Star Trek Axanar Logo Wallpaper by DeviantArt user gazomg

Annual Report

See also: Axanar Response to Annual Report Analysis

On December 15, 2015, producer Alec Peters issued a revised Annual Report, a 23-page document to donors, outlining the Axanar Productions’ finances covering the Prelude to Axanar and Axanar Kickstarter campaigns.

Contents

This is one in a series of AxaMonitor articles examining Axanar’s crowdfunding efforts, its spending, its goals and how it has reported on those activities. The entire series is listed here.

The report includes:

  • Prelude to Axanar financials.
  • Financials for infrastructure to produce the Axanar feature film.
  • An examination of Axanar’s initial expectations and why its costs have risen.
  • Lessons learned and accomplishments.
  • Plans for 2016.

Openness and Transparency

Upon the report’s release, Peters praised its demonstration of Axanar’s openness and transparency:

DOWNLOAD the Axanar Annual Report, 2015, Revised. 2.1 MB PDF

There are many Star Trek fan films that are raising 6-figure amounts. But none show you exactly where that money is going. None gives you daily updates or visibility into the operations as Axanar does. This is our commitment to you.1)

That transparency, however, was intended only for donors, Peters told one questioner:

Q. Does the Axanar team plan to make this report public (to non-donors) at any point in the near future?
Peters: Why would we? What vested interest does a non-donor have in our finances? Our fiduciary obligation is to our donors, not the general public.2) [emphasis added]

Editor’s Note

AXANAR‘s 2015 Annual Report.

A Pattern of Obfuscation?

REPORTS LIKE Axanar’s are not required by the crowdfunding platforms. Peters admirably chose to release this Annual Report in the interests of “financial accountability and transparency in the world of crowd-funded projects.”3)

While the report does indeed contain a great deal of information, analyzing presented various challenges. One spreadsheet, for example, was a bitmap graphic with entries organized chronologically.4) The information had to be re-entered into a new spreadsheet, then categorized and sorted in more meaningful ways. The document even lacked page numbers.

AXANAR RESPONSE Spokesman Mike Bawden responds to the findings of AxaMonitor‘s analysis of the Annual Report.

SIGNIFICANT, THOUGH, was how salary data was obscured. Few job positions are specified, some employees’ wages are bundled together with non-personnel costs, expenses are sometimes vaguely described, requiring additional research to discover they were actually personnel-related. Also, it’s not clear whether other personnel were inappropriately paid as independent contractors instead of employees, a common problem among independent film productions.

Once the data were transcribed, coded, sorted and analyzed, a pattern of possible problems emerged, from unreported salaries to ballooning costs and repeated deficit spending. They are noted below as ‘questioned costs’ in charts for Axanar’s two Kickstarter campaigns, and are presented here in the interest of seeking greater openness and transparency from Axanar Productions.

— Carlos Pedraza,
AxaMonitor editor

Deficits

Despite successful Kickstarter campaigns that both exceeded their goals by large amounts, both the Prelude budget and Axanar infrastructure costs ran deficits requiring cash infusions from their successive crowdfunding campaign.

Kickstarter FinancialsRotate mobile device for best view of charts

Income Expenses Deficit
Prelude to Axanar Campaign $113,833 123,285 -9,452*
Axanar Infrastructure Campaign $638,471 641,797 -3,326
* Deficit covered by Axanar Kickstarter campaign.
† Deficit covered by Axanar Indiegogo campaign.
ABOVE The spreadsheet at top is from the images on pages 5-6 of Axanar’s Annual Report. BELOW The spreadsheet is from AxaMonitor’s Excel analysis of spending on Prelude. Click image to view full size.

'Prelude' Spending

See also: Prelude Kickstarter details

About the Prelude Data The analysis in this section is based on the spreadsheet image labeled Prelude to Axanar Income and Expenses on pages 5-6 of the Annual Report. The data has been transcribed into the Axanar Financials Excel spreadsheet.

Analysis Methodology

Spending data for Prelude to Axanar in the Annual Report was displayed in an image rather than an actual spreadsheet, and listed in chronological order — presenting obstacles to easily analyzing project income and expenses. The data had to be transcribed into an Excel spreadsheet, each item labeled with a spending category and then sorted with like items.

Budget Categories

Rotate mobile device for best view of charts

Prelude expenses were grouped into these subtotaled budget categories:

Figure 1

Category Amount
Administration $2,378
Art 1,500
Sets 2,000
Costumes 13,987
Craft Services 2,337
Entertainment 716
Equipment 4,158
Loss & Damage5) 2,450
Makeup 7,440
Marketing 7,416
Perks 18,516
Pick upAdditional footage shot 1,460
Post-production 1,000
Salaries 20,086
Shipping 5,059
Soundstage 9,128
Travel 2,651
VFX 15,000
Unattributed* 6,003
Total $123,285
* Four expenses lacked sufficient detail to assign to a budget category. See Budget questions below. $113,833 raised, leaving deficit of ($9,452).

Spending by Category

The chart below illustrates the proportion of spending by budget category, based on the amounts in Figure 1 (above).

Figure 2

Click image to view full size.

'Prelude' Budget Questions

Rotate mobile device for best view of charts

Various items in the spending report are unclear, and noted below. The item number corresponds with the Item column on the Axanar Financials spreadsheet tab labeled “Prelude.”

Item No. Description Amount Questioned Costs
3 Insurance $198 Was this the total expenditure for production insurance?
28 Stripe Deposit(s) 22,826 UPDATE Stripe collects and process all payments for projects hosted on Kickstarter, starting in 2015.6) However, the report does not explain this, requiring additional research to determine.
106-109 • Anderson Live Media
• Robert Romero
• The Film Group
• Camadeus Film
6,003 These vendors are not identified, so the expenses are not attributed to any budget categories. They make up 5 percent of the Prelude expenditures.
Personnel
88 NPI Production Services 6,815 What personnel were covered by this payroll service vendor? Cast? Crew? Both? Presumably, these were employees, not contractors.
89 Metamorfic,7) “Cast” 5,000 Listed as 1099 payment for contractors, but cast members should be paid as employees. This is a serious employment compliance problem; back taxes may be owed.
90 Brad Look 3,208 Not identified in Annual Report; independently ID’d via IMDb as makeup design and supervisor.
91 Gary Perticone 2,000 Not identified in Annual Report; independently ID’d via IMDb as hair and wigs designer and supervisor.
92 Tony Todd,8) promotional fee 2,000 No description of what promotional services the actor provided the production.

'Axanar' Spending

AXANAR EXCEL spreadsheet, transcribed from the Kickstarter figures presented in the Annual Report, categorized and sorted for ease of analysis.

The spending described for Axanar solely comprises funds raised during the second Kickstarter campaign, the ‘infrastructure Kickstarter,’ a month-long effort in 2014, following release of the short film, Prelude to Axanar. The effort succeeded in raising $638,471 from 8,548 backers; its original goal was $100,000. Of the three crowdfunding campaigns, this one raised the most in the shortest time.

CONTROVERSY This campaign is also the production’s most controversial, as it marks the production’s departure from its original goal of simply producing Star Trek: Axanar, the feature film, and instead investing a significant portion of donors’ dollars in the infrastructure of Ares Studios, a for-profit venture by Axanar Productions to produce future Star Trek-related films and other science fiction properties.9)

'Axanar' Methodology

See also: Axanar Kickstarter details

About the Axanar Data The analysis in this section is based on the figures presented on pages 7-10 of the Annual Report. The data has been transcribed into the Axanar Financials Excel spreadsheet.

Income and expenses for Axanar spending appear in a line item format. For analysis purposes, line items were grouped into one income and 10 expense categories.

Rotate mobile device for best view of charts

'Axanar' Budget Categories

Figure 3

Category Amount
Salaries $121,527.88
Admin (includes ~$67K Kickstarter fees) 107,876.81
Computer 1,098.18
Equipment 35,155.87
Marketing 13,919.25
Perks 37,258.30
Production 60,322.56
Studio 246,456.66
Transportation 9,163.62
Travel 9,018.29
Total Expenses $641,797.42*
* $638,471 raised, leaving ($3,326.42) deficit.

'Axanar' Spending by Category

The chart below illustrates the proportion of spending by budget category, based on the amounts in Figure 3 (above). The spending on the Ares Studios assets consumed the lion’s share (38 percent) of the money raised in this Kickstarter campaign.

Figure 4

Click image to view full size.

'Axanar' Budget Questions

« 54 percent of the salary total is unaccounted for in terms of personnel names, services, or tax liability. »

The following charts detail questions arising out of spending from Axanar’s Kickstarter campaign.

Axanar Salaries

One of the most controversial parts of the Annual Report are the salary expenses paid out of the proceeds from the Axanar Kickstarter because of the plaintiffs’ allegation of the defendants’ “direct financial benefit.” Rotate mobile device for best view of charts

Payee Amount Questioned Costs
Salaries 1099 $17,420.00 The contractors paid out of this line item are not identified, nor the services they provided, so it’s not possible to know whether they should have been employees instead. If so, the production would liable for unpaid taxes. This is a common problem among independent film productions.10)
Alec Peters 38,166.57 This may be the defendant’s “direct financial benefit” to which the lawsuit refers. It’s unclear if applicable employer taxes were paid as part of this amount.
Peters’ Union Fees 3,099.00 Although not specifically identified as producer Alec Peters’ initiation dues for SAG-AFTRA,11) he has confirmed he joined the actors’ union as a result of his portrayal as Captain Garth in Prelude to Axanar.12) This would be an additional financial benefit Peters gained. He has stated he will not portray the younger Garth in Axanar.
Diana Kingsbury Deferred til 2016 Her position is reported as heading fulfillment. It’s unknown what amount her deferred salary is, nor how much is owed for applicable employer taxes. Kingsbury is also listed on IMDb as a producer. It’s not clear if she receives compensation for the latter position.13)
Robert Burnett 5,000.00 This salary as director is a round figure, making it possible that this does not include applicable employer taxes, in which case it’s unclear what line item taxes were paid out of.
Curtis Laseter 9,800.00 Construction coordinator. He is no longer with the production. The Annual Report notes that construction workers’ salaries are not reflected in the salary section of the report but in the Set Construction line item. Dean Newberry replaced Laseter. His salary is not reflected in this part of the report.14)
Salaries 48,042.31 The report fails to name how many people were paid out of this line item, whether they were employees or contractors, nor whether this figure includes applicable employer taxes.
Total $121,527.88
Unreported Salaries

The unreported salaries and personnel total $65,462 — 54 percent of the salary total is unaccounted for in terms of personnel names, services, or tax liability. Note that this does not include the unknown amount of Diana Kingsbury’s deferred compensation and the unknown set construction personnel.


Other Expense Questions

Rotate mobile device for best view of charts

The following expenses are red-flagged with questions or concerns. The items are referred to by the line number on which they appear in AxaMonitor‘s Axanar Financials spreadsheet on the tab labeled Axanar 2014-15.

Line No. Description Amount Questioned Costs
30 Insurance $9,320.52 This appears to be the annual cost for production insurance, but only a short-term policy would’ve been needed for shooting the Vulcan Scene in June 2015.
35 Event Cost 1,061.52 No information about the event, what it was for or cost breakdown.
39-42 Perks (shipping and production) 37,258.30 $25,142 alone has been spent on producing perks, yet four of the Top 5 rewards cannot be delivered until Axanar is produced. Those four perks represent more than 69 percent of the total number of donors.
44 Prelude to Axanar deficit 7,000.00 This makes up the shortfall between Prelude‘s costs and the amount raised in the previous Kickstarter campaign. Though this listed as $7,000, the actual amount was $9,452.15) This additional shortfall should be added to the bottom line for the Axanar Kickstarter, which is currently listed as -$3,326.42, for a total -$5,778.42, presumably to be carried forward to proceeds from the Indiegogo campaign.
46 Set Construction 36,372.56 This line item conflates labor costs with materials and other costs related to constructing Axanar‘s sets.16) Apart from construction coordinator Dean Newberry, the report fails to account for additional employees, their salaries and applicable employer taxes. Without this information it is impossible to calculate what the non-personnel costs were for Axanar‘s sets.

“Building our sets is a much more expensive process,” the Annual Report states. “But with a locked script finally in, we now know how many sets we have to build. … The initial budget of $100,000 is certainly low. The entire process of set construction will cost $150,00-200,000.”17)

Since only $36,373 is encompassed in this spending report, the balance of as much as $163,627 will presumably come from the subsequent Indiegogo campaign funds.
47-49 Studio 246,456.66 This amount includes facility fees, studio build-out and rent. However, the total projected infrastructure cost is expected to exceed $400,000,18) Since those costs do not appear to be encompassed by this spending report, they will presumably be covered by proceeds from the subsequent Indiegogo campaign.
50 Auto 9,163.62 These costs are not broken out.
51 Travel 9,018.29 These costs are not broken out.
37 Convention Expenses 2,670.00 These costs are not broken out, nor correlated with possible associated travel expenses.
n/a Vulcan Scene Unknown Costs for preproduction, principal photography and post-production for the three-minute ’Vulcan Scene’ are not specified. They are likely spread out over several line items in this spending report (e.g., unspecified salaries, insurance, equipment and equipment rental, music, makeup and set construction).

Source Data

Download the source documents for the series of articles. The data was assembled into spreadsheets from publicly accessible information made available by the crowdfunding platforms and/or the Axanar Annual Report. Click on the citation number to access the downloadable spreadsheets. 19)

Submit Findings

Readers who make interesting findings by sorting the crowdfunding and financial data on their own are invited to submit them to AxaMonitor. Please use the Feedback page to submit new information. Thank you!


Accomplishments and Rising Costs

Moving the Goal Posts?

IDIC Artwork from the Axanar Kickstarter campaign page.

Main article: Axanar Kickstarter Details
See also: Fan Films and Infringement and Fan Films: Breaking the Unwritten Rules and Defining Profit

The trajectory of the Axanar project’s crowdfunding effort, as it was articulated in the Prelude Kickstarter, began this way:

Prelude to Axanar will then allow us to launch into Axanar having proven our ability to deliver professional quality Star Trek. There will be a subsequent Kickstarter for the feature-length Axanar.20)

At the Outset

The Prelude Kickstarter started out with a modest $10,000 goal. It ended up with $101,171. Of that amount, executive producer Alec Peters allotted $10,000 to what he called “infrastructure for Axanar Productions.”

This means the legal paperwork needed to create our production company and the rather expensive insurance to cover all our productions over the coming year. It allows us to set up production offices … and start to produce Axanar.21)

The 'Infrastructure Kickstarter'

The release of Prelude to Axanar and subsequent acclaim may have been a game-changer, because the second Kickstarter campaign, for Axanar itself, turned out not to be really for producing the film.

[The] Axanar Kickstarter was launched with some very specific goals in mind, namely, building the infrastructure that would allow us to make Axanar and other Star Trek properties.22) [emphasis added]

In Axanar’s 2015 Annual Report, Peters acknowledges the public perception of the Axanar Kickstarter was to “incorrectly assume that the money was to go to production costs.”23) [emphasis added]

First Commercial Hint

Instead, this Kickstarter money was destined for infrastructure — and the first mention of a grander commercial production plan. The campaign described these costs as:

SCIFI AUTHOR David Gerrold (right) toured the Ares bridge set with producer Alec Peters in May 2015. This photo was posted on Twitter by Axanar director Robert Meyer Burnett.
  • Set construction, $100,000
  • Soundstage, $125,000. “This will be the permanent home of Axanar Productions and allow us to do more than just Axanar, from other adventures in the Star Trek universe and beyond. David Gerrold (writer of “The Trouble with Tribbles”) is already lined up to shoot his sci-fi series ‘Running Dark’ here. First year’s rent is $ 125,000.” [link and emphasis added]
  • Soundstage renovation.24) The description includes this:
Sci-Fi Film School - After the sets our built, we will be holding a Sci-Fi film school. Learn all about film making from our veteran industry staff including David Gerrold (writing), Richard Hatch and Gary Graham (acting), Robert Burnett (Editing/Directing), Christian Gossett (writing/directing) and Academy Award winner Kevin Haney and Star Trek veteran Brad Look (make-up). Donors will get first shot at the initial film school session.
  • Axanar pre-production costs, $50,000. This includes costume manufacture, VFX pre-visualization and modeling, and make-up. “These are just pre-production costs to get these departments going.”25)
  • Axanar production costs, $325,000-$425,000.26)
SET CONSTRUCTION Concept drawing for the bridge set of the U.S.S. Ares.

Ballooning Costs

Curiously, this last item — part of the Kickstarter campaign page — does not correspondingly appear in the Annual Report. The project needs articulated during the campaign totaled $404,000 (including Kickstarter fees and the cost of backers’ rewards). The total raised was $638,471. Peters concluded the campaign on August 24, 2014, with this statement:

Well, due to all your generosity, we have everything we need for the sets and studio and are well on our way to covering most of the budget.27) [emphasis added]

As it turned out, costs — especially to build out the studio Peters intended to use for commercial projects, and to rent out to bring in revenue28) — rapidly grew from lack of planning.

We outlined costs … for infrastructure that we would need to raise roughly $400,000 for. … That was before we found out what everything would really cost and what we didn’t even know we needed.29) [emphasis added]
ARES STUDIOS is the Valencia, Calif., soundstage being retrofitted for profit by Alec Peters with funds raised by donors to the film, Axanar. This picture from its Indiegogo campaign features the studio name Photoshopped onto the warehouse exterior.

According to the Annual Report, even the $638,471 raised — more than six times the campaign’s original $100,000 goal30) — was insufficient to cover all the infrastructure costs Axanar Productions encountered.31)

Time to Indiegogo

By the time Peters embarked on his third crowdfunding campaign, this time on Indiegogo nearly a year later, not only had the costs ballooned … so had his ambitions for Axanar Productions.32)

In the end, it was agreed that more time and more money would equal greater quality.33)

And so Axanar moved forward to its most ambitious campaign, this time on a rival crowdfunding platform — Indiegogo — and a new target, $1.32 million — to actually move Axanar into production.34)

Plans for 2016

GRAPHIC PLEA This banner makes the plea to fund Axanar through its now-curtailed Indiegogo campaign.

Change in Character

Main article: Axanar Indiegogo Details
See also: Fan Films: Breaking the Unwritten Rules and Defining Profit

The move from Kickstarter to Indiegogo in 2015 marked not only a change in platform but a significant increase in producer Alec Peters’ estimate of Axanar‘s cost as well as plans for Ares Studios, an effort for commercial production of other science fiction properties and rental of the production facilities paid for with donor money.

Move to Indiegogo

Kickstarter, where Axanar had raised $739,642 — the most of any fan film — and Indiegogo operate on very similar business models: Run a time-limited campaign, if you meet your goal you get all the money pledged, minus a percentage to the crowdfunding platform and transaction fees to the company who handle payments. But Indiegogo offered several advantages to Axanar over Kickstarter.

Keeping All Pledges

Kickstarter operates on an “all or nothing” basis — campaigns that fail to meet their goals lose all the money that’s been pledged to them. Indiegogo allows campaigns that don’t meet their fiscal goals to keep everything that’s been pledged but with the platform taking a larger percentage of the proceeds.

Indiegogo's Flexibility

While both platforms offer maximum campaign lengths of 60 days35) 36), Indiegogo offers an “In Demand” category for select projects, allowing them to raise money indefinitely, and the platform offered Axanar that designation.

[Indiegogo] love Axanar and really want our business and so have come with an aggressive offer to woo us away from Kickstarter.37)

Also on the table was:

  • A $35,000 savings in fees if Axanar exceeded $1 million.
  • Accepting both credit cards and PayPal. Kickstarter uses Amazon Payments for financial transactions.

Peters was also persuaded by the success of the year’s two biggest film projects, Super Troopers II, which raised $4.5 million, and Con Man, which raised $3.2 million — both on Indiegogo.38)

He also announced his intention to run at least four more crowdfunding campaigns and wanted to compare his successes between the two platforms:

With us planning on probably four campaigns next year (two books and “Tales of the Four Years War,” to start), we can see how each platform does. No decisions have been made, but I thought I would keep you all updated. I believe in a free flow of information and transparency.39)

'Axanar's' Cost Rises

See also: Ambition vs. Achievement

With each successive (and successful) crowdfunding campaign, the cost to produce Axanar continued to increase, in large measure because of the decision to build its own commercial studio. Studio expenses alone consumed 38 percent of the proceeds from the second Kickstarter campaign.40)

“This decision changed Axanar dramatically,” Peters explained. “In the end, it was agreed that more time and more money would equal greater quality.”41)


ARES DIGITAL is a for-profit company created by Axanar Productions with co-producer Terry McIntosh to process and ship merchandise (known as “perks”) to donors of any project’s Kickstarter, Indiegogo and private donation campaigns.

Commercial Activities

See also: Merchandise

Building his own studio, which he named Ares Studios, also presented Peters with an economic opportunity. He would now have a permanent facility to produce not only more “independent Star Trek productions” but to earn income from renting out the facility and from Ares’ own original films, which would be freed from the intellectual property restrictions of fan films.42)

Axanar is not just an independent Star Trek film; it is the beginning of a whole new way that fans can get the content they want, by funding it themselves. Why dump hundreds or thousands of dollars a year on 400 cable channels, when what you really want is a few good sci-fi shows? Hollywood is changing. Netflix, Hulu, Amazon, and other providers are redefining content delivery, and Axanar Productions/Ares Studios hopes to be part of that movement.43)
NO COMMENT In his interview with TrekZONE, Alec Peters refused to say whether he was part of the investor group acquiring the assets of the former Area Studios YouTube.

In March 2016, Peters announced the Ares Studios assets were to be transferred to a secret group of investors for up to $400,000 that would go into the production of Axanar. At the time, and in a video interview with TrekZONE, Peters refused to say whether he was part of that investment group.

Even so, by May 2016 Peters felt he was sufficiently empowered to offer a 2 percent stake in the studio to departed chief technologist Terry McIntosh in exchange for the Ares Digital fulfillment software.

The crowdfunding campaigns had required Axanar to set up a full-fledged merchandising and fulfillment operation featuring a full line of Star Trek-based apparel, five blends of coffee, posters, artwork, patches, models and books in a Donors’ Store, which Peters realized presented a potential revenue stream he launched with co-producer McIntosh called Ares Digital.44)

However, Ares Digital utterly failed to enable Axanar to deliver promised perks to its donors, forcing the production to start its fulfillment efforts from scratch.


4)
Axanar Annual Report, 2015, Revised, pp. 5-6.
5)
Director of photography Milton Santiago explains damage to the dolly on the Prelude set, 3/27/16.
7)
Metamorfic Productions LLC is an independent production company whose principals include Prelude crew Christian Gossett (director) and Jhennifer Webberley (producer).
8)
Actor who portrayed Admiral Ramirez; he later left Axanar citing irregularities and production delays.
11)
Axanar Annual Report 2015, Revised, p. 10.
12)
citation needed
14)
Axanar Annual Report, 2015, Revised, p. 16
15)
Axanar Annual Report, 2015, Revised, p. 3.
16)
Axanar Annual Report, 2015, Revised, p. 16.
17)
Axanar Annual Report, 2015, Revised, p. 15.
18)
Axanar Annual Report 2015, Revised, p. 8.
19)
Download Excel spreadsheet with data from Axanar crowdfunding campaigns on Kickstarter and Indiegogo. Also, the Axanar Financials spreadsheet summarizes data from the Axanar Annual Report, 2015, Revised, and the data used to generate charts in the Ambition vs. Achievement article.
35)
Kickstarter Creator FAQs, retrieved 3/6/16.
40)
AxaMonitor Annual Report analysis, "Axanar Spending by Category".
43)
Axanar Indiegogo campaign, retrieved 3/6/16.