form10q.htm

10-Q 1 form10q.htm PLATINUM STUDIOS FORM 10-Q form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

T QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

¨ TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 333-145871

PLATINUM STUDIOS, INC.

(Name of registrant in its charter)

CALIFORNIA	20-5611551
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

11400 W. Olympic Blvd., 14th Floor, Los Angeles, CA 90064

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (310) 807-8100

Indicate by check mark whether the registrant (1) has filed all reports required 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o

Non-accelerated filer o Smaller reporting company x

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

The number of shares of registrant’s common stock outstanding, as of May 9, 2008 was 219,455,281.

PLATINUM STUDIOS, INC.

INDEX

PART I: FINANCIAL INFORMATION
ITEM 1:	FINANCIAL STATEMENTS (Unaudited)	3
	Balance Sheets	3
	Statements of Operations	4
	Statements of Cash Flows	5
	Notes to the Financial Statements	6
ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3 :	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4:	CONTROLS AND PROCEDURES	28
PART II: OTHER INFORMATION		28
Item 1	LEGAL PROCEEDINGS	28
ITEM 1A :	RISK FACTORS	28
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	28
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	28
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	28
ITEM 5	OTHER INFORMATION	28
ITEM 6:	EXHIBITS	28
SIGNATURES		29

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

PLATINUM STUDIOS, INC

BALANCE SHEETS

	March 31, 2008			December 31, 2007
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	150,527		$	4,445
Accounts receivable		38,600			44,695
Other receivable		50,000			20,000
Prepaid expenses		112,966			109,124
Inventory		54,823			59,528
Other current assets		247			-
Total current assets		407,163			237,792
Property and equipment, net		245,090			257,130
Web sites		40,000			40,000
Character rights, net		205,435			228,261
Deposits and other		39,118			39,118
Total assets	$	936,806		$	802,301
LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$	856,332		$	663,848
Accrued expenses and other current liabilities		1,058,283			788,868
Bank overdraft		-			89,665
Deferred revenue		1,750			100,000
Short term notes payable		1,881,037			1,889,908
Related party payable		193,079			193,079
Capital leases payable, current		75,288			73,282
Total current liabilities		4,065,769			3,798,650
Long term notes payable to shareholder		2,551,263			2,531,464
Accrued interest due to shareholder		75,905			60,479
Capital leases payable, non-current		89,815			106,395
Total liabilities		6,782,752			6,496,988

Common stock, $.0001 par value; 500,000,000 shares authorized; 217,008,614 and 201,255,825 issued and outstanding, respectively		21,701			20,126
Additional paid in capital		8,257,545			3,750,782
Accumulated deficit		(14,125,192	)		(9,465,595	)
Total shareholders' deficit		(5,845,946	)		(5,694,687	)
Total liabilities and shareholders' deficit	$	936,806		$	802,301

The accompanying footnotes are an integral part of these financial statements

PLATINUM STUDIOS, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended
	March 31,
	2008			2007
Net revenue	$	179,382		$	1,037,829

Costs and expenses:
Cost of revenues (excluding depreciation expense)		67,573			35,411
Operating expenses		1,082,628			1,206,412
Research and development		212,553			276,927
Stock option expense		3,376,692			-
Depreciation and amortization		44,339			38,488
Total costs and expenses		4,783,785			1,557,238
Operating loss		(4,604,403	)		(519,409	)
Other income (expense):
Other income		182			-
Gain (loss) on disposition of assets		100			-
Gain on settlement of debt		37,334			-
Interest expense		(92,810	)		(77,802	)
Total other income (expense):		(55,194	)		(77,802	)
Loss before provision for income taxes		(4,659,597	)		(597,211	)
Provision for income taxes		-			-
Net loss	$	(4,659,597	)	$	(597,211	)

Basic and diluted loss per share:
Net loss per share	$	(0.02	)	$	(0.00	)
Basic and diluted weighted average shares		211,938,990			201,255,825

The accompanying footnotes are an integral part of these financial statements

PLATINUM STUDIOS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2008			2007
Cash flows from operating activities
Net loss	$	(4,659,597	)	$	(597,211	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation		21,513			15,662
Amortization		22,826			22,826
Equity instruments issued for services		3,376,692			-
Gain on settlement of debt		(37,334	)		-
Decrease (increase) in operating assets:
Accounts receivable		6,095			(220	)
Other receivable		(30,000	)		-
Inventories		4,705			(66,366	)
Prepaid expenses and other current assets		(1,097	)		(91,563	)
Increase (decrease) in operating liabilities:
Accounts payable		223,734			(45,911	)
Accounts payable related party		-			(25,000	)
Bank overdraft		(89,665	)		-
Accrued expenses		269,415			172,950
Accrued interest		43,671			33,829
Deferred revenue		(98,250	)		(300,000	)
Net cash flows used in operating activities		(947,292	)		(881,004	)

Cash flows from investing activities
Investment in property and equipment		(2,403	)		(11,070	)
Purchase of domain name		-			(1,000	)
Net cash flows used in investing activities		(2,403	)		(12,070	)

Cash flows from financing activities
Proceeds from non-related loans		150,000			-
Proceeds from related party loans		19,799			95,000
Payments on related party loans		(83,500	)		-
Payments on capital leases		(21,643	)		(13,612	)
Issuance of common stock, net of offering costs		1,031,121			1,141,216
Net cash flows provided by financing activities		1,095,777			1,222,604

Net increase/(decrease) in cash		146,082			329,530
Cash, at beginning of year		4,445			331,435
Cash, at end of period	$	150,527		$	660,965

Supplemental disclosure of cash flow information:

Cash paid for interest	$	61,555		$	43,817
Cash paid for taxes	$	-		$	-
Stock issued as payments of accounts payable and accrued interest	$	100,525		$	-

The accompanying footnotes are an integral part of these financial statements

PLATINUM STUDIOS, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2008

(UNAUDITED)

( 1 ) Description of business

Nature of operations – The Company controls a library consisting of more than 5,600 characters and is engaged principally as a comics-based entertainment company adapting characters and storylines for production in film, television, publishing and all other media.

Platinum Studios, LLC was formed and operated as a California limited liability company from its inception on November 20, 1996 through September 14, 2006. On September 15, 2006, Platinum Studios, LLC filed with the State of California to convert Platinum Studios, LLC into Platinum Studios, Inc., (“the Company”, “Platinum”) a California corporation.

This change to the Company structure was made in preparation of a private placement memorandum and common stock offering in October, 2006 (Note 12).

( 2 )

Basis of financial statement presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X, promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and disclosures required by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The condensed financial statements should be read in conjunction with the Company’s December 31, 2007 financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K (the “Annual Report”). All terms used but not defined elsewhere herein have the meanings ascribed to them in the Annual Report.

The balance sheet at December 31, 2007 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

( 3 )

Going concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses which have resulted in an accumulated deficit of $14,125,192 as of March 31, 2008. The Company plans to seek additional financing in order to execute its business plan, but there is no assurance the Company will be able to obtain such financing on terms favorable to the Company or at all. These items raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects related to recovery and classification of assets, or the amounts and classifications of liabilities that might result from the outcome of this uncertainty.

( 4 )

Summary of significant accounting policies

Reclassifications – Certain prior year amounts have been reclassified in order to conform to the current year’s presentation.

Revenue recognition - Revenue from the licensing of characters and storylines (“the properties”) owned by the Company are recognized in accordance with guidance provided in Securities and Exchange Commission Staff Accounting Bulletin No. 104 “Revenue Recognition” (an amendment of Staff Accounting Bulletin No. 101 “Revenue Recognition”) (“SAB 104”). Under the SAB 104 guidelines, revenue is recognized when the earnings process is complete. This is considered to have occurred when persuasive evidence of an agreement between the customer and the Company exists, when the properties are made available to the licensee and the Company has satisfied its obligations under the agreement, when the fee is fixed or determinable and when collection is reasonably assured.

The Company derives its licensing revenue primarily from options to purchase rights, the purchase of rights to properties and first look deals. For option agreements and first look deals that contain non-refundable payment obligations to us, we recognize such non-refundable payments as revenue at the inception of the agreement and receipt of payment, prior to the collection of any additional amounts due, provided all the criteria for revenue recognition under SAB 104 have been met. First look deals that have contingent components are deferred and recognized at the later of the expiration of the first look period or in accordance with the terms of the first look contract.

For licenses requiring material continuing involvement or performance based obligations, by the Company, the revenue is recognized as and when such obligations are fulfilled.

The Company records as deferred revenue any licensing fees collected in advance of obligations being fulfilled or if a licensee is not sufficiently creditworthy, the Company will record deferred revenue until payments are received.

License agreements typically include reversion rights which allow the Company to repurchase property rights which have not been used by the studio (the buyer) in production within a specified period of time as defined in the purchase agreement. The cost to repurchase the rights is generally based on the costs incurred by the studio to further develop the characters and story lines.

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and cash equivalents – The Company considers all highly liquid investment securities with an original maturity date of three months or less to be cash equivalents.

Accounts receivable – Trade receivables are carried at original invoice amount. The company does not regularly issue credit to its customers. The Company performs ongoing reviews of its receivables for collectability. Trade receivables are written off when deemed uncollectable. Recoveries of trade receivables previously written off are recorded as income when received. No trade receivables were written off for the three months ended March 31, 2008 and 2007. The Company’s allowance for doubtful accounts was $0 as of March 31, 2008 and December 31, 2007.

Concentrations of risk - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of uninsured cash balances. The Company maintains its cash balances with what management believes to be a high credit quality

financial institution. At times, balances within the Company’s cash accounts may exceed the Federal Deposit Insurance Corporation (FDIC) limit of $100,000.

During the three months ended March 31, 2008 and 2007, the Company had customer revenues representing a concentration of the Company’s total revenues. For the three months ended March 31, 2008, three customers represented approximately 56%, 19% and 15% of total revenues. For the three months ended March 31, 2007, one customer represented approximately 96% of the Company’s total revenues.

Depreciation - Depreciation is computed on the straight-line method over the following estimated useful lives:

Fixed assets	Useful Lives

Furniture and fixtures	7 years
Computer equipment	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of lease term or useful economic life

Character development costs - Character development costs consist primarily of costs to acquire properties from the creator, development of the property using internal or independent writers and artists, and the registration of a property for a trademark or copyright. These costs are capitalized in the year incurred if the Company has executed a contract or is negotiating a revenue generating opportunity for the property. If the property derives

( 4 )

Summary of significant accounting policies (continued)

a revenue stream that is estimable, the capitalized costs associated with the property are expensed as revenue is recognized.

If the Company determines there is no determinable market for a property, it is deemed impaired and is written off.

Purchased intangible assets and long-lived assets – Intangible assets are capitalized at acquisition costs and intangible assets with definite lives are amortized on the straight-line basis. The Company periodically reviews the carrying amounts of intangible assets and property in conformance with the Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). Under SFAS 144, long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, the impairment charge to be recognized is measured by the excess of the carrying amount over the fair value of the asset.

Advertising costs - Advertising costs are expensed the later of when incurred or when the advertisement is first run. For the three months ended March 31, 2008 and 2007 advertising expenses were $42,189 and $104,998, respectively.

Research and development - Research and development costs, primarily character development costs and design not associated with an identifiable revenue opportunity, are

charged to operations as incurred. For the three months ended March 31, 2008 and 2007 research and development expenses were $212,553 and $276,927, respectively.

Income taxes – From inception thru September 14, 2006 the Company operated as a limited liability company and elected to be taxed similar to a partnership. Accordingly, each member was responsible for reporting its respective share of the Company’s net income or loss for Federal and California income tax purposes and the Company did not pay Federal income tax. From September 15, 2006 forward the Company has accounted for income taxes using the liability method, whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company was subject to an annual minimum tax of $800 and a fee based on gross receipts in California from inception through September 14, 2006.

Net income/(loss) per share – In accordance with SFAS No. 128 “Earnings Per Share”, basic income per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the periods, excluding shares subject to repurchase or forfeiture. Diluted income per share increases the shares outstanding for the assumption of the vesting of restricted stock and the exercise of dilutive stock options and warrants, using the treasure stock method, unless the effect is anti-dilutive.

Recent accounting pronouncements – In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainly in Income Taxes” (“FIN 48”). FIN 48 applies to all tax positions related to income taxes subject to SFAS 109, “Accounting for Income Taxes”. Under FIN 48 a company would recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. FIN 48 clarifies how a company would measure the income tax benefits from the tax positions that are recognized, provides guidance as to the timing of the de-recognition of previously recognized tax benefits and describes the methods for classifying and disclosing the liabilities within the financial statements for any unrecognized tax benefits. FIN 48 also addresses when a company should record interest and penalties related to tax positions and how the interest and penalties may be classified within the income statement and presented in the balance sheet. FIN 48 is effective for fiscal years beginning after December 15, 2006. For Platinum, FIN 48 will be effective for the first quarter of fiscal 2007.

In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements. This statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, and amends Accounting Research Bulletin (“ARB”) 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the decon-solidation of a subsidiary. It also amends certain of ARB 51’s consolidation procedures for consistency with the requirements of SFAS No. 141 (revised 2007). This statement will be effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, or the Company’s fiscal year beginning January 1, 2009. Earlier adoption is prohibited. The Company currently is unable to determine what impact the future application of this pronouncement may have on our financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No.159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company adopted SFAS No. 159 on January 1, 2008, resulting in no financial statement impact.

In September 2006, the FASB issued SFAS Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. This new standard will require employers to fully recognize the obligations associated with single-employer defined benefit pension, retiree healthcare and other postretirement plans in their financial statements. The Company adopted SFAS No. 158 on December 31, 2007, resulting in no financial statement impact since the Company currently does not sponsor the defined benefit pension or postretirement plans within the scope of the standard.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about fair value measurements. SFAS No. 157 requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy as defined in the standard. Additionally, companies are required to provide enhanced disclosure regarding financial instruments in one of the categories, including a reconciliation of the beginning and ending balances separately for each major category of assets and liabilities. In February 2008, the FASB issued FASB Staff Position (FSP) No. FAS 157-2, which delays by one year the effective date of SFAS No. 157 for certain types of non-financial assets and non-financial liabilities. As a result, SFAS No. 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007, or the company’s fiscal year beginning January 1, 2008, for financial assets and liabilities carried at fair value on a recurring basis, and on January 1, 2009, for non-recurring non-financial assets and liabilities that are recognized or disclosed at fair value. The Company adopted SFAS No. 157 on January 1, 2008, for financial assets and liabilities carried at fair value on a recurring basis, with no material impact on its financial statements. The Company is currently unable to determine what impact the application of SFAS No. 157 on January 1, 2009, for non-recurring non-financial assets and liabilities that are recognized or disclosed at fair value, will have on its financial statements.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets. This statement amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125, or SFAS 140, regarding (1) the circumstances under which a servicing asset or servicing liability must be recognized (2) the initial and subsequent measurement of recognized servicing assets and liabilities, and (3) information required to be disclosed relating to servicing assets and liabilities. The Company adopted this standard on January 1, 2007, with no impact on its consolidated financial statements.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, or SFAS 155. This statement amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to narrow the scope exception for interest-only and principal-only strips on debt instruments to include only such strips representing rights to receive a specified portion of the contractual interest or principal cash flows. SFAS 155 also amends SFAS 140 to allow qualifying special-purpose entities to hold a passive derivative financial instrument pertaining to beneficial interests that itself is a derivative financial instrument. The Company adopted this standard on January 1, 2007, with no impact on its consolidated financial statements.

PLATINUM STUDIOS, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2008

(UNAUDITED)

EITF No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities, was issued in June 2007. The EITF reached a consensus that nonrefundable payments for goods and services that will be used or rendered for future research and development activities should be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered and the related services are performed. Entities should continue to evaluate whether they expect the goods to be delivered or services to be rendered. If the entity does not expect the goods to be delivered or services to be rendered, the capitalized advance payment should be charged to expense. This pronouncement is effective for financial statements issued for fiscal years beginning after December 15, 2007 (the Company’s fiscal year beginning January 1, 2008) and interim periods within those fiscal years. Earlier application is not permitted. Entities are required to report the effects of applying this pronouncement prospectively for new contracts entered into on or after the effective date of this pronouncement. The Company currently is not a party to research and development arrangements that include nonrefundable advance payments.

( 5 )

Inventory

Inventory is stated at the lower of cost (computed on a first-in, first-out basis) or market. The inventory consists of finished goods purchase for resale.

	March 31, 2008 (Unaudited)		December 31, 2007

Kiss merchandise		54,823		59,528

	$	54,823	$	59,528

For the three months ended March 31, 2008 and the year ended December 31, 2007 the Company recorded no inventory impairment or inventory reserve expense.

( 6 )

Property and equipment

Property and equipment are recorded at cost. The cost of repairs and maintenance are expensed when incurred, while expenditures refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Upon asset retirement or disposal, any resulting gain or loss is included in the results of operations.

	March 31, 2008 (Unaudited)			December 31, 2007
Property and equipment, cost:
Office equipment	$	13,207		$	10,804
Furniture and fixtures		118,140			118,140
Computer equipment		158,291			151,220
Software		91,292			91,292
Leasehold improvements		20,557			20,557
		401,487			392,013
Less accumulated depreciation		(156,397	)		(134,883	)

Net property and equipment	$	245,090		$	257,130

( 7 ) Due to related party

	March 31, 2008 (Unaudited)		December 31, 2007

B.Altounian - Consulting prior to employment		193,079		193,079

	$	193,079	$	193,079

( 8 ) Short-term and long-term debt

Short-term debt	March 31, 2008 (Unaudited)		December 31, 2007

Loan payable to member - uncollateralized; payable in monthly installments of interest only at variable interest rates. At March 31, 2008 and December 31, 2007 , the interest rates were 5.15% and 7.15%, respectively. Due upon demand	$	735,874	$	740,011
Loan payable to 3rd party - uncollateralized; payable in annual installments of interest only at 6%. Due upon demand		17,938		17,676

( 8 ) Short-term and long-term debt (continued)

Short-term debt	March 31, 2008 (Unaudited)		December 31, 2007
Loan payable to member - uncollateralized; payable in monthly installments of interest only at 5%. Due upon demand.		128,535		160,964
Loan payable to member - uncollateralized; payable in monthly installments of principal and interest at varying rates. The rate at March 31, 2008 and December 31, 2007 was 3.99%. Due upon demand.		122,660		120,570
Loan payable to member - uncollateralized; payable in monthly installments of principal and interest at varying rates. The rate at March 31, 2008 and December 31, 2007 was 15.99% and 17.49%, respectively. Due upon demand.		15,496		15,917
Loan payable to member - uncollateralized; interest only at 5%. Due upon demand.		11,152		10,000
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 5%. Payable on demand.		510		510
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due April, 2008.		109,279		213,315
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 18%. Due April, 2008.		28,695		27,573
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 18%. Due April, 2008.		114,778		110,290
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due June, 2008.		109,649		106,658
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due June, 2008.		27,445		26,697

( 8 ) Short-term and long-term debt (continued)

Short-term debt	March 31, 2008 (Unaudited)		December 31, 2007
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due June, 2008.		27,421		26,673
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due May, 2008.		55,630		54,149
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due June, 2008.		16,482		16,033
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due May, 2008.		72,078		109,195
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due May, 2008.		27,503		26,755
Loan payable to shareholder - uncollateralized; payable in monthly installments of interest only at 12%. Due June, 2008.		109,912		106,922
Loan payable to bank - uncollateralized; payable in monthly installments of interest only at 9%. Due April, 2008.		150,000		-
Total short-term debt	$	1,881,037	$	1,889,908

Long-term debt

Loan payable to member - uncollateralized; payable in monthly installments of interest only at variable interest rates. At March 31, 2008 and December 31, 2007, the interest rates were 7.151% and 7.487%, respectively. Monthly payments of principal and interest begin on July 1, 2009; final payment due June 1, 2034.		1,293,989		1,293,989

Loan payable to member - uncollateralized; principal includes interest accrued at variable interest rates. At March 31, 2008 and December 31, 2007 the interest rate was 5.0%. The loans are due June 30, 2010.		1,257,274		1,237,475

Total long-term debt	$	2,551,263	$	2,531,464

Total short-term and long-term debt	$	4,432,300	$	4,421,372

( 8 ) Short-term and long-term debt (continued)

The following summarizes future cash payment obligations:

Years Ending December 31,
			-
2008			1,881,037
2009			8,699
2010			1,275,708
2011			19,907
2012			21,496
Thereafter			1,225,453

Total short-term and long-term debt obligations			4,432,300

( 9 ) Operating and capital leases

The Company has entered into operating leases having expiration dates through 2011 for real estate and various equipment needs, including office facilities, computers, office equipment and a vehicle.

On July 10, 2006, the Company entered into an operating agreement for the lease of real property located in Los Angeles, California. The agreement has a five year term, commencing September 1, 2006 and ending August 31, 2011.

The Company has various non-cancelable leases for computers, software, and furniture, at a cost of $273,150 at March 31, 2008 and December 31, 2007. The capital leases are secured by the assets which cannot be freely sold until the maturity date of the lease. Accumulated amortization for equipment under capital lease totaled $96,880 and $81,454 at March 31, 2008 and December 31, 2007, respectively.

( 9 ) Operating and capital leases (continued)

Years Ending December 31,	Capital Leases
2008	$	94,303
2009		58,060
2010		37,947
2011		24,705
Thereafter		-

Total minimum obligations		215,015

Less amounts representing interest		35,338

Present value of net minimum obligations		179,677
Less current portion		73,282

Long-term portion	$	106,395



Years Ending December 31,	Operating Leases
2008	$	427,945
2009		430,761
2010		442,815
2011		302,855
Thereafter		-

Total minimum obligations	$	1,604,376

( 10 )

Commitments

During 2004, the Company entered into an agreement with Top Cow Productions, Inc. to acquire certain rights in and to certain comic books, related characters, storylines and intellectual property (the properties). The current agreement period expires on June 30, 2010. The Company has the right to extend the agreement for an additional twelve month period for an additional $350,000 and has pre-paid $75,000 toward this extended period. If the Company enters into production on a particular property, additional fees based on a percentage of the adjusted gross revenue resulting from the production, as defined in the agreement, will be due to the owner. The agreement is collateralized by a security interest in and to all rights licensed or granted to the Company under this agreement including the right to receive revenue. The current agreement period cost of $350,000 is included in Other Assets on the balance sheet and is being amortized on a straight-line basis beginning in 2006 when the rights became available for exploitation.

( 11 )

Related party transactions

The Company has an exclusive option to enter licensing/acquisition of rights agreements for individual characters, subject to existing third party rights, within the RIP Awesome Library of RIP Media, Inc., a related entity in which Scott Rosenberg is a majority shareholder. The Company did not exercise this right during the years ended December 31, 2007 and 2006. Scott Mitchell Rosenberg also provides production consulting services to the Company’s customers (production companies) through Scott Mitchell Rosenberg Productions (another related entity) wholly owned by Scott Mitchell Rosenberg. At the time the Company enters into a purchase agreement with a production company, a separate contract may be entered into between the related entity and the production company. In addition, consulting services regarding development of characters and storylines may also be provided to the Company by this related entity. Revenue would be paid directly to the related entity by the production company.

( 12 ) Stockholders equity

As of May 1, 2006, the Company issued a five percent (5.0%) ownership interest in Platinum Studios, LLC to Brian Altounian in consideration of a capital contribution in the amount of $500,000.

On September 14, 2006, Scott Mitchell Rosenberg converted $5,731,057 in outstanding principal and interest as a capital contribution in Platinum Studios, LLC in fulfillment of commitments made to the Company prior to the issuance to Brian Altounian.

Platinum Studios LLC filed Articles of Incorporation with the Secretary of the State of California on September 15, 2006, by which Platinum Studios, LLC converted from a California limited liability company into Platinum Studios, Inc., a California corporation. On September 15, 2006, 135,000,000 common shares were issued for conversion of LLC interests as all members of the limited liability company became shareholders of the corporation, maintaining their same percentage ownership, with no additional contribution required by any of the members to the corporation.

A Private Placement Memorandum was issued on October 12, 2006, offering up to 50,000,000 shares of common stock, $0.0001 par value per share, for sale to Accredited Investors (as defined in the memorandum), at a price of $0.10 per share on a “best efforts” basis, for a total offering price to investors of $5,000,000. The proceeds of the offering are expected to be used for property acquisitions, marketing and general and administrative expenses. The offering was closed on April 30, 2007 with the Company having sold 49,047,250 shares resulting in proceeds of $4,904,725 and net proceeds of $4,682,207 after related costs.

On July 1, 2007, the Board of Directors approved the cancellation/conversion of $1,720,857 in debt due to Scott Mitchell Rosenberg consisting of $1,625,000 in principal and $95,857 of accrued interest through conversion of the debt into 17,208,575 shares of common stock of the Company valued at $0.10 per share. In addition, Mr. Rosenberg received a warrant to purchase 2,437,500 additional shares of common stock for his agreement to accept this offer from the Company rather than demanding repayment of the debt amount. As an incentive to convert the outstanding debt obligation, warrants were issued to the debt-holder, Charlotte Rosenberg. Based on the Black-Scholes method of valuation, $195,507 of interest expense was recorded as the fair value of the warrants issued as part of this debt conversion.

( 12 ) Stockholders equity (continued)

Effective July 12, 2007, the Company obtained board approval of an incentive plan under which equity incentives would be granted to officers, employees, non-employee directors and consultants of the Company. The board further resolved for 45,000,000 shares of the Company’s common stock, $0.0001 par value, be reserved for issuance in accordance with the requirements of this plan. As of March 31, 2008, the Company granted stock options to purchase up to an aggregate of 22,050,000 shares of its common stock to employees and consultants and granted 7,950,000 shares of restricted common stock to employees and consultants.

Of the stock options granted, the following were granted to executive officers

Brian Altounian 7,965,000 options

Helene Pretsky 6,000,000 options

Of the restricted stock issued, the following were issued to executive officers:

Brian Altounian 5,250,000 shares

Helene Pretsky 2,000,000 shares

( 13 ) Common Stock Purchase Warrants

Warrants outstanding at March 31, 2008 are summarized as follows:

		Oustanding						Exerciseable
Range of Exercise Prices		Number Oustanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exerciseable		Weighted Average Exercise Price

Warrants

$	0.10		2,896,100		4.34	$	0.10		2,896,100	$	0.10
$	0.10		2,896,100		4.34	$	0.10		2,896,100	$	0.10

As of March 31, 2008, no warrants have been exercised.

( 14 ) Stock Options

The Company has an Employee Stock Option Plan. Under this Plan, the Board of Directors may issue incentive and non-qualified stock options to employees of the Company. Options granted under this Plan, options are granted at the fair market value at the date of grant, and vest in accordance with a vesting schedule determined by the Company’s Board of Directors, usually immediately or over a three-year period with one-third vested on the grant date and in three equal annual installments vesting on each anniversary date thereafter. As of March 31, 2008, 22,950,000 shares were available for future grants under the Employee Stock Option Plan. The Company settles stock option exercises with newly issued common shares. The following is a summary of stock option activity (in thousands, except per share data):

	Three months ended March 31, 2008
	Shares		Weighted Average Exercise Price
Outstanding—beginning of year		—	$	—
Granted at fair value		22,050		0.10
Exercised		—		—
Canceled/forfeited		—		—
Outstanding—end of quarter		22,050		0.10
Options exercisable at quarter-end		19,906	$	0.10

The following table summarizes information about stock options as of March 31, 2008 (in thousands, except per share data):

	Options Outstanding								Options Exercisable
Range of Exercise Prices	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contract Life		Aggregate Intrinsic Value		Shares		Weighted Average Exercise Price		Weighted Average Remaining Contract Life		Aggregate Intrinsic Value
$0.0-$0.10		22,050		$ 0.10		2.75		$882		19,906		$ 0.10		2.75		$788

Total unrecognized compensation costs related to non-vested awards was approximately $271,158 as of March 31, 2008. These non-vested awards are expected to be exercised over the weighted average period of 2.75 years.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company’s average stock price of $0.14 during the three months ended March 31, 2008, which would have been received by the option holders had all option holders exercised their options as of that date. Based on the average stock price during the three months ended March 31, 2008, there were 19,906,250 of in-the-money options exercisable as of March 31, 2008.

22,050,000 options were granted and 19,906,250 shares vested during the three months ended March 31, 2008.

( 15 ) Income taxes

As discussed in Note 4 regarding income taxes, the Company operated as a Limited Liability Company taxed as a partnership prior to September 15, 2006. As of September 15, 2006, the Company is taxed as a corporation. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates on the date of enactment.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2006.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. Included in the balance at March 31, 2008 and December 31, 2007, are no tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company has not filed a tax return for the years ended December 31, 2007 and 2006.

Minimum state tax payments have accrued in states for which the company has operated since 2006. Upon filing all amounts paid will be subject to penalties and interest according to the state tax jurisdiction. The statue of limitations remains open on all years from 2006 going forward. The statute will not begin to run until the Company files the tax return. Once the returns have been filed the IRS will have three years to examine and adjust the amounts reported.

The Company operates at a loss and will only be liable for minimum state tax payments once a return is filed. No unrecognized liability will be added to The Company’s balance sheet for the un-filed returns as the amounts reported are an immaterial amount.

The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates on the date of enactment.

( 16 ) Subsequent events

On April 3, 2008, the Company paid in full a bank promissory note of $150,000.

On April 9, 2008, Villard Books, an imprint of Ballantine Books at the Random House Publishing Group, announced that it will publish a graphic novel based on the Company’s "Unique" series. Platinum Studios is currently partnered with Walt Disney Pictures to develop "Unique" into a full-length feature film, while the graphic novel was recently named a finalist in ForeWord Magazine's 2007 Book of the Year Awards.

On April 16, 2008, DreamWorks Studios optioned the rights to make a feature film from the Company’s comic book property "Atlantis Rising," Alex Kurtzman and Roberto Orci, who brought the project to DreamWorks Studios, will produce through their DreamWorks based company. Platinum Studios' Chairman and CEO, Scott Mitchell Rosenberg, will also produce. The Greenberg Group CEO and former Universal Pictures senior executive Randy Greenberg will executive produce and Platinum Studios Rich Marincic will co-produce. Created by Scott Mitchell Rosenberg, "Atlantis Rising" is a five-part mini series first published by Platinum Studios Comics in November of 2007. The fifth and final installment in the series was released in late April 2008.

On May 8, 2008 the Company and Hyde Park Entertainment Group, an entertainment company which produces, finances and distributes motion pictures around the world, announced an agreement for the co-production of the motion picture "Dead of Night" based on the best-selling Italian comic book series, 'Dylan Dog' created by Tiziano Sclavi. Published since 1986 by Sergio Bonelli Editore, the comic series has sold more than 56 million units worldwide and has been translated into 17 languages. The companies' goal is for Dylan Dog to become a franchise with multiple pictures. Brandon Routh, ('Superman Returns'), is set to star as 'Dylan' - a private investigator who is drawn into the world of the undead. Kevin Munroe, whose 2007 re-imagining of 'Teenage Mutant Ninja Turtles' resurrected the billion dollar franchise, will direct a script by Joshua Oppenheimer and Thomas Dean Donnelly ('Sahara' and 'Conan The Barbarian'). Hyde Park chairman and CEO, Amritraj will produce alongside Platinum Studios' chairman and CEO, Scott Mitchell Rosenberg, who brought the billon dollar "Men In Black" franchise to Sony. Platinum Studios' Rich Marincic will co-produce and Hyde Park's Patrick Aiello will executive produce. Former Universal Pictures senior executive Randy Greenberg of the Greenberg Group, who helped negotiate the deal with Platinum Studio's General Counsel Helene Pretsky, will executive produce. SAF Comics president, Ervin Rustemagic, will also executive produce.

On May 9, 2008 the Company obtained a $50,000 line of credit with City National Bank. The line of credit bears interest at the rate of City National Bank’s prime rate plus 2.5%.

On May 12, 2008, the Company announced a deal to co-produce a feature film based on the action fantasy thriller "Witchblade" with Top Cow Productions, an entertainment company specializing in building intellectual properties through comic book and graphic novel publication, and Arclight Films, one of the leading international film sales companies. The 'Witchblade' comic book has been published in more than 21 languages and distributed in over 55 countries. The notable success of the comic book led to the highly rated made-for-TV movie in 2000, which spawned a weekly series that ran for two seasons on TNT. The property has been licensed all over the world into magnets, trading cards, posters, lithographs, skateboards, collectible masks, lunch pails, role playing games, collectible Halloween masks, soundtracks, novelizations, die cast cars, Digital DVD comics, statues, Christmas ornaments and multiple toy lines. Hamilton, Nigel Odell, head of Arclight's production operations, Platinum Studios' CEO Scott Mitchell Rosenberg and Steve Squillante of Havenwood Media are set to produce. Top Cow's CEO Marc Silvestri and President Matt Hawkins would serve as executive producers as would Platinum Studios' Rich Marincic. Former Universal Pictures senior executive Randy Greenberg of the Greenberg Group, who helped negotiate the deal with Platinum Studios General Counsel, Helene Pretsky, would also executive produce. It is anticipated that the film will be shot on location in Australia.

For the period from April 1, 2008 to May 9, 2008, the Company issued an additional 2,446,667 shares for proceeds of $367,000. The proceeds are expected to be used for property acquisitions, marketing and general and administrative expenses.

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

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they:

·	discuss our future expectations;
·	contain projections of our future results of operations or of our financial condition; and
·	state other "forward-looking" information.

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this prospectus. See "Risk Factors."

GENERAL

We are a comics-based entertainment company. We own the rights to a library of over 5,600 of comic book characters, which we adapt and produce for film, television and all other media. Our library contains characters in a full range of genre and styles. With deals in place with film studios and media players, our management believes we are positioned to become a leader in the creation of new content across all media.

We are focused on adding titles and expanding our library with the primary goal of creating new franchise properties and characters. In addition to in-house development and further acquisitions, we are developing content with professionals outside the realm of comic books. We have teamed up with screenwriters, producers, directors, movie stars, and novelists to develop entertainment content and potential new franchise properties. We believe our core brand offers a broader range of storylines and genres than the traditional superhero-centric genre. Management believes this approach is maintained with Hollywood in mind, as the storylines offer the film industry fresh, high-concept brandable content as a complimentary alternative to traditional super hero storylines.

Over the next several years, we are working to become the leading independent comic book commercialization producer for the entertainment industry across all platforms including film, television, direct-to-home, publishing, and digital media, creating merchandising vehicles through all retail product lines. Our management believes this will allow us to maximize the potential and value of our owned content creator relationships and acquisitions, story development and character/franchise brand-building capabilities while keeping required capital investment relatively low.

We derive revenues from a number of sources in each of the following areas: Print Publishing, Digital Publishing, Filmed Entertainment, and Merchandise/Licensing.

Set forth below is a discussion of the financial condition and results of operations of Platinum Studios, Inc. (the “Company”, “we”, “us,” and “our”) for the three months ended March 31, 2008 and 2007. The following discussion should be read in conjunction with the information set forth in the consolidated financial statements and the related notes thereto appearing elsewhere in this report.

RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 2008 COMPARED TO THE QUARTER ENDED MARCH 31, 2007

NET REVENUE (UNAUDITED)

Net revenue for the three months ended March 31, 2008 was $179,382 compared to $1,037,829 for the three months ended March 31, 2007. The decreased net revenue was primarily attributable to option fee revenue of $100,000 for the three months ended March 31, 2008 compared to $1,000,000 for the same period in 2007. Currently the Company derives most of its revenue from options to purchase rights, the purchase of rights to properties and first look deals. This type of revenue can vary significantly between quarters and years. The company anticipates additional option fee revenue during 2008.

EXPENSES (UNAUDITED)

Cost of revenues

For the three months ended March 31, 2008 cost of revenues was $67,573 compared to $35,411 for the three months ended March 31, 2007. The increase is primarily due to higher printing costs per unit for comic books combined with increased comic book sales.

Operating expenses

Operating expenses decreased $123,784 or 10% for the three months ended March 31, 2008 to $1,082,628, as compared to $1,206,412 for the three months ended March 31, 2007. The decrease was due to decreases in advertising costs and accounting fees.

Research and development

Research and development costs decreased $64,374 or 23% for the three months ended March 31, 2008 to $212,553, as compared to $276,927 for the three months ended March 31, 2007. The decrease was primarily due to decreased artwork expense partially offset by increased salary expense.

Stock option expense

Stock option expense for the three months ended March 31, 2008 was $3,376,692 compared to $0 for the same period in 2007. This expense was due to the granting of options as part of the employee incentive plan. The majority of these options vested at the time of the grant, resulting in a significant non-cash expense for the quarter. The Company does not anticipate additional expense of this magnitude in future quarters.

Depreciation and amortization

For the three months ended March 31, 2008 depreciation and amortization was $44,339 compared to $38,488 for the three months ended March 31, 2007. The increase is due to addition capital leases for computer equipment.

As a result of the foregoing, the net loss increased by $4,062,386 for the three months ended March 31, 2008, to $4,659,597, as compared to $597,211 for the same period in 2007.

LIQUIDITY AND CAPITAL RESOURCES (UNAUDITED)

Net cash used in operations during the three months ended March 31, 2008 was $947,292, primarily due to the net loss of the company.

Net cash used by investing activities was $2,403 for the three months ended March 31, 2008.

Net cash provided by financing activities was $1,095,777 for the three months ended March 31, 2008, primarily attributed to capital contributions in exchange for common stock.

At March 31, 2008 the Company had cash balances of $150,527. The Company will issue additional equity and may consider debt financing to fund future growth opportunities and support operations. Although the Company believes its unique intellectual content offers the opportunity for significantly improved operating results in future quarters, no assurance can be given that the Company will operate on a profitable basis in 2008, or ever, as such performance is subject to numerous variables and uncertainties, many of which are out of the Company’s control.

MARKET RISKS

We conduct our operations in primary functional currencies: the United States dollar, the British pound and the Australian dollar. Historically, neither fluctuations in foreign exchange rates nor changes in foreign economic conditions have had a significant impact on our financial condition or results of operations. We currently do not hedge any of our foreign currency exposures and are therefore subject to the risk of exchange rate fluctuations. We invoice our international customers primarily in U.S. dollars, except in the United Kingdom and Australia, where we invoice our customers primarily in British pounds and Australian dollars, respectively. In the future we anticipate billing certain European customers in Euros, though we have not done so to date.

We are exposed to foreign exchange rate fluctuations as the financial results of foreign subsidiaries are translated into U.S. dollars in consolidation and as our foreign currency consumer receipts are converted into U.S. dollars. Our exposure to foreign exchange rate fluctuations also arises from payables and receivables to and from our foreign subsidiaries, vendors and customers. Foreign exchange rate fluctuations did not have a material impact on our financial results in the three months ended March 31, 2008 or in the years ended December 31, 2007, 2006 and 2005.

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. We place our cash and cash equivalents with high credit quality institutions to limit credit exposure. We believe no significant concentration of credit risk exists with respect to these investments.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers who are dispersed across many geographic regions.

GOING CONCERN

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

REVENUE RECOGNITION. Revenue from the licensing of characters and storylines (“the properties”) owned by the Company are recognized in accordance with guidance provided in Securities and Exchange Commission Staff Accounting Bulletin No. 104 “Revenue Recognition” (an amendment of Staff Accounting Bulletin No. 101 “Revenue Recognition”) (“SAB 104”). Under the SAB 104 guidelines, revenue is recognized when the earnings process is complete. This is considered to have occurred when persuasive evidence of an agreement between the customer and the Company exists, when the properties are made available to the licensee and the Company has satisfied its obligations under the agreement, when the fee is fixed or determinable and when collection is reasonably assured. The Company derives its licensing revenue primarily from options to purchase rights, the purchase of rights to properties and first look deals. For option agreements and first look deals that contain non-refundable payment obligations to us, we recognize such non-refundable payments as revenue at the inception of the agreement and receipt of payment, prior to the collection of any additional amounts due, provided all the criteria for revenue recognition under SAB 104 have been met. First look deals that have contingent components are deferred and recognized at the later of the expiration of the first look period or in accordance with the terms of the first look contract. For licenses requiring material continuing involvement or performance based obligations, by the Company, the revenue is recognized as and when such obligations are fulfilled. The Company records as deferred revenue any licensing fees collected in advance of obligations being fulfilled or if a licensee is not sufficiently creditworthy, the Company will record deferred revenue until payments are received. License agreements typically include reversion rights which allow the Company to repurchase property rights which have not been used by the studio (the buyer) in production within a specified period of time as defined in the purchase agreement. The cost to repurchase the rights is generally based on the costs incurred by the studio to further develop the characters and story lines.

CHARACTER DEVELOPMENT COSTS. Character development costs consist primarily of costs to acquire properties from the creator, development of the property using internal or independent writers and artists, and the registration of a property for a trademark or copyright. These costs are capitalized in the year incurred if the Company has executed a contract or is negotiating a revenue generating opportunity for the property. If the property derives a revenue stream that is estimable, the capitalized costs associated with the property are expensed as revenue is recognized. If the Company determines there is no determinable market for a property, it is deemed impaired and is written off.

PURCHASED INTANGIBLE ASSETS AND LONG-LIVED ASSETS. Intangible assets are capitalized at acquisition costs and intangible assets with definite lives are amortized on the straight-line basis. The Company periodically reviews the carrying amounts of intangible assets and property in conformance with the Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). Under SFAS 144, long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, the impairment charge to be recognized is measured by the excess of the carrying amount over the fair value of the asset.

ADVERTISING COSTS. Advertising costs are expensed the later of when incurred or when the advertisement is first run. For the three months ended March 31, 2008 and 2007 advertising expenses were $42,189 and $104,998, respectively.

RESEARCH AND DEVELOPMENT. Research and development costs, primarily character development costs and design not associated with an identifiable revenue opportunity, are charged to operations as incurred. For the three months ended March 31, 2008 and 2007 research and development expenses were $212,553 and $276,927, respectively.

INCOME TAXES. From inception thru September 14, 2006 the Company operated as a limited liability company and elected to be taxed similar to a partnership. Accordingly, each member was responsible for reporting its respective share of the Company’s net income or loss for Federal and California income tax purposes and the Company did not pay Federal income tax. From September 15, 2006 forward the Company has accounted for income taxes using the liability method, whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company was subject to an annual minimum tax of $800 and a fee based on gross receipts in California from inception through September 14, 2006.

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainly in Income Taxes” (“FIN 48”). FIN 48 applies to all tax positions related to income taxes subject to SFAS 109, “Accounting for Income Taxes”. Under FIN 48 a company would recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. FIN 48 clarifies how a company would measure the income tax benefits from the tax positions that are recognized, provides guidance as to the timing of the de-recognition of previously recognized tax benefits and describes the methods for classifying and disclosing the liabilities within the financial statements for any unrecognized tax benefits. FIN 48 also addresses when a company should record interest and penalties related to tax positions and how the interest and penalties may be classified within the income statement and presented in the balance sheet. FIN 48 is effective for fiscal years beginning after December 15, 2006. For Platinum, FIN 48 will be effective for the first quarter of fiscal 2007.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

n/a

ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure; and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. There was no change to our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in the Registrant’s Form 10-K filed on March 31, 2008.

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

The Company has entered into Subscription Agreements with various accredited investors pursuant to which the investors subscribed to purchase a total of 7,507,772 shares of our common stock, resulting in proceeds to the company of $1,126,159.

The Company relied an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, the transaction did not involve a public offering, the investors were accredited investors and/or qualified institutional buyers, the investors had access to information about us and their investment, the investors took the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 6. EXHIBITS

31.1*		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

31.2*		Certification by Interim Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

32.1*		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

32.2*		Certification by Interim Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

* Filed herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on May 15, 2008.

				Platinum Studios, Inc.


			By:	/s/ Scott Mitchell Rosenberg
				Scott Mitchell Rosenberg
				Chief Executive Officer
				and Chairman of the Board


			By:	/s/ Brian Altounian
				Brian Altounian
				President, Chief Operating Officer & Principal Financial and Accounting Officer