Blackwatch Communications, a Montreal-based company, has designed an innovative plan for private investors to buy into films.

The first Blackwatch feature film, Obstruction of Justice, was shot last year for $1.2 million and will be released theatrically in the next two months. The company's second film, a psychological thriller called Dead Innocent, just wrapped in Montreal. It features Sara Botsford (e.n.g.) in her directorial debut and stars Genevieve Bujold and Graham Greene. The $2 million film is scheduled to hit theaters in the fall.

In order to finance these two films and an upcoming unnamed project, Blackwatch set up a one-time $7 million public offering with three closings. Half the funds from each closing goes into a limited partnership, which is 100% owned by private investors. The funds are used to acquire world rights and to produce the film. The other half of the funding goes to Blackwatch Communications (50% owned by investors) to market and distribute the film.

The gross revenues of a project then are divided. Half goes to the limited partnership in perpetuity and the other half goes to Blackwatch Distribution (50% owned by investors). The funds in the limited partnership act as a mutual fund for investors. The money is not actually reinvested in films, but used as a guarantee to borrow money from the bank, so the funds remain there to collect interest. The cycle then begins again.

Blackwatch producer Bill Mariani does not anticipate any further public offerings and says he plans to take the company public in three years.

"The best part about this is that the investors are never thrown out of the loop so they share in the company profits," says Mariani. "We have never received any government funding, we've done it all through private investment. The only drawback, if you can call it that, is that we have to do commercial scripts and we have to make money."