10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2021

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission file number: 000-32201

RIVULET MEDIA, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0824714
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
1206 East Warner Road, Suite 101-I Gilbert, Arizona	85296
(Address of principal executive offices)	(Zip Code)

(480) 225-4052

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None.	None.	None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
	Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of May 31, 2021, the Company had 128,520,171 shares of common stock, $0.0001 par value, issued and outstanding.

1

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

Table of Contents

	Page Number
PART I - FINANCIAL INFORMATION	3
Item 1. Condensed Consolidated Financial Statements	3
Condensed Consolidated Balance Sheets – April 30, 2021 (Unaudited) and July 31, 2020	3
Condensed Consolidated Statements of Operations (Unaudited) – Three Months and Nine Months Ended April 30, 2021, and For the Period February 11, 2020 (date of inception) through April 30, 2020	4
Condensed Consolidated Statements of Stockholders’ Equity (Deficiency) (Unaudited) – Three Months and Nine Months Ended April 30, 2021, and For the Period February 11, 2020 (date of inception) through April 30, 2020	5
Condensed Consolidated Statement of Cash Flows (Unaudited) – Nine Months Ended April 30, 2021 and For the Period February 11, 2020 (date of inception) through April 30, 2020	7
Notes to Condensed Consolidated Financial Statements (Unaudited) – Three Months and Nine Months Ended April 30, 2021, and For the Period February 11, 2020 (date of inception) through April 30, 2020	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33
PART II - OTHER INFORMATION	35
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
SIGNATURES	37

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

	April 30, 2021			July 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	—		$	18,281
Investment in marketable securities		733,998			10,436
Other prepaid expenses and current assets		11,785			2,945
Total current assets		745,783			31,662
Property and equipment, net		12,327			—
Intellectual property		42,457			300
Project development costs, including $128,667 and $51,500 with related parties, at April 30, 2021 and July 31, 2020, respectively		3,337,396			134,413
Total assets	$	4,137,963		$	166,375
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
Current liabilities:
Bank overdraft	$	10,211		$	—
Accounts payable and accrued expenses		192,392			170,972
Compensation and related expenses payable, including $360,000 and $90,000 to a related party, at April 30, 2021 and July 31, 2020, respectively		401,551			120,317
Deferred revenue		11,613			—
Payable for rescinded stock subscription receivable		60,000			—
Unsecured promissory notes payable to related party, including accrued interest payable of $13,325, at April 30, 2021		918,325			—
Convertible promissory note payable, including accrued interest payable of $427, at July 31, 2020		—			25,427
Total current liabilities		1,594,092			316,716
Non-current liabilities:
Secured multiple advance promissory note payable to related party, including accrued interest payable of $52,166, at April 30, 2021		1,052,166			—
Convertible promissory note payable, net of discount on debt, including accrued interest payable of $3,096, at April 30, 2021		65,374			—
Total liabilities		2,711,632			316,716
Commitments and contingencies
Stockholders’ equity (deficiency):
Preferred Stock, $0.0001 par value; authorized – 20,000,000 shares; issued and outstanding – 1,434 shares		202			202
Series B preferred stock, $0.0001 par value; authorized – 2,000,000 shares; issued and outstanding – 1,347 shares		72			72
Common stock, $0.0001 par value; authorized – 200,000,000 shares; issued and outstanding – 126,270,171 shares and 96,691,761 shares at April 30, 2021 and July 31, 2020, respectively		12,627			9,669
Additional paid-in capital		3,879,095			1,456,644
Common stock subscription receivable from related party		(482,600	)		(550,000	)
Accumulated deficit		(1,983,065	)		(1,066,928	)
Total stockholders’ equity (deficiency)		1,426,331			(150,341	)
Total liabilities and stockholders’ equity (deficiency)	$	4,137,963		$	166,375

See accompanying notes to condensed consolidated financial statements.

3

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended April 30, 2021			Nine Months Ended April 30, 2021			For the Period February 11, 2020 (date of inception) through April 30, 2020
Revenues – related party	$	3,000		$	3,000		$	—
Costs and expenses:
General and administrative:
Officers, directors, affiliates, and other related parties		256,149			784,365			110,000
Other costs		329,283			816,606			177,345
Production costs		1,639			1,639			—
Sales and marketing		8,015			13,190			649
Total costs and expenses		595,086			1,615,800			287,994
Loss from operations		(592,086	)		(1,612,800	)		(287,994	)
Other income (expense):
Increase (decrease) in fair value of investment in marketable securities		691,389			723,562			(129	)
Interest expense, net		(15,037	)		(26,899	)		—
Total other income (expense), net		676,352			696,663			(129	)
Net income (loss)	$	84,266		$	(916,137	)	$	(288,123	)
Net income (loss) per common share:
Basic	$	0.00		$	(0.01	)	$	(0.00	)
Diluted	$	0.00		$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding:
Basic		115,681,834			90,504,204			75,964,632
Diluted		129,880,700			90,504,204			75,964,632

See accompanying notes to condensed consolidated financial statements.

4

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(Unaudited)

Three Months and Nine Months Ended April 30, 2021, and
For the Period February 11, 2020 (date of inception) through April 30, 2020

															Common
															Stock
															Subscription						Total
													Additional		Receivable						Stockholders’
	Preferred				Series B Preferred				Common Stock				Paid-In		From			Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Related Party			Deficit			(Deficiency)
Balance, July 31, 2020		1,434	$	202		1,347	$	72		96,691,761	$	9,669	$	1,456,644	$	(550,000	)	$	(1,066,928	)	$	(150,341	)
Payments received on common stock subscription receivable from related party		-		-		-		-		-		-		-		67,400			-			67,400
Conversion of unsecured convertible promissory note payable		-		-		-		-		128,410		13		25,669		-			-			25,682
Sales of common stock		-		-		-		-		13,200,000		1,320		658,680		-			-			660,000
Stock-based compensation expense		-		-		-		-		-		-		22,239		-			-			22,239
Net loss		-		-		-		-		-		-		-		-			(477,730	)		(477,730	)
Balance, October 31, 2020		1,434		202		1,347		72		110,020,171		11,002		2,163,232		(482,600	)		(1,544,658	)		147,250
Sales of common stock		-		-		-		-		11,250,000		1,125		1,123,875		-			-			1,125,000
Stock-based compensation expense		-		-		-		-		-		-		22,239		-			-			22,239
Discount on convertible promissory note payable		-		-		-		-		-		-		48,010		-			-			48,010
Net loss		-		-		-		-		-		-		-		-			(522,673	)		(522,673	)
Balance, January 31, 2021		1,434		202		1,347		72		121,270,171		12,127		3,357,356		(482,600	)		(2,067,331	)		819,826
Sales of common stock		-		-		-		-		5,000,000		500		499,500		-			-			500,000
Stock-based compensation expense		-		-		-		-		-		-		22,239		-			-			22,239
Net income		-		-		-		-		-		-		-		-			84,266			84,266
Balance, April 30, 2021		1,434	$	202		1,347	$	72		126,270,171	$	12,627	$	3,879,095	$	(482,600	)	$	(1,983,065	)	$	1,426,331

(Continued)

5

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(Unaudited) (Continued)

Three Months and Nine Months Ended April 30, 2021, and
For the Period February 11, 2020 (date of inception) through April 30, 2020

																Common
																Stock
																Subscription						Total
													Additional			Receivable						Stockholders’
	Preferred				Series B Preferred				Common Stock				Paid-In			From			Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Related Party			Deficit			(Deficiency)
Balance, February 11, 2020 (date of inception)		-	$	-		-	$	-		-	$	-	$	-		$	-		$	-		$	-
Common stock issued for intellectual property		-		-		-		-		62,531,965		6,254		(5,954	)		-			-			300
Common stock subscription receivable from related party		-		-		-		-		11,000,000		1,100		548,900			(550,000	)		-			-
Sales of common stock		-		-		-		-		5,023,800		502		149,498			-			-			150,000
Common stock issued for services		-		-		-		-		600,000		60		17,854			-			-			17,914
Stock issued in connection with reverse acquisition transaction		1,434		202		1,362		72		7,808,867		781		8,314			-			-			9,369
Net loss		-		-		-		-		-		-		-			-			(288,123	)		(288,123	)
Balance, April 30, 2020		1,434	$	202		1,362	$	72		86,964,632	$	8,697	$	718,612		$	(550,000	)	$	(288,123	)	$	(110,540	)

See accompanying notes to condensed consolidated financial statements.

6

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

	Nine Months Ended April 30, 2021			For the Period February 11, 2020 (date of inception) through April 30, 2020
Cash flows from operating activities:
Net loss	$	(916,137	)	$	(288,123	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		673			-
Stock-based compensation expense		66,717			-
(Increase) decrease in fair value of investment in marketable securities		(723,562	)		129
Common stock issued for services		-			17,914
Amortization of discount on convertible promissory note payable		10,288			-
Changes in operating assets and liabilities:
(Increase) in -
Prepaid expenses and current assets		(8,840	)		(8,968	)
Increase in -
Bank overdraft		10,211			12,766
Accounts payable and accrued expenses		21,420			86,997
Compensation and related expenses payable		281,234			28,372
Deferred revenue		11,613			-
Accrued interest payable		68,842			-
Due to related parties		-			341
Net cash used in operating activities		(1,177,541	)		(150,572	)
Cash flows from investing activities:
Purchase of property and equipment		(13,000	)		-
Purchase of intellectual property		(42,157	)		-
Increase in project development costs		(3,202,983	)		-
Net cash used in investing activities		(3,258,140	)		-
Cash flows from financing activities:
Cash acquired in reverse acquisition transaction		-			572
Proceeds from sales of common stock		2,285,000			150,000
Proceeds from rescinded stock subscription receivable		60,000			-
Payments received on common stock subscription receivable		67,400			-
Proceeds from issuance of convertible promissory note payable		100,000			-
Proceeds from issuance of secured promissory note payable		1,000,000			-
Proceeds from issuance of unsecured promissory notes payable		1,106,500			-
Payments on unsecured promissory notes payable		(201,500	)		-
Net cash provided by financing activities		4,417,400			150,572
Cash:
Net decrease		(18,281	)		-
Balance at beginning of period		18,281			-
Balance at end of period	$	-		$	-

(Continued)

7

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Continued)

	Nine Months Ended April 30, 2021		For the Period February 11, 2020 (date of inception) through April 30, 2020
Supplemental disclosures of cash flow information:
Cash paid for -
Interest	$	-	$	-
Income taxes	$	50	$	-
Non-cash investing and financing activities:
Principal amount of convertible promissory note payable converted into common stock	$	25,000	$	-
Debt discount recognized on amendment of convertible promissory note payable	$	48,010	$	-
Principal amount of unsecured promissory note transferred at date of maturity to promissory note with later maturity date	$	85,000	$	-
Investment securities acquired in connection with reverse acquisition transaction	$	-	$	8,797
Value of preferred and common stock issued with reverse acquisition transaction	$	-	$	9,369

See accompanying notes to condensed consolidated financial statements.

8

RIVULET MEDIA, INC. AND SUBSIDIARIES
(Formerly known as Bio-Matrix Scientific Group, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months and Nine Months Ended April 30, 2021, and
For the Period February 11, 2020 (date of inception) through April 30, 2020

1. ORGANIZATION AND BASIS OF PRESENTATION

The condensed consolidated financial statements of Rivulet Media, Inc., a Delaware corporation, including its wholly-owned subsidiaries (collectively, the “Company”), at April 30, 2021, and for the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020, are unaudited. In the opinion of management of the Company, all adjustments, including normal recurring accruals, have been made that are necessary to present fairly the financial position of the Company as of April 30, 2021, and the results of its operations for the three months and nine months ended April 30, 2020, and for the period February 11, 2020 (date of inception) through April 30, 2020, and its cash flows for the nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for a full fiscal year. The consolidated balance sheet at July 31, 2020 has been derived from the Company’s audited consolidated financial statements at such date.

The condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020, as filed with the SEC.

Bio-Matrix Scientific Group, Inc. (“Bio-Matrix”) was organized on October 6, 1998 in the State of Delaware, originally under the name Tasco International, Inc, which was subsequently changed to Tasco Holdings International, Inc., and then to Bio-Matrix Scientific Group, Inc. in 2006. On May 26, 2020, Bio-Matrix’s name was further changed to Rivulet Media, Inc.

2019 Reverse Acquisition Transaction

On July 31, 2019, Bio-Matrix acquired 100% of the share capital of Pine Hills, Inc., a Wyoming corporation, in exchange for the issuance of 4,080,000 common shares of Bio-Matrix, to Heather Cassady, the sole shareholder of Pine Hills, Inc. In conjunction with this transaction, all of the outstanding shares of Series AA and Series AAA Preferred Stock of Bio-Matrix were cancelled. Pine Hills was in the business of providing data storage and the archiving of corporate documents, and its operations subsequent to that date were nominal.

Upon completion of the transaction, Heather Cassady owned approximately 54% of the voting capital stock of Bio-Matrix immediately after the transaction. For financial accounting purposes, this transaction was considered a reverse acquisition of Bio-Matrix by Pine Hills, Inc. and was treated as a recapitalization with Pine Hills, Inc. as the accounting acquirer. Pine Hills was liquidated on August 13, 2020.

2020 Change in Control Transaction

On March 26, 2020, Debbie Rasmussen and Klusman Family Holdings (together, the “Buyers”) and David Koos and Heather Cassady (together, the “Sellers”) closed a Stock Purchase Agreement (the “SPA”) whereby Buyers purchased from Sellers 4,364,235 shares of the outstanding common stock of Bio-Matrix. This transaction resulted in a change in control of Bio-Matrix, based on the transfer of approximately 55.8% of the outstanding common shares of Bio-Matrix from Sellers to Buyers. The amount of consideration for the purchase of such common shares was $215,000, with the source of the consideration being a loan from an unaffiliated third party.

As a condition of closing of the transaction, each director and officer of Bio-Matrix resigned from their position effective April 6, 2020, and Mike Witherill and Aaron Klusman were appointed as directors of Bio-Matrix to take office effective April 6, 2020. Additionally, effective April 6, 2020, Mr. Klusman was appointed Chairman and Chief Executive Officer of Bio-Matrix and Mr. Witherill was appointed Vice-Chairman and President of Bio-Matrix. At the closing of the transaction, Mike Witherill and Aaron Klusman, directly and indirectly, effectively owned the equivalent of 77,896,200 shares of common stock of Bio-Matrix, representing approximately 89.6% of the outstanding shares of common stock of Bio-Matrix.

In conjunction with the change in control transaction, all current liabilities of Bio-Matrix, including accounts payable and notes payable to related and unrelated parties, plus accrued interest, aggregating $141,936, were paid by the Buyers through a contribution to capital to Bio-Matrix prior to the closing of the reverse acquisition transaction, which became effective on April 13, 2020.

9

2020 Reverse Acquisition Transaction

On April 13, 2020, Bio-Matrix acquired 100% of the equity capital of Rivulet Films, Inc. (“Rivulet Films”), which was organized on February 11, 2020 in the State of Arizona, in exchange for the issuance of 79,155,765 shares of common stock of Bio-Matrix distributed on a pro rata basis to the shareholders of Rivulet Films. Rivulet Films is a development stage company involved in the arts, entertainment, and recreation business.

The current control shareholders of Bio-Matrix (consisting of Mike Witherill, Debbie Rasmussen (the wife of Mike Witherill), and Klusman Family Holdings (controlled by Aaron Klusman), through a series of orchestrated and interdependent transactions over a period of approximately three months, obtained effective control of Bio-Matrix (both a majority of the equity and the board of directors) and caused Rivulet Films to become a wholly-owned subsidiary of Bio-Matrix. Accordingly, for financial accounting purposes, this transaction was considered a reverse acquisition of Bio-Matrix by Rivulet Films and was treated as a recapitalization with Rivulet Films as the accounting acquirer and Bio-Matrix as the accounting acquire. The financial statements presented herein consist of those of Rivulet Films for the period commencing February 11, 2020 (date of inception), with the financial statements of Bio-Matrix included for the period commencing April 13, 2020.

The stockholders’ equity section of Bio-Matrix has been retroactively restated to reflect the accounting effect of the reverse acquisition transaction. All share and per share amounts presented herein also reflect the retroactive restatement of the stockholders’ equity section of Bio-Matrix. All costs associated with the reverse acquisition transaction were charged to expense as incurred.

Changes in Capital Structure of Company

On January 29, 2020, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the State of Delaware to (1) reduce the number of shares of common stock that the Company is authorized to issue from 16,000,000,000 shares to 100,000,000 shares, with no change in the $0.0001 per share par value; (2) effect a reverse stock split of the Company’s issued and outstanding shares of common stock and all classes of issued and outstanding preferred stock at an exchange ratio of one new share for every 2,000 old shares, with fractional shares of stock being rounded up to the nearest whole share. All share and per share amounts presented in these financial statements and footnotes for all periods presented have been retroactively restated to reflect the 1-for-2,000 reverse stock split.

On May 26, 2020, the Company filed an Amended and Restated Certificate of Incorporation with the State of Delaware to (1) change the Company’s name to Rivulet Media, Inc.; (2) increase the number of shares of common stock that the Company is authorized to issue from 100,000,000 shares to 200,000,000 shares, par value $0.0001 per share, with the number of shares of preferred stock that the Company is authorized to issue remaining unchanged at 20,000,000 shares, par value $0.0001 per share; and (3) eliminate the class of Non-Voting Preferred Stock, of which 200,000 shares, par value $1.00 per share, had been authorized, of which none were outstanding.

The Company forms special purpose subsidiaries to produce various programs and music projects.

In June 2020, the Company formed Borderline Productions LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a documentary film entitled “It’s Complicated” about the life of former Arizona Sheriff Joseph M. Arpaio. Production activities commenced as of July 31, 2020.

In June 2020, the Company formed PBP Productions LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a feature film entitled “Please Baby Please”. Production activities commenced during September 2020.

In August 2020, the Company formed Mistress Movie, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a feature film entitled “Mistress”. Production activities commenced during December 2020.

In October 2020, the Company formed Into the Black Productions LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a documentary film entitled “Into the Black”. Production activities had not commenced as of April 30, 2021.

In February 2021, the Company formed Storyland Animation Studio, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to produce a children’s television series entitled “Storyland”. Production activities commenced during February 2021.

10

In February 2021, the Company formed Origin Story Productions, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to be a union signatory entity.

In March 2021, the Company formed Eventide Media, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to provide event-based audio and video design, production and installation services. Business activities commenced during April 2021 and generated revenues of $3,000 for the three months and nine months ended April 30, 2021.

Business

The Company is engaged in the production, distribution and marketing of feature-length films, television series and mini-series, and television movies, from initial creative development through principal photography, postproduction, distribution and ancillary sales. The Company also provides event-based audio and video design, production and installation services. Upon completion of a production, the Company expects to receive initial revenues from domestic and foreign distribution contracts.

The Company’s business activities are subject to significant risks and uncertainties, including the need for additional capital, as described below at “Going Concern”. The Company does not currently have positive cash flows from operations and is dependent on periodic infusions of capital to fund its operating requirements.

Going Concern

The Company’s consolidated financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has suffered losses from operations and negative operating cash flows since inception. During the nine months ended April 30, 2021, the Company incurred a net loss of $916,137. The Company has financed its working capital requirements during this period primarily through the sale of its equity securities and the issuance of convertible debt. Accordingly, management has concluded that these matters raise substantial doubt about the Company’s ability to continue as a going concern.

At April 30, 2021, the Company had limited cash resources available to fund its operations and will therefore need to raise additional funds in the short-term. The Company estimates that a significant amount of capital will be necessary over a sustained period of time to advance the development of the Company’s business activities to the point at which it can become commercially viable and self-sustaining. However, there can be no assurance that the Company will be successful in this regard.

As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the period from February 11, 2020 (date of inception) through July 31, 2020, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and successfully implement its business plan, and to ultimately achieve sustainable operating revenues and profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The development and expansion of the Company’s business is dependent on many factors, including the capital resources available to the Company. No assurances can be given that any future financing will be available or, if available, that they will be on terms that are satisfactory to the Company or adequate to fund the development and expansion of the Company’s business operations to a level that is commercially viable and self-sustaining. There is also significant uncertainty as to the affect that the coronavirus pandemic may have on the availability, amount, and type of financing in the future.

If cash resources are insufficient to satisfy the Company’s ongoing cash requirements, the Company would be required to scale back its operations, obtain funds, if available, although there can be no certainty, through strategic alliances that may require the Company to relinquish rights to any assets, or to discontinue its operations entirely.

11

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

The most significant estimates to be made by management in the preparation of the consolidated financial statements relate to revenues realized and costs incurred for films and television programs; valuing equity instruments issued; the realization of deferred tax assets; accruals for contingent liabilities; impairment assessments for investments in films and television programs, equity investments and intangible assets.

Film, Television Programs, and Music Production Costs

Film, television program, and music production costs are capitalized in accordance with Accounting Standards Codification 926, Entertainment - Films. Capitalized amounts are stated at the lower of cost, less accumulated amortization, or fair value. These costs represent capitalized costs for the production of films and other entertainment projects. In addition to the films, television programs and music that the Company may produce, costs of productions in development are capitalized as development costs and are transferred to production costs when the project is set for production. Films, television programs and music in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects, as well as amounts paid to musical artists. Projects in development are written off if they are determined not to be recoverable and are evaluated for impairment at each reporting period.

Once a project is released to consumers, the capitalized costs are amortized on an individual project basis in the proportion that the current revenue for each project bears to the estimated remaining unrecognized revenue to be received from all sources for each project as of the beginning of the current fiscal year. Revenue and cost forecasts are periodically reviewed by management and revised when warranted.

The carrying value of film costs are reviewed for impairment each reporting period on a project-by-project basis. If events or changes in circumstance indicate that the fair value of the capitalized costs on a specific project is less than the carrying value, an impairment charge is recognized in the amount by which the unamortized costs exceed the project’s fair value.

The Company has not completed any film or television programs as of April 30, 2021 and has not recognized any impairment charges.

Revenue Recognition

Film and Television Program Revenues

The Company’s film and television program business is expected to generate revenues principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

Revenue will be recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities, such as sales tax and value-added tax.

Revenues from the licensing of film and television content and the sales and licensing of music will be recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes, or logos) will be recognized over the corresponding license term. Commissions will be recognized as such services are provided.

Licensing Arrangements. The Company’s content licensing arrangements are expected to include fixed fee and minimum guarantee arrangements, and sales or usage-based royalties.

12

Fixed Fee or Minimum Guarantees.

The Company’s fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media, or territory) will be recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.

Sales or Usage Based Royalties.

Sales or usage based royalties will represent amounts due to the Company based on the “sale” or “usage” of the Company’s content by the customer, and revenues which will be recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and has been satisfied (or partially satisfied). Generally, when the Company licenses completed content (with standalone functionality, such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation will generally be satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements will generally not be reported to the Company until after the close of the reporting period. The Company will record revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates will be based on information from the Company’s customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry.

Revenues by Market or Product Line.

The following describes the revenues expected to be generated by market or product line.

Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis. Revenue from the theatrical release of feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the exhibition date and are based on the Company’s participation in box office receipts of the theatrical exhibitor.

Home Entertainment. Home entertainment consists of Digital Media and Packaged Media.

Digital Media. Digital media will include digital transaction revenue sharing arrangements (pay-per-view and video-on-demand platforms, electronic sell through (“EST”), and digital rental) and licenses of content to digital platforms for a fixed fee.

Digital Transaction Revenue Sharing Arrangements: Will represent primarily revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a title-by-title basis. These digital media platforms generate revenue from rental and EST arrangements, such as download-to-own, download-to-rent, and video-on-demand. These revenue sharing arrangements are recognized as sales or usage-based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above.

Licenses of Content to Digital Platforms: Will represent primarily the licensing of content to subscription-video-on-demand (“SVOD”) or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun.

Packaged Media: Packaged media revenues will represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as “Packaged Media”) in the retail market. Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

Television: Television revenues will be derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and non-fiction programming. Television revenues will include fixed fee arrangements, as well as arrangements in which the Company will earn advertising revenue from the exploitation of certain content on television networks. Television will also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform. Revenues associated with a title, right, or window from television licensing arrangements will be recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun.

13

International: International revenues will be derived from (1) licensing of the Company’s productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; (2) the direct distribution of the Company’s productions, acquired films, and the Company’s catalog product and libraries of acquired titles; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming. License fees and minimum guarantee amounts associated with title, window, media or territory, will be recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues will also be generated from sales or usage-based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company’s customer generating a royalty due to the Company has occurred.  

Event-Based: Event-based revenues are derived from providing audio and video design, production and installation services and are recognized when the terms and conditions of such services have been formally agreed to and documented, the services have been provided, the amount to be billed is determinable, and the amount billed is reasonably collectible.  

Other: Other revenues will be derived from the licensing of the Company’s film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions earned and executive producer fees related to talent management.  

Related Parties: Revenues from related parties are expected to reflect pricing comparable to arm’s-length customers.  

Deferred Revenue

Deferred revenue relates to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation.

Payment terms are expected to vary by location and type of customer and the nature of the licensing arrangement, however, other than multi-year license arrangements; payments will generally be due within 60 days after revenue is recognized. For certain multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period. When the Company expects the period between fulfillment of the Company’s performance obligation and the receipt of payment to be greater than a year, a significant financing component will be present. In these cases, such payments will be discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The significant financing component will be recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less.

In other cases, customer payments may be made in advance of when the Company fulfills its performance obligation and recognizes revenue. This may primarily occur under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements will not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company’s risk of customer non-performance and incentivize the customer to exploit the Company’s content.

Cash

The Company maintains its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company may periodically have cash balances in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice.

Investment in Marketable Securities

The Company’s investment in marketable securities consists primarily of corporate equities with a quoted market price that are classified as trading securities. Marketable securities are stated at fair value as determined by the closing price of each security at each balance sheet date. Unrealized gains and losses on these securities are included in operations for the applicable period. The investment in marketable securities has been presented as a current asset at each balance sheet date.

14

Concentration of Risk

The Company may periodically contract with consultants and vendors to provide services related to the Company’s business activities. Agreements for these services may be for a specific time period or for a specific project or task.

There were no costs and expenses incurred that represented 10% or more of costs for the three months ended April 30, 2021.

Costs and expenses incurred that represented 10% or more of costs for the nine months ended April 30, 2021 consist of legal fees of $194,607 incurred with the Company’s corporate law firm, which represented 12% of total general and administrative costs for such period.

Income Taxes

The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Alternatively, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made.

The Company’s wholly-owned subsidiary, Rivulet Films, converted from a pass-through limited liability corporation to a “C” corporation effective April 13, 2020.

As the Company’s net operating losses in the respective jurisdictions in which it operates have yet to be utilized, all previous tax years remain open to examination by the respective taxing authorities.

The Company had no unrecognized tax benefits as of April 30, 2021 and does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. As of April 30, 2021, the Company had no uncertain tax positions, and will continue to evaluate for uncertain tax positions in subsequent periods. In future periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense.

Stock-Based Compensation

The Company periodically issues common stock and stock options to officers, directors, employees, contractors, and consultants for services rendered. Options vest and expire according to terms established at the issuance date of each grant. Stock grants, which are generally time vested, are measured at the grant date fair value and charged to operations ratably over the vesting period.

The Company accounts for stock-based payments to officers, directors, employees, contractors, and consultants by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as compensation expense over the period during which the individual is required to perform services in exchange for the award, which is generally over the vesting period of the award.

The fair value of stock options granted as stock-based compensation is determined utilizing the Black-Scholes option-pricing model, and is affected by several variables, the most significant of which are the life of the equity award, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date, and the estimated volatility of the common stock. Estimated volatility is based on the historical volatility of the Company’s common stock over an appropriate calculation period, or, if not available, by reference to the volatility of a representative sample of comparable public companies. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair market value of the common stock is determined by reference to the quoted market price of the Company’s common stock on the grant date.

15

The Company recognizes the fair value of stock-based compensation awards in in the Company’s consolidated statements of operations. Through April 30, 2021, stock-based compensation costs have been included in general and administrative costs. The Company issues new shares of common stock to satisfy stock option exercises.

Fair Value of Financial Instruments

The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required.

Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.

Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.

Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models.

The Company will determine the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company will perform an analysis of the assets and liabilities at each reporting period end.

The Company’s financial instruments include investment in marketable securities, prepaid expenses, deposits, accounts payable, accrued expenses, and due to related parties. The estimated fair value of these instruments approximates their respective carrying amounts due to the short-term nature of these instruments.

Earnings Per Share

The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS.

Basic EPS is measured as the income (loss) attributable to common stockholders divided by the weighted average number of common shares outstanding for the period.

Diluted EPS is computed similar to basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potential shares of common stock pertaining to convertible notes payable, common stock subscriptions receivable and stock options had been issued as of the beginning of the period presented, or issuance date, if later. Dilution is computed by applying the treasury stock method for common stock subscriptions receivable and outstanding vested and unvested stock options, and the if-converted method is utilized for outstanding convertible notes payable. Under the treasury stock method, common stock subscriptions receivable are assumed to be received and stock options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if the funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible notes payable are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Basic and diluted loss per common share was the same for the nine months ended April 30, 2021 and for the period February 11, 2020 (date of inception) through April 30, 2020 because the Company incurred a net loss for such periods and the effect of convertible notes payable, common stock subscriptions receivable and stock options outstanding were therefore anti-dilutive.

At April 30, 2021, the Company included the impact of the outstanding securities summarized below, which entitle the holders thereof to acquire common shares, in its calculation of diluted income per share, as their effect was dilutive. 

Convertible promissory note payable	257,739
Common stock subscription receivable	9,652,000
Common stock options	9,000,000
Total	18,909,739

16

Weighted average common shares outstanding has been retroactively restated for all periods presented to reflect the accounting effect of the 2020 Reverse Acquisition Transaction (see Note 1).

Property and Equipment

Property and equipment is recorded at cost. Major improvements are capitalized, while maintenance and repairs that do not improve or extend the useful life of the respective assets are charged to expense as incurred. Gains and losses from disposition of property and equipment will be included in income and expense when realized. Depreciation of property and equipment will be provided using the straight-line method over an estimated useful life of three and seven years.

The Company recognizes depreciation of property and equipment in general and administrative costs in the Company’s consolidated statement of operations.

Leases

Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. ASU 2016-02 requires recognition in the statement of operations of a single lease cost that is calculated as a total cost of the lease allocated over the lease term, generally on a straight-line basis. ASU 2016-02 excludes short-term operating leases with a lease term of 12 months or less at the commencement date, and that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The Company did not have any leases within the scope of ASU 2016-02 at April 30, 2021.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities measure credit losses for most financial assets, including accounts and notes receivable. ASU 2016-13 will replace the current “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the provisions of ASU 2016-13 as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. Management has not yet evaluated the effect that the adoption of ASU 2016-13 will have on the Company’s consolidated financial statement presentation or disclosures.

In March 2019, the FASB issued ASU 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials (“ASU 2019-02”). ASU 2019-02 aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. Accordingly, the capitalization of production costs for episodic television series is no longer constrained until persuasive evidence of secondary market revenues exists. This new guidance also updates certain presentation and disclosure requirements for capitalized film and television costs and requires impairment testing to be performed at a group level for capitalized film and television costs when the content is predominantly monetized with other owned or licensed content. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements. In addition, under previous guidance, film and television programs accounted for under the broadcasting accounting standard were carried on the balance sheet at the lower of cost or net realizable value. This new guidance requires that an entity test a film or television program for impairment, when impairment indicators are present, at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. The impairment would be measured as the difference between the carrying value of the film group and its fair value rather than its net realizable value. This new guidance requires that an entity provide new disclosures about content that is either produced or licensed and classify cash flows for licensed content as cash flows from operating activities in the statement of cash flows. ASU 2019-02 was effective for the Company’s fiscal year beginning August 1, 2020 and was required to be adopted on a prospective basis. The adoption of ASU 2019-02 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. The Company will continue to present all project development costs, including capitalized costs of acquired programming rights, as non-current assets in its consolidated balance sheet.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

17

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06). ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. ASU 2020-06 will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also revises the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For contracts in an entity’s own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. ASU 2020-06 simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. Management has not yet evaluated the effect that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

3. CHANGE IN CONTROL AND REVERSE ACQUISITION TRANSACTIONS

The change in control transaction effective March 26, 2020 and the reverse acquisition transaction effective April 13, 2020 are described at Note 1.

A summary of the current assets acquired from Bio-Matrix and the stockholders’ equity accounts adjusted as a result of the reverse acquisition transaction effective as of April 13, 2020 is presented below. There were no liabilities assumed in conjunction with the reverse acquisition transaction. In conjunction with the change in control transaction, all current liabilities of Bio-Matrix, including accounts payable and notes payable to related and unrelated parties, plus accrued interest, aggregating $141,936, were paid by the Buyers through a contribution to capital to Bio-Matrix prior to the closing of the reverse acquisition transaction, which became effective on April 13, 2020. All amounts recorded were at historical (predecessor) cost basis. 

Current assets acquired:
Cash	$	572
Investment in marketable securities		8,797
Total current assets	$	9,369
Adjustment to stockholders’ deficiency:
Preferred stock (1,434 shares issued)	$	202
Series B preferred stock (1,347 shares issued)		72
Common stock (7,810,996 shares issued)		781
Additional paid-in capital		8,314
Shares issued in reverse acquisition transaction	$	9,369

4. INVESTMENT IN MARKETABLE SECURITIES

On April 13, 2020, in conjunction with the reverse acquisition (see Notes 1 and 3), the Company recorded an initial investment in marketable securities as presented below.

The Company’s investment in marketable securities consists primarily of corporate equities with a quoted market price that are classified as trading securities at April 30, 2021 and July 31, 2020. Marketable securities are stated at fair value as determined by the closing price of each security at each balance sheet date. Unrealized gains and losses on these securities are included in operations for the applicable period.

18

							Change in
							Fair Value
							For the
	Number						Nine Months
	of		Fair Value at				Ended
	Shares		July 31, 2020		April 30, 2021		April 30, 2021
Common Shares of Entest Group, Inc. (ENTI)		66,667	$	260	$	1,266	$	1,006
Common Shares of Regen Biopharma, Inc. (RGBP)		29,076,665		5,814		561,180		555,366
Series A Preferred Shares of Regen Biopharma, Inc. (RGBPP)		2,907,666		4,362		171,552		167,190
Total			$	10,436	$	733,998	$	723,562

5. PROPERTY AND EQUIPMENT

Property and equipment as of April 30, 2021 is summarized as follows:

Computer and office equipment	$	7,064
Furniture and fixtures		5,936
Property and equipment, at cost		13,000
Less accumulated depreciation		(673	)
Property and equipment, net	$	12,327

Depreciation expense for the three months and nine months ended April 30, 2021 was $673. The Company had no depreciation expense for the period February 11, 2020 (date of inception) through April 30, 2020. Depreciation expense is included in general and administrative costs in the Company’s consolidated statement of operations.

6. INTELLECTUAL PROPERTY

At July 31, 2020, intellectual property consisted of rights for various program and property rights. The agreements underlying these rights were entered into with related parties during February 2020. The Company issued 62,531,965 shares of common stock in exchange for such rights. As such rights were acquired from related parties, the Company recorded such rights at their historical (predecessor) cost basis reflecting an aggregate value of $300.

During the three months and nine months ended April 30, 2021, the Company purchased program and property rights aggregating $42,157.

7. PROJECT DEVELOPMENT COSTS

At April 30, 2021, the Company had one documentary film entitled “It’s Complicated” related to the life of former Arizona Sheriff Joseph M. Arpaio, two feature films and one television show in development.

	Production
			“Please
	“It’s		Baby
	Complicated”		Please”		“Mistress”		“Storyland”		Total
Balance, July 31, 2020	$	134,413	$	—	$	—	$	—	$	134,413
Additions		3,518		738,480		7,037		—		749,035
Capitalized interest		—		3,236		—		—		3,236
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, October 31, 2020		137,931		741,716		7,037		—		886,684
Additions		20,154		1,240,919		874,669		—		2,135,742
Capitalized interest		—		24,208		—		—		24,208
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, January 31, 2021		158,085		2,006,843		881,706		—		3,046,634
Additions		—		111,021		142,769		12,250		266,040
Capitalized interest		—		24,722		—		—		24,722
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, April 30, 2021	$	158,085	$	2,142,586	$	1,024,475	$	12,250	$	3,337,396

19

During the nine months ended April 30, 2021, the Company paid producer fees to an officer of the Company of $25,000, which are accounted for as project development costs in the accompanying consolidated balance sheet at April 30, 2021.

8. PROMISSORY NOTES PAYABLE

SHORT-TERM NOTES PAYABLE

On June 9, 2020, the Company issued a short-term unsecured convertible promissory note for $25,000, with interest at 12% interest per annum and maturing on September 7, 2020. The unsecured convertible promissory note was convertible into shares of common stock of the Company at $0.20 per share, which was in excess of the closing market price of the Company’s common stock on June 9, 2020 of $0.07 per share. On August 31, 2020, the principal balance of the unsecured convertible promissory note of $25,000, plus accrued interest payable of $682, was repaid through conversion into 128,410 shares of common stock.

On October 29, 2020, the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $100,000, with interest at 10% per annum. The note matures on April 29, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $5,083. On April 29, 2021, the maturity date of this note was extended to July 31, 2021.

On November 10, 2020, the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $200,000, with interest at 5% per annum. The note was scheduled to mature on February 8, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $4,708. On February 8, 2021, the maturity date of this note was extended to June 30, 2021.

On December 10, 2020, the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $160,000, with interest at 5% per annum. The proceeds under this promissory note were received by the Company in November 2020. The note was scheduled to mature on March 10, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $3,496. On February 26, 2021, the maturity date of this note was extended to June 30, 2021.

On December 21, 2020, the Company issued a short-term promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $40,000, without interest, with a scheduled maturity date of January 31, 2021. On January 31, 2021, the maturity date of this note was extended to June 30, 2021.

On December 23, 2020, the Company issued a short-term promissory note to John Morgan, an officer of the Company, for $20,000, without interest. The note was repaid on January 7, 2021.

Between December 15, 2020 and December 26, 2020, the Company’s subsidiary Mistress Movie LLC issued six short-term promissory notes to Cross Entertainment, LLC, a related party, aggregating $170,000, without interest, with a scheduled maturity date of February 28, 2021. As of January 31, 2021, $60,000 had been repaid and the remaining principal amount of $110,000 was due on these notes. On February 26, 2021, the maturity date of the $110,000 principal amount of the notes were extended to June 30, 2021.

On December 26, 2020, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $110,000, without interest, with a scheduled maturity date of June 30, 2021. The Company received proceeds of $10,000 on this note through April 30, 2021. On January 31, 2021, the principal balance of the note dated January 7, 2021 of $85,000 was transferred to this note. As of April 30, 2021, principal amount of $95,000 was due on this note.

On January 5, 2020, the Company issued a short-term promissory note to Lawrence M. Silver, who is an approximate 9% shareholder of the Company, for $70,000, without interest, with a scheduled maturity date of January 31, 2021. On January 31, 2021, the maturity date of this note was extended to June 30, 2021.

On January 7, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $145,000, without interest, with a scheduled maturity date of January 31, 2021. Proceeds on this note were $145,000, of which $60,000 was repaid and the balance of $85,000 was transferred to the note dated December 26, 2020 as described above. As of April 30, 2021, there was no amounts due and payable on this note.

On January 29, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $85,000, without interest, with a scheduled maturity date of February 28, 2021. As of April 30, 2021, principal of $15,000 was due on this note. On February 26, 2021, the maturity date of this note was extended to June 30, 2021.

20

On February 11, 2021, the Company issued a short-term promissory note to Lawrence M. Silver, who is an approximate 9% shareholder of the Company, for $100,000, without interest, with a scheduled maturity date of June 30, 2021.

On April 20, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $1,500, without interest, with a scheduled maturity date of May 20, 2021. The note was repaid on April 21, 2021.

On April 21, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $15,000, with interest at 10% per annum. The note matures on May 21, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $37. On May 21, 2021, the maturity date of this note was extended to July 31, 2021.

LONG-TERM NOTES PAYABLE

On September 16, 2020, the Company issued a two-year unsecured convertible promissory note payable for $100,000, with interest at 5% per annum and maturing on September 15, 2022. The note was originally convertible into shares of common stock of the Company at $0.80 per share, which was above the closing market price of the Company’s common stock of $0.26 per share on September 16, 2020.

This note was amended on December 15, 2020 to make it convertible into shares of common stock of the Company at $0.40 per share, which was below the closing market price of the Company’s common stock of $0.59 per share on December 15, 2020.

As a result of the December 15, 2020 amendment to this convertible promissory note payable, the Company recognized a beneficial conversion feature on such date to recognize the difference between the closing market price of the common stock and the amended conversion price, which resulted in the Company recording a discount on debt aggregating $48,010. This debt discount is being presented as a reduction to the carrying amount of the related convertible promissory note payable in the consolidated balance sheet and is being amortized to operations as interest expense from December 15, 2020 through September 16, 2022, the maturity date of the note. For the three months and nine months ended April 30, 2021, debt discount charged to operations as interest expense was $3,430 and $10,288, respectively, which resulted in unamortized debt discount of $37,722 at April 30, 2021.

If the closing price of the Company’s common stock reaches $0.60 per share or greater (decreased from $1.20 per share as part of the December 15, 2020 amendment to the note), the outstanding principal and all accrued interest on this note shall automatically convert into common stock at the specified conversion rate. As of April 30, 2021, accrued interest payable related to the unsecured convertible promissory note payable was $3,096.

On October 26, 2020, Rivulet Films issued a multiple advance promissory note (the “Note”) to Lawrence Silver, an approximate 11% shareholder of the Company, for $1,000,000, with interest at 10% per annum. The Note matures on October 6, 2022, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. The Note is secured by a first lien security interest on all of the assets of Rivulet Films (including its equity interest in PBP Productions LLC), personal guarantees of the Company’s officers, Michael Witherill and Aaron Klusman, and a corporate guarantee of the Company. Rivulet Films is required to use borrowings under the Note primarily to pay production costs associated with the movie production currently entitled “Please Baby Please”. Borrowings under this Note may be repaid at any time and reborrowed until the maturity date. Rivulet Films is required to apply any other funds received by it for the purpose of film financing and then any excess proceeds to pay any principal and interest owing under this Note. As of April 30, 2021, principal borrowings outstanding under the Note were $1,000,000, and related accrued interest was $52,166, which has been capitalized as project development costs (see Note 7).

9. STOCKHOLDERS’ EQUITY (DEFICIENCY)

Preferred Stock

The Company is authorized to issue a total of 20,000,000 shares of preferred stock, par value $0.0001 per share.

In conjunction with the reverse acquisition transaction (see Note 1), the Company recorded issued and outstanding preferred stock of Bio-Matrix consisting of 1,434 shares of Preferred Stock with a carrying value of $202 and 1,347 shares of Series B Preferred Stock with a carrying value of $72.

The class of Non-Voting Preferred Stock, of which 200,000 shares, par value $1.00 per share, had been authorized, of which none were outstanding, were eliminated effective May 26, 2020.

21

Common Stock

The Company is authorized to issue a total of 200,000,000 shares of common stock, par value $0.0001 per share.

During the period from February 11, 2020 (date of inception) through April 30, 2020, Rivulet Films entered into four common stock subscription agreements aggregating $700,000. Three of the subscriptions receivable aggregating $150,000 for 5,023,800 shares of common stock were paid in April 2020. The remaining $550,000 of subscriptions receivable from Blue Scout Enterprises LLC (“Blue Scout”), a related party, to purchase 11,000,000 shares of common stock was presented as a reduction to stockholders’ deficiency in the accompanying consolidated balance sheet at July 31, 2020.

The $550,000 subscription receivable from Blue Scout dated February 11, 2020 for 11,000,000 shares of common stock is unsecured and provides for interest at 2% per annum, with interest and principal due on March 7, 2023. Interest income is being recognized on a cash basis as and when received by the Company. Interest income as of April 30, 2021 that had not been recognized by the Company was $12,539.

On August 24, 2020, a principal payment of $17,400 was received with respect to the $550,000 common stock subscription receivable, as a result of which 348,000 shares of common stock were issued.

On September 2, 2020, a principal payment of $20,000 was received with respect to the $550,000 common stock subscription receivable, as a result of which 400,000 shares of common stock were issued.

On September 16, 2020, a principal payment of $30,000 was received with respect to the $550,000 common stock subscription receivable, as a result of which 600,000 shares of common stock were issued.

On October 14, 2020, Blue Scout entered into assignment agreements with its respective LLC members to distribute such equity interests through note agreements secured by the underlying common shares, based on the original purchase price of $0.05 per share. As a result of this distribution of equity interests in the subscription receivable, a director of the Company and an employee of the Company received 1,000,000 shares and 400,000 shares, respectively.

On August 13, 2020, the Company sold 2,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $100,000.

On August 26, 2020, the Company sold 1,200,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $60,000.

On September 30, 2020, the Company sold 1,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $50,000.

On September 30, 2020, the Company sold 1,000,000 shares of common stock to an unrelated party at $0.05 per share for total proceeds of $50,000.

On October 8, 2020, the Company sold 2,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $100,000.

On October 13, 2020, the Company sold 1,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $50,000.

On October 15, 2020, the Company sold 5,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $250,000.

On November 26, 2020, the Company sold 1,000,000 shares of common stock to a convertible promissory note holder at $0.10 per share for total proceeds of $100,000.

On November 30, 2020, the Company sold an aggregate of 2,200,000 shares of common stock to two existing note holders and shareholders at $0.10 per share for total proceeds of $220,000.

On December 3, 2020, the Company entered into a Subscription Agreement to sell 4,800,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $480,000 which was received by the Company in late November and early December 2020.

22

On December 22, 2020, the Company sold 250,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $25,000.

On January 21, 2021, the Company sold 2,000,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $200,000.

On January 29, 2021, the Company sold 1,000,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $100,000.

On February 24, 2021, the Company sold 1,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $100,000.

On February 26, 2021, the Company sold 500,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $50,000.

On March 11, 2021, the Company sold 3,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $300,000.

On April 14, 2021, the Company sold 500,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $50,000.

Additional information with respect to shares of common stock issued is provided at Notes 1 and 6.

10. STOCK-BASED COMPENSATION

On May 26, 2020, the Board of Directors of the Company approved and adopted the 2020 Equity Incentive Plan, with an aggregate of 16,000,000 shares issuable under the plan, with a ten-year expiration, and providing that options for no more than 10,000,000 shares be granted as Incentive Stock Options. As of April 30, 2021, stock options for 9,000,000 shares of common stock had been granted.

For stock options issued during the nine months ended April 30, 2021, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model utilizing the following assumptions:

Risk-free interest rate	0.34%
Expected dividend yield	0%
Expected volatility	37.85%
Expected life	5 years

Stock-based compensation cost for the three months and nine months ended April 30, 2021 was $22,239 and $66,717, respectively, and was recorded in general and administrative costs in the accompanying statements of operations.

A summary of stock option activity during the nine months ended April 30, 2021 is presented below.

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Stock options outstanding at July 31, 2020		9,000,000	$	0.10
Granted		9,000,000		0.10
Exercised		—		—
Expired		—		—
Stock options outstanding at April 30, 2021		9,000,000	$	0.10		10.00
Stock options exercisable at April 30, 2021		5,000,000	$	0.10		10.00

Total deferred compensation expense for the outstanding value of unvested stock options was approximately $50,038 as of April 30, 2021, which will be recognized subsequent to April 30, 2021 over a weighted-average period of approximately 1.25 years.

23

The intrinsic value of exercisable but unexercised in-the-money stock options at April 30, 2021 was approximately $962,500 based on a fair market value of $0.29 per share on April 30, 2021.

The Company expects to satisfy such stock obligations through the issuance of authorized but unissued shares of common stock.

11. RELATED PARTY TRANSACTIONS

During the nine months ended April 30, 2021, the Company paid producer fees to an officer of $25,000, which were accounted for as project development costs in the accompanying consolidated financial statements at April 30, 2021 (see Note 7).

During the three months and nine months ended April 30, 2021, the Company recorded revenues of $3,000 from a related party.

Information with respect to the issuance of promissory notes to related parties is provided at Note 8.

Information with respect to the collection of common stock subscriptions receivable from related parties is provided at Note 9.

Information with respect to employee compensation is provided at Note 12.

12. COMMITMENTS AND CONTINGENCIES

Lease Commitments

On May 1, 2020, the Company entered into a short-term lease agreement with an unrelated party for office space in Gilbert, Arizona through December 31, 2020 at the rate of approximately $800 per month. On January 1, 2021, the Company renewed the short-term lease agreement for three months through March 31, 2021. On March 30, 2021 the Company extended the short-term lease agreement for six months through September 30, 2021 at the rate of approximately $1,400 per month.

On February 3, 2021, the Company entered into a short-term lease agreement for 2,716 square feet of office on a month-to-month basis. Through March 12, 2021 the cost was $5,000 per month, at which time the cost increased to $8,148 per month.

During the three months and nine months ended April 30, 2021, the Company charged $24,682 and $29,578, respectively, to general and administrative costs with respect to these lease agreements.

Employment Agreements

On May 27, 2020, the Company, and Paris Film, Inc. and Rob Paris (together, “Paris”) entered into an Employment Agreement (the “Paris Agreement”), pursuant which the Company agreed to employ Paris in the position of President of Rivulet Films, a subsidiary of the Company. The employment of Paris began on June 1, 2020, for a guaranteed term of six months, following which time the employment relationship may be terminated with or without good cause or for any reason or no reason by either the Paris or the Company.

Paris was paid $10,000 per month commencing June 1, 2020 through November 30, 2020, which was guaranteed by the Company. Additionally, upon execution of the Paris Agreement, the Company issued stock options to purchase 9,000,000 shares of common stock at an exercise price of $0.10 per share, which was the fair market value of the Company’s common stock on such date, of which options for 5,000,000 shares vested on May 27, 2020, options for 2,000,000 shares will vest on June 1, 2021, and the remaining options for 2,000,000 shares will vest on June 1, 2022. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $300,227 ($0.03336 per share), of which $166,793 was attributable to the stock options fully-vested on May 27, 2020 and was therefore was charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from May 27, 2020 through June 1, 2022.

During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $22,239 and $66,717, respectively, with respect to stock options issued pursuant to the Paris Agreement. Paris also has the right to participate in all equity stock option plans and programs established for employees by Rivulet Films in all aspects and benefits to that of any other similarly situated C-suite employee of Rivulet Films, including its Chief Executive Officer. Rivulet Films will also provide Paris with other benefits, such as bonuses, perk packages, preferred stock positions, box office bonuses, and back-end/contingent compensation made generally available to similarly situated employees, including its Chief Executive Officer. Paris will be attached as producer, subject to a separate producer agreement to be negotiated, to all projects sourced by Paris during the term of his employment. The Paris Agreement subjects Paris to certain restrictive covenants and a standard confidentiality provision. During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $40,000 and $100,000, respectively, with respect to the cash portion of the Paris Agreement, which was charged to general and administrative costs. The Paris Agreement was amended effective March 1, 2021 to increase Paris’ salary to $15,000 per month.

24

In connection with the employment, to the extent controlled by Paris and so long as Paris remains attached to each project in perpetuity, Paris grants to Rivulet Films a right of first refusal to all rights, title, and interest to the film projects known as “Please Baby Please” and “Acolyte”, as well as to all other film, story, or other production concepts which Paris creates, develops, or otherwise originates during the term of employment and not passed on by Rivulet Films.

On August 12, 2020, the Company, and Michael J. Witherill entered into an Employment Agreement with respect to his positions as President, Chief Financial Officer, Principal Accounting Officer, and a member of the Board of Directors of the Company. Mr. Witherill is to devote his full time and attention to his duties, and receives an annual salary of $360,000, payable in accordance with the Company’s standard payroll practices, provided that such amount may be deferred as determined by Mr. Witherill or the Board of Directors as needed to cover other Company expenses, and provided further that Mr. Witherill is permitted to serve as a director of not-for-profit and for-profit businesses that do not compete with the Company. The Employment Agreement was amended on January 26, 2021 to additionally allow Mr. Witherill to serve as an officer and director of Chee Corp. During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $90,000 and $270,000, respectively, with respect to this Employment Agreement, which was charged to general and administrative costs.

On August 14, 2020, the Company and Aaron Klusman entered into an Employment Agreement with respect to his positions as Chief Executive Officer and a member of the Board of Directors of the Company. Mr. Klusman is to devote as much time and attention to his duties as is necessary, and receives an annual salary of $360,000, payable in accordance with the Company’s standard payroll practices, provided that such amount may be deferred as determined by Mr. Klusman or the Board of Directors as needed to cover other Company expenses, and provided further that Mr. Klusman is permitted to purchase, sell, oversee, manage, and develop real estate properties and projects; and serve as a director of not for profit and for profit businesses that do not compete with the Company. During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $90,000 and $270,000, respectively, with respect to this Employment Agreement, which was charged to general and administrative costs.

Both Mr. Witherill and Mr. Klusman (together, the “Executives”) are eligible for a quarterly and an annual discretionary bonus as periodically established by the Board of Directors based upon metrics that will be established by the Board of Directors in its sole discretion. The Executives are also eligible to participate in and receive stock options under the Company’s 2020 Equity Incentive Plan. These Employment Agreements provide that notwithstanding anything to the contrary in the Company’s existing or future incentive plans or any award agreement, upon a Change of Control, as defined in the Employment Agreements, all of the Executives’ outstanding unvested equity-based awards shall, at their option, vest and become immediately exercisable and unrestricted.

The employment of the Executives under the Employment Agreements commenced effective April 1, 2020, and will continue for two years, subject to successive one-year renewals. Each Executive is an “at-will” employee. Either the Executive or the Company may terminate his employment with or without cause, for any reason or no reason, and at any time. The Executives are each subject to standard confidentiality provisions and a non-compete, non-solicitation covenant for a one-year period following termination of employment.

Legal Matters

The Company may, from time to time, be involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business, which are not expected to have a material adverse effect upon the Company’s financial statements. As of April 30, 2021, the Company was not a party to any pending or threatened legal proceedings.

Impact of Novel Coronavirus (COVID-19) on the Company’s Business Operations

The global outbreak of the novel coronavirus (COVID-19) has led to severe disruptions in general economic activities, as businesses and governments have taken broad actions to mitigate this public health crisis. Although the Company has not experienced any significant disruption to its business to date, these conditions could significantly negatively impact the Company’s business in the future. The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become available.

The extent to which the COVID-19 outbreak ultimately impacts the Company’s business, future revenues, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity and longevity, the actions to curtail the virus and treat its impact (including an effective vaccine), and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may be at risk of experiencing a significant impact to its business as a result of the global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

25

There is also significant uncertainty as to the effect that the coronavirus may have on the amount and type of financing available to the Company in the future.

13. INCOME TAXES

During the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020, the Company did not provide any provision for income taxes, as the Company incurred losses for income tax purposes during such periods. Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has recorded a full valuation allowance against its deferred tax assets as the Company believes that at this time it is more likely than not that the deferred tax assets will not be realized.

14. SUBSEQUENT EVENTS

The Company performed an evaluation of subsequent events through the date of filing of these consolidated financial statements with the SEC. There were no material subsequent events which affected, or could affect, the amounts or disclosures in the consolidated financial statements, other than those as described below.

Sale of Common Stock

On May 5, 2021, the Company sold 2,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $200,000.

On May 14, 2021, the Company sold 250,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $25,000.

Issuance of Promissory Notes

On May 3, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $15,000, with interest at 10% per annum. The note matures on November 3, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

On May 6, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $70,000, without interest, with a scheduled maturity date of July 31, 2021.

On May 11, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $25,000, without interest, with a scheduled maturity date of June 30, 2021.

On May 12, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $50,000, without interest, with a scheduled maturity date of June 30, 2021.

On May 13, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $13,000, without interest, with a scheduled maturity date of June 30, 2021.

On May 28, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $35,000, with interest at 10% per annum. The note matures on July 31, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

On June 2, 2021, the Company issued a short-term unsecured promissory note to Lawrence M. Silver, who is an approximate 9% shareholder of the Company, for $90,933, with interest at 10% per annum. The note matures July 31, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

On June 14, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $25,000, with interest at 10% per annum. The note matures on July 31, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

Payments of Promissory Notes

On May 5, 2021 the Company paid $8,000 on the short-term promissory note to Cross Entertainment, LLC, originally dated January 29, 2021.

On May 5, 2021 and May 6, 2021, the Company paid $70,000 and $50,000, respectively, on the short-term promissory notes to Lawrence M. Silver originally dated January 5, 2021 and February 11, 2021.

26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q of Rivulet Media, Inc. (the “Company”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These might include forward-looking statements regarding the Company’s financial position, strategy and other plans and objectives for future operations, including assumptions and predictions related thereto. These statements are generally accompanied by words such as “intend”, “anticipate”, “believe”, “estimate”, “potential(ly)”, “continue”, “forecast”, “predict”, “plan”, “may”, “will”, “could”, “would”, “should”, “expect” or the negative of such terms or other comparable terminology. The Company believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to it on the date hereof, but the Company cannot provide assurances that these assumptions and expectations will prove to have been correct or that the Company will take any action that the Company may presently be planning. These forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual results or experience may differ materially from those expected, anticipated or implied in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, available cash resources, competition from other similar businesses, changes in the entertainment and media industry, and market and general economic factors. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020, including the section entitled “Item 1A. Risk Factors”. The Company does not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

Overview

The Company is engaged in the production, distribution and marketing of feature-length films, television series and mini-series, and television movies, from initial creative development through principal photography, postproduction, distribution and ancillary sales, as well as the music production and distribution industry. The Company also provides event-based audio and video design, production and installation services.

The Company’s activities are subject to significant risks and uncertainties, including the need for additional capital, as described below at “Going Concern”. The Company does not currently have positive cash flows from operations and is dependent on periodic infusions of capital to fund its operating requirements.

At July 31, 2020, the Company, through its subsidiary Borderline Productions LLC, had commenced production of a documentary film related to the life of former Arizona Sheriff Joseph M. Arpaio entitled “It’s Complicated”. During the three months ended October 31, 2020, the Company, through its subsidiary PBP Productions LLC, commenced the filming of its first film production, “Please Baby Please”. In December 2020, the Company, through its subsidiary Mistress Movie, LLC, commenced the filming of its second film production, “Mistress”. In April 2021, the Company, through its subsidiary Storyland Productions, LLC, commenced creation of a television series, “Storyland”. The films are now in post-production. Upon completion of a production, the Company expects to receive initial revenues from domestic and foreign distribution contracts. At April 30, 2021 and July 31, 2020, project development costs aggregated $3,337,396 and $134,413, respectively.

In March 2021, the Company formed Eventide Media, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to provide event-based audio and video design, production and installation services. Business activities commenced during April 2021 and generated revenues of $3,000 for the three months and nine months ended April 30, 2021.

Going Concern

The Company’s consolidated financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has suffered losses from operations and negative operating cash flows since inception. During the nine months ended April 30, 2021, the Company incurred a net loss of $916,137. The Company has financed its working capital requirements during this period primarily through the sale of its equity securities and the issuance of convertible debt. Accordingly, management has concluded that these matters raise substantial doubt about the Company’s ability to continue as a going concern.

At April 30, 2021, the Company had limited cash resources available to fund its operations and will therefore need to raise additional funds in the short-term. The Company estimates that a significant amount of capital will be necessary over a sustained period of time to advance the development of the Company’s business activities to the point at which it can become commercially viable and self-sustaining. However, there can be no assurances that the Company will be successful in this regard.

27

As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the period from February 11, 2020 (inception) through July 31, 2020, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and successfully implement its business plan, and to ultimately achieve sustainable operating revenues and profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The development and expansion of the Company’s business is dependent on many factors, including the capital resources available to the Company. No assurances can be given that any future financing will be available or, if available, that they will be on terms that are satisfactory to the Company or adequate to fund the development and expansion of the Company’s business operations to a level that is commercially viable and self-sustaining. There is also significant uncertainty as to the affect that the coronavirus pandemic may have on the availability, amount and type of financing in the future.

If cash resources are insufficient to satisfy the Company’s ongoing cash requirements, the Company would be required to scale back its operations, obtain funds, if available, although there can be no certainty, through strategic alliances that may require the Company to relinquish rights to any assets, or to discontinue its operations entirely.

Recent Accounting Pronouncements

Information with respect to recent accounting pronouncements is provided at Note 2 to the condensed consolidated financial statements for the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020.

Concentration of Risk

Information with respect to concentration of risk is provided at Note 2 to the condensed consolidated financial statements for the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020.

Critical Accounting Policies and Estimates

The discussion and analysis of financial condition and results of operations presented below is based on the Company’s consolidated financial statements for the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain accounting policies and estimates are particularly important to the understanding of the Company’s financial position and results of operations and require the application of significant judgment by management or can be materially affected by changes from period to period in economic factors or conditions that are outside of the Company’s control. As a result, these issues are subject to an inherent degree of uncertainty. In applying these policies, management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on the Company’s historical operations, the future business plans and the projected financial results, the terms of existing contracts, trends in the industry, and information available from other outside sources. For a more complete description of the Company’s significant accounting policies, see Note 2 to the condensed consolidated financial statements.

Film, Television Programs, and Music Production Costs 

Film, television program, and music production costs are capitalized in accordance with Accounting Standards Codification 926, Entertainment - Films. Capitalized amounts are stated at the lower of cost, less accumulated amortization, or fair value. These costs represent capitalized costs for the production of films and other entertainment projects. In addition to the films, television programs and music that the Company may produce, costs of productions in development are capitalized as development costs and are transferred to production costs when the project is set for production. Films, television programs and music in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects, as well as amounts paid to musical artists. Projects in development are written off if they are determined not to be recoverable and are evaluated for impairment at each reporting period.

Once a project is released to consumers, the capitalized costs are amortized on an individual project basis in the proportion that the current revenue for each project bears to the estimated remaining unrecognized revenue to be received from all sources for each project as of the beginning of the current fiscal year. Revenue and cost forecasts are periodically reviewed by management and revised when warranted.

28

The carrying value of film costs are reviewed for impairment each reporting period on a project-by-project basis. If events or changes in circumstance indicate that the fair value of the capitalized costs on a specific project is less than the carrying value, an impairment charge is recognized in the amount by which the unamortized costs exceed the project’s fair value.

The Company has not completed any film or television programs as of April 30, 2021 and, accordingly, has not recognized any impairment charges.

Revenue Recognition

Film and Television Program Revenues

The Company’s film and television program business is expected to generate revenues principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

Revenues will be recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities, such as sales tax and value-added tax.

Event-Based Revenues

Event-based revenues are derived from providing audio and video design, production and installation services and are recognized when the terms and conditions of such services have been formally agreed to and documented, the services have been provided, the amount to be billed is determinable, and the amount billed is reasonably collectible.

Results of Operations

At April 30, 2021, the Company had commenced business operations, but did not have positive cash flows from operations and will be dependent on periodic infusions of capital to fund its operating requirements.

Operating Expenses

The Company generally recognizes operating costs and expenses as they are incurred in two general categories, sales and marketing costs and expenses and general and administrative costs and expenses. The Company’s operating costs and expenses also include non-cash components related to depreciation and amortization of property and equipment which are allocated, as appropriate, to sales and marketing costs and expenses and general and administrative costs and expenses.

Sales and marketing costs and expenses consist primarily of press releases, web design and photo shoots and related one-time use equipment.

General and administrative costs and expenses consist of stock-based compensation, payroll to officers and employees, accounting fees, audit fees, legal fees, transfer agent fees, insurance, investor relations and other general corporate expenses. Management expects general and administrative costs and expenses to increase in future periods as the Company adds personnel and incurs additional costs related to its operation as a public company for a full fiscal year, including higher legal, accounting, insurance, compliance, compensation and other costs.

29

The Company’s consolidated statements of operations as discussed herein are presented below.

	Three Months Ended April 30, 2021			Nine Months Ended April 30, 2021			For the Period February 11, 2020 (date of inception) through April 30, 2020
Revenues – related party	$	3,000		$	3,000		$	—
Costs and expenses:
General and administrative:
Officers, directors, affiliates, and other related parties		256,149			784,365			110,000
Other costs		329,283			816,606			177,345
Production costs		1,639			1,639			—
Sales and marketing		8,015			13,190			649
Total costs and expenses		595,086			1,615,800			287,994
Loss from operations		(592,086	)		(1,612,800	)		(287,994	)
Other income (expense):
Increase (decrease) in fair value of investment in marketable securities		691,389			723,562			(129	)
Interest expense, net		(15,037	)		(26,899	)		—
Total other income (expense), net		676,352			696,663			(129	)
Net income (loss)	$	84,266		$	(916,137	)	$	(288,123	)
Net income (loss) per common share:
Basic	$	0.00		$	(0.01	)	$	(0.00	)
Diluted	$	0.00		$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding:
Basic		115,681,834			90,504,204			75,964,632
Diluted		129,880,700			90,504,204			75,964,632

Three Months Ended April 30, 2021 and For the Period February 11, 2020 (date of inception) through April 30, 2020

Revenues. The Company generated revenues of $3,000 from a related party during the three months ended April 30, 2021 related to an event-based video production. The Company did not have any revenues for the period February 11, 2020 (date of inception) through April 30, 2020.

General and Administrative:

Officers, Directors, Affiliates and Other Related Parties.

For the three months ended April 30, 2021, general and administrative costs associated with officers, directors, affiliates and other related parties were $256,149, which consisted of stock-based compensation of $22,239, compensation to officers of $220,000, and costs associated with an area standards agreement incurred with the Company’s IATSE union liaison of $13,910.

For the period February 11, 2020 (date of inception) through April 30, 2020, general and administrative costs associated with officers, directors, affiliates, and other related parties were $110,000, which consisted of compensation to officers.

Other.

For the three months ended April 30, 2021, other general and administrative costs were $329,283, which consisted of compensation and related costs of $135,728, health insurance of $16,072, accounting and review fees of $53,501, tax preparation fees of $10,119, legal fees of $61,870, office rent of $24,682, transfer agent fees of $2,780, depreciation of $673, and other operating costs of $23,858.

30

For the period February 11, 2020 (date of inception) through April 30, 2020, other general and administrative costs were $177,345, which consisted of compensation and related costs of $36,622, accounting fees of $3,860, legal fees of $133,729, transfer agent fees of $1,760, and other operating costs of $1,374.

Production Costs. For the three months ended April 30, 2021, event-based production costs were $1,639, which consisted of equipment rental. The Company did not have any production costs for the period February 11, 2020 (date of inception) through April 30, 2020.

Sales and Marketing. For the three months ended April 30, 2021, selling and marketing costs were $8,015, which consisted of public relations costs of $5,000, branding guidance and advertising of $2,050, and other sales and marketing costs of $965. For the period February 11, 2020 (date of inception) through April 30, 2020, selling and marketing costs were $649, which consisted of public relation costs of $525 and advertising of $124.

Interest Expense. For the three months ended April 30, 2021, the Company had interest expense of $15,037 (including amortization of debt discount of $6,858), which was related to the convertible promissory note payable and short-term unsecured debt. The Company capitalized $24,722 of interest expense related to the secured multiple advance promissory note as such costs related to production costs of a feature film in process. For the period February 11, 2020 (date of inception) through April 30, 2020, the Company did not have any interest expense.

Increase (Decrease) in Fair Value of Investment in Marketable Securities. For the three months ended April 30, 2021, the Company recorded an increase in the fair value of its investment in marketable securities of $691,389. For the period February 11, 2020 (date of inception) through April 30, 2020, the Company recorded a decrease in the fair value of its investment in marketable securities of $129.

Net Income (Loss). For the three months ended April 30, 2021, the Company generated net income of $84,266. For period February 11, 2020 (date of inception) through April 30, 2020, the Company incurred a net loss of $288,123.

Nine Months Ended April 30, 2021

Revenues. The Company generated revenues of $3,000 from a related party during the nine months ended April 30, 2021 related to an event-based video production.

General and Administrative:

Officers, Directors, Affiliates and Other Related Parties.

For the nine months ended April 30, 2021, general and administrative costs associated with officers, directors, affiliates and other related parties were $784,365, which consisted of stock-based compensation of $66,717, compensation to officers of $640,000, and an area standards agreement incurred with the Company’s IATSE union liaison of $77,648.

Other.

For the nine months ended April 30, 2021, other general and administrative costs were $816,606, which consisted of compensation and related costs of $286,309, health insurance of $26,706, accounting, review and audit fees of $194,294, tax preparation fees of $10,119, legal fees of $215,613, office rent of $29,578, transfer agent fees of $9,830, depreciation of $673, and other operating costs of $43,484.

Production Costs. For the nine months ended April 30, 2021, event-based production costs were $1,639, which consisted of equipment rental.

Sales and Marketing. For the nine months ended April 30, 2021, selling and marketing costs were $13,190, which consisted of public relations of $5,000, press release costs of $2,475, branding guidance and advertising of $4,750, and other sales and marketing costs of $965.

Interest Expense. For the nine months ended April 30, 2021, the Company had interest expense of $26,899 (including amortization of debt discount of $10,288), net of interest income of $65, which was related to the convertible promissory note payable and short-term unsecured debt. The Company capitalized $52,166 of interest expense related to the secured multiple advance promissory note as such costs related to production costs of a feature film in process.

31

Increase (Decrease) in Fair Value of Investment in Marketable Securities. For the nine months ended April 30, 2021, the Company recorded an increase in the fair value of its investment in marketable securities of $723,562.

Net Income (Loss). For the nine months ended April 30, 2021, the Company incurred a net loss of $916,137.

Liquidity and Capital Resources – April 30, 2021

The Company’s consolidated financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has suffered losses from operations and negative operating cash flows since inception. During the nine months ended April 30, 2021, the Company incurred a net loss of $916,137. The Company has financed its working capital requirements during this period primarily through the sale of its equity securities and the issuance of convertible debt. Accordingly, management has concluded that these matters raise substantial doubt about the Company’s ability to continue as a going concern.

As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the period from February 11, 2020 (inception) through July 31, 2020, has also expressed substantial doubt about the Company’s ability to continue as a going concern (see “Going Concern” above).

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan, and to ultimately achieve sustainable operating revenues and profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At April 30, 2021, the Company had a bank overdraft of $10,211 and a working capital deficiency of $848,309. During the nine months ended April 30, 2021, the Company generated cash of $2,285,000 from the sale of 29,450,000 shares of common stock, and cash of $67,400 from the collection of common stock subscriptions receivable from both related and unrelated parties for 1,348,000 shares of common stock which has been subscribed for in August and September 2020. However, at April 30, 2021, the Company also had $805,000 of short-term indebtedness due on June 30, 2021 and $100,000 due on July 31, 2021, with respect to which it will either need to repay or extend the due date.

At April 30, 2021, the Company had limited cash resources available to fund its operations and repay its short-term indebtedness, and will therefore need to raise additional funds to repay debt and finance its short-term working capital requirements. The Company estimates that a significant amount of capital will be necessary over a sustained period of time to advance the development of the Company’s business activities to the point at which it can become commercially viable and self-sustaining. However, there can be no assurances that the Company will be successful in this regard.

Operating Activities

For the nine months ended April 30, 2021, operating activities utilized cash of $1,177,541, as compared to utilizing cash of $150,572 for the period February 11, 2020 (date of inception) through April 30, 2020, to fund the Company’s ongoing operating expenses.

Investing Activities

For the nine months ended April 30, 2021, the Company’s investing activities utilized cash of $3,258,140 consisting of $13,000 for the purchase of property and equipment, $42,157 for the purchase of intellectual property, and $3,202,983 for the payment of project development costs. The Company had no investing activities for the period February 11, 2020 (date of inception) through April 30, 2020.

Financing Activities

For the nine months ended April 30, 2021, the Company’s financing activities provided net cash of $4,417,400, consisting of proceeds of $2,285,000 from the sale of 29,450,000 shares of common stock, $67,400 received from common stock subscriptions receivable for 1,348,000 shares of common stock, proceeds from a rescinded stock subscription receivable of $60,000, proceeds of $100,000 from the issuance of a convertible promissory note payable, $1,000,000 from the issuance of a secured Multiple Advance Promissory Note, and proceeds of $1,106,500 in unsecured promissory notes from related parties, reduced by repayments of $201,500.

For the period February 11, 2020 (date of inception) through April 30, 2020, the Company’s financing activities generated cash of $150,000 from the sale of 5,023,800 shares of common stock, and cash of $572 acquired in connection with the reverse merger transaction.

32

Project Funding

The Company expects that its film projects will generally be funded through a variety of techniques. The films that the Company intends to produce will likely include a well-known cast and a compelling script. The Company plans to use its sales agents to pre-sell foreign distribution rights, which would include money guarantees from the distributors. In addition, the Company’s sales agents will attempt to secure domestic right pre-sales through backstop (floor amount) agreements or direct distribution agreements with money guarantees. The Company plans to produce films in states that provide significant tax incentive rebates.

The Company’s objective is for these agreements, together with the tax incentives, to provide security for bank financing at 80% to 90% of the aggregate contract and tax incentive amounts, as well as that bank loans, pre-sale agreements and tax incentive assignments will provide sufficient funds to finance the respective project costs.

In some cases, while the funds may be sufficient to fully finance a production, there may be a timing difference between obtaining the funds and the time frame needed to complete the project. In such cases, the Company intends to seek temporary funding from film project lenders until the Company is able to obtain project financing from a senior lender.

Principal Commitments

Employment Agreements

The Company and its wholly owned subsidiaries have entered into employment agreements with their officers with total aggregate monthly salaries of $75,000.

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements at July 31, 2020 or April 30, 2021.

Trends, Events and Uncertainties

The production, distribution and marketing of feature-length films, television series and mini-series, and television movies, from initial creative development through principal photography, postproduction, distribution and ancillary sales, is, by its nature, unpredictable and costly, and occurs over an extended period of time. Although the Company will undertake program development efforts with commercially reasonable diligence, there can be no assurance that the Company’s efforts to raise funds in the future will be sufficient to enable the Company to develop its program content to the extent needed to create future revenues to sustain operations as contemplated herein.

There can be no assurances that the Company will ever achieve sustainable revenues sufficient to support its operations. Even if the Company is able to generate revenues, there can be no assurances that the Company will be able to achieve profitability or positive operating cash flows. There can be no assurances that the Company will be able to secure additional financing on acceptable terms or at all. If cash resources are insufficient to satisfy the Company’s ongoing cash requirements, the Company would be required to scale back or discontinue its operations, or obtain funds, if available (although there can be no certainty), through strategic alliances that may require the Company to relinquish rights to certain of its programs, or to curtail or discontinue its operations entirely.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework (2013).

The Company’s internal control over financial reporting is designed to ensure that material information regarding the Company’s operations is made available to management and the board of directors to provide them reasonable assurance that the published financial statements are fairly presented.

33

The Company is required to establish and maintain disclosure controls and procedures (as defined in Rules 13a-14(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that the Company files with the Securities and Exchange Commission (the “SEC”) under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, consisting of its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

As required by Rule 15d-15(b) of the SEC, the Company carried out an evaluation, under the supervision and with the participation of its management, consisting of the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of April 30, 2021, the end of the most recent period covered by this report.

Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of April 30, 2021, due to the identification of significant deficiencies and the existence of the material weaknesses in the Company’s internal control over financial reporting as described below, the design and operation of its disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to the Company’s management, consisting of the Company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control Over Financial Reporting

The Company’s internal control over financial reporting is designed to provide reasonable assurance concerning both the reliability of its financial reporting and the preparation of its financial statements in accordance with United States generally accepted accounting principles (“US GAAP”) and SEC reporting standards. The Company’s internal control over financial reporting includes policies and procedures that obligate the Company to maintain reasonably detailed records that accurately and fairly reflect the Company’s business transactions, provide reasonable assurance that the Company’s business transactions are properly and timely recorded, ensure that the Company’s receipts and disbursements are authorized by management, if applicable, by the Company’s board of directors, that revenues are properly and timely recorded, and that assets are properly identified, recorded and periodically evaluated for impairment.

Based on the Company’s assessment, management has concluded that the Company’s internal control over financial reporting was not effective as of April 30, 2021 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with US GAAP and SEC reporting standards, for the reasons noted below.

The Company effected a reverse merger transaction effective April 13, 2020 with a company that had only recently been formed on February 11, 2020, as a result of which the business, operations, accounting, board of directors and executive management of the Company changed. In conjunction with the preparation of the unaudited consolidated financial statements as of and for the period ended April 30, 2021, the Company identified certain accounting issues that indicated certain deficiencies in the Company’s internal ability to prepare financial statements in accordance with US GAAP and SEC reporting standards.

Current executive management has not yet assembled the financial and accounting staff necessary to provide the checks and balances needed for proper internal controls, as well as to provide the technical competence and accounting experience to address accounting and reporting issues under US GAAP and SEC reporting standards. Current management has retained the services of qualified outside consultants with expertise to perform specific accounting and finance functions, and to assist in the design of accounting and internal control systems. Accordingly, the Company has not yet completed the process to establish adequate internal controls over financial reporting, and it expects that this process will take some time to accomplish and will require the availability of additional operating capital. However, there can be no assurances that these efforts will be sufficient to fully develop and implement adequate disclosure controls and procedures and internal controls over financial reporting.

The Company’s management, consisting of its principal executive officer and principal financial officer, does not expect that its disclosure controls and procedures or its internal controls over financial reporting will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and any instances of malfeasance or fraud have been detected.

Management believes that the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020.

Changes in Internal Controls over Financial Reporting

The Company’s management, consisting of its principal executive officer and principal financial officer, has determined that no change in the Company’s internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) occurred during or subsequent to the quarter ended April 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, other than the material weaknesses as noted above.

34

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not currently subject to any pending or threatened legal actions or claims.

ITEM 1A. RISK FACTORS

The Company’s business, financial condition, results of operations and cash flows may be impacted by a number of factors, many of which are beyond the Company’s control, including those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020, as filed with the Securities and Exchange Commission on November 12, 2020 (the “2020 Form 10-K”).

The Risk Factors set forth in the 2020 Form 10-K should be read carefully in connection with evaluating the Company’s business and in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q. Any of the risks described in the 2020 Form 10-K could materially adversely affect the Company’s business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. These are not the only risks that the Company faces. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

As of the date of this filing, there have been no material changes to the Risk Factors previously disclosed in the Company’s 2020 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 24, 2021, the Company sold 1,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $100,000.

On February 26, 2021, the Company sold 500,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $50,000.

On March 11, 2021, the Company sold 3,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $300,000.

On April 14, 2021, the Company sold 500,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $50,000.

In each case the shares were issued in a transaction exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder. 

The proceeds from the sale of the shares of common stock referred to above were used for project development and general working capital purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Item 1.01 Entry into a Material Definitive Agreement.

On June 2, 2021, Rivulet Media, Inc. (the “Company”) executed a Promissory Note payable to Lawrence M. Silver, as lender, pursuant to which the Company borrowed $90,933.12. The note matures on July 31, 2021. The note is unsecured, bears interest at a rate of 10% per annum, and the unpaid principal may be accelerated upon an event of default as defined thereunder.

The description of the promissory note is only a summary of the material terms of the note, does not purport to be a complete description of the note, and is qualified in its entirety by reference to the note, a copy of which is filed and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.

35

ITEM 6. EXHIBITS

Except as otherwise indicated (a) all exhibits were previously filed, (b) all omitted exhibits are intentionally omitted, and (c) all Reports referenced below were filed under SEC file number 000-32201.

Exhibit Number	Description of Document
3.1	Amended and Restated Certificate of Incorporation of Bio-Matrix Scientific Group, Inc., incorporated by reference to Exhibit A of the Schedule 14C filed on May 1, 2020.
3.2	Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 of the Form 8-K filed on April 22, 2020.
10.1	Promissory Note dated January 29, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on February 10, 2021.
10.2	Form of Amendment to Promissory Note, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on February 26, 2021.
10.3	Form of Amendment to Promissory Note, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 2, 2021.
10.4	Promissory Note dated February 11, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 3, 2021.
10.5	Promissory Note dated April 20, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on April 22, 2021.
10.6	Amendment to Promissory Note dated April 29, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on May 10, 2021.
10.7	Promissory Note dated May 7, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on May 10, 2021.
10.8*	Promissory Note dated June 2, 2021.
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32.1**	Section 1350 Certifications.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document

* Filed herewith.

** Furnished herewith.

+ Indicates a management contract or any compensatory plan, contract or arrangement.

36

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RIVULET MEDIA, INC.
	(Registrant)
Date: June 21, 2021	By:	/s/ AARON KLUSMAN
		Aaron Klusman
		Chief Executive Officer, Chairman of the Board  (Principal Executive Officer)

Date: June 21, 2021	By:	/s/ MICHAEL WITHERILL
		Michael Witherill
		President, Chief Financial Officer, Vice-Chairman of the Board (Principal Financial Officer and Principal Accounting Officer)

37

EX-10.8

Exhibit 10.8

PROMISSORY NOTE

$90,933.12 June 2, 2021

FOR VALUE RECEIVED, RIVULET MEDIA, INC., a Delaware corporation with an address of 1206 E. Warner Rd, Suite 101-I, Gilbert, AZ 85296 (“Maker”), agrees and promises to pay to the order of LAWRENCE M. SILVER, with an address of 200 East Palmetto Park Road #514, Boca Raton, FL 33432 (“Holder”), the sum of Ninety Thousand Nine Hundred Thirty-Three and 12/100 Dollars ($90,933.12), with such amount payable to Holder at the address set forth above, or at such other place as Holder may designate.

1.Interest. Interest shall accrue on the outstanding principal balance of this promissory note (this “Note”) at a rate of 10% per annum.

2.Payments. The entire balance of this Note is due and payable on or before July 31, 2021 (the “Maturity Date”). Maker may prepay all or any portion of this Note at any time without penalty.

3.Security. This Note is unsecured.

4.Default. The existence or occurrence of any one or more of the following will constitute an “Event of Default” under this Note:

4.1       Non-Performance. Maker’s failure to comply timely and fully with any of the

terms or provisions of this Note, including, without limitation, the failure to pay all amounts due within ten (10) days after the due date.

4.2       Bankruptcy; Insolvency. Maker being insolvent by being unable to pay debts when

due or by having liabilities in excess of assets; or Maker committing an act of bankruptcy, making a general assignment for the benefit of creditors, or the filing by or against Maker of a voluntary or involuntary petition in bankruptcy or for the appointment of a receiver (and any involuntary petition is not dismissed within thirty (30) days from the filing thereof); or if there commences under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, proceedings affecting any significant part of Maker’s property or for the composition, extension, arrangement, or adjustment of any of their respective obligations; or if a writ of attachment, execution, or any similar process is issued or levied against any significant part of Maker’s property that is not released, stayed, bonded, or vacated within a reasonable time after its issue or levy.

5.Default Interest. Upon the occurrence of an Event of Default, Holder shall be entitled to receive and Maker shall pay interest on the entire unpaid principal balance at a rate (the “Default Rate”) equal to twelve percent (12%) per annum. The Default Rate shall be computed from the occurrence of the Event of Default until payment in full. This clause, however, shall not be construed as an agreement or privilege to extend the Maturity Date, nor as a waiver of any other right or remedy accruing to Holder by reason of the occurrence of any Event of Default.

6.Acceleration. In addition to all other rights and remedies at law and/or equity Holder may have if an Event of Default occurs, Holder, at its option without further notice to Maker, may declare immediately due and payable the unpaid principal balance of this Note together with all other sums owed by Maker under this Note.

7.Notices. All notices that Holder or Maker is required or permitted to give under this Note shall be delivered to the addresses of Maker and Holder as set forth in the opening paragraph.

8. Severability. If any term or provision of this Note is, to any extent, determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Note will not be affected, and the invalid or enforceable term or provision will be reduced or otherwise modified by the court or authority only to the minimum extent necessary to make it valid and enforceable. If any term or provision cannot be reduced or modified to make it reasonable and permit its enforcement, it will be severed from this Note and the remaining terms will be interpreted in a way as to give maximum validity and enforceability to this Note. It is the intention of Maker that, if any provision of this Note is capable of two constructions, one of which would render the provisions void and the other of which would render the provisions valid, then the provision will have the meaning that renders it valid.

9.Time of the Essence. Time is of the essence of this Note. Whenever notice must be given, payment made, document delivered, or an act done under this Note on a day that is not a Business Day, the notice may be given, payment made, document delivered, or act done on the next following day that is a Business Day. “Business Day” means a day other than a Saturday, Sunday, or a day observed as a legal holiday by the United States government or the State of Arizona.

10.Governing Law; Jurisdiction and Venue. This Note is to be governed by and interpreted in accordance with the laws of the State of Arizona. Any legal action or proceeding with respect to this Note or any document related hereto shall be brought in Maricopa County, Arizona in any court of competent jurisdiction, and, by execution and delivery of this Note, Maker and the Holder hereby accept the jurisdiction and venue of such courts.

11.Successors and Assigns. This Note shall be binding upon and inure to the benefit of Maker and Holder and their respective successors and permitted assigns. Maker may not voluntarily or involuntarily transfer, convey, or assign this Note, or any of its duties or obligations hereunder, without Holder’s prior written consent, which may be withheld for any reason, or for no reason at all. As used herein, the term “Holder” means and includes the successors and permitted assigns of the Holder.

12.Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of Maker, which is absolute and unconditional, to pay the principal amount and accrued interest of this Note at the time, place, and rate, and in the currency, herein prescribed. This Note is a direct debt obligation of Maker.

13.Attorneys’ Fees and Costs. Each party shall bear its own expenses in connection with the issuance of this Note; provided, however, that if any action at law or in equity is necessary to enforce or interpret the terms of this Note, the prevailing party shall be entitled to its reasonable attorneys’ fees, costs, and disbursements in addition to any other relief to which such party may be entitled.

14.No Waiver by Holder. No delay or failure of Holder in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude further exercise thereof.

MAKER
Rivulet Media, Inc., a Delaware corporation
By:	/s/ Michael Witherill
	Michael Witherill, President and CFO

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Aaron Klusman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rivulet Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 21, 2021	By:	/s/ Aaron Klusman
		Aaron Klusman
		Chief Executive Officer, Chairman of the Board (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Witherill, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rivulet Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 21, 2021	By:	/s/ Michael Witherill
		Michael Witherill
		President, Chief Financial Officer, Vice-Chairman of the Board (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATIONS

Each of the undersigned officers of Rivulet Media, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(i)       The Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(ii)      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 21, 2021	By:	/s/ Aaron Klusman
		Aaron Klusman Chief Executive Officer, Chairman of the Board (Principal Executive Officer)
Date: June 21, 2021	By:	/s/ Michael Witherill
		Michael Witherill President, Chief Financial Officer, Vice-Chairman of the Board (Principal Financial Officer and Principal Accounting Officer)

XML

Cover - shares	9 Months Ended
	Apr. 30, 2021	May 31, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Apr. 30, 2021
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--07-31
Entity File Number	000-32201
Entity Registrant Name	Rivulet Media, Inc.
Entity Central Index Key	0001079282
Entity Tax Identification Number	33-0824714
Entity Incorporation, State or Country Code	DE
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		128,520,171

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Apr. 30, 2021	Jul. 31, 2020
Current assets
Cash		$ 18,281
Investment securities	733,998	10,436
Other prepaid expenses and current assets	11,785	2,945
Total current assets	745,783	31,662
Property and equipment, net	12,327
Intellectual property	42,457	300
Project development costs, including $128,667 and $51,500 with related parties, at April 30, 2021 and July 31, 2020, respectively	3,337,396	134,413
Total assets	4,137,963	166,375
Current liabilities
Bank overdraft	10,211
Accounts payable and accrued expenses	192,392	170,972
Compensation and related expenses payable, including $360,000 and $90,000 to a related party, at April 30, 2021 and July 31, 2020, respectively	401,551	120,317
Deferred revenue	11,613
Payable for rescinded stock subscription receivable	60,000
Unsecured promissory notes payable to related party, including accrued interest payable of $13,325, at April 30, 2021	918,325
Convertible promissory note payable, including accrued interest payable of $427, at July 31, 2020		25,427
Total current liabilities	1,594,092	316,716
Non-current liabilities:
Secured multiple advance promissory note payable to related party, including accrued interest payable of $52,166, at April 30, 2021	1,052,166
Convertible promissory note payable, net of discount on debt, including accrued interest payable of $3,096, at April 30, 2021	65,374
Total liabilities	2,711,632	316,716
Stockholders' deficiency:
Preferred Stock, $0.0001 par value; authorized - 20,000,000 shares; issued and outstanding - 1,434 shares; Series B preferred stock, $0.0001 par value; authorized - 2,000,000 shares; issued and outstanding - 1,347 shares	202	202
Common stock, $0.0001 par value; authorized - 200,000,000 shares; issued and outstanding - 126,270,171 shares and 96,691,761 shares at April 30, 2021 and July 31, 2020, respectively	12,627	9,669
Additional paid-in capital	3,879,095	1,456,644
Common stock subscription receivable, related party	(482,600)	(550,000)
Accumulated deficit	(1,983,065)	(1,066,928)
Total stockholders’ equity (deficiency)	1,426,331	(150,341)
Total liabilities and members' equity	4,137,963	166,375
Series B Preferred Stock
Stockholders' deficiency:
Preferred Stock, $0.0001 par value; authorized - 20,000,000 shares; issued and outstanding - 1,434 shares; Series B preferred stock, $0.0001 par value; authorized - 2,000,000 shares; issued and outstanding - 1,347 shares	$ 72	$ 72

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Apr. 30, 2021	Jul. 31, 2020
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, issued	1,434	1,434
Preferred stock, outstanding	1,434	1,434
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, issued	126,270,171	96,691,761
Common stock, outstanding	126,270,171	96,691,761
Series B Preferred Stock
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, issued	1,347	1,347
Preferred stock, outstanding	1,347	1,347

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Apr. 30, 2021
Income Statement [Abstract]
Revenues	$ 3,000		$ 3,000
General and administrative costs:
Officers, directors, affiliates and other related parties	256,149	110,000	784,365
Other costs	329,283	177,345	816,606
Production costs	1,639		1,639
Sales and marketing	8,015	649	13,190
Total costs and expenses	595,086	287,994	1,615,800
Loss from operations	(592,086)	(287,994)	(1,612,800)
Other income (expense)
Increase (decrease) in fair value of investment in marketable securities	691,389	(129)	723,562
Interest expense, net	(15,037)		(26,899)
Total other income (expense), net	676,352	(129)	696,663
Net income (loss)	$ 84,266	$ (288,123)	$ (916,137)
Net income (loss) per common share:
Basic	$ 0.00	$ 0.00	$ (0.01)
Diluted	$ 0.00	$ 0.00	$ (0.01)
Weighted average common shares outstanding:
Basic	115,681,834	75,964,632	90,504,204
Diluted	129,880,700	75,964,632	90,504,204

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (Unaudited) - USD ($)	Preferred Stock Series B Preferred Stock	Preferred Stock	Common Stock	Additional Paid-In Capital	Common Stock Subscription Receivable From Related Party	Accumulated Deficit	Total
Beginning Balance at Feb. 10, 2020
Beginning Balance (in shares) at Feb. 10, 2020
Common stock issued for intellectual property			$ 6,254	(5,954)			300
Common stock issued for intellectual property (in shares)			62,531,965
Common stock subscription receivable from related party			$ 1,100	548,900	(550,000)
Common stock subscription receivable from related party (in shares)			11,000,000
Sales of common stock			$ 502	149,498			150,000
Sales of common stock (in share)			5,023,800
Common stock issued for services			$ 60	17,854			17,914
Common stock issued for services (in shares)			600,000
Stock issued in connection with reverse acquisition transaction	$ 72	$ 202	$ 781	8,314			9,369
Stock issued in connection with reverse acquisition transaction (in shares)	1,362	1,434	7,808,867
Stock-based compensation expense
Net Income (Loss)						(288,123)	(288,123)
Ending Balance at Apr. 30, 2020	$ 72	$ 202	$ 8,697	718,612	(550,000)	(288,123)	(110,540)
Ending Balance (in shares) at Apr. 30, 2020	1,362	1,434	86,964,632
Beginning Balance at Jul. 31, 2020	$ 72	$ 202	$ 9,669	1,456,644	(550,000)	(1,066,928)	(150,341)
Beginning Balance (in shares) at Jul. 31, 2020	1,347	1,434	96,691,761
Payments received on common stock subscription receivable from related party					67,400		67,400
Conversion of unsecured convertible promissory note payable			$ 13	25,669			25,682
Conversion of unsecured convertible promissory note payable (in share)			128,410
Sales of common stock			$ 1,320	658,680			660,000
Sales of common stock (in share)			13,200,000
Stock-based compensation expense				22,239			22,239
Net Income (Loss)						(477,730)	(477,730)
Ending Balance at Oct. 31, 2020	$ 72	$ 202	$ 11,002	2,163,232	(482,600)	(1,544,658)	147,250
Ending Balance (in shares) at Oct. 31, 2020	1,347	1,434	110,020,171
Beginning Balance at Jul. 31, 2020	$ 72	$ 202	$ 9,669	1,456,644	(550,000)	(1,066,928)	(150,341)
Beginning Balance (in shares) at Jul. 31, 2020	1,347	1,434	96,691,761
Common stock issued for services
Stock-based compensation expense							66,717
Net Income (Loss)							(916,137)
Ending Balance at Apr. 30, 2021	$ 72	$ 202	$ 12,627	3,879,095	(482,600)	(1,983,065)	1,426,331
Ending Balance (in shares) at Apr. 30, 2021	1,347	1,434	126,270,171
Beginning Balance at Oct. 31, 2020	$ 72	$ 202	$ 11,002	2,163,232	(482,600)	(1,544,658)	147,250
Beginning Balance (in shares) at Oct. 31, 2020	1,347	1,434	110,020,171
Sales of common stock			$ 1,125	1,123,875			1,125,000
Sales of common stock (in share)			11,250,000
Stock-based compensation expense				22,239			22,239
Discount on convertible promissory note payable				48,010			48,010
Net Income (Loss)						(522,673)	(522,673)
Ending Balance at Jan. 31, 2021	$ 72	$ 202	$ 12,127	3,357,356	(482,600)	(2,067,331)	819,826
Ending Balance (in shares) at Jan. 31, 2021	1,347	1,434	121,270,171
Sales of common stock			$ 500	499,500			500,000
Sales of common stock (in share)			5,000,000
Stock-based compensation expense				22,239			22,239
Net Income (Loss)						84,266	84,266
Ending Balance at Apr. 30, 2021	$ 72	$ 202	$ 12,627	$ 3,879,095	$ (482,600)	$ (1,983,065)	$ 1,426,331
Ending Balance (in shares) at Apr. 30, 2021	1,347	1,434	126,270,171

XML

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)	3 Months Ended	9 Months Ended
	Apr. 30, 2020	Apr. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (288,123)	$ (916,137)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		673
Stock-based compensation		66,717
(Increase) decrease in fair value of investment in marketable securities	129	(723,562)
Common stock issued for services	17,914
Amortization of discount on convertible promissory note payable		10,288
Change in operating assets and liabilities:
Prepaid expenses and other current assets	(8,968)	(8,840)
Bank overdraft	12,766	10,211
Accounts payable and accrued expenses	86,997	21,420
Compensation and related expenses payable	28,372	281,234
Deferred revenue		11,613
Accrued interest payable		68,842
Due to related parties	341
Net cash used in operating activities	(150,572)	(1,177,541)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(13,000)
Purchase of intellectual property		(42,157)
Increase in project development costs		(3,202,983)
Net cash used in investing activities		(3,258,140)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash acquired in reverse acquisition transaction	572
Proceeds from sale of common stock	150,000	2,285,000
Proceeds from rescinded stock subscription receivable		60,000
Payments received on common stock subscription receivable		67,400
Proceeds from issuance of convertible promissory note payable		100,000
Proceeds from issuance of secured promissory note payable		1,000,000
Proceeds from issuance of unsecured promissory note payable		1,106,500
Payments on unsecured promissory notes payable		(201,500)
Net cash provided by financing activities	150,572	4,417,400
Net increase (decrease) in cash and cash equivalents		(18,281)
Cash - beginning of period		18,281
Cash - end of period
Supplemental disclosure of cash flow information
Interest paid
Taxes paid		50
NONCASH INVESTING AND FINANCING ACTIVITIES
Principal amount of convertible promissory note payable converted into common stock		25,000
Debt discount recognized on amendment of convertible promissory note payable		48,010
Principal amount of unsecured promissory note transferred at date of maturity to promissory note with later maturity date		85,000
Investment securities acquired in connection with reverse acquisition transaction	8,797
Value of preferred and common stock issued with reverse acquisition transaction	$ 9,369

XML

ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Apr. 30, 2021

Accounting Policies [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

1. ORGANIZATION AND BASIS OF PRESENTATION

The condensed consolidated financial statements of Rivulet Media, Inc., a Delaware corporation, including its wholly-owned subsidiaries (collectively, the “Company”), at April 30, 2021, and for the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020, are unaudited. In the opinion of management of the Company, all adjustments, including normal recurring accruals, have been made that are necessary to present fairly the financial position of the Company as of April 30, 2021, and the results of its operations for the three months and nine months ended April 30, 2020, and for the period February 11, 2020 (date of inception) through April 30, 2020, and its cash flows for the nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for a full fiscal year. The consolidated balance sheet at July 31, 2020 has been derived from the Company’s audited consolidated financial statements at such date.

The condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020, as filed with the SEC.

Bio-Matrix Scientific Group, Inc. (“Bio-Matrix”) was organized on October 6, 1998 in the State of Delaware, originally under the name Tasco International, Inc, which was subsequently changed to Tasco Holdings International, Inc., and then to Bio-Matrix Scientific Group, Inc. in 2006. On May 26, 2020, Bio-Matrix’s name was further changed to Rivulet Media, Inc.

2019 Reverse Acquisition Transaction

On July 31, 2019, Bio-Matrix acquired 100% of the share capital of Pine Hills, Inc., a Wyoming corporation, in exchange for the issuance of 4,080,000 common shares of Bio-Matrix, to Heather Cassady, the sole shareholder of Pine Hills, Inc. In conjunction with this transaction, all of the outstanding shares of Series AA and Series AAA Preferred Stock of Bio-Matrix were cancelled. Pine Hills was in the business of providing data storage and the archiving of corporate documents, and its operations subsequent to that date were nominal.

Upon completion of the transaction, Heather Cassady owned approximately 54% of the voting capital stock of Bio-Matrix immediately after the transaction. For financial accounting purposes, this transaction was considered a reverse acquisition of Bio-Matrix by Pine Hills, Inc. and was treated as a recapitalization with Pine Hills, Inc. as the accounting acquirer. Pine Hills was liquidated on August 13, 2020.

2020 Change in Control Transaction

On March 26, 2020, Debbie Rasmussen and Klusman Family Holdings (together, the “Buyers”) and David Koos and Heather Cassady (together, the “Sellers”) closed a Stock Purchase Agreement (the “SPA”) whereby Buyers purchased from Sellers 4,364,235 shares of the outstanding common stock of Bio-Matrix. This transaction resulted in a change in control of Bio-Matrix, based on the transfer of approximately 55.8% of the outstanding common shares of Bio-Matrix from Sellers to Buyers. The amount of consideration for the purchase of such common shares was $215,000, with the source of the consideration being a loan from an unaffiliated third party.

As a condition of closing of the transaction, each director and officer of Bio-Matrix resigned from their position effective April 6, 2020, and Mike Witherill and Aaron Klusman were appointed as directors of Bio-Matrix to take office effective April 6, 2020. Additionally, effective April 6, 2020, Mr. Klusman was appointed Chairman and Chief Executive Officer of Bio-Matrix and Mr. Witherill was appointed Vice-Chairman and President of Bio-Matrix. At the closing of the transaction, Mike Witherill and Aaron Klusman, directly and indirectly, effectively owned the equivalent of 77,896,200 shares of common stock of Bio-Matrix, representing approximately 89.6% of the outstanding shares of common stock of Bio-Matrix.

In conjunction with the change in control transaction, all current liabilities of Bio-Matrix, including accounts payable and notes payable to related and unrelated parties, plus accrued interest, aggregating $141,936, were paid by the Buyers through a contribution to capital to Bio-Matrix prior to the closing of the reverse acquisition transaction, which became effective on April 13, 2020.

2020 Reverse Acquisition Transaction

On April 13, 2020, Bio-Matrix acquired 100% of the equity capital of Rivulet Films, Inc. (“Rivulet Films”), which was organized on February 11, 2020 in the State of Arizona, in exchange for the issuance of 79,155,765 shares of common stock of Bio-Matrix distributed on a pro rata basis to the shareholders of Rivulet Films. Rivulet Films is a development stage company involved in the arts, entertainment, and recreation business.

The current control shareholders of Bio-Matrix (consisting of Mike Witherill, Debbie Rasmussen (the wife of Mike Witherill), and Klusman Family Holdings (controlled by Aaron Klusman), through a series of orchestrated and interdependent transactions over a period of approximately three months, obtained effective control of Bio-Matrix (both a majority of the equity and the board of directors) and caused Rivulet Films to become a wholly-owned subsidiary of Bio-Matrix. Accordingly, for financial accounting purposes, this transaction was considered a reverse acquisition of Bio-Matrix by Rivulet Films and was treated as a recapitalization with Rivulet Films as the accounting acquirer and Bio-Matrix as the accounting acquire. The financial statements presented herein consist of those of Rivulet Films for the period commencing February 11, 2020 (date of inception), with the financial statements of Bio-Matrix included for the period commencing April 13, 2020.

The stockholders’ equity section of Bio-Matrix has been retroactively restated to reflect the accounting effect of the reverse acquisition transaction. All share and per share amounts presented herein also reflect the retroactive restatement of the stockholders’ equity section of Bio-Matrix. All costs associated with the reverse acquisition transaction were charged to expense as incurred.

Changes in Capital Structure of Company

On January 29, 2020, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the State of Delaware to (1) reduce the number of shares of common stock that the Company is authorized to issue from 16,000,000,000 shares to 100,000,000 shares, with no change in the $0.0001 per share par value; (2) effect a reverse stock split of the Company’s issued and outstanding shares of common stock and all classes of issued and outstanding preferred stock at an exchange ratio of one new share for every 2,000 old shares, with fractional shares of stock being rounded up to the nearest whole share. All share and per share amounts presented in these financial statements and footnotes for all periods presented have been retroactively restated to reflect the 1-for-2,000 reverse stock split.

On May 26, 2020, the Company filed an Amended and Restated Certificate of Incorporation with the State of Delaware to (1) change the Company’s name to Rivulet Media, Inc.; (2) increase the number of shares of common stock that the Company is authorized to issue from 100,000,000 shares to 200,000,000 shares, par value $0.0001 per share, with the number of shares of preferred stock that the Company is authorized to issue remaining unchanged at 20,000,000 shares, par value $0.0001 per share; and (3) eliminate the class of Non-Voting Preferred Stock, of which 200,000 shares, par value $1.00 per share, had been authorized, of which none were outstanding.

The Company forms special purpose subsidiaries to produce various programs and music projects.

In June 2020, the Company formed Borderline Productions LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a documentary film entitled “It’s Complicated” about the life of former Arizona Sheriff Joseph M. Arpaio. Production activities commenced as of July 31, 2020.

In June 2020, the Company formed PBP Productions LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a feature film entitled “Please Baby Please”. Production activities commenced during September 2020.

In August 2020, the Company formed Mistress Movie, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a feature film entitled “Mistress”. Production activities commenced during December 2020.

In October 2020, the Company formed Into the Black Productions LLC, an Arizona limited liability company, as a wholly-owned subsidiary of Rivulet Films, to produce a documentary film entitled “Into the Black”. Production activities had not commenced as of April 30, 2021.

In February 2021, the Company formed Storyland Animation Studio, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to produce a children’s television series entitled “Storyland”. Production activities commenced during February 2021.

In February 2021, the Company formed Origin Story Productions, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to be a union signatory entity.

In March 2021, the Company formed Eventide Media, LLC, an Arizona limited liability company, as a wholly-owned subsidiary of the Company, to provide event-based audio and video design, production and installation services. Business activities commenced during April 2021 and generated revenues of $3,000 for the three months and nine months ended April 30, 2021.

Business

The Company is engaged in the production, distribution and marketing of feature-length films, television series and mini-series, and television movies, from initial creative development through principal photography, postproduction, distribution and ancillary sales. The Company also provides event-based audio and video design, production and installation services. Upon completion of a production, the Company expects to receive initial revenues from domestic and foreign distribution contracts.

The Company’s business activities are subject to significant risks and uncertainties, including the need for additional capital, as described below at “Going Concern”. The Company does not currently have positive cash flows from operations and is dependent on periodic infusions of capital to fund its operating requirements.

Going Concern

The Company’s consolidated financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has suffered losses from operations and negative operating cash flows since inception. During the nine months ended April 30, 2021, the Company incurred a net loss of $916,137. The Company has financed its working capital requirements during this period primarily through the sale of its equity securities and the issuance of convertible debt. Accordingly, management has concluded that these matters raise substantial doubt about the Company’s ability to continue as a going concern.

At April 30, 2021, the Company had limited cash resources available to fund its operations and will therefore need to raise additional funds in the short-term. The Company estimates that a significant amount of capital will be necessary over a sustained period of time to advance the development of the Company’s business activities to the point at which it can become commercially viable and self-sustaining. However, there can be no assurance that the Company will be successful in this regard.

As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the period from February 11, 2020 (date of inception) through July 31, 2020, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and successfully implement its business plan, and to ultimately achieve sustainable operating revenues and profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The development and expansion of the Company’s business is dependent on many factors, including the capital resources available to the Company. No assurances can be given that any future financing will be available or, if available, that they will be on terms that are satisfactory to the Company or adequate to fund the development and expansion of the Company’s business operations to a level that is commercially viable and self-sustaining. There is also significant uncertainty as to the affect that the coronavirus pandemic may have on the availability, amount, and type of financing in the future.

If cash resources are insufficient to satisfy the Company’s ongoing cash requirements, the Company would be required to scale back its operations, obtain funds, if available, although there can be no certainty, through strategic alliances that may require the Company to relinquish rights to any assets, or to discontinue its operations entirely.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Apr. 30, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

The most significant estimates to be made by management in the preparation of the consolidated financial statements relate to revenues realized and costs incurred for films and television programs; valuing equity instruments issued; the realization of deferred tax assets; accruals for contingent liabilities; impairment assessments for investments in films and television programs, equity investments and intangible assets.

Film, Television Programs, and Music Production Costs

Film, television program, and music production costs are capitalized in accordance with Accounting Standards Codification 926, Entertainment - Films. Capitalized amounts are stated at the lower of cost, less accumulated amortization, or fair value. These costs represent capitalized costs for the production of films and other entertainment projects. In addition to the films, television programs and music that the Company may produce, costs of productions in development are capitalized as development costs and are transferred to production costs when the project is set for production. Films, television programs and music in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects, as well as amounts paid to musical artists. Projects in development are written off if they are determined not to be recoverable and are evaluated for impairment at each reporting period.

Once a project is released to consumers, the capitalized costs are amortized on an individual project basis in the proportion that the current revenue for each project bears to the estimated remaining unrecognized revenue to be received from all sources for each project as of the beginning of the current fiscal year. Revenue and cost forecasts are periodically reviewed by management and revised when warranted.

The carrying value of film costs are reviewed for impairment each reporting period on a project-by-project basis. If events or changes in circumstance indicate that the fair value of the capitalized costs on a specific project is less than the carrying value, an impairment charge is recognized in the amount by which the unamortized costs exceed the project’s fair value.

The Company has not completed any film or television programs as of April 30, 2021 and has not recognized any impairment charges.

Revenue Recognition

Film and Television Program Revenues

The Company’s film and television program business is expected to generate revenues principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

Revenue will be recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities, such as sales tax and value-added tax.

Revenues from the licensing of film and television content and the sales and licensing of music will be recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes, or logos) will be recognized over the corresponding license term. Commissions will be recognized as such services are provided.

Licensing Arrangements. The Company’s content licensing arrangements are expected to include fixed fee and minimum guarantee arrangements, and sales or usage-based royalties.

Fixed Fee or Minimum Guarantees.

The Company’s fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media, or territory) will be recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.

Sales or Usage Based Royalties.

Sales or usage based royalties will represent amounts due to the Company based on the “sale” or “usage” of the Company’s content by the customer, and revenues which will be recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and has been satisfied (or partially satisfied). Generally, when the Company licenses completed content (with standalone functionality, such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation will generally be satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements will generally not be reported to the Company until after the close of the reporting period. The Company will record revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates will be based on information from the Company’s customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry.

Revenues by Market or Product Line.

The following describes the revenues expected to be generated by market or product line.

Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis. Revenue from the theatrical release of feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the exhibition date and are based on the Company’s participation in box office receipts of the theatrical exhibitor.

Home Entertainment. Home entertainment consists of Digital Media and Packaged Media.

Digital Media. Digital media will include digital transaction revenue sharing arrangements (pay-per-view and video-on-demand platforms, electronic sell through (“EST”), and digital rental) and licenses of content to digital platforms for a fixed fee.

Digital Transaction Revenue Sharing Arrangements: Will represent primarily revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a title-by-title basis. These digital media platforms generate revenue from rental and EST arrangements, such as download-to-own, download-to-rent, and video-on-demand. These revenue sharing arrangements are recognized as sales or usage-based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above.

Licenses of Content to Digital Platforms: Will represent primarily the licensing of content to subscription-video-on-demand (“SVOD”) or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun.

Packaged Media: Packaged media revenues will represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as “Packaged Media”) in the retail market. Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

Television: Television revenues will be derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and non-fiction programming. Television revenues will include fixed fee arrangements, as well as arrangements in which the Company will earn advertising revenue from the exploitation of certain content on television networks. Television will also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform. Revenues associated with a title, right, or window from television licensing arrangements will be recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun.

International: International revenues will be derived from (1) licensing of the Company’s productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; (2) the direct distribution of the Company’s productions, acquired films, and the Company’s catalog product and libraries of acquired titles; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming. License fees and minimum guarantee amounts associated with title, window, media or territory, will be recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues will also be generated from sales or usage-based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company’s customer generating a royalty due to the Company has occurred.  

Event-Based: Event-based revenues are derived from providing audio and video design, production and installation services and are recognized when the terms and conditions of such services have been formally agreed to and documented, the services have been provided, the amount to be billed is determinable, and the amount billed is reasonably collectible.  

Other: Other revenues will be derived from the licensing of the Company’s film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions earned and executive producer fees related to talent management.  

Related Parties: Revenues from related parties are expected to reflect pricing comparable to arm’s-length customers.  

Deferred Revenue

Deferred revenue relates to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation.

Payment terms are expected to vary by location and type of customer and the nature of the licensing arrangement, however, other than multi-year license arrangements; payments will generally be due within 60 days after revenue is recognized. For certain multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period. When the Company expects the period between fulfillment of the Company’s performance obligation and the receipt of payment to be greater than a year, a significant financing component will be present. In these cases, such payments will be discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The significant financing component will be recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less.

In other cases, customer payments may be made in advance of when the Company fulfills its performance obligation and recognizes revenue. This may primarily occur under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements will not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company’s risk of customer non-performance and incentivize the customer to exploit the Company’s content.

Cash

The Company maintains its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company may periodically have cash balances in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice.

Investment in Marketable Securities

The Company’s investment in marketable securities consists primarily of corporate equities with a quoted market price that are classified as trading securities. Marketable securities are stated at fair value as determined by the closing price of each security at each balance sheet date. Unrealized gains and losses on these securities are included in operations for the applicable period. The investment in marketable securities has been presented as a current asset at each balance sheet date.

Concentration of Risk

The Company may periodically contract with consultants and vendors to provide services related to the Company’s business activities. Agreements for these services may be for a specific time period or for a specific project or task.

There were no costs and expenses incurred that represented 10% or more of costs for the three months ended April 30, 2021.

Costs and expenses incurred that represented 10% or more of costs for the nine months ended April 30, 2021 consist of legal fees of $194,607 incurred with the Company’s corporate law firm, which represented 12% of total general and administrative costs for such period.

Income Taxes

The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Alternatively, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made.

The Company’s wholly-owned subsidiary, Rivulet Films, converted from a pass-through limited liability corporation to a “C” corporation effective April 13, 2020.

As the Company’s net operating losses in the respective jurisdictions in which it operates have yet to be utilized, all previous tax years remain open to examination by the respective taxing authorities.

The Company had no unrecognized tax benefits as of April 30, 2021 and does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. As of April 30, 2021, the Company had no uncertain tax positions, and will continue to evaluate for uncertain tax positions in subsequent periods. In future periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense.

Stock-Based Compensation

The Company periodically issues common stock and stock options to officers, directors, employees, contractors, and consultants for services rendered. Options vest and expire according to terms established at the issuance date of each grant. Stock grants, which are generally time vested, are measured at the grant date fair value and charged to operations ratably over the vesting period.

The Company accounts for stock-based payments to officers, directors, employees, contractors, and consultants by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as compensation expense over the period during which the individual is required to perform services in exchange for the award, which is generally over the vesting period of the award.

The fair value of stock options granted as stock-based compensation is determined utilizing the Black-Scholes option-pricing model, and is affected by several variables, the most significant of which are the life of the equity award, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date, and the estimated volatility of the common stock. Estimated volatility is based on the historical volatility of the Company’s common stock over an appropriate calculation period, or, if not available, by reference to the volatility of a representative sample of comparable public companies. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair market value of the common stock is determined by reference to the quoted market price of the Company’s common stock on the grant date.

The Company recognizes the fair value of stock-based compensation awards in in the Company’s consolidated statements of operations. Through April 30, 2021, stock-based compensation costs have been included in general and administrative costs. The Company issues new shares of common stock to satisfy stock option exercises.

Fair Value of Financial Instruments

The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required.

Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.

Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.

Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models.

The Company will determine the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company will perform an analysis of the assets and liabilities at each reporting period end.

The Company’s financial instruments include investment in marketable securities, prepaid expenses, deposits, accounts payable, accrued expenses, and due to related parties. The estimated fair value of these instruments approximates their respective carrying amounts due to the short-term nature of these instruments.

Earnings Per Share

The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS.

Basic EPS is measured as the income (loss) attributable to common stockholders divided by the weighted average number of common shares outstanding for the period.

Diluted EPS is computed similar to basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potential shares of common stock pertaining to convertible notes payable, common stock subscriptions receivable and stock options had been issued as of the beginning of the period presented, or issuance date, if later. Dilution is computed by applying the treasury stock method for common stock subscriptions receivable and outstanding vested and unvested stock options, and the if-converted method is utilized for outstanding convertible notes payable. Under the treasury stock method, common stock subscriptions receivable are assumed to be received and stock options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if the funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible notes payable are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Basic and diluted loss per common share was the same for the nine months ended April 30, 2021 and for the period February 11, 2020 (date of inception) through April 30, 2020 because the Company incurred a net loss for such periods and the effect of convertible notes payable, common stock subscriptions receivable and stock options outstanding were therefore anti-dilutive.

At April 30, 2021, the Company included the impact of the outstanding securities summarized below, which entitle the holders thereof to acquire common shares, in its calculation of diluted income per share, as their effect was dilutive. 

Convertible promissory note payable	257,739
Common stock subscription receivable	9,652,000
Common stock options	9,000,000
Total	18,909,739

Weighted average common shares outstanding has been retroactively restated for all periods presented to reflect the accounting effect of the 2020 Reverse Acquisition Transaction (see Note 1).

Property and Equipment

Property and equipment is recorded at cost. Major improvements are capitalized, while maintenance and repairs that do not improve or extend the useful life of the respective assets are charged to expense as incurred. Gains and losses from disposition of property and equipment will be included in income and expense when realized. Depreciation of property and equipment will be provided using the straight-line method over an estimated useful life of three and seven years.

The Company recognizes depreciation of property and equipment in general and administrative costs in the Company’s consolidated statement of operations.

Leases

Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. ASU 2016-02 requires recognition in the statement of operations of a single lease cost that is calculated as a total cost of the lease allocated over the lease term, generally on a straight-line basis. ASU 2016-02 excludes short-term operating leases with a lease term of 12 months or less at the commencement date, and that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The Company did not have any leases within the scope of ASU 2016-02 at April 30, 2021.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities measure credit losses for most financial assets, including accounts and notes receivable. ASU 2016-13 will replace the current “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the provisions of ASU 2016-13 as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. Management has not yet evaluated the effect that the adoption of ASU 2016-13 will have on the Company’s consolidated financial statement presentation or disclosures.

In March 2019, the FASB issued ASU 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials (“ASU 2019-02”). ASU 2019-02 aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. Accordingly, the capitalization of production costs for episodic television series is no longer constrained until persuasive evidence of secondary market revenues exists. This new guidance also updates certain presentation and disclosure requirements for capitalized film and television costs and requires impairment testing to be performed at a group level for capitalized film and television costs when the content is predominantly monetized with other owned or licensed content. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements. In addition, under previous guidance, film and television programs accounted for under the broadcasting accounting standard were carried on the balance sheet at the lower of cost or net realizable value. This new guidance requires that an entity test a film or television program for impairment, when impairment indicators are present, at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. The impairment would be measured as the difference between the carrying value of the film group and its fair value rather than its net realizable value. This new guidance requires that an entity provide new disclosures about content that is either produced or licensed and classify cash flows for licensed content as cash flows from operating activities in the statement of cash flows. ASU 2019-02 was effective for the Company’s fiscal year beginning August 1, 2020 and was required to be adopted on a prospective basis. The adoption of ASU 2019-02 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. The Company will continue to present all project development costs, including capitalized costs of acquired programming rights, as non-current assets in its consolidated balance sheet.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06). ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. ASU 2020-06 will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also revises the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For contracts in an entity’s own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. ASU 2020-06 simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. Management has not yet evaluated the effect that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

XML

CHANGE IN CONTROL AND REVERSE RECAPITALIZATION TRANSACTIONS

9 Months Ended

Apr. 30, 2021

Notes to Financial Statements

CHANGE IN CONTROL AND REVERSE RECAPITALIZATION TRANSACTIONS

3. CHANGE IN CONTROL AND REVERSE ACQUISITION TRANSACTIONS

The change in control transaction effective March 26, 2020 and the reverse acquisition transaction effective April 13, 2020 are described at Note 1.

A summary of the current assets acquired from Bio-Matrix and the stockholders’ equity accounts adjusted as a result of the reverse acquisition transaction effective as of April 13, 2020 is presented below. There were no liabilities assumed in conjunction with the reverse acquisition transaction. In conjunction with the change in control transaction, all current liabilities of Bio-Matrix, including accounts payable and notes payable to related and unrelated parties, plus accrued interest, aggregating $141,936, were paid by the Buyers through a contribution to capital to Bio-Matrix prior to the closing of the reverse acquisition transaction, which became effective on April 13, 2020. All amounts recorded were at historical (predecessor) cost basis. 

Current assets acquired:
Cash	$	572
Investment in marketable securities		8,797
Total current assets	$	9,369
Adjustment to stockholders’ deficiency:
Preferred stock (1,434 shares issued)	$	202
Series B preferred stock (1,347 shares issued)		72
Common stock (7,810,996 shares issued)		781
Additional paid-in capital		8,314
Shares issued in reverse acquisition transaction	$	9,369

XML

INVESTMENT IN MARKETABLE SECURITIES

9 Months Ended

Apr. 30, 2021

Cash and Cash Equivalents [Abstract]

INVESTMENT IN MARKETABLE SECURITIES

4. INVESTMENT IN MARKETABLE SECURITIES

On April 13, 2020, in conjunction with the reverse acquisition (see Notes 1 and 3), the Company recorded an initial investment in marketable securities as presented below.

The Company’s investment in marketable securities consists primarily of corporate equities with a quoted market price that are classified as trading securities at April 30, 2021 and July 31, 2020. Marketable securities are stated at fair value as determined by the closing price of each security at each balance sheet date. Unrealized gains and losses on these securities are included in operations for the applicable period.

							Change in
							Fair Value
							For the
	Number						Nine Months
	of		Fair Value at				Ended
	Shares		July 31, 2020		April 30, 2021		April 30, 2021
Common Shares of Entest Group, Inc. (ENTI)		66,667	$	260	$	1,266	$	1,006
Common Shares of Regen Biopharma, Inc. (RGBP)		29,076,665		5,814		561,180		555,366
Series A Preferred Shares of Regen Biopharma, Inc. (RGBPP)		2,907,666		4,362		171,552		167,190
Total			$	10,436	$	733,998	$	723,562

XML

PROPERTY AND EQUIPMENT

9 Months Ended

Apr. 30, 2021

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

5. PROPERTY AND EQUIPMENT

Property and equipment as of April 30, 2021 is summarized as follows:

Computer and office equipment	$	7,064
Furniture and fixtures		5,936
Property and equipment, at cost		13,000
Less accumulated depreciation		(673	)
Property and equipment, net	$	12,327

Depreciation expense for the three months and nine months ended April 30, 2021 was $673. The Company had no depreciation expense for the period February 11, 2020 (date of inception) through April 30, 2020. Depreciation expense is included in general and administrative costs in the Company’s consolidated statement of operations.

XML

INTELLECTUAL PROPERTY

9 Months Ended

Apr. 30, 2021

Notes to Financial Statements

INTELLECTUAL PROPERTY

6. INTELLECTUAL PROPERTY

At July 31, 2020, intellectual property consisted of rights for various program and property rights. The agreements underlying these rights were entered into with related parties during February 2020. The Company issued 62,531,965 shares of common stock in exchange for such rights. As such rights were acquired from related parties, the Company recorded such rights at their historical (predecessor) cost basis reflecting an aggregate value of $300.

During the three months and nine months ended April 30, 2021, the Company purchased program and property rights aggregating $42,157.

XML

PROJECT DEVELOPMENT COSTS

9 Months Ended

Apr. 30, 2021

Research and Development [Abstract]

PROJECT DEVELOPMENT COSTS

7. PROJECT DEVELOPMENT COSTS

At April 30, 2021, the Company had one documentary film entitled “It’s Complicated” related to the life of former Arizona Sheriff Joseph M. Arpaio, two feature films and one television show in development.

	Production
			“Please
	“It’s		Baby
	Complicated”		Please”		“Mistress”		“Storyland”		Total
Balance, July 31, 2020	$	134,413	$	—	$	—	$	—	$	134,413
Additions		3,518		738,480		7,037		—		749,035
Capitalized interest		—		3,236		—		—		3,236
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, October 31, 2020		137,931		741,716		7,037		—		886,684
Additions		20,154		1,240,919		874,669		—		2,135,742
Capitalized interest		—		24,208		—		—		24,208
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, January 31, 2021		158,085		2,006,843		881,706		—		3,046,634
Additions		—		111,021		142,769		12,250		266,040
Capitalized interest		—		24,722		—		—		24,722
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, April 30, 2021	$	158,085	$	2,142,586	$	1,024,475	$	12,250	$	3,337,396

During the nine months ended April 30, 2021, the Company paid producer fees to an officer of the Company of $25,000, which are accounted for as project development costs in the accompanying consolidated balance sheet at April 30, 2021.

XML

PROMISSORY NOTES PAYABLE

9 Months Ended

Apr. 30, 2021

Notes to Financial Statements

PROMISSORY NOTES PAYABLE

8. PROMISSORY NOTES PAYABLE

SHORT-TERM NOTES PAYABLE

On June 9, 2020, the Company issued a short-term unsecured convertible promissory note for $25,000, with interest at 12% interest per annum and maturing on September 7, 2020. The unsecured convertible promissory note was convertible into shares of common stock of the Company at $0.20 per share, which was in excess of the closing market price of the Company’s common stock on June 9, 2020 of $0.07 per share. On August 31, 2020, the principal balance of the unsecured convertible promissory note of $25,000, plus accrued interest payable of $682, was repaid through conversion into 128,410 shares of common stock.

On October 29, 2020, the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $100,000, with interest at 10% per annum. The note matures on April 29, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $5,083. On April 29, 2021, the maturity date of this note was extended to July 31, 2021.

On November 10, 2020, the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $200,000, with interest at 5% per annum. The note was scheduled to mature on February 8, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $4,708. On February 8, 2021, the maturity date of this note was extended to June 30, 2021.

On December 10, 2020, the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $160,000, with interest at 5% per annum. The proceeds under this promissory note were received by the Company in November 2020. The note was scheduled to mature on March 10, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $3,496. On February 26, 2021, the maturity date of this note was extended to June 30, 2021.

On December 21, 2020, the Company issued a short-term promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $40,000, without interest, with a scheduled maturity date of January 31, 2021. On January 31, 2021, the maturity date of this note was extended to June 30, 2021.

On December 23, 2020, the Company issued a short-term promissory note to John Morgan, an officer of the Company, for $20,000, without interest. The note was repaid on January 7, 2021.

Between December 15, 2020 and December 26, 2020, the Company’s subsidiary Mistress Movie LLC issued six short-term promissory notes to Cross Entertainment, LLC, a related party, aggregating $170,000, without interest, with a scheduled maturity date of February 28, 2021. As of January 31, 2021, $60,000 had been repaid and the remaining principal amount of $110,000 was due on these notes. On February 26, 2021, the maturity date of the $110,000 principal amount of the notes were extended to June 30, 2021.

On December 26, 2020, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $110,000, without interest, with a scheduled maturity date of June 30, 2021. The Company received proceeds of $10,000 on this note through April 30, 2021. On January 31, 2021, the principal balance of the note dated January 7, 2021 of $85,000 was transferred to this note. As of April 30, 2021, principal amount of $95,000 was due on this note.

On January 5, 2020, the Company issued a short-term promissory note to Lawrence M. Silver, who is an approximate 9% shareholder of the Company, for $70,000, without interest, with a scheduled maturity date of January 31, 2021. On January 31, 2021, the maturity date of this note was extended to June 30, 2021.

On January 7, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $145,000, without interest, with a scheduled maturity date of January 31, 2021. Proceeds on this note were $145,000, of which $60,000 was repaid and the balance of $85,000 was transferred to the note dated December 26, 2020 as described above. As of April 30, 2021, there was no amounts due and payable on this note.

On January 29, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $85,000, without interest, with a scheduled maturity date of February 28, 2021. As of April 30, 2021, principal of $15,000 was due on this note. On February 26, 2021, the maturity date of this note was extended to June 30, 2021.

On February 11, 2021, the Company issued a short-term promissory note to Lawrence M. Silver, who is an approximate 9% shareholder of the Company, for $100,000, without interest, with a scheduled maturity date of June 30, 2021.

On April 20, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $1,500, without interest, with a scheduled maturity date of May 20, 2021. The note was repaid on April 21, 2021.

On April 21, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $15,000, with interest at 10% per annum. The note matures on May 21, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. As of April 30, 2021, accrued interest related to the unsecured promissory note was $37. On May 21, 2021, the maturity date of this note was extended to July 31, 2021.

LONG-TERM NOTES PAYABLE

On September 16, 2020, the Company issued a two-year unsecured convertible promissory note payable for $100,000, with interest at 5% per annum and maturing on September 15, 2022. The note was originally convertible into shares of common stock of the Company at $0.80 per share, which was above the closing market price of the Company’s common stock of $0.26 per share on September 16, 2020.

This note was amended on December 15, 2020 to make it convertible into shares of common stock of the Company at $0.40 per share, which was below the closing market price of the Company’s common stock of $0.59 per share on December 15, 2020.

As a result of the December 15, 2020 amendment to this convertible promissory note payable, the Company recognized a beneficial conversion feature on such date to recognize the difference between the closing market price of the common stock and the amended conversion price, which resulted in the Company recording a discount on debt aggregating $48,010. This debt discount is being presented as a reduction to the carrying amount of the related convertible promissory note payable in the consolidated balance sheet and is being amortized to operations as interest expense from December 15, 2020 through September 16, 2022, the maturity date of the note. For the three months and nine months ended April 30, 2021, debt discount charged to operations as interest expense was $3,430 and $10,288, respectively, which resulted in unamortized debt discount of $37,722 at April 30, 2021.

If the closing price of the Company’s common stock reaches $0.60 per share or greater (decreased from $1.20 per share as part of the December 15, 2020 amendment to the note), the outstanding principal and all accrued interest on this note shall automatically convert into common stock at the specified conversion rate. As of April 30, 2021, accrued interest payable related to the unsecured convertible promissory note payable was $3,096.

On October 26, 2020, Rivulet Films issued a multiple advance promissory note (the “Note”) to Lawrence Silver, an approximate 11% shareholder of the Company, for $1,000,000, with interest at 10% per annum. The Note matures on October 6, 2022, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date. The Note is secured by a first lien security interest on all of the assets of Rivulet Films (including its equity interest in PBP Productions LLC), personal guarantees of the Company’s officers, Michael Witherill and Aaron Klusman, and a corporate guarantee of the Company. Rivulet Films is required to use borrowings under the Note primarily to pay production costs associated with the movie production currently entitled “Please Baby Please”. Borrowings under this Note may be repaid at any time and reborrowed until the maturity date. Rivulet Films is required to apply any other funds received by it for the purpose of film financing and then any excess proceeds to pay any principal and interest owing under this Note. As of April 30, 2021, principal borrowings outstanding under the Note were $1,000,000, and related accrued interest was $52,166, which has been capitalized as project development costs (see Note 7).

XML

STOCKHOLDERS' DEFICIENCY

9 Months Ended

Apr. 30, 2021

Equity [Abstract]

STOCKHOLDERS' DEFICIENCY

9. STOCKHOLDERS’ EQUITY (DEFICIENCY)

Preferred Stock

The Company is authorized to issue a total of 20,000,000 shares of preferred stock, par value $0.0001 per share.

In conjunction with the reverse acquisition transaction (see Note 1), the Company recorded issued and outstanding preferred stock of Bio-Matrix consisting of 1,434 shares of Preferred Stock with a carrying value of $202 and 1,347 shares of Series B Preferred Stock with a carrying value of $72.

The class of Non-Voting Preferred Stock, of which 200,000 shares, par value $1.00 per share, had been authorized, of which none were outstanding, were eliminated effective May 26, 2020.

Common Stock

The Company is authorized to issue a total of 200,000,000 shares of common stock, par value $0.0001 per share.

During the period from February 11, 2020 (date of inception) through April 30, 2020, Rivulet Films entered into four common stock subscription agreements aggregating $700,000. Three of the subscriptions receivable aggregating $150,000 for 5,023,800 shares of common stock were paid in April 2020. The remaining $550,000 of subscriptions receivable from Blue Scout Enterprises LLC (“Blue Scout”), a related party, to purchase 11,000,000 shares of common stock was presented as a reduction to stockholders’ deficiency in the accompanying consolidated balance sheet at July 31, 2020.

The $550,000 subscription receivable from Blue Scout dated February 11, 2020 for 11,000,000 shares of common stock is unsecured and provides for interest at 2% per annum, with interest and principal due on March 7, 2023. Interest income is being recognized on a cash basis as and when received by the Company. Interest income as of April 30, 2021 that had not been recognized by the Company was $12,539.

On August 24, 2020, a principal payment of $17,400 was received with respect to the $550,000 common stock subscription receivable, as a result of which 348,000 shares of common stock were issued.

On September 2, 2020, a principal payment of $20,000 was received with respect to the $550,000 common stock subscription receivable, as a result of which 400,000 shares of common stock were issued.

On September 16, 2020, a principal payment of $30,000 was received with respect to the $550,000 common stock subscription receivable, as a result of which 600,000 shares of common stock were issued.

On October 14, 2020, Blue Scout entered into assignment agreements with its respective LLC members to distribute such equity interests through note agreements secured by the underlying common shares, based on the original purchase price of $0.05 per share. As a result of this distribution of equity interests in the subscription receivable, a director of the Company and an employee of the Company received 1,000,000 shares and 400,000 shares, respectively.

On August 13, 2020, the Company sold 2,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $100,000.

On August 26, 2020, the Company sold 1,200,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $60,000.

On September 30, 2020, the Company sold 1,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $50,000.

On September 30, 2020, the Company sold 1,000,000 shares of common stock to an unrelated party at $0.05 per share for total proceeds of $50,000.

On October 8, 2020, the Company sold 2,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $100,000.

On October 13, 2020, the Company sold 1,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $50,000.

On October 15, 2020, the Company sold 5,000,000 shares of common stock to an existing note holder and shareholder at $0.05 per share for total proceeds of $250,000.

On November 26, 2020, the Company sold 1,000,000 shares of common stock to a convertible promissory note holder at $0.10 per share for total proceeds of $100,000.

On November 30, 2020, the Company sold an aggregate of 2,200,000 shares of common stock to two existing note holders and shareholders at $0.10 per share for total proceeds of $220,000.

On December 3, 2020, the Company entered into a Subscription Agreement to sell 4,800,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $480,000 which was received by the Company in late November and early December 2020.

On December 22, 2020, the Company sold 250,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $25,000.

On January 21, 2021, the Company sold 2,000,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $200,000.

On January 29, 2021, the Company sold 1,000,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $100,000.

On February 24, 2021, the Company sold 1,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $100,000.

On February 26, 2021, the Company sold 500,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $50,000.

On March 11, 2021, the Company sold 3,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $300,000.

On April 14, 2021, the Company sold 500,000 shares of common stock to an unrelated party at $0.10 per share for total proceeds of $50,000.

Additional information with respect to shares of common stock issued is provided at Notes 1 and 6.

XML

STOCK-BASED COMPENSATION

9 Months Ended

Apr. 30, 2021

Notes to Financial Statements

STOCK-BASED COMPENSATION

10. STOCK-BASED COMPENSATION

On May 26, 2020, the Board of Directors of the Company approved and adopted the 2020 Equity Incentive Plan, with an aggregate of 16,000,000 shares issuable under the plan, with a ten-year expiration, and providing that options for no more than 10,000,000 shares be granted as Incentive Stock Options. As of April 30, 2021, stock options for 9,000,000 shares of common stock had been granted.

For stock options issued during the nine months ended April 30, 2021, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model utilizing the following assumptions:

Risk-free interest rate	0.34%
Expected dividend yield	0%
Expected volatility	37.85%
Expected life	5 years

Stock-based compensation cost for the three months and nine months ended April 30, 2021 was $22,239 and $66,717, respectively, and was recorded in general and administrative costs in the accompanying statements of operations.

A summary of stock option activity during the nine months ended April 30, 2021 is presented below.

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Stock options outstanding at July 31, 2020		9,000,000	$	0.10
Granted		9,000,000		0.10
Exercised		—		—
Expired		—		—
Stock options outstanding at April 30, 2021		9,000,000	$	0.10		10.00
Stock options exercisable at April 30, 2021		5,000,000	$	0.10		10.00

Total deferred compensation expense for the outstanding value of unvested stock options was approximately $50,038 as of April 30, 2021, which will be recognized subsequent to April 30, 2021 over a weighted-average period of approximately 1.25 years.

The intrinsic value of exercisable but unexercised in-the-money stock options at April 30, 2021 was approximately $962,500 based on a fair market value of $0.29 per share on April 30, 2021.

The Company expects to satisfy such stock obligations through the issuance of authorized but unissued shares of common stock.

XML

RELATED PARTY TRANSACTIONS

9 Months Ended

Apr. 30, 2021

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

11. RELATED PARTY TRANSACTIONS

During the nine months ended April 30, 2021, the Company paid producer fees to an officer of $25,000, which were accounted for as project development costs in the accompanying consolidated financial statements at April 30, 2021 (see Note 7).

During the three months and nine months ended April 30, 2021, the Company recorded revenues of $3,000 from a related party.

Information with respect to the issuance of promissory notes to related parties is provided at Note 8.

Information with respect to the collection of common stock subscriptions receivable from related parties is provided at Note 9.

Information with respect to employee compensation is provided at Note 12.

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Apr. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

Lease Commitments

On May 1, 2020, the Company entered into a short-term lease agreement with an unrelated party for office space in Gilbert, Arizona through December 31, 2020 at the rate of approximately $800 per month. On January 1, 2021, the Company renewed the short-term lease agreement for three months through March 31, 2021. On March 30, 2021 the Company extended the short-term lease agreement for six months through September 30, 2021 at the rate of approximately $1,400 per month.

On February 3, 2021, the Company entered into a short-term lease agreement for 2,716 square feet of office on a month-to-month basis. Through March 12, 2021 the cost was $5,000 per month, at which time the cost increased to $8,148 per month.

During the three months and nine months ended April 30, 2021, the Company charged $24,682 and $29,578, respectively, to general and administrative costs with respect to these lease agreements.

Employment Agreements

On May 27, 2020, the Company, and Paris Film, Inc. and Rob Paris (together, “Paris”) entered into an Employment Agreement (the “Paris Agreement”), pursuant which the Company agreed to employ Paris in the position of President of Rivulet Films, a subsidiary of the Company. The employment of Paris began on June 1, 2020, for a guaranteed term of six months, following which time the employment relationship may be terminated with or without good cause or for any reason or no reason by either the Paris or the Company.

Paris was paid $10,000 per month commencing June 1, 2020 through November 30, 2020, which was guaranteed by the Company. Additionally, upon execution of the Paris Agreement, the Company issued stock options to purchase 9,000,000 shares of common stock at an exercise price of $0.10 per share, which was the fair market value of the Company’s common stock on such date, of which options for 5,000,000 shares vested on May 27, 2020, options for 2,000,000 shares will vest on June 1, 2021, and the remaining options for 2,000,000 shares will vest on June 1, 2022. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $300,227 ($0.03336 per share), of which $166,793 was attributable to the stock options fully-vested on May 27, 2020 and was therefore was charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from May 27, 2020 through June 1, 2022.

During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $22,239 and $66,717, respectively, with respect to stock options issued pursuant to the Paris Agreement. Paris also has the right to participate in all equity stock option plans and programs established for employees by Rivulet Films in all aspects and benefits to that of any other similarly situated C-suite employee of Rivulet Films, including its Chief Executive Officer. Rivulet Films will also provide Paris with other benefits, such as bonuses, perk packages, preferred stock positions, box office bonuses, and back-end/contingent compensation made generally available to similarly situated employees, including its Chief Executive Officer. Paris will be attached as producer, subject to a separate producer agreement to be negotiated, to all projects sourced by Paris during the term of his employment. The Paris Agreement subjects Paris to certain restrictive covenants and a standard confidentiality provision. During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $40,000 and $100,000, respectively, with respect to the cash portion of the Paris Agreement, which was charged to general and administrative costs. The Paris Agreement was amended effective March 1, 2021 to increase Paris’ salary to $15,000 per month.

In connection with the employment, to the extent controlled by Paris and so long as Paris remains attached to each project in perpetuity, Paris grants to Rivulet Films a right of first refusal to all rights, title, and interest to the film projects known as “Please Baby Please” and “Acolyte”, as well as to all other film, story, or other production concepts which Paris creates, develops, or otherwise originates during the term of employment and not passed on by Rivulet Films.

On August 12, 2020, the Company, and Michael J. Witherill entered into an Employment Agreement with respect to his positions as President, Chief Financial Officer, Principal Accounting Officer, and a member of the Board of Directors of the Company. Mr. Witherill is to devote his full time and attention to his duties, and receives an annual salary of $360,000, payable in accordance with the Company’s standard payroll practices, provided that such amount may be deferred as determined by Mr. Witherill or the Board of Directors as needed to cover other Company expenses, and provided further that Mr. Witherill is permitted to serve as a director of not-for-profit and for-profit businesses that do not compete with the Company. The Employment Agreement was amended on January 26, 2021 to additionally allow Mr. Witherill to serve as an officer and director of Chee Corp. During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $90,000 and $270,000, respectively, with respect to this Employment Agreement, which was charged to general and administrative costs.

On August 14, 2020, the Company and Aaron Klusman entered into an Employment Agreement with respect to his positions as Chief Executive Officer and a member of the Board of Directors of the Company. Mr. Klusman is to devote as much time and attention to his duties as is necessary, and receives an annual salary of $360,000, payable in accordance with the Company’s standard payroll practices, provided that such amount may be deferred as determined by Mr. Klusman or the Board of Directors as needed to cover other Company expenses, and provided further that Mr. Klusman is permitted to purchase, sell, oversee, manage, and develop real estate properties and projects; and serve as a director of not for profit and for profit businesses that do not compete with the Company. During the three months and nine months ended April 30, 2021, the Company recorded a charge to operations of $90,000 and $270,000, respectively, with respect to this Employment Agreement, which was charged to general and administrative costs.

Both Mr. Witherill and Mr. Klusman (together, the “Executives”) are eligible for a quarterly and an annual discretionary bonus as periodically established by the Board of Directors based upon metrics that will be established by the Board of Directors in its sole discretion. The Executives are also eligible to participate in and receive stock options under the Company’s 2020 Equity Incentive Plan. These Employment Agreements provide that notwithstanding anything to the contrary in the Company’s existing or future incentive plans or any award agreement, upon a Change of Control, as defined in the Employment Agreements, all of the Executives’ outstanding unvested equity-based awards shall, at their option, vest and become immediately exercisable and unrestricted.

The employment of the Executives under the Employment Agreements commenced effective April 1, 2020, and will continue for two years, subject to successive one-year renewals. Each Executive is an “at-will” employee. Either the Executive or the Company may terminate his employment with or without cause, for any reason or no reason, and at any time. The Executives are each subject to standard confidentiality provisions and a non-compete, non-solicitation covenant for a one-year period following termination of employment.

Legal Matters

The Company may, from time to time, be involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business, which are not expected to have a material adverse effect upon the Company’s financial statements. As of April 30, 2021, the Company was not a party to any pending or threatened legal proceedings.

Impact of Novel Coronavirus (COVID-19) on the Company’s Business Operations

The global outbreak of the novel coronavirus (COVID-19) has led to severe disruptions in general economic activities, as businesses and governments have taken broad actions to mitigate this public health crisis. Although the Company has not experienced any significant disruption to its business to date, these conditions could significantly negatively impact the Company’s business in the future. The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become available.

The extent to which the COVID-19 outbreak ultimately impacts the Company’s business, future revenues, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity and longevity, the actions to curtail the virus and treat its impact (including an effective vaccine), and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may be at risk of experiencing a significant impact to its business as a result of the global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

There is also significant uncertainty as to the effect that the coronavirus may have on the amount and type of financing available to the Company in the future.

XML

INCOME TAXES

9 Months Ended

Apr. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

13. INCOME TAXES

During the three months and nine months ended April 30, 2021, and for the period February 11, 2020 (date of inception) through April 30, 2020, the Company did not provide any provision for income taxes, as the Company incurred losses for income tax purposes during such periods. Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has recorded a full valuation allowance against its deferred tax assets as the Company believes that at this time it is more likely than not that the deferred tax assets will not be realized.

XML

SUBSEQUENT EVENTS

9 Months Ended

Apr. 30, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

14. SUBSEQUENT EVENTS

The Company performed an evaluation of subsequent events through the date of filing of these consolidated financial statements with the SEC. There were no material subsequent events which affected, or could affect, the amounts or disclosures in the consolidated financial statements, other than those as described below.

Sale of Common Stock

On May 5, 2021, the Company sold 2,000,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $200,000.

On May 14, 2021, the Company sold 250,000 shares of common stock to an existing shareholder at $0.10 per share for total proceeds of $25,000.

Issuance of Promissory Notes

On May 3, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $15,000, with interest at 10% per annum. The note matures on November 3, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

On May 6, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $70,000, without interest, with a scheduled maturity date of July 31, 2021.

On May 11, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $25,000, without interest, with a scheduled maturity date of June 30, 2021.

On May 12, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $50,000, without interest, with a scheduled maturity date of June 30, 2021.

On May 13, 2021, the Company issued a short-term promissory note to Cross Entertainment, LLC, a related party, for $13,000, without interest, with a scheduled maturity date of June 30, 2021.

On May 28, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $35,000, with interest at 10% per annum. The note matures on July 31, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

On June 2, 2021, the Company issued a short-term unsecured promissory note to Lawrence M. Silver, who is an approximate 9% shareholder of the Company, for $90,933, with interest at 10% per annum. The note matures July 31, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

On June 14, 2021 the Company issued a short-term unsecured promissory note to Daniel Crosser, who is an approximate 13% shareholder of the Company, for $25,000, with interest at 10% per annum. The note matures on July 31, 2021, with the principal balance outstanding, plus accrued but unpaid interest, being due and payable on the maturity date.

Payments of Promissory Notes

On May 5, 2021 the Company paid $8,000 on the short-term promissory note to Cross Entertainment, LLC, originally dated January 29, 2021.

On May 5, 2021 and May 6, 2021, the Company paid $70,000 and $50,000, respectively, on the short-term promissory notes to Lawrence M. Silver originally dated January 5, 2021 and February 11, 2021.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Apr. 30, 2021

Summary Of Significant Accounting Policies

Basis of Preparation

Basis of Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

Consolidation

Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

The most significant estimates to be made by management in the preparation of the consolidated financial statements relate to revenues realized and costs incurred for films and television programs; valuing equity instruments issued; the realization of deferred tax assets; accruals for contingent liabilities; impairment assessments for investments in films and television programs, equity investments and intangible assets.

Film, Television Programs, and Music Production Costs

Film, Television Programs, and Music Production Costs

Film, television program, and music production costs are capitalized in accordance with Accounting Standards Codification 926, Entertainment - Films. Capitalized amounts are stated at the lower of cost, less accumulated amortization, or fair value. These costs represent capitalized costs for the production of films and other entertainment projects. In addition to the films, television programs and music that the Company may produce, costs of productions in development are capitalized as development costs and are transferred to production costs when the project is set for production. Films, television programs and music in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects, as well as amounts paid to musical artists. Projects in development are written off if they are determined not to be recoverable and are evaluated for impairment at each reporting period.

Once a project is released to consumers, the capitalized costs are amortized on an individual project basis in the proportion that the current revenue for each project bears to the estimated remaining unrecognized revenue to be received from all sources for each project as of the beginning of the current fiscal year. Revenue and cost forecasts are periodically reviewed by management and revised when warranted.

The carrying value of film costs are reviewed for impairment each reporting period on a project-by-project basis. If events or changes in circumstance indicate that the fair value of the capitalized costs on a specific project is less than the carrying value, an impairment charge is recognized in the amount by which the unamortized costs exceed the project’s fair value.

The Company has not completed any film or television programs as of April 30, 2021 and has not recognized any impairment charges.

Revenue Recognition

Revenue Recognition

Film and Television Program Revenues

The Company’s film and television program business is expected to generate revenues principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.

Revenue will be recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities, such as sales tax and value-added tax.

Revenues from the licensing of film and television content and the sales and licensing of music will be recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes, or logos) will be recognized over the corresponding license term. Commissions will be recognized as such services are provided.

Licensing Arrangements. The Company’s content licensing arrangements are expected to include fixed fee and minimum guarantee arrangements, and sales or usage-based royalties.

Fixed Fee or Minimum Guarantees.

The Company’s fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media, or territory) will be recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.

Sales or Usage Based Royalties.

Sales or usage based royalties will represent amounts due to the Company based on the “sale” or “usage” of the Company’s content by the customer, and revenues which will be recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and has been satisfied (or partially satisfied). Generally, when the Company licenses completed content (with standalone functionality, such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation will generally be satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements will generally not be reported to the Company until after the close of the reporting period. The Company will record revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates will be based on information from the Company’s customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry.

Revenues by Market or Product Line.

The following describes the revenues expected to be generated by market or product line.

Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis. Revenue from the theatrical release of feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the exhibition date and are based on the Company’s participation in box office receipts of the theatrical exhibitor.

Home Entertainment. Home entertainment consists of Digital Media and Packaged Media.

Digital Media. Digital media will include digital transaction revenue sharing arrangements (pay-per-view and video-on-demand platforms, electronic sell through (“EST”), and digital rental) and licenses of content to digital platforms for a fixed fee.

Digital Transaction Revenue Sharing Arrangements: Will represent primarily revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a title-by-title basis. These digital media platforms generate revenue from rental and EST arrangements, such as download-to-own, download-to-rent, and video-on-demand. These revenue sharing arrangements are recognized as sales or usage-based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above.

Licenses of Content to Digital Platforms: Will represent primarily the licensing of content to subscription-video-on-demand (“SVOD”) or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun.

Packaged Media: Packaged media revenues will represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s, Blu-ray, 4K Ultra HD, referred to as “Packaged Media”) in the retail market. Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer).

Television: Television revenues will be derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and non-fiction programming. Television revenues will include fixed fee arrangements, as well as arrangements in which the Company will earn advertising revenue from the exploitation of certain content on television networks. Television will also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform. Revenues associated with a title, right, or window from television licensing arrangements will be recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun.

International: International revenues will be derived from (1) licensing of the Company’s productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; (2) the direct distribution of the Company’s productions, acquired films, and the Company’s catalog product and libraries of acquired titles; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming. License fees and minimum guarantee amounts associated with title, window, media or territory, will be recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues will also be generated from sales or usage-based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company’s customer generating a royalty due to the Company has occurred.  

Event-Based: Event-based revenues are derived from providing audio and video design, production and installation services and are recognized when the terms and conditions of such services have been formally agreed to and documented, the services have been provided, the amount to be billed is determinable, and the amount billed is reasonably collectible.  

Other: Other revenues will be derived from the licensing of the Company’s film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions earned and executive producer fees related to talent management.  

Related Parties: Revenues from related parties are expected to reflect pricing comparable to arm’s-length customers.  

Deferred Revenue

Deferred Revenue

Deferred revenue relates to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation.

Payment terms are expected to vary by location and type of customer and the nature of the licensing arrangement, however, other than multi-year license arrangements; payments will generally be due within 60 days after revenue is recognized. For certain multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period. When the Company expects the period between fulfillment of the Company’s performance obligation and the receipt of payment to be greater than a year, a significant financing component will be present. In these cases, such payments will be discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The significant financing component will be recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less.

In other cases, customer payments may be made in advance of when the Company fulfills its performance obligation and recognizes revenue. This may primarily occur under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements will not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company’s risk of customer non-performance and incentivize the customer to exploit the Company’s content.

Cash

Cash

The Company maintains its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company may periodically have cash balances in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice.

Investment in Marketable Securities

Investment in Marketable Securities

The Company’s investment in marketable securities consists primarily of corporate equities with a quoted market price that are classified as trading securities. Marketable securities are stated at fair value as determined by the closing price of each security at each balance sheet date. Unrealized gains and losses on these securities are included in operations for the applicable period. The investment in marketable securities has been presented as a current asset at each balance sheet date.

Concentration of Risk

Concentration of Risk

The Company may periodically contract with consultants and vendors to provide services related to the Company’s business activities. Agreements for these services may be for a specific time period or for a specific project or task.

There were no costs and expenses incurred that represented 10% or more of costs for the three months ended April 30, 2021.

Costs and expenses incurred that represented 10% or more of costs for the nine months ended April 30, 2021 consist of legal fees of $194,607 incurred with the Company’s corporate law firm, which represented 12% of total general and administrative costs for such period.

Income Taxes

Income Taxes

The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Alternatively, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made.

The Company’s wholly-owned subsidiary, Rivulet Films, converted from a pass-through limited liability corporation to a “C” corporation effective April 13, 2020.

As the Company’s net operating losses in the respective jurisdictions in which it operates have yet to be utilized, all previous tax years remain open to examination by the respective taxing authorities.

The Company had no unrecognized tax benefits as of April 30, 2021 and does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. As of April 30, 2021, the Company had no uncertain tax positions, and will continue to evaluate for uncertain tax positions in subsequent periods. In future periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense.

Stock Based Compensation

Stock-Based Compensation

The Company periodically issues common stock and stock options to officers, directors, employees, contractors, and consultants for services rendered. Options vest and expire according to terms established at the issuance date of each grant. Stock grants, which are generally time vested, are measured at the grant date fair value and charged to operations ratably over the vesting period.

The Company accounts for stock-based payments to officers, directors, employees, contractors, and consultants by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as compensation expense over the period during which the individual is required to perform services in exchange for the award, which is generally over the vesting period of the award.

The fair value of stock options granted as stock-based compensation is determined utilizing the Black-Scholes option-pricing model, and is affected by several variables, the most significant of which are the life of the equity award, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date, and the estimated volatility of the common stock. Estimated volatility is based on the historical volatility of the Company’s common stock over an appropriate calculation period, or, if not available, by reference to the volatility of a representative sample of comparable public companies. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair market value of the common stock is determined by reference to the quoted market price of the Company’s common stock on the grant date.

The Company recognizes the fair value of stock-based compensation awards in in the Company’s consolidated statements of operations. Through April 30, 2021, stock-based compensation costs have been included in general and administrative costs. The Company issues new shares of common stock to satisfy stock option exercises.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required.

Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.

Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.

Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models.

The Company will determine the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company will perform an analysis of the assets and liabilities at each reporting period end.

The Company’s financial instruments include investment in marketable securities, prepaid expenses, deposits, accounts payable, accrued expenses, and due to related parties. The estimated fair value of these instruments approximates their respective carrying amounts due to the short-term nature of these instruments.

Earnings (Loss) per share

Earnings Per Share

The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS.

Basic EPS is measured as the income (loss) attributable to common stockholders divided by the weighted average number of common shares outstanding for the period.

Diluted EPS is computed similar to basic EPS, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potential shares of common stock pertaining to convertible notes payable, common stock subscriptions receivable and stock options had been issued as of the beginning of the period presented, or issuance date, if later. Dilution is computed by applying the treasury stock method for common stock subscriptions receivable and outstanding vested and unvested stock options, and the if-converted method is utilized for outstanding convertible notes payable. Under the treasury stock method, common stock subscriptions receivable are assumed to be received and stock options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if the funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible notes payable are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Basic and diluted loss per common share was the same for the nine months ended April 30, 2021 and for the period February 11, 2020 (date of inception) through April 30, 2020 because the Company incurred a net loss for such periods and the effect of convertible notes payable, common stock subscriptions receivable and stock options outstanding were therefore anti-dilutive.

At April 30, 2021, the Company included the impact of the outstanding securities summarized below, which entitle the holders thereof to acquire common shares, in its calculation of diluted income per share, as their effect was dilutive. 

Convertible promissory note payable	257,739
Common stock subscription receivable	9,652,000
Common stock options	9,000,000
Total	18,909,739

Weighted average common shares outstanding has been retroactively restated for all periods presented to reflect the accounting effect of the 2020 Reverse Acquisition Transaction (see Note 1).

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost. Major improvements are capitalized, while maintenance and repairs that do not improve or extend the useful life of the respective assets are charged to expense as incurred. Gains and losses from disposition of property and equipment will be included in income and expense when realized. Depreciation of property and equipment will be provided using the straight-line method over an estimated useful life of three and seven years.

The Company recognizes depreciation of property and equipment in general and administrative costs in the Company’s consolidated statement of operations.

Leases

Leases

Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. ASU 2016-02 requires recognition in the statement of operations of a single lease cost that is calculated as a total cost of the lease allocated over the lease term, generally on a straight-line basis. ASU 2016-02 excludes short-term operating leases with a lease term of 12 months or less at the commencement date, and that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The Company did not have any leases within the scope of ASU 2016-02 at April 30, 2021.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities measure credit losses for most financial assets, including accounts and notes receivable. ASU 2016-13 will replace the current “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the provisions of ASU 2016-13 as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. Management has not yet evaluated the effect that the adoption of ASU 2016-13 will have on the Company’s consolidated financial statement presentation or disclosures.

In March 2019, the FASB issued ASU 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials (“ASU 2019-02”). ASU 2019-02 aligns the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. Accordingly, the capitalization of production costs for episodic television series is no longer constrained until persuasive evidence of secondary market revenues exists. This new guidance also updates certain presentation and disclosure requirements for capitalized film and television costs and requires impairment testing to be performed at a group level for capitalized film and television costs when the content is predominantly monetized with other owned or licensed content. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements. In addition, under previous guidance, film and television programs accounted for under the broadcasting accounting standard were carried on the balance sheet at the lower of cost or net realizable value. This new guidance requires that an entity test a film or television program for impairment, when impairment indicators are present, at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. The impairment would be measured as the difference between the carrying value of the film group and its fair value rather than its net realizable value. This new guidance requires that an entity provide new disclosures about content that is either produced or licensed and classify cash flows for licensed content as cash flows from operating activities in the statement of cash flows. ASU 2019-02 was effective for the Company’s fiscal year beginning August 1, 2020 and was required to be adopted on a prospective basis. The adoption of ASU 2019-02 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. The Company will continue to present all project development costs, including capitalized costs of acquired programming rights, as non-current assets in its consolidated balance sheet.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06). ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. ASU 2020-06 will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also revises the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For contracts in an entity’s own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. ASU 2020-06 simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. Management has not yet evaluated the effect that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Apr. 30, 2021

Summary Of Significant Accounting Policies Tables Abstract

Schedule of Outstanding Securities

At April 30, 2021, the Company included the impact of the outstanding securities summarized below, which entitle the holders thereof to acquire common shares, in its calculation of diluted income per share, as their effect was dilutive. 

Convertible promissory note payable	257,739
Common stock subscription receivable	9,652,000
Common stock options	9,000,000
Total	18,909,739

XML

CHANGE IN CONTROL AND REVERSE RECAPITALIZATION TRANSACTIONS (Tables)

9 Months Ended

Apr. 30, 2021

Change In Control And Reverse Recapitalization Transactions

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

Current assets acquired:
Cash	$	572
Investment in marketable securities		8,797
Total current assets	$	9,369
Adjustment to stockholders’ deficiency:
Preferred stock (1,434 shares issued)	$	202
Series B preferred stock (1,347 shares issued)		72
Common stock (7,810,996 shares issued)		781
Additional paid-in capital		8,314
Shares issued in reverse acquisition transaction	$	9,369

XML

INVESTMENT IN MARKETABLE SECURITIES (Tables)

9 Months Ended

Apr. 30, 2021

Investment In Marketable Securities

Schedule of Investment in Marketable Securities

Unrealized gains and losses on these securities are included in operations for the applicable period.

							Change in
							Fair Value
							For the
	Number						Nine Months
	of		Fair Value at				Ended
	Shares		July 31, 2020		April 30, 2021		April 30, 2021
Common Shares of Entest Group, Inc. (ENTI)		66,667	$	260	$	1,266	$	1,006
Common Shares of Regen Biopharma, Inc. (RGBP)		29,076,665		5,814		561,180		555,366
Series A Preferred Shares of Regen Biopharma, Inc. (RGBPP)		2,907,666		4,362		171,552		167,190
Total			$	10,436	$	733,998	$	723,562

XML

PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Apr. 30, 2021

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment as of April 30, 2021 is summarized as follows:

Computer and office equipment	$	7,064
Furniture and fixtures		5,936
Property and equipment, at cost		13,000
Less accumulated depreciation		(673	)
Property and equipment, net	$	12,327

XML

PROJECT DEVELOPMENT COSTS (Tables)

9 Months Ended

Apr. 30, 2021

Research and Development [Abstract]

Schedule of Project Development Cost

At April 30, 2021, the Company had one documentary film entitled “It’s Complicated” related to the life of former Arizona Sheriff Joseph M. Arpaio, two feature films and one television show in development.

	Production
			“Please
	“It’s		Baby
	Complicated”		Please”		“Mistress”		“Storyland”		Total
Balance, July 31, 2020	$	134,413	$	—	$	—	$	—	$	134,413
Additions		3,518		738,480		7,037		—		749,035
Capitalized interest		—		3,236		—		—		3,236
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, October 31, 2020		137,931		741,716		7,037		—		886,684
Additions		20,154		1,240,919		874,669		—		2,135,742
Capitalized interest		—		24,208		—		—		24,208
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, January 31, 2021		158,085		2,006,843		881,706		—		3,046,634
Additions		—		111,021		142,769		12,250		266,040
Capitalized interest		—		24,722		—		—		24,722
Transferred to production costs		—		—		—		—		—
Charged to operations		—		—		—		—		—
Balance, April 30, 2021	$	158,085	$	2,142,586	$	1,024,475	$	12,250	$	3,337,396

XML

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Apr. 30, 2021

Notes to Financial Statements

Schedule of Stock Option Assumptions

For stock options issued during the nine months ended April 30, 2021, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model utilizing the following assumptions:

Risk-free interest rate	0.34%
Expected dividend yield	0%
Expected volatility	37.85%
Expected life	5 years

Schedule of Stock Option Activity

A summary of stock option activity during the nine months ended April 30, 2021 is presented below.

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Stock options outstanding at July 31, 2020		9,000,000	$	0.10
Granted		9,000,000		0.10
Exercised		—		—
Expired		—		—
Stock options outstanding at April 30, 2021		9,000,000	$	0.10		10.00
Stock options exercisable at April 30, 2021		5,000,000	$	0.10		10.00

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Apr. 30, 2021 shares
Convertible Promissory Note
Shares Outstanding	257,739
Common Stock Subscription Receivable From Related Party
Shares Outstanding	9,652,000
Common Stock Options
Shares Outstanding	9,000,000
Securities [Member]
Shares Outstanding	18,909,739

XML

CHANGE IN CONTROL AND REVERSE RECAPITALIZATION TRANSACTIONS (Details) - USD ($)	Apr. 30, 2021	Jan. 31, 2021	Oct. 31, 2020	Jul. 31, 2020	Apr. 30, 2020	Apr. 13, 2020	Feb. 10, 2020
Preferred stock	$ 202			$ 202
Common stock	12,627			9,669
Additional paid-in capital	3,879,095			1,456,644
Adjustment to stockholders' equity (deficiency)	1,426,331	$ 819,826	$ 147,250	(150,341)	$ (110,540)
Series B Preferred Stock
Preferred stock	$ 72			$ 72
Bio-Matrix Scientific Group, Inc
Cash						$ 572
Investment securities						8,797
Total current assets						9,369
Preferred stock						202
Common stock						781
Additional paid-in capital						8,314
Adjustment to stockholders' equity (deficiency)						9,369
Bio-Matrix Scientific Group, Inc | Series B Preferred Stock
Preferred stock						$ 72

XML

INVESTMENT SECURITIES (Details) - USD ($)	3 Months Ended	9 Months Ended
	Apr. 30, 2020	Apr. 30, 2021	Jul. 31, 2020	Apr. 13, 2020
Fair Value		$ 733,998	$ 10,436
Change in Fair Value for the Period	$ (129)	723,562
Common Shares of Entest Group, Inc. (ENTI)
Investment Owned, Balance, Shares				66,667
Fair Value		1,266	260
Change in Fair Value for the Period		1,006
Common Shares of Regen Biopharma, Inc. (RGBP)
Investment Owned, Balance, Shares				29,076,665
Fair Value		561,180	5,814
Change in Fair Value for the Period		555,366
Series A Preferred Shares of Regen Biopharma, Inc. (RGBPP)
Investment Owned, Balance, Shares				290,766
Fair Value		171,552	$ 4,362
Change in Fair Value for the Period		$ 167,190

XML

PROPERTY AND EQUIPMENT (Details) - USD ($)	Apr. 30, 2021	Jul. 31, 2020
Property and equipment, at cost	$ 13,000
Less accumulated depreciation	(673)
Property and equipment, net	12,327
Computer Equipment [Member]
Property and equipment, at cost	7,064
Furniture and Fixtures [Member]
Property and equipment, at cost	$ 5,936

XML

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Apr. 30, 2020	Apr. 30, 2021
Property, Plant and Equipment [Abstract]
Depreciation		$ 673

XML

PROJECT DEVELOPMENT COSTS (Details) - USD ($)	3 Months Ended				9 Months Ended
	Apr. 30, 2021	Jan. 31, 2021	Oct. 31, 2020	Apr. 30, 2020	Apr. 30, 2021
Beginning Balance	$ 3,046,634	$ 886,684	$ 134,413		$ 134,413
Additions	266,040	2,135,742	749,035		3,202,983
Capitalized interest	24,722	24,208	3,236
Transferred to production costs
Charged to operations
Ending Balance	3,337,396	3,046,634	886,684		3,337,396
It's Complicated [Member]
Beginning Balance	158,085	137,931	134,413		134,413
Additions		20,154	3,518
Capitalized interest
Transferred to production costs
Charged to operations
Ending Balance	158,085	158,085	137,931		158,085
Please Baby Please [Member]
Beginning Balance	2,006,843	741,716
Additions	111,021	1,240,919	738,480
Capitalized interest	24,722	24,208	3,236
Transferred to production costs
Charged to operations
Ending Balance	2,142,586	2,006,843	741,716		2,142,586
Mistress [Member]
Beginning Balance	881,706	7,037
Additions	142,769	874,669	7,037
Capitalized interest
Transferred to production costs
Charged to operations
Ending Balance	1,024,475	881,706	7,037		1,024,475
Storyland [Member]
Beginning Balance
Additions	12,250
Capitalized interest
Transferred to production costs
Charged to operations
Ending Balance	$ 12,250				$ 12,250

XML

STOCKHOLDERS' EQUITY (DEFICIENCY) (Details Narrative) - USD ($)	Apr. 30, 2021	Jul. 31, 2020
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, issued	1,434	1,434
Preferred stock, outstanding	1,434	1,434
Preferred stock Value	$ 202	$ 202
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, issued	126,270,171	96,691,761
Common stock, outstanding	126,270,171	96,691,761
Series B Preferred Stock
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, issued	1,347	1,347
Preferred stock, outstanding	1,347	1,347
Preferred stock Value	$ 72	$ 72

XML

STOCK-BASED COMPENSATION (Details) - Stock Option [Member]	9 Months Ended
	Apr. 30, 2021 USD ($)
Risk-free interest rate	34.00%
Expected dividend yield	$ 0
Expected volatility	37.85%
Expected life	5 years

XML

STOCK-BASED COMPENSATION (Details 2) - Stock Option [Member]	9 Months Ended
	Apr. 30, 2021 $ / shares shares
Number of Shares
Beginning Balance | shares	9,000,000
Granted | shares	9,000,000
Exercised | shares
Expired | shares
Ending Balance | shares	9,000,000
Exercisable at end of period | shares	5,000,000
Weighted Average Exercise Price
Beginning Balance | $ / shares	$ 0.10
Granted | $ / shares	0.10
Exercised | $ / shares
Expired | $ / shares
Ending Balance | $ / shares	0.10
Exercisable at end of period | $ / shares	$ 0.10
Weighted Average Remaining Contractual Life Ending Balance	10 years
Weighted Average Remaining Contractual Life Exercisable at end of period	10 years

XML

RELATED PARTY TRANSACTIONS (Details Narrative)	9 Months Ended
	Apr. 30, 2021 USD ($)
Related Party Transactions
Producer fees	$ 25,000