0001640334-19-002417.txt : 20191119 0001640334-19-002417.hdr.sgml : 20191119 20191119170203 ACCESSION NUMBER: 0001640334-19-002417 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 47 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191119 DATE AS OF CHANGE: 20191119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Almost Never Films Inc. CENTRAL INDEX KEY: 0001422768 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 261665960 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53049 FILM NUMBER: 191231970 BUSINESS ADDRESS: STREET 1: 8605 SANTA MONICA BLVD #98258 CITY: WEST HOLLYWOOD, STATE: CA ZIP: 90069-4109 BUSINESS PHONE: 213-296-3005 MAIL ADDRESS: STREET 1: 8605 SANTA MONICA BLVD #98258 CITY: WEST HOLLYWOOD, STATE: CA ZIP: 90069-4109 FORMER COMPANY: FORMER CONFORMED NAME: Smack Sportswear DATE OF NAME CHANGE: 20120413 FORMER COMPANY: FORMER CONFORMED NAME: Reshoot Production CO DATE OF NAME CHANGE: 20080104 10-Q 1 hlwd_10q.htm FORM 10-Q hlwd_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

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

 

FOR THE QUARTERLY PERIOD ENDED: September 30, 2019

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-53049

 

ALMOST NEVER FILMS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

26-1665960

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

8605 Santa Monica Blvd #98258

West Hollywood, CA 90069-4109

(Address of principal executive offices, Zip Code)

 

(213) 296-3005

(Registrant’s telephone number, including area code)

___________________________________________________________

(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

 

N/A

 

N/A

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ¨ No x

 

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

 

Emerging growth company

¨

 

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 ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

The number of shares of registrant’s common stock outstanding as November 08, 2019 was 5,798,765

 

 
 
 
 

 FORM 10-Q

ALMOST NEVER FILMS INC.

(F/K/A SMACK SPORTSWEAR)

September 30, 2019

 

TABLE OF CONTENTS

  

 

Page No.

 

PART I. - FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and June 30, 2019

 

4

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2019 and three months ended September 30, 2018

 

5

 

Consolidated Statements of Stockholders’ Equity (Unaudited)

 

6

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2019 and September 30, 2018.

 

7

 

Notes to Condensed Consolidated Financial Statements

 

8

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

17

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

Item 4.

Controls and Procedures

 

22

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

24

 

Item 1A

Risk Factors

 

24

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

24

 

Item 3.

Defaults Upon Senior Securities

 

24

 

Item 4.

Mine Safety Disclosures

 

24

 

Item 5.

Other Information

 

24

 

Item 6.

Exhibits

 

25

 

Signature

 

26

 

 
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FORWARD LOOKING STATEMENTS

 

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 8-K which was filed with the SEC on January 20, 2016 (the “Super 8-K”), in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

 

We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

  

 
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PART I. FINANCIAL INFORMATION

 

Almost Never Films Inc. and Subsidiaries

Consolidated Balance Sheets

   

 

 

September 30,

 

 

June 30,

 

 

 

2019

 

 

2019

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$9,265

 

 

$57,154

 

Accounts receivable

 

 

581,049

 

 

 

583,333

 

Loan receivable

 

 

32,000

 

 

 

32,000

 

Total Current Assets

 

 

622,314

 

 

 

672,487

 

 

 

 

 

 

 

 

 

 

Deferred assets

 

 

55,148

 

 

 

103,898

 

Film costs

 

 

85,496

 

 

 

428,731

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$762,958

 

 

$1,205,116

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$61,886

 

 

$41,813

 

Due to related party

 

 

12,000

 

 

 

12,000

 

Deferred film revenue

 

 

-

 

 

 

354,398

 

Interest payable

 

 

67,553

 

 

 

117,716

 

Promissory note payable

 

 

180,000

 

 

 

230,000

 

Promissory note payable - related party

 

 

400,000

 

 

 

320,000

 

Total Current Liabilities

 

 

721,439

 

 

 

1,075,927

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

721,439

 

 

 

1,075,927

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Preferred stock: no par value, 5,000,000 authorized; Series A Preferred stock: 2,000,000 authorized; No shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock: 25,000,000 authorized; $0.001 par value 5,798,765 and 5,778,765 shares issued and outstanding respectively.

 

 

5,799

 

 

 

5,779

 

Additional paid in capital

 

 

1,895,486

 

 

 

1,880,506

 

Accumulated deficit

 

 

(1,858,139)

 

 

(1,755,486)

Total shareholders' equity attributable to Almost Never Films Inc. shareholders

 

 

43,146

 

 

 

130,799

 

Non-controlling interest

 

 

(1,627)

 

 

(1,610)

Total shareholders' equity

 

 

41,519

 

 

 

129,189

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$762,958

 

 

$1,205,116

 

   

The accompanying notes are an integral part of these unaudited financial statements.

 

 

4
 
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Almost Never Films Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Revenues

 

$343,256

 

 

 

-

 

Cost of Revenues

 

 

343,256

 

 

 

-

 

Gross Profit

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

General and administration expenses

 

 

68,251

 

 

 

41,768

 

Professional fees

 

 

34,441

 

 

 

19,680

 

Total operating expenses

 

 

102,692

 

 

 

61,448

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(102,692)

 

 

(61,448)

 

 

 

 

 

 

 

 

 

Other (Expense) Income

 

 

 

 

 

 

 

 

Interest expense

 

 

(19,760)

 

 

(20,352)

Gain (loss) on modification of debt

 

 

19,782

 

 

 

-

 

Total other income (expense)

 

 

22

 

 

 

(20,352)

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

 

(102,670)

 

 

(81,800)

Provision for income taxes

 

 

-

 

 

 

-

 

Net loss

 

$(102,670)

 

 

(81,800)

 

 

 

 

 

 

 

 

 

Net loss attributable to:

 

 

 

 

 

 

 

 

Almost Never Films Inc.

 

 

(102,653)

 

 

(81,800)

Non-controlling interest

 

 

(17)

 

 

-

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss

 

 

(102,670)

 

 

(81,800)

 

 

 

 

 

 

 

 

 

Comprehensive loss Per Common Share – Basic

 

$(0.02)

 

 

(0.02)

attributable to Almost Never Films Inc. Shareholders

 

$(0.02)

 

 

(0.02)

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding - Basic and Diluted

 

 

5,780,287

 

 

 

5,328,765

 

  

The accompanying notes are an integral part of these unaudited financial statements.

 

 
5
 
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Almost Never Films Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Non- 

 

 

Total

 

 

 

Number of
Shares

 

 

Amount

 

 

Paid in

Capital

 

 

Accumulated

Deficit

 

 

controlling

Interest

 

 

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2019

 

 

5,778,765

 

 

$5,779

 

 

$1,880,506

 

 

$(1,755,486)

 

$(1,610)

 

$129,189

 

  

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

   

 

Common shares issued to settle note payable and accrued interest

 

 

20,000

 

 

 

20

 

 

 

14,980

 

 

 

-

 

 

 

-

 

 

 

15,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(102,653)

 

 

(17)

 

 

(102,670)

Balance - September 30, 2019

 

 

5,798,765

 

 

$5,799

 

 

$1,895,486

 

 

$(1,858,139)

 

$(1,627)

 

$41,519

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Non-

 

 

Total

 

 

 

Number of
Shares

 

 

Amount

 

 

Paid in

Capital

 

 

Accumulated

Deficit

 

 

controlling

Interest

 

 

Stockholders'

Equity

 

  

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Balance - June 30, 2018

 

 

5,328,765

 

 

$5,329

 

 

$1,655,956

 

 

$(1,289,249)

 

$-

 

 

$372,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(81,800)

 

 

-

 

 

 

(81,800)

Balance - September 30, 2018

 

 

5,328,765

 

 

$5,329

 

 

$1,655,956

 

 

$(1,371,049)

 

$-

 

 

$290,236

 

 

The accompanying notes are an integral part of these unaudited financial statements.

 

 
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Almost Never Films Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

  

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net loss

 

$(102,670)

 

$(81,800)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Consulting expense

 

 

48,750

 

 

 

17,500

 

Gain on modification of debt

 

 

(19,782)

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,284

 

 

 

-

 

Prepaid expenses and deposits

 

 

-

 

 

 

89,267

 

Film costs

 

 

343,235

 

 

 

(422,570)

Accounts payable and accrued expenses

 

 

20,073

 

 

 

(33,184)

Deferred film revenue

 

 

(354,398)

 

 

227,553

 

Interest payable

 

 

14,619

 

 

 

20,352

 

Net Cash Provided by (Used in) Operating Activities

 

 

(47,889)

 

 

(182,882)

 

 

 

 

 

 

 

 

 

Net Increase in Cash and Cash Equivalents

 

 

(47,889)

 

 

(182,882)

Cash and Cash Equivalents, beginning of period

 

 

57,154

 

 

 

270,826

 

Cash and Cash Equivalents, end of period

 

$9,265

 

 

$87,944

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$(35,000)

 

$-

 

Cash paid for income taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental Non-cash Disclosure:

 

 

 

 

 

 

 

 

Conversion of debt into common stock

 

$15,000

 

 

$-

 

  

The accompanying notes are an integral part of these unaudited financial statements.

  

 
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Almost Never Films Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(Unaudited)

 

NOTE 1 – ORGANIZATION AND OPERATIONS

 

Nature of the Business

 

Almost Never Films Inc. (the “Company”) was originally incorporated in Nevada in October 2007 as Smack Sportswear (“Smack”), which originally manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. The Company is now an independent film company focusing on film production, finance and production related services for movies under budgets of $35 million. The Company’s common stock are currently traded on QTC Pink markets under the symbol of “HLWD.”

 

Share Exchange and Recapitalization

 

On January 15, 2016, Smack entered into a share exchange agreement with Almost Never Films Inc., a private company incorporated in Indiana on July 8, 2015, and its two shareholders, Danny Chan and Derek Williams.

 

Pursuant to the agreement, Smack issued 1,000,000 shares of our Series A Convertible Preferred Stock to Mr. Chan and Mr. Williams in exchange for all 2,500,000 shares of issued and outstanding common stock of Almost Never Films Inc. (Indiana). As a result of the share exchange, Almost Never Films Inc. (Indiana) became Smack’s wholly-owned subsidiary, and Mr. Chan and Mr. Williams acquired a controlling interest in the Company.

 

The share exchange was accounted for as a “reverse acquisition,” and resulted in a recapitalization. Almost Never Films Inc. (Indiana) is deemed to be the acquirer for accounting purposes. The assets acquired and liabilities assumed were $6,566 and $598,869, respectively. Consequently, the assets and liabilities and the historical operations that would be reflected in the financial statements prior to the share exchange would be those of Almost Never Films Inc. (Indiana) and would be recorded at the historical cost basis of Almost Never Films Inc. (Indiana), and the combined financial statements after completion of the share exchange included the assets and liabilities of Almost Never Films Inc. (Indiana), historical operations of Almost Never Films Inc. (Indiana), and operations of Almost Never Films Inc. (Indiana) from the closing date of the share exchange. As a result of the issuance of the shares of our Series A Convertible Preferred Stock pursuant to the share exchange, a change in control of the Company occurred as of the date of consummation of the share exchange. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. The Company has not yet generated any revenue since inception.

 

On February 29, 2016, the stockholders of Smack voted to amend the Articles of Incorporation of the Company to (i) increase the authorized capital of the Company to 5,000,000 shares of common stock and (ii) to change the name of the Company to “Almost Never Films Inc.” which took effect on March 2, 2016.

 

On August 9, 2017, the Company has approved a 1 for 40 reverse split of its issued and outstanding common stock. The common stock accounts and all share related balances have been be applied retroactively for all periods presented.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Team Sports Superstore (Inactive), Almost Never Films Inc. (Indiana), FWIL, LLC (Indiana), Virginia Christmas, LLC (New York), Christmas Camp, LLC (New York), and Country Christmas, LLC (Ohio). Its 90 % owned subsidiaries are One HLWD KY LLC (Kentucky), Two HLWD KY LLC (Kentucky) and Three HLWD KY (Kentucky), LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

 

 
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The Company dissolved FWIL, LLC on September 16, 2019.

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed financial statements do not include all the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included.

 

The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited financial statements and the notes thereto that are included in the Company’s audited June 30, 2019 financial statements that was filed with the SEC on October 15, 2019. The results of operations for the three months ended September 30, 2019, are not necessarily indicative of the results to be expected for the full year

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the fair value of common stock issued for services, film costs, among others. Actual results could differ from these estimates.

 

Cash

 

Cash includes demand deposits with banks or other financial institutions. All cash balances are hold by major banking institutions.

 

Concentration of Risk

 

The Company maintains its cash with a financial institution, and at times, amounts may exceed federally insured limits. Currently the FDIC insurance coverage limit is $250,000, and the Company is potentially exposed to no un-insured cash balances. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

 

The Company’s accounts receivable from customer individually accounts for more than 10% of total receivable are as follows:

 

 

 

September 30,

 

 

June 30,

 

 

 

2019

 

 

2019

 

 

 

 

 

 

 

 

Accounts receivable - Pureflix

 

$581,049

 

 

$583,333

 

 

The Company’s revenue from customer individually accounts for more than 10% of total revenue are as follows:

 

 

 

Three-month ended

September 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

MVE Productions

 

$343,256

 

 

$-

 

 

Film Costs, Net

 

The Company records film costs in accordance with ASC – 926 - Entertainment – Films. Film costs include direct production costs, production overhead and acquisition costs for both motion picture and television productions and are stated at the lower of unamortized cost or estimated fair value and classified as noncurrent assets. The Company qualifies for certain government programs that provide incentives earned in regard to expenditures on qualifying film production activities. The incentives are recorded as an offset to the related asset balance. Estimates used in calculating the fair value of the film costs are based upon assumptions about future demand and market conditions and are reviewed on a periodic basis.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

 
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In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

As of September 30, 2019, the balance reported for cash and accounts receivable approximates its fair value because of their short maturities. Notes payable are recorded at agreed values. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. Promissory notes receivable, loan receivable and promissory notes payable are stated at historical amounts less principal payments. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies.

 

Revenue Recognition

 

In May 2014, the FASB issued new accounting guidance related to revenue from contracts with customers. The core principle of the Standard is that recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new guidance requires that companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company has chosen to early adopt and apply the standards beginning in the fiscal year ended June 30, 2018, using the modified retrospective approach, which applies the new standard to contracts that are not completed as of the date of adoption. The Company concluded that no adjustment to the opening balance of retained earnings was required upon the adoption of the new standard.

 

The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

 

Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.

 

When the Company enters into a contract, the Company analyses the services required in the contract in order to identify the required performance obligations which would indicate the Company has met and fulfilled its obligations. For the current contracts in place, the Company has identified performance obligations as one single event, the sign-off by both parties that production is completed and the product (film) is ready for distribution. To appropriately identify the performance obligations, the Company considers all of the services required to be satisfied per the contract, whether explicitly stated or implicitly implied. The Company allocates the full transaction price to the single performance obligation being satisfied.

  

 
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The Company recognizes revenue when the customer confirms to the Company that all of the terms and conditions of the contract has been met, and the sign-off of the project has been completed. The Company derives its revenues from the follows:

 

·

Production Service Agreement Revenue is related to films where the Company has been engaged as an independent contractor to provide production services and other elements related to production for individual film projects.

 

·

Revenue from self-produced films is related to films where the Company has self-produced certain films along with a third party, with the expectation that these films will be distributed in the future.

 

The Company analyses whether gross sales, or net sales should be recorded, has control over establishing price, and has control over the related costs with earning revenues. The Company has recorded all revenues at the gross price.

 

Cash payments received are recorded as deferred revenue until the conditions, stated above, of revenue recognition have been met, specifically all obligations have been met as specified in the related customer contract.

 

Stock Repurchase and Cancellation

 

During the year ended June 30, 2018, the Company repurchased and cancelled 85,475 shares of common stock. The Company accounted for the transaction in accordance with ASC 505 – Equity – 30 Treasury Stock, Purchase of Treasury Shares or Stock Rights.

  

Loss per Share Calculations

 

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended September 30, 2019, and 2018, as there are no potential shares outstanding that would have a dilutive effect.

 

Recently Issued Accounting Pronouncements

 

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, or ASU 2018-07. Under this ASU, the accounting for awards issued to nonemployees will be similar to the accounting for employee awards. This includes allowing for the measurement of awards at the grant date and recognition of awards with performance conditions when those conditions are probable, both of which are earlier than under current guidance for nonemployee awards. The Company has early adopted this guidance, specifically related to the tax calculations of consulting services compensation.

 

 
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In March 2019, the FASB issued new guidance on film production costs ASU 2019-02, Entertainment Films- Other Assets – Film Costs (Subtopic 926-20). The new guidance is effective for fiscal years beginning after December 15, 2019 (for the year ended June 30, 2021 for the Company) and interim periods within those fiscal years and may be early adopted. The new guidance aligns the accounting for the production costs of an episodic series with those of a film by removing the content distinction for capitalization. It also addresses presentation, requires new disclosures for produced and licensed content and addresses cash flow classification for license agreements to better reflect the economics of an episodic series. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

In March 2019, the FASB issued ASU No. 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters Intangibles-Goodwill and Other (Subtopic 920-350). The update 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. The amendments also require that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. The amendments in this update require that an entity test a film or license agreement for program material within the scope of Subtopic 920-350 for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee s obligation to make lease payments arising from a lease and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company does not have any leases and does not have any material impact related to the new guidance.

 

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

 

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. During the three months ended September 30, 2019 the Company had a net loss from operations of $102,653. As of September 30, 2019, the Company has an accumulated deficit of $1,858,139. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion and an identification of new business opportunities.

 

The Company plans on raising the required funds through completion of film projects resulting in revenues, and further potential equity and debt offerings. However, there is no assurance that the Company will be successful in this or any of its endeavors or become financially viable to continue as a going concern.

 

NOTE 3 – FILM COSTS, NET

 

Film costs are comprised of the following:

 

 

 

September 30,

2019

 

 

June 30,

2019

 

Independent Self-Produced Film Costs, Net

 

$85,496

 

 

$85,475

 

Capitalized Film Costs covered under Production Service Agreements, Net

 

 

-

 

 

 

343,256

 

Total Film Costs, Net

 

$85,496

 

 

$428,731

 

  

 
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Film costs include salaries and wages, and all other direct costs associated with the motion pictures and television productions. In addition, the Company qualifies for certain government programs that provide incentives earned in regard to expenditures on qualifying film production activities. The incentives are recorded as an offset to the related asset balance.

 

The Company performs fair value measurements related to film costs on an annual basis to evaluate and review indicators of impairment. During the three months ended September 30, 2019, the Company did not recognize an impairment loss.

 

On November 10, 2017 the Company executed a First Amendment Agreement to its 6x picture Production and Distribution Agreement between Big Film Factory LLC (“Big Film” or “Prodco”) and Pure Flix Entertainment LLC (“PFE”), (the “Agreement”). The Agreement memorializes the understanding with respect to the development, packaging, production, post-production and worldwide distribution of the films intended for initial and primary worldwide exhibition. The Company, will be added as a party to the initial agreement by and between Big Film and PFE, wherever Big Film is referenced in connection with providing production services in conjunction with Big Film as well as providing production capital and cash following each of the first six (6) films produced under the Agreement (“6 Pictures”). Both Prodco and PFE agree to expand the defined role of “Prodco” in the Agreement, to add the Company to that definition, and grant the Company equally the same role and responsibilities heretofore only held by Big Film in connection with the 6 Pictures.

 

On July 16, 2019, the Company received notice that Country Christmas Album has been confirmed as completed and delivered in accordance with the agreement terms.

 

During the three months ended September 30, 2019 and 2018, $343,256 and $0, respectively, of capitalized film costs were expensed as cost of revenues.

 

NOTE 4 – DEFERRED FILM REVENUE

 

On March 27, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Christmas Camp LLC.’ The Production Services Agreement was planned to run from April 9, 2018 to August 27, 2018. As of February 28, 2019, all criteria had been met in order for the Company to recognize revenue.

 

On March 27, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Last Vermont Christmas LLC.’ The Production Services Agreement was planned to run from April 9, 2018 to September 28, 2018. As of March 18, 2019, all criteria had been met in order for the Company to recognize revenue.

 

On June 19, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Country Christmas LLC.’ The Production Services Agreement was planned to run from June 25, 2018 to October 15, 2018. On July 16, 2019, the Company received notice that Country Christmas Album has been confirmed as completed and delivered in accordance with the agreement terms and therefore the Company has recorded $343,256 revenues during the period of three months ended September 30,2019.

 

 
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NOTE 5 – PROMISSORY NOTES PAYABLE

 

On October 11, 2017, the Company issued a $150,000 Promissory Note in exchange for receiving $150,000 proceeds. The principal of $150,000 is due fourteen (14) months from the receipt of the funds. and a total interest charge of ten percent or $15,000 is to be recorded over the term of the loan. The proceeds were used by the Company to fund the motion picture known as One HLWD KY LLC. During the year ended June 30, 2019, the Company paid principal of $100,000 and $15,000 of interest payable. On September 24,2019, the Company signed amendment agreement with lender for the balance of principal note of $50,000 with new maturity date of June 30, 2020. During the three months ended September 30, 2019, and 2018, interest expense of $1260 and $3,212 was recorded, respectively. As of September 30,2019, and June 30,2019, an interest payable of $9,219 and $17,510 has been recorded , respectively.. Due to change of maturity date of the loan agreement to June 30, 2020, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of change recognized as of gain on modification of debt.

 

On January 4, 2018, the Company issued a $80,000 Promissory Note in exchange for receiving $80,000 proceeds. The principal of $80,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. The proceeds were used by the Company to fund the motion picture known as River Runs Red.

 

On September 24,2019, the Company signed amendment agreement with lender for the principal note of $80,000 with new maturity date of June 30,2020. During the three months ended September 30, 2019, and 2018, interest expense of $2,016 and $2,016 was recorded, respectively. As of September 30,2019, and June 30,2019, an interest payable of $5,786 and $8,684 has been recorded, respectively Due to change of maturity date of the loan agreement to June 30,2020, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of changing recognized as of gain on gain on modification of debt.

 

On February 6, 2018, the Company issued a $100,000 Promissory Note in exchange for receiving $100,000 proceeds. The principal of $100,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. The proceeds were used by the Company to fund the motion picture known as River Runs Red.

 

On September 24,2019, the Company signed amendment agreements with lender with maturity date of June 30,2020, transferred the principal of note and interest payable equally to two new lenders. An interest payable of $16,328 has been recorded as of date of transfer. During the three months ended September 30,2019 and 2018, interest expenses of $2,521 and $2,521 was recorded, respectively. According to amendment agreement, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of change recognized as of gain on modification of debt.

 

On February 7, 2018, the Company issued a $150,000 Promissory Note in exchange for receiving $150,000 proceeds. The principal of $150,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. The proceeds were used by the Company to fund the motion picture known as River Runs Red. During the year ended June 30, 2019, the Company paid $150,000 of principal and $15,000 of interest payable.

 

On September 24, 2019, the Company singed general and mutual release agreement with lender, to pay $15,000 the balance of due via issuance of 20,000 shares of common stock of the Company. As of September 24, 2019, unpaid interest of $15,000 was due. During the three months ended September 30,2019 and 2018, interest expenses of $4,955 and $3,781 was recorded, respectively. According to general and mutual release agreement, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of change recognized as of gain on modification of debt.

 

On September 24,2019, the company issued a $50,000 Promissory Note in exchange of settlement loan agreement of February 06,2018 with another lender for replacing $50,000 proceeds. The principal of $50,000 is due on June 30, 2020, and bears interest at 10% per annum. As of September 24, 2019, unpaid interest of $8,164 was due and transferred to a new lender. During the three months ended September 30,2019, the Company paid $5,000 of interest payable and $82 interest expenses was recorded. As of September 30, 2019, unpaid interest of $3,247 was due.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

On September 19, 2017 the company issued a 10% Promissory Note in exchange for receiving $350,000 from Kruse Farms, LP., a Company owned by one of the Company’s principle owners, to fund the production of a motion picture. The principal of $350,000 is due in twenty-four (24) months from receipt of the funds. On September 24,2019, the Company and the lender have extended the maturity date to June 30, 2020. Interest payable of $41,055 and $62,142 has been recorded as of September 30, 2019, and June 30, 2019, respectively. During the three months ended September 30, 2019and 2018, interest expense was $8,822 and $8,822, respectively. As of September 30, 2019, the principal balance of note is $350,000.

 

 
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On September 24,2019, the company issued a $50,000 Promissory Note in to the Company’s Chief Executive Officer exchange of settlement loan agreement of February 06,2018 with another lender for replacing $50,000 proceeds. The principal of $50,000 is due on June 30,2020, and bears interest at 10% per annum. As of September 24, 2019, unpaid interest of $8,164 was due and transferred to lender. During the three months ended September 30,2019, $82 interest expenses was recorded. As of September 30,2019, unpaid interest of $8,247 was due.

As of September 30, 2019, and June 30,2019, the Company has advanced $20,000 as a loan to the Company’s Chief Creative Officer, respectively.

 

As of September 30,2019, and June 30,2019, the Company borrowed a $12,000 from an individual related to the Company’s Chief Creative Officer. The amounts are due on demand and non-interest bearing.

 

During the three months ended September 30, 2019, and 2018, the Company paid $0 , and $25,640, respectively to the Chief Creative Officer for fees related to production and managing movie services.

 

NOTE 7 – SHARE CAPITAL

 

Common Stock

   

On October 17, 2018, the Company issued 250,000 and 200,000 common shares at $0.50 for consulting services, to two individuals, valued at $125,000, and $100,000, respectively.

 

On September 24,2019, the Company issued 20,000 common shares at $0.001 par value for settlement of $15,000 interest payable of notes

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

The Company neither owns nor leases any real or personal property. The Company’s officers have provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.

 

 
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NOTE 9 – INCOME TAXES

 

The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law. The Tax Act includes numerous changes to tax laws impacting business, the most significant being a permanent reduction in the federal corporate income tax rate from 34% to 21%. The rate reduction took effect on January 1, 2018.

 

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% and 27.5% to the net loss before provision for income taxes for the following reasons:

 

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

Federal Income Tax benefits (expenses) attributable to

 

 

 

 

Current Operation

 

$20,340

 

 

$17,178

 

Less: Valuation Allowance

 

 

(20,340)

 

 

(17,178)

Net Provision for Federal Income Taxes

 

$-

 

 

$-

 

 

Net deferred tax assets consist of the following components as of:

 

 

 

September 30,

 

 

June 30,

 

 

2019

 

2019

 

 

 

 

 

 

 

 

Deferred tax assets

 

$320,676

 

 

$300,336

 

Less: valuation allowance

 

 

(320,676)

 

 

(300,336)

Deferred tax assets, net

 

$-

 

 

$-

 

 

At September 30, 2019, the Company had $1,852,328 of the U.S. net operating losses (the “U.S. NOLs”), which begin to expire beginning in 2036. NOLs generated in tax years prior to June 30, 2018, can be carryforward for twenty years, whereas NOLs generated after June 30, 2019 can be carryforward indefinitely.

 

NOTE 12 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date the consolidated financial statements were issued. Based on our evaluation no events have occurred that require disclosure, other than those disclosed below.

 

Subsequent to the quarter end, the Company dissolved CXA Movie, LLC on October 5, 2019.

  

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

 

Business Development

 

SMACK Sportswear (“SMACK or the Company”) was originally incorporated in Nevada in October 2007. Through June 30, 2016, we were a manufacturer and seller of performance and lifestyle based indoor and sand volleyball apparel and accessories. As of July 31, 2015, we completed the disposition of certain assets of the Company to William Sigler, a former director of the Company; in connection with said transactions Mr. Sigler resigned and agreed to sell all his shares of common stock in the Company. As a result of the sale of certain inventory from the Company to Mr. Sigler, the Company was considered a “shell company” (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended).

 

On January 15, 2016, pursuant to the share exchange agreement, among Almost Never Films Inc. f/k/a Smack Sportswear (the “Company”, “we,” “our” or “us”), Almost Never Films Inc. (“ANF”), an Indiana corporation, and the two shareholders of ANF (the “ANF Shareholders”), we issued to the ANF Shareholders, 1,000,000 shares of our Series A Convertible Preferred Stock (the “Series A Preferred Stock”), par value $0.001 per share in exchange for all 100,000,000 shares of the issued and outstanding common stock of ANF (the “Share Exchange”). As a result of the Share Exchange, ANF became our wholly-owned subsidiary, and our business has become the business of ANF, effective January 15, 2016.

 

The share exchange was accounted for as a “reverse acquisition,” and resulted in a recapitalization. Almost Never Films Inc. (Indiana) is deemed to be the acquirer for accounting purposes. The assets acquired and liabilities assumed were $6,566 and $598,869, respectively. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the share exchange will be those of Almost Never Films Inc. (Indiana) and will be recorded at the historical cost basis of Almost Never Films Inc. (Indiana), and the combined financial statements after completion of the share exchange include the assets and liabilities of Almost Never Films Inc. (Indiana), historical operations of Almost Never Films Inc. (Indiana), and operations of Almost Never Films Inc. (Indiana) from the closing date of the share exchange. As a result of the issuance of the shares of our Series A Convertible Preferred Stock pursuant to the share exchange, a change in control of the Company occurred as of the date of consummation of the share exchange. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. The Company has not yet generated any revenue since the reverse acquisition.

 

On February 29, 2016, the stockholders of Smack voted to amend the Articles of Incorporation of the Company to (i) increase the authorized capital of the Company to 200,000,00 shares of common stock and (ii) to change the name of the Company to “Almost Never Films Inc.” which took effect on March 2, 2016.

 

The Company has 5,000,000 authorized preferred shares with no par value.

 

Smack issued 1,000,000 shares of our Series A Convertible Preferred Stock to the Mr. Chan and Mr. Williams in exchange for all 100,000,000 shares of issued and outstanding common stock of Almost Never Films Inc. (Indiana), with a value of $10,000.

 

On March 4, 2016, all 1,000,000 preferred shares were converted into 100,000,000 common shares.

 

There were no shares of preferred stock issued and outstanding as of September 30, 2019.

 

On March 8, 2016, the Company executed a Stock Purchase Agreement with a shareholder. Pursuant to the Stock Purchase Agreement, the Company sold, and said shareholder purchased, an aggregate of 49,720,000 shares of the Company’s Common Stock at a price of $0.005 per share in exchange for the cancellation of and discharge of certain promissory notes issued by the Company and payable to said shareholder. The foregoing issuance was deemed to be exempt from registration under Section 4(a)(2) of the Securities Act as not involving any public offering and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.

  

 
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In March through November 2016, the Company entered into four share purchase agreements with four investors for 12,500,000 common shares at $0.02 per share for total proceeds of $250,000

      

On November 16, 2016, the company entered into a collaboration agreement (the “KBM Agreement”) with Konwiser Brothers Media (“KBM”, and together with ANF, the “Parties). Pursuant to the Agreement, the Parties will create an LLC or other entity (the “Company”), for the purpose of developing, producing and exploiting proposed motion picture project currently entitled “Field Trip” (the “Picture”). KBM will contribute its development and producing services to the Company and all rights to the Screenplay, and ANF will make financial contributions, assist in the raising of additional financing and participate in the development and production process as set forth more fully herein. The Company will own 100% of the copyright to the Picture and all other ancillary and related rights, and each of KBM and ANF will own an undivided 50% interest in the Company. KBM will be the managing member of the Company. The operating agreement for the Company will be consistent with the terms of this Agreement. This transaction, and the ones mentioned below, removed the Company from its prior shell status. On September 27, 2017, KBM informed the Company of its intent to terminate the KBM Agreement.

 

On December 1, 2016, the Company filed a registration statement on Form S-1, registering 10,000,000 shares for certain selling shareholders. The Form S-1 was declared effective on December 9, 2016.

 

On December 12, 2016, the Company entered into a collaboration agreement (the “SAE Agreement”) with Saisam Entertainment, LLC (“SAE”, and together with the Company, the “Parties). Pursuant to the Agreement, the Parties will create an LLC or other entity (the “Company”), for the purpose of developing, producing and exploiting proposed motion picture project currently entitled “Love is not Easy” (the “Picture”). The Company owns and controls the rights to the screenplay for the Picture.

 

On June 6, 2017, the Company issued a 2.5% promissory note (the “ANF Note”) to Weirong Zhang (the “Investor”). Pursuant to the ANF Note, the Company received $200,000, which was due to the Lender ninety (90) days from the date the purchase price of $200,000 was paid. The ANF Note accrues interest at 2.5% per 90 days. Thereafter, on June 7, 2017, The Money Pool, LLC (“Money Pool”) issued a non-transferable promissory note to the Company for $200,000 (the “Money Pool Note”). The Company funded the Money Pool Note with the funds received from the Investor. Money Pool shall use the funds from the Money Pool Note, along with its own funds, in order to provide a bridge loan to Blue Rider San Juan, LLC (“Blue Rider”), in connection with the production of a motion picture known as “Speed Kills”. Blue Rider is the international sales agent for “Speed Kills.” The Money Pool Notes accrues interest of a flat 2.5% for the first 45 days from funding. In the event the Money Pool Note is not paid in full within 45 days, the flat interest rate will increase to 3.5% for each 45-day period any balance or accrued interest remains unpaid. The principal and interest shall be payable by Money Pool to the Company from payments made by Blue Rider on the bridge loan provided by Money Pool. On June 9, 2017, the Company issued a 2.5% promissory note (the “Kruse Note”) to William R. Kruse (the “Kruse”). Pursuant to the Kruse Note, the Company received $200,000, which is due to Kruse ninety (90) days from the date the purchase price of $200,000 was paid. The Kruse Note accrues interest at 2.5% per annum. Thereafter, on June 12, 2017, Money Pool issued a non-transferable promissory note to the Company for $200,000 (the “Pool Note”). The Company shall fund the Pool Note with the funds received from Kruse. Money Pool shall use the funds from the Pool Note, along with its own funds, in order to provide a bridge loan to Blue Rider, in connection with the production of a motion picture known as “Ana”. Blue Rider is the international sales agent for “Ana.” The Pool Notes accrues interest of a flat 2.5% for the first 45 days from funding. In the event the Pool Note is not paid in full within 45 days, the flat interest rate will increase to 3.5% for each 45-day period any balance or accrued interest remains unpaid. The principal and interest shall be payable by Money Pool to the Company from payments made by Blue Rider on the bridge loan provided by Money Pool.

 

On August 2, 2017, Derek Williams presented the Board of Directors of the Company with his resignation as Chief Operating Officer and a member of the Board of Directors of the Company. Mr. William’s decision to resign was not due to any disagreement with the Company.

 

On August 24, 2017, the Board of Directors of the Company appointed Daniel Roth as Chief Creative Officer of the Corporation and Damiano Tucci as Chief Operating Officer of the Corporation.

 

On September 13, 2017, the Company completed a 1 for 40 reverse stock split and changed the authorized capital of the Company to 25,000,000 shares of common stock, par value $.001 per share.

  

 
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On November 10, 2017 the Company executed a First Amendment Agreement to its 6x picture Production and Distribution Agreement between Big Film Factory LLC (“Big Film” or “Prodco”) and Pure Flix Entertainment LLC (“PFE”), (the “Agreement”). The Agreement memorializes the understanding with respect to the development, packaging, production, post-production and worldwide distribution of the films intended for initial and primary worldwide exhibition. The Company, a Nevada corporation, will be added as a party to the initial agreement by and between Big Film and PFE, wherever Big Film is referenced in connection with providing production services in conjunction with Big Film as well as providing production capital and cash following each of the first six (6) films produced under the Agreement (“6 Pictures”). Both Prodco and PFE agree to expand the defined role of “Prodco” in the Agreement, to add the Company to that definition, and grant the Company equally the same role and responsibilities heretofore only held by Big Film in connection with the 6 Pictures.

 

The Company will be accorded a company credit and producer credits equal to those of Big Film. Furthermore, Prodco will provide the Company, Big Film and PFE with Producer’s E & O Insurance for a term of not less than three (3) years from delivery of any such Picture to PFE, and with limits of $1 million/$3 million/ $25K SIR as are common to the television/SVOD industry.

 

On April 26, 2018, the Company filed a registration statement on Form S-1, registering 514,822 shares for certain selling shareholders. The Form S-1 was declared effective on May 10, 2018.

 

Criteria

 

The Company was originally incorporated in Nevada in October 2007 as Smack Sportswear (“Smack”), which originally manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. The Company is now an independent film company focused on film production and production related services in connection with genre specific motion pictures with production costs in the $5.0 million to $50.0 million range.

 

History

 

As described above, we were incorporated in Nevada in October 2007 under the name SMACK Sportswear under which we manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. As a result of the sale of certain inventory from the Company to Mr. Sigler in July 2015, the Company became a “shell company” (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). As a result of the Share Exchange, we acquired the proposed business of Almost Never.

 

Almost Never, our wholly-owned subsidiary upon the closing of Share Exchange, was incorporated in the State of Indiana on July 8, 2015. As a result of the Share Exchange, the Company amended its Articles of Incorporation to change its name from “Smack Sportswear” to “Almost Never Films Inc.” to more accurately reflect its new business. We also request changed the Company’s trading symbol to “HLWD”

 

We currently have authorized 30,000,000 shares of capital stock, consisting of (i) 25,000,000 shares of Common Stock, and (ii) 5,000,000 shares designated as preferred stock containing such rights, privileges and designations as our Board of directors may, from time to time, determine. As of the date of this Report, an aggregate of 5,203,765 shares of our Common Stock and no shares of our Series A Convertible Preferred Stock are issued and outstanding.

 

On March 4, 2017, all previously authorized 1,000,000 preferred shares were converted into 2,500,000 common shares. In March through November 2017, the Company entered into four share purchase agreements with three investors for 312,500 common shares at $0.08 per share for total proceeds of $250,000

 

On March 8, 2017, the Company executed a Stock Purchase Agreement with a shareholder. Pursuant to the Stock Purchase Agreement, the Company sold, and said shareholder purchased, an aggregate of 1,243,000 shares of the Company’s Common Stock at a price of $0.005 per share in exchange for the cancellation of and discharge of certain promissory notes issued by the Company and payable to said shareholder. The foregoing issuance was deemed to be exempt from registration under Section 4(a)(2) of the Securities Act as not involving any public offering and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.

  

 
19
 
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On September 13, 2017, the Company completed a 1 for 40 reverse stock split and changed the authorized capital of the Company to 25,000,000 shares of common stock, par value $.001 per share.

 

Our principal executive office is located at 8605 Santa Monica Blvd #98258, West Hollywood, California 90069-4109.

 

Our Business

 

We are an independent film company focused on film production and production related services in connection with genre specific motion pictures with production costs in the $5.0 million to $50.0 million range.

 

Our business is to facilitate relationships (and as such, provide production related services) between creative talent (including writers, actors and directors) and companies who produce, finance and distribute motion pictures. We intend to acquire or license rights to materials upon which we believe motion pictures can be based (screenplays, books, short stories etcetera, which are referred to within the entertainment industry as the “underlying property”). We may further develop an underlying property by contracting for additional writing services and/or by bringing in new writers to perform “polishes” or “rewrites” on a particular underlying property.

 

If we are satisfied with the creative state of the underlying property, we then intend to make offers to directors and/or actors, to perform services in connection with a particular motion picture based on that underlying property. These offers are very often contingent and subject to the satisfaction of certain production elements, such as financier approval of the screenplay and the financier’s selection of a start date for principal photography.

 

If a director or actors accepts one of our offers, the director or actors are said to be “attached” to the motion picture project. Armed with the underlying property and the attached creative element(s) (these elements are often called the “package” in Hollywood), we may then approach third party financiers seeking financing as well as distribution for the potential motion picture. Another approach that we may take is to contact the financiers first, seeking first to produce the film, and then with a finished (or nearly finished) motion picture product, obtain distribution for the picture.

 

We entered into our first two collaboration agreements to produce the films “Field Trip” and “Love is not Easy” during the quarter ended December 31, 2016.

 

Critical accounting policies and estimates

 

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, our commitments to strategic alliance partners and the timing of the achievement of collaboration milestones. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

 

 
20
 
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Going Concern

 

The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to our ability to continue as a going concern.

 

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

 

Results of Operations

 

For the three months ended September 30, 2019 compared to September 30, 2018

 

During the three months ended September 30, 2019, the Company had $343,256 in revenue and incurred cost of revenue of $343,256, $68,251 on general and administrative expenses and $34,441 on professional fees. The Company’s professional fees were primarily for ongoing regulatory requirements. During the three months ended September 30, 2018, the Company had $0 in revenue and incurred $41,768 on general and administrative expenses and $19,680 on professional fees.

 

Other Expense

 

During the three months ended September 30, 2019, the Company incurred interest expenses of $19,760 relating to an unsecured promissory notes payable and gain on modification of debt of $19,782. During the three months ended September 30, 2018, the Company incurred interest expenses of $20,352, relating to an unsecured promissory note payable.

 

Net Loss

 

The Company’s net loss for the three months ended September 30, 2019 was $102,653. The Company’s net loss for the three months ended September 30, 2018 was $81,800.

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

 

As of September 30, 2019, we had a cash balance of $9,265. As of June 30, 2019, we had a cash balance of $57,154. We do not have sufficient funds to operate for the next twelve months. There can be no assurance that additional capital will be available to the Company. We currently have no agreements, arrangements or understandings with any person or entity to obtain funds through bank loans, lines of credit or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.

  

Going Concern Consideration

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. During the three months ended September 30, 2019, the Company incurred a net loss from continuing operations of $102,653, and cash used in operating activities was $47,889. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

  

 
21
 
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The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion and an identification of new business opportunities. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on operations, in the case of debt financing, or cause substantial dilution for our stock holders, in case of equity financing.

  

We do not have any material commitments for capital expenditures during the next twelve months. Although our proceeds from the issuance of debt and our offering of shares of common stock is currently sufficient to fund our operating expenses, we anticipate we will need to raise additional funds in the future so that we can expand our operations. Therefore, our future operations are dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

 

Off-balance sheet arrangements

 

During the three months ended September 30, 2019, we did not have any “off-balance sheet arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K).

 

Recent accounting pronouncements

 

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

  

 
22
 
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Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and the Company’s Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of September 30, 2019. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2019 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

 

Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in the reports that we file or submit under the Exchange Act have been recorded, processed, summarized and reported accurately. Our management intends to develop procedures to address the current deficiencies to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

  

 
23
 
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PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

    

 
24
 
Table of Contents

 

ITEM 6. EXHIBITS

 

 

 

Incorporated by Reference

 

 

 

 

Exhibit No.

 

Description

 

Form

 

SEC File No.

 

Exhibit

 

Filing Date

 

Filed Herewith

 

 

 

 

 

 

 

3.1

 

Articles of Incorporation of the Company

 

SB2

 

333-148510

 

3.1

 

1/7/2008

 

3.2

 

Amendment to Articles of Incorporation of the Company

 

8-K

 

000-53049

 

3.2

 

4/13/2012

 

3.3

 

Amendment to Articles of Incorporation of the Company

 

8-K

 

000-53049

 

3.1

 

2/29/2016

 

3.4

 

Bylaws of the Company

 

SB2

 

333-148510

 

3.2

 

1/7/2008

 

4.1

 

Certificate of Designation of Series A Convertible Preferred Stock

 

8-K

 

000-53049

 

4.1

 

1/18/2016

 

10.1

 

Share Exchange Agreement dated January 15, 2016 by and among SMACK Sportswear, Inc., Almost Never Films Inc., and the Shareholders of Almost Never Films Inc.

 

8-K

 

000-53049

 

2.1

 

1/18/2016

 

31.1

 

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

 

 

 

 

 

31.2

 

Certification by Chief Executive Officer and 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

 

 

 

 

 

101.INS

 

XBRL Instance Document.*

 

 

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema.*

 

 

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase.*

 

 

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase.*

 

 

 

 

 

101.LAB

 

XBRL Taxonomy Extension Label Linkbase.*

 

 

 

 

 

101.PRE

 

XBRL Extension Presentation Linkbase.*

 

 

 

 

 

___________________

*

Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheet, (ii) the Condensed Consolidated Statement of Operations, (iii) the Condensed Consolidated Statement of Cash Flows, and (iv) Notes to Combined Financial Statements.

  

 
25
 
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SIGNATURE

 

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

 

 

ALMOST NEVER FILMS INC.

 

Date: November 19, 2019

By:

/s/ Danny Chan

 

Danny Chan, Chief Executive Officer and Chief Financial Officer

(principal executive officer and principal financial and accounting officer)

 

 

 26

 

EX-31.1 2 hlwd_ex311.htm CERTIFICATION hlwd_ex311.htm

EXHIBIT 31.1

 

CERTIFICATION

 

I, Danny Chan, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of ALMOST NEVER FILMS INC. for the quarter ended September 30, 2019;

 

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.

I am 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 our supervision, to ensure that material information relating to the registrant is made known to us by others, 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 our 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 our 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.

I have disclosed, based on my 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 function):

 

 

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: November 19, 2019

 

/s/ Danny Chan

 

Danny Chan

 

Chief Executive Officer and Chief Financial Officer

(principal executive officer and principal financial and accounting officer)

 

EX-32.1 3 hlwd_ex321.htm CERTIFICATION hlwd_ex321.htm

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of ALMOST NEVER FILMS INC. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Danny Chan, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

Date: November 19, 2019

 

/s/ Danny Chan

 

Danny Chan

 

Chief Executive Officer and Chief Financial Officer

(principal executive officer and principal financial and accounting officer)

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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shares pure shares 0001422768 --06-30 Non-accelerated Filer false 2020 Q1 true false Yes 10-Q 2019-09-30 Almost Never Films Inc. 5798765 9265 57154 270826 87944 581049 583333 32000 32000 622314 672487 55148 103898 85496 428731 762958 1205116 61886 41813 12000 12000 354398 67553 117716 9219 17510 5786 8684 16328 15000 8164 3247 180000 230000 150000 80000 100000 150000 50000 400000 320000 721439 1075927 721439 1075927 5000000 5000000 2000000 2000000 0 0 0 0 25000000 25000000 2500000 5000000 0.001 0.001 5798765 5778765 5798765 5778765 5799 5779 1895486 1880506 -1858139 -1755486 43146 130799 -1627 -1610 41519 129189 5779 1880506 -1755486 -1610 5799 1895486 -1858139 -1627 5329 1655956 -1289249 372036 5329 1655956 -1371049 290236 762958 1205116 343256 343256 0 0 68251 41768 34441 19680 102692 61448 -102692 -61448 19760 20352 8822 8822 82 19782 22 -20352 -102670 -81800 0 0 -102670 -81800 -102653 -17 -81800 -102653 -81800 17 -102670 -81800 -0.02 -0.02 -0.02 -0.02 5780287 5328765 5778765 5798765 5328765 5328765 20000 20000 20 14980 15000 15000 48750 17500 -2284 -89267 -343235 422570 20073 -33184 -354398 227553 14619 20352 -47889 -182882 -47889 -182882 35000 0 0 15000 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>NOTE 1 – ORGANIZATION AND OPERATIONS </strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>Nature of the Business</strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Almost Never Films Inc. (the “Company”) was originally incorporated in Nevada in October 2007 as Smack Sportswear (“Smack”), which originally manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. The Company is now an independent film company focusing on film production, finance and production related services for movies under budgets of $35 million. The Company’s common stock are currently traded on QTC Pink markets under the symbol of “HLWD.”</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span style="text-decoration:underline">Share Exchange and Recapitalization</span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On January 15, 2016, Smack entered into a share exchange agreement with Almost Never Films Inc., a private company incorporated in Indiana on July 8, 2015, and its two shareholders, Danny Chan and Derek Williams.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Pursuant to the agreement, Smack issued 1,000,000 shares of our Series A Convertible Preferred Stock to Mr. Chan and Mr. Williams in exchange for all 2,500,000 shares of issued and outstanding common stock of Almost Never Films Inc. (Indiana). As a result of the share exchange, Almost Never Films Inc. (Indiana) became Smack’s wholly-owned subsidiary, and Mr. Chan and Mr. Williams acquired a controlling interest in the Company.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The share exchange was accounted for as a “reverse acquisition,” and resulted in a recapitalization. Almost Never Films Inc. (Indiana) is deemed to be the acquirer for accounting purposes. The assets acquired and liabilities assumed were $6,566 and $598,869, respectively. Consequently, the assets and liabilities and the historical operations that would be reflected in the financial statements prior to the share exchange would be those of Almost Never Films Inc. (Indiana) and would be recorded at the historical cost basis of Almost Never Films Inc. (Indiana), and the combined financial statements after completion of the share exchange included the assets and liabilities of Almost Never Films Inc. (Indiana), historical operations of Almost Never Films Inc. (Indiana), and operations of Almost Never Films Inc. (Indiana) from the closing date of the share exchange. As a result of the issuance of the shares of our Series A Convertible Preferred Stock pursuant to the share exchange, a change in control of the Company occurred as of the date of consummation of the share exchange. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. The Company has not yet generated any revenue since inception.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On February 29, 2016, the stockholders of Smack voted to amend the Articles of Incorporation of the Company to (i) increase the authorized capital of the Company to 5,000,000 shares of common stock and (ii) to change the name of the Company to “Almost Never Films Inc.” which took effect on March 2, 2016.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On August 9, 2017, the Company has approved a 1 for 40 reverse split of its issued and outstanding common stock. The common stock accounts and all share related balances have been be applied retroactively for all periods presented.</span></span></p> 35000000 2 1000000 6566 598869 1 for 40 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Basis of Consolidation</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Team Sports Superstore (Inactive), Almost Never Films Inc. (Indiana), FWIL, LLC (Indiana), Virginia Christmas, LLC (New York), Christmas Camp, LLC (New York), and Country Christmas, LLC (Ohio). Its <span><span> 90 % </span></span>owned subsidiaries are One HLWD KY LLC (Kentucky), Two HLWD KY LLC (Kentucky) and Three HLWD KY (Kentucky), LLC. All significant intercompany transactions and balances have been eliminated in consolidation.</span></span></p> <p><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company dissolved FWIL, LLC on September 16, 2019.</span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Basis of Presentation</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed financial statements do not include all the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited financial statements and the notes thereto that are included in the Company’s audited June 30, 2019 financial statements that was filed with the SEC on October 15, 2019. The results of operations for the three months ended September 30, 2019, are not necessarily indicative of the results to be expected for the full year</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Use of Estimates</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the fair value of common stock issued for services, film costs, among others. Actual results could differ from these estimates.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Cash</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Cash includes demand deposits with banks or other financial institutions. All cash balances are hold by major banking institutions.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Concentration of Risk</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The Company maintains its cash with a financial institution, and at times, amounts may exceed federally insured limits. Currently the FDIC insurance coverage limit is $250,000, </span></span>and the Company is potentially exposed to no un-insured cash balances.<span><span> The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.</span></span></span></span><br/> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company’s accounts receivable from customer individually accounts for more than 10% of total receivable are as follows:</span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </p><table border="0" cellpadding="0" cellspacing="0" style="border:0px;margin:auto;background-color:#ffffff" width="85%"><tbody><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><strong>September 30,</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><strong>June 30,</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr><tr style="background-color:#cceeff"><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt">Accounts receivable - Pureflix</p></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">581,049</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">583,333</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr></tbody></table><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">The Company’s revenue from customer individually accounts for more than 10% of total revenue are as follows:</p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><table border="0" cellpadding="0" cellspacing="0" style="border:0px;margin:auto;background-color:#ffffff" width="85%"><tbody><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="6" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center"><strong>Three-month ended</strong></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center"><strong>September 30,</strong></p></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2018</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr><tr style="background-color:#cceeff"><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top">MVE Productions</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">343,256</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">—</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr></tbody></table><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>Film Costs, Net</strong></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company records film costs in accordance with <i>ASC – 926 - Entertainment – Films</i>. Film costs include direct production costs, production overhead and acquisition costs for both motion picture and television productions and are stated at the lower of unamortized cost or estimated fair value and classified as noncurrent assets. The Company qualifies for certain government programs that provide incentives earned in regard to expenditures on qualifying film production activities. The incentives are recorded as an offset to the related asset balance. Estimates used in calculating the fair value of the film costs are based upon assumptions about future demand and market conditions and are reviewed on a periodic basis.</span></span></p><p style="MARGIN:0px"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Fair Value of Financial Instruments</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">As of September 30, 2019, the balance reported for cash and accounts receivable approximates its fair value because of their short maturities. Notes payable are recorded at agreed values. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. Promissory notes receivable, loan receivable and promissory notes payable are stated at historical amounts less principal payments. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Revenue Recognition</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In May 2014, the FASB issued new accounting guidance related to revenue from contracts with customers. The core principle of the Standard is that recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new guidance requires that companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company has chosen to early adopt and apply the standards beginning in the fiscal year ended June 30, 2018<i>, </i>using the modified retrospective approach, which applies the new standard to contracts that are not completed as of the date of adoption. The Company concluded that no adjustment to the opening balance of retained earnings was required upon the adoption of the new standard.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company recognizes revenue from its contracts with customers in accordance with <i>ASC 606 – Revenue from Contracts with Customers. </i>The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>When the Company enters into a contract, the Company analyses the services required in the contract in order to identify the required performance obligations which would indicate the Company has met and fulfilled its obligations. For the current contracts in place, the Company has identified performance obligations as one single event, the sign-off by both parties that production is completed and the product (film) is ready for distribution. To appropriately identify the performance obligations, the Company considers all of the services required to be satisfied per the contract, whether explicitly stated or implicitly implied. The Company allocates the full transaction price to the single performance obligation being satisfied.</span></span></span></span></p> <p style="MARGIN:0px"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company recognizes revenue when the customer confirms to the Company that all of the terms and conditions of the contract has been met, and the sign-off of the project has been completed. The Company derives its revenues from the follows:</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><table border="0" cellpadding="0" cellspacing="0" style="TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr><td style="width:36px" valign="top"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><span><span>•</span></span></span></span></span></span></td><td style="width:808px" valign="top"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><span>Production Service Agreement Revenue is related to films where the Company has been engaged as an independent contractor to provide production services and other elements related to production for individual film projects.</span></span></span></span></span></td></tr><tr><td style="width:36px" valign="top"> </td><td style="width:808px" valign="top"> </td></tr><tr><td style="width:4%;vertical-align:top">•</td><td style="width:36px" valign="top"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Revenue from self-produced films is related to films where the Company has self-produced certain films along with a third party, with the expectation that these films will be distributed in the future.</span></span></td></tr></tbody></table><p style="MARGIN:0px"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><span> </span></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The Company analyses whether gross sales, or net sales should be recorded, has control over establishing price, and has control over the related costs with earning revenues. The Company has recorded all revenues at the gross price.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Cash payments received are recorded as deferred revenue until the conditions, stated above, of revenue recognition have been met, specifically all obligations have been met as specified in the related customer contract.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>Stock Repurchase and Cancellation</strong></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">During the year ended June 30, 2018, the Company repurchased and cancelled 85,475 shares of common stock. The Company accounted for the transaction in accordance with <i>ASC 505 – Equity – 30 Treasury Stock, Purchase of Treasury Shares or Stock Rights.</i></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Loss per Share Calculations</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended September 30, 2019, and 2018, as there are no potential shares outstanding that would have a dilutive effect.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Recently Issued Accounting Pronouncements</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In June 2018, the FASB issued ASU No. 2018-07<i>, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting</i>, or ASU 2018-07. Under this ASU, the accounting for awards issued to nonemployees will be similar to the accounting for employee awards. This includes allowing for the measurement of awards at the grant date and recognition of awards with performance conditions when those conditions are probable, both of which are earlier than under current guidance for nonemployee awards. The Company has early adopted this guidance, specifically related to the tax calculations of consulting services compensation.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">In March 2019, the FASB issued new guidance on film production costs ASU 2019-02, <i>Entertainment Films- Other Assets – Film Costs (Subtopic 926-20). </i>The new guidance is effective for fiscal years beginning after December 15, 2019 (for the year ended June 30, 2021 for the Company) and interim periods within those fiscal years and may be early adopted. The new guidance aligns the accounting for the production costs of an episodic series with those of a film by removing the content distinction for capitalization. It also addresses presentation, requires new disclosures for produced and licensed content and addresses cash flow classification for license agreements to better reflect the economics of an episodic series. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.</p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In March 2019, the FASB issued ASU No. 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters Intangibles-Goodwill and Other (Subtopic 920-350). The update 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. The amendments also require that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. The amendments in this update require that an entity test a film or license agreement for program material within the scope of Subtopic 920-350 for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.</span></span></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee s obligation to make lease payments arising from a lease and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company does not have any leases and does not have any material impact related to the new guidance.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.</span></span></span></span></p><p><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Going Concern</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. During the three months ended </span></span>September<span><span> 30, 2019 the Company had a net loss from operations of $102,653. </span></span>As of September 30, 2019, the Company has an accumulated deficit of <span><span>$1,858,139. </span></span>These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion and an identification of new business opportunities.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The Company plans on raising the required funds through completion of film projects resulting in revenues, and further potential equity and debt offerings. However, there is no assurance that the Company will be successful in this or any of its endeavors or become financially viable to continue as a going concern.</span></span></span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Basis of Consolidation</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Team Sports Superstore (Inactive), Almost Never Films Inc. (Indiana), FWIL, LLC (Indiana), Virginia Christmas, LLC (New York), Christmas Camp, LLC (New York), and Country Christmas, LLC (Ohio). Its <span><span> 90 % </span></span>owned subsidiaries are One HLWD KY LLC (Kentucky), Two HLWD KY LLC (Kentucky) and Three HLWD KY (Kentucky), LLC. All significant intercompany transactions and balances have been eliminated in consolidation.</span></span></p><p><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company dissolved FWIL, LLC on September 16, 2019.</span></span></p> 0.90 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Basis of Presentation</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed financial statements do not include all the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited financial statements and the notes thereto that are included in the Company’s audited June 30, 2019 financial statements that was filed with the SEC on October 15, 2019. The results of operations for the three months ended September 30, 2019, are not necessarily indicative of the results to be expected for the full year</span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Use of Estimates</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the fair value of common stock issued for services, film costs, among others. Actual results could differ from these estimates.</span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Cash</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Cash includes demand deposits with banks or other financial institutions. All cash balances are hold by major banking institutions.</span></span></span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Concentration of Risk</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The Company maintains its cash with a financial institution, and at times, amounts may exceed federally insured limits. Currently the FDIC insurance coverage limit is $250,000, </span></span>and the Company is potentially exposed to no un-insured cash balances.<span><span> The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.</span></span></span></span><br/> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company’s accounts receivable from customer individually accounts for more than 10% of total receivable are as follows:</span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </p><table border="0" cellpadding="0" cellspacing="0" style="border:0px;margin:auto;background-color:#ffffff" width="85%"><tbody><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><strong>September 30,</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><strong>June 30,</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr><tr style="background-color:#cceeff"><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt">Accounts receivable - Pureflix</p></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">581,049</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">583,333</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr></tbody></table><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">The Company’s revenue from customer individually accounts for more than 10% of total revenue are as follows:</p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><table border="0" cellpadding="0" cellspacing="0" style="border:0px;margin:auto;background-color:#ffffff" width="85%"><tbody><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="6" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center"><strong>Three-month ended</strong></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center"><strong>September 30,</strong></p></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2018</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr><tr style="background-color:#cceeff"><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top">MVE Productions</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">343,256</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">—</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr></tbody></table> 250000 <p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company’s accounts receivable from customer individually accounts for more than 10% of total receivable are as follows:</span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </p><table border="0" cellpadding="0" cellspacing="0" style="border:0px;margin:auto;background-color:#ffffff" width="85%"><tbody><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><strong>September 30,</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><strong>June 30,</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr><tr style="background-color:#cceeff"><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt">Accounts receivable - Pureflix</p></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">581,049</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">583,333</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr></tbody></table><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">The Company’s revenue from customer individually accounts for more than 10% of total revenue are as follows:</p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><table border="0" cellpadding="0" cellspacing="0" style="border:0px;margin:auto;background-color:#ffffff" width="85%"><tbody><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="6" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center" valign="bottom"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center"><strong>Three-month ended</strong></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center"><strong>September 30,</strong></p></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2019</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:center;width:9%" valign="bottom"><strong>2018</strong></td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="bottom"> </td></tr><tr><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td colspan="2" style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr><tr style="background-color:#cceeff"><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt" valign="top">MVE Productions</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">343,256</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom">$</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:right;width:9%" valign="bottom">—</td><td style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;width:1%" valign="bottom"> </td></tr></tbody></table> 0.10 <p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>Film Costs, Net</strong></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company records film costs in accordance with <i>ASC – 926 - Entertainment – Films</i>. Film costs include direct production costs, production overhead and acquisition costs for both motion picture and television productions and are stated at the lower of unamortized cost or estimated fair value and classified as noncurrent assets. The Company qualifies for certain government programs that provide incentives earned in regard to expenditures on qualifying film production activities. The incentives are recorded as an offset to the related asset balance. Estimates used in calculating the fair value of the film costs are based upon assumptions about future demand and market conditions and are reviewed on a periodic basis.</span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Fair Value of Financial Instruments</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">As of September 30, 2019, the balance reported for cash and accounts receivable approximates its fair value because of their short maturities. Notes payable are recorded at agreed values. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. Promissory notes receivable, loan receivable and promissory notes payable are stated at historical amounts less principal payments. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies.</span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Revenue Recognition</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In May 2014, the FASB issued new accounting guidance related to revenue from contracts with customers. The core principle of the Standard is that recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new guidance requires that companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company has chosen to early adopt and apply the standards beginning in the fiscal year ended June 30, 2018<i>, </i>using the modified retrospective approach, which applies the new standard to contracts that are not completed as of the date of adoption. The Company concluded that no adjustment to the opening balance of retained earnings was required upon the adoption of the new standard.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company recognizes revenue from its contracts with customers in accordance with <i>ASC 606 – Revenue from Contracts with Customers. </i>The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>When the Company enters into a contract, the Company analyses the services required in the contract in order to identify the required performance obligations which would indicate the Company has met and fulfilled its obligations. For the current contracts in place, the Company has identified performance obligations as one single event, the sign-off by both parties that production is completed and the product (film) is ready for distribution. To appropriately identify the performance obligations, the Company considers all of the services required to be satisfied per the contract, whether explicitly stated or implicitly implied. The Company allocates the full transaction price to the single performance obligation being satisfied.</span></span></span></span></p><p style="MARGIN:0px"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company recognizes revenue when the customer confirms to the Company that all of the terms and conditions of the contract has been met, and the sign-off of the project has been completed. The Company derives its revenues from the follows:</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><table border="0" cellpadding="0" cellspacing="0" style="TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr><td style="width:36px" valign="top"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><span><span>•</span></span></span></span></span></span></td><td style="width:808px" valign="top"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><span>Production Service Agreement Revenue is related to films where the Company has been engaged as an independent contractor to provide production services and other elements related to production for individual film projects.</span></span></span></span></span></td></tr><tr><td style="width:36px" valign="top"> </td><td style="width:808px" valign="top"> </td></tr><tr><td style="width:4%;vertical-align:top">•</td><td style="width:36px" valign="top"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Revenue from self-produced films is related to films where the Company has self-produced certain films along with a third party, with the expectation that these films will be distributed in the future.</span></span></td></tr></tbody></table><p style="MARGIN:0px"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><span> </span></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The Company analyses whether gross sales, or net sales should be recorded, has control over establishing price, and has control over the related costs with earning revenues. The Company has recorded all revenues at the gross price.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Cash payments received are recorded as deferred revenue until the conditions, stated above, of revenue recognition have been met, specifically all obligations have been met as specified in the related customer contract.</span></span></span></span></p> <p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>Stock Repurchase and Cancellation</strong></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">During the year ended June 30, 2018, the Company repurchased and cancelled 85,475 shares of common stock. The Company accounted for the transaction in accordance with <i>ASC 505 – Equity – 30 Treasury Stock, Purchase of Treasury Shares or Stock Rights.</i></span></span></p> 85475 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Loss per Share Calculations</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended September 30, 2019, and 2018, as there are no potential shares outstanding that would have a dilutive effect.</span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Recently Issued Accounting Pronouncements</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In June 2018, the FASB issued ASU No. 2018-07<i>, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting</i>, or ASU 2018-07. Under this ASU, the accounting for awards issued to nonemployees will be similar to the accounting for employee awards. This includes allowing for the measurement of awards at the grant date and recognition of awards with performance conditions when those conditions are probable, both of which are earlier than under current guidance for nonemployee awards. The Company has early adopted this guidance, specifically related to the tax calculations of consulting services compensation.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">In March 2019, the FASB issued new guidance on film production costs ASU 2019-02, <i>Entertainment Films- Other Assets – Film Costs (Subtopic 926-20). </i>The new guidance is effective for fiscal years beginning after December 15, 2019 (for the year ended June 30, 2021 for the Company) and interim periods within those fiscal years and may be early adopted. The new guidance aligns the accounting for the production costs of an episodic series with those of a film by removing the content distinction for capitalization. It also addresses presentation, requires new disclosures for produced and licensed content and addresses cash flow classification for license agreements to better reflect the economics of an episodic series. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.</p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>In March 2019, the FASB issued ASU No. 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters Intangibles-Goodwill and Other (Subtopic 920-350). The update 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. The amendments also require that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. The amendments in this update require that an entity test a film or license agreement for program material within the scope of Subtopic 920-350 for impairment at a film group level when the film or license agreement is predominantly monetized with other films and/or license agreements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.</span></span></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee s obligation to make lease payments arising from a lease and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company does not have any leases and does not have any material impact related to the new guidance.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.</span></span></span></span></p> <p><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>Going Concern</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. During the three months ended </span></span>September<span><span> 30, 2019 the Company had a net loss from operations of $102,653. </span></span>As of September 30, 2019, the Company has an accumulated deficit of <span><span>$1,858,139. </span></span>These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion and an identification of new business opportunities.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>The Company plans on raising the required funds through completion of film projects resulting in revenues, and further potential equity and debt offerings. However, there is no assurance that the Company will be successful in this or any of its endeavors or become financially viable to continue as a going concern.</span></span></span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>NOTE 3 – FILM COSTS, NET</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Film costs are comprised of the following:</span></span></span></span></p><p style="MARGIN:0px"> </p><table border="0" cellpadding="0" cellspacing="0" style="WIDTH:100%;TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong><span><span>September </span></span></strong><span><span><strong>30,</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>2019</strong></span></span></span></span></p></td><td style="PADDING-BOTTOM:1px" valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>June 30,</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>2019</strong></span></span></span></span></p></td><td style="PADDING-BOTTOM:1px" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#cceeff"><td valign="top"><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Independent Self-Produced Film Costs, Net</span></span></span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>85,496</span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>85,475 </span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#ffffff"><td valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Capitalized Film Costs covered under Production Service Agreements, Net</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>—</span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>343,256</span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#cceeff"><td valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Total Film Costs, Net</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 3px double;width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="BORDER-BOTTOM:black 3px double;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>85,496</span></span></span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 3px double;width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="BORDER-BOTTOM:black 3px double;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>428,731</span></span></span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr></tbody></table><p style="MARGIN:0px"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Film costs include salaries and wages, and all other direct costs associated with the motion pictures and television productions. In addition, the Company qualifies for certain government programs that provide incentives earned in regard to expenditures on qualifying film production activities. The incentives are recorded as an offset to the related asset balance.</span></span></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">The Company performs fair value measurements related to film costs on an annual basis to evaluate and review indicators of impairment. During the three months ended September 30, 2019, the Company did not recognize an impairment loss.</span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>On November 10, 2017 the Company executed a First Amendment Agreement to its 6x picture Production and Distribution Agreement between Big Film Factory LLC (“Big Film” or “Prodco”) and Pure Flix Entertainment LLC (“PFE”), (the “Agreement”). The Agreement memorializes the understanding with respect to the development, packaging, production, post-production and worldwide distribution of the films intended for initial and primary worldwide exhibition. The Company, will be added as a party to the initial agreement by and between Big Film and PFE, wherever Big Film is referenced in connection with providing production services in conjunction with Big Film as well as providing production capital and cash following each of the first six (6) films produced under the Agreement (“6 Pictures”). Both Prodco and PFE agree to expand the defined role of “Prodco” in the Agreement, to add the Company to that definition, and grant the Company equally the same role and responsibilities heretofore only held by Big Film in connection with the 6 Pictures.</span></span></span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>On July 16, 2019, the Company received notice that Country Christmas Album has been confirmed as completed and delivered in accordance with the agreement terms.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>During the three months ended September 30, 2019 and 2018, $343,256 and $0, respectively, of capitalized film costs were expensed as cost of revenues.</span></span></span></span></p> <table border="0" cellpadding="0" cellspacing="0" style="WIDTH:100%;TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong><span><span>September </span></span></strong><span><span><strong>30,</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>2019</strong></span></span></span></span></p></td><td style="PADDING-BOTTOM:1px" valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>June 30,</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:center"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>2019</strong></span></span></span></span></p></td><td style="PADDING-BOTTOM:1px" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#cceeff"><td valign="top"><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>Independent Self-Produced Film Costs, Net</span></span></span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>85,496</span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>85,475 </span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#ffffff"><td valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Capitalized Film Costs covered under Production Service Agreements, Net</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>—</span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 1px solid;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>343,256</span></span></span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#cceeff"><td valign="top"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">Total Film Costs, Net</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 3px double;width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="BORDER-BOTTOM:black 3px double;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>85,496</span></span></span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:black 3px double;width:1%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>$</span></span></span></span></td><td style="BORDER-BOTTOM:black 3px double;text-align:right;width:9%" valign="bottom"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>428,731</span></span></span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr></tbody></table> 85496 85475 0 343256 343256 0 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span><strong>NOTE 4 – DEFERRED FILM REVENUE</strong></span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>On March 27, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Christmas Camp LLC.’ The Production Services Agreement was planned to run from April 9, 2018 to August 27, 2018. As of February 28, 2019, all criteria had been met in order for the Company to recognize revenue.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><span><span>On March 27, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Last Vermont Christmas LLC.’ The Production Services Agreement was planned to run from April 9, 2018 to September 28, 2018. As of March 18, 2019, all criteria had been met in order for the Company to recognize revenue.</span></span></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">On June 19, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Country Christmas LLC.’ The Production Services Agreement was planned to run from June 25, 2018 to October 15, 2018. On July 16, 2019, the Company received notice that Country Christmas Album has been confirmed as completed and delivered in accordance with the agreement terms and therefore the Company has recorded $343,256 revenues during the period of three months ended September 30,2019.</p> <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>NOTE 5 – PROMISSORY NOTES PAYABLE</strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On October 11, 2017, the Company issued a $150,000 Promissory Note in exchange for receiving $150,000 proceeds. The principal of $150,000 is due fourteen (14) months from the receipt of the funds. and a total interest charge of ten percent or $15,000 is to be recorded over the term of the loan. The proceeds were used by the Company to fund the motion picture known as One HLWD KY LLC. During the year ended June 30, 2019, the Company paid principal of $100,000 and $15,000 of interest payable. On September 24,2019, the Company signed amendment agreement with lender for the balance of principal note of $50,000 with new maturity date of June 30, 2020. During the three months ended September 30, 2019, and 2018, interest expense of $1260 and $3,212 was recorded, respectively. As of September 30,2019, and June 30,2019, an interest payable of $9,219 and $17,510 has been recorded , respectively.. Due to change of maturity date of the loan agreement to June 30, 2020, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of change recognized as of gain on modification of debt.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On January 4, 2018, the Company issued a $80,000 Promissory Note in exchange for receiving $80,000 proceeds. The principal of $80,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum.  The proceeds were used by the Company to fund the motion picture known as River Runs Red. </span></span></p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 24,2019, the Company signed amendment agreement with lender for the principal note of $80,000 with new maturity date of June 30,2020. During the three months ended September 30, 2019, and 2018, interest expense of $2,016 and $2,016 was recorded, respectively. As of September 30,2019, and June 30,2019, an interest payable of $5,786 and $8,684 has been recorded, respectively. Due to change of maturity date of the loan agreement to June 30,2020, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of changing recognized as of gain on gain on modification of debt.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On February 6, 2018, the Company issued a $100,000 Promissory Note in exchange for receiving $100,000 proceeds. The principal of $100,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. The proceeds were used by the Company to fund the motion picture known as River Runs Red.</span></span></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 24,2019, the Company signed amendment agreements with lender with maturity date of June 30,2020, transferred the principal of note and interest payable equally to two new lenders. An interest payable of $16,328 has been recorded as of date of transfer. During the three months ended September 30,2019 and 2018, interest expenses of $2,521 and $2,521 was recorded, respectively. According to amendment agreement, the default interest at 22% recorded in the previous, adjusted to 10% and the effect of change recognized as of gain on modification of debt.</span></span></p><p style="MARGIN:0px"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On February 7, 2018, the Company issued a $150,000 Promissory Note in exchange for receiving $150,000 proceeds. The principal of $150,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. The proceeds were used by the Company to fund the motion picture known as River Runs Red. During the year ended June 30, 2019, the Company paid $150,000 of principal and $15,000 of interest payable.</span></span></p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 24,2019, the Company singed general and mutual release agreement with lender, to pay $15,000 the balance of due via issuance of 20,000 shares of common stock of the Company. As of September 24, 2019, unpaid interest of $15,000 was due. During the three months ended September 30,2019 and 2018, interest expenses of $4,955 and $3,781 was recorded, respectively. According to general and mutual release agreement , the default interest at 22% recorded in the previous, adjusted to 10% and the effect of change recognized as of gain on modification of debt.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 24,2019, the company issued a $50,000 Promissory Note in exchange of settlement loan agreement of February 06,2018 with another lender for replacing $50,000 proceeds. The principal of $50,000 is due on June 30,2020, and bears interest at 10% per annum. As of September 24, 2019, unpaid interest of $8,164 was due and transferred to a new lender. During the three months ended September 30,2019, the Company paid $5,000 of interest payable and $82 interest expenses was recorded. As of September 30,2019, unpaid interest of $3,247 was due.</span></span></p> 150000 80000 100000 150000 50000 P14M P12M P12M P12M 15000 100000 150000 15000 15000 5000 41055 62142 8164 8247 50000 80000 350000 350000 50000 50000 1260 3212 2016 2016 2521 2521 4955 3781 82 0.22 0.22 0.22 0.22 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>NOTE 6 – RELATED PARTY TRANSACTIONS</strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 19, 2017 the company issued a 10% Promissory Note in exchange for receiving $350,000 from Kruse Farms, LP., a Company owned by one of the Company’s principle owners, to fund the production of a motion picture. The principal of $350,000 is due in twenty-four (24) months from receipt of the funds. On September 24,2019, the Company and the lender have extended the maturity date to June 30, 2020. Interest payable of $41,055 and $62,142 has been recorded as of September 30, 2019, and </span></span><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">June 30, 2019</span></span><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">, respectively. During the three months ended September 30, 2019and 2018, interest expense was $8,822 and $8,822, respectively. As of September 30, 2019, the principal balance of note is $350,000.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 24,2019, the company issued a $50,000 Promissory Note in to the Company’s Chief Executive Officer exchange of settlement loan agreement of February 06,2018 with another lender for replacing $50,000 proceeds. The principal of $50,000 is due on June 30,2020, and bears interest at 10% per annum. As of September 24, 2019, unpaid interest of $8,164 was due and transferred to lender. During the three months ended September 30,2019, $82 interest expenses was recorded. As of September 30,2019, unpaid interest of $8,247 was due.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">As of September 30, 2019, and June 30,2019, the Company has advanced $20,000 as a loan to the Company’s Chief Creative Officer, respectively.</p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">As of September 30,2019, and June 30,2019, the Company borrowed a $12,000 from an individual related to the Company’s Chief Creative Officer. The amounts are due on demand and non-interest bearing.</p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">During the three months ended September 30, 2019, and 2018, the Company paid $0 , and $25,640, respectively to the Chief Creative Officer for fees related to production and managing movie services.</p> P24M 50000 20000 20000 12000 12000 0 25640 <p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><strong>NOTE 7 – SHARE CAPITAL</strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif"><i>Common Stock</i></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On October 17, 2018, the Company issued 250,000 and 200,000 common shares at $0.50 for consulting services, to two individuals, valued at $125,000, and $100,000, respectively.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-size:10pt"><span style="font-family:Times New Roman,Times,serif">On September 24,2019, the Company issued 20,000 common shares at $0.001 par value for settlement of $15,000 interest payable of notes</span></span></p> 250000 200000 0.50 0.50 0.001 125000 100000 20000 15000 <p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>NOTE 8 – COMMITMENTS AND CONTINGENCIES</strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">The Company neither owns nor leases any real or personal property. The Company’s officers have provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.</span></span></p> <p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>NOTE 9 – INCOME TAXES</strong></span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law. The Tax Act includes numerous changes to tax laws impacting business, the most significant being a permanent reduction in the federal corporate income tax rate from 34% to 21%. The rate reduction took effect on January 1, 2018.</span></span></p><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% and 27.5% to the net loss before provision for income taxes for the following reasons:</span></span></p><p style="MARGIN:0px"> </p><table border="0" cellpadding="0" cellspacing="0" style="WIDTH:100%;TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="6" style="border-bottom:1px solid black;text-align:center;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>Three Months Ended</strong><strong> September 30, </strong></span></span></p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td colspan="2" style="border-bottom:1px solid black;text-align:center;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2019</strong></span></span></p></td><td style="padding-bottom:1px;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td colspan="2" style="border-bottom:1px solid black;text-align:center;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2018</strong></span></span></p></td><td style="padding-bottom:1px;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="top"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="top"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Federal Income Tax benefits (expenses) attributable to</span></span></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td></tr><tr style="background-color:rgb(204, 238, 255)"><td style="background-color:rgb(204, 238, 255)" valign="top"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Current Operation</span></span></p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">20,340</span></span></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">17,178</span></span></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="top"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Less: Valuation Allowance</span></span></p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(20,340</span></span></td><td style="padding-bottom:1px;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(17,178</span></span></td><td style="padding-bottom:1px;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td></tr><tr style="background-color:rgb(204, 238, 255)"><td style="background-color:rgb(204, 238, 255)" valign="top"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Net Provision for Federal Income Taxes</span></span></p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:3px double black;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="border-bottom:3px double black;text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="padding-bottom:3px;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:3px double black;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="border-bottom:3px double black;text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="padding-bottom:3px;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr></tbody></table><p style="MARGIN:0px;text-align:justify"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Net deferred tax assets consist of the following components as of:</span></span></p><p style="MARGIN:0px"> </p><table border="0" cellpadding="0" cellspacing="0" style="WIDTH:100%;TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:center" valign="bottom"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"><strong>September 30,</strong></p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:center" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>June 30,</strong></span></span></p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2019</strong></span></span></p></td><td style="PADDING-BOTTOM:1px" valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2019</strong></span></span></td><td valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr><td><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#cceeff"><td valign="top"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Deferred tax assets</span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">320,676</span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">300,336 </span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#ffffff"><td valign="top"><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Less: valuation allowance</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(320,676</span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(300,336</span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td></tr><tr style="background-color:#cceeff"><td valign="top"><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Deferred tax assets, net</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:3px double;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="BORDER-BOTTOM:3px double;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:3px double;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="BORDER-BOTTOM:3px double;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr></tbody></table><p style="MARGIN:0px"> </p><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">At September 30, 2019, the Company had $1,852,328 of the U.S. net operating losses (the “U.S. NOLs”), which begin to expire beginning in 2036. NOLs generated in tax years prior to June 30, 2018, can be carryforward for twenty years, whereas NOLs generated after June 30, 2019 can be carryforward indefinitely.</span></span></p> 0.34 0.21 0.275 <table border="0" cellpadding="0" cellspacing="0" style="WIDTH:100%;TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="6" style="border-bottom:1px solid black;text-align:center;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>Three Months Ended</strong><strong> September 30, </strong></span></span></p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td colspan="2" style="border-bottom:1px solid black;text-align:center;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2019</strong></span></span></p></td><td style="padding-bottom:1px;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td style="background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong> </strong></span></span></p></td><td colspan="2" style="border-bottom:1px solid black;text-align:center;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2018</strong></span></span></p></td><td style="padding-bottom:1px;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="top"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="top"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Federal Income Tax benefits (expenses) attributable to</span></span></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"> </td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"> </td></tr><tr style="background-color:rgb(204, 238, 255)"><td style="background-color:rgb(204, 238, 255)" valign="top"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Current Operation</span></span></p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">20,340</span></span></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">17,178</span></span></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:rgb(255, 255, 255)"><td style="background-color:rgb(255, 255, 255)" valign="top"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Less: Valuation Allowance</span></span></p></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(20,340</span></span></td><td style="padding-bottom:1px;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td><td style="width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:1px solid black;text-align:right;width:9%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(17,178</span></span></td><td style="padding-bottom:1px;width:1%;background-color:rgb(255, 255, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td></tr><tr style="background-color:rgb(204, 238, 255)"><td style="background-color:rgb(204, 238, 255)" valign="top"><p style="MARGIN:0px"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Net Provision for Federal Income Taxes</span></span></p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:3px double black;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="border-bottom:3px double black;text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="padding-bottom:3px;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="border-bottom:3px double black;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="border-bottom:3px double black;text-align:right;width:9%;background-color:rgb(204, 238, 255)" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="padding-bottom:3px;width:1%;background-color:rgb(204, 238, 255)" valign="bottom"><p style="MARGIN:0px"> </p></td></tr></tbody></table> 20340 17178 -20340 -17178 <table border="0" cellpadding="0" cellspacing="0" style="WIDTH:100%;TEXT-ALIGN:justify;FONT:10pt TIMES NEW ROMAN" width="100%"><tbody><tr><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:center" valign="bottom"><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt"><strong>September 30,</strong></p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:center" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>June 30,</strong></span></span></p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr><td valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><p style="MARGIN:0px;text-align:center"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2019</strong></span></span></p></td><td style="PADDING-BOTTOM:1px" valign="bottom"><p style="MARGIN:0px"> </p></td><td valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="BORDER-BOTTOM:black 1px solid;text-align:center;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt"><strong>2019</strong></span></span></td><td valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr><td><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td colspan="2" style="text-align:right;width:9%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#cceeff"><td valign="top"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Deferred tax assets</span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">320,676</span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">300,336 </span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr><tr style="background-color:#ffffff"><td valign="top"><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Less: valuation allowance</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(320,676</span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:1px solid;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">(300,336</span></span></td><td style="PADDING-BOTTOM:1px;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">)</span></span></td></tr><tr style="background-color:#cceeff"><td valign="top"><p style="MARGIN:0px;text-align:justify"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">Deferred tax assets, net</span></span></p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:3px double;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="BORDER-BOTTOM:3px double;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td><td style="BORDER-BOTTOM:3px double;width:1%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">$</span></span></td><td style="BORDER-BOTTOM:3px double;text-align:right;width:9%" valign="bottom"><span style="font-family:Times New Roman,Times,serif"><span style="font-size:10pt">—</span></span></td><td style="PADDING-BOTTOM:3px;width:1%" valign="bottom"><p style="MARGIN:0px"> </p></td></tr></tbody></table> 320676 300336 320676 300336 0 0 1852328 <p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"><strong>NOTE 12 – SUBSEQUENT EVENTS</strong></p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">Management has evaluated subsequent events through the date the consolidated financial statements were issued. Based on our evaluation no events have occurred that require disclosure, other than those disclosed below.</p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify"> </p><p style="font-size:10pt;font-family:Times New Roman, Times, serif;margin-top:0pt;margin-bottom:0pt;text-align:justify">Subsequent to the quarter end, the Company dissolved CXA Movie, LLC on October 5, 2019.</p> EX-101.SCH 5 hlwd-20190930.xsd XBRL TAXONOMY EXTENSION SCHEMA 0001 - Document - Document and Entity Information link:presentationLink link:definitionLink link:calculationLink 0002 - Statement - Condensed Consolidated Balance Sheets link:presentationLink link:definitionLink link:calculationLink 0003 - Statement - Condensed Consolidated Balance Sheets (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 0004 - Statement - Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) link:presentationLink link:definitionLink link:calculationLink 0005 - 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