0001640334-21-002460.txt : 20210929 0001640334-21-002460.hdr.sgml : 20210929 20210928203349 ACCESSION NUMBER: 0001640334-21-002460 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 48 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210929 DATE AS OF CHANGE: 20210928 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-53049 FILM NUMBER: 211288943 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-K 1 hlwd_10k.htm FORM 10-K hlwd_10k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

(Mark one)

 

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

 

For the Year Ended June 30, 2021

 

or

 

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

 

For the transition period from

 

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

 

(I.R.S. Employer

of Incorporation or Organization)

 

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)

 

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

None

 

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

 

Title of

each class

 

Trading

Symbol(s)

 

Name of each exchange on which

 registered

Common Stock, $.001 par vale

 

HLWD

 

N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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

 

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 the “large accelerated filer,” “accelerated filer,” “non-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

(Do not check if a smaller reporting company)

 

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 ☒

 

The number of shares of registrant’s common stock outstanding as of September 7, 2021 was 5,798,765.

 

 

 

 

TABLE OF CONTENTS

 

FORWARD-LOOKING STATEMENTS

 

 

3

 

 

 

 

 

 

 

PART I

 

 

 

 

ITEM 1.

DESCRIPTION OF BUSINESS

 

 

4

 

ITEM 1A.

RISK FACTORS

 

 

10

 

ITEM 2.

DESCRIPTION OF PROPERTY

 

 

10

 

ITEM 3.

LEGAL PROCEEDINGS

 

 

10

 

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

 

10

 

 

 

 

 

 

PART II

 

 

 

 

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

 

 

11

 

ITEM 6.

SELECTED FINANCIAL DATA

 

 

11

 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

 

 

12

 

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

 

15

 

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

 

 

16

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

 

27

 

ITEM 9A.

CONTROLS AND PROCEDURES

 

 

 27

 

ITEM 9B.

OTHER INFORMATION

 

 

 28

 

 

 

 

 

 

 

PART III

 

 

 

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

 

 

29

 

ITEM 11.

EXECUTIVE COMPENSATION

 

 

30

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

 

31

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

 

31

 

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

 

32

 

ITEM 15.

EXHIBITS

 

 

33

 

SIGNATURES

 

 

34

 

 

 

2

Table of Contents

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report contains forward-looking statements, including, without limitation, in the sections captioned “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to exploration programs, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC, and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above.

 

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward- looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, insufficient cash flows and resulting illiquidity, our inability to expand our business, government regulations, lack of diversification, volatility in the price of gold, increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies.

 

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise.

 

Readers should read this Report in conjunction with our financial statements and the related notes thereto in this Report, and other documents which we may file from time to time with the SEC.

 

 
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Table of Contents

 

PART I

 

ITEM 1. DESCRIPTION OF BUSINESS.

 

This Report contains summaries of the material terms of various agreements executed in connection with the transactions described herein. The summaries of these agreements are subject to, and are qualified in their entirety by reference to, these agreements, all of which are incorporated herein by reference.

 

Business Development

 

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 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.

 

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, 2017.

 

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, 2017.

 

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 June 30, 2021.

 

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.

 

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.

 

 
4

Table of Contents

 

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 is 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.

 

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.

 

On May 23, 2018 the Company executed a Co-Production Agreement with The Media Farm (‘TMF”) with reference to the financing, development, production , and exploitation of up to two (2) feature Length motion picture (each and collectively “Picture(s)”) and TMF’s television series, “The Chair” (“Series”).

 

On June 19, 2018 the Company executed a Production Services Agreement with MVE Productions, LLC (“MVE”) with respect to production services to be performed by Almost Never Films, Inc for the MVE in connection with the motion picture tentatively titled “Country Christmas Album”.

 

On October 18, 2018, Damiano Tucci presented the Board of Directors of the Company with his resignation as Chief Operating Officer of the Company. Mr. Tucci’s decision to resign was not due to any disagreement with the Company. On October 18, 2018, the Board of Directors of the Company accepted Mr. Tucci’s resignation. Accordingly, Damiano Tucci ceased to be the Company’s Chief Operating Officer. Daniel Roth, the Company’s current Chief Creative Officer, accepted the additional position of Chief Operating Officer.

 

 
5

Table of Contents

 

Criteria

 

We are a 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.

 

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.

 

Share Exchange and Recapitalization

 

On January 15, 2017, 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 100,000,000 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 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, 2017, 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, 2017.

 

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.

 

We continue to be a “smaller reporting company,” as defined under the Exchange Act, following the Share Exchange.

 

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 OTCQB trading symbol to “HLWD”

 

 
6

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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.

 

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 proposed 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.

 

 
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Motion Picture Property Acquisition Process

 

Our acquisition process is the process by which we intend to acquire or license “underlying properties”. In turn, we expect to use those properties to attract creative talent (including writers, actors and directors) to the potential motion picture project. If successful, we will then grant or license out those rights to third party financiers of motion pictures, who will then contract with the creative talent we have attracted to the property as well as finance, produce and distribute/exploit the motion picture.

 

Almost Never Feature Film Production

 

Our initial primary involvement with feature film production is in the area of the development of “underlying properties”. We intend to engage third parties to produce, finance and exploit/distribute the motion picture “packages” we put together. We may also provide production expertise (i.e. “production services”) to the third party producer and/or financier of the motion picture in question. If we do provide production expertise, we, or members of our executive team, Danny Chan, Daniel Roth, and Damiano Tucci, may be credited as “producers” or “executive producers” of the particular film in question. We expect to primarily derive our income from producer fees, consulting and service fees as well as our participation in the profits of the various pictures produced by third parties, that were developed and/or “packaged” by us.

 

Our feature film strategy generally is to perform production services, develop and/or produce feature films when the production budgets for the films are expected to be entirely or substantially covered by a third party. In this way, we believe our risk is, by in large, only the capital required, if any, to develop and package the motion picture project. The entirety of the production budget, as well as any costs associated with distributing and/or exploiting the motion pictures in question, will be expected to be borne by a third party or parties who have the resources and expertise to produce and/or distribute motion pictures.

 

Distributing Almost Never Motion Pictures

 

Currently, we do not intend to directly distribute motion pictures. Instead, when we seek financing for our motion picture “packages,” the distribution rights are often obtained by the financier as collateral for their investment; in other words, third parties purchase the world-wide exploitation and distribution rights to a motion picture for the cost it takes to produce the motion picture.

 

Foreign Markets

 

In general, a very important portion of the financing for “independent” (i.e., not produced by a major studio or one of their subsidiaries) motion pictures comes from the “foreign markets” (i.e., those markets outside of the United States and English-speaking Canada). With respect to productions we are associated with, the third party financier owns and/or controls the production rights and uses these rights as collateral or purchases the rights outright in connection with the funding of the pictures we develop.

 

Profit Participation

 

Our profit participation in motion picture projects will be determined by a calculation that assumes that all “negative costs” (production costs) of the picture (including, but not limited to, costs for development, principal photography and post-production) and “distribution expenses” (including, but not limited to, costs for marketing the film at various international film markets as well as costs associated with the delivery of the film and the physical elements to the various licensees of the film) are recovered by the financier plus interest thereon. After repayment of all negative costs, distribution expenses and interest thereon, the financier/distributor will charge a “distribution fee” (often a percentage of the gross income) for performing any sales or distribution services in connection with the picture. Following the payment of distribution fees and other costs, any amounts payable to creative elements that are contingent compensation (including, but not limited to, deferred compensation and bonuses) are paid to those third parties. Any money remaining is considered net profits from which profit participation is derived.

 

 
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Competition

 

The motion picture industry is intensely competitive. In addition to competing with the major film studios that dominate the motion picture industry, we will also compete with numerous independent motion picture production companies, television networks, pay television systems, and online streaming media companies such as Netflix, Hulu, and Amazon Prime. Virtually all of our competitors are significantly larger than we are, have been in business much longer than we have, and have significantly more resources at their disposal. Our competitors range from small independent producers to well financed established film studios, particularly, major U.S. film studios.

 

Intellectual Property

 

We believe that intellectual property will be material to our business and we will expend cost and effort in an attempt to develop and protect our intellectual property and to maintain compliance vis-à-vis other parties’ intellectual property. Our ability to protect and enforce our intellectual property rights is subject to certain risks. Enforcement of intellectual property rights is costly and time consuming.

 

From time to time, we may encounter disputes over rights and obligations concerning intellectual property. We cannot offer any assurances that we will prevail in any intellectual property dispute.

 

Industry Background

 

The Feature Film Industry. The feature film industry encompasses the development, production and exhibition of feature-length motion pictures and their subsequent distribution in the online, DVD, television, video on demand and other ancillary markets. The major studios dominate the industry, some of which have divisions that are promoted as “independent” distributors of motion pictures, including Universal Pictures, Warner Bros Entertainment (also known as Warner Bros. Studios, Inc., Warner Bros. Pictures, Inc. commonly called Warner Bros., or simply WB) including subsidiaries New Line Cinema and Castle Rock Entertainment & DC Entertainment, Twentieth Century Fox, Sony Pictures Entertainment (including Columbia Pictures and Tristar Pictures), Paramount Pictures, Walt Disney Studios, MGM Holdings and Lions Gate Entertainment. In recent years, however, true “independent” motion picture production and distribution companies have played an important role in the production of motion pictures for the worldwide feature film market.

 

Independent Feature Film Production and Financing. Generally, independent production companies do not have access to the extensive capital required to make big budget motion pictures, such as the “blockbuster” product produced by the major studios. They also do not have the capital necessary to maintain the substantial overhead that is typical of such studios’ operations. Independent producers target their product at specialized markets and usually produce motion pictures with budgets of less than $25 million. Generally, independent producers do not maintain significant infrastructure. They instead hire only creative and other production personnel and retain the other elements required for development, pre-production, principal photography and post-production activities on a project-by-project basis. Also, independent production companies typically finance their production activities from bank loans, pre-sales, equity offerings, co-productions and joint ventures rather than out of operating cash flow. They generally complete financing of an independent motion picture prior to commencement of principal photography to minimize risk of loss.

 

Independent Feature Film Distribution. Motion picture distribution encompasses the exploitation of motion pictures in theatres and in markets, such as the DVD, pay-per-view, pay television, free television and ancillary markets, such as hotels, airlines and streaming films on the Internet. Independent producers do not typically have distribution capabilities and rely instead on pre-sales to North American and international distributors. Generally, the local distributor will acquire distribution rights for a motion picture in one or more of the aforementioned distribution channels from an independent producer. The local distributor will agree to advance the producer a non-refundable minimum guarantee. The local distributor will then generally receive a distribution fee of between 20% and 35% of receipts, while the producer will receive a portion of gross receipts in excess of the distribution fees, distribution expenses and monies retained by exhibitors. The local distributor and theatrical exhibitor generally will enter into an arrangement providing for the exhibitor’s payment to the distributor of a percentage (generally 40% to 50%) of the box-office receipts for the exhibition period, depending upon the success of the motion picture.

 

 
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Government Regulation

 

The Company is not currently subject to any direct government regulations, other than the securities laws and the regulations thereunder applicable to all publicly owned companies and laws and regulations applicable to general businesses. It is possible that certain laws and regulations may be adopted at the local, state, national and international level that could affect the Company’s operations. Changes to such laws could create uncertainty in the marketplace which could reduce demand for the Company’s products or increase the cost of doing business as a result of costs of litigation or a variety of other such costs, or could in some other manner have a material adverse effect on the Company’s business, financial condition, results of operations and prospects. If any such law or regulation is adopted it could limit the Company’s ability to operate and could force the business operations to cease, which would have a significantly negative effect on the Company.

 

Employees

 

The Company currently has no employees. Danny Chan, our Chief Executive Officer and Chief Financial Officer, and Daniel Roth our Chief Creative Officer and Chief Operating Officer, operate the Company.

 

ITEM 1A. RISK FACTORS

 

Smaller reporting companies are not required to provide the information required by this Item 1A.

 

ITEM 1B. Unresolved Staff Comments

 

None

 

ITEM 2. DESCRIPTION OF PROPERTY.

 

The Company does not have a principal office, but maintains a mailing address at

8605 SANTA MONICA BLVD #98258

WEST HOLLYWOOD, CA 90069-4109.

 

ITEM 3. LEGAL PROCEEDINGS.

 

We know of no existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

 

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

 

None.

 

 
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PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

 

Our common stock is quoted on the Financial Industry Regulatory Authority’s OTC Bulletin Board under the symbol “HLWD”. The following quotations obtained from Yahoo! Finance reflect the highs and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

The high and low bid prices of our common stock for the previous two fiscal years are as follows:

 

Quarter Ended

 

High

 

 

Low

 

June 30, 2021

 

$0.2984

 

 

$0.03

 

March 31, 2021

 

$0.495

 

 

$0.03

 

December 31, 2020

 

$0.159

 

 

$0.02

 

September 30, 2020

 

$0.10

 

 

$0.0825

 

June 30, 2020

 

$0.25

 

 

$0.25

 

March 31, 2020

 

$0.25

 

 

$0.25

 

December 31, 2019

 

$0.25

 

 

$0.25

 

September 30, 2019

 

$0.25

 

 

$0.25

 

 

Transfer Agent

 

Our transfer agent for our common stock is Empire Stock Transfer, Inc. They are located at 1859 Whitney Mesa Drive, Henderson NV 89014. Tel: 702 818-5898 Fax: 702 974-1444.

 

Holders of Common Stock

 

As of September 7, 2021, we have approximately 103 registered shareholders holding 5,798,765 shares of our common stock.

 

Dividends

 

We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Our directors will determine if and when dividends should be declared and paid in the future based on our financial position at the relevant time. All shares of our common stock are entitled to an equal share of any dividends declared and paid.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

During the year ended June 30, 2021, the Company sold the following shares of its common stock:

 

None.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

 
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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following management’s discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in the exhibits to this Report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” commencing on page 17 above, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s actual results and plans could differ materially from those anticipated in these forward-looking statements as a result of several factors, some of which cannot be anticipated or predicted. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report.

 

As a result of the Share Exchange and the change in business and operations of the Company, a discussion of the past financial results of the Company is not pertinent, and under applicable accounting principles the historical financial results of Almost Never, the accounting acquirer, prior to the Share Exchange are considered the historical financial results of the Company.

 

Upon the completion of the Share Exchange, Almost Never became a wholly-owned subsidiary of the Company. All references to “Almost Never” shall mean and refer to Almost Never prior to the Share Exchange and to the Company as well as to the business of Almost Never (constituting our only business) after the Share Exchange as required by the context.

 

The following discussion highlights Almost Never’s results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on Almost Never’s audited and unaudited financial statements supplied as exhibits to this Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

 

Basis of Presentation

 

The audited financial statements of Almost Never from June 30, 2020 to June 30, 2021, including a summary of our significant accounting policies and notes thereto, should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited financial statements. All such adjustments are of a normal recurring nature.

 

Overview

 

Upon the consummation of the transactions contemplated by the Exchange Agreement, on January 15, 2017, we issued 1,000,000 shares of our Series A Convertible Preferred Stock to the Almost Never Shareholders in exchange for all 100,000,000 shares of issued and outstanding common stock of Almost Never. As a result of the Exchange Agreement, Almost Never became our wholly-owned subsidiary, and the two Almost Never Shareholders have voting power equal to approximately 80% of the voting power of the Company.

 

Almost Never Films Inc. was founded as an Indiana corporation in July 2015. Activities since inception, through October 31, 2015, were devoted primarily to business development that included meetings with producers, actors, directors and screenwriters in the film industry to explore various partnerships and other collaborations. Development consists of meeting with screenwriters, producers, directors, talent agencies, and other motion picture industry executives.

 

As part of Share Exchange, Doug Samuelson, our sole officer, resigned from all his positions with the Company and Danny Chan was elected as our Chief Executive Officer, Chief Financial Officer and a director on our Board, and Derek Williams was elected as our Chief Operating Officer. Mr. Chan and Mr. Williams held the same executive office positions at Almost Never prior to the Share Exchange. Effectively ten (10) days after the filing and distribution of an Information Statement on Schedule 14f-1, Mr. Williams became a director on our Board and Doug Samuelson, a former director, resigned.

 

 
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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.

 

On October 18, 2018, Damiano Tucci presented the Board of Directors of the Company with his resignation as Chief Operating Officer of the Company. Mr. Tucci’s decision to resign was not due to any disagreement with the Company. On October 18, 2018, the Board of Directors of the Company accepted Mr. Tucci’s resignation. Accordingly, Damiano Tucci ceased to be the Company’s Chief Operating Officer. Daniel Roth, the Company’s current Chief Creative Officer, accepted the additional position of Chief Operating Officer.

 

Results of Operations for the years ended June 30, 2021 and 2020

 

 

 

Years Ended

 

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2021

 

 

2020

 

 

Amount

 

Revenue

 

$-

 

 

$343,256

 

 

$(343,256 )

Cost of revenue

 

 

-

 

 

 

343,256

 

 

 

(343,256 )

Operating expenses

 

 

96,029

 

 

 

261,037

 

 

 

(165,008 )

Other income (expenses), net

 

 

(32,120 )

 

 

(52,025 )

 

 

(19,905 )

Net loss

 

$(128,149 )

 

$(313,062 )

 

$184,913

 

 

Revenue. During the years ended June 30, 2021 and 2020, the Company recorded revenue of nil and $343,256, respectively. Revenue during the year ended June 30, 2020 was associated with one film completed under a Production Service Agreement.

   

Cost of revenue. During the years ended June 30, 2021 and 2020, the Company incurred cost of revenue of nil and $343,256, respectively. Cost of Revenue during the year ended June 30, 2020 was associated with one film completed under a Production Service Agreement.

 

Operating Expenses. Operating expenses were $96,029 and $261,037 for the years ended June 30, 2021, and 2020, respectively. During the years ended June 30, 2021 and 2020, operating expenses consisted of professional fees of $11,732 and $63,970, respectively; and general administrative expenses of $84,297 and $197,067 respectively. The decrease in operating expenses during the year ended June 30, 2021 compared to the prior year were primarily related to amortization of two prepaid consulting contracts during the year ended June 30, 2020, of which there was no similar expense incurred during the year ended June 30, 2021, in addition to reductions in general office overhead and a reduction in utilization of professional services.

 

Other Expense. During the year ended June 30, 2021, the Company incurred interest expenses of $32,120, relating to unsecured promissory notes payable. During the year ended June 30, 2020, the Company incurred interest expenses of $59,807, relating to unsecured promissory notes payable, a gain on modification debt of $19,782, and a loss attributed to bad debt on a loan receivable of $12,000.

 

Net Loss. For the years ended June 30, 2021, and 2020, we incurred a loss of $28,149 and $313,062, respectively. The decrease in loss was attributable to an increase in gross profit in addition to decreases in our general and administrative expenses, professional fees, and interest expense, and a bad debt loss associated with a loan receivable, offset by a gain on modification of debt incurred during the year ended June 30, 2020.

 

 
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Liquidity and Capital Resources

 

Working Capital

 

 

 

June 30,

 

 

June 30,

 

 

Change

 

 

 

2021

 

 

2020

 

 

Amount

 

Cash

 

$138,482

 

 

$80,510

 

 

$57,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

$138,482

 

 

$100,510

 

 

$37,972

 

Current Liabilities

 

 

521,000

 

 

 

354,879

 

 

 

(166,121 )

Working Capital

 

$(382,518 )

 

$(254,369 )

 

$(128,149 )

 

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 June 30, 2021 and 2020, we had a cash balance of $138,482 and $80,510, respectively. 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.

 

As of June 30, 2021, we had a working capital deficit of $382,518 as compared to working capital deficit of $254,369 as of June 30, 2020. The increase in working capital deficit was mainly due to cash utilized in the Company’s net loss and repayments of principal on a notes payable, offset by advances from the Company’s Chief Executive Officer.

 

Cash Flows

 

 

 

Year Ended

 

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2021

 

 

2020

 

 

Amount

 

Net Cash provided by Operating Activities

 

$8,650

 

 

$422,559

 

 

$(413,909 )

Net Cash used in Investing Activities

 

$-

 

 

$-

 

 

$-

 

Net Cash provided by (used in) Financing Activities

 

$49,322

 

 

$(399,203 )

 

$448,525

 

Net Increase in Cash and Cash Equivalents

 

$57,972

 

 

$23,356

 

 

$34,616

 

 

Cash Flows provided by Operating Activities

 

Cash flows provided by Operating Activities were during the year ended June 30, 2021 was $8,650 compared to $422,559 net cash provided by operating activities for the year ended June 30, 2020. The decrease in cash flows provided by operating activities during the year ended June 30, 2021 compared to the prior year was primarily a result of a collection of accounts receivable of $583,333 during the year ended June 30, 2020.

 

Financing Activities

 

During the year ended June 30, 2021, net cash provided by financing activities was $49,322, compared to cash used in financing activities of $399,203 for the year ended June 30, 2020. During the year ended June 30, 2021, cash flows provided financing activities were the result of $83,299 of advances from the Company’s Chief Executive Officer and $20,000 from repayment of a note receivable from a related party offset by $53,977 in principal repayments of notes payable. During the year ended June 30, 2020, cash flows used in financing activities were the result of a repayment advances from a related party of $12,000 and $387,203 in repayments of a note payable.

 

 
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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 year ended June 30, 2021, the Company incurred a net loss of $128,149. As of June 30, 2021, the Company had a working capital deficiency of $382,518 and an accumulated deficit of $2,196,358. 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. During the period ended June 30, 2021, the Company did not raise any capital from investors. Management believes this funding and future funding will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow it to continue looking for opportunities to acquire operating companies or merge with other operational entities. 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.

 

Off-Balance Sheet Arrangements

 

We have no “off-balance sheet arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K).

 

Critical Accounting Policies, Estimates, and Judgments

 

Our financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. 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. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. 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.

 

Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

 
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

 

hlwd_10kimg1.jpg

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and shareholders of Almost Never Films Inc.

 

Opinions on the Financial Statements and Internal Control over Financial Reporting

 

We have audited the accompanying consolidated balance sheets of Almost Never Films Inc. and subsidiaries (the “Company”) as of June 30, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended June 30, 2021, and the related notes (collectively referred to as the “financial statements”).   In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern Uncertainty

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinions

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Simon & Edward, LLP /s/

Los Angeles, California

September 27, 2021

 

We have served as the Company's auditor since 2016.

 

 
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Almost Never Films Inc. and Subsidiaries

Consolidated Balance Sheets

 

 

 

 

June 30,

 

 

June 30,

 

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$138,482

 

 

$80,510

 

Loan receivable – related party

 

 

 

-

 

 

 

20,000

 

Total Current Assets

 

 

 

138,482

 

 

 

100,510

 

 

 

 

 

 

 

 

 

 

 

Film costs

 

 

 

85,496

 

 

 

85,496

 

TOTAL ASSETS

 

 

$223,978

 

 

$186,006

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

$75,708

 

 

$64,920

 

Due to related party

 

 

 

83,799

 

 

 

500

 

Interest payable

 

 

 

122,673

 

 

 

96,662

 

Deferred film revenue – related party

 

 

 

 100,000

 

 

 

 -

 

Promissory note payable

 

 

 

78,820

 

 

 

82,797

 

Promissory note payable - related party

 

 

 

60,000

 

 

 

110,000

 

Total Current Liabilities

 

 

 

521,000

 

 

 

354,879

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

 

521,000

 

 

 

354,879

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

 

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 shares issued and outstanding

 

 

 

5,799

 

 

 

5,799

 

Additional paid in capital

 

 

 

1,895,486

 

 

 

1,895,486

 

Accumulated deficit

 

 

 

(2,196,358)

 

 

(2,068,521)

Total shareholders’ deficit attributable to Almost Never Films Inc. shareholders

 

 

 

(295,073)

 

 

(167,236)

Noncontrolling interest

 

 

 

(1,949)

 

 

(1,637)

Total shareholders’ deficit

 

 

 

(297,022)

 

 

(168,873)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

$223,977

 

 

$186,006

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
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Almost Never Films Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

 

 

 

Years Ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Revenues

 

$-

 

 

$343,256

 

Cost of Revenues

 

 

-

 

 

 

343,256

 

Gross Profit

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

General and administration expenses

 

 

84,297

 

 

 

197,067

 

Professional fees

 

 

11,732

 

 

 

63,970

 

Total operating expenses

 

 

96,029

 

 

 

261,037

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(96,029

 

 

(261,037)

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(32,120)

 

 

(59,807)

Gain on modification of debt

 

 

-

 

 

 

19,782

 

Bad debt for loan receivable

 

 

-

 

 

 

(12,000)

Total expense, net

 

 

(32,120)

 

 

(52,025)

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

 

(128,149)

 

 

(313,062)

Provision for income taxes

 

 

-

 

 

 

-

 

Net loss

 

$(128,149)

 

$(313,062)

 

 

 

 

 

 

 

 

 

Net loss attributable to:

 

 

 

 

 

 

 

 

Almost Never Films Inc.

 

 

(127,837)

 

 

(313,035)

Noncontrolling interest

 

 

(312)

 

 

(27)

 

 

 

 

 

 

 

 

 

Comprehensive Loss

 

$(128,149)

 

 

(313,062)

 

 

 

 

 

 

 

 

 

Net Loss Per Common Share - Basic and Diluted

 

$(0.02)

 

$(0.05)

 

 

 

 

 

 

 

 

Net Loss Per Share Attributable to Common Stockholders of the Company - Basic and Diluted

 

$(0.02)

 

$(0.05)

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding - Basic and Diluted

 

 

5,798,765

 

 

 

5,794,162

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
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Almost Never Films Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Deficit)

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Non-

 

 

Total

Stockholders’

 

 

 

Number of Shares

 

 

Amount

 

 

Paid in

Capital

 

 

Accumulated

Deficit

 

 

controlling Interest

 

 

Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2019

 

 

5,778,765

 

 

$5,779

 

 

$1,880,506

 

 

$(1,755,486)

 

$(1,610)

 

$129,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued to settle interest of note payable

 

 

20,000

 

 

 

20

 

 

 

14,980

 

 

 

-

 

 

 

-

 

 

 

15,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(313,035)

 

 

(27)

 

 

(313,062)

Balance - June 30, 2020

 

 

5,798,765

 

 

$5,799

 

 

$1,895,486

 

 

$(2,068,521)

 

$(1,637)

 

$(168,873)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(127,837)

 

 

(312)

 

 

(128,149)

Balance - June 30, 2021

 

 

5,798,765

 

 

$5,799

 

 

$1,895,486

 

 

$(2,196,358)

 

$(1,949)

 

$(297,022)

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
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Almost Never Films Inc. and Subsidiaries

Consolidated Statements of Cash Flows

 

 

 

Years Ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net loss

 

$(128,149)

 

$(313,062)

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

 

 

 

 

 

 

 

 

Consulting expense

 

 

-

 

 

 

103,898

 

Gain on modification of debt

 

 

-

 

 

 

(19,782)

Bad debt for loan receivable

 

 

-

 

 

 

12,000

 

Expenses paid directly by related party

 

 

-

 

 

 

500

 

Interest accrued on promissory notes payable

 

 

32,034

 

 

 

58,645

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

-

 

 

 

583,333

 

Film costs

 

 

-

 

 

 

343,235

 

Accounts payable and accrued expenses

 

 

10,788

 

 

 

22,988

 

Deferred film revenue

 

 

-

 

 

 

(354,398)

Deferred film revenue – related party

 

 

 100,000

 

 

 

 -

 

Interest paid on promissory notes payable

 

 

(6,023)

 

 

(14,798)

Net Cash provided by Operating Activities

 

 

8,650

 

 

 

422,559

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowing from related party

 

 

83,299

 

 

 

-

 

Repayment of note receivable – related party

 

 

20,000

 

 

 

-

 

Repayment of note payable

 

 

(3,977)

 

 

(97,203)

Repayment of related party advances

 

 

-

 

 

 

(12,000)

Repayment of promissory note payable - related party

 

 

(50,000)

 

 

(290,000)

Net Cash provided by (used in) Financing Activities

 

 

49,322

 

 

 

(399,203)

 

 

 

 

 

 

 

 

 

Net Increase in cash and cash equivalents

 

 

57,972

 

 

 

23,356

 

Cash and Cash Equivalents, beginning of period

 

 

80,510

 

 

 

57,154

 

Cash and Cash Equivalents, end of period

 

$138,482

 

 

$80,510

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$6,023

 

 

$14,797

 

Cash paid for income taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental Non-cash Disclosure:

 

 

 

 

 

 

 

 

Promissory note issued to related party for settlement of loan arrangement

 

$-

 

 

$50,000

 

Conversion of debt into common stock

 

$-

 

 

$15,000

 

Interest payable reclassified to note payable – related party

 

$-

 

 

$30,000

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
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Almost Never Films Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

 

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 OTC Pink under the symbol of “HLWD.”

 

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.

 

In March 2016, the Company increased the authorized capital to 5,000,000 shares of common stock and changed the name of the Company to “Almost Never Films Inc.” upon the approval from stockholders of the company. 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 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.

 

The Company dissolved FWIL, LLC on September 16, 2019 and Country Christmas, LLC (CXA) on October 5, 2019. 

 

Basis of Presentation

 

The accompanying audited 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”).

 

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 revenue from customers individually accounting for more than 10% of total revenue are as follows:

 

 

 

Year Ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

MVE Productions

 

$-

 

 

$343,256

 

 

 

 

-

 

 

 

343,256

 

 

 
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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.

 

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 June 30, 2021, the balance reported for cash approximates its fair value because of its short maturity. Accounts payable and accrued expenses are recorded at purchase amounts. 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

 

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.

 

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.

 

 
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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.

 

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 years ended June 30, 2021, and 2020, as there are no potential shares outstanding that would have a dilutive effect.

 

Recently Issued Accounting Pronouncements

 

On July 1, 2020, the Company adopted 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 and account for any changes on a prospective basis. The new guidance 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 impact of adoption of this standard did not impact the consolidated financial statements.

 

On July 1, 2020, the Company adopted 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. The impact of adoption of this standard did not impact the consolidated financial statements

 

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.

 

COVID-19

 

In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (“COVID-19”) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no retroactive material adverse impacts on the Company’s results of operations and financial position at June 30, 2021. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company in the future. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of these consolidated financial statements. These estimates may change, as new events occur and additional information is obtained.

 

Going Concern

 

The accompanying 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 year ended June 30, 2021, the Company incurred a net loss of $128,149. As of June 30, 2021, the Company had a working capital deficiency of $382,518 and an accumulated deficit of $2,196,358. 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.

 

 
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NOTE 3 – FILM COSTS

 

Film costs are comprised of the following:

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

Independent Self-Produced Film Costs

 

$85,496

 

 

$85,496

 

 

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 years ended June 30, 2021 and 2020, 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”). In accordance with the Agreement, 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 years ended June 30, 2021 and 2020, nil and $343,256, 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 year ended June 30, 2020.

 

During the year ended June 30, 2021, the Company entered into an agreement with Harley Commodity Co. (“Harley”), a related party (see Note 6), to provide certain development services in connection with a future motion picture project. During the year ended June 30, 2021, the Company received an advance of $100,000 from Harley, which as of June 30, 2021 was recorded as deferred revenue – related party as development at such date had not yet been completed.

 

 
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Table of Contents

 

NOTE 5 – PROMISSORY NOTES PAYABLE

 

 

(i)

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. 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. The $50,000 principal note was paid off on June 12, 2020, and interest expense of $4,767 was recorded for the year ended June 30, 2020. 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. As of June 30, 2021 and 2020, the principal note payable was of nil and nil, respectively. As of June 30, 2021 and 2020, interest payable was $12,726. Subsequently on August 12, 2021, the outstanding interest payable was fully waived by the lender in the amount of $12,063.

 

 

 

 

(ii)

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. The note is in default currently and accrues interest at 22% per annum. For the years ended June 30, 2021, and 2020, interest expense of $16,465 and $7,999 were recorded, respectively. As of June 30, 2021 and 2020, interest payable were $12,414and $1,979 with the outstanding principal amount of $73,820 and $77,797, respectively. During the years ended June 30, 2021 and 2020, the Company repaid principal of $3,977 and $2,203, respectively, and interest of $6,023 and $9,797 respectively.

 

 

 

 

(iii)

On February 6, 2018, the Company issued a $100,000 Promissory Note in exchange for receiving $100,000proceeds. 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 and 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 years ended June 30, 2021 and 2020, interest expenses of nil 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 September 24, 2019, the principal balance of the loan was transferred to a new lender [see note 5(v)] who assumed $50,000 of the outstanding principal balance and the Company’s Chief Executive Officer (“CEO”) [see note 6(ii)] who assumed the remaining $50,000 outstanding principal balance. As of June 30, 2021 and 2020, there was no remaining interest or principal payable to the holder of this note.

 

 

 

(iv)

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 repaid $150,000 of principal. On September 24, 2019, the Company singed a general and mutual release agreement with the lender, to pay the remaining $15,000 the balance of due via issuance of 20,000shares of common stock of the Company. During the years ended June 30, 2021 and 2020, interest expenses of nil and $4,955 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.

 

 

 

 

(v)

On September 24, 2019, the company issued a $50,000 Promissory Note in exchange of settlement loan agreement of February 6, 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. The Company did not reach an agreement with note holder for new maturity date and as of June 30, 2020, the note is in default. As of September 24, 2019, unpaid interest of $8,164 was due and transferred to a new lender. During the years ended June 30, 2021 and 2020, the Company repaid nil and $45,000, respectively of principal note payable and nil and $5,000, respectively of interest payable. During the years ended June 30, 2021 and 2020, interest expenses of $1,100 and $846, respectively was recorded. As of June 30, 2021 and 2020, unpaid principal was $5,000and $5,000, respectively and accrued interest payable of $5,111 and $4,011, respectively.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

 

(I)

 During the year ended June 30, 2021, the Company’s CEO provided the Company with a series of advances, totaling $83,299. The funds are unsecured, non-interest bearing and due on demand. Subsequently, the Company’s CEO provided additional advances to the Company with a cumulative total of $15,124. On July 12, 2021, the Company repaid $83,299 of advances from the Company’s CEO, resulting in a remaining balance payable of $15,124.

 

 

 

 

(ii)

During the year ended June 30, 2021, the Company recorded received a payment of $100,000 of revenue from Harley Commodity Co. Ltd., an entity significantly influenced by the Company’s Chief Executive Officer, for development services agreement related to a future motion picture project entered on June 30, 2021 (see Note 4).

 

 

 

 

(iii)

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. The note is in default currently. During the years ended June 30, 2021 and 2020, the Company recorded interest expense of $6,000 and $33,270, respectively. As of June 30, 2021 and 2020, the principal balance of note was $60,000 and $60,000, respectively, with interest payable of $71,953 and $65,953 outstanding.

 

 

 

 

(iv)

On February 26, 2018, the Company issued a note receivable to its Chief Creative officer of $10,000 and an additional $10,000 on March 28, 2018. Amounts are unsecured, non-interest bearing and due on demand, with no fixed terms of repayment. During the year ended June 30, 2021, the note was repaid in full. As of June 30, 2021 and 2020, the Company had recorded a note receivable from this individual of nil and $20,000, respectively.

 

 

 

 

(v)

On September 24, 2019, the company issued a $50,000 Promissory Note to the Company’s Chief Executive Officer in exchange of settlement loan agreement of February 6, 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. The note was in default currently. During the years June 30, 2021 and 2020, the Company repaid principal of $50,000 and nil, respectively. During the years ended June 30, 2021 and 2020, the Company recorded interest expenses of $8,468 and $3,836, respectively. As of June 30, 2021 and 2020, unpaid principal totaled nil and $50,000, respectively with accrued interest totaled $20,468 and $12,000, respectively

 

 
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NOTE 7 – SHARE CAPITAL

 

Common Stock

 

The Company has 25,000,000 shares of common stock authorized with a par value of $0.001 per share.

 

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.

 

As of June 30, 2021 and 2020, there were 5,798,765 shares of common stock issued and outstanding.

 

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.

 

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% to the net loss before provision for income taxes for the following reasons:

 

 

 

Year Ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

Federal Income Tax benefits (expenses) attributable to

 

 

 

 

 

 

Current Operation

 

$21,449

 

 

$37,621

 

Less: Valuation Allowance

 

 

(21,449 )

 

 

(37,621 )

Net Provision for Federal Income Taxes

 

$-

 

 

$-

 

 

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

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Deferred tax assets

 

$359,406

 

 

$337,957

 

Less: valuation allowance

 

 

(359,406)

 

 

(337,957 )

Deferred tax assets, net

 

$-

 

 

$-

 

 

At June 30, 2021, the Company had $16,212,412 of the U.S. net operating losses (the “U.S. NOLs”), which begin to expire beginning in 2038. NOLs generated in tax years prior to June 30, 2018, can be carried forward for twenty years, whereas NOLs generated after June 30, 2019 can be carried forward indefinitely.

 

NOTE 10 – SUBSEQUENT EVENTS

 

The Company has evaluated all subsequent events through the date these consolidated financial statements were issued and determined that there were no subsequent events or transactions (except the ones disclosed in Note 5 and 6) that require recognition or disclosures in the consolidated financial statements.

 

 
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

There were no disagreements with our accountants related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and subsequent interim periods.

 

Item 9A. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) concluded as of the evaluation date that our disclosure controls and procedures were not effective such that the material information required to be included in our SEC reports is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company.

 

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

 

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

 
27

Table of Contents

 

Under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of June 30, 2021, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below.

 

Management assessed the effectiveness of our company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses:

 

·

Lack of proper segregation of duties due to limited personnel;

 

 

·

Lack of a formal review process that includes multiple levels of review from adequate personnel with requisite expertise.

 

We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

 

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist our company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.

 

Management has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

 

Changes in Internal Controls Over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the year ended June 30, 2021 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

Item 9B. Other Information

 

None.

 

 
28

Table of Contents

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

 

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

Directors and Executive Officers

 

Effective as of the consummation of the transactions contemplated by the Exchange Agreement, Doug Samuelson resigned as our Interim Chief Executive Officer and Chief Financial Officer and Director. Danny Chan became our Chief Executive Officer and Chief Financial Officer and a director of the Company. Derek Williams became our Chief Operating Officer.

 

Below are the names of and certain information regarding the Company’s current executive officers and directors:

 

Name

 

Age

 

Position

 

Date Named to Board of Directors/as Executive Officer

Danny Chan

 

43

 

Chief Executive Officer, Chief Financial Officer and Director

 

January 15, 2017

Daniel Roth

 

51

 

Chief Creative Officer, Chief Operating Officer

 

August 24, 2017

 

The principal occupation and business experience during the past five years for our executive officers and directors are as follows:

 

Danny Chan, 43, Chief Executive Officer, Chief Financial Officer, Director. Danny Chan joined us as Chief Executive Officer, Chief Financial Officer and a director of our Board on January 15, 2017. Since October of 2012 to Present, Mr. Chan serves as a managing director of Iconic Private Equity Partners. From July of 2010 to September of 2012 Mr. Chan served as managing director of Raider Capital Corporation. Mr. Chan earned a bachelor’s degree in finance from Indiana University.

 

Daniel T Roth, 51, Chief Creative Officer. Daniel Roth has over 20 years of experience in the film and television industry. specializing in developing, financing and producing content for film. Previously, from September of 2012 until August 24, 2017, Mr. Roth was a co-founder and partner of Parkside Pictures. Mr. Roth began his career in 1997 as a casting director, eventually opening his company Casting House in 2002 with offices in New York and Los Angeles.

 

Mr. Roth has produced over 30 movies over his career, including producing “LBJ” directed by Rob Reiner and starring Woody Harrelson, which premiered in September 2016 at the Toronto Film Festival. Also producing the Rob Cohen (“Fast & Furious”) film Hurricane Heist.” Mr. Roth is a graduate of the Ohio State University.

 

Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.

 

A majority of the authorized number of directors constitutes a quorum of the Board for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board individually or collectively consent in writing to the action.

 

Other Key Personnel

 

We have no significant employees other than the officers and directors described above.

 

Family Relationships

 

There are no family relationships among our directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

No executive officer or director of ours has been involved in the last ten years in any 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.

 

 
29

Table of Contents

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Exchange Act requires our directors, executive officers and greater than ten percent beneficial owners of our Common Stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Directors, executive officers and greater than ten percent stockholders are required by the rules and regulations of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of the copies of these reports furnished to us and written representations from such directors, executive officers and stockholders with respect to the period from June 30, 2017, through June 30, 2021, we are not aware of any required Section 16(a) reports that were not filed on a timely basis.

 

Board Committees

 

The Board currently does not have any committees. Until further determination by the Board, the full Board will undertake the duties of the audit committee, compensation committee and nominating committee.

 

Code of Ethics

 

The Company currently has not adopted a written code of ethics. We intend to implement a comprehensive corporate governance program, including adopting a Code of Ethics.

 

Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board be “independent” and, as a result, we are not at this time required to have our Board comprised of a majority of “Independent Directors.”

 

ITEM 11. EXECUTIVE COMPENSATION.

 

Summary Compensation Table

 

The following table summarizes the compensation of our executive officers, directors and President during the fiscal years ended June 30, 2021 and 2020. No other officers or directors received annual compensation in excess of $100,000 during the last fiscal year.

 


Name and Principal Position

 


Year

 


Salary
($)

 

 


Bonus
($)

 

 


Stock
Awards
($)

 

 


Option
Awards
($)

 

 

Non-Equity
Incentive
Plan
Compensation
($)

 

 

Nonqualified
Deferred
Compensation
Earnings
($)

 

 

All
Other
Compensa-tion
($)

 

 

Total
($)

 

Danny Chan

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daniel Roth

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-Based Compensation

 

The Company periodically issues Common Stock to employees for services. The Company accounts for stock payments to employees by measuring the cost of services received in exchange for equity on the grant date fair value of the awards, with the cost recognized as compensation expense in the Company’s financial statements over the vesting period of the awards.

 

Director Compensation

 

No director has been compensated for his role as a Director in the fiscal years ended June 30, 2021 or 2020.

 

We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred exchange plans and nonqualified deferred exchange plans. Similarly, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or a change in a named executive officer’s responsibilities following a change in control.

 

We have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers listed above.

 

Employment Agreement

 

We have no employment agreements with any of our officers, and have not issued any incentive or other stock options, profit sharing or similar benefits.

 

 
30

Table of Contents

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. In accordance with SEC rules, shares of our Common Stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the applicable table below are deemed beneficially owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. Subject to community property laws, where applicable, the persons or entities named in the tables below have sole voting and investment power with respect to all shares of our Common Stock indicated as beneficially owned by them.

 

Beneficial Ownership of Our Common Stock

 

The following table sets forth information with respect to the beneficial ownership of our Common Stock as of September 18, 2019 by (i) each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock, (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our Common Stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. Other than the Share Exchange, to our knowledge, there is no arrangement, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.

 

Unless otherwise indicated in the following table, the address for each person named in the table is c/o 8605 Santa Monica Blvd #98258

West Hollywood, California 90069-4109.

 

Name and Address of Beneficial Owner

 

Title of

Class

 

Amount and Nature of Beneficial Owner

 

 

Percent

of Class(1)

 

5% Stockholder

 

 

 

 

 

 

 

 

William R. Kruse (1)

 

Common Stock

 

 

1,522,950

 

 

 

26.35%

Named Executive Officers and Directors

 

 

 

 

 

 

 

 

 

 

Danny Chan, Chief Executive Officer, Chief Financial Officer and Director

 

Common Stock

 

 

933,095

 

 

 

16.09%

Daniel T. Roth, Chief Creative Officer#

 

Common Stock

 

 

776,476

 

 

 

13.44%

___________ 

(1) 1340 S Main Ste 300, Grapevine TX 76051

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Transactions with Related Persons

 

During our last fiscal year and except as disclosed below, none of the following persons has had any direct or indirect material interest in any transaction worth more than $120,000 to which our company was or is a party, or in any proposed transaction to which our company proposes to be a party:

 

 

(a)

any director or officer of our company;

 

 

 

 

(b)

any proposed director of officer of our company;

 

 

 

 

(c)

any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or,

 

 

 

 

(d)

any member of the immediate family of any of the foregoing persons (including a spouse, parents, children, siblings, and in-laws).

 

 
31

Table of Contents

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit Fees

 

The following table sets forth the fees billed to the Company for professional services rendered by the Company’s independent registered public accounting firm, for the years ended June 30, 2021 and June 30, 2020:

 

Fees

 

2021

 

 

 

 

 

Audit fees

 

$20,500

 

Audit Related Fees

 

$-

 

Tax fees

 

$2,200

 

All other fees

 

$-

 

 

 

 

 

 

Total Fees

 

$22,700

 

  

Fees

 

2020

 

 

 

 

 

Audit fees

 

$29,500

 

Audit Related Fees

 

$-

 

Tax fees

 

$3,500

 

All other fees

 

$-

 

 

 

 

 

 

Total Fees

 

$33,000

 

 

Audit Fees. Consist of fees billed for professional services rendered for the audits of our financial statements and reviews of our interim consolidated financial statements included in quarterly reports.

 

Tax Fees Somerset CPAs did not provide us with professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions.

 

 
32

Table of Contents

 

ITEM. 15. 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.

 

 

 

 

 

 

 
33

Table of Contents

 

SIGNATURES

 

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.
    
Dated: September 28,  2021By:/s/ Danny Chan

 

 

Danny Chan 
  2021Chief Executive Officer and Chief Financial Officer 

 

 

34

EX-31.1 2 hlwd_ex311.htm EX-31.1 hlwd_ex311.htm

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO

SEC Rules 13a-14(a) and 15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Danny Chan, Chief Executive Officer and Chief Financial Officer of Almost Never Films Inc., certify that:

 

1.

I have reviewed this Annual Report on Form 10-K of Almost Never Films Inc.;

 

 

2.

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

 

 

3.

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

 

 

4.

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

 

 

(a)

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

 

 

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under 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.

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

 

 

(a)

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

 

 

 

 

(b)

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

 

       
Date: September 28, 2021 By: /s/ Danny Chan

 

 

Danny Chan  
    Chief Executive Officer and Chief Financial Officer  
    (Principal Executive and Principal Financial Officer)  

 

EX-32.1 3 hlwd_ex321.htm EX-32.1 hlwd_ex321.htm

EXHIBIT 32.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

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 Annual Report on Form 10-K of Smack Sportswear, (the “Company”) for the year ended June 30, 2021, 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 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:

 

 

1.

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

 

 

 

 

2.

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

 

Date: September 28, 2021

     
By: /s/ Danny Chan

 

Danny Chan  
 

Chief Executive Officer and Chief Financial Officer

 
  (Principal Executive and Principal Financial Officer)  

 

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related party Total Current Assets [Assets, Current] Film costs TOTAL ASSETS [Assets] LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable and accrued expenses Due to related party Interest payable Deferred film revenue - related party Promissory note payable Promissory note payable - related party Total Current Liabilities [Liabilities, Current] TOTAL LIABILITIES [Liabilities] Stockholders' Equity (Deficit) 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 shares issued and outstanding Additional paid in capital Accumulated deficit Total shareholders' deficit attributable to Almost Never Films Inc. shareholders [Total shareholders' deficit attributable to Almost Never Films Inc. shareholders] Noncontrolling interest Total shareholders' deficit [Stockholders' Equity Attributable to Parent] TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY [Liabilities and Equity] Statement [Table] Statement [Line Items] Statement Class Of Stock Axis Series A Preferred Stock [Member] Stockholders' Equity (Deficit) Preferred stock, shares authorized Common stock, shares authorized Common stock, shares par value Common stock, shares issued Common stock, shares outstanding Preferred stock, shares issued Preferred stock, shares outstanding Condensed Consolidated Statements of Operations and Comprehensive Loss Revenues Cost of Revenues Gross Profit [Gross Profit] Operating Expenses General and administration expenses Professional fees Total operating expenses [Operating Expenses] Loss from operations [Operating Income (Loss)] Other Income (Expense) Interest expense [Interest Expense] Gain on modification of debt Bad debt for loan receivable Total expense, net [Nonoperating Income (Expense)] Net loss before income taxes [Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest] Provision for income taxes Net loss [Net Income (Loss) Attributable to Parent] Net loss attributable to: Almost Never Films Inc. Noncontrolling interest [Net Income (Loss) Attributable to Noncontrolling Interest] Comprehensive Loss Net Loss Per Common Share - Basic and Diluted Net Loss Per Share Attributable to Common Stockholders of the Company - Basic and Diluted Weighted Average Common Shares Outstanding - Basic and Diluted Condensed Consolidated Statements of Stockholders Equity (Deficit) Equity Components [Axis] Common Stock [Member] Additional Paid-in Capital [Member] Accumulated Deficit [Member] Non-controlling Interest [Member] Balance, shares [Shares, Issued] Balance, amount Common shares issued to settle interest of note payable, shares Common shares issued to settle interest of note payable, amount Net loss Balance, shares Balance, amount Condensed Consolidated Statements of Cash Flows Cash Flows from Operating Activities: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Consulting expense Gain on modification of debt [Gain on modification of debt] Bad debt for loan receivable [Gain (Loss) Related to Litigation Settlement] Expenses paid directly by related party Interest accrued on promissory notes payable Changes in operating assets and liabilities: Accounts receivable Film costs [Increase (Decrease) in Film Costs] Accounts payable and accrued expenses [Increase (Decrease) in Accounts Payable and Accrued Liabilities] Deferred film revenue Deferred film revenue - related party [Deferred film revenue - related party] Interest paid on promissory notes payable Net Cash provided by Operating Activities [Net Cash Provided by (Used in) Operating Activities] Cash Flows from Financing Activities: Borrowing from related party Repayment of note receivable - related party Repayment of note payable Repayment of related party advances [Repayment of Notes Receivable from Related Parties] Repayment of promissory note payable - related party [Repayments of Long-term Debt] Net Cash provided by (used in) Financing Activities [Net Cash Provided by (Used in) Financing Activities] Net Increase in cash and cash equivalents [Cash and Cash Equivalents, Period Increase (Decrease)] Cash and Cash Equivalents, beginning of period Cash and Cash Equivalents, end of period Supplemental Disclosure Information: Cash paid for interest Cash paid for income taxes Supplemental Non-cash Disclosure: Promissory note issued to related party for settlement of loan arrangement Conversion of debt into common stock Interest payable reclassified to note payable - related party ORGANIZATION AND OPERATIONS NOTE 1 - ORGANIZATION AND OPERATIONS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FILM COSTS NOTE 3 - FILM COSTS DEFERRED FILM REVENUE NOTE 4 - DEFERRED FILM REVENUE PROMISSORY NOTES PAYABLE NOTE 5 - PROMISSORY NOTES PAYABLE RELATED PARTY TRANSACTIONS NOTE 6 - RELATED PARTY TRANSACTIONS SHARE CAPITAL NOTE 7 - SHARE CAPITAL COMMITMENTS AND CONTINGENCIES NOTE 8 - COMMITMENTS AND CONTINGENCIES INCOME TAXES NOTE 9 - INCOME TAXES SUBSEQUENT EVENTS NOTE 10 - SUBSEQUENT EVENTS COVID-19 [COVID-19] Basis of Consolidation Basis of Presentation Use of Estimates Cash Concentration of Risk Film Costs, Net Fair Value of Financial Instruments Revenue Recognition Loss per Share Calculations Recently Issued Accounting Pronouncements COVID-19 Going Concern Schedule of revenue from customers Schedule of film costs Schedule of net loss before provision for income taxes Schedule of Net deferred tax assets Consolidated Entities Axis Exchange Agreement [Member] Budget amount Common stock, shares authoriziation Description of common stock reverse stock split Series A convertible preferred stock issued Common stock exchange shares MVE Productions Total [Total] Net loss from operation Working capital deficit FDIC insurance coverage limit Accumulated deficit Independent Self-Produced Film Costs, Net Capitalized film costs expensed as cost of revenues Related Party [Axis] Harley [Member] Revenues Related party advances Award Date Axis Debt Instrument Axis Settlement Loan Agreement [Member] September 24, 2019 [Member] Promissory Note [Member] Two new lender [Member] Promissory Note [Member] [Promissory Note [Member]] Chief Executive Officer [Member] October 11, 2017 [Member] February 6, 2018 [Member] February 7, 2018 [Member] Amendment Agreement [Member] Lender [Member] January 4, 2018 [Member] Interest payable Interest expense Unpaid principle Number of shares issued for conversion of debt Value of stock issued for conversion of stock Repayment of notes payable Promissory note payable Promissory note [Debt Instrument, Face Amount] Promissory note interest payable Recorded interest over term of loan Percentage of accrued interest Proceeds from issuance of promissory note payable Outstanding principal balance Interest rate description Principal note payable Maturity date Short Term Debt Type Axis Chief Executive Officer [Member] Kruse Farm [Member] Notes Payable, Other Payables [Member] Promissory note Revenue Advance from related party Description of balancing payable Accured interest Unpaid principle amount Interest expense [Investment Income, Investment Expense] Proceeds fro issuance of promissory note Percentage of promissory note Note receivable Additional amount Notes Payable Percentage of notes payable Shares issued price per share (in dollars per share) Common stock share issued Common stock share outstanding Common stock share authorized Common stock par value Common stock issued for settlement interest payable of notes Common stock issued for settlement interest payable of notes (in shares) Federal Income Tax benefits (expenses) attributable to Current Operation Federal Income Tax benefits (expenses) attributable to Current Operation [Federal Income Tax Expense (Benefit), Continuing Operations] Less: Valuation Allowance Net Provision for Federal Income Taxes Deferred tax assets, generated from net operating loss at statutory rates Deferred tax assets [Deferred Tax Assets, Operating Loss Carryforwards] Less: Valuation Allowance [Deferred Tax Assets, Valuation Allowance] Deferred tax assets, net Net operating loss carry forwards NOL expiration description The maximum number of common shares permitted to be issued by an entity's charter and bylaws. Effective interest rate for the funds borrowed under the debt agreement considering interest compounding and original issue discount or premium. Contractual interest rate for funds borrowed, under the debt agreement. Difference between the fair value of payments made and the carrying amount of debt which is extinguished prior to maturity. Disclosure of accounting policy for film costs related to film libraries. The cash inflow from a long-term borrowing made from related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth. 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