Avalon Family Films, Inc.

In January of 2006, the company was offering to sell 80 units at $25,000 for each unit to raise capital purportedly for the production of independent family feature films. The company claimed these films do not have to be box office hits to earn high returns. We expressed our concern over the rate of return as unrealistic and also over their claim that 100% of the receipts would be distributed to investors until the initial investment was recouped.

In September of 2007, the company provided us with a business plan projecting an expected 22% internal rate of return by investing in ten films to be produced over five years. The company is seeking $15 million with a release schedule of one film to every six months. The plan projects that initial investments will be returned in year five, but that the projected profit and rate of return of 22% is for projects through year seventeen. The plan’s terms also explain that there is no early exit for investors.

Prior to investing, you should seek the advice of an attorney and an accountant. There is no market for this kind of investment thus it may be difficult or impossible to sell one’s interest in this project. According to the company, they are now producing movies thus investors should insist on seeing copies of actual financial statements and should not rely on projections or pro-forma statements. The company’s president refused our request for these documents.

The company claims that their offer is exempt from registration as a security as it is being offered to accredited investors. We aren’t certain whether this is the case or not. The promotional offerings we received appear to be of general circulation and are being made available to members of the general public. For this reason, and others, registration may be required under applicable state and federal laws

We suggest that you consult with your state corporation commissioner or the Securities and Exchange Commission.