Paramount Pictures and Warner Bros., Alan Bell, Lee Mimms and Michael J. Smith. Jim Cardwell was appointed Chairman and CEO, and Duane Eberlein was appointed Co- Chairman and CFO. WR Inc. acquired the intellectual property rights to Frank and Living the Lie. WR Inc. shares were for the first time offered in a series of private placements, raising seed capital to build a major Hollywood entertainment company. WR ENTERTAINMENT ASA Page 16 of 34

17 MERKUR MARKET ADMISSION DOCUMENT WR Inc. entered into an exclusive option agreement to acquire the motion picture screen rights for Morgan Kane, and later secured the ebook publishing rights to all Morgan Kane titles worldwide. Lionsgate Entertainment expressed an interest in investing in the WR Inc. and to serve as its worldwide distributor WR Inc. conducted a corporate restructuring, and management decided that WR Inc. would explore launching an Initial Public Offering on a Scandinavian- based public platform. The primary reason for selecting Scandinavia as the site for an IPO was based on strong Company ties to Norway. The majority of the Company s shareholders are Norwegian, and the Morgan Kane series, for which WR Inc. holds the motion picture, electronic books and merchandising rights, was created in Norway. The first public offering is now planned to take place concurrently with the completion of the first Morgan Kane picture in 2016, on one of the three trading platforms of Oslo Børs in Norway WR Inc. exercised the option agreement and acquired the Morgan Kane motion picture rights. WR Inc. ramped up its publishing program releasing all 83 Norwegian ebook titles in the Scandinavian market. WR Inc. completed development of the first Morgan Kane screenplay and its go- to market strategies for launching the Morgan Kane brand WR Entertainment AS was incorporated, to acquire 100% of the shares of WR Inc. The Company was converted to an ASA, and prepares for public trading on the Merkur Market, with the ticker code [WRE- ME]. In November 2015, WR ASA acquires 100% of the shares of WR Inc. through a share exchange. Ryan Wiik, Tasmin Lucia- Khan, Jenny Chu and Henning Øglænd join the board of directors. WR ASA's subsidiary, WR Inc. commences planning for pre- production on the first installment in the Morgan Kane feature film franchise, with a $26.7 million production budget Material Agreements The Company has not entered into any material agreements outside the ordinary course of business. There are no other contracts entered into by any member of the group which contains any provision under which any member of the group has any obligation or entitlement which is material to the group as at the date of the admission document. WR ENTERTAINMENT ASA Page 17 of 34

18 MERKUR MARKET ADMISSION DOCUMENT 5. FOUNDER, BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES 5.1. The Board At the general meeting of shareholders, the members of the board of directors are elected to serve for a term of two years from the time of election. However, all board members continue to serve until they are replaced. Those persons referred to below have served in the office for one month, except Ryan Wiik and James Cardwell, which have served in the office for six months. The current board of directors is composed of two females and three males. The board is made up of four Europeans including two Norwegians, as well as one US citizen: Name Board position Committees (Nomination, remuneration, audit committees, etc.) Business Address James Cardwell Chairman Audit, Compensation 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Ryan Wiik Vice Chairman Compensation 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Jenny Chu Board member 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Henning Øglænd Board member 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Tasmin Lucia- Khan Board member 9701 Wilshire Blvd, 10 FL Beverly Hills, CA James Cardwell is Chairman of the Board, and participates in executive management as Managing Director of the Company. He is also a member of the audit and compensation committees. Ryan Wiik is Vice Chairman of the Board, and participates in executive management of the Company. He is also a member of the compensation committee. Jenny Chu is an independent board member, and has no participation in executive management of the Company. Henning Øglænd is an independent board member, and has no participation in executive management of the Company. Tasmin Lucia- Khan is a board member, and participates in executive management as Chief Executive Officer of the Company. Duane Eberlein and James Cardwell are professionally qualified accountants and have broad experience in corporate compliance, disclosure requirements and reporting. Henning Øglænd is a Norwegian lawyer and serves as board member for several Norwegian companies. See Appendix C for CV s and further details of the above- mentioned persons management expertise and experience. Other than disclosed above, there are no relationships between individual members of the board and the Company s executive management, major business connections or larger shareholders. None of the above- mentioned persons has any outside principal activities that are significant to the Company. WR ENTERTAINMENT ASA Page 18 of 34

19 MERKUR MARKET ADMISSION DOCUMENT 5.2. Management The Company's management consists of: Name Management Position Business Address James Cardwell Managing Director 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Duane Eberlein CFO 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Tasmin Lucia- Khan CEO 9701 Wilshire Blvd, 10 FL Beverly Hills, CA Erik Christoffersen General Manager c/o DLA Piper Norway DA Bryggegata 6, PO Box 1364 Vika N Oslo, Norway 5.3. Statement regarding offences or other incidents None of the members of the Board or management have for the last five years been subject to convictions in relation to fraudulent offences or bankruptcies, receiverships or liquidations. Neither has any of the members of the Board or management been involved with any public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies). Nor has any of them been disqualified by a court from acting as a member of the administrative management or supervisory body of a company, or from managing or conducting the affairs of a company, for the last five years Board Practices Remuneration and benefits upon termination Currently there are no contracts in place providing for termination benefits for the members of the board, management or supervisory bodies. However, the Company plans to complete contracts with each member of management in January Each member of management will receive compensation until termination of employment subject to terms and conditions of each member s employment contract. Generally, an allowance of up to six months salary will accrue to each employee (payable on termination), subject to the terms and conditions of each employment contract. There are no termination benefits planned for non- employee members of the board of directors Corporate governance The Company does not comply with the Norwegian Code of Practice for Corporate Governance, since it only has seven employees, and separation of the board of directors and executive management is currently impractical. Management plans to implement the practices outlined in the Norwegian Code of Practice for Corporate Governance as soon as practicable. WR ENTERTAINMENT ASA Page 19 of 34

20 MERKUR MARKET ADMISSION DOCUMENT The audit committee The audit committee consists of James Cardwell and Duane Eberlein. Responsibilities of the audit committee include review of external and internal audit reports, recommendations for engagement of auditors, review of internal controls, and oversight of the Company s financial and accounting functions. The Company is in the process of developing terms of reference for members of the audit committee The remuneration committee The remuneration committee consists of James Cardwell, Duane Eberlein and Ryan Wiik. Responsibilities of the remuneration committee include review and recommendations concerning compensation of members of company management, review of industry and regional compensation surveys to determine compensation levels within the Company, recommendations for distribution of stock warrants to deserving employees under the Company s stock warrant program, and recommendations for health insurance and other benefit programs for company employees. The Company is in the process of developing terms of reference for members of the remuneration committee Conflicts of Interest WR Inc., the Company s subsidiary, has had the following transactions with major stockholders and senior management: Note payable Ryan Wiik, 8%. In August 2012, Ryan Wiik, a shareholder and Board Member, assumed certain of WR Inc. s obligations secured by a lien on WR Inc. s unencumbered assets. The note bears interest at the rate of 8% per annum, and is due no later than 30 days from the funding from the first public offering of WR ASA or June 30, 2017, whichever is earlier. Effective July 1, 2015, Mr. Wiik converted $165,000 principal amount of the note payable to equity, acquiring 117,850 shares of the WR, Inc. s capital stock at a price of $1.40 per share. The note payable due Mr. Wiik totaled $171,047 at November 30, 2015, and accrued and unpaid interest due was $44,152 at November 30, Loan payable Related Party, 8% On January 9, 2014, a member of Ryan Wiik s family paid off a loan payable by WR Inc. to Torvgaten 32 AS, a Norwegian company, also owned by the Wiik family. A new loan agreement was entered into, with interest of 8% per annum, providing for an 80% security interest in WR Inc. s rights to the first Morgan Kane motion picture. The loan is due no later than 30 days from the funding from the first public offering by WR ASA, or June 30, 2017, whichever is earlier. In January 2014, the holder of the note received 345,075 shares of the WR Inc. s capital stock at a price of $0.27 in exchange for a principal reduction in the loan of $93,858. The note payable totaled $185,718 at November 30, 2015 and accrued and unpaid interest due was $31,167 at November 30, WR ENTERTAINMENT ASA Page 20 of 34

21 MERKUR MARKET ADMISSION DOCUMENT Note payable to Appelsinhaugen AS (formerly Planbygg Inter AS) - Related Party This non- interest bearing $400,000 note is payable to Appelsinhaugen AS, a Norwegian company and a WR shareholder. The note is secured by a 20% security interest in the first Morgan Kane motion picture, and is due no later than 30 days from the funding from the first public offering by WR ASA, or June 30, 2017, whichever is earlier. Service Agreements: James Cardwell and Ryan Wiik have producers agreements and Duane Eberlein has an executive producers agreement with Morgan Kane I, LLC., calling for payments of $250,000 each upon obtaining sufficient funding to cover the $26.7 million budget for the Morgan Kane picture. Ryan Wiik has an artist services agreement to perform in the role of Morgan Kane in the first Morgan Kane picture, and will be paid $200,000 for such services. For the first and second sequel of the Morgan Kane pictures, Ryan Wiik will be paid $400,000 per picture. There are no restrictions agreed by the persons referred to in this chapter 5 on the disposal within a certain period of time of their holdings in the Company s securities Employees The Group has a total number of seven employees at the end of the period covered by the financial statements, i.e. November 30, Shareholdings and Stock Options Name Shares Owned Proposed Warrant Grants Sunset View Holdings, a proprietorship owned by Ryan Wiik 26,644,875 1,125,000 James Cardwell 2,875,000 4,392,000 Duane Eberlein 2,625,000 1,876,500 Tasmin Lucia- Khan 0 1,200,000 Jenny Chu 0 200,000 Henning Øglænd 0 200,000 The Company has organized a stock warrants program as incentive compensation for its employees and directors. A total of 12,500,000 warrants have been reserved for incentive compensation. WR ENTERTAINMENT ASA Page 21 of 34

22 MERKUR MARKET ADMISSION DOCUMENT 6. FINANCIAL INFORMATION 6.1. Historical Financial Information While WR Entertainment AS was formed in January 2015, the Company s financial statements include the consolidation of its wholly- owned subsidiary, WR Inc. which was formed in September Therefore, the consolidated financial statements include the years ended December 31, 2013 and 2014, and the eleven months ended November 30, The financial statements are prepared in accordance with US GAAP. The Company's consolidated financial statements will be provided separately. The Company s financial statements are audited, and include balance sheets, income statements, statement of shareholders equity, cash flow statements, and notes to the financial statements, including accounting policies, explanatory notes and all other required disclosures Profit and loss statements (audited) WR ENTERTAINMENT ASA Page 22 of 34

23 MERKUR MARKET ADMISSION DOCUMENT Balance sheets (audited) WR ENTERTAINMENT ASA Page 23 of 34

24 MERKUR MARKET ADMISSION DOCUMENT Cash flow statements (audited) 6.2. Summary of Accounting Policies The Company s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ( US GAAP ) which assumes the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The accounting policies are presented in more detail in the consolidated financial statements attached as appendix A. WR ENTERTAINMENT ASA Page 24 of 34

25 MERKUR MARKET ADMISSION DOCUMENT 6.3. Additional information for large transactions WR ASA acquired 100% of the stock in WR Inc. and the acquisition was consummated on November 30, No special conditions or terms were included in the transaction which was effected by an exchange of one WR ASA share for each WR Inc. share. Consideration for the transaction was a one for one share exchange with WR ASA issuing new shares to the former WR Inc. shareholders. The proposed offer was communicated to WR ASA stockholders on November 18, 2015 and was approved by all WR ASA stockholders on November 19, The offer was made to WR Inc. stockholders on November 20, 2015 and accepted by all WR Inc. stockholders on or before November 30, A description of the business of WR Inc. is included in section 4 above. The Board of Directors of WR Inc. at the time of the acquisition consisted of James Cardwell, Duane Eberlein, Lee Mimms, Alan Bell and Ryan Wiik. The executive management of WR Inc. at the time of the acquisition were: James Cardwell (Chairman), Duane Eberlein (CFO) and Ryan Wiik (Creative Director). There were seven employees of WR Inc. at the time of the acquisition. The key figures from the financial statements of WR Inc. are included in section 6 above. All assets and liabilities were included on WR Inc. s balance sheet. The significance of the transaction for WR ASA is that WR ASA went from being a minority shareholder of WR Inc. to become the sole shareholder of WR Inc. There were no agreements entered into in connection with the transaction for the benefit of the Company s senior management or members of the board Auditing of historical annual financial information The Company's historical financial information has been audited. The audit opinions on the historical financial information were unqualified. All financial data in the admission document that was not extracted from the issuer's audited financial statements include the source of the data and that the data is unaudited Age of latest financial information The consolidated financial statements include the years ended December 31, 2013 and 2014, and the eleven months ended November 30, Interim and other financial information The consolidated financial statements include the years ended December 31, 2013 and 2014, and the eleven months ended November 30, WR ENTERTAINMENT ASA Page 25 of 34

26 MERKUR MARKET ADMISSION DOCUMENT 6.7. Dividend policy The Company does not have a dividend policy and has no restrictions as to the distribution of dividends. However, the Company does not intend to make dividend distributions in the foreseeable future, based on management s belief that shareholder value will be enhanced by investing the Company s cash in growth opportunities vs. paying dividends Working Capital Statement The Company does not currently have sufficient working capital for the year ending January 13, However, the Company is actively engaged in raising $6 million in outside equity funding. Without the planned increase in working capital, management believes the company can continue to operate with minimal overhead until June 30, 2017, the date that its long term debt is due and payable. The Company plans to increase its working capital by $6 million from the sale of its capital shares, to provide adequate resources to fund the operations of the Company s Publishing Division, including increasing the division s available titles by translating more titles, the use of targeted marketing campaigns, sales programs, advertising, and as a result ultimately increasing sales and profits. Management believes that the increased working capital, together with increased Publishing Division sales and resulting profits, will provide sufficient funds to cover the overhead requirements of the Company s Film Division. Management is currently in negotiations with a group of qualified investors, and based on those negotiations, management believes it is likely that the investors will make an investment in the Company. The Company s initial proposal was for a maximum investment of approximately $6 million and a minimum of $3 million. The agreement between the Company and the investors may take the form of an initial $3 million investment, with a call for an additional $3 million if deemed necessary by the Company. Management estimates that this funding will be completed on or before January 31, The Company is not dependent on entering into new or renegotiated debt agreements to raise liquidity. If management s planned actions do not provide adequate working capital for its operations, the Company may be forced to liquidate, selling its assets, including its intellectual properties and rights, and it may be forced to seek protection under bankruptcy laws. WR ENTERTAINMENT ASA Page 26 of 34

27 MERKUR MARKET ADMISSION DOCUMENT 7. CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL 7.1. Company corporate registration The Company's registered name is WR Entertainment ASA. The Company is organized as a public limited liability company ("allmennaksjeselskap" or "ASA") in accordance with the Norwegian Public Limited Liability Companies Act. The Company was registered with the Company Registry under company organization no on February 9, 2015 as WR Entertainment AS. On 19 November 2015 the Company's general meeting resolved to convert the Company from a private limited liability company ("aksjeselskap" or "AS") to a public limited liability company ("allmennaksjeselskap" or "ASA"). The conversion was effective from [date] The Company s address and contact details are: WR Entertainment ASA c/o Advokatfirma DLA Piper Norway DA Bryggegata 6, PO Box 1364 Vika N Oslo, Norway. NO: (+47) US: (+1) Organizational and legal structure WR Entertainment ASA is the parent company of WR Inc. Morgan Kane I LLC is a wholly owned subsidiary of WR Inc. Other than these three entities, there are no other companies within the group. WR ENTERTAINMENT ASA Page 27 of 34

28 MERKUR MARKET ADMISSION DOCUMENT 7.3. The Shares and the Share Capital As of the date of this Admission Document, the Company's share capital is NOK 1,505,046 divided among 75,252,300 shares each having a par value of NOK All of the Company's shares are ordinary shares with ISIN (International Security Identification Number) NO All of the Company's shares have been fully paid. There are no shares held by or on behalf of the Company itself or by subsidiaries of the Company. There are no shares not representing capital, however, the Company has reserved a total of 12,500,000 warrants to be granted to officers, directors and employees, as incentive compensation. Other than the warrants mentioned above there are no convertible securities, exchangeable securities or securities with warrants. Other than the warrants mentioned above there are no acquisition rights and/or obligations over authorized but unissued capital or an undertaking to increase the capital. There is no subordinated debt or transferrable securities issued by the Company which give the holders any rights to subscribe for new shares Development in the share capital The following table shows the development of the Company's share capital since its inception: Date Transaction Change in shares Change in share capital (NOK) Total number of shares Total share capital (NOK) Face value (NOK) Incorporation 2,000, ,000 2,000, , Reverse share split (4:1) (1,500,000) 0 500, , Capital Increase (cash) 143,750 57, , , Capital Increase (bonus issue) 0 772, ,750 1,030, Capital decrease (475,000) (760,000) 168, , Capital decrease 0 (253,125) 168,750 16, Capital increase 14,881,710 1,488,171 15,050,460 1,505, Share split (1:5) 60,201, ,252,300 1,505, WR ENTERTAINMENT ASA Page 28 of 34

29 MERKUR MARKET ADMISSION DOCUMENT 7.5. Board Authorization to Issue Shares On November 19, 2015, the EGM authorized the Board of Directors proposal to increase the Company s share capital with up to NOK 10,000 by issuance of up to 500,000 new shares each having a par value of NOK The share subscription price shall not be lower than NOK 8 per share. Within its limits, the authorization may be utilized several times. The purpose of the board authorization is to enable the Company to obtain additional short term equity financing through one or more private placements. The authorization is valid until 30 June Subscription Rights, Warrants and Other Financial Instruments Description of equity incentive plan and warrant terms approved by the EGM on November 19, 2015 On November 19, 2015, the EGM resolved to issue 12,500,000 warrants, each giving the holder a right to subscribe for one new share in the Company. The other terms and conditions of the warrants are set out in the Company's Equity Incentive Plan & Warrant Terms, which were approved by the EGM on November 19, The EGM pre- approved allocation of 9,893,500 warrants to the Board of Directors, as detailed in the table included in section 5.7. Such allocation has however not yet formally taken place. It is expected that these warrants will be allocated in January 2016 on the basis of the terms and conditions of the Company's Equity Incentive Plan & Warrant Terms. The warrants will thus be allocated at market value and will vest over periods ranging from 1 month to close to 5 years after the date of the EGM. The remaining 2,606,500 warrants are reserved for future grants to key personnel. Except for the above mentioned, the Company currently has no outstanding rights shares, convertible loans, convertible securities, exchangeable securities, securities with warrants or other financial instruments in issue giving the holder the right to subscribe for shares in the Company. No third party has any financial instruments or rights entitling them to subscribe for or acquire shares in any members of the group Major Shareholders Following is a list of shareholders with an interest of 5% or more in the issuer s capital or voting rights: Name of Shareholder Shares owned Percentage Owned Sunset View Holdings 26,644, % Appelsinhaugen AS 7,953, % Jonny Martinsen 7,318, % Høyen Eiendom AS 4,425, % Magne Steinmo 3,817, % The Company is not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of the issuer. WR ENTERTAINMENT ASA Page 29 of 34

30 MERKUR MARKET ADMISSION DOCUMENT 7.8. Articles of association A copy of the issuer's articles of association is attached to the admission document as appendix B. It is the mission of the Company to become a major, profitable publicly held media and entertainment group with a competitive edge, and the Company's strategic objective is to become the global leader for book- to- film franchise entertainment. See section 3 "The Business of the Company", in the Articles of Association. The issuer s Articles of Association provides the authority to sign on behalf of the company to the chairman or the vice chairman acting jointly with one other Board member. The Board of Directors may grant power of procuration. See section 5 "Authority to sign", in the Articles of Association. The Company has a single class of shares. Shareholders have the right to attend shareholder meetings, to vote their shares either in person or by proxy, receive financial statements and have all of the other rights provided by the Norwegian Public Limited Liability Companies Act. The right to attend and vote at the general meeting may only be exercised by shareholders who are registered into the shareholder register five business days prior to the general meeting (the record date). Pursuant to the Norwegian Public Limited Liability Act, notice of a General Meeting shall be sent by written notice to all shareholders whose address in known at the latest 21 days before the date of the meeting. The notice should set forth the time and the place of the meeting. The time to give notice of attendance may not expire earlier than five days before the meeting. Shareholders have the rights at the annual General Meeting as follows: i. to adopt the annual accounts and the annual report, including the declaration of dividend; ii. to elect Board members and the chairman of the Board, and determine the Board's remuneration; and iii. to deal with any other matters which according to law or the articles of association pertain to the general meeting. There are no other shareholder rights pursuant to the Company s Articles of Association or pursuant to any other instruments. All other shareholder rights are determined by the Norwegian Public Limited Liability Companies Act. There are no restrictions on transfers of shares. Other than what follows from the Norwegian Public Liability Companies Act, there are no conditions necessary to change the rights of holders of the shares. The Company's Articles of Association do not contain any provisions that would have the effect of delaying, deferring or preventing a change in control of the issuer. There are no provisions governing the ownership threshold above which shareholder ownership must be disclosed in the Articles of Association. There are no conditions imposed by the Articles of Association governing changes in the capital, where conditions are more stringent than what is required by law. WR ENTERTAINMENT ASA Page 30 of 34

31 MERKUR MARKET ADMISSION DOCUMENT 8. LEGAL MATTERS 8.1. Legal and arbitration proceedings The members of the group comply with the laws of each country within which they operate. The Company is unaware of any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the issuer is aware), during the previous 12 months which may have, or have had in the recent past significant effects on the issuer and/or group's financial position or profitability. Between November 30, 2015 and the date of this Admission Document, there has been no significant change in the financial or trading position of the Company Related Party Transactions WR Inc., the Company s subsidiary, has had the following transactions with major stockholders and senior management: Note payable Ryan Wiik, 8%. In August 2012, Ryan Wiik, a shareholder and Board Member, assumed certain of WR Inc. s obligations secured by a lien on WR Inc. s unencumbered assets. The note bears interest at the rate of 8% per annum, and is due on June 30, Effective July 1, 2015, Mr. Wiik converted $165,000 principal amount of the note payable to equity, acquiring 117,850 shares of the WR, Inc. s capital stock at a price of $1.40 per share. The note payable due Mr. Wiik totaled $171,047 at November 30, 2015, and accrued and unpaid interest due was $44,152 at November 30, Loan payable Related Party, 8% On January 9, 2014, a member of Ryan Wiik s family paid off a loan payable by WR Inc. to Torvgaten 32 AS, a Norwegian company, also owned by the Wiik family. A new loan agreement was entered into, with interest of 8% per annum, providing for an 80% security interest in WR Inc. s rights to the first Morgan Kane motion picture. The loan is due on June 30, In January 2014, the holder of the note received 345,075 shares of the WR Inc. s capital stock at a price of $0.27 in exchange for a principal reduction in the loan of $93,858. The note payable totaled $185,718 at November 30, 2015 and accrued and unpaid interest due was $31,167 at November 30, Note payable to Appelsinhaugen AS (formerly Planbygg Inter AS) - Related Party This non- interest bearing $400,000 note is payable to Appelsinhaugen AS, a Norwegian company and a WR shareholder. The note is secured by a 20% security interest in the first Morgan Kane motion picture, and is due on June 30, WR ENTERTAINMENT ASA Page 31 of 34

32 MERKUR MARKET ADMISSION DOCUMENT Service Agreements: James Cardwell and Ryan Wiik have producers agreements and Duane Eberlein has an executive producers agreement with Morgan Kane I, LLC., calling for payments of $250,000 each upon obtaining sufficient funding to cover the $26.7 million budget for the Morgan Kane picture. Ryan Wiik has an artist services agreement to perform in the role of Morgan Kane in the first Morgan Kane picture, and will be paid $200,000 for such services. For the first and second sequel of the Morgan Kane pictures, Ryan Wiik will be paid $400,000 per picture. There are no restrictions agreed by the persons referred to in this chapter 5 on the disposal within a certain period of time of their holdings in the Company s securities. WR ENTERTAINMENT ASA Page 32 of 34

33 MERKUR MARKET ADMISSION DOCUMENT 9. ADDITIONAL INFORMATION 9.1. Advisors Advokatfirmaet DLA Piper DA, Bryggegata 6, P.O. Box 1364 Vika, 0114 Oslo, Norway serves as the Company's legal advisor in connection with the admission for trading on Merkur Market Auditors The Company's auditor is RSM Norge AS, Filipstad Brygge 1, 0252 Oslo, Norway, who has acted as the Company's auditor since being elected at the extraordinary general meeting held 19 November RSM Norge AS is a member of The Norwegian Institute of Public Accountants ("Den norske Revisorforening ). Prior to the appointment of RSM Norge AS in November 2015, the Company's auditor was PKF Beckman Lundevall Revisjon AS, Sandstuveien 70G, 0680 Oslo, Norway. The firm is also a member of The Norwegian Institute of Public Accountants ( Den norske Revisorforening ). The Company had no disagreements or other issues with its prior auditors, and engaged RSM Norge AS in relation to the preparations for listing on Merkur Market, primarily based on RSM Norge AS's considerable experience in international accounting and tax matters, which is of prime importance to the Company. The certified public accountants Squar, Milner, Peterson, Miranda & Williamson, LLP., Santa Monica Blvd, Suite 800, Los Angeles, CA 90025, USA were engaged to perform the audit of the financial statements of WR ASA and subsidiaries for the years ended December 31, 2013 and 2014, and for the eleven months ended November 30, Expert Statements There are no reports, letters, valuations or statements prepared by any expert at the Company's request referred to in this Admission Document. WR ENTERTAINMENT ASA Page 33 of 34

34 MERKUR MARKET ADMISSION DOCUMENT 10. DEFINITIONS AND GLOSSARY OF TERMS Merkur Market VPS WR WR Entertainment The Company / WR ASA A multilateral trading facility operated by Oslo Børs ASA. Verdipapirsentralen ASA Abbreviation for Wide Release Wide Release Entertainment WR Entertainment ASA, a Norwegian publicly traded company, Reg. No The Group The group of companies and subsidiaries owned by WR Entertainment ASA Board of Directors WR Inc. WR Pictures WR Publishing Sunset View Holdings ( SVH ) EGM P&A IPO USD NOK Key Man life insurance The board of directors of WR Entertainment ASA WR Films Entertainment Group, Inc., a California USA corporation, Reg. No The film division of WR Inc. The publishing division of WR Inc. SVH is a proprietorship owned by Ryan Wiik. Extraordinary General Meeting Prints and advertising Initial Public Offering U.S. Dollar(s) Norwegian Kroner(s) An insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business Lionsgate Entertainment Lions Gate Entertainment Inc. [ NYSE:LGF ] WR ENTERTAINMENT ASA Page 34 of 34

35 APPENDIX A FINANCIAL STATEMENTS WR Entertainment AS Consolidated Financial Statements Years Ended December 31, 2013 and 2014 and Eleven Months Ended November 30, 2015