SOURCE: Rainmaker Entertainment Inc.

Rainmaker Entertainment Inc.

May 05, 2016 18:25 ET

Rainmaker Entertainment Provides Financial Update With Respect to Ratchet & Clank Domestic Release

VANCOUVER, BC--(Marketwired - May 05, 2016) - Rainmaker Entertainment Inc. (TSX VENTURE: RNK) ("Rainmaker" or the "Company") announced today that it will take an impairment charge in Q1 2016 with respect to its investment in Ratchet Productions, LLC, the joint venture which produced the recently released feature Ratchet & Clank. As at December 31, 2015 the Company's 63% interest in Ratchet Productions, LLC had a carrying amount of $9.4M and certain other receivables of $0.6 million.

As outlined in the December 31, 2015 Management Discussion & Analysis ("MD&A"), the timing of advertising expenditures for the film was expected to result in a charge to income in the first two fiscal quarters of 2016 with offsetting future income to be included in subsequent quarters upon a successful release of the film. As a result of the disappointing North American box office results of $US 4.8 million for Ratchet & Clank on its opening weekend, the Company believes an impairment charge against its investment in Ratchet Productions, LLC will be prudent. The impairment charge will be included when the Company releases its March 31, 2016 quarterly results. The resulting impairment charge combined with a proportional share of advertising expenses, previously estimated to be $1.0-$4.0 million (See December 31, 2015 Management Discussion & Analysis) will result in an estimated $10.0 million charge to net income in the first quarter, representing the full carrying amount of the Company's investment in the joint venture and other miscellaneous receivables. Rainmaker will not record any further additional losses of the joint venture in future periods as it is not required to fund any additional losses of the joint venture beyond its carrying amount.

Any future recognition of income in subsequent quarters by Rainmaker as a result of sales or future distribution of the film will be recognized as income when received. As the film release is still in early stages it is not possible to estimate the final recoverable amount due to Rainmaker over the life of the film; however, based on current estimates, the Company believes its recoverable cash proceeds will be significantly less than its original $10.0 million book investment . The film is tentatively scheduled for release in certain international territories this summer, including China. In the event any such releases exceed expectations, the Company may adjust its recoupment forecasts.

President and Chief Creative Officer, Michael Hefferon comments, "We are obviously disappointed with the North American opening release results. The huge success of the Jungle Book, and continued strength of Zootopia, represented a loss of a large portion of the family market. Although support from the Ratchet & Clank fan base has been positive, the turnout for the film was not sufficient to overcome the highly competitive market place for the opening weekend of the film."

Forward-Looking Statements

Certain information set forth in this press release contains "forward-looking statements" and "forward-looking information under applicable securities laws. These statements relate to future events or future performance and include, but are not limited to, statements regarding our future plans and financial performance. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions are often used to identify forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific. In evaluating these statements, readers should specifically consider risks which may cause actual results to differ materially from any forward-looking statement. The forward-looking statements contained herein are based upon certain assumptions considered reasonable at the time they were prepared. Such assumptions include, but are not limited to, assumptions regarding: (i) general economic conditions, (ii) Rainmaker's future business prospects and opportunities, and (iii) estimated future income to be earned from Ratchet & Clank. Should one or more of the risks or uncertainties identified herein materialize, or should the assumptions underlying the forward-looking statements prove to be incorrect, then actual results may vary materially from those described herein. In respect of Rainmakers business generally, readers should also refer to Forward-looking Statements in the Management Discussion & Analysis for year ended December 31, 2015. Readers are cautioned not to place undue reliance on forward-looking statements. Except as required by applicable securities laws, Rainmaker does not assume any obligation to update the forward-looking statements contained herein.

About Rainmaker Entertainment

Based in Vancouver, British Columbia, Rainmaker Entertainment Inc. is a multifaceted animation studio and one of Canada's largest producers of CG animation. Rainmaker's first feature film, Escape From Planet Earth (distributed by The Weinstein Company), opened on 3200 screens across North America. Originally established as Mainframe Entertainment, the company produced the first ever CGI animation series, ReBoot, and over the course of its 15+ years of innovative history, Rainmaker has continued to break new ground in animation, telling engaging stories and creating compelling characters for all media. In addition to projects Rainmaker has produced with partners and clients including Mattel, The Weinstein Company, Hasbro, Lionsgate and Sony, Rainmaker also develops proprietary projects. Since announcing its return to television development and production in 2013 under the Mainframe Entertainment banner, two animated series are currently in the pipeline: in Fall 2013, the company announced its plans to develop a new version of its iconic CG-animated ReBoot series; and in April 2014, the company began production for HIT Entertainment of 104 10-minute episodes of the new CG-animated Bob the Builder series. For more information, visit www.rainmaker.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Further information, please contact:

    Bryant Pike
    Tel: (604) 714-2600
    Fax: (604) 714-5990
    Email: investor@rainmaker.com