S-1/A

As filed with the U.S. Securities and Exchange Commission on June 6, 2019

Registration No. 333-229248

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PCI MEDIA, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization) 7812
(Primary Standard Industrial Classification Code Number) 83-2105853
(I.R.S. Employer Identification Number)

523 Victoria Avenue

Venice, California 90291

(310) 577-9100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

D. Hunt Ramsbottom Jr.

Chief Executive Officer

PCI Media, Inc.

523 Victoria Avenue

Venice, California 90291

(310) 577-9100

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Anthony J. Richmond, Esq.
David A Zaheer, Esq.
Latham & Watkins LLP
140 Scott Drive
Menlo Park, California 94025
(650) 328-4600 John D. Hogoboom, Esq. Lowenstein Sandler LLP 1251 Avenue of the Americas New York, NY 10020 (212) 262-6700

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box:  ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	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 7(a)(2)(B) of the Securities Act.  ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities To be Registered	Proposed Maximum Aggregate Offering Price (1)(2)	Amount of Registration Fee (3)
Units, each consisting of one share of Common Stock, par value $0.001 per share, and one Warrant to purchase one share of Common Stock, par value $0.001 per share	(3)	(3)
Common Stock, par value $0.001 per share, included in the Units	—	—(4)
Warrants included in the Units	—	—(4)
Common Stock, par value $0.001 per share, underlying the Warrants included in the Units	(3)	(3)
Representative’s Warrant to Purchase Units(5)	(3)	(3)
Units underlying the Representative’s Warrant	—	—(4)
Common Stock, par value $0.001 per share, included in the Units underlying the Representative’s Warrant	—	—(4)
Warrants included in the Units underlying the Representative’s Warrant	—	—(4)
Common Stock, par value $0.001 per share, underlying the Warrants included in the Units underlying the Representative’s Warrant	(3)	(3)
	$57,408,000	$6,957.85(6)

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).

(2) Pursuant to Rule 416 under the Securities Act, there are also being registered such additional securities as may be issued to prevent dilution resulting from share splits, share dividends or similar transactions.

(3) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price, including the offering price of Units that the underwriters have the option to purchase to cover over-allotments, if any.

(4) No fee required pursuant to Rule 457(g) under the Securities Act.

(5) The registrant has agreed to issue a Representative’s Warrant exercisable within five years after the effective date of this registration statement representing 8% of the securities issued in this offering to Roth Capital Partners, LLC. The Representative’s Warrant is exercisable at a per Unit exercise price equal to 115% of the initial public offering price. The initial issuance of the Representative’s Warrant and the initial issuance and resales of Units, Shares, Warrants and Warrant Shares issuable upon exercise of the Representative’s Warrant are registered hereby. See “Underwriting – Representative’s Warrant.”

(6) The registrant previously paid $2,257.96 of this amount in connection with a prior filing of this registration statement.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 6, 2019

PRELIMINARY PROSPECTUS

PCI Media, Inc.

2,500,000 Units

This is the initial public offering of securities of PCI Media, Inc. We are offering to sell 2,500,000 units in this offering (the “Units”), each unit consisting of one share of our common stock (each, a “Share”) and a warrant to purchase our common stock (each, a “Warrant”). Each Warrant entitles the holder to purchase one Share at an initial exercise price equal to 130% of the initial public offering price per Unit. The Warrants may only be exercised for cash or, in the circumstances described herein, pursuant to a cashless exercise. The Warrants will expire on June     , 2024 at 5:00 p.m., New York City time.

Prior to this offering, there has been no public market for our securities. The initial public offering price is expected to be between $6.00 and $8.00 per Unit. We have applied to list the Units, Shares and Warrants on the Nasdaq Capital Market under the symbols “PCIM.U”, “PCIM” and “PCIM.W”, respectively. The Warrants will trade together with the Shares only as Units until December     , 2019, and thereafter each of the Shares and Warrants will trade separately.

We are an “emerging growth company” as defined under federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements. See “Prospectus Summary – Implications of Being an Emerging Growth Company”.

Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 13 of this prospectus.

	Per Unit	Total
Initial public offering price	$	$
Underwriting discount(1)	$	$
Proceeds, before expenses(1)	$	$

(1) See “Underwriting” for additional information regarding underwriting compensation.

We have agreed to issue a Representative’s Warrant exercisable within five years after the effective date of this registration statement representing 8% of the Units issued in this offering to Roth Capital Partners, LLC. The Representative’s Warrant will be exercisable at a per Unit exercise price equal to 115% of the initial public offering price per Unit. See “Underwriting – Representative’s Warrant.”

We have granted the underwriters a 30-day option to purchase up to an additional 375,000 Units on the terms set forth above to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Delivery of the Units is expected to be made on or about                 , 2019.

Roth Capital Partners

Prospectus dated                 , 2019

TABLE OF CONTENTS

Prospectus Summary	2
The Offering	8
Summary Consolidated Financial Data	11
Risk Factors	13
Special Note Regarding Forward-Looking Statements	30
Use of Proceeds	31
Dividend Policy	32
Capitalization	33
Dilution	35
Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Business	48
Management	63
Executive Compensation	70
Certain Relationships and Related Party Transactions	81
Principal Stockholders	85
Description of Units and Warrants	87
Description of Capital Stock	89
Shares Eligible For Future Sale	93
Material U.S. Federal Income Tax Considerations	96
Underwriting	103
Notice to Investors	107
Legal Matters	109
Experts	109
Where You Can Find Additional Information	109
Index To Consolidated Financial Statements	F-i

We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than its date.

Persons who come into possession of this prospectus and any free writing prospectus we may authorize for use in connection with this offering in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction.

i

Trademarks, Trade Names and Service Marks

PCI Media, Psyop and Content & Co. and our other registered or common law trademarks, service marks or trade names appearing in this prospectus are the property of PCI Media, Inc. or one of its subsidiaries. Other trademarks, service marks or trade names appearing in this prospectus are the property of their owners. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. We have omitted the ^® and ™ designations, as applicable, for the trademarks used in this prospectus.

Market, Industry and Other Data

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on reports from various sources, including those set forth below. Because this information involves a number of assumptions and limitations, you are cautioned not to give undue weight to such information. Information based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. In some cases, we do not expressly refer to the sources from which data is derived. The content of the below sources, except to the extent specifically set forth in this prospectus, does not constitute a portion of this prospectus and is not incorporated herein.

● Worldwide Ad Spending, eMarketer’s Updated Estimates and Forecasts for 2016-2022, November 2018;

● Advertising Expenditure Forecasts, Zenith, September 2018;

● Advertising Forecasts Winter Update, MAGNA, December 2018;

● Forbes Marketing Accountability 2017;

● Zenith’s Online Video Forecasts 2018; and

● Worldwide Semiannual Augmented and Virtual Reality Spending Guide, International Data Corporation (IDC), May 2018.

In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section captioned “Risk Factors” and elsewhere in this prospectus. See “Special Note Regarding Forward-Looking Statements.”

1

PROSPECTUS SUMMARY

This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read this entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the related notes included elsewhere in this prospectus before making an investment decision.

PCI Media, Inc. was recently formed as a Delaware corporation. Prior to the closing of this offering, the members of Psyop Media Company, LLC (other than Psyop, Inc. and All Asia Digital Entertainment Inc.) will contribute their membership interests in Psyop Media Company, LLC to PCI Media, Inc. in exchange for shares of common stock of PCI Media, Inc., Psyop, Inc. and All Asia Digital Entertainment Inc. will be merged with and into PCI Media, Inc., and Psyop Media Company, LLC will become a wholly owned subsidiary of PCI Media, Inc. We refer to these contribution and merger transactions, collectively, as the “Contribution and Merger Transactions.” Unless the context otherwise requires, the terms “the Company,” “we,” “us” and “our” refer to (i) upon completion of this offering, PCI Media, Inc. and, unless otherwise stated, all of its subsidiaries after giving effect to the Contribution and Merger Transactions, and (ii) prior to the completion of this offering, Psyop Media Company, LLC and, unless otherwise stated, all of its subsidiaries prior to consummation of the Contribution and Merger Transactions.

Our Company

We are a media company that creates innovative and award-winning content for some of the world’s most well-known brands. We create content for commercials, television series, digital and social media, experiential and influencer platforms and virtual reality (VR) and augmented reality (AR) experiences. We believe our content is highly creative, engages large audiences and influences their behavior. Our work has generated billions of views and impressions on digital platforms and has reached television audiences in over two hundred countries. Our commercial content is broadcasted regularly during the world’s largest televised events, including the Olympic Games, the World Cup and the Super Bowl.

Over the past 18 years, we believe we have consistently delivered iconic and effective content for our customers, including many blue-chip brands. We have produced content for brands across major industry groups, including: automotive; consumer products; technology; games; food; beverage; footwear; apparel; media; telecom; finance; hospitality; and energy.

We have won numerous awards and accolades for our creative work, including Cannes Lions, Clio Awards, Effie Awards and an Emmy Award.

Our primary product offerings include:

Commercial content:    We produce animated television commercials, including animated and computer graphics (CG) content. We also produce live action and mixed media commercials. We presently generate substantially all of our revenues from the production of commercial content.

Branded entertainment:    We create, develop, produce and distribute for our brand clients original short- and long-form content in which our clients’ brands are integrated into the content. The content we create can be used on television, digital and social media, experiential and influencer platforms.

VR and AR:    We produce VR and AR live action, animation and mixed media content. We create VR experiences that can be used on many commercially available VR platforms, such as Samsung VR Gear, Google Daydream, Playstation VR and Oculus Home for Rift.

2

We believe our competitive strengths include:

Excellent reputation:    Over the past 18 years, we believe we have earned an excellent reputation for our creative ability, innovation, execution and on-time delivery of complex and challenging media content.

Our creative storytelling capabilities:    We believe our creative content turns ideas into visual, relatable stories that resonate with consumers and influences their behavior. We believe that our years of experience and access to creative talent allow us to tell compelling stories whether in six seconds or 22 minutes.

Diverse, creative talent base:    We employ or represent over 20 directors and over 80 designers, technical directors and other artists who we believe deliver a unique combination of creative direction (character, world and story development) and execution (unique and high quality imagery and related production content).

Strong relationships with advertising agencies and brands:    We have produced highly successful and creative advertising campaigns for our customers, many of which are global brands which we believe have allowed us to develop long-standing, strong relationships with leading advertising agencies and brands. We are often commissioned to create multiple campaigns for brands over many years, acting as the go-to production company for these clients. In addition, despite that some of our competitors are larger than us, we have been able to compete effectively with them and win projects from new and existing clients.

Strong relationships with film, television and digital production companies:    We maintain Production Overall Deals (PODs) with award-winning production companies in film, television and digital series. In PODs, we manage development and distribution of content created by production companies. PODs enable us to extend and diversify our creative capabilities and provide access to additional talent for our clients.

End-to end solution:    We have developed in-house production processes that enable us to serve as a one-stop-shop, providing a full suite of solutions to the advertising industry and brands. We are able to conduct a project from concept through design and all stages of production using in-house and contracted creative talent when necessary.

Our Industry

We create branded advertising content primarily for television, digital and other advertising platforms.

The global advertising market is large and growing.    Global advertising spending was a $577 billion global market in 2017, projected to grow to $811 billion in 2022, according to eMarketer. The U.S. is currently our customers’ primary target market. eMarketer forecasts that the U.S. will have the largest share of global advertising spending in 2022, which it estimates will be $290 billion. As our business grows, we expect to capitalize on the large and expanding demand for services such as ours.

Television spending continues to be strong.    Television has historically been the single largest advertising medium worldwide. Zenith forecasts that television advertising in the U.S. peaked in 2017 at $69 billion and will decline slightly to $66 billion in 2020. Television and online video together are becoming more important to advertisers seeking to build brands than either form alone.

Digital advertising spending is increasing.    Digital technologies have transformed media consumption, viewing habits and social interaction. Content is being viewed at ever-increasing rates on wired and wireless smart devices across the globe. In 2017, global digital advertising spending surpassed global television advertising spending for the first time, according to MAGNA. According to MAGNA, in 2018, U.S. digital advertising spending exceeded $100 billion and accounted for half of total U.S. advertising sales for the first time. MAGNA projects that U.S. digital advertising sales will be $163 billion by 2023.

3

Creative short-form video content attracts audiences.    Given the proliferation of entertainment channels, capturing the attention of audiences is becoming increasingly challenging. We believe that brands are seeking creative content in short-form video that includes animation and mixed media to evoke emotions that resonate with viewers. According to Zenith, the rapid rise in video viewing makes online video the world’s fastest-growing advertising format. According to Zenith, global viewers spend an average of 67 minutes a day watching content, up from 56 minutes in 2017 and is projected to reach 84 minutes by 2020.

VR and AR are poised for considerable growth.    International Data Corporation, or IDC, forecasted that worldwide revenues for the VR and AR markets reached $27 billion in 2018, an increase of 92% from 2017. According to IDC, VR and AR spending is expected to achieve a compound annual growth rate of 72% worldwide, and 99% in the U.S., over the 2017-2022 forecast period. While a large majority of the growth in spending is expected to be dedicated to gaming applications, hardware and equipment, IDC suggests that producers are quickly moving beyond games to create new content mainstream audiences will embrace.

Our Growth Strategy

We intend to build upon our proven ability to aggregate large audiences for brands by continuing to make compelling content that is viewable on both traditional and new platforms. We have begun to implement the growth strategies described below, and expect to continue to do so over the several years following this offering. Although the net proceeds of this offering will be available to assist us to implement our growth strategies, we cannot estimate the ultimate amount of capital needed to achieve our expected growth. We may need additional capital to implement these strategies, particularly in the event we pursue acquisitions of complementary businesses or technologies.

We intend to grow our business by:

Capitalizing on market trends in advertising and digital media:    We believe our long history of creating award-winning content for television provides us with the expertise to continue to capture television advertising spending. We also believe our expertise in delivering entertaining, narrative-based short-form video content positions us well for the expected growth in digital advertising. We intend to build our core business by leveraging the increased use of animation and visual effects to differentiate marketing messages and capture audiences in the growing digital media market.

Implementing client service teams:    We believe we can increase recurring work from our existing clients with a more client-focused approach to delivering our services. We are hiring account directors with knowledge of the needs of brands in key industries so that we can collaborate more closely with brands and the advertising agencies. By doing so, we believe we can get involved earlier and more intimately in a particular pitch.

Expanding direct-to-brand sales:    Brands are increasingly working directly with content creators, bypassing advertising agencies. We believe this industry disruption is being caused by the desire of brands to obtain greater cost-effectiveness, transparency and control over customer data. We believe that we can increase our direct-to-brand sales by increasing business development efforts with brands. We recently reorganized our sales organization to include a specific focus on brand management.

Growing through acquisitions:    We believe that the highly fragmented content creation media industry, which is comprised primarily of small-to-medium-sized private companies, provides us with significant opportunities to grow our business through acquisitions. We intend to pursue acquisitions that provide services within our current core product offerings, extend our geographic reach and expand our product offerings.

4

Cross-selling services:    Our ability to produce diverse, engaging content across various media platforms allows us to offer clients a one-stop-shop for all of their content needs. We intend to cross-sell our various capabilities to drive additional revenue from existing clients and to seek to win new clients.

Further developing intellectual property:    We intend to build upon our success in developing original series that we own and license to brands, networks and major and new digital media studios. When we develop an original series, we retain the copyright of that content. By licensing to other platforms portions of the content from original series that we develop, we can create additional revenue streams from development fees, brand license fees, distribution license fees and ancillary sources (such as from foreign viewership).

Expanding our geographic presence:    We believe that by expanding our physical presence into select international regions, we will be better able to attract and retain internationally-based brands as clients. With a physical presence outside of the U.S., we believe we can provide better customer service and offer local talent who can work more intimately with internationally-based brands than we can from our offices in the U.S.

Expanding our talent roster:    We intend to continue to seek to attract and retain world-class creative and technical talent, thereby increasing our ability to win jobs and build brand equity through additional high quality creative content. We believe that our reputation and our client base will allow us to continue to attract top creative talent.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties, including those in the section entitled “Risk Factors” and elsewhere in this prospectus. These risks include, but are not limited to, the following:

● our limited visibility into the timing and certainty of future projects;

● the potential loss of business from advertising agencies, including as a result of reductions of business from the brands they represent;

● our ability to successfully execute our growth and acquisition strategy and manage effectively our growth;

● fluctuations in production schedules and project volumes may cause our revenues and cash flows to vary from quarter to quarter;

● changes in the competitive environment in our industry and the markets we serve, and our ability to compete effectively;

● our dependence on a strong brand image;

● our cash needs and the adequacy of our cash flows and earnings;

● our dependence upon our executive officers, founders and key employees;

● our ability to attract and retain qualified personnel;

● the effects of restrictions imposed by our indebtedness on our current and future operations;

● our reliance on our technology systems, the impact of technological changes and cybersecurity risks;

● our ability to protect our trademarks or other intellectual property rights;

● the Stockholders’ Agreement, provides our founders and one of our existing investors the right, subject to certain conditions, to nominate for election two members to our board of directors and requires all of our existing equityholders to vote in favor of their election, which will substantially limit the right of investors in this offering to elect or remove those nominees;

● our founders and their affiliates will together hold approximately 48% of the voting power of our outstanding capital stock (or 46% if the underwriters’ over-allotment option to purchase additional shares in this offering is exercised in full) assuming no exercise of the Warrants included in the Units,

5

and therefore will continue to have substantial control over our company after this offering which could limit your ability to influence the outcome of key decisions, including a change of control, and your ability to influence corporate matters, including the election of directors, amendments of our organizational documents and acquisitions of other companies and businesses; and

● increased costs as a result of being a public company.

Recent Developments

Our expectations with respect to our contract revenues for the three months ending June 30, 2019 discussed below are based upon management estimates for the period, which is not yet completed. Our expectations are subject to the completion of our financial closing procedures and any adjustments that may result from the completion of the quarterly review of our unaudited financial statements. Following the completion of the period and our quarterly financial closing process, we may report contract revenues for the three months ended June 30, 2019 that could differ from our expectations, and the differences could be material.

While we believe that our expectations for our contract revenues for the three months ending June 30, 2019 are based on reasonable assumptions, our actual results may vary, and such variations may be material. Factors that could cause our expectations to differ include, but are not limited to: (i) any failure by us to achieve our expected contract revenues for the remaining portion of such period, (ii) unanticipated adjustments in the calculation of, or application of accounting principles for, our contract revenues for such period and (iii) discovery of new information that affects the recognition of contract revenues during such period. Our expectations are also subject to a number of additional risks and uncertainties, including those identified in “Special Note Regarding Forward-Looking Statements” and “Risk Factors”. There is no assurance that such expectations will prove to be correct.

The expectations set forth below have been prepared by, and are the responsibility of, our management. Citrin Cooperman & Company, LLP has not audited, reviewed, compiled or performed any procedures with respect to the preliminary estimates. Accordingly, Citrin Cooperman & Company, LLP does not express an opinion or any other form of assurance with respect thereto.

We estimate that our contract revenues for the three months ended June 30, 2019 will be between approximately $13.2 million and $13.6 million, as compared to $11.6 million for the three months ended June 30, 2018.

Corporate Information

Psyop, Inc. was founded in April 2000. On January 1, 2012, in connection with a corporate restructuring, Psyop, Inc. and its affiliate, Psyop Services, LLC, contributed all of their assets and liabilities to Psyop Media Company, LLC. We were formed in October 2018 as a Delaware corporation. In December 2018, we changed our name from ZZZ Media Holdings, Inc. to PCI Media, Inc. Our principal executive offices are located at 523 Victoria Avenue, Venice, California 90291, and our telephone number is (310) 577-9100. Our website address is www.pcimediainc.com. The information on or that can be accessed through our website is not incorporated by reference into this prospectus, and you should not consider any such information as part of this prospectus or in deciding whether to purchase our securities.

Implications of Being an Emerging Growth Company

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the year following the fifth anniversary of the consummation of this offering, (2) the last day of the year in which we have total annual

6

gross revenue of at least $1.07 billion, (3) the last day of the year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

● we are presenting herein only two years of audited consolidated financial statements and related management’s discussion and analysis of financial condition and results of operations;

● we will avail ourselves of the exemption from the requirement to obtain an auditor attestation report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or Sarbanes Oxley;

● we will provide less extensive disclosure about our executive compensation arrangements; and

● we will not be required to hold stockholder non-binding advisory votes on executive compensation or golden parachute arrangements.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, the information that we provide to our stockholders may be different than the information you might receive from other public reporting companies in which you hold equity interests.

7

THE OFFERING

Securities offered by us

2,500,000 Units (or 2,875,000 Units if the underwriters exercise their over-allotment option in full).

Over-allotment option

We have granted the underwriters a 30-day option to purchase up to an aggregate of 375,000 additional Units from us at the initial public offering price, less the underwriting discount, to cover over-allotments, if any.

Common stock outstanding after this offering

7,500,000 shares, including 2,500,000 Shares included as part of the Units offered hereby (or 7,875,000 and 2,875,000 shares, respectively, if the underwriters exercise their over-allotment option in full), assuming no exercise of the Warrants included in the Units.

Warrants to be outstanding after this offering

2,500,000 Warrants included as part of the Units offered hereby. See “Description of Units and Warrants”.

Terms of Warrants issued as a part of a Unit offered in this offering

Exercise price – 130% of the initial public offering price per Unit. The Warrants do not have any price protection features.

Exercisability – each Warrant is exercisable for one Share, subject to adjustment as described herein.

Exercise period – each Warrant will be immediately exercisable beginning on December     , 2019 (the “Separation Date”) and will expire on June     , 2024 or earlier upon redemption.

Optional cashless exercise – If at any time during the exercise period for the Warrants there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares of common stock underlying the Warrants, then the Warrants may only be exercised by means of a “cashless exercise” according to a formula set forth in the Warrant agreement.

Redemption of Warrants

We may call the Warrants for redemption as follows: (i) at a price of 0.01 for each Warrant at any time while the Warrants are exercisable; (ii) upon not less than 30 days prior written notice of redemption to each Warrant holder; and (iii) if, and only if, the reported last sale price of the common stock equals or exceeds 200% of the offering price of a Unit in this offering (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of our common stock occurring after the issuance date) for the 20-trading-day period ending on the third business day prior to the notice of redemption to Warrant holders.

If the foregoing conditions are satisfied and we call the Warrants for redemption, each Warrant holder will then be entitled to exercise his,

8

her or its Warrants prior to the date scheduled for redemption. However, there can be no assurance that the price of the common stock will exceed the call price or the Warrant exercise price after the redemption call is made.

Separation Date

The Warrants will trade together with the Shares only as Units until the Separation Date. Upon their separation from the Shares, we expect that the Shares and the Warrants will each be eligible for trading on the Nasdaq Capital Market.

Use of proceeds

We estimate that the net proceeds from the sale of securities in this offering will be approximately $14.3 million, based upon the initial public offering price of $7.00 per Unit (which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), after deducting the underwriting discount and estimated offering expenses payable by us. If the underwriters’ over-allotment option to purchase additional Units in this offering is exercised in full, we estimate that the net proceeds will be approximately $16.7 million, after deducting the underwriting discount and estimated offering expenses payable by us.

The principal purposes of this offering are to increase our financial flexibility, create a public market for our securities and to facilitate future access to the public equity markets for us and our stockholders. We currently intend to use the net proceeds from this offering for working capital and other general corporate purposes. We may use a portion of such net proceeds to acquire complementary businesses or technologies. However, we do not have agreements or commitments for any acquisitions at this time.

Dividend policy

We currently do not intend to declare or pay any cash dividends in the foreseeable future. Any determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions, contractual restrictions and other factors that our board of directors considers relevant. See “Dividend Policy” for further information.

Proposed Nasdaq trading symbols

“PCIM” (Shares)

“PCIM.U” (Units)

“PCIM.W” (Warrants)

The total number of shares of our common stock that will be outstanding after this offering is based on 7,500,000 shares of our common stock outstanding on a pro forma basis as of March 31, 2019, after giving effect to the Contribution and Merger Transactions, and excludes, as of that date, the following:

● 787,500 shares of common stock, subject to annual increases, reserved for future grant or issuance under our 2019 Incentive Award Plan, or our 2019 Plan, which will become effective in connection with the completion of this offering;

● 393,750 shares of common stock, subject to annual increases, reserved for future grant or issuance under the 2019 Employee Stock Purchase Plan, or the ESPP, which will become effective in connection with the completion of this offering;

9

● shares issuable upon vesting of restricted stock units to be granted to our non-employee directors under the 2019 Plan in connection with this offering as described in “Executive Compensation – Director Compensation – Post-IPO Compensation Program”; and

● 300,000 shares issuable upon the exercise of options to be granted to our Chief Executive Officer under the 2019 Plan in connection with this offering (assuming no exercise of the underwriters’ over-allotment option) as described in “Executive Compensation – Executive Compensation Arrangements – D. Hunt Ramsbottom Employment Agreement”.

Except as otherwise indicated, all information in this prospectus assumes:

● the completion of the Contribution and Merger Transactions;

● no exercise by the underwriters of their over-allotment option to purchase additional Units;

● the filing and effectiveness of our amended and restated certificate of incorporation and the effectiveness of our amended and restated bylaws in connection with our initial public offering;

● no exercise of the Warrants included in the Units; and

● no exercise by Roth Capital Partners, LLC of the Representative’s Warrant or any Warrants included therein.

10

SUMMARY CONSOLIDATED FINANCIAL DATA

The consolidated statements of operations data for the years ended December 31, 2018 and 2017 and the consolidated balance sheet data as of December 31, 2018 and 2017 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2019 and 2018 and the consolidated balance sheet data as of March 31, 2019 are derived from our unaudited condensed consolidated financial statements included in this prospectus. The unaudited condensed consolidated financial statements are prepared on a basis consistent with that used to prepare our audited consolidated financial statements and include, in the opinion of management, all adjustments, consisting only of normal recurring items, necessary for a fair presentation of the consolidated financial statements. Certain amounts in the tables below may not total due to rounding.

You should read this data together with our consolidated financial statements and related notes, as well as the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this prospectus. Our historical results are not necessarily indicative of our future results.

	Unaudited Three Months Ended March 31,						Year Ended December 31,
(Dollars in thousands except per share data)	2019			2018			2018			2017
Consolidated Statement of Operations Data:
Contract revenues	$	15,056		$	14,410		$	57,367		$	61,962
Cost of contract revenues		11,997			11,270			45,395			45,273
Gross profit		3,059			3,140			11,972			16,690
Selling, general and administrative expenses		3,656			3,576			14,212			16,184
Operating income (loss)		(597	)		(436	)		(2,240	)		505
Other income (expense):
Interest income		-			-			-			7
Interest expense		(28	)		(43	)		(139	)		(161	)
Other expense		(70	)		(21	)		(77	)		(137	)
		(98	)		(64	)		(216	)		(291	)
Income (loss) before income tax benefit (expense)		(695	)		(500	)		(2,456	)		215
Income tax benefit (expense)		12			99			116			(17	)
Income (loss) before income from equity method investment		(683	)		(401	)		(2,340	)		198
Income from equity method investment		3			-			219			-
Net income (loss)	$	(680	)	$	(401	)	$	(2,121	)	$	198
Other comprehensive income
Foreign currency translation gain (loss)		9			-			(9	)		18
Comprehensive income (loss)	$	(671	)	$	(401	)	$	(2,130	)	$	216
Pro forma information (unaudited):(1)
Net income (loss) before pro forma provision for income taxes	$	(680	)	$	(401	)	$	(2,121	)	$	198
Pro forma benefit (provision) for income taxes		78			(34	)		203			(245	)
Pro forma net income (loss)		(602	)		(435	)	$	(1,918	)	$	(47	)
Basic and diluted pro forma net income (loss) per share:	$	(0.08	)	$	(0.06	)	$	(0.26	)	$	(0.01	)
Basic and diluted pro forma weighted average shares outstanding:		7,500,000			7,500,000			7,500,000			7,500,000
Non-GAAP Measure:
Adjusted EBITDA(2)	$	93		$	(78	)	$	(146	)	$	2,172

11

	As of March 31,		As of December 31,
(Dollars in thousands)	2019		2018		2017
Consolidated Balance Sheet Data:
Cash	$	1,615	$	4,034	$	6,241
Total assets		13,233		15,244		18,753
Total liabilities		12,940		14,278		14,915
Long-term debt, net of current portion		1,978		3,093		3,752
Total members’ equity		294		965		3,838

(1) Unaudited pro forma provision for income taxes, net income and per share information give effect to the Contribution and Merger Transactions.

(2) In addition to our results determined in accordance with GAAP, we have presented Adjusted EBITDA, which is a non-GAAP measure. The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods indicated:

	Three Months Ended March 31,						Year Ended December 31,
(Dollars in thousands)	2019			2018			2018			2017
Net income (loss)	$	(680	)	$	(401	)	$	(2,121	)	$	198
Interest expense, net		28			43			139			154
Depreciation and amortization		309			334			1,312			1,706
Income tax expense (benefit)		(12	)		(99	)		(116	)		17
Equity based compensation(a)		-			-			-			85
Initial public offering costs(b)		448			45			640			12
Adjusted EBITDA	$	93		$	(78	)	$	(146	)	$	2,172

(a) Non-cash charges related to equity-based compensation.

(b) One-time costs relating to this offering.

We use Adjusted EBITDA to understand and evaluate our business. Accordingly, we believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:

● although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and

● other companies, including companies in our industry, may calculate Adjusted EBITDA, or similarly titled measures differently, which reduces its usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including cash flows from operating activities, investing activities and financing activities, net income (loss) and our other GAAP financial results.

12

RISK FACTORS

Investing in our securities involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the consolidated financial statements and the related notes, before deciding whether to purchase our securities. The risks and uncertainties described below include those that we consider material and that we are currently aware of, but are not the only ones we face. If any of the following risks is realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the market price of our securities could decline and you could lose part or all of your investment.

Risks Related to Our Business and Industry

We have limited visibility of the timing and certainty of future projects. Our failure to regularly win new projects would have a material adverse effect on our business, results of operations or financial condition.

It normally takes three to five months for us to make a pitch, receive an award of a project and complete the project except in the case of a branded entertainment series which can take six months or longer. We do not have any long-term or exclusive contracts with advertising agencies or brands. As a result, we do not control when we will be afforded the opportunity to pitch for a project and, if we pitch for a project, there is no assurance that we will receive an award for, or complete, the project. Because the number of projects we are awarded and complete from time to time may differ significantly depending on the circumstances, it is difficult for us to anticipate the timing and certainty of future revenues or working capital needs. To sustain and increase our revenues, we will need to regularly be awarded and complete new projects. We could fail to be awarded new projects for various reasons, some of which are outside of our control. For example, we may not be awarded new projects if competitors offer more creative content at lower cost or with faster execution time. If we are unable to secure projects for extended periods of time, this would have a material adverse effect on our business, results of operations or financial condition.

The loss of business from advertising agencies, including as a result of a reduction of business from the brands they represent, would harm our business, results of operations or financial condition.

Our client base consists primarily of advertising agencies. We do not have exclusive contracts with advertising agencies and depend on the discretion of these agencies to work with us as they embark on advertising campaigns for brands. If we fail to maintain satisfactory relationships with an advertising agency, we risk losing business from the brands represented by that agency. Brands also may change advertising agencies for various reasons. If a brand elects to reduce or cease business with an advertising agency with which we have a relationship, we could lose revenues from that advertising agency. A brand could determine to reduce its business with an advertising agency for various reasons, some of which are outside of our control. For example, a brand could decide that it prefers to obtain content from a studio other than ours, or determine that it desires to reduce or cease business with the advertising agency for reasons unrelated to us. The loss of business from advertising agencies, including as a result of a reduction of business from the brands they represent, could harm our business, results of operations or financial condition.

A significant percentage of our revenue is generated by two advertising agencies.

Our business depends, in significant part, on being awarded work from two advertising agencies. For the year ended December 31, 2018, the advertising agencies, Argonaut Inc. and Barton F. Graf LLC, accounted for 16% and 11% of our revenues, respectively. For the year ended December 31, 2017, the advertising agencies, Barton F. Graf LLC and Argonaut Inc., accounted for 16% and 13% of our revenues, respectively. As a result, the loss or reduction of business from either of these advertising agencies could have a material adverse effect on our business, results of operations or financial condition.

13

Failure to manage our growth effectively could cause our business to suffer.

We intend to grow organically and through selected acquisitions. To manage our growth effectively, we must manage our employees, operations, finances, and investments efficiently. We also must effectively integrate any companies or businesses we acquire. We may encounter risks and challenges frequently experienced by growing companies such as our ability to: strengthen our reputation for superior content creation; distinguish ourselves from our competitors; develop and offer content that meet our clients’ needs as they change; and attract and maintain talent. Failure to manage our growth effectively could have a material adverse effect on our business, results of operations or financial condition.

The market in which we participate is competitive, and we may not be able to compete successfully with our current or future competitors.

We operate in the competitive, highly fragmented advertising and creative content production markets. We compete with many firms with no single company maintaining a significant share of the market. Some of our competitors have greater resources than those available to us and such resources may enable them to aggressively compete with us. We must compete with these firms to maintain existing client relationships and to obtain new clients and assignments. If existing or new companies acquire one of our existing competitors or form an exclusive relationship with one or several advertising agencies or brands, our ability to compete effectively could be significantly compromised and our results of operations could be harmed. For example, S⁴ Capital recently acquired the digital production agency, Media Monks, and it is currently unclear what impact this will have on the competitive landscape. Any of the factors described above could make it more difficult for us to acquire new projects and could result in increased pricing pressure, increased sales and marketing expenses or the loss of market share, and could have a material adverse effect on our business, results of operations or financial condition.

Economic downturns could adversely affect the demand for our content.

Our business depends on the demand for advertising and on the economic health of brands that purchase our content. Recent market volatility and other events have led some experts to conclude that a recession could occur in the near term. An economic recession could result in the decline in advertising spending generally or the purchase of our content by brands in particular. Further, an economic recession may not impact advertising revenue across all media platforms in an equal manner. While reported revenue in the advertising industry may mirror GDP in total, reported revenue may fluctuate among individual media platforms more significantly than others. For example, during an economic recession, brands may choose to spend less money advertising on television and more money advertising on social and digital media. While we create content for multiple platforms, certain areas of our business may decline more significantly than others in an economic downturn, especially if our business focuses more heavily on the less-favored platforms. Accordingly, if an economic downturn occurs, this could have a material adverse effect on our business, results of operations or financial condition.

If our clients experience financial distress, or seek to change or delay payment terms, this could negatively affect our business, results of operations or financial condition.

We have a diverse client base, and at any given time, one or more of our clients may experience financial difficulty, file for bankruptcy protection or go out of business. Unfavorable economic and financial conditions could result in an increase in client financial difficulties that affect us. If our clients experience financial difficulties, they may be unable to pay for commitments that we have entered into on their behalf, or may seek to significantly delay or otherwise alter payment terms. This could result in reduced revenues as well as write-offs of accounts receivable and expenditures billable to clients, and if such difficulties were severe, reduced liquidity. Accordingly, if our clients experience financial distress, this could have a material adverse effect on our business, results of operations or financial condition.

14

Our quarterly results of operations may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of securities analysts or investors, which could cause our stock price to decline.

Our quarterly results of operations have in the past, and may in the future, fluctuate as a result of a variety of factors, many of which are outside of our control, including limited visibility of the timing and certainty of future projects. In future periods, our revenue or profitability could decline or grow more slowly than we expect. If our quarterly revenues or results of operations do not meet or exceed the expectations of securities analysts or investors, the price of our securities could decline substantially. In addition to the other risk factors set forth in this “Risk Factors” section, factors that may cause fluctuations in our quarterly revenues or results of operations include:

● our ability to increase sales to existing clients and attract new clients;

● our failure to accurately estimate or control costs;

● the potential loss of significant clients;

● maintaining appropriate staffing levels and capabilities relative to projected growth;

● adverse judgments or settlements in legal disputes; and

● general economic, industry and market conditions and those conditions specific to media companies such as us.

We believe that our quarterly revenues and results of operations on a year-over-year and sequential quarter-over-quarter basis may vary significantly in the future and that period-to-period comparisons of our results of operations may not be meaningful. You should not rely on the results of prior quarters as an indication of future performance.

Fluctuations in production schedules and project volume may cause our revenues and cash flows to vary from quarter to quarter.

Our revenues, cash flows from operations, results of operations and other key operating and financial measures have varied in the past, and may vary in the future, significantly from quarter to quarter due to production schedules and project volume. Often our clients engage in an evaluation process that frequently involves not only our pitch but also pitches of our competitors. We have limited control over the timing and mix of individual projects which could result in material fluctuations of our revenues, cash flows, results of operations and other key operating and financial measures from period to period.

We are a holding company and depend upon our subsidiaries for our cash flows.

We are a holding company. All of our operations are conducted, and almost all of our assets are owned, by our subsidiaries. Consequently, our cash flows and our ability to meet our obligations depend upon the cash flows of our subsidiaries and the payment of funds by these subsidiaries to us in the form of dividends, distributions or otherwise. The ability of our subsidiaries to make any payments to us depends on their earnings, the terms of their indebtedness, including the terms of any credit facilities and legal restrictions. In particular, our credit facility provides that cash distributions paid by Psyop Media Company, LLC in any fiscal year cannot exceed the operating cash flow generated in the immediately preceding fiscal year, and future credit facilities entered into by our subsidiaries may impose other limitations on the ability of our subsidiaries to make distributions to us. Any failure to receive dividends or distributions from our subsidiaries when needed could have a material adverse effect on our business, results of operations or financial condition.

Our acquisition strategy involves significant risks.

One of our business strategies is to pursue acquisitions. However, acquisitions involve numerous risks and uncertainties, including intense competition for suitable acquisition targets, the potential unavailability of financial resources necessary to consummate acquisitions, difficulties in identifying suitable acquisition targets or in completing any transactions identified on sufficiently favorable terms; and the need to obtain regulatory or other

15

governmental approvals that may be necessary to complete acquisitions. In addition, any future acquisitions may entail significant transaction costs, tax consequences and risks associated with entry into new markets and lines of business, any of which could have a material adverse effect on our business, results of operations or financial condition.

Future acquisitions or strategic investments could disrupt our business and harm our business, results of operations or financial condition.

We may in the future explore potential acquisitions of companies or strategic investments to strengthen our business. However, we have limited experience in acquiring and integrating businesses. Even if we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business.

Acquisitions involve numerous risks, any of which could harm our business, including:

● anticipated benefits may not materialize as rapidly as we expect, or at all;

● diversion of management time and focus from operating our business to address acquisition integration challenges;

● retention of employees from the acquired company;

● cultural challenges associated with integrating employees from the acquired company into our organization;

● integration of the acquired company’s accounting, management information, human resources and other administrative systems;

● the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies; and

● litigation or other claims in connection with the acquired company, including claims from terminated employees, former stockholders or other third parties.

Failure to appropriately mitigate these risks or other issues related to such strategic investments and acquisitions could result in reducing or completely eliminating any anticipated benefits of transactions, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could have a material adverse effect on business, results of operations or financial condition.

Our operations may remain unprofitable and we may require working capital financing.

Our ability to achieve net income and cash flow is subject to, among other things, the number of projects we win, the magnitude of our margins and the overall profitability of our projects. If we are not able to operate our business at a profit or to retain cash, we may be required to obtain external working capital financing.

Our credit facility includes a line of credit in the amount of $3 million, which we may draw subject to compliance with applicable covenants and conditions. Our credit facility also includes a letter of credit facility in the amount of $2 million for the issuance of standby letters of credit. As of March 31, 2019, we have two standby letters of credit outstanding for an aggregate amount of $1.1 million.

As of December 31, 2018, the credit facility required us to comply with the following financial covenants: (a) a debt service coverage ratio of at least 1.25 to 1.00; and (b) a debt to equity ratio of not more than 2.00 to 1.00. As of December 31, 2018, we were in violation of the debt service coverage ratio covenant and the debt to equity ratio covenant. We subsequently received a waiver from the lender for both of these violations. As of December 31, 2018, our debt service coverage ratio was (0.38) to 1.00 and our debt to equity ratio was 3.89 to 1.00.

16

In the event that we were unable to access the line of credit or the amount of available drawings thereunder are insufficient, we could be required to seek external working capital financing from other sources, which may not be available on satisfactory terms, or at all.

If we are unable to access a sufficient amount of working capital at the times we need to, this could have a material adverse effect on our business, results of operations or financial condition.

Our credit facility imposes significant limitations on our business operations.

Our credit facility imposes significant limitations on our business operations, including our ability to incur additional debt, guaranties or liens, to consummate acquisitions or dispositions, to make loans or advances or to make restricted payments. These limitations are subject to various exceptions. For example, our credit facility allows us to make permitted acquisitions of persons or assets that are in, or utilized in, a line of business that is reasonably related to our line of business and so long as we satisfy other requirements. In the event that we desire to make an acquisition or take another action that is not permitted under the credit facility, we would need the consent of the lender and there is no assurance that we would be able to obtain such consent. Any failure to comply with these limitations could result in a default under our credit facility. Upon a default, unless waived, the lender under our credit facility could have all remedies available to a secured lender, and could elect to terminate its commitments, cease making further loans, cause our loans to become due and payable in full, institute foreclosure proceedings against our assets, and force us into bankruptcy or liquidation.

Our future success depends on the continuing efforts of our key employees and our ability to attract, hire, retain and motivate highly skilled and creative employees in the future.

Our future success depends on the continuing efforts of our executive officers, our founders and other key employees. We rely on the leadership, knowledge and experience that our executive officers, founders and key employees provide. They foster our corporate culture, which we believe has been instrumental to our ability to attract and retain new talent. Any failure to attract new or retain key creative talent could have a material adverse effect on our business, financial condition and results of operations.

The market for talent in our key areas of operations, including California and New York, is intensely competitive, which could increase our costs to attract and retain talented employees. As a result, we may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them.

Employee turnover, including changes in our management team, could disrupt our business. The loss of one or more of our executive officers, founders or other key employees, or our inability to attract and retain highly skilled and creative employees, could have a material adverse effect on our business, results of operations or financial condition.

We must obtain visas for employees we hire who are not U.S. citizens or legal residents.

We hire some of our creative, technical and production personnel upon their graduating from colleges and universities that maintain programs in the fields for which we require talent. Most of these institutions are in the U.S.; however, in recent years some of these students have not been U.S. citizens or legal residents prior to attending school. We must obtain visas to hire these individuals. Any failure, difficulty or delay in obtaining visas to hire these individuals may have a material adverse effect on our business, results of operations or financial condition. Immigration reform is attracting significant attention in the public arena and in the current U.S. administration and Congress. If new immigration legislation is enacted in the U.S. or in the other jurisdictions in which we do business, such legislation may contain provisions that could make it more difficult or costly for us to recruit and retain our creative, technical and production personnel. Also, we cannot be assured that the enforcement of immigration laws by governmental authorities will not disrupt our workforce.

17

Most of our management team has limited experience managing a public company.

With the exception of our Chief Executive Officer and Chief Financial Officer, most members of our management team have limited or no experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. Upon the closing of this offering, we will become subject to significant reporting and other obligations as a public company. These new obligations will require significant attention from our management and could divert their attention away from the day-to-day management of our business. In the event that our management team does not successfully or efficiently manage our transition to being a public company, this could have a material adverse effect on our business, results of operations or financial condition.

We believe our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business could be harmed.

We believe our corporate culture has been a key element of our success. However, as our organization grows, it may be difficult to maintain our culture, which could reduce our ability to attract and maintain new talent and operate effectively. The failure to maintain the key aspects of our culture as our organization grows could result in decreased employee satisfaction, increased difficulty in attracting top talent and increased turnover and could compromise the quality of our client service, all of which are important to our success and to the effective execution of our business strategy. Accordingly, if we are unable to maintain our corporate culture as we grow our business, this could have a material adverse effect on our business, results of operations or financial condition.

We may be responsible for expenses incurred for a project that has been cancelled.

A client can cancel a project after awarding it to us. Often the contracts we enter into have cancellation terms that obligate the client to reimburse us for expenses incurred for a project that has been cancelled. Our project schedules typically require quick turnarounds and, as a result, we normally book resources required for the project promptly upon the award of the contract. Some of our projects may be cancelled after we have incurred expenses, and we may not be able to obtain reimbursement for these expenses. Our inability to recover expenses that we incur on cancelled projects could have a material adverse effect on our business, results of operations or financial condition.

We may be responsible for expenses for a project that exceed those contemplated by the approved budget.

Because the creation of content often requires us to make changes to a project to achieve the goals of the brand, projects may go over budget. When we bid for a contract, we include assumptions regarding the expenses for the applicable shoots and post-production. If the scope of a project changes prior to beginning the work, we may request for the client to cover the “overage” for the scope change before we commence work. However, if expenses exceed the budget after we have begun the work, we may have already begun to incur expenses and may not be able to recover the overages from our clients. Our inability to recover overages from clients negatively impacts the profitability of the particular project, and could have a material adverse effect on our business, results of operations or financial condition.

It may become increasingly expensive to operate in the media business.

The cost of producing special effects-driven and animated advertisements has steadily increased and may continue to increase in the future. For example, costs to maintain or obtain the latest technologies to produce high-quality work in animation and mixed media has been increasing. If costs continue to increase without proportionate increases in revenues, this could have a material adverse effect on our business, results of operations or financial condition.

18

We are subject to legal or reputational risks that could restrict our activities or negatively impact us.

Our business is subject to specific rules, prohibitions, media restrictions, labeling disclosures and warning requirements applicable to advertising for certain products. Advertisers and consumer groups may challenge advertising based on false or exaggerated claims through legislation, regulation, judicial actions or otherwise. Existing and proposed laws and regulations concerning user privacy, use of personal information and on-line tracking technologies also could affect the efficacy and profitability of internet-based and digital marketing. We could be exposed to liabilities for content we have created for our clients if their products, claims or other factors are challenged. We could suffer reputational risk as a result of legal action or from undertaking work that may be challenged by consumer groups or considered controversial, which may have a material adverse effect on our business, results of operations or financial condition.

Our business could be adversely affected if we fail to protect our intellectual property.

We generally enter into confidentiality agreements with our employees, freelancers and vendors to control access to and distribution of our intellectual property or that of our clients. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our or our clients’ intellectual property without authorization. Policing unauthorized use of creative content is difficult. The steps we take may not prevent misappropriation of intellectual property and our confidentiality agreements may not be enforceable. In addition, we may be required to litigate in the future to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources. In the event we are unable to prevent or are required to defend misappropriations of intellectual property, this could have a material adverse effect on our business, results of operations or financial condition.

Others may assert intellectual property infringement claims against us.

We are subject to the possibility of claims that brands’ products, services or techniques misappropriate or infringe the intellectual property rights of third parties. Infringement or misappropriation claims (or claims for indemnification resulting from such claims) may be asserted or prosecuted against us. We create and use characters in our content; because of the competitive advantages that are derived from identifiable characters, we must carefully define our own characters, both to protect the characters we have created from infringement and to avoid claims of others that we have infringed on their characters. Irrespective of the validity or the successful assertion of such claims, we would incur significant costs and diversion of resources with respect to the defense thereof, which could have a material adverse effect on our business, results of operations or financial condition.

We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers.

As is commonplace in our industry, we employ individuals who were previously employed at other companies with whom we compete. Although no claims against us are currently pending, we may be subject in the future to claims that our employees or prospective employees are subject to a continuing obligation to their former employers (such as non-competition or non-solicitation obligations) or claims that our employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

The market growth forecasts included in this prospectus may prove to be inaccurate and, even if the market in which we compete achieves forecasted growth, we cannot assure you our business will grow at similar rates, or at all.

Market growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. The forecasts in this prospectus relating to expected growth in the advertising

19

market may prove to be inaccurate. Even if the market experiences the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Any inaccurate market growth forecasts, our ability to grow at market forecasted rates, or at all, could have an adverse effect on our business, results of operations or financial condition.

We depend on advanced technologies and computer systems and we cannot predict the effect that rapid technological change or alternative forms of entertainment may have on us or our industry.

Our industry continues to undergo significant changes as a result of technological developments. Because we are required to maintain advanced digital imagery products to continue to win business, we must ensure that our production environment integrates the latest tools and techniques developed in the industry. However, the rapid growth of technology and shifting consumer tastes prevent us from being able to accurately predict the overall effect that technological growth or the availability of alternative forms of advertising may have on the potential revenues from, and profitability of, our content. To enhance our technologies, we are required to purchase third-party licenses, which can result in significant expenditures. In some cases, the licenses are not available on commercially reasonable terms, or at all. At the time we purchase licenses, we do not know if the related technology will enhance our revenues. Furthermore, the licensed software could have errors or defects that may result in a delay in delivery of our content and which could result in significantly increased production costs and our ability to complete work in a timely fashion. Such delays could have an adverse effect on our brand name and our relationship with our clients, which, given our reliance on our core strategic client relationships, could result in a decrease in our revenues. As a result, in the event that we do not keep pace with technological advancements, or our technologies do not meet our expectations, this could have a material adverse effect on our business, results of operations or financial condition.

We rely heavily on information technology systems and could face cybersecurity risks.

We rely heavily on information technologies and infrastructure to manage and conduct our business. This includes the production and digital storage of content and client information and the development of new business opportunities and creative content. The incidence of malicious technology-related events, such as cyberattacks, ransomware, computer hacking, computer viruses, worms or other destructive or disruptive software and other malicious activities could have a negative impact on our business and productivity. In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information or other intellectual property. We have taken preventative steps and seek to follow industry best practices, including the use of firewalls, deployment of antivirus software and regular patch maintenance updates; however no system is completely immune from these types of attacks. If we become subject to cyber breach, this could have a material adverse effect on our business, results of operations or financial condition.

Power outages, equipment failure, natural disasters (including extreme weather) or terrorist activities can impact an entire system. We have designed our systems to provide replication across our Los Angeles and New York locations, including data and toolsets designed to allow most or all work-related activities to continue if there is a disruption at one location. However, in the event of such a disruption, our ability to operate nonetheless may be adversely affected. Human error may also affect our systems and result in disruption of our services or loss or improper disclosure of client and personal data, business information, including intellectual property, or other confidential information. We also utilize third parties to store, transfer or process data, and system failures or network disruptions or breaches in the systems of such third parties could adversely affect our reputation or business. Any such breaches or breakdowns could expose us to legal liability, be expensive to remedy, result in a loss of our or our clients’ or vendors’ proprietary information and damage our reputation. In addition, such a breach may require notification to governmental agencies, the media or other individuals pursuant to various federal and state privacy and security laws, if applicable. Efforts to develop, implement and maintain security measures are costly, may not be successful in preventing these events from occurring and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. We take precautions to limit access to sensitive information to only those individuals requiring it. Any significant

20

distribution in our equipment or loss or improper disclosure of data could have a material adverse effect on our business, results of operations or financial condition.

Our networks and systems may require significant expansion to accommodate new processing and storage requirements.

We may experience limitations relating to the capacity of our networks, systems and processes. In the future, we may need to expand our network and systems at a more rapid pace than we have in the past if our networks and systems cannot accommodate new processing and storage requirements due to potential growth in our business. Our network or systems may not be capable of meeting the demand for increased capacity, or we may incur additional unanticipated expenses to accommodate these capacity demands. In addition, we may lose valuable data, be unable to obtain or provide creative content on a timely basis or our network may temporarily shut down if we fail to adequately expand or maintain our network capabilities to meet future requirements. Any lapse in our ability to store or transmit data or any disruption in our network processing may damage our reputation and result in the loss of clients, and could have a material adverse effect on our business, results of operations or financial condition.

Failure to attract or retain qualified information technology staff may impair our ability to effectively compete.

Due to the nature of our business, we have significantly more complex technology requirements than most typical enterprises of a comparable size. We find ourselves competing for top information technology and software development talent against much larger technology companies that can offer significant career advantages, or technology startups that can offer significant compensation incentives. If we become unable to acquire or retain qualified information technology staff, this could have a material adverse effect on our business, results of operations or financial condition.

Our tax liabilities may be greater than anticipated.

The U.S. tax laws applicable to our business activities are subject to interpretation. We are subject to audit by the Internal Revenue Service and by taxing authorities of the state and local jurisdictions in which we operate. Our tax obligations are based in part on our corporate operating structure, including the manner in which we develop, value, and use our intellectual property, the jurisdictions in which we operate, how tax authorities assess revenue-based taxes such as sales and use taxes, the scope of our international operations and the value we ascribe to our intercompany transactions. Taxing authorities may challenge our tax positions and methodologies for valuing developed technology or intercompany arrangements, as well as our positions regarding the collection of sales and use taxes and the jurisdictions in which we are subject to taxes, which could expose us to additional taxes. Any adverse outcomes of such challenges to our tax positions could result in additional taxes for prior periods, interest and penalties, as well as higher future taxes. In addition, our future tax expense could increase as a result of changes in tax laws, regulations or accounting principles, or as a result of earning income in jurisdictions that have higher tax rates. An increase in our tax expense could have a negative effect on our business, results of operations or financial condition. Moreover, the determination of our provision for income taxes and other tax liabilities requires significant estimates and judgment by management, and the tax treatment of certain transactions is uncertain. Although we believe we will make reasonable estimates and judgments, the ultimate outcome of any particular issue may differ from the amounts previously recorded in our financial statements and any such occurrence could materially affect our financial position and results of operations.

U.S. tax legislation passed in 2017 may materially adversely affect our financial condition, results of operations and cash flows.

U.S. tax legislation passed in 2017 has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures, adopting elements of a territorial tax system, imposing a one-time transition tax (or “repatriation tax”) on all undistributed earnings and profits of certain U.S.-owned foreign

21

corporations, revising the rules governing net operating losses and the rules governing foreign tax credits, and introducing new anti-base erosion provisions. Many of these changes are effective immediately, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the U.S. Treasury and Internal Revenue Service, any of which could lessen or increase certain adverse impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. We continue to work with our tax advisors to determine the full impact that the recent tax legislation as a whole will have on us. We urge our investors to consult with their legal and tax advisors with respect to such legislation and the potential tax consequences of investing in our securities.

Risks Related to this Offering and Ownership of Our Securities

The market price of our securities may be volatile or may decline regardless of our operating performance.

The market price of our securities can experience high levels of volatility. If you purchase our securities in this offering, you may not be able to resell those securities at or above the initial public offering price. Following the completion of this offering, the market price of our securities may fluctuate significantly in response to numerous factors, some of which are beyond our control and may not be related to our operating performance, including:

● announcements of new advertising campaigns, client relationships, acquisitions or other events by us or our competitors;

● price and volume fluctuations in the overall stock market from time to time;

● volatility in the market price and trading volume of media companies in general and of companies in the advertising industry in particular;

● fluctuations in the trading volume of our shares or the size of our public float;

● actual or anticipated changes or fluctuations in our results of operations;

● whether our results of operations meet the expectations of securities analysts or investors;

● actual or anticipated changes in the expectations of investors or securities analysts;

● litigation involving us, our industry, or both;

● regulatory developments in the regions in which we operate;

● general economic conditions and trends;

● major catastrophic events;

● lock-up releases or sales of large blocks of our common stock;

● departures of key employees; or

● an adverse impact on the company from any of the other risks cited herein.

If an active, liquid trading market for our securities does not develop, you may not be able to sell your shares quickly or at or above the initial offering price.

There has not been a public market for our securities. An active and liquid trading market for our securities may not develop or be sustained following this offering. Given the small size of this offering, it may take some time for an active market to develop. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your securities. An inactive market may also impair our ability to raise capital to continue to fund operations by selling our securities and may impair our ability to acquire other companies by using our securities as consideration. You may not be able to sell your securities quickly or at or above the initial public offering price. The initial public offering price will be determined by negotiations with the representative of the underwriters. This price may not be indicative of the price at which our securities will trade after this offering, and our securities could trade below the initial public offering price.

22

In addition, if the stock market for media companies, or the stock market generally, experiences a loss of investor confidence, the trading price of our securities could decline for reasons unrelated to our business, results of operations or financial condition. The trading price of our securities might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Historically, securityholders have filed securities class action litigation against companies following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, and divert resources and the attention of management from our business, which could have a material adverse effect on our business, results of operations or financial condition.

Sales of substantial shares of our common stock into the public market after this offering, including when the “lock-up” period ends, or the perception that such sales might occur, could cause the market price of our common stock to decline.

Sales of substantial shares of our common stock into the public market after this offering, including when the “lock-up” or “market standoff” period ends, or the perception that such sales might occur, could cause the market price of our securities to decline and may make it more difficult for you to sell your securities at a time and price that you deem appropriate. Upon completion of this offering, we will have 7.5 million shares of common stock outstanding, assuming no exercise of the Warrants included in the Units. All of the securities sold in this offering will be freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our “affiliates” as defined in Rule 144 under the Securities Act.

Subject to exceptions described under the caption “Underwriting,” we, all of our directors and officers and substantially all of the holders of our capital stock and securities convertible into, or exchangeable for, our capital stock have agreed not to offer, sell or agree to sell, directly or indirectly, any shares of common stock without the permission of Roth Capital Partners, LLC for a period of 180 days from the date of this prospectus. When the lock-up period expires, we, our directors and officers and locked-up stockholders will be able to sell shares into the public market, subject, in the case of certain stockholders, to provisions of the Stockholders’ Agreement. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement”.

Roth Capital Partners, LLC may, in its sole discretion, permit us and our directors and officers and locked-up stockholders to sell shares prior to the expiration of the restrictive provisions contained in the “lock-up” agreements with the underwriters.

Holders of up to approximately 5.0 million shares, or 66.7%, of our common stock after this offering (assuming no exercise of the underwriters’ option to purchase additional shares), will have rights to require us to file registration statements covering the sale of such shares or to include such shares in registration statements that we may file for ourselves or other stockholders. We also intend to register the offer and sale of all shares of common stock that we may issue under our equity compensation plans. The market price of our securities could decline as a result of the sale of substantial shares of our common stock into the public market after this offering, or the perception that such sales might occur.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of the Units is substantially higher than the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase Units in this offering, you will incur an immediate dilution of $5.09 in net tangible book value per share from the price you paid, based on an assumed initial public offering price of $7.00 per Unit share (which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), assuming no exercise of the Warrants included in the Units, no value is attributed to the Units or the Warrants and the Units and Warrants are classified and accounted for as equity. The exercise by the underwriters of the over-allotment option, will result in further

23

dilution. In addition, if we raise additional funds by issuing equity securities or issue our equity securities in connection with acquisitions, our stockholders may experience further dilution. For a detailed description of the dilution that you will experience immediately after this offering, see “Dilution.”

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective upon the closing of this offering, may have the effect of delaying or preventing a change of control or changes in our management. Some of these provisions:

● authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock and up to 100,000,000 shares of authorized common stock;

● require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

● specify that special meetings of our stockholders can be called only by the chair of our board of directors or by the secretary upon the direction of our board of directors;

● establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

● establish a classified board of directors so that not all members of our board of directors are elected at one time;

● require the approval of the holders of at least a majority of the voting power of all outstanding shares of voting stock in order for our stockholders to amend or repeal our amended and restated bylaws;

● provide that our directors may be removed only for cause; and

● provide that vacancies on our board of directors may, except as otherwise required by law, be filled only by a majority of directors then in office, even if less than a quorum.

Additionally, pursuant to the Stockholders’ Agreement described under “Certain Relationships and Related Party Transactions—Stockholders’ Agreement”, certain stockholders will agree with us to vote all of their shares of our common stock for the Company’s nominees to the board of directors at each meeting at which such matter is presented for a vote.

In addition, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us. Furthermore, our amended and restated certificate of incorporation and amended and restated bylaws that will go into effect prior to the closing of this offering specify that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving actions brought against us by stockholders; provided that the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any claim for which the federal courts have exclusive jurisdiction. We believe this provision benefits us by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws to be inapplicable or unenforceable in such action.

24

These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws that will go into effect prior to the closing of this offering could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.

You will have limited rights to elect or remove members of our board of directors.

Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective upon the closing of this offering provide that our board of directors shall consist of between one and fifteen members, with the exact number of directors to be determined by vote of our board. Upon consummation of this offering, our board of directors will consist of four members. However, under the terms of the Stockholders’ Agreement, the founders and one of our existing investors will have the right, subject to certain conditions, to nominate for election two additional members to our board of directors. The Stockholders’ Agreement requires all of our existing equityholders to vote in favor of the election of such nominees, which will substantially limit the right of investors in this offering to elect or remove such nominees.

We may choose to redeem our outstanding Warrants at a time that is disadvantageous to our Warrant holders.

We may redeem the Warrants issued as a part of the Units at any time after the Warrants become exercisable in whole and not in part, at a price of $0.01 per Warrant, upon a minimum of 30 days prior written notice of redemption, if and only if the last sales price of our common stock equals or exceeds 200% of the initial public offering price per Unit in this offering (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of our common stock occurring after the issuance date) for any 20-trading-day period ending three business days before we send the notice of redemption. If at any time during the exercise period for the Warrants there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares of common stock underlying the Warrants, then the Warrants may only be exercised by means of a “cashless exercise” according to a formula set forth in the Warrant agreement. Redemption of the Warrants could force the Warrant holders to (i) exercise the Warrants and pay the exercise price at a time when it may be disadvantageous for the holders to do so, (ii) sell the Warrants at the then current market price when they might otherwise wish to hold the Warrants, or (iii) accept the nominal redemption price which, at the time the Warrants are called for redemption, is likely to be substantially less than the market value of the Warrants.

Certain Warrant holders are unlikely to receive direct notice of redemption of our Warrants.

We expect most purchasers of our Warrants will hold their securities indirectly in “street name” through a financial intermediary that is a participant in the Depositary Trust Company and not in their own names. Consequently those holders are unlikely to receive notice directly from us that the Warrants are being called for redemption. If you fail to receive notice of redemption from a third party holder of your Warrants and your Warrants are redeemed for nominal value, you will not have recourse against us.

Our amended and restated certificate of incorporation and amended and restated bylaws will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation and amended and restated bylaws which will become effective prior to the closing of this offering will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for the following civil actions:

● any derivative action or proceeding brought on our behalf;

25

● any action asserting a claim of breach of a fiduciary duty by any of our directors, officers or stockholders owed to us or our stockholders;

● any action arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or amended and restated bylaws; or

● any action asserting a claim against us governed by the internal affairs doctrine.

Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any claim for which the federal courts have exclusive jurisdiction.

If any such action is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder will be deemed to have consented to (a) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce such actions and (b) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or stockholders, which may discourage such lawsuits against us and our directors, officers and stockholders. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation and amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.

We have never paid cash dividends on our capital stock, and we do not anticipate paying cash dividends in the foreseeable future.

We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. In addition, our credit facility restricts, and we may enter into credit agreements or other borrowing arrangements in the future that will restrict, our ability to declare or pay cash dividends on our common stock. We currently intend to retain any future earnings to fund the growth of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future.

Our inability to raise additional capital on acceptable terms in the future may limit our ability to expand our operations.

If our available cash balances, net proceeds from this offering and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our creative content as a result of other risks described in this “Risk Factors” section, we may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements. We may also consider raising additional capital in the future to expand our business, pursue strategic investments, take advantage of financing opportunities, or other reasons. Additional funding may not be available to us on acceptable terms, or at all. If we raise funds by issuing equity securities, dilution to our securityholders could result. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. The terms of debt securities issued or borrowings could impose significant restrictions on our operations. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity and other

26

operating restrictions that could adversely affect our ability to conduct our business and pursue acquisitions. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our securities to decline. If we do not have, or are not able to obtain, sufficient funds, we may have to delay strategic opportunities, investments or projects. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of, or eliminate some or all of our creative work. Any of these actions could have a material adverse effect on our business, results of operations or financial condition.

Our founders will continue to have substantial control over our company after this offering which could limit your ability to influence the outcome of key decisions, including a change of control.

Our common stock has one vote per share. Our founders and their affiliates, will together hold approximately 48% of the voting power of our outstanding capital stock following this offering (or 46% if the underwriters’ over-allotment option to purchase additional shares in this offering is exercised in full), assuming no exercise of the Warrants included in the Units. As a result, our founders will continue to control a majority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval so long as their ownership of our common stock is at least 50%. Additionally, under the Stockholders’ Agreement, for so long as our founders collectively hold at least 15% of our outstanding common stock, a committee established by the founders will have the right to nominate one person for election to our board of directors once every three years (i.e., to one of the three classes of the board). Similarly, under the Stockholders’ Agreement, for so long as the sole stockholder of All Asia Digital Entertainment Inc. holds at least 5% of our outstanding common stock, it will also have the right to nominate one person for election to our board of directors once every three years. At the closing of this offering, the sole stockholder of All Asia Digital Entertainment Inc. will hold approximately 12% of our common stock (or 12% if the underwriters’ over-allotment option to purchase additional shares in this offering is exercised in full). The Stockholders’ Agreement requires all of our existing equityholders to vote in favor of the election of such nominees. The founders’ concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future, and could impede the election of directors, amendments of our organizational documents, acquisitions of other companies and businesses, a change of control of the company, any merger, consolidation, sale of all or substantially all of our assets, and other major corporate transactions that could maximize value for all securityholders, even if approved by a majority of the board of directors.

The founders may have interests that conflict with those of investors in this offering and no assurance can be given that our company will be managed in the best interest of our other stockholders.

The founders may have interests in the management and operations of our company that are different from and may, in certain situations conflict with, the interests of our other stockholders. As a result of these potentially divergent interests, the founders may cause our company to be managed for their benefit and to the detriment of investors who purchase Units in this offering. Because we have agreed to indemnify and hold harmless the founders to the maximum extent permitted by applicable law, you may have no effective recourse against the founders if they do not act in the best interests of the other stockholders.

We have broad discretion in the use of net proceeds that we receive in this offering and we may not use them effectively.

We currently intend to use the net proceeds from this offering for working capital and other general corporate purposes. We may use a portion of such net proceeds to acquire complementary businesses or technologies. However, we do not have agreements or commitments for any acquisitions at this time. Our management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds from this offering. The failure by our management to apply these funds effectively could have a material adverse effect on our business, results of operations or financial condition.

27

The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or Exchange Act, and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Capital Market, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal control over financial reporting. Significant resources and management oversight will be required to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could harm our business, results of operations or financial condition. We expect to but have not yet hired additional employees to comply with these requirements and we may need to hire even more employees in the future than we currently anticipate, which will increase our costs and expenses. In addition, after we no longer qualify as an “emerging growth company” and a “smaller reporting company,” we expect to incur additional management time and cost to comply with the more stringent reporting requirements applicable to companies that are deemed accelerated filers or large accelerated filers, including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.

We also expect to obtain director and officer liability insurance as a result of being a public company and these new rules and regulations. We may be required to accept reduced coverage or incur substantially higher costs to obtain coverage than that for a private company. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

If we fail to maintain or implement effective internal control, we may not be able to report financial results accurately or on a timely basis, or to detect fraud, which could have a material adverse effect on the market price of our securities.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting. We expect to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We also expect to improve our internal control over financial reporting. We anticipate that we will expend significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our securities. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Capital Market.

28

We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” or a “smaller reporting company” as defined in SEC rules. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.

We are an “emerging growth company” and a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to those companies will make our securities less attractive to investors.

For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including, not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these exemptions for so long as we are an “emerging growth company,” which will be until the earlier of (1) January 1, 2024, (2) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (3) the last day of a three-year period during which we have issued more than $1 billion in non-convertible debt and (4) the date on which we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act. Even after we no longer qualify as an “emerging growth company,” we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Investors may find our securities less attractive because we rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities, and the market price of our securities may be more volatile and may decline.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards. We currently intend to utilize the allowable extended transition period. However, if we chose to “opt out” of such extended transition period, we will be required to comply with new or revised accounting standards on the relevant dates adoption of such standards is required for non-emerging growth companies. A decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, the market prices and trading volumes of our securities could decline.

The trading markets for our securities will partially depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our securities or change their opinion of our business prospects, the market prices of our securities would likely decline. If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the market prices or trading volumes of our securities to decline.

29

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and expectations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may”, “will”, “should”, “expects”, “plans”, “anticipates”, “could”, “intends”, “target”, “projects”, “contemplates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

● our future financial and results of operations;

● our growth plans;

● our business plan and our ability to effectively manage our growth;

● our ability to attract and retain brands and advertising agencies;

● the effects of increased competition in our market and our ability to compete effectively;

● our plans to use the proceeds from this offering;

● estimates of our expenses, future revenues, capital requirements, our needs for additional capital and our ability to obtain additional capital;

● our ability to attract and retain qualified directors, employees and key personnel such as our founders while maintaining our corporate culture;

● future acquisitions of or investments in complementary companies; and

● the effects of trends on, and fluctuations in, our results of operations.

We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions and other factors described in the section captioned “Risk Factors” and elsewhere in this prospectus. These risks are not exhaustive. Other sections of this prospectus include additional factors that could adversely impact our business and financial performance. Furthermore, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus forms a part with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

The forward-looking statements made in this prospectus relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this prospectus or to conform such statements to actual results or revised expectations, except as required by law.

30

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the Units in this offering will be approximately $14.3 million, based upon the assumed initial public offering price of $7.00 per Unit (which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), after deducting the underwriting discount and estimated offering expenses payable by us. If the underwriters’ over-allotment option to purchase additional Units in this offering is exercised in full, we estimate that the net proceeds will be approximately $16.7 million, after deducting the underwriting discount and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $7.00 per Unit would increase (decrease) the net proceeds that we receive from this offering by approximately $2.3 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million in the number of Units offered by us would increase (decrease) the net proceeds that we receive from this offering by approximately $6.4 million, assuming that the assumed initial public offering price per Unit remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

We will not receive any proceeds from the issuance of shares of common stock issuable upon exercise of the Warrants unless and until such Warrants are exercised. If the Warrants were fully exercised, we would receive additional proceeds of up to approximately $22.8 million, based upon the assumed initial offering price of $7.00 per Unit (which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus).

The principal purposes of this offering are to increase our financial flexibility, create a public market for our securities and to facilitate future access to the public equity markets for us and our stockholders. We currently intend to use the net proceeds from this offering for working capital and other general corporate purposes. We may use a portion of such net proceeds to acquire complementary businesses or technologies. However, we do not have agreements or commitments for any acquisitions at this time.

Our management will have broad discretion in the application of the net proceeds from this offering, and investors will be relying on our judgment regarding the application of the net proceeds from this offering. Pending the use of proceeds from this offering as described above, we intend to invest such net proceeds in short-term and long-term interest-bearing obligations, including government and investment-grade debt securities and money market funds.

31

DIVIDEND POLICY

PCI Media, Inc. has never declared or paid cash dividends on its capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors considers relevant. In addition, the terms of our credit facility contain restrictions on our ability to pay dividends. For further information regarding our credit facility, see the sections captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility,” “Risk Factors—Risks Related to Our Business and Industry—Our credit facility imposes significant limitations on our business operations,” and the notes to our audited consolidated financial statements in this prospectus.

32

CAPITALIZATION

The following table sets forth cash, as well as our capitalization, as of March 31, 2019:

● on an actual basis;

● on a pro forma basis to give effect to (i) the completion of the Contribution and Merger Transactions, and (ii) the filing and effectiveness of our amended and restated certificate of incorporation prior to the consummation of this offering; and

● on a pro forma as adjusted basis to give further effect to the issuance and sale by us of 2,500,000 Units in this offering, and the receipt of the net proceeds from our sale of these shares at an assumed initial public offering price of $7.00 per Unit, the midpoint of the price range on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us. The table below assumes no exercise of the Warrants included in the Units, no value is attributed to the Units or the Warrants, and the Units and Warrants are classified and accounted for as equity.

You should read this information together with the information provided under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Summary Financial Data” as well as our consolidated financial statements and the related notes, appearing elsewhere in this prospectus.

	As of March 31, 2019
	Actual			Pro     Forma			Pro Forma     As Adjusted(1)
	(in thousands, except share and per share data)
Cash	$	1,615		$	1,615		$	15,915
Total Long-term debt	$	4,103		$	4,103		$	4,103
Stockholders’/members’ equity:
Members’ equity		446			—			—
Preferred stock, $0.001 par value; no shares authorized, issued and outstanding, actual; 10,000,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		—			—			—
Common stock, $0.001 par value; 1,000 shares authorized, 1 share issued and outstanding, actual; 100,000,000 shares authorized, 5,000,000 shares issued and outstanding, pro forma; 100,000,000 shares authorized, 7,500,000 shares issued and outstanding, pro forma as adjusted		—			5			8
Additional paid-in capital		—			441			14,738
Accumulated other comprehensive loss		(152	)		(152	)		(152	)
Total stockholders’/members’ equity		294			294			14,589
Total capitalization	$	4,397		$	4,397		$	18,697

(1) A $1.00 increase (decrease) in the assumed initial public offering price of $7.00 per Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of cash, total stockholders’ equity and total capitalization by approximately $2.3 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. We may also increase or decrease the number of Units we are offering. Each increase (decrease) of 1.0 million in the number of Units offered by us would increase (decrease) the pro forma as adjusted amount of cash, total stockholders’ equity and total capitalization by approximately $6.4 million, assuming that the assumed initial public offering price per Unit remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

33

The table above is based on 7,500,000 shares of our common stock outstanding on a pro forma basis as of March 31, 2019, after giving effect to the Contribution and Merger Transactions, and excludes, as of that date, the following:

● 787,500 shares of common stock, subject to annual increases, reserved for future grant or issuance under our 2019 Plan, which will become effective in connection with the completion of this offering;

● 393,750 shares of common stock, subject to annual increases, reserved for future grant or issuance under the ESPP, which will become effective in connection with the completion of this offering;

● shares issuable upon vesting of restricted stock units to be granted to our non-employee directors under the 2019 Plan in connection with this offering as described in “Executive Compensation – Director Compensation – Post-IPO Compensation Program”; and

● 300,000 shares issuable upon the exercise of options to be granted to our Chief Executive Officer under the 2019 Plan in connection with this offering (assuming no exercise of the underwriters’ over-allotment option) as described in “Executive Compensation – Executive Compensation Arrangements – D. Hunt Ramsbottom Employment Agreement”.

34

DILUTION

If you invest in our securities in this offering, your interest in our common stock will be immediately diluted to the extent of the difference between the initial public offering price per Unit in this offering and the pro forma as adjusted net tangible book value per share of our common stock after this offering. Such calculation does not reflect any dilution associated with the sale and exercise of Warrants. As of March 31, 2019, we had a historical net tangible book value of $0.0 million. Our net tangible book value represents total tangible assets less total liabilities. Our pro forma net tangible book value at March 31, 2019, before giving effect to this offering, was $0.0 million, or $0.00 per share of our common stock. Pro forma net tangible book value, before the issuance and sale of shares in this offering, gives effect to:

● the Contribution and Merger Transactions; and

● the filing and effectiveness of our amended and restated certificate of incorporation prior to the consummation of this offering.

After giving further effect to the assumed sale of 2,500,000 Units in this offering at an assumed initial public offering price of $7.00 per Unit, the midpoint of the price range set forth on the cover page of this prospectus, assuming no exercise of the Warrants included in the Units, no value is attributed to the Units or the Warrants, and the Units and Warrants are classified and accounted for as equity, and after deducting the underwriting discount and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at March 31, 2019 would have been approximately $14.3 million, or approximately $1.91 per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $1.91 per share to existing stockholders and an immediate dilution of $5.09 per share to new investors. The following table illustrates this per share dilution:

Assumed initial public offering price per Unit			$	7.00
Pro forma net tangible book value per share as of March 31, 2019	$	0.00
Increase in pro forma net tangible book value per share attributable to investors purchasing shares in this offering		1.91
Pro forma as adjusted net tangible book value per share				1.91
Dilution in pro forma as adjusted net tangible book value per share to investors in this offering			$	5.09

A $1.00 increase (decrease) in the assumed initial public offering price of $7.00 per Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease), our pro forma as adjusted net tangible book value per share after this offering by $0.31, and would increase (decrease) dilution per share to new investors in this offering by $(0.31), assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

If the underwriters fully exercise their option to purchase additional Units and all such Units are sold by us, our pro forma as adjusted net tangible book value after this offering would increase to approximately $2.13 per share, the dilution to investors in this offering would be approximately $4.87 per share.

35

The following table shows, as of March 31, 2019, on a pro forma as adjusted basis, after giving effect to the pro forma adjustments described above, the number of shares of common stock purchased from us, the total consideration paid to us and the average price paid per share by existing stockholders and by new investors purchasing Units in this offering at an assumed initial public offering price of $7.00 per Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, assuming no exercise of the Warrants included in the Units and no value is attributed to the Units or Warrants and before deducting the underwriting discount and estimated offering expenses payable by us (in thousands, except per share amounts and percentages):

	Shares Purchased					Total Consideration					Average Price Per Share
	Number		Percent			Amount		Percent
Existing stockholders(1)		5,000,000		66.7	%	$	11,395,032		39.4	%	$	2.28
New investors		2,500,000		33.3			17,500,000		60.6		$	7.00
Total		7,500,000		100	%	$	28,895,032		100	%	$	3.85

(1) The consideration from existing stockholders represents the net assets and cash contributed in exchange for membership units in Psyop Media Company, LLC.

A $1.00 increase (decrease) in the assumed initial public offering price of $7.00 per Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors and total consideration paid by all stockholders by approximately $2.3 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million Units in the number of Units offered by us would increase (decrease) the total consideration paid by new investors and total consideration paid by all stockholders by approximately $6.4 million, assuming that the assumed initial public offering price remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.

The tables and discussion above are based on 7,500,000 shares of our common stock outstanding on a pro forma basis as of March 31, 2019, after giving effect to the Contribution and Merger Transactions, and exclude, as of that date, the following:

● 787,500 shares of common stock, subject to annual increases, reserved for future grant or issuance under our 2019 Plan, which will become effective in connection with the completion of this offering;

● 393,750 shares of common stock, subject to annual increases, reserved for future grant or issuance under the ESPP, which will become effective in connection with the completion of this offering;

● shares issuable upon vesting of restricted stock units to be granted to our non-employee directors under the 2019 Plan in connection with this offering as described in “Executive Compensation – Director Compensation – Post-IPO Compensation Program”; and

● 300,000 shares issuable upon the exercise of options to be granted to our Chief Executive Officer under the 2019 Plan in connection with this offering (assuming no exercise of the underwriters’ over-allotment option) as described in “Executive Compensation – Executive Compensation Arrangements – D. Hunt Ramsbottom Employment Agreement”.

36

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under the headings “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” Certain amounts in the tables below may not total due to rounding.

Company Overview

We are a media company that creates innovative and award-winning content for our customers which include some of the world’s most well-known brands. We create content for commercials, television series, digital and social media, experiential and influencer platforms and virtual reality (VR) and augmented reality (AR) experiences. We believe our content is highly creative, engages large audiences and influences their behavior. Our work has generated billions of views and impressions on digital platforms and has reached television audiences in over two hundred countries. Our commercial content is broadcasted regularly during the world’s largest televised events, including the Olympic Games, the World Cup and the Super Bowl.

Comparability to Future Results

Prior to this offering, we were organized as a limited liability company and treated as a pass-through entity for U.S. federal income tax purposes. As a result, we were not subject to U.S. federal income tax, and our income statements did not contain a provision for such taxes and our balance sheets did not contain assets or liabilities relating to such taxes. In addition, profits and losses from our business were passed through to our members, primarily our founders. Because of our organizational structure, the founders received a substantial portion of their compensation from their pro rata share of our profits.

In connection with this offering, we have reorganized our business as a corporation subject to U.S. federal income taxation. In future periods, we will record expenses and/or benefits relating to income taxes on our consolidated income statements and related tax assets and/or liabilities on our balance sheets. The pro forma effects of this change in our structure are presented above under “Summary Consolidated Financial Data.”

In connection with this offering, we are entering into Employment Agreements with each of our founders and Services Agreements with entities affiliated with each of our founders under which we have agreed to pay an aggregate of not less than $1.75 million per year. See “Certain Relationships and Related Party Transactions—Founders Agreements.” These agreements will result in a material increase in our selling, general and administrative expenses in periods following the offering.

As a result of the matters described above, the consolidated financial statements included in this prospectus may not be comparable to our consolidated financial statements for periods ending after this offering.

Factors Affecting Our Operating Results

Various factors are expected to continue to affect our future results of operations, including the following:

Quarterly Fluctuations in Revenues.    Our revenues, cash flows from operations, operating results and other key operating and financial measures may vary from quarter to quarter due to production schedules and project volume. We have limited control over the timing and mix of individual projects which could result in material fluctuations of our revenues, cash flows from operations, operating results and other key operating and financial measures from period to period.

37

Public Company Expenses.    Following the completion of this offering, we expect to incur additional professional fees and other expenses as a result of being a public company. We expect such costs will be significant and will adversely impact our results of operations and cash flows. In addition, we expect to increase our staff as our operations grow and as we integrate potential future acquisitions. We intend to invest appropriate resources to properly manage our business, and this investment will likely result in future increases in general and administrative expenses.

Acquisitions.    One of our business strategies is to pursue acquisitions in related businesses. We may pursue acquisitions of additional businesses that provide services within our current core product offerings, extend our geographic reach and expand our product offerings. If completed, acquisitions could have significant effects on our business, financial condition and results of operations. We cannot assure you that we will enter into any definitive acquisition agreements on satisfactory terms, or at all. Costs associated with potential acquisitions are expensed as incurred, and could be significant.

Components of Our Financial Performance

In assessing the financial performance of our business, we consider various financial and operating metrics, including the following:

Contract Revenues.    We derive our contract revenues from a broad number of customers and projects. Most commonly, our customers are advertising agencies that are the contracting agency on behalf of brands. We might service a number of different brands through a single customer, nonetheless, no single customer will typically generate more than 20% of our revenues in any given year. Projects usually extend over two or four months but can be as short as a few weeks and no project to date has been longer than eight months, with the exception of branded entertainment. When we enter into contracts, we believe we can reasonably project the timing of its revenues, costs and cash flows.

We control the timing and mix of individual projects as they are in production; however, we do not have extended visibility into future projects as clients’ campaigns and needs can change dramatically due to market conditions and marketing strategies. This dynamic leads to management’s limited ability to accurately project revenues and expenses from future projects.

Effective January 1, 2019, we adopted Financial Accounting Standards Board (the “FASB”) ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective method (i.e. applied prospectively January 1, 2019 without revising prior periods). The adoption of ASC 606 did not have a material impact on our consolidated financial statements.

In accordance with ASC 606, our revenue is recognized when a customer obtains control of the promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) 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; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

We primarily generate revenue from fixed-price contracts, where revenue is recognized over time as work is completed. Accordingly, earnings are recognized on a contract-by-contract basis in the ratio that actual costs incurred bear to total estimated costs, as determined by management (the cost-to-cost method). Using the cost-to-cost method, revenues are recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total

38

estimated costs, multiplied by the total estimated contract revenue, less accumulated revenue recognized in prior periods.

To determine the proper revenue recognition method for contracts with customers, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as having multiple performance obligations. ASU 2014-09 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. While the nature of our contracts promises to deliver multiple goods and services, these services are highly interdependent and interrelated and our customer is purchasing the final deliverable not the individual items and accordingly such goods and services are considered a single performance obligation. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The nature of the our contracts do not have variable consideration, such as liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. In contrast, the contracts are often modified to account for changes in contract specifications or requirements. Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full in the period it is identified.

We estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as the transaction price, we may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection.

The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, we usually receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability.

Our backlog for awarded projects at March 31, 2019 was approximately $8.6 million. Backlog refers to projects for which the client has requested work and we have entered into a contract but which has not yet been completed. Such contracts are cancellable but there are penalty provisions associated with such cancellations. Substantially all of our backlog as of March 31, 2019 is expected to be completed in 2019 due to the short-term nature of the projects.

Cost of Contract Revenues.    Cost of contract revenues includes all labor and related benefits, subcontractors, software maintenance and other direct costs related to contract performance such as equipment rental, travel,

39

supplies and other production costs. Also included in cost of contract revenues are occupancy costs and depreciation. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Selling, General and Administrative Expenses.    Selling, general and administrative expenses include expenses related to administration employees, sales personnel, software engineers and other technical support personnel, expendable computer software and equipment, professional fees, facilities expenses and other operating expenses not directly related and/or allocable to projects. Additionally, we utilize external sales personnel that are paid commissions based on projects they secure.

Interest Income (Expense).    Our interest income consists of interest earned on our cash and cash equivalents. Interest expense consists of interest incurred on the outstanding balance under our credit facility with our financial institution, interest on a note payable to a former executive relating to the repurchase of his member interests, as well as interest on the amount payable for the 40% interest we acquired in Broken Bone Club Limited.

Results of Operations

The following table sets forth certain information regarding our consolidated results of operations for the periods indicated:

	Three Months Ended March 31,						Year Ended December 31,
	2019			2018			2018			2017
							(in thousands)
Contract revenues	$	15,056		$	14,410		$	57,367		$	61,962
Cost of contract revenues		11,997			11,270			45,395			45,273
Gross profit		3,059			3,140			11,972			16,690
Selling, general and administrative expenses		3,656			3,576			14,212			16,184
Operating income (loss)		(597	)		(436	)		(2,240	)		505
Other income (expense):
Interest income		-			-			-			7
Interest expense		(28	)		(43	)		(139	)		(161	)
Other expense		(70	)		(21	)		(77	)		(137	)
		(98	)		(64	)		(216	)		(291	)
Income (loss) before income tax benefit (expense)		(695	)		(500	)		(2,456	)		215
Income tax benefit (expense)		12			99			116			(17	)
Income (loss) before income from equity method investment		(683	)		(401	)		(2,340	)		198
Income from equity method investment		3			-			219			-
Net income (loss)	$	(680	)	$	(401	)	$	(2,121	)	$	198
Other comprehensive income:
Foreign currency translation gain (loss)		9			-			(9	)		18
Comprehensive income (loss)	$	(671	)	$	(401	)	$	(2,130	)	$	216

40

Comparison of Three Months Ended March 31, 2019 and Three Months Ended March 31, 2018

Contract Revenues. Contract revenues increased $0.6 million, or 4.5%, from $14.4 million for the three months ended March 31, 2018 to $15.1 million for the three months ended March 31, 2019. The increase was primarily attributable to an increase in our live action revenues that was partially offset by a decrease in our animation revenue and production services revenue. The increase in live action revenues and reduction in animation and production services revenue were the result of normal variation in sales volume across our customer base.

Cost of Contract Revenues. Cost of contract revenues increased by approximately $0.7 million for the three months ended March 31, 2019 to $12.0 million compared to $11.3 million for the three months ended March 31, 2018. This increase is primarily attributable to an increase in live action production expense because of the increase in live action revenues, partially offset by decreases in animation and production services labor costs resulting from lower revenues.

Gross profit was approximately flat year over year at $3.1 million for the three months ended March 31, 2019 and 2018 as a result of the factors described above.

Gross margin decreased approximately 1.5% from 21.8% for the three months ended March 31, 2018 to 20.3% for the same period in 2019. The decrease in gross margin was the result of the variation in the mix of revenues period over period as live action revenues typically will have lower gross margins than animation. During the three months ended March 31, 2019 live action revenues increased and animation revenues decreased compared to the prior year. In the ordinary course of business, there is normal variability in the revenue mix from quarter to quarter.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by approximately $0.1 million, from $3.6 million for the three months ended March 31, 2018 to $3.7 million for the three months ended March 31, 2019. The increase was primarily a result of increases in professional fees related to this offering partially offset by reductions in staff costs and travel and entertainment costs.

Net interest expense. Net interest expense was approximately flat and less than $0.1 million for the three months ended March 31, 2019 and 2018.

Comparison of Year Ended December 31, 2018 and Year Ended December 31, 2017

Contract revenues.    Contract revenues declined $4.6 million, or 7.4%, from $62.0 million for the year ended December 31, 2017 to $57.4 million for the year ended December 31, 2018. The decrease was primarily attributable to a reduction in our animation and live action revenues that was partially offset by an increase in our production services revenue. The reduction in animation and live action revenues and the increase in production services revenue were the result of normal variation in sales volume across our customer base.

Cost of contract revenues.    Cost of contract revenues was approximately flat at $45.4 million for the year ended December 31, 2018 compared to $45.3 million for the year ended December 31, 2017.

Gross profit declined from $16.7 million for the year ended December 31, 2017 to $12.0 million for the year ended December 31, 2018. The decline in gross profit was a result of the decline in revenues coupled with the decline in gross margin described below.

Gross margin decreased approximately 6.1% from 26.9% for the year ended December 31, 2017 to 20.9% for the year ended December 31, 2018. The decrease in gross margin was primarily attributable to a decline in our animation product offerings gross margin. The decline in animation product offering gross margin year-over-year was the result of variation in the mix of our projects. In the ordinary course of business, there is normal variability in the gross margin from project to project.

41

Selling, general and administrative expenses.    Selling, general and administrative expenses declined approximately $2.0 million, or 12.2%, from $16.2 million for the year ended December 31, 2017 to $14.2 million for the year ended December 31, 2018. The decrease was primarily attributable to reductions in staff costs of approximately $1.5 million, occupancy costs of $0.4 million, leasehold amortization of $0.3 million, sales commissions of $0.3 million and insurance expense of $0.1 million, partially offset by increases in professional fees primarily related to this offering of $0.8 million.

Net interest expense.    Net interest expense was approximately flat at $0.14 million for the year ended December 31, 2018 and $0.15 million for the year ended December 31, 2017.

Liquidity and Capital Resources

Our principal sources of liquidity at March 31, 2019 consisted of cash and cash equivalents of approximately $1.6 million and $2.0 million of cash available under our line of credit.

We have historically financed our operations through cash flows from operations, cash on hand and borrowings under our credit facility. We incurred losses from operations of approximately $0.7 million and $2.1 million for the three months ended March 31, 2019 and for the year ended December 31, 2018, respectively. As of March 31, 2019, we have a working capital deficit of approximately $1.8 million and negative cash flows from operations of approximately $2.6 million. Management believes that the business operations have improved and will continue to improve as a result of reductions in staff, facility consolidations and new client business wins. The backlog of projects as of May 1, 2019 is $9.1 million and our pitch activity remains strong. Management believes that our current cash coupled with our $2.0 million of availability under our line of credit are adequate to meet our needs for the next twelve months. We anticipate that we will continue to obtain funding to meet our working capital needs under the line of credit beyond its currently scheduled maturity based on historical experience and our relationship with our lender. We may also seek additional borrowings or raise additional equity to achieve our long-term business objectives.

As discussed above, we derive a substantial amount of our revenues from a diverse and changing group of advertising agencies who engage us on a project-by-project basis. Advance payments on these commercial projects help fund our operations, but may fluctuate significantly from quarter-to-quarter depending on production schedules and project volume. Thus, we have limited visibility into our future cash flows beyond contracts that have been signed and are in process. We have little control over the timing and mix of individual projects, which limits our ability to predict our future operations and related cash flows.

Historically, our primary cash expenditures have been dedicated to the payment of salaries and wages to our employees and fees to our freelancers. Other areas that require significant portions of our expenditures are commissions paid to sales representatives, occupancy costs and expenditures on technological equipment.

We do not expect to make significant internal investments in equipment over the next three years outside of the normal maintenance required to refresh our production pipeline. We plan to invest approximately $0.7 million in connection with the consolidation and buildout of one of our Los Angeles facilities. We plan to sublease the other Los Angeles facility.

In April 2017, we purchased 85,000 Class B-2 units from our former Chief Operating Officer for $1.2 million which is being paid in four equal annual installments of $300,000 beginning March 15, 2018 and ending of March 15, 2021.

In May 2017, we purchased 225,000 Class B-1 units from an entity owned by our former Chief Executive Officer for $3.5 million, which is being paid, pursuant to an amended agreement with our former Chief Executive Officer, as follows: $500,000 in May 2017; $500,000 in March 2018; $750,000 prior to the end of 2019; $750,000 in March 2020; and $1.0 million in March 2021. The unpaid amount of these payment obligations bear interest at a rate of 3% per annum.

42

In April 2018, we acquired a 40% interest in Broken Bone Club Limited, a private limited company incorporated in England and Wales for 1.25 million Great Britain Pounds (“GBP”) (or USD $1.8 million). We paid 250,000 GBP (or approximately USD $355,000) at the closing of the transaction and are required to pay the remaining 1 million GBP (or USD $1.4 million) in 48 equal monthly installments, with unpaid amounts bearing interest at 3% per annum, starting from May 10, 2018. Broken Bone Club Limited is a holding company, the sole assets of which consist of shares of Golden Wolf Ltd and Golden Wolf, Inc. (collectively, “Golden Wolf”). Golden Wolf is an award-winning animation and video production company based in London that creates content targeted at millennial audiences. We acquired an interest in Broken Bone Club Limited because we believe Golden Wolf’s business strategically complements our core business and the acquisition allows for the expansion of our product offerings into the London market.

Future principal payments due under the arrangements described in the three paragraphs above for the years ending December 31 are as follows (in thousands):

2019 (After March 31)	$	994
2020		1,376
2021		1,626
2022		108
	$	4,104

Our future capital requirements will depend on many factors, including our rate of sales growth. Although we currently are not a party to any agreement or letter of intent with respect to potential material investments in, or acquisitions of, complementary businesses, services or technologies, we may enter into these type of arrangements in the future, which could also require us to seek additional equity or debt financing. Such additional funds may not be available on terms favorable to us or at all. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt and issuing shares of our common stock, and could increase our expenses and require that our assets secure such debt. Equity financing, if obtained, could result in dilution to our then existing stockholders and/or require such stockholders to waive certain rights and preferences.

We intend to use the net proceeds of this offering for working capital and other general corporate purposes. We may use a portion of the net proceeds to acquire complementary businesses or technologies. We believe that our cash flow from operations and net proceeds from this offering will be sufficient to fund our projected operating requirements for at least the next twelve months.

Selected Cash Flow Data

Net cash used in operating activities was $2.6 million for the three months ended March 31, 2019. This was primarily attributable to a net loss of $0.7 million, a decrease in accounts payable and other current liabilities of $1.7 million, an increase in contract assets of $0.8 million and an increased in prepaid expenses of $0.3 million. This was partially offset by a decrease in accounts receivable of $0.5 million and non-cash depreciation expenses of $0.3 million.

Net cash used in operating activities was $2.3 million for the three months ended March 31, 2018. This was primarily attributable to a net loss of $0.4 million, a decrease in accounts payable and other current liabilities of $1.7 million, an increase in costs and estimated earnings in excess of billings on uncompleted contracts of $0.5 million, a decrease in billings in excess of costs and estimated earnings on uncompleted contracts of $0.4 million and an increased in prepaid expenses of $0.3 million. This was partially offset by a decrease in accounts receivable of $0.3 million, an increase in long term liabilities of $0.3 million, a decrease in other assets of $0.2 million and non-cash depreciation expense of $0.3 million.

43

Net cash used in investing activities was $0.1 million for the three months ended March 31, 2019 and consisted primarily of $0.1 million paid during the year for the investment in Golden Wolf.

Net cash used in investing activities was $0.1 million for the three months ended March 31, 2018 and consisted of $0.1 million of capital expenditures.

Net cash provided by financing activities was $0.3 million for the three months ended March 31, 2019 which consisted of $1.0 million in proceeds from our line of credit This was partially offset by $0.4 million of principal payments of bank notes payable and $0.3 million for the repurchase of membership units described above.

Net cash used in financing activities was $1.7 million for the three months ended March 31, 2018 which consisted of $0.3 million of principal payments of bank notes payable, $0.8 million for the repurchase of membership units described above and $0.5 million of profits distributed its members.

Net cash provided by operating activities was $1.3 million for the year ended December 31, 2018. This was primarily attributable to depreciation and amortization expense of $1.3 million, a decrease in accounts receivable of $1.4 million, a decrease in costs and estimated earnings in excess of billings on uncompleted contracts of $0.5 million and an increase in deferred rent of $0.3 million. This was partially offset by a net loss of $2.1 million and a decrease in billings in excess of costs and estimated earnings on uncompleted contracts of $0.2 million.

Net cash used in investing activities was $0.9 million for the year ended December 31, 2018 and consisted of $0.7 million paid during the year for the investment in Golden Wolf. The remaining $0.2 million was used for capital expenditures.

Net cash used in financing activities was $2.6 million for the year ended December 31, 2018 which consisted of $1.1 million of principal payments of bank notes payable, $0.8 million for the repurchase of membership units described above and $0.7 million of distributions to equity holders.

Net cash provided by operating activities was $0.4 million for the year ended December 31, 2017. This was primarily attributable to net income of $0.2 million, depreciation and amortization of $1.7 million, an increase in accounts payable and other current liabilities of $0.4 million, an increase in deferred rent of $0.3 million and a decrease in prepaid expenses and other assets of $0.3 million. This was partially offset by an increases in accounts receivable of $2.1 million and costs and estimated earnings in excess of billings on uncompleted contracts of $0.5 million.

Net cash used in investing activities was $0.6 million for the year ended December 31, 2017 which consisted of $0.3 million of capital expenditures and $0.3 million related to the purchase of an intangible asset.

Net cash used in financing activities was $1.8 million for the year ended December 31, 2017 which consisted of $1.3 million of principal payments of bank notes payable and $0.5 million for the repurchase of membership units described above.

Credit Facility

We maintain a credit facility with Bridgehampton National Bank. The credit facility currently consists of one term loan (Term Loan C) with an original aggregate principal amount of $3.0 million, a line of credit in the amount of $3.0 million and a letter of credit facility in the amount of $2.0 million for the issuance of standby letters of credit.

Term Loan B in the original amount of $1.0 million matured in March 2018 and bore interest at 5.75% per annum and was payable in 60 consecutive equal monthly installments of principal and interest in the amount of $18,836.

44

Term Loan C in the amount of $3.0 million matures April 2019 and is payable in 36 consecutive equal monthly installments of principal and interest in the amount of $88,838 and bears interest at 4.5% per annum. At March 31, 2019, there is no balance outstanding under Term Loan C.

The line of credit matures on June 30 of each year and bears interest at a rate per annum equal to the greater of (i) the prime rate plus 1.0% or (ii) 4.5%. At December 31, 2018, no amounts were outstanding under the line of credit. Currently there is $1.0 million outstanding under the line of credit.

At March 31, 2019, two standby letters of credit were outstanding under our credit facility in the aggregate amount of $1.1 million, which have been issued to our landlords for two of our leased facilities.

The credit facility is guaranteed by our domestic operating subsidiaries. The credit facility is collateralized by all our and the guarantor subsidiaries’ assets. On May 31, 2018, the credit facility was amended to reduce the debt service coverage ratio from 1.50 to 1.00 to 1.25 to 1.00. As of December 31, 2018, the credit facility required us to comply with the following financial covenants: (a) a debt service coverage ratio of at least 1.25 to 1.00; and (b) a debt to equity ratio of not more than 2.00 to 1.00. As of December 31, 2018, we were in violation of the debt service coverage ratio covenant and the debt to equity ratio covenant. We subsequently received a waiver from the lender for both of these violations. As of December 31, 2018, our debt service coverage ratio was (0.38) to 1.00 and our debt to equity ratio was 3.89 to 1.00. Additionally, cash distributions paid to Psyop Media Company, LLC’s members in any fiscal year cannot exceed the operating cash flow generated in the immediately preceding fiscal year.

Off-Balance Sheet Transactions

As of March 31, 2019, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances. However, estimates inherently relate to matters that are uncertain at the time the estimates are made, and are based upon information then presently available. Actual results may differ significantly from these estimates under different assumptions or conditions.

Revenue Recognition

Effective January 1, 2019, we adopted Financial Accounting Standards Board (the “FASB”) ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective method (i.e. applied prospectively January 1, 2019 without revising prior periods). The adoption of ASC 606 did not have a material impact on our consolidated financial statements.

In accordance with ASC 606, our revenue is recognized when a customer obtains control of the promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) 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; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the

45

goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

We primarily generate revenue from fixed-price contracts, where revenue is recognized over time as work is completed. Accordingly, earnings are recognized on a contract-by-contract basis in the ratio that actual costs incurred bear to total estimated costs, as determined by management (the cost-to-cost method). Using the cost-to-cost method, revenues are recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs, multiplied by the total estimated contract revenue, less accumulated revenue recognized in prior periods.

To determine the proper revenue recognition method for contracts with customers, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as having multiple performance obligations. ASU 2014-09 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. While the nature of our contracts promises to deliver multiple goods and services, these services are highly interdependent and interrelated and our customer is purchasing the final deliverable not the individual items and accordingly such goods and services are considered a single performance obligation. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The nature of the our contracts do not have variable consideration, such as liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. In contrast, the contracts are often modified to account for changes in contract specifications or requirements. Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full in the period it is identified.

We estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as the transaction price, we may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection.

The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, we usually receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability.

46

Cost Recognition

Contract costs include all labor, subcontractors and other direct costs related to contract performance such as equipment rental, supplies and other production costs. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Accounts Receivable

We carry our accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, management evaluates our accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. Accounts are written off once management has determined the balances will not be collected. Specific allowances for doubtful accounts in the amounts of $0, $0 and $26,113 were recorded for customers’ balances at March 31, 2019, December 31, 2018 and 2017, respectively.

Income Taxes

Psyop is a limited liability company and treated as a partnership for income tax purposes. As such, income or loss of Psyop, in general, is allocated to its members for inclusion in their personal income tax return. We conduct business in New York City and are subject to New York City Unincorporated Business tax.

We comply with GAAP, which requires an asset and liability approach to financial reporting of income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.

In accordance with GAAP, we are required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in us recording a tax liability that would reduce members’ equity. We are subject to potential examination by jurisdiction authorities in the areas of income taxes for all periods subsequent to 2015. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with tax laws. Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company”, which we are, to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We are taking advantage of this exemption and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Recently Issued Accounting Pronouncements

See Note 2 to our consolidated financial statements on pages F-5 and F-17 and included elsewhere in this prospectus for recently adopted accounting pronouncements.

47

BUSINESS

We are a media company that creates innovative and award-winning content for some of the world’s most well-known brands. We create content for commercials, television series, digital and social media, experiential and influencer platforms and virtual reality (VR) and augmented reality (AR) experiences. We believe our content is highly creative, engages large audiences and influences their behavior. Our work has generated billions of views and impressions on digital platforms and has reached television audiences in over two hundred countries. Our commercial content is broadcasted regularly during the world’s largest televised events, including the Olympic Games^®, the World Cup^® and the Super Bowl^®.

Our Business

We create content for distribution across all major platforms through Psyop, its wholly-owned subsidiaries, and Golden Wolf, of which we have a 40% ownership interest.

Psyop:    Pysop is a story- and design-led, full-service production company that partners with advertising agencies and brands. Psyop primarily specializes in the creation of animated commercials, including animation integrated with live action, or mixed media productions. Psyop also develops, produces and distributes original short- and long-form content for brands and operates as a turnkey studio that offers access to top writers, directors and showrunners. Psyop presently generates substantially all of our revenues.

Golden Wolf:    In early 2018, we acquired a minority stake in Golden Wolf. Golden Wolf is an award-winning animation and video production company based in London that creates content targeted at millennial audiences. We represent and work with Golden Wolf on select projects where our clients have prioritized reaching millennial audiences.

Our Customers

Over the past 18 years, we believe we have consistently delivered iconic and effective content for blue-chip brands. Our customers include many blue-chip brands such as Coca-Cola, Google and Microsoft. We have produced content for brands across major industry groups including: automotive; consumer products; technology; games; food; beverage; footwear; apparel; media; telecom; finance; hospitality; and energy. We have produced commercial content, which has been broadcast during some of the world’s largest televised events including the Super Bowl, the Winter Olympics and the World Cup.

48

The following is a list of selected brands for which we have created content:

Automotive Consumer Packaged Goods Technology & Games Food & Beverage Footwear & Apparel Media & Telecom Other

Trademarks shown in this prospectus are the property of the owners thereof.

We have partnered with major advertising companies to deliver content to brands, including: Barton F. Graf LLC; Argonaut Inc.; McCann Worldgroup, Inc.; Rubin Postaer & Associates, Inc.; Leo Burnett Company, Inc.; DDB Worldwide Communications Group, Inc.; 72andSunny Partners LLC; Wieden+Kennedy, Inc.; Ogilvy & Mather International Inc.; J. Walter Thompson Worldwide; and Saatchi & Saatchi Advertising Group, Inc.

For the year ended December 31, 2018, Barton F. Graf LLC and Argonaut Inc. accounted for 11% and 16% of our revenues, respectively. For the year ended December 31, 2017, Barton F. Graf LLC and Argonaut Inc. accounted for 16% and 13% of our revenues, respectively.

Accolades

We have won numerous awards and accolades for our creative work. Our awards and accolades include:

● ADDY Awards – American Advertising Awards (2014; 2016; 2017)

● AICP Awards (2007; 2008; 2009; 2011; 2012; 2013; 2014)

● Annie Awards (2016)

● Cannes Lions (2007; 2009)

● Clio Awards (2007; 2011; 2012; 2013; 2016; 2017)

● D&AD Awards (2002; 2003; 2006; 2007; 2011; 2012; 2015)

● Effie Awards (2012; 2014)

● Emmy Award (2009; 2010; 2013 (nomination))

● FWA Awards (2013; 2015)

● Game Marketing Awards (2013; 2016)

● London International Awards (2010; 2011)

49

● One Show Awards (2007; 2009)

● Spike Awards (2012)

● Shots Awards (2015)

● Sundance Film Festival (2008)

● Webby Awards (2014)

In addition, in 2014, Advertising Age, an industry trade publication, recognized the original content web series Content & Co created for Subway Restaurants as the Small Agency Integrated Campaign of the Year. In 2015, Advertising Age stated that, “Psyop easily could be dubbed the Pixar of the spots [commercial] world, given its reputation as the go-to shop for top notch animation and design.”

Primary Product Offerings

Commercial content:    The creation of commercial content comprises substantially all of our business. We produce animated television commercials, including animated and computer graphics (CG) content. We also produce live action and mixed media commercials. Our commercials can be viewed on television as well as through digital and other platforms. We presently generate substantially all of our revenues from the production of commercial content. We believe we have a long-standing reputation in the global advertising industry for producing visually compelling messages that engage and entertain consumers.

Branded entertainment:    We create, develop, produce and distribute for our brand clients original short- and long-form content in which our clients’ brands are integrated into the content. The content we create can be used on television, digital and social media, experiential platforms (which are event-based advertising where consumers interact with the activities centering around brands) and influencer platforms (which are advertising that focuses marketing activities primarily around popular social media personalities). When we produce branded short- and long-form content, we retain the copyright of that content. This allows us to license portions of the same content to other platforms to create additional revenue streams. We have created more than 20 premium branded scripted and reality series that have been distributed in North America and Europe. For example, we created The 4 to 9ers, an original scripted web series comedy which we licensed to Subway for use on their channels (YouTube, Facebook and Twitter), licensed to Hulu under a revenue sharing agreement and licensed for mobile use to Telephonica in Spain under a revenue sharing agreement.

VR and AR:    We produce VR and AR live action, animation and mixed media content. We believe that VR and AR experiences enable brands to actively engage audiences with their content. We create VR experiences that can be used on many commercially available VR platforms, such as Samsung VR Gear, Google Daydream, Playstation VR and Oculus Home for Rift. Our VR and AR capabilities allow us to generate new revenue streams by producing new products for existing clients. For example, in 2014, we created two short films for Samsung Electronics Co., Ltd. We used content from these films to create the first fully-3D pre-rendered (non-interactive) VR experience for the 2014 World Cup. We also created an interactive VR experience called Kismet that can be used on multiple platforms. This work allowed us to showcase our capabilities and generated new VR work from existing clients.

50

Selected Work

Commercials

Animation

Company:	Supercell Oy (Tencent Games)
Brand:	Clash of Clans and Clash Royale Mobile Games
Work:	Animated Commercials

Company:	Cricket Wireless, LLC (AT&T Inc.)
Brand:	Cricket Wireless
Work:	Animated Commercials

Company:	The Coca-Cola Company
Brand:	Coke
Work:	Animated Commercials

51

Company:	The Coca-Cola Company
Brand:	Fanta
Work:	Animated Commercials

Live Action

Company:	Samsung Electronics Co., Ltd.
Brand:	Samsung
Project Title:	Breaking Out
Work:	Live-Action Commercial

Digital / Social

Company:	Ubisoft Entertainment SA
Brand:	Assassin’s Creed
Project Title:	Tales from the Tomb
Work:	Spots for Digital, Over-the-Top Media and Linear Platforms

52

Video Game Cinematics

Company:	Microsoft Studios (Microsoft Corporation)
Brand:	RECORE
Project Title:	RECORE Launch Trailer
Work:	Release Trailer for Video Game

Experiential

Company:	Ad Council
Campaign:	Family & Community for Diversity & Inclusion Awareness
Project Title:	Love Has No Labels
Work:	Video Using Real-Time X-Ray / Motion Capture Sensor Technology on 10x10 Screen

Mobile Gaming

Company:	Bush Brothers & Company
Brand:	Bush’s Beans
Project Title:	Bean Dash Mobile Game
Work:	Arcade Game for Linear, Digital and Social Media and iOS and Android Platforms

53

Virtual Reality / Mixed Media

Company:	Honda Motor Company, Ltd.
Brand:	Honda
Project Title:	Candy Cane Lane, Get Well Card VR Experience
Work:	Interactive VR Experiences

Augmented Reality

Company:	Supercell Oy (Tencent Games)
Brand:	Clash of Clans and Clash Royale Mobile Games
Project Title:	Clash Builder and Clash Royale King AR Experience
Work:	AR Campaign on Facebook Messenger

54

Branded Entertainment

Company:	Fiat Chrysler Automobiles N.V.
Brand:	Ram Trucks
Work:	Live-Action Television Pilot

National Television / Over-the-Top Media

Company:	Airbnb
Brand:	Airbnb
Work:	Animated Commercial

55

Influencer

Company:	Subway Restaurants
Brand:	Subway
Project Title:	Summer with Cimorelli
Work:	Original Short-Form Web Series

Web Series

Company:	Subway Restaurants
Brand:	Subway
Project Title:	The 4-to-9ers
Work:	Original Short-Form Scripted Hulu Spotlight Web Series

TV Series

Company:	Edgewell Personal Care Company
Brand:	Schick Razors
Project Title:	Clean Break
Work:	Multi-Channel Series

56

Virtual Reality

Company:	Psyop Media Company, LLC
Brand:	Kismet
Work:	Daily VR Experience

Web Series

Company:	Psyop Media Company, LLC
Brand:	Grandma’s Kats Are Trying to Kill Her
Work:	Original, Scripted, Short-Form Animated Series

Our Competitive Strengths

We believe that our competitive strengths include:

Excellent reputation:    Over the past 18 years, we believe we have earned an excellent reputation for our creative ability, innovation, execution and on-time delivery of complex and challenging media content. Our track record has created consistent demand for our services from leading advertising agencies and global brands.

Our creative storytelling capabilities:    We believe our creative content turns ideas into visual, relatable stories that resonate with consumers and influences their behavior. We believe that our years of experience and access to creative talent allow us to tell compelling stories whether in six seconds or 22 minutes. We believe many of our clients have repeatedly engaged us to create content to target audiences because of our demonstrated strength in storytelling.

Diverse, creative talent base:    We employ or represent over 20 directors and over 80 designers, technical directors and other artists who we believe deliver a unique combination of creative direction (character, world and story development) and execution (unique and high quality imagery and related production content). Our corporate culture is designed to breed a collaborative effort and multidisciplinary approach among our directors, designers and visual effects artists that enables us to deliver award-winning quality work in a timely manner. We believe our innovative and creative work facilitates our ability to recruit and retain exceptional talent.

57

Strong relationships with advertising agencies and brands:    We have produced highly successful and creative advertising campaigns for global brands which we believe have allowed us to develop long-standing, strong relationships with leading advertising agencies and brands. We are often commissioned to create multiple campaigns for brands over many years, acting as the go-to production company for these clients. In addition, despite that some of our competitors are larger than us, we have been able to compete effectively with them and by winning projects from new and existing clients.

Strong relationships with film, television and digital production companies:    We maintain Production Overall Deals (PODs) with award-winning production companies in film, television and digital series. In a POD, studios like us pay writers, producers, directors or actors for exclusivity for their projects. In PODs, we manage development and distribution of content created by production companies. PODs enable us to extend and diversify our creative capabilities and provide access to additional talent for our clients.

End-to end solution:    We have developed in-house production processes that enable us to serve as a one-stop-shop, providing a full suite of solutions to the advertising industry and brands. We are able to conduct a project from concept through design and all stages of production using in-house and contracted creative talent when necessary.

Our Industry

We create branded advertising content primarily for television, digital and other advertising platforms.

The global advertising market is large and growing.    Global advertising spending was a $577 billion global market in 2017, projected to grow to $811 billion in 2022, according to eMarketer.

Global Advertising Spending from 2016 to 2022 (in billion U.S. dollars)

Source: eMarketer

Television spending continues to be strong.    Television has historically been the single largest advertising medium worldwide. Zenith forecasts that television advertising in the U.S. peaked in 2017 at $69 billion and will decline slightly to $66 billion in 2020. Zenith suggests that advertisers are finding that it makes sense to plan advertising campaigns for television and online video together because they work best as complements rather than substitutes. Television and online video together are becoming more important to advertisers seeking to build brands than either form of advertising is alone.

Digital advertising spending is increasing.    Digital technologies have transformed media consumption, viewing habits and social interaction. Content is being viewed at ever-increasing rates on wired and wireless smart

58

devices across the globe. Social media platforms offer consumers the option to view, share and comment on the content they consume anywhere and at any time. As a result, brands are increasingly turning to digital media platforms and social networks to engage consumers. In fact, in 2017, global digital advertising spending surpassed global television advertising spending for the first time, according to MAGNA. According to MAGNA, in 2018, U.S. digital advertising spending exceeded $100 billion and accounted for half of total U.S. advertising sales for the first time. MAGNA projects that U.S. digital advertising sales will be $163 billion by 2023.

Today, according to Forbes, over 90% of Global 5000 Chief Marketing Officers are investing in a new modern marketing mix of 20 marketing outlets including emerging digital, mobile and social outlets to support every stage of the customer journey from brand awareness to customer engagement to demand and sales. These new channels are additive to traditional channels like television.

Creative short-form video content attracts audiences.    Given the proliferation of entertainment channels, capturing the attention of audiences is becoming increasingly challenging. We believe that brands are seeking creative content in short-form video that includes animation and mixed media to evoke emotions that resonate with viewers. According to Zenith, the rapid rise in video viewing makes online video the world’s fastest-growing advertising format. According to Zenith, global viewers spend an average of 67 minutes a day watching content, up from 56 minutes in 2017 and is projected to reach 84 minutes by 2020.

VR and AR are poised for considerable growth.    International Data Corporation, or IDC, forecasted that worldwide revenues for the VR and AR markets reached $27 billion in 2018, an increase of 92% from 2017. According to IDC, VR and AR spending is expected to achieve a compound annual growth rate of 72% worldwide, and 99% in the U.S., over the 2017-2022 forecast period. While a large majority of the growth in spending is expected to be dedicated to gaming applications, hardware and equipment, IDC suggests that producers are quickly moving beyond games to create new content mainstream audiences will embrace.

Our Growth Strategy

We intend to build upon our proven ability to aggregate large audiences for brands by continuing to make compelling content that is viewable on both traditional and new platforms. We have begun to implement the growth strategies described below, and expect to continue to do so over the several years following this offering. Although the net proceeds of this offering will be available to assist us to implement our growth strategies, we cannot estimate the ultimate amount of capital needed to achieve our expected growth. We may need additional capital to implement these strategies, particularly in the event we pursue acquisitions of complementary businesses or technologies.

We intend to grow our business by:

Capitalizing on market trends in advertising and digital media:    We believe our long history of creating award-winning content for television provides us with the expertise to continue to capture television advertising spending. We also believe our expertise in delivering entertaining, narrative-based short-form video content positions us well for the shift to digital advertising. We intend to build our core business by leveraging the shift in the increased use of animation and visual effects to differentiate marketing messages and capture audiences in the growing digital media market.

Implementing client service teams:    We believe we can increase recurring work from our existing clients with a more client-focused approach to delivering our services. Historically, we have relied primarily on sales representatives or our relationships with advertising agencies to learn about potential projects well after the brand has approached the advertising agency with a specific advertising need and after months of the brand and the advertising agency working together to create an advertising concept. We are hiring account directors with knowledge of the needs of brands in key industries so that we can collaborate more closely with brands and the advertising agencies. By doing so, we believe we can get involved earlier and more intimately in a particular pitch.

59

Expanding direct-to-brand sales:    Brands are increasingly working directly with content creators, bypassing advertising agencies. We believe this industry disruption is being caused by the desire of brands to obtain greater cost-effectiveness, transparency and control over customer data. We believe that we can increase our direct-to-brand sales by increasing business development efforts with brands. We recently reorganized our sales organization to include a specific focus on brand management.

Growing through acquisitions:    We believe that the highly fragmented content creation media industry, which is comprised primarily of small-to-medium-sized private companies, provides us with significant opportunities to grow our business through acquisitions. We intend to pursue acquisitions that provide services within our current core product offerings, extend our geographic reach and expand our product offerings.

Cross-selling services:    With the proliferation of social and digital media platforms, brands are increasingly seeking to reach audiences on multiple platforms. Our ability to produce diverse, engaging content across various media platforms allows us to offer clients a one-stop-shop for all of their content needs. We intend to cross-sell our various capabilities to drive additional revenue from existing clients and to seek to win new clients.

Further developing intellectual property:    We intend to build upon our success in developing original series that we own and license to brands, networks and major and new digital media studios. When we develop an original series, we retain the copyright of that content. This allows us the right to license portions of the same content to other platforms to create additional revenue streams from development fees, brand license fees, distribution license fees and ancillary sources (such as from foreign viewership).

Expanding our geographic presence:    We believe that by expanding our physical presence into select international regions, we will be better able to attract and retain internationally-based brands as clients. With a physical presence outside of the U.S., we can provide better customer service and offer local talent who can work more intimately with internationally-based brands than we can from our offices in the U.S.

Expanding our talent roster:    We intend to continue to seek to attract and retain world-class creative and technical talent, thereby increasing our opportunities to win jobs and build brand equity through additional high quality creative content. We believe that our reputation and our client base will allow us to continue to attract top creative talent. In addition, we believe that we offer talent an attractive work environment that provides them with the flexibility to create content within our broad range of content offerings. We believe that this flexibility traditionally is not offered at other larger, more traditional media companies.

Competition

We operate in the competitive, highly fragmented advertising and creative content production markets. We compete with many firms with no single company maintaining a significant share of the market. Some of our competitors have greater resources than those available to us and such resources may enable them to aggressively compete with us. We compete with these firms to maintain existing client relationships, to obtain new clients and assignments and attract and retain talent. We believe we effectively compete by providing clients with, among other things, award-winning talent, creative storytelling capabilities and a one-stop-shop content production solution. If existing or new companies acquire one of our existing competitors or form an exclusive relationship with one or several advertising agencies or brands, our ability to compete effectively could be significantly compromised and our results of operations could be harmed. For example, S⁴ Capital recently acquired the digital production agency, Media Monks, and it is currently unclear what impact this will have on the competitive landscape.

Our Sales Process

The process of developing short- and long-form video content starts with a brand’s desire to communicate its message to a target audience. The brand uses its advertising agency, or in some instances, works with us directly or through our account directors, to develop a communication and media strategy.

60

The agency distributes “boards” (early ideas of the proposed video campaign) to sales representatives and us directly. We receive boards from agencies, sales representatives working on commission, and directly from brands. If we are interested in pursuing the project, we will create a “treatment” (a written narrative proposal for the project) based on the board. After interaction with the agency or the brand about the creative intent and consumer engagement goals of the brand (in the context of the treatment), we will formally submit a bid. The agency or brand will generally pick three treatments from production companies and request each production company “pitch” their ideas to the brand. The pitch is usually over the phone where our director communicates the creative intent of the treatment directly to the brand. The agency may or may not make a recommendation, but the brand will make the final decision and “award” the production contract. The entire sales cycle ranges between one and three weeks. By hiring account directors with specific industry or brand knowledge, we are seeking to expand our role by participating in the creation of the boards.

We believe that the most important factors in determining whether a project is awarded to us are:

● focusing on projects that have the highest probability to award to us given our reputation and unique capabilities;

● selecting a director ideally suited to the creative brief and the personality of the brand / agency; and

● understanding the objectives and particular preferences of the client of a particular pitch.

Our success depends to a significant extent upon continuing to bring a high-level of creativity and uniqueness to the production process. The creative process required to maintain the highest and freshest quality of work is delicate and involves close collaboration among the various participants – the clients, the directors, the designers and the technical personnel involved with the project. There is often an element of experimentation to see “what works” both creatively and technically. We believe that experience with the tools and techniques from previous projects is a very important factor in developing the work.

Substantially all of our work is contracted for by advertising agencies. Over the last few years, we have experienced a trend in which brands are becoming more directly involved in content production decisions. The agency “recommend” is no longer an assurance that the idea communicated in the treatment has been sold through by the agency. As a result, we believe that the strategy for winning business has changed and that we must understand brand objectives and strategy and present creative ideas that achieve the brand’s consumer engagement goals across both traditional and digital platforms. Maintaining relationships with advertising agencies and brands to ensure that they are satisfied with the creative content we produce and that they are aware of our capabilities for producing content for multiple platforms is key to ensuring repeat and new business. In addition, we believe that hiring account directors will better help us understand brands’ objectives and strategies. We anticipate that this knowledge will enable us to collaborate more closely with brands and the advertising agencies. By doing so, we believe we can get involved earlier and more intimately in a particular pitch and enhance our opportunities for new and repeat business.

Although the general sales process of a typical pitch is outlined above, the actual work required for each job varies due to the unique nature of each project. The process of developing original branded influencer programs, web series or television series follows a different sales cycle than for animated television content. Instead of contacting their agency, brands contact us directly to create an original branded series. The client provides a creative or marketing brief which leads to the development of two to three original program concepts developed by our creative and production partners as part of their POD agreements. As a studio, we are responsible for the creative development, production and distribution of the program. The sales timeline for these programs is typically three to six months. These programs typically generate two to three years of revenues from the branded content, which is longer than for other content we produce such as animated television advertisements. When we develop an original series, we own the intellectual property we develop and are able to receive multiple revenue streams from development fees, brand license fees, distribution license fees and ancillary sources (such as from foreign viewership).

61

We are seeing a shift in the advertising industry with major advertisers going straight to the creative source for content creation, as opposed to contracting with advertising agencies who then engage with the creative source. Our branded entertainment capabilities of strategy, planning, and distribution alongside our deep relationships with the creatives in TV, film, and new media provide brands with an end-to-end solution to create more content that reaches their audiences at scale. Because of this, our branded entertainment programs have historically been sourced with brands directly.

Employees

As of March 31, 2019, we employed 109 persons, of whom approximately 85 perform creative, technical and production functions. We also engage creative, technical and production personnel on a temporary employee basis from a pool of over 200 such persons. We consider our relations with our employees and temporary staff to be satisfactory.

All of our live action production activities are subject to requirements of various production guilds and unions. Our commercial directors are subject to operating guidelines imposed by the Director’s Guild of America (DGA). Our commercial production staff operate in accordance with the guidelines of the AICP agreement with the International Alliance of Theatrical and Stage Employees (IATSE) and affiliated unions. Other than our directors, who are members of the DGA, none of our staff of full-time employees is unionized.

We aspire to hire the most highly qualified persons in the fields in which we operate. We hire many of our creative, technical and production personnel upon their graduating from colleges and universities that maintain programs in the fields for which we require talent and are at or near the top of their classes in academic and professional achievements. Most of these institutions are in the U.S.; however, in recent years some of these students have not been U.S. citizens or legal residents prior to attending schools and therefore obtained student visas. We must obtain visas to hire these individuals.

Intellectual Property

We believe that the names “Psyop” and “Content & Co” are important to our business and we have registered those names as trademarks with the United States Patent and Trademark Office.

Rights to characters and other creative elements created by us for completed client projects become the property of the respective clients. Often, the contracts with the clients provide for separate payment for characters in addition to payments for the production of the project. Creative elements, including characters, design and music, we create for projects that are not completed remain our property for further development and use as we may determine. To date, we have not registered copyrights for our owned intellectual properties that are copyrightable.

We own the intellectual property for the branded series we have produced, including The 4 to 9ers, The Day Crew, Summer with Cimorelli, Clean Break, Training for Tahoe, Stand United and Camp W. We also own the intellectual property on Kismet.

Facilities

We lease space in two office buildings in New York, New York comprising approximately 26,000 and 3,000 rentable square feet each. These leases expire in 2025 and 2022. We sublease to tenants three floors in our New York offices comprising approximately 16,000 rentable square feet through January 2021.

We conduct our operations in Los Angeles, California from two facilities comprising approximately 10,900 and 10,000 useable square feet. These leases expire in 2020 and 2022. We are currently consolidating our Los Angeles operations to one facility and plan to sublease our other Los Angeles facility.

Legal Proceedings

We are not a party to any pending litigation and are not aware of any threatened legal proceedings that could have a material adverse effect on our business, financial condition and / or results of operations.

62

MANAGEMENT

Executive Officers and Directors

The following table sets forth information regarding our executive officers and directors, including the individuals who will be our non-employee directors after completion of this offering (ages as of March 31, 2019):

Name	Age		Position(s)
Executive Officers
D. Hunt Ramsbottom		61	Chief Executive Officer, President and Director
Thomas Boyle		51	Chief Financial Officer
Non-Employee Directors
Sandy Grushow(1)(3)		59	Director
David Sanderson(2)(3)		58	Director
Marc Stapley(1)(2)		49	Director

(1) Member of the nominating and corporate governance committee.

(2) Member of the audit committee.

(3) Member of the compensation committee.

Executive Officers

D. Hunt Ramsbottom: Mr. Ramsbottom was appointed as Chief Executive Officer and President and a member of our board of directors of PCI Media, Inc. in October 2018. Mr. Ramsbottom was appointed as Interim Chief Executive Officer and President at Psyop Media Company, LLC in January 2017. Mr. Ramsbottom has over 25 years of experience building and managing growth companies. During the course of his career, he has led six public and private companies in multiple sectors including, energy, agriculture, automotive and now media. Prior to joining Psyop, Mr. Ramsbottom served as Chief Executive Officer and President of Rentech, Inc., a wood fibre processing and wood pellet production company, from September 2005 until December 2014. From July 2011 to December 2014, Mr. Ramsbottom was Chief Executive Officer and a member of the board of directors of Rentech Nitrogen GP, LLC, the general partner of Rentech Nitrogen Partners, L.P., a publicly-traded nitrogen fertilizer master limited partnership that was majority owned by Rentech, Inc. Prior to accepting his position at Rentech, Inc., Mr. Ramsbottom held various key management positions including: from 2004 to 2005, as Principal and Managing Director of Circle Funding Group, LLC, a buyout firm; from 1997 to 2004, as Chief Executive Officer and Chairman of M2 Automotive, Inc., an automotive repair venture; and from 1989 to 1997, as Chief Executive Officer of Thompson PBE, a supplier of paints and related supplies, which was acquired by FinishMaster, Inc. in 1997. Mr. Ramsbottom earned a Bachelor of Science in Business at Plymouth State University. We believe that Mr. Ramsbottom is qualified to serve as a member of our board of directors based on the perspective he brings as our Chief Executive Officer and President and his extensive experience building and managing growth companies.

Thomas Boyle: Mr. Boyle was appointed as Chief Financial Officer of PCI Media, Inc. in October 2018. Mr. Boyle has been serving as Chief Financial Officer of Psyop since April 2008. Prior to joining Psyop, Mr. Boyle served as Vice President of Finance and Corporate Controller for MDC Partners, Inc., an advertising and marketing company, from July 2005 until April 2008. Mr. Boyle held several key financial management positions including: from 2004 to 2005, as Senior Director of Corporate Finance at Symbol Technologies, a manufacturer and supplier of mobile data capture and delivery equipment; from 2002 to 2004, as Assistant Corporate Controller at Moody’s Corporation; from 2000 to 2002, as Corporate Controller and later as Chief Accounting Officer at DoubleClick Inc. Prior to that time, Mr. Boyle spent nine years in public accounting with PricewaterhouseCoopers LLP and BDO Seidman LLP. Mr. Boyle received a Bachelor of Science in Accountancy from Villanova University.

63

Non-Employee Directors

Sandy Grushow: Mr. Grushow will be appointed to the board of directors of PCI Media, Inc. in connection with the closing of this offering. Mr. Grushow has been the Chief Executive Officer of Phase 2 Media, a strategic and creative advisory practice, since October 2012. As Chief Executive Officer of Phase 2 Media, Mr. Grushow applies his 25 years of experience running two entertainment businesses to guide Phase 2 Media in serving its clients’ strategic business and creative, content and branding needs. From January 2009 to September 2012, Mr. Grushow served as Chief Content Officer of Medialink, a media advisory and business development company. From 2005 to 2007, Mr. Grushow served as President of Phase Two Productions, a TV production company at Twentieth Century Fox Television. From 1999 to 2004, Mr. Grushow served as Chairman of Fox TV Entertainment Group, where he oversaw entertainment operations of the Fox Network and the Fox TV studio, Twentieth Century Fox Television. From 1996 to 1999, Mr. Grushow served as President of Twentieth Century Fox Television. From 1990 to 1995, Mr. Grushow held several executive positions at Fox Entertainment including President of the division. He is also a board member of the industry’s largest ad-supported streaming video service, TubiTV and Monica & Andy, a digitally native vertical brand in the “Mom’s” space. Mr. Grushow received a Bachelor of Arts in Communications from University of California, Los Angeles. We believe that Mr. Grushow is qualified to serve as a member of our board of directors based on his extensive experience with media and entertainment companies, and assisting companies with their creative, content and branding needs.

David Sanderson: Mr. Sanderson will be appointed to the board of directors of PCI Media, Inc. in connection with the closing of this offering. Mr. Sanderson has served in key managerial positions at Bain & Company including, from September 1990 to present, as a Partner, from 1995 to 2018, as a Director from 2003 to 2018, as the Head of Global Media and Entertainment Practice, from 2006 to 2018 as Co-Head of the Global Technology, Media and Telecommunications Practice, where he gained broad experience across the media and entertainment industry, including content businesses (film, TV and video games) and aggregation/distribution platforms (cable, satellite, Internet, home video, wireless and print) and advised private equity investors focused on the media sector. Prior to joining Bain & Company, from 1985 to 1988, Mr. Sanderson served at International Business Machines Corporation as a National Account Manager and Systems Engineer and, from 1982 to 1985, as a Systems Programmer. Mr. Sanderson received a Bachelor of Science in Applied Mathematics from the University of Massachusetts, Amherst, a Master of Science in Computer Science from Syracuse University and a Master of Business Administration from Stanford University, where he was an Arjay Miller Scholar. We believe that Mr. Sanderson is qualified to serve as a member of our board of directors based on his extensive experience within the media and entertainment industry.

Marc Stapley: Mr. Stapley will be appointed to the board of directors of PCI Media, Inc. in connection with the closing of this offering. Mr. Stapley has been the Chief Executive Officer of Helix, a private genomics company, since April 2019. Mr. Stapley has served in key managerial positions at Illumina, Inc., the global leader in sequencing and array-based solutions for analysis of genetic variation and function, including from January 2012 to January 2017 as Chief Financial Officer, from December 2015 to October 2017 as Chief Administrative Officer, responsible for all G&A functions including finance, business development, HR, IT, legal, facilities and government affairs, and from October 2017 to January 2019 as Executive Vice President, responsible for corporate strategy, corporate and business development, population genomics, government affairs, IT and facilities. Before joining Illumina, from 2009 to 2012, Mr. Stapley was Senior Vice President, Finance at Pfizer Inc. and was responsible for global financial processes and systems, leading integration efforts in both the Wyeth Ltd. and King Pharmaceutical, Inc. acquisitions and providing oversight to the company’s largest technology investment program. Prior to Pfizer, he served in a variety of senior finance roles at Alcatel-Lucent, including Americas Chief Financial Officer. He also worked as Finance Director and Controller for several groups at Cadence Design Systems, Inc. Mr. Stapley began his career as an Auditor at Coopers & Lybrand. He holds a B.Sc. (Honors) in Mathematics from The University of Reading (England) and is a member of the Institute of Chartered Accountants in England and Wales. He is a member of the board of directors of Helix, and a member of the board of directors of Glaukos Corporation, a public ophthalmic medical technology company. We believe that Mr. Stapley is qualified to serve as a member of our board of directors based on his extensive financial experience.

64

Board Composition

Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective upon the closing of this offering provide that our board of directors shall consist of between one and fifteen members, with the exact number of directors to be determined by vote of our board and currently set at four members. After completion of this offering, our board will consist of four members: Mr. Ramsbottom, Mr. Grushow, Mr. Sanderson and Mr. Stapley.

In accordance with our amended and restated certificate of incorporation and amended and restated bylaws, which will be in effect upon the closing of this offering, our board of directors will be divided into three classes with staggered three year terms. At each annual meeting of stockholders after the initial classification, the successors to the directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following their election. Our directors will be divided among the three classes as follows:

● the Class I director will be Mr. Grushow, and his term will expire at the annual meeting of stockholders to be held in 2020;

● the Class II director will be Mr. Sanderson, and his term will expire at the annual meeting of stockholders to be held in 2021; and

● the Class III directors will be Mr. Ramsbottom and Mr. Stapley, and their terms will expire at the annual meeting of stockholders to be held in 2022.

Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our Company.

Our board of directors has determined that upon completion of this offering, Mr. Sanderson, Mr. Grushow and Mr. Stapley will be independent directors. In making this determination, our board applied the standards set forth in the Nasdaq Capital Market listing standards and in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In evaluating the independence of Mr. Sanderson, Mr. Grushow and Mr. Stapley, our board considered their current and historical employment, any compensation we have given to them, any transactions we have with them, their beneficial ownership of our capital stock, their ability to exert control over us, all other material relationships they have had with us and the same facts with respect to their immediate family. Our board also considered all other relevant facts and circumstances known to it in making this independence determination. In addition, Mr. Sanderson, Mr. Grushow and Mr. Stapley will be non-employee directors, as defined in Rule 16b-3 of the Exchange Act.

Although there is no specific policy regarding diversity in identifying director nominees, both the nominating and corporate governance committee and our board seek the talents and backgrounds that would be most helpful to the Company in selecting director nominees. In particular, the nominating and corporate governance committee, when recommending director candidates to the full board for nomination, may consider whether a director candidate, if elected, assists in achieving a mix of board members that represents a diversity of background and experience.

Under the Stockholders’ Agreement described under “Certain Relationships and Related Party Transactions—Stockholders’ Agreement”, for so long as our founders collectively hold at least 15% of our outstanding common stock, a committee of our founders will have the right to nominate one person for election to our board of directors once every three years (i.e., to one of the three classes of the board) and to appoint one observer to the board of directors who must be reasonably acceptable to us.

Under the Stockholders’ Agreement, for so long as the sole stockholder of All Asia Digital Entertainment Inc. holds at least 5% of our outstanding common stock, it will have the right to nominate one person for election to our board of directors once every three years and to appoint one observer to each committee of the board of directors (other than the audit committee) who must be reasonably acceptable to us.

65

Board Leadership Structure

Our board of directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide effective oversight of management. Our amended and restated bylaws and corporate governance guidelines, which will become effective immediately prior to the consummation of this offering, will provide our board of directors with flexibility to combine or separate the positions of chairman of the board of directors and chief executive officer. Our board of directors currently believes that our existing leadership structure, under which Mr. Ramsbottom serves as chairman of our board of directors and Mr. Sanderson will serve as our lead independent director, is effective, provides the appropriate balance of authority between independent and non-independent directors, and achieves the optimal governance model for us and for our stockholders.

Board Oversight of Risk

Although management is responsible for the day-to-day management of the risks our company faces, our board of directors and its committees take an active role in overseeing management of our risks and have the ultimate responsibility for the oversight of risk management. Our board regularly reviews information regarding our operational, financial, legal and strategic risks. Specifically, senior management attends quarterly meetings of our board of directors, provides presentations on operations including significant risks, and is available to address any questions or concerns raised by our board.

In addition, we expect that our three board committees will assist the board of directors in fulfilling its oversight responsibilities in certain areas of risk. The audit committee will coordinate our board of directors’ oversight of the Company’s internal control over financial reporting, disclosure controls and procedures, related party transactions and code of conduct and management will regularly report to the audit committee on these areas. The compensation committee will assist our board of directors in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs as well as succession planning as it relates to our Chief Executive Officer. The nominating and corporate governance committee will assist our board of directors in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors and corporate governance. When any of the committees receives a report related to material risk oversight, the chairman of the relevant committee will report on the discussion to the full board of directors.

Code of Business Conduct and Ethics

We anticipate adopting a code of business conduct and ethics, effective upon the completion of this offering, which will apply to all of our employees, officers and directors, including those officers responsible for financial reporting. Following the completion of this offering, the code of business conduct and ethics will be available on our website at www.pcimediainc.com. We intend to disclose any amendments to the code, or any waivers of its requirements, on our website to the extent required by the applicable rules and exchange requirements. The inclusion of our website address in this prospectus does not incorporate by reference the information on or accessible through our website into this prospectus.

Board Committees

In connection with this offering, our board of directors has established the following committees: an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each committee are described below. Members will serve on these committees until their resignation or until otherwise determined by our board of directors.

Audit Committee

Our audit committee oversees our corporate accounting and financial reporting process. Among other matters, the audit committee:

● appoints our independent registered public accounting firm;

66

● evaluates the independent registered public accounting firm’s qualifications, independence and performance;

● determines the engagement of the independent registered public accounting firm;

● discusses with management and the independent registered public accounting firm the results of the annual audit and the review of our quarterly financial statements;

● approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;

● is responsible for reviewing our financial statements and our management’s discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC;

● reviews our accounting policies and estimates; and

● reviews the audit committee charter and the committee’s performance at least annually.

The members of our audit committee will be Mr. Stapley (chairperson) and Mr. Sanderson. All members of our audit committee meet or will meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. Under the rules of the SEC, members of the audit committee must also meet heightened independence standards. However, a minority of the members of the audit committee may be exempt from the heightened audit committee independence standards for one year from the date of effectiveness of the registration statement of which this prospectus forms a part. Our board of directors has determined that Mr. Sanderson and Mr. Stapley are independent under the heightened audit committee independence standards of the SEC and Nasdaq. Our board of directors has determined that Mr. Stapley qualified as an “audit committee financial expert”, as defined by the rules under the Exchange Act. As allowed under the applicable rules and regulations of the SEC and Nasdaq, we intend to add an additional member to our audit committee who will meet the applicable independence requirements prior to the one year anniversary of our listing on the Nasdaq Capital Market. The audit committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq.

Under the Stockholders’ Agreement, for so long as the sole stockholder of All Asia Digital Entertainment Inc. holds at least 5% of our outstanding common stock, it will have the right to nominate one person for election to our board of directors once every three years and, if the designee of the sole stockholder of All Asia Digital Entertainment Inc. satisfies all independence and other requirements of membership on a board of directors imposed by the rules of Nasdaq (including the requirements of Rule 10A-3(b)(1)(ii) under the Exchange Act), the sole stockholder of All Asia Digital Entertainment Inc. may elect for such designee to serve on the audit committee of the board.

Compensation Committee

Our compensation committee’s responsibilities include:

● reviewing and approving, or recommending that our board of directors approve, the compensation of our chief executive officer and other executive officers;

● reviewing and recommending to our board of directors the compensation of our directors;

● selecting independent compensation consultants and advisors and assessing whether there are any conflicts of interest with any of the committee’s compensation advisors; and

● reviewing and approving, or recommending that our board of directors approve, incentive compensation and equity plans.

Our compensation committee will consist of Mr. Sanderson (chairperson) and Mr. Grushow. Each of the members of our compensation committee is or will be independent under the applicable rules and regulations of Nasdaq and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. As

67

allowed under the applicable rules and regulations of the SEC and Nasdaq, we intend to add an additional member to our compensation committee who will meet the applicable independence requirements prior to the one year anniversary of our listing on Nasdaq. The compensation committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee is responsible for making recommendations to our board of directors regarding candidates for directorships and the composition of our board of directors. In addition, the nominating and corporate governance committee is responsible for overseeing our corporate governance policies and reporting and making recommendations to our board of directors concerning governance matters. The members of our nominating and corporate governance committee will be Mr. Grushow (chairperson) and Mr. Stapley. Each of the members of our nominating and corporate governance committee is or will be an independent director under the applicable rules and regulations of Nasdaq relating to nominating and corporate governance committee independence. As allowed under the applicable rules and regulations of the SEC and Nasdaq, we intend to add an additional member to our nominating and corporate governance committee who will meet the applicable independence requirements prior to the one year anniversary of our listing on Nasdaq. The nominating and corporate governance committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq.

Under the Stockholders’ Agreement, for so long as our founders collectively hold at least 15% of our outstanding common stock, a committee of our founders will have the right to nominate one person for election to our board of directors once every three years (i.e., to one of the three classes of the board) and, if such designee of the founders satisfies all independence and other requirements of membership on a board of directors imposed by the rules of Nasdaq (other than the requirements of Rule 10A-3(b)(1)(ii) under the Exchange Act), such committee may elect for such designee to serve on the nominating and corporate governance committee of the board.

Limitation on Liability and Indemnification Matters

Our amended and restated certificate of incorporation that will become effective immediately prior to the consummation of this offering, contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

● any breach of the director’s duty of loyalty to us or our stockholders;

● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

● unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

● any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective immediately prior to the consummation of this offering, provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Our amended and restated bylaws will also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, provided that, to the extent required by law, such advancement of expenses prior of the final disposition of the proceeding may be made only upon receipt of an undertaking by the person to repay all amounts advanced if it is ultimately determined that the person is not entitled to be indemnified under our amended and restated bylaws or otherwise. Our amended and restated bylaws will also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under Delaware

68

law. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by our board of directors. With specified exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions that will be in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and our stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage.

69

EXECUTIVE COMPENSATION

This section discusses the material components of the executive compensation program for our executive officers who are named in the “2018 Summary Compensation Table” below. In 2018, our “named executive officers” were employed by Psyop Productions, LLC or Psyop Media Company, LLC. Psyop Productions, LLC is a wholly owned subsidiary of Psyop Media Company, LLC. Their positions were as follows:

● D. Hunt Ramsbottom, President and Chief Executive Officer; and

● Thomas Boyle, Chief Financial Officer, Secretary and Executive Vice President.

From January 1, 2018 until December 7, 2018, Mr. Ramsbottom served as our Interim President and Chief Executive Officer. On December 7, 2018, Mr. Ramsbottom became our Chief Executive Officer.

This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt following the completion of this offering may differ materially from the currently planned programs summarized in this discussion.

2018 Summary Compensation Table

The following table sets forth information concerning the compensation of our named executive officers for the year ended December 31, 2018.

Name and Principal Position	Salary ($)		Bonus ($)		Stock Awards ($)		All Other Compensation ($)(1)		Total ($)
D. Hunt Ramsbottom		450,000		-		-		15,211		465,211
President and Chief Executive Officer
Thomas Boyle		250,000		50,000		-		22,348		322,348
Chief Financial Officer, Secretary and Executive Vice President

(1) Amounts reported include company-paid insurance premiums ($15,211 for Mr. Ramsbottom and $8,787 for Mr. Boyle), company-paid matching contributions under our 401(k) plan ($5,769 for Mr. Boyle) and company-paid disability insurance premiums ($7,792 to Mr. Boyle).

Narrative to Summary Compensation Table

2018 Salaries

The named executive officers receive a base salary to compensate them for services rendered to our company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.

The annual base salaries for Messrs. Ramsbottom and Boyle for 2018 were $450,000 and $250,000, respectively. The annual base salaries for Messrs. Boyle and Ramsbottom remain unchanged for 2019.

2018 Bonuses

In 2018, each of Messrs. Boyle and Ramsbottom was eligible to earn a cash incentive bonus (the “EBITDA Bonus”) pursuant to their employment agreements based upon the consolidated EBITDA of Psyop Media Company,

70

LLC and its consolidated affiliates and subsidiaries for 2018. For 2018, Mr. Boyle’s target EBITDA Bonus was $156,000 and Mr. Ramsbottom’s target EBITDA bonus was $250,000. During calendar year 2018, Psyop Media Company, LLC and its consolidated affiliates and subsidiaries did not achieve a consolidated EBITDA at a level that would have triggered the payment of the EBITDA Bonus. However, the board of managers of Psyop Media Company, LLC paid Mr. Boyle a discretionary bonus equal to $50,000 to reward him for his contributions to the company in 2018.

Mr. Ramsbottom did not receive a bonus with respect to 2018 performance.

Equity Compensation

Mr. Ramsbottom currently holds Class C Units and Mr. Boyle currently holds Class B-3 units and Class C units in Psyop Media Company, LLC, which are intended to constitute “profits interests” within the meaning of the relevant IRS Revenue Procedure guidance.

In connection with this offering, assuming an initial public offering price of $7.00 per Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, we expect that the Class C Units subject to the award granted to Mr. Ramsbottom and the Class B-3 and Class C units subject to the awards granted to Mr. Boyle will be converted into 66,272 and 108,082 shares of common stock, respectively.

We have adopted the 2019 Incentive Award Plan, referred to below as the 2019 Plan, in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our company and certain of our affiliates and to enable our company and certain of our affiliates to obtain and retain services of these individuals, which is essential to our long-term success. For additional information about the 2019 Plan, please see the section titled “2019 Incentive Award Plan” below.

IPO-Related Equity Awards

Our board of directors intends to grant of stock options pursuant to the 2019 Plan to certain of our employees in connection with this offering. These stock options are expected to cover up to an aggregate of 157,500 shares of our common stock.

To the extent granted, these stock option grants will be effective immediately following the determination of the initial public offering price per Unit. The exercise price of these stock options will equal the initial public offering price per Unit sold hereby. These stock options are expected to vest, subject to continued employment, in three equal annual installments following the closing of this offering.

Other Elements of Compensation

Retirement Plans

We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee contributions, and these matching contributions are fully vested as of the date on which the contribution is made. We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan, and making fully vested matching contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

71

Employee Benefits and Perquisites

All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including:

● medical, dental and vision benefits;

● medical and dependent care flexible spending accounts;

● short-term and long-term disability insurance; and

● life insurance.

We cover all costs associated with the named executive officers’ participation in the medical, dental, vision and disability plans. In addition, in 2018, we paid the premiums on supplemental disability insurance for Mr. Boyle. We believe the perquisites described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.

Tax Gross-Ups

Mr. Boyle’s existing employment agreement provides for a gross-up payment to reimburse him for any excise taxes imposed on him in connection with a change in control.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the number of Psyop Media Company, LLC Class C units underlying outstanding unvested incentive unit awards for each named executive officer as of December 31, 2018.

	Stock Awards(1)
Name	Grant Date		Number of Stock Awards That Have Not Vested (#)			Market Value of Stock Awards That Have Not Vested ($)(2)
Hunt Ramsbottom		12/7/18		25,762	(1)		50,000

(1) The outstanding Class C units will vest in full upon the consummation of this offering, subject to Mr. Ramsbottom’s continued service through this offering.

(2) There is no public market for the Class C units. The fair value of the Class C units was determined using the Black Scholes Option Allocation Model and reflects the contractual terms of the Class C units with a time horizon of two years for a transaction to occur, calculated using the risk free rate of return of 2.48%, volatility of 40% and a 27.5% discount for lack of marketability. The resulting fair value was approximately $50,000.

Executive Compensation Arrangements

D. Hunt Ramsbottom Employment Agreement

On December 7, 2018, Hunt Ramsbottom entered into an employment agreement with Psyop Productions, LLC and Psyop Media Company, LLC to serve as the President and Chief Executive Officer. The initial term of Mr. Ramsbottom’s agreement ends on the six-month anniversary of its effective date, with automatic six-month renewals thereafter, but upon the consummation of this offering the initial term automatically will be extended such that it will end on the third anniversary of the effective date of this offering (with automatic six-month renewals thereafter).

Pursuant to this employment agreement, Mr. Ramsbottom is entitled to receive a base salary of $450,000 per year, which will increase to $500,000 per year upon the consummation of this offering. In addition to his base salary, Mr. Ramsbottom (and his spouse and/or eligible dependents) shall be eligible, at our sole cost, to participate in and be covered under the health and welfare benefit plans and programs maintained by us for the benefit of our employees.

72

For calendar year 2018, Mr. Ramsbottom was eligible to earn a cash performance bonus targeted at $250,000. The actual amount of any 2018 bonus will be determined based on the achievement of certain pre-determined consolidated EBITDA thresholds. For each calendar year following calendar year 2018, Mr. Ramsbottom will be eligible to earn a cash performance bonus, which will be determined by our board of directors (or a subcommittee thereof) in its discretion, based on the achievement of performance goals developed in consultation with Mr. Ramsbottom. In addition, our Board will not be precluded from awarding Mr. Ramsbottom a discretionary bonus with respect to any calendar year following 2018. The payment of any annual bonus, to the extent any annual bonus becomes payable, will be contingent upon Mr. Ramsbottom’s continued employment through December 31st of the applicable calendar year.

In addition, if, in connection with this offering, a minimum of 20% of our outstanding common stock (measured as of immediately following this offering) is sold at an enterprise valuation of greater than or equal to $30,000,000, Mr. Ramsbottom will receive an additional cash bonus equal to $350,000, payable within 15 calendar days following the consummation of this offering.

Mr. Ramsbottom currently holds 25,762 Class C units in Psyop Media Company, LLC, which will vest in full upon consummation of this offering, subject to Mr. Ramsbottom’s continued service through this offering. The Class C Unit Award will vest in full upon the consummation of this offering, subject to Mr. Ramsbottom’s continued service through this offering. We expect these units to be converted into 66,272 shares of common stock following the consummation of this offering. Further, under this employment agreement and following the completion of this offering, Mr. Ramsbottom will be issued an option (the “IPO Option”) to purchase a number of shares of our common stock covering 4% of our fully diluted capitalization (but excluding any warrants and/or stock options that have an exercise or strike price greater than or equal to the initial public offering price per Unit) as of the consummation of this offering. This IPO Option will vest and become exercisable based on the attainment of certain price-per-share goals, subject to Mr. Ramsbottom’s continued employment through the applicable vesting date.

Under his employment agreement, if Mr. Ramsbottom’s employment is terminated without “cause” or due to his resignation for “good reason” (each, as defined in his employment agreement) following this offering, then, subject to his timely execution and non-revocation of a general release of claims, he will be eligible to receive (i) 12 months of continued payment of base salary, (ii) a pro-rated annual bonus for the calendar year in which Mr. Ramsbottom’s employment is terminated based on the achievement of any applicable performance goals or objectives and (iii) 12 months of company-paid continued coverage under our group health plans. Further, following the consummation of this offering, if Mr. Ramsbottom’s employment is terminated without “cause” or for “good reason”, in either case, within 12 months following a “change in control” (as defined in his employment agreement), then, in addition to the payments and benefits described above, (i) Mr. Ramsbottom will receive a lump-sum cash payment equal to the greater of (A) his target annual bonus for the year in which the termination occurs and (B) his base salary in effect on the termination date, (ii) all of his outstanding equity awards that vest based solely on the passage of time will vest in full and (iii) the IPO Option will be deemed vested and exercisable based on the price per share determined as of such change in control.

Mr. Ramsbottom’s employment agreement contains customary confidentiality and non-solicitation provisions. Mr. Ramsbottom’s employment agreement includes a “best pay” provision under Section 280G of the Code, pursuant to which any “parachute payments” that become payable to him will either be paid in full or reduced so that such payments are not subject to the excise tax under Section 4999 of the Code, whichever results in the better after-tax treatment to Mr. Ramsbottom.

Thomas Boyle Employment Agreement

On January 1, 2012, Psyop Productions, LLC and Psyop Media Company, LLC entered into an employment agreement with Thomas Boyle, pursuant to which he serves as Chief Financial Officer, Secretary and Executive Vice President. The initial term of this employment agreement ended on January 1, 2015, and the employment agreement has automatically renewed for one-year terms following such date.

73

Pursuant to this employment agreement, Mr. Boyle is entitled to receive a base salary of $250,000 per year. In addition to the base salary, Mr. Boyle (and his eligible dependents) is eligible, at our sole cost, to participate in and be covered under the health and welfare benefit plans and programs maintained by us for the benefit of our employees.

Mr. Boyle is eligible to earn an annual bonus of up to $156,000. The actual amount of this bonus is determined based on the achievement of certain consolidated EBITDA thresholds. In addition, Mr. Boyle is eligible to earn an annual discretionary cash bonus based upon goals and objectives mutually agreed upon between Mr. Boyle and our Chief Executive Officer. Our Chief Executive Officer, in his sole discretion, will determine whether the goals and objectives have been achieved and decide the amount of the discretionary bonus, if any, to be paid to Mr. Boyle.

Under his employment agreement, upon a termination of Mr. Boyle’s employment due to his death or permanent disability, he will be eligible to receive (i) an amount equal to the sum of his aggregate bonus for the fiscal year immediately prior to the year in which his employment terminates, prorated through the date of Mr. Boyle’s death or disability, as applicable, and (ii) in the case of his termination due to his permanent disability only, continued health and welfare benefits through the end of the term. In addition, upon a termination of Mr. Boyle’s employment without “cause” or due to his resignation for “good reason” (each, as defined in his employment agreement) he will be eligible to receive (i) a lump sum payment equal to the sum of six months of his base salary and his aggregate bonus for the fiscal year immediately prior to the year in which his employment terminates and (ii) company-paid health and welfare benefits for up to six months.

Mr. Boyle’s employment agreement also contains customary confidentiality, non-competition and non-solicitation provisions. Mr. Boyle’s employment agreement includes a “gross up” provision under Section 280G of the Code, pursuant to which any “parachute payments” that become payable to him will increased in order to cover any incremental taxes associated with such payments.

Director Compensation

2018 Director Compensation Program

Prior to this offering, Psyop Media Company, LLC had a discretionary compensation program for our nonemployee directors. The following table contains information concerning the compensation payable to the non-employee directors of Psyop Media Company, LLC with respect to 2018 services.

Name	Fees Earned or Paid in Cash ($)		All Other Compensation (1)		Total ($)
Bernard Cragg		-		-		-
Brian Kelly		-		106,150		106,150

(1) In 2018, Psyop Media Company LLC paid Mr. Kelly $106,150 pursuant to a verbal agreement under which Mr. Kelly provided advice with respect to strategic initiatives.

Post-IPO Director Compensation Program

Director IPO Grants

We expect to grant the following equity awards to our non-employee directors in connection with this offering (collectively, the “Director IPO Grants”), effective as of the date on which this offering is consummated:

● a restricted stock unit, or RSU, award with an aggregate value of $90,000, which will vest with respect to 50% of the RSUs subject to such award on each of the first two anniversaries of the date on which this offering is consummated;

74

● an RSU award with an aggregate value of $90,000, which will vest in full on the first anniversary of the date on which this offering is consummated; and

● an RSU award with an aggregate value of $15,000, which will vest on the day immediately preceding the 2020 annual stockholders’ meeting.

The number of RSUs subject to each Director IPO Grant will be determined based on the initial public offering price per share of the Units, and the vesting of each will be subject to the non-employee director’s continued service through the applicable vesting date. Settlement of the Director IPO Grants will be deferred, in accordance with the 2019 Plan and in a manner intended to comply with Internal Revenue Code Section 409A, until the earliest of (i) such non-employee director’s separation from service, (ii) a change in control event and (iii) the three-year anniversary of the applicable grant date.

Director Compensation Program

In June 2019, our board of directors and stockholders approved a non-employee director compensation program (the “Director Compensation Program”), which provides for annual retainer fees and long-term equity awards for our non-employee directors (each, an “Eligible Director”). The material terms of the Director Compensation Program are summarized below.

The Director Compensation Program to consists of the following components:

Cash Compensation

● Annual Retainer: $30,000

● Annual Committee Chair Retainer: $15,000

● Annual Committee Member (Non-Chair) Retainer: $5,000

● Annual Chairman of the Board Retainer: $30,000

● Annual Lead Independent Director Retainer: $15,000

The annual cash retainer will be paid in quarterly installments in arrears. Annual cash retainers will not be pro-rated for any partial calendar quarter of service.

Equity Compensation

● Initial Grant to each Eligible Director who is initially elected or appointed to serve on our board of directors after the effective date of this offering: RSU award with an aggregate value of $90,000, and vesting with respect to 50% of the RSUs subject to the award on each of the first two anniversaries of the grant date.

● Pro-Rated Initial Grant to each Eligible Director who is initially elected or appointed to serve on our board of directors after the effective date of this offering: RSU award with an aggregate value of $90,000, with such value prorated for the number of whole months remaining between the grant date and the next subsequent annual stockholders’ meeting, and vesting in full on the calendar day immediately preceding the next subsequent annual stockholders’ meeting following the grant date.

● Annual Grant to each Eligible Director who is serving on our board of directors as of (and who will continue to serve after) the date of the annual stockholders’ meeting beginning with calendar year 2020: RSU award with an aggregate value of $90,000, and vesting in full on the earlier to occur of (i) the first anniversary of the grant date and (ii) the date of the next subsequent annual stockholders’ meeting following the grant date of such award.

The number of RSUs subject to each of the foregoing awards will be determined based on the closing price per share of our common stock on the applicable grant date, and the vesting of each will be subject to the non-employee

75

director’s continued service through the applicable vesting date. In addition, each such award will vest in full upon the non-employee director’s death or disability or upon a change in control of our Company (as defined in the 2019 Plan).

Settlement of the these awards will be deferred, in accordance with the 2019 Plan and in a manner intended to comply with Internal Revenue Code Section 409A, until the earliest of (i) such non-employee director’s separation from service, (ii) a change in control event and (iii) the three-year anniversary of the applicable grant date.

2019 Incentive Award Plan

In connection with this offering, our board of directors adopted and our stockholders approved the 2019 Incentive Award Plan, or the 2019 Plan, under which we may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which we compete. The 2019 Plan becomes effective prior to the completion of this offering. The material terms of the 2019 Plan are summarized below.

Eligibility and Administration.    Our employees, consultants and directors, and employees and consultants of our subsidiaries are eligible to receive awards under the 2019 Plan. Following our initial public offering, the 2019 Plan will be administered by our board of directors with respect to awards to non-employee directors and by our compensation committee with respect to other participants, each of which may delegate its duties and responsibilities to committees of our directors and/or officers (referred to collectively as the plan administrator below), subject to certain limitations that may be imposed under Section 16 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and/or stock exchange rules, as applicable. The plan administrator has the authority to make all determinations and interpretations under, prescribe all forms for use with, and adopt rules for the administration of, the 2019 Plan, subject to its express terms and conditions. The plan administrator will also set the terms and conditions of all awards under the 2019 Plan, including any vesting and vesting acceleration conditions.

Limitation on Awards and Shares Available.    An aggregate of 787,500 shares of our common stock is initially available for issuance under awards granted pursuant to the 2019 Plan, which shares may be authorized but unissued shares, or shares purchased in the open market or treasury shares. In addition, the number of shares available for issuance will be increased on January 1 of each calendar year beginning in 2020 and ending in 2029 by an amount equal to the lesser of five percent of the shares of common stock outstanding on the final day of the immediately preceding calendar year, assuming the conversion of any shares of preferred stock, but excluding shares issuable upon the exercise or payment of stock options, warrants or other equity securities with respect to which shares have not actually been issued, and such smaller number of shares as determined by our board of directors.

If an award (or any part of an award) under the 2019 Plan is forfeited, expires, lapses, is terminated, surrendered, repurchased, cancelled or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration, lapse, termination, surrender, cancellation or cash settlement, be used again for new grants under the 2019 Plan. In addition, shares tendered by a participant or withheld by us in payment of the exercise price of a stock option or to satisfy any tax withholding obligation with respect to an award will, as applicable, become or again be available for award grants under the 2019 Plan. However, the following shares may not be used again for grant under the 2019 Plan: (i) shares subject to a stock appreciation right, or SAR, that are not issued in connection with the stock settlement of the award on its exercise and (ii) shares purchased on the open market with the cash proceeds from the exercise of options.

Awards granted under the 2019 Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which we enter into a merger or similar corporate transaction will not reduce the shares available for grant under the 2019 Plan. The sum of any cash compensation and the aggregate grant date fair value (determined as of the date of the grant under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all awards

76

granted to a non-employee director as compensation for services as a non-employee director during any calendar year, which we refer to as the director limit, shall not exceed the amount equal to $500,000.

Awards.    The 2019 Plan provides for the grant of stock options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs, restricted stock, dividend equivalents, restricted stock units, or RSUs, SARs, and other stock or cash based awards. No determination has been made as to the types or amounts of awards that will be granted to specific individuals pursuant to the 2019 Plan. Certain awards under the 2019 Plan may constitute or provide for a deferral of compensation, subject to Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. All awards under the 2019 Plan will be set forth in award agreements, which will detail all terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. Awards other than cash awards generally will be settled in shares of our common stock, but the plan administrator may provide for cash settlement of any award. A brief description of each award type follows.

● Stock Options.    Stock options provide for the purchase of shares of our common stock in the future at an exercise price set on the grant date. ISOs, by contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. The exercise price of a stock option may not be less than 100% of the fair market value of the underlying share on the date of grant (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute options granted in connection with a corporate transaction. The term of a stock option may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders). Vesting conditions determined by the plan administrator may apply to stock options and may include continued service, performance and/or other conditions. The maximum number of shares of common stock that may be issued pursuant to the exercise of ISOs will be 787,500.

● SARs.    SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. The exercise price of a SAR may not be less than 100% of the fair market value of the underlying share on the date of grant (except with respect to certain substitute SARs granted in connection with a corporate transaction) and the term of a SAR may not be longer than ten years. Vesting conditions determined by the plan administrator may apply to SARs and may include continued service, performance and/or other conditions.

● Restricted Stock and RSUs.    Restricted stock is an award of nontransferable shares of our common stock that are subject to certain vesting conditions and other restrictions. RSUs are contractual promises to deliver shares of our common stock in the future, which may also remain forfeitable unless and until specified conditions are met, and may be accompanied by the right to receive the equivalent value of dividends paid on shares of our common stock prior to the delivery of the underlying shares. Delivery of the shares underlying RSUs may be deferred under the terms of the award or at the election of the participant, if the plan administrator permits such a deferral. Conditions applicable to restricted stock and RSUs may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine.

● Other Stock or Cash Based Awards.    Other stock or cash based awards are awards of cash, fully vested shares of our common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our common stock. Other stock or cash based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards.

● Dividend Equivalents.    Dividend equivalents represent the right to receive the equivalent value of dividends paid on shares of our common stock and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are credited as of dividend record dates during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator.

77

Performance Awards.    Performance awards include any of the foregoing awards that are granted subject to vesting and/or payment based on the attainment of specified performance goals or other criteria the plan administrator may determine, which may or may not be objectively determinable. Performance criteria upon which performance goals are established by the plan administrator may include but are not limited to: (1) net earnings or losses (either before or after one or more of the following: (a) interest, (b) taxes, (c) depreciation, (d) amortization, and (e) non-cash equity-based compensation expense); (2) gross or net sales or revenue or sales or revenue growth; (3) net income (either before or after taxes) or adjusted net income; (4) profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; (5) budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); (6) cash flow (including operating cash flow and free cash flow or cash flow return on capital); (7) return on assets; (8) return on capital or invested capital; (9) cost of capital; (10) return on stockholders’ equity; (11) total stockholder return; (12) return on sales; (13) costs, reductions in costs and cost control measures; (14) expenses; (15) working capital; (16) earnings or loss per share; (17) adjusted earnings or loss per share; (18) price per share or dividends per share (or appreciation in or maintenance of such price or dividends); (19) regulatory achievements or compliance; (20) implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; (21) market share; (22) economic value or economic value added models; (23) division, group or corporate financial goals; (24) customer satisfaction/growth; (25) customer service; (26) employee satisfaction; (27) recruitment and maintenance of personnel; (28) human resources management; (29) supervision of litigation and other legal matters; (30) strategic partnerships and transactions; (31) financial ratios (including those measuring liquidity, activity, profitability or leverage); (32) debt levels or reductions; (33) sales-related goals; (34) financing and other capital raising transactions; (35) cash on hand; (36) acquisition activity; (37) investment sourcing activity; or (38) marketing initiatives, any of which may be measured either in absolute terms for us or any operating unit of our company or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices.

Certain Transactions.    The plan administrator has broad discretion to take action under the 2019 Plan, as well as make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our stockholders known as “equity restructurings,” the plan administrator will make equitable adjustments to the 2019 Plan and outstanding awards. In the event of a change in control of our company (as defined in the 2019 Plan), to the extent that the surviving entity declines to continue, convert, assume or replace outstanding awards, then all such awards will become fully vested and exercisable in connection with the transaction. Individual award agreements may provide for additional accelerated vesting and payment provisions.

Foreign Participants, Claw-Back Provisions, Transferability, Repricing and Participant Payments.    The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. The plan administrator may, without stockholder approval, reduce the exercise price of an option or SAR in exchange for cash, other awards or options or SARs with an exercise price that is less than the exercise price per share of the original option or SAR. All awards will be subject to the provisions of any claw-back policy implemented by our company to the extent set forth in such claw-back policy and/or in the applicable award agreement. With limited exceptions for domestic relations orders, certain beneficiary designations and the laws of descent and distribution, awards under the 2019 Plan are generally non-transferable prior to vesting, and are exercisable only by the participant. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2019 Plan, the plan administrator may, in its discretion, accept cash or check, shares of our common stock that meet specified conditions, a “market sell order” or such other consideration as it deems suitable.

Plan Amendment and Termination.    The 2019 Plan will terminate on the tenth anniversary of its effective date. Our board of directors may amend or terminate the 2019 Plan at any time, and will obtain stockholder approval

78

of any amendment to the extent necessary to comply with applicable law or any amendment to increase the director limit. No ISOs may be granted pursuant to the 2019 Plan after the tenth anniversary of the earlier of the date on which our board of directors adopted the 2019 Plan and the date on which our stockholders approved the 2019 Plan.

2019 Employee Stock Purchase Plan

In June 2019, our board of directors adopted and our stockholders approved the 2019 Employee Stock Purchase Plan, or the ESPP. The material terms of the ESPP are summarized below.

Shares available; administration.    A total of 393,750 shares of our common stock are initially reserved for issuance under our ESPP.

Our board of directors or a committee designated by our board of directors has the authority to interpret the terms of the ESPP and determine eligibility of participants. The compensation committee will be the administrator of the ESPP.

Eligibility.    The plan administrator may designate certain of our subsidiaries as participating “designated subsidiaries” in the ESPP and may change these designations from time to time. Employees of our company and our designated subsidiaries are eligible to participate in the ESPP if they meet the eligibility requirements under the ESPP established from time to time by the plan administrator. However, an employee may not be granted rights to purchase stock under the ESPP if such employee, immediately after the grant, would own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of our common or other class of stock.

If the grant of a purchase right under the ESPP to any eligible employee who is a citizen or resident of a foreign jurisdiction would be prohibited under the laws of such foreign jurisdiction or the grant of a purchase right to such employee in compliance with the laws of such foreign jurisdiction would cause the ESPP to violate the requirements of Section 423 of the Code, as determined by the plan administrator in its sole discretion, such employee will not be permitted to participate in the ESPP.

Eligible employees become participants in the ESPP by enrolling and authorizing payroll deductions by the deadline established by the plan administrator prior to the relevant offering date. Directors who are not employees, as well as consultants, are not eligible to participate. Employees who choose not to participate, or are not eligible to participate at the start of an offering period but who become eligible thereafter, may enroll in any subsequent offering period.

Participation in an Offering.    We intend for the ESPP to qualify under Section 423 of the Internal Revenue Code and stock will be offered under the ESPP during offering periods. The length of offering periods under the ESPP will be determined by the plan administrator and may be up to 27 months long. Employee payroll deductions will be used to purchase shares on each purchase date during an offering period. The number of purchase periods within, and purchase dates during, each offering period will be established by the plan administrator. Offering periods under the ESPP will commence when determined by the plan administrator. The plan administrator may, in its discretion, modify the terms of future offering periods.

The ESPP will permit participants to purchase our common stock through payroll deductions of up to 10% of their eligible compensation, which will generally include gross cash compensation. The plan administrator will establish a maximum number of shares that may be purchased by a participant during any offering period or purchase period, which, in the absence of a contrary designation, will be 5,000 shares. In addition, no employee will be permitted to accrue the right to purchase stock under the ESPP at a rate in excess of $25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per share of our common stock as of the first day of the offering period).

79

On the first trading day of each offering period, each participant automatically will be granted an option to purchase shares of our common stock. The option will be exercised on the applicable purchase date(s) during the offering period, to the extent of the payroll deductions accumulated during the applicable purchase period. We expect that the purchase price of the shares, in the absence of a contrary determination by the plan administrator, will be 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the applicable purchase date, which will be the final trading day of the applicable purchase period.

Participants may voluntarily end their participation in the ESPP at any time at least two weeks prior to the end of the applicable offering period (or such longer or shorter period specified by the plan administrator), and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. Participation ends automatically upon a participant’s termination of employment.

Transferability.    A participant may not transfer rights granted under the ESPP other than by will, the laws of descent and distribution or as otherwise provided in the ESPP.

Certain transactions.    In the event of certain transactions or events affecting our common stock, such as any stock dividend or other distribution, change in control, reorganization, merger, consolidation or other corporate transaction, the plan administrator will make equitable adjustments to the ESPP and outstanding rights. In addition, in the event of the foregoing transactions or events or certain significant transactions, including a change in control, the plan administrator may provide for (1) either the replacement of outstanding rights with other rights or property or termination of outstanding rights in exchange for cash, (2) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, (3) the adjustment in the number and type of shares of stock subject to outstanding rights, (4) the use of participants’ accumulated payroll deductions to purchase stock on a new purchase date prior to the next scheduled purchase date and termination of any rights under ongoing offering periods or (5) the termination of all outstanding rights. Under the ESPP, a change in control has the same definition as given to such term in the 2019 Plan.

Plan amendment; termination.    The plan administrator may amend, suspend or terminate the ESPP at any time. However, stockholder approval of any amendment to the ESPP must be obtained for any amendment which increases the aggregate number or changes the type of shares that may be sold pursuant to rights under the ESPP, changes the corporations or classes of corporations whose employees are eligible to participate in the ESPP, or changes the ESPP in any manner that would cause the ESPP to no longer be an employee stock purchase plan within the meaning of Section 423(b) of the Internal Revenue Code.

80

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transactions

The following is a description of transactions since January 1, 2016, to which we have been a party, in which the amount involved exceeds or will exceed $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest.

In April 2017, we purchased 85,000 Class B-2 units from our former Chief Operating Officer for $1.2 million which is being paid in four equal annual installments of $300,000 beginning March 15, 2018 and ending of March 15, 2021.

In May 2017, we purchased 225,000 Class B-1 units from an entity owned by our former Chief Executive Officer for $3.5 million, which is being paid as follows: $500,000 in May 2017; $500,000 in March 2018; $750,000 in March 2019; $750,000 in March 2020; and $1.0 million in March 2021. We renegotiated the $750,000 due on March 2019 and such amount will be paid as follows: $250,000 in April 2019, and $100,000 each month from May 2019 to September 2019. The unpaid amount of these payment obligations bear interest at a rate of 3% per annum. From April 2019 to September 2019, the interest rate is 10% per annum. Beginning October 2019, the interest rate will revert back to 3% per annum.

Indemnification Agreements and Directors’ and Officers’ Liability Insurance

Prior to the completion of this offering, we intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, penalties fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer.

Contribution and Merger Transactions

In connection with this offering, we will enter into a Contribution Agreement with each of the members of Psyop Media Company, LLC (other than Psyop, Inc. and All Asia Digital Entertainment Inc.) and Merger Agreements with Psyop, Inc. and All Asia Digital Entertainment Inc. Pursuant to the Merger Agreements, prior to the closing of this offering, each of Psyop, Inc. and All Asia Digital Entertainment Inc. will be merged with and into PCI Media, Inc. Pursuant to the Contribution Agreement, prior to the closing of this offering, the members of Psyop Media Company, LLC (other than Psyop, Inc. and All Asia Digital Entertainment Inc.) will contribute their membership interests in Psyop Media Company, LLC to PCI Media, Inc. in exchange for shares of common stock of PCI Media, Inc., and Psyop Media Company, LLC will become a wholly owned subsidiary of PCI Media, Inc. For more information on the number of shares of common stock to be held by certain of our holders upon the closing of this offering, see “Principal Stockholders”.

Stockholders’ Agreement

In connection with this offering, we will enter into a Stockholders’ Agreement with certain direct and indirect equityholders of Psyop Media Company, LLC in their capacity as stockholders of PCI Media, Inc. The following description of the Stockholders’ Agreement is a summary and is qualified by reference to the Stockholders’ Agreement, a copy of which is filed with the Securities and Exchange Commission as an exhibit to our registration statement, of which this prospectus forms a part.

Registration Rights.    The Stockholders’ Agreement will provide the stockholders party thereto with certain demand registration rights whereby the stockholders can require us to register their shares of common stock under the Securities Act and conduct underwritten offerings of such shares. The Stockholders’ Agreement will also provide the stockholders with piggyback registration rights.

81

Founders Committee.    The Stockholders’ Agreement provides for a Founders Committee consisting of three of the founders of Psyop Media Company, LLC, which is authorized to make certain decisions and exercise certain rights under the Stockholders’ Agreement as described below. The “founders” are Hejung Marie Hyon, Kylie Matulick, Eben Mears, Robert Todd Mueller and Marco Spier. The initial members of the Founders Committee are Eben Mears, Robert Todd Mueller and Marco Spier.

Board Nominee; Observer; Voting Agreement (Founders).    Pursuant to the Stockholders’ Agreement:

● For so long as the founders collectively hold at least 15% of our outstanding common stock, the Founders Committee will have the right to nominate one person, referred to as the Founders’ Designee, for election to our board of directors once every three years (i.e., to one of the three classes of the board); provided that (a) the Founders’ Designee is reasonably acceptable to the nominating and corporate governance committee of the board and (b) such nomination is made by a date to be specified in the Stockholders’ Agreement.

● If the Founders’ Designee satisfies all independence and other requirements of membership on a board of directors imposed by the rules of Nasdaq (other than the requirements of Rule 10A-3(b)(1)(ii) under the Exchange Act), the Founders Committee may elect for the Founders’ Designee to serve on the nominating and corporate governance committee of the board. However, for purposes of serving on such committee, the Founders’ Designee need not be an “independent director” (as defined in Nasdaq rules) until one year after the listing of our common stock on Nasdaq.

● For so long as the founders collectively hold at least 15% of our outstanding common stock, the Founders Committee will have the right to appoint one observer to the board of directors who must be reasonably acceptable to us.

● For so long as the founders collectively hold at least 25% of our outstanding common stock, the nominating and corporate governance committee of the board will seek the advice of the Founders Committee before recommending the nomination of a person for election to the board of directors (other than the Astro Designee, as defined below).

● Each founder will agree with us to vote all of his or her shares of our common stock for the Company’s nominees to the board of directors at each meeting at which such matter is presented for a vote.

Board Nominee; Observer; Voting Agreement (All Asia Digital Entertainment Inc.).    Pursuant to the Stockholders’ Agreement:

● For so long as the sole stockholder of All Asia Digital Entertainment Inc. holds at least 5% of our outstanding common stock, such sole stockholder will have the right to nominate one person, referred to as the Astro Designee, for election to our board of directors once every three years (i.e., to one of the three classes of the board); provided that (a) the Astro Designee is reasonably acceptable to the nominating and corporate governance committee of the board, (b) the Astro Designee satisfies all independence and other requirements of membership on a board of directors imposed by the rules of Nasdaq (including the requirements of Rule 10A-3(b)(1)(ii) under the Exchange Act), and (c) such nomination is made by a date to be specified in the Stockholders’ Agreement.

● If the Astro Designee satisfies all independence and other requirements of membership on a board of directors imposed by the rules of Nasdaq (including the requirements of Rule 10A-3(b)(1)(ii) under the Exchange Act), the sole stockholder of All Asia Digital Entertainment Inc. may elect for the Astro Designee to serve on the audit committee of the board.

● For so long as the sole stockholder of All Asia Digital Entertainment Inc. holds at least 5% of our outstanding common stock, such sole stockholder will have the right to appoint one observer to each committee of the board of directors (other than the audit committee) who must be reasonably acceptable to us. Such sole stockholder will have the right to appoint one observer to our board who is reasonably acceptable to us after the stockholder is no longer able to nominate a director to the board and until such stockholder ceases to hold 50% of the shares issued to it at closing.

82

● The sole stockholder of All Asia Digital Entertainment Inc. will agree with us to vote all of its shares of our common stock for the Company’s nominees to the board of directors at each meeting at which such matter is presented for a vote.

Access Rights.    For so long as the founders collectively hold at least 25% of our outstanding common stock, each member of the Founders Committee will have reasonable access to our books and records and members of management, subject to the execution of a confidentiality agreement in customary form.

Lock-Up.    Each of the founders will agree to lock-up provisions with respect to the shares of common stock that he or she receives pursuant to the Contribution Agreement (referred to as his or her “Founder Shares”), including restrictions on the disposition of such Founder Shares without the prior written consent of our board of directors. Under the lock-up provisions, each founder may dispose of his or her Founder Shares without the consent of the board of directors according to the following schedule:

● during the first six months after the date of the Stockholders’ Agreement, none of his or her Founder Shares;

● during the period from the six-month anniversary of the date of the Stockholders’ Agreement through the 18-month anniversary of the date of the Stockholders’ Agreement (such 18-month anniversary referred to as the “Initial Release Date”), up to 25% of the aggregate number of Founder Shares originally issued to such founder;

● during the period from the Initial Release Date through the 30-month anniversary of the date of the Stockholders’ Agreement (such 30-month anniversary, referred to as the “Second Release Date”), up to 50% of the aggregate number of Founder Shares originally issued to such founder (less the number of Founder Shares disposed of pursuant to the immediately preceding bullet);

● during the period from the Second Release Date through the date that is the 36-month anniversary of the date of the Stockholders’ Agreement (such 36-month anniversary, referred to as the “Third Release Date”), up to 75% of the aggregate number of Founder Shares originally issued to such founder (less the number of Founder Shares disposed of pursuant to the two immediately preceding bullets); and

● after the Third Release Date, up to 100% of the aggregate number of Founder Shares originally issued to such founder (less the number of Founder Shares disposed of pursuant to the three immediately preceding bullets).

The lock-up provisions will also allow each founder to transfer his or her Founder Shares to certain family members, estate planning vehicles and other persons, subject to customary restrictions.

Founder Agreements

We have entered into employment agreements (the “Founder Agreements”) with each of the following: Kylie Matulick, Eben Mears, Robert Todd Mueller, Hejung Marie Hyon, and Marco Spier. The initial term of the Founder Agreements will end on the third anniversary of the closing of this offering, and thereafter will renew for successive one-year terms unless either party provides 90 days’ notice to not renew his or her agreement.

Pursuant to the Founder Agreements, each founder is entitled to receive an annual base salary of $75,000, subject to annual revision.

Under the Founder Agreements, each founder is also eligible (i) to participate, at our sole cost, in and be covered under the health and welfare benefit plans and programs maintained for the benefit of our employees and (ii) reimbursement of reasonable commuting and automobile expenses. Each founder is entitled to at least 25 paid vacation or sick days per year and up to 30 days of unpaid personal leave, the timing of which is subject only to the approval of the other founders. Each founder will also have the right to review our books and records.

83

Upon a termination of a Founder Agreement due to the founder’s permanent disability, the founder will be eligible to receive continued health and welfare benefits through the end of the term. In addition, upon a termination of a Founder Agreement due to a termination by us without “cause” or by the founder for “good reason” (each, as defined in the applicable Founder Agreement), the founder will receive a lump sum payment equal to the sum of six months of the founder’s salary and benefits.

The founders’ agreements contain customary confidentiality, non-competition and non-solicitation provisions. The agreements include a “gross up” provision under Section 280G of the Code, pursuant to which any “parachute payments” that become payable to either founder will be increased to cover any incremental taxes associated with such payments. The Founders’ Agreements also contain provisions exculpating the founders for any personal liability to us or our stockholders for monetary damages for breach of fiduciary duties as an officer or director of our company to the extent permitted by applicable law, and requiring us to indemnify each founder to the maximum extent permitted by applicable law for claims made or threatened to be made against each founder by reason of her or her service as a director, officer or employee of our company or certain related entities. Each founder also has the right to review our books and records.

In addition to the Founder Agreements, we have entered into service agreements (the “Services Agreements”) with entities affiliated with each founder (each, a “Founder Entity”). Pursuant to the Services Agreements, each Founder Entity serves as an Executive Creative Director, the services of which are performed by the applicable founder. The initial term of each Service Agreement will end on the third anniversary of the closing of this offering and thereafter automatically will renew for one-year terms, subject to either party providing 90 days’ notice to not renew its Services Agreement.

Under the Services Agreements, each Founder Entity is entitled to receive a service fee of $275,000 per year, subject to annual revision, but will be reduced by any live action directing fees payable to the Founder Entity and/or the applicable founder. In addition, it is entitled to receive “additional compensation” equal to 20% of the amount by which directing income earned collectively by the Founder Entities for a given fiscal year exceeds $1,750,000.

Upon a termination due to the applicable founder’s death or permanent disability, the Founder Entity will be eligible to receive an amount equal to the additional compensation payable for the fiscal year in which the founder’s employment terminates or the immediately preceding fiscal year, whichever is higher, prorated through the date of the founder’s death or disability. In addition, upon a termination of the Founder Entity’s services by us without “cause” or by the Founder Entity due to resignation for “good reason,” (each, as defined in the applicable Services Agreement), it will receive (i) a lump sum payment equal to the sum of six months of the annual service fee, and (ii) an amount equal to the sum of the additional compensation payable for the fiscal year in which its services terminate or the immediately preceding fiscal year, whichever is higher.

84

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial ownership of our common stock as of March 31, 2019, and as adjusted to reflect the sale of the Units offered by us in this offering, for:

● each of our named executive officers;

● each of our directors;

● all of our current directors and executive officers as a group; and

● each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding shares common stock.

We have determined beneficial ownership in accordance with the rules of the SEC, which generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security. Unless otherwise indicated, to our knowledge, the persons and entities named in the table below have sole voting and sole investment power with respect to all shares that they beneficially own, subject to community property laws where applicable. The information in the table below does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Sections 13(d) and 13(g) of the Securities Act.

We have based our calculation of the percentage of beneficial ownership prior to and after this offering on 5,000,000 shares of common stock outstanding immediately prior to this offering (after giving effect to the Contribution and Merger Transactions) and on 7,500,000 shares of common stock outstanding immediately after the completion of this offering (and after giving effect to the Contribution and Merger Transactions and assuming no exercise of the underwriters’ over-allotment option). The number of shares for each person or entity identified in the table below is based on an assumed public offering price of $7.00 per share, which is the midpoint of the range set forth on the cover page of this prospectus. We have deemed shares of our common stock subject to stock options that are currently exercisable or exercisable within 60 days of March 31, 2019 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentage ownership of that person. We did not, however, deem such shares outstanding for the purpose of computing the percentage ownership of any other person.

85

Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o PCI Media, Inc., 523 Victoria Avenue, Venice, California 90291.

	Shares Beneficially Owned Immediately Prior to  this Offering				% of Outstanding Shares Beneficially Owned after this Offering
Name and Address of Beneficial Owners	Shares		%
5% Stockholders:
All Asia Digital Entertainment Inc.		907,143		18.1		12.1
Hejung Marie Hyon		780,034		15.6		10.4
Kylie Matulick		497,387		9.9		6.6
Eben Mears		780,034		15.6		10.4
Robert Todd Mueller		780,034		15.6		10.4
Marco Spier		780,034		15.6		10.4
Directors and Named Executive Officers:
D. Hunt Ramsbottom		66,272		1.3		*
Thomas Boyle		149,110		3.0		2.0
Sandy Grushow		—		—		—
David Sanderson		—		—		—
Marc Stapley		—		—		—
All directors and named executive officers as a group (5 persons)		215,837		4.3		2.9

* less than 1%.

86

DESCRIPTION OF UNITS AND WARRANTS

General

The following description of our Units and Warrants are summaries and are qualified by reference to the forms of Warrant agreement, Warrant certificate and Unit certificate filed with the Securities and Exchange Commission as exhibits to our registration statement, of which this prospectus forms a part.

Units

Each Unit consists of one share and one Warrant. The Units will begin trading on June     , 2019. The Units will automatically separate and each of the shares and Warrants will trade separately commencing on December     , 2019.

Warrants to Be Issued as part of a Unit in this Offering

In connection with the purchase of each Unit, each investor will receive one share and one Warrant. Each full Warrant entitles the registered holder to purchase one share at an initial exercise price per share equal to 130% of the initial public offering price per Unit.

The Warrants may only be exercised for cash or, in the circumstances described below, pursuant to a cashless exercise. The Warrants will expire on June     , 2024 at 5:00 p.m., New York City time. We may call the Warrants for redemption as follows:

● at a price of $0.01 for each Warrant at any time while the Warrants are exercisable;

● upon not less than 30 days prior written notice of redemption to each Warrant holder; and

● if, and only if, the reported last sale price of the common stock equals or exceeds 200% of the initial public offering price per Unit (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of our common stock occurring after the issuance date) for the 20-trading-day period ending on the third business day prior to the notice of redemption to Warrant holders.

If the foregoing conditions are satisfied and we call the Warrants for redemption, each Warrant holder will be entitled to exercise his, her or its Warrant prior to the date scheduled for redemption. However, there can be no assurance that the price of the common stock will exceed the call price or the Warrant exercise price after the redemption call is made.

The Warrants will initially be represented by the certificate representing a Unit, and from and after the Separation Date, will be issued in registered form, in each case pursuant to a Warrant Agreement between Registrar and Transfer Company, as Warrant agent, and us. Until the Separation Date, the Warrants may not be transferred, split up or combined separately from the shares with which they were sold as a Unit. You should review a copy of the Warrant agreement, which has been filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the Warrants.

The exercise price and number of shares issuable on exercise of the Warrants is subject to adjustment in certain circumstances, including but not limited to in the event of a stock split, stock dividend, recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for the issuances of common stock or securities convertible or exercisable into common stock at a price below the then current exercise price of the Warrants.

If at any time during the exercise period for the Warrants there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares of common stock underlying the Warrants, then the Warrants may only be exercised by means of a "cashless exercise" according to a formula set forth in the Warrant agreement.

87

The Warrants may be exercised upon surrender of the Warrant certificate on or prior to the expiration date at the offices of the Warrant agent, with the exercise form on the reverse side of the Warrant certificate completed and executed as indicated, and, unless the Warrant holder is effecting a cashless exercise pursuant to the terms of the Warrants agreement, accompanied by full payment of the exercise price, by certified check payable to us or by wire transfer of immediately available funds to an account designated by us, for the number of Warrants being exercised. The Warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their Warrants and received shares. After issuance of shares upon exercise of the Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

88

DESCRIPTION OF CAPITAL STOCK

General

As of the closing of this offering, our authorized capital stock will consist of 100,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.

The following description of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated bylaws are summaries and are qualified by reference to the amended and restated certificate of incorporation and amended and restated bylaws that will become effective upon the closing of this offering. Our amended and restated certificate of incorporation and amended and restated bylaws will be approved by our pre-IPO stockholders prior to this offering. Copies of these documents will be filed with the Securities and Exchange Commission as exhibits to our registration statement, of which this prospectus forms a part. The description of our capital stock reflects changes to our capital structure that will occur upon the closing of this offering.

Common Stock

Upon completion of this offering, we will have 7,500,000 shares of our common stock outstanding, assuming the completion of the Contribution and Merger Transactions, which will occur prior to the completion of this offering. After giving effect to the Contribution and Merger Transactions and prior to the completion of this offering, our common stock will be held of record by 13 stockholders.

Voting Rights

Holders of our common stock are entitled to one vote per share of common stock. Holders of shares of common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders. We will not provide for cumulative voting for the election of directors in our amended and restated certificate of incorporation.

Economic Rights

Dividends.    Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only then at the times and in the amounts that our board of directors may determine. See “Dividend Policy” for more information. Any dividend or distributions paid or payable to the holders of shares of common stock will be paid pro rata, on an equal priority, pari passu basis.

Right to Receive Liquidation Distributions.    Upon our dissolution, liquidation or winding-up, the assets legally available for distribution to our stockholders will be distributable ratably among the holders of our common stock, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

Choice of Forum

Our amended and restated certificate of incorporation and amended and restated bylaws will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty by any of our directors, officers, or stockholders owed to us or our stockholders; (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or (4) any action asserting a

89

claim against us governed by the internal affairs doctrine; provided that the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any claim for which the federal courts have exclusive jurisdiction. If any such action is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder will be deemed to have consented to (a) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce such actions and (b) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder. Our amended and restated certificate of incorporation will also provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to this choice of forum provision. It is possible that a court of law could rule that the choice of forum provision contained in our amended and restated certificate of incorporation and amended and restated bylaws is inapplicable or unenforceable if it is challenged in a proceeding or otherwise. This choice of forum provision has important consequences for our stockholders. See “Risk Factors – Risks Related to this Offering and Ownership of Our Common Stock – Our amended and restated certificate of incorporation and amended and restated bylaws will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.”

Preferred Stock

Under the terms of our amended and restated certificate of incorporation that will become effective upon the closing of this offering, our board of directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock could adversely affect the voting power of holders of our common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. Upon the closing of this offering, there will be no shares of preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.

Anti-takeover Provisions

Classified Board of Directors and Removal of Directors

Our amended and restated certificate of incorporation and amended and restated bylaws will provide that our board of directors will be divided into three classes, with the classes as nearly equal in number as possible and each class serving three-year staggered terms. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board.

Our amended and restated certificate of incorporation and our amended and restated bylaws will provide that a director may be removed only for cause. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.

As described under “Certain Relationships and Related Party Transactions—Stockholders’ Agreement,” the Stockholders’ Agreement provides our founders and one of our existing investors the right, subject to certain conditions, to nominate for election two members to our board of directors (which would be in addition to the four members currently serving) and requires all of our existing equityholders to vote in favor of their election, which

90

will substantially limit the right of investors in this offering to elect or remove those nominees. Because investors in this offering will have a limited ability to change the composition of our board of directors, their ability to effect a change of control of the company will also be limited.

Stockholder Action; Special Meeting of Stockholders

Our amended and restated certificate of incorporation will provide that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing by such stockholders. Our amended and restated certificate of incorporation and amended and restated bylaws also will provide that, except as otherwise required by law, special meetings of our stockholders can only be called by the chair of our board of directors or by the secretary upon the direction of our board of directors.

Amendment to or Repeal of Amended and Restated Bylaws

Our amended and restated bylaws will require the approval of a majority of the then authorized directors in order for our board of directors to amend or repeal such bylaws or the approval of the holders of at least a majority of the voting power of all outstanding shares of voting stock in order for our stockholders to amend or repeal such bylaws. This provision will have the effect of making it more difficult to amend or repeal our amended and restated bylaws.

Authorized But Unissued Shares

The authorized but unissued shares of our common stock and preferred stock are available for future issuance without stockholder approval, subject to any limitations imposed by the listing standards of Nasdaq. These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could make more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

The foregoing provisions of our amended and restated certificate of incorporation and amended and restated bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by our board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management or delaying or preventing a transaction that might benefit you or other minority stockholders.

In addition, upon the closing of this offering, we will be subject to Section 203 of the Delaware General Corporation Law. Subject to certain exceptions, Section 203 prevents a publicly held Delaware corporation from engaging in a “business combination” with any “interested stockholder” for three years following the date that the person became an interested stockholder, unless the interested stockholder attained such status with the approval of our board of directors or unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger or consolidation involving us and the “interested stockholder” and the sale of more than 10% of our assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.

Transfer Agent, Warrant Agent and Registrar

Upon completion of this offering, the transfer agent and registrar for our Units and common stock, and warrant agent for our Warrants, will be Computershare Trust Company, N.A. The address of the transfer agent, warrant agent and registrar is 250 Royall Street, Canton, Massachusetts 02021.

91

Limitations of Liability and Indemnification

See the section captioned “Certain Relationships and Related Party Transactions – Indemnification Agreements and Directors’ and Officers’ Liability Insurance.”

Listing

Before the date of this prospectus, there has been no public market for our Units, Shares or Warrants. We have applied to have our Units approved for listing on the Nasdaq Capital Market, subject to notice of issuance, under the symbol “PCIM.U.” Once the securities comprising the Units begin separate trading, we expect that the Shares and Warrants will be approved for listing on the Nasdaq Capital Market under the symbols PCIM and PCIM.W, respectively.

92

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market prices of our securities prevailing from time to time. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. As described below, only a limited number of shares of our common stock will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market prices at such time and our ability to raise equity capital in the future.

Upon the completion of this offering, 7,500,000 shares of common stock will be outstanding, assuming no exercise of the Warrants included in the Units and no exercise of the underwriters’ over-allotment option to purchase additional shares. Of these outstanding shares, all of the shares of our common stock sold in this offering will be freely tradable as part of the Units or, after the Separation Date, separately, except that any shares included in the Units purchased in this offering by our affiliates, as that term is defined in Rule 144 under the Securities Act, would only be able to be sold in compliance with the Rule 144 limitations described below.

The remaining outstanding shares of our common stock will be, deemed “restricted securities” as defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below. All of our executive officers, directors and holders of substantially all of our capital stock and securities exercisable or convertible into our capital stock have entered into market standoff agreements with us or lock-up agreements with the underwriters under which they have agreed, subject to specific exceptions, not to sell any of our stock for 180 days following the date of this prospectus. As a result of these agreements and subject to the provisions of Rule 144 or Rule 701 and the Stockholders’ Agreement, shares of our common stock will be available for sale in the public market as follows:

● beginning on the date of this prospectus, all 2,500,000 shares of our common stock sold in this offering will be immediately available for sale in the public market; and

● beginning 181 days after the date of this prospectus, the remaining 5,000,000 shares of our common stock will be eligible for sale in the public market from time to time thereafter, subject in some cases to the volume and other restrictions of Rule 144 and the provisions of the Stockholders’ Agreement, as described under “Certain Relationships and Related Party Transactions—Stockholders’ Agreement”.

Lock-Up Agreements

We and all of our directors and officers, as well as the other holders of substantially all shares of common stock (including securities exercisable or convertible into our common stock) outstanding immediately prior to this offering, have agreed or will agree that, without the prior written consent of Roth Capital Partners, LLC, during the period from the date of this prospectus and ending on the date 180 days after the date of this prospectus, we and they will not, among other things:

● offer, pledge, sell, contract to sell, grant any option to purchase, make any short sale or otherwise dispose of any shares of common stock, options or warrants to purchase shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock; or

● in our case, file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or

● in the case of our directors, officers and other holders of our securities, make any demand for exercise of any rights with respect to the registration of any securities.

This agreement is subject to certain exceptions. See “Underwriting” below for additional discussion.

93

In addition, our founders have agreed to lock-up provisions under the Stockholders’ Agreement. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement” below.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares of our common stock proposed to be sold for at least six months is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144.

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares of our common stock on behalf of our affiliates are entitled to sell upon expiration of the market standoff agreements and lock-up agreements described above and the restrictions imposed by the Stockholders’ Agreement also described above, within any three-month period, a number of shares that does not exceed the greater of:

● 1% of the number of shares of our capital stock then outstanding, which will equal 75,000 shares immediately after this offering; or

● the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

Sales under Rule 144 by our affiliates or persons selling shares of our common stock on behalf of our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 generally allows a stockholder who purchased shares of our capital stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.

Registration Statement

We intend to file a registration statement on Form S-8 under the Securities Act promptly after the completion of this offering to register shares of our common stock reserved for future issuance under our 2019 Plan. The registration statement on Form S-8 is expected to become effective immediately upon filing, and shares of our common stock covered by the registration statement will then become eligible for sale in the public market, subject to the Rule 144 limitations applicable to affiliates, vesting restrictions and any applicable market standoff agreements and lock-up agreements. See the section captioned “Executive Compensation—2019 Incentive Award Plan” and “Executive Compensation—2019 Employee Stock Purchase Plan” for a description of our equity compensation plans.

94

Registration Rights

Upon the closing of this offering, the holders of 5,000,000 shares of common stock or their transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement” for additional information. Shares covered by a registration statement will be eligible for sale in the public market upon the expiration or release from the terms of the lock-up agreement and, with respect to certain of our stockholders, upon the termination of the restrictions on transfer contained in the Stockholders’ Agreement.

95

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the Units or components thereof, which we refer to collectively as the securities, issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or foreign tax laws are not discussed. This discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service, or IRS, in effect as of the date of this offering. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a holder of the securities. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position regarding the tax consequences of the purchase, ownership and disposition of the securities or Shares received upon the exercise of the Warrants.

This discussion is limited to holders that hold the securities as a “capital asset” within the meaning of Section 1221 of the Code (property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the alternative minimum tax or the unearned income Medicare contribution tax. In addition, it does not address consequences relevant to holders subject to particular rules, including, without limitation:

● U.S. expatriates and former citizens or long-term residents of the United States;

● persons holding securities as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

● banks, insurance companies, and other financial institutions;

● brokers, dealers or traders in securities;

● “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

● partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);

● tax-exempt organizations or governmental organizations;

● persons deemed to sell our securities under the constructive sale provisions of the Code;

● persons who hold or receive our securities pursuant to the exercise of any employee stock option or otherwise as compensation;

● tax-qualified retirement plans;

● “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; and

● persons subject to special tax accounting rules as a result of any item of gross income with respect to the securities being taken into account in an “applicable financial statement” (as defined in the Code).

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds the securities, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding the securities and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.

96

THIS DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED AS TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SECURITIES ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.

Each Unit will be treated for U.S. federal income tax purposes as an investment unit consisting of one Share and one Warrant to purchase one Share. In determining their basis for the Share and Warrant composing a Unit, purchasers of securities should allocate their purchase price for the Unit between the components on the basis of their relative fair market values at the time of issuance. The Company does not intend to advise purchasers of the securities with respect to this determination, and purchasers of the securities are advised to consult their tax and financial advisors with respect to the relative fair market values of the Shares and the Warrants for federal income tax purposes.

Tax Considerations Applicable to U.S. Holders

Definition of a U.S. Holder

For purposes of this discussion, a “U.S. holder” is any beneficial owner of the securities that, for U.S. federal income tax purposes, is:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;

● an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

● a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more United States persons (within the meaning of Section 7701(a)(30) of the Code), or (2) has made a valid election under applicable Treasury Regulations to continue to be treated as a United States person.

Distributions on Shares

As described in the section entitled “Dividend Policy,” we currently do not intend to declare or pay any cash dividends in the foreseeable future. However, if we do make distributions on our common stock, such distributions generally will constitute dividends to the extent paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. With respect to non-corporate taxpayers, such dividends are generally taxed at the lower applicable capital gains rate provided certain holding period requirements are satisfied. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital and first be applied against and reduce a U.S. holder’s adjusted tax basis in its Shares, but not below zero. Any excess will be treated as capital gain and will be treated as described below in the section relating to the sale or disposition of our common stock. Dividends received by a corporate U.S. holder may be eligible for a dividends received deduction, subject to applicable limitations.

Sale or Other Taxable Disposition of Shares

Upon the sale, exchange or other taxable disposition of the Shares, a U.S. holder generally will recognize capital gain or loss equal to the difference between (i) the amount of cash and the fair market value of any property received upon the sale, exchange or other taxable disposition and (ii) such holder’s tax basis in the Shares. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period in such Shares is more than one year at the time of the sale, exchange or other taxable disposition. Long-term capital gains recognized by certain non-corporate U.S. holders, including individuals, generally will be subject to reduced rates of U.S. federal income tax. The deductibility of capital losses is subject to limitations.

97

Sale or Other Disposition, Exercise or Expiration of Warrants

Upon the sale or other disposition of a Warrant (other than by exercise), a U.S. holder will generally recognize capital gain or loss equal to the difference between the amount realized on the sale or other disposition and the U.S. holder’s tax basis in the Warrant. This capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period in such Warrant is more than one year at the time of the sale or other disposition. The deductibility of capital losses is subject to limitations.

In general, a U.S. holder will not be required to recognize income, gain or loss upon exercise of a Warrant for its exercise price. A U.S. holder’s tax basis in a share of common stock received upon exercise will be equal to the sum of (1) the U.S. holder’s tax basis in the Warrant and (2) the exercise price of the Warrant. A U.S. holder’s holding period in the shares received upon exercise will commence on the day after such holder exercises the Warrants. Although there is no direct legal authority as to the U.S. federal income tax treatment of an exercise of a Warrant on a cashless basis, we intend to take the position that such exercise will not be taxable, either because the exercise is not a gain realization event or because it qualifies as a tax-free recapitalization. In the former case, the holding period of the shares of our common stock received upon exercise of Warrants should commence on the day after the Warrants are exercised. In the latter case, the holding period of the shares of our common stock received upon exercise of Warrants would include the holding period of the exercised Warrants. However, our position is not binding on the IRS, and the IRS may treat a cashless exercise of a Warrant as a taxable exchange. U.S. holders are urged to consult their tax advisors as to the consequences of an exercise of a Warrant on a cashless basis, including with respect to their holding period and tax basis in the common stock received.

If a Warrant expires without being exercised, a U.S. holder will recognize a capital loss in an amount equal to such holder’s tax basis in the Warrant. Such loss will be long-term capital loss if, at the time of the expiration, the U.S. holder’s holding period in such Warrant is more than one year. The deductibility of capital losses is subject to limitations.

Constructive Dividends on Warrants

As described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends to holders of our common stock in the foreseeable future. However, if at any time during the period in which a U.S. holder holds Warrants we were to pay a taxable dividend to our stockholders and, in accordance with the anti-dilution provisions of the Warrants, the conversion rate of the Warrants were increased, that increase would be deemed to be the payment of a taxable dividend to a U.S. holder of the Warrants to the extent of our earnings and profits, notwithstanding the fact that such holder will not receive a cash payment. If the conversion rate is adjusted in certain other circumstances (or in certain circumstances, there is a failure to make adjustments), such adjustments may also result in the deemed payment of a taxable dividend to a U.S. holder. U.S. holders should consult their tax advisors regarding the proper treatment of any adjustments to the Warrants.

We are currently required to report the amount of any deemed distributions on our website or to the IRS. The IRS proposed regulations addressing the amount and timing of deemed distributions, as well as, obligations of withholding agents and filing and notice obligations of issuers in respect of such deemed distributions. If adopted as proposed, the regulations would generally provide that (i) the amount of a deemed distribution is the excess of the fair market value of the right to acquire stock immediately after the exercise price adjustment over the fair market value of the right to acquire stock (after the exercise price adjustment) without the adjustment, (ii) the deemed distribution occurs at the earlier of the date the adjustment occurs under the terms of the instrument and the date of the actual distribution of cash or property that results in the deemed distribution and (iii) we are required to report the amount of any deemed distributions on our website or to the IRS and to all holders (including holders that would otherwise be exempt from reporting). The final regulations will be effective for deemed distributions occurring on or after the date of adoption, but holders and withholding agents may rely on them prior to that date under certain circumstances.

98

Information Reporting and Backup Withholding

A U.S. holder may be subject to information reporting and backup withholding when such holder receives payments on the securities (including constructive dividends) or receives proceeds from the sale or other taxable disposition of securities. Certain U.S. holders are exempt from backup withholding, including corporations and certain tax-exempt organizations. A U.S. holder will be subject to backup withholding if such holder is not otherwise exempt and such holder:

● fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number;

● furnishes an incorrect taxpayer identification number;

● is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or

● fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS. U.S. holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.

Tax Considerations Applicable to Non-U.S. Holders

For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of the securities that is neither a U.S. holder nor an entity treated as a partnership for U.S. federal income tax purposes.

Distributions on Shares

As described in the section entitled “Dividend Policy,” we currently do not intend to declare or pay any cash dividends in the foreseeable future. However, if we do make distributions on our common stock, such distributions of cash or property on our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a non-U.S. holder’s adjusted tax basis in its Shares, but not below zero. Any excess will be treated as capital gain and will be treated as described below in the section relating to the sale or disposition of our Shares or Warrants.

Subject to the discussion below on effectively connected income, dividends paid to a non-U.S. holder of our common stock will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the non-U.S. holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for the lower treaty rate). A non-U.S. holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.

If dividends paid to a non-U.S. holder are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such dividends are attributable), the non-U.S. holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the non-U.S. holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States.

99

Any such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated rates. A non-U.S. holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected dividends, as adjusted for certain items. Non-U.S. holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.

Exercise of Warrants

A non-U.S. holder generally will not be subject to U.S. federal income tax on the exercise of Warrants into shares of common stock. However, if a cashless exercise of the Warrants results in a taxable exchange, as described in "—Tax Considerations Applicable to U.S. Holders—Sale or Other Disposition, Exercise or Expiration of Warrants," the rules described below under "Sale or Other Disposition of Shares or Warrants" would apply.

Sale or Other Disposition of Shares or Warrants

Subject to the discussions below on backup withholding and foreign accounts, a non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of Shares or Warrants unless:

● the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable);

● the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

● our common stock or Warrants constitute U.S. real property interests, or USRPIs, by reason of our status as a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes.

Gain described in the first bullet point above will generally be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates. A non-U.S. holder that is a foreign corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) of a portion of its effectively connected earnings and profits for the taxable year, as adjusted for certain items.

A non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on any gain derived from the disposition, which may be offset by certain U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States) provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, we believe we are not currently and do not anticipate becoming a USRPHC. Because the determination of whether we are a USRPHC depends on the fair market value of our USRPIs relative to the fair market value of our other business assets and our non-U.S. real property interests, however, there can be no assurance we are not a USRPHC or will not become one in the future.

Non-U.S. holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Constructive Dividends on Warrants

As described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends in the foreseeable future. However, if at any time during the period in which a non-U.S. holder holds Warrants we

100

were to pay a taxable dividend to our stockholders and, in accordance with the anti-dilution provisions of the Warrants, the conversion rate of the Warrants were increased, that increase would be deemed to be the payment of a taxable dividend to a non-U.S. holder to the extent of our earnings and profits, notwithstanding the fact that such holder will not receive a cash payment. If the conversion rate is adjusted in certain other circumstances (or in certain circumstances, there is a failure to make adjustments), such adjustments may also result in the deemed payment of a taxable dividend to a non-U.S. holder. Any resulting withholding tax attributable to deemed dividends may be collected from other amounts payable or distributable to the non-U.S. holder. Non-U.S. holders should consult their tax advisors regarding the proper treatment of any adjustments to the Warrants.

Information Reporting and Backup Withholding

Subject to the discussion below on foreign accounts, a non-U.S. holder will not be subject to backup withholding with respect to distributions on our securities we make to the non-U.S. holder, provided the applicable withholding agent does not have actual knowledge or reason to know such holder is a United States person and the holder certifies its non-U.S. status, such as by providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or other applicable certification. However, information returns will be filed with the IRS in connection with any distributions on our securities paid to the non-U.S. holder, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is established.

Information reporting and backup withholding may apply to the proceeds of a sale or other taxable disposition of Shares or Warrants within the United States, and information reporting may (although backup withholding generally will not) apply to the proceeds of a sale or other taxable disposition of Shares or Warrants outside the United States conducted through certain U.S.-related financial intermediaries, in each case, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder on IRS Form W-8BEN or W-8BEN-E, or other applicable form (and the payor does not have actual knowledge or reason to know that the beneficial owner is a U.S. person) or such owner otherwise establishes an exemption. Proceeds of a disposition of our Shares or Warrants conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Additional Withholding Tax on Payments Made to Foreign Accounts

Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act, or “FATCA”) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our securities paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

101

Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our securities. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock on or after January 1, 2019, recently proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.

Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in the Units.

102

UNDERWRITING

We have entered into an underwriting agreement with Roth Capital Partners, LLC, acting as the representative of the several underwriters named below, with respect to the Units subject to this offering. Subject to certain conditions, we have agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the number of Units provided below opposite their respective names.

Underwriters	Number of Units
Roth Capital Partners, LLC
Total		2,500,000

The underwriters are offering the Units subject to their acceptance of the Units from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the Units offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the Units if any such Units are taken. However, the underwriters are not required to take or pay for the Units covered by the underwriters’ over-allotment option described below.

Over-Allotment Option

We have granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of 375,000 additional Units to cover over-allotments, if any, at the public offering price set forth on the cover page of this prospectus, less the underwriting discount. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the Units offered by this prospectus. If the underwriters exercise this option, each underwriter will be obligated, subject to certain conditions, to purchase a number of additional shares proportionate to that underwriter’s initial purchase commitment as indicated in the table above.

Discount, Commissions and Expenses

The underwriters have advised us that they propose to offer the Units to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $                per Unit. The underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of $                per Unit to certain brokers and dealers. After this offering, the initial public offering price, concession and reallowance to dealers may be changed by the representative. No such change will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The Units are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.

The following table shows the underwriting discount payable to the underwriters by us in connection with this offering. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option to purchase additional Units.

	Per Unit(1)	Total Without Exercise of Over-Allotment Option	Total With Exercise of Over-Allotment Option
Public offering price	$	$	$
Underwriting discount	$	$	$

(1) Does not include the Representative’s Warrant or the rights granted to the representative, each as described below.

103

We have agreed to reimburse the underwriters for certain out-of-pocket expenses, including the fees and disbursements of their counsel, up to an aggregate of $175,000. We estimate that the total expenses payable by us in connection with this offering, other than the underwriting discount referred to above, will be approximately $1.8 million.

Representative’s Warrant

We have also agreed to issue to the representative a warrant to purchase a number of our Units equal to an aggregate of 8% of the Units sold in this offering. The Representative’s Warrant will have an exercise price equal to 115% of the initial public offering price of the Units sold in this offering and may be exercised on a cashless basis. The Representative’s Warrant is not redeemable by us, becomes exercisable 180 days from the effective date of the registration statement of which this prospectus forms a part and will expire on the fifth anniversary of such effective date. The Representative’s Warrant will provide for adjustment in the number and price of such Representative’s Warrant (and the Units underlying such Representative’s Warrant) in the event of recapitalization, merger or other fundamental transaction. Representative’s Warrant and the securities issuable in respect thereof have been deemed compensation by FINRA and are therefore subject to FINRA Rule 5110(g)(1). In accordance with FINRA Rule 5110(g)(1), neither the Representative’s Warrant nor any securities issuable in respect thereof may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of such securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which the Representative’s Warrant is being issued, except the transfer of any security:

● by operation of law or by reason of reorganization of the Company;

● to any FINRA member firm participating in this offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction described above for the remainder of the time period;

● if the aggregate amount of securities of the Company held by either an underwriter or a related person do not exceed 1% of the securities being offered;

● that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund; or

● the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction set forth above for the remainder of the time period.

In addition, in accordance with FINRA Rule 5110(f)(2)(G), the Representative’s Warrant may not contain certain terms.

No Public Market

Prior to this offering, there has not been a public market for our securities and the public offering price for our securities, including the initial public offering price of the Units, will be determined through negotiations between us and the representative. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the representative believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

No assurance can be given that the initial public offering price will correspond to the price at which our securities will trade in the public market subsequent to this offering or that an active trading market for our securities will develop and continue after this offering.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or the Securities Act, and liabilities arising from breaches of representations

104

and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

Lock-up Agreements

We, our officers, directors and substantially all of our stockholders have agreed, subject to limited exceptions, for a period of 180 days after the date of the underwriting agreement, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of common stock or any securities convertible into or exchangeable for our common stock either owned as of the date of the underwriting agreement or thereafter acquired without the prior written consent of the representative. The representative may, in its sole discretion and at any time or from time to time before the termination of the lock-up period release all or any portion of the securities subject to lock-up agreements; provided, however, that, subject to limited exceptions, at least three business days before the release or waiver or any lock-up agreement, the representative must notify us of the impending release or waiver and we will be required to announce the impending release or waiver through a major news service at least two business days before the release or waiver.

Price Stabilization, Short Positions and Penalty Bids

In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:

● Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

● Over-allotment involves sales by the underwriters of Units in excess of the number of Units the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of Units over-allotted by the underwriters is not greater than the number of Units that they may purchase in the over-allotment option. In a naked short position, the number of Units involved is greater than the number of Units in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing Units in the open market.

● Syndicate covering transactions involve purchases of Units in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of Units to close out the short position, the underwriters will consider, among other things, the price of Units available for purchase in the open market as compared to the price at which they may purchase Units through the over-allotment option. If the underwriters sell more Units than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying Units in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the Units in the open market after pricing that could adversely affect investors who purchase in the offering.

● Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the Units originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our Units or preventing or retarding a decline in the market price of the Units. As a result, the price of our Units may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Units. In addition, neither we nor the underwriters make any representations that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

105

Listing, Warrant Agent and Transfer Agent

We have applied to have our Units approved for listing on the Nasdaq Capital Market, subject to notice of issuance, under the symbol “PCIM.U.” Once the securities comprising the Units begin separate trading, we anticipate that the Shares and Warrants will be listed on the Nasdaq Capital Market under the symbols PCIM and PCIM.W, respectively. The transfer agent of our Units and common stock, and warrant agent for our Warrants, is Computershare Trust Company, N.A.

Electronic Distribution

This prospectus in electronic format may be made available on websites or through other online services maintained by one or more of the underwriters, or by their affiliates. Other than this prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

Other

From time to time, certain of the underwriters and/or their affiliates have provided, and may in the future provide, various investment banking and other financial services for us for which services they have received and, may in the future receive, customary fees. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans. Except for services provided in connection with this offering, no underwriter has provided any investment banking or other financial services to us during the 180-day period preceding the date of this prospectus and we do not expect to retain any underwriter to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.

106

NOTICE TO INVESTORS

Notice to Investors in the United Kingdom

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(c) by the underwriter to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of these securities shall result in a requirement for the publication by the issuer or the underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any such securities to be offered so as to enable an investor to decide to purchase any such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Each underwriter has represented, warranted and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of any of the securities in circumstances in which section 21(1) of the FSMA does not apply to the issuer; and

(b) it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the securities in, from or otherwise involving the United Kingdom.

European Economic Area

In particular, this document does not constitute an approved prospectus in accordance with European Commission’s Regulation on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another

107

Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of securities to the public in that Relevant Member State at any time:

● to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

● to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in the last annual or consolidated accounts; or

● in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of securities to the public” in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes the securities offered hereby are “securities.”

108

LEGAL MATTERS

Latham & Watkins, LLP, Menlo Park, California will pass upon the validity of the securities being offered by this prospectus. Lowenstein Sandler LLP, New York, New York is acting as counsel to the underwriters.

EXPERTS

The consolidated financial statements of Psyop Media Company, LLC and subsidiaries as of December 31, 2018 and 2017, and for the years then ended have been included herein in reliance upon the report of Citrin Cooperman & Company, LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirements of the Exchange Act and, in accordance with this law, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the public reference facilities and website of the SEC referred to above. We also maintain a website at www.pcimediainc.com where, upon completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information on or that can be accessed through our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.

109

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Financial Statements
Unaudited Consolidated Balance Sheets	F-1
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)	F-2
Unaudited Consolidated Statements of Changes in Members’ Equity	F-3
Unaudited Consolidated Statements of Cash Flows	F-4
Unaudited Notes to Consolidated Financial Statements	F-5
Audited Financial Statements
Report of Independent Registered Public Accounting Firm	F-13
Consolidated Balance Sheets	F-14
Consolidated Statements of Operations and Comprehensive Income (Loss)	F-15
Consolidated Statements of Changes in Members’ Equity	F-16
Consolidated Statements of Cash Flows	F-17
Notes to Consolidated Financial Statements	F-18

F-i

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	March 31, 2019 (unaudited)			December 31, 2018
ASSETS
Current assets
Cash	$	1,615,223		$	4,033,604
Accounts receivable, net		3,548,865			4,020,506
Contract assets		1,384,542			572,429
Prepaid expenses		899,990			653,238
Total current assets		7,448,620			9,279,777
Property and equipment, net		3,258,855			3,530,641
Deferred tax asset		169,337			157,555
Equity method investment		1,989,734			1,942,699
Other assets		366,726			333,003
Total assets	$	13,233,272		$	15,243,675
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities
Accounts payable and other current liabilities	$	4,256,840		$	5,986,394
Bank note payable, current portion		-			352,302
Bank line of credit		1,000,000			-
Other notes payable, current portion		2,125,580			1,368,353
Contract liabilities		1,834,478			1,724,770
Total current liabilities		9,216,898			9,431,819
Other notes payable, less current portion		1,978,293			3,092,825
Other long term liabilities		1,744,386			1,753,574
Total liabilities		12,939,577			14,278,218
Commitments and contingencies
Members’ equity
Members’ equity		1,255,612			1,935,981
Due from member		(809,875	)		(809,030	)
Accumulated other comprehensive loss		(152,042	)		(161,494	)
Total members’ equity		293,695			965,457
Total liabilities and members’ equity	$	13,233,272		$	15,243,675

See accompanying notes to unaudited consolidated financial statements.

F-1

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Three Months Ended March 31,
	2019			2018
Contract revenues	$	15,056,063		$	14,410,092
Cost of contract revenues		11,997,344			11,270,107
Gross profit		3,058,719			3,139,985
Selling, general and administrative expenses		3,655,906			3,576,247
Operating loss		(597,187	)		(436,262	)
Other expense
Interest expense		(27,630	)		(42,752	)
Other expense		(70,308	)		(20,850	)
		(97,938	)		(63,602	)
Loss before income tax benefit		(695,125	)		(499,864	)
Income tax benefit		11,782			99,092
Income from equity method investment		2,974			-
Net loss		(680,369	)		(400,772	)
Other comprehensive income
Foreign currency translation gain		9,452			-
Comprehensive loss	$	(670,917	)	$	(400,772	)

See accompanying notes to unaudited consolidated financial statements.

F-2

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

Three Months Ended March 31, 2019

	Members’ Equity			Accumulated Other Comprehensive Loss			Due From Member			Total Members’ Equity
Balances, December 31, 2018	$	1,935,981		$	(161,494	)	$	(809,030	)	$	965,457
Foreign currency translation adjustment					9,452						9,452
Net loss		(680,369	)								(680,369	)
Member advance								(845	)		(845	)
Balances, March 31, 2019	$	1,255,612		$	(152,042	)	$	(809,875	)	$	293,695

See accompanying notes to unaudited consolidated financial statements.

F-3

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities
Net loss	$	(680,369	)	$	(400,772	)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred income tax benefit		(11,782	)		(80,218	)
Deferred rent		(9,187	)		117,288
Depreciation and amortization		309,161			333,615
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Accounts receivable		471,641			271,240
Contract assets		(812,113	)		(530,176	)
Prepaid expenses		(246,752	)		(254,557	)
Other assets		(38,723	)		128,191
Accounts payable and other current liabilities		(1,729,555	)		(1,745,657	)
Contract liabilities		109,708			(430,001	)
Other long term liabilities		-			283,813
Net cash used in operating activities		(2,637,971	)		(2,307,724	)
Cash flows from investing activities
Acquisition of property and equipment		(32,375	)		(51,791	)
Investment in equity method investee		(81,897	)		-
Net cash used in investing activities		(114,272	)		(51,791	)
Cash flows from financing activities
Principal payments on bank note payable		(352,302	)		(307,617	)
Proceeds from bank line of credit		1,000,000			-
Payment for repurchase of membership units		(300,000	)		(800,000	)
Payment for member		(845	)		(31,193	)
Distributions to members		-			(547,000	)
Net cash provided by (used in) financing activities		346,853			(1,685,810	)
Effect of exchange rate changes on cash		(12,991	)		-
Net decrease in cash		(2,418,381	)		(4,045,325	)
Cash, beginning of period		4,033,604			6,240,967
Cash, end of period	$	1,615,223		$	2,195,642
Supplemental disclosures of cash flow information, cash paid during the period:
Income taxes, net	$	-		$	15,000
Interest	$	5,416		$	93,338

See accompanying notes to unaudited consolidated financial statements.

F-4

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations

Psyop Media Company, LLC and its wholly-owned subsidiaries, (collectively, “the Company”) is a media company that creates innovative and award-winning content for some of the world’s most well-known brands. The Company creates content for commercials, television series, digital and social media, experiential and influencer platforms and virtual reality (VR) and augmented reality (AR) experiences. The Company operates as a single operating segment from its offices in New York, NY and Los Angeles, CA.

The Company has historically financed its operations through cash flows from operations, cash on hand and borrowings under the Company’s credit facility. The Company incurred losses from operations of approximately $671,000 and $2,130,000 for the three months ended March 31, 2019 and for the year ended December 31, 2018, respectively. As of March 31, 2019, the Company has a working capital deficit of approximately $1,768,000 and negative cash flows from operations of approximately $2,638,000. Management believes that the business operations have improved and will continue to improve as a result of reductions in staff, facility consolidations and new client business wins. The backlog of projects as of May 1, 2019 is $9,100,000 and our pitch activity remains strong. Management believes the Company’s current cash coupled with its $2,000,000 of availability under its line of credit are adequate to meet its needs for the next twelve months. The Company anticipates that it will continue to obtain funding to meet its working capital needs under the line of credit beyond its currently scheduled maturity based on historical experience and its relationship with its lender. The Company may also seek additional borrowings or raise additional equity to achieve its long-term business objectives.

2. Summary of significant accounting policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Psyop Media Company, LLC and its wholly-owned subsidiaries. The Company has prepared the unaudited condensed consolidated interim financial statements included herein in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting interim financial information. Accordingly, the financial statements have been condensed and do not include certain information and disclosures pursuant to these rules. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the financial statements and related footnotes for the year ended December 31, 2018 included in this Form S-1 filing.

The accompanying financial statements reflect all adjustments, consisting of normally recurring accruals, which in the opinion of management are necessary for a fair presentation, in all material respects, of the information contained therein. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Equity Method Investments

The equity method is used to account for investment in entities in which the Company has an ownership interest of less than 50% and has significant influence, or joint control by contractual arrangement over the operating and financial policies of the affiliate. The Company currently has one equity investment and it is reflected in investment in equity method investee.

Revenue Recognition

Effective January 1, 2019, the Company adopted Financial Accounting Standards Board (the “FASB”) ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective method (i.e.

F-5

applied prospectively January 1, 2019 without revising prior periods). The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.

In accordance with ASC 606, the Company’s revenue is recognized when a customer obtains control of the promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) 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; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company primarily generates revenue from fixed-price contracts, where revenue is recognized over time as work is completed. Accordingly, earnings are recognized on a contract-by-contract basis in the ratio that actual costs incurred bear to total estimated costs, as determined by management (the cost-to-cost method). Using the cost-to-cost method, revenues are recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs, multiplied by the total estimated contract revenue, less accumulated revenue recognized in prior periods.

To determine the proper revenue recognition method for contracts with customers, the Company evaluates whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as having multiple performance obligations. ASU 2014-09 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. While the nature of our contracts promises to deliver multiple goods and services, these services are highly interdependent and interrelated and our customer is purchasing the final deliverable not the individual items and accordingly such goods and services are considered a single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively the Company’s best estimate of the standalone selling price of each distinct performance obligation in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The nature of the Company’s contracts does not have variable consideration, such as liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. In contrast, the contracts are often modified to account for changes in contract specifications or requirements. Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract.

As a significant change in one or more of these estimates could affect the profitability of its contracts, the Company reviews and updates its contract-related estimates regularly. The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full in the period it is identified.

The Company estimates the collectability of contract amounts at the same time that it estimates project costs. If the Company anticipates that there may be issues associated with the collectability of the full amount calculated as

F-6

the transaction price, the Company may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection.

The timing of when the Company bills its customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, the Company usually receives advances or deposits from its customers before revenue is recognized, resulting in deferred revenue, which is a contract liability.

The following table presents the Company’s revenue by industry vertical for the three months ended March 31, 2019:

Industry	Amount
Technology and Games	$	5,603,683
Media and Telecom		3,402,879
Food and Beverage		1,586,979
Financial Services		1,056,975
Travel & Transportation		1,193,341
Footwear and Apparel		685,116
Agriculture		503,750
Retail		366,690
Automotive		53,499
Other		603,151
	$	15,056,063

Cost Recognition

Contract costs include all labor, subcontractors and other direct costs related to contract performance such as equipment rental, supplies and other production costs. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under GAAP approximate the carry amounts presented in the consolidated balance sheets.

Cash

The Company considers all investment instruments with original maturities of three months or less to be cash equivalents. The Company has a credit risk as at various times during the three month period; balances of cash at financial institutions exceeded the federally insured limit. The Company has not experienced any losses in such accounts, and the Company had no holdings in cash equivalents during the periods ended March 31, 2019 and December 31, 2018.

Accounts Receivable

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, management evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a

F-7

history of past write-offs and collections and current credit conditions. Accounts are written off once management has determined the balances will not be collected. Specific allowances for doubtful accounts in the amounts of $0 and $0 were recorded for customers’ balances at March 31, 2019 and December 31, 2018, respectively.

Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation and amortization. Costs of additions and substantial improvements to property and equipment are capitalized, while maintenance and repairs are charged to operations as incurred. Asset and related accumulated depreciation and amortization amounts are relieved from the accounts for retirements or dispositions.

Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets ranging from three to five years, while leasehold improvements are amortized, using the straight line method, over the shorter of either their economic useful lives or the term of the respective leases.

Impairment of Long-Lived Assets

In accordance with GAAP, the Company periodically assesses the recoverability of the carrying amounts of long-lived assets whenever events or changes in circumstances occur that indicate the carrying value may not be recoverable. An impairment loss is recognized when expected undiscounted future cash flows are less than the carrying amount of the asset. The impairment loss is the difference by which the carrying amount of the asset exceeds its fair value. At March 31, 2019 and December 31, 2018, there was no impairment loss on the Company’s long-lived assets.

Income taxes

The Company is a limited liability company and treated as a partnership for income tax purposes and is not subject to federal or state taxes. As such, income or loss of the Company, in general, is allocated to the members for inclusion in their personal income tax return. The Company conducts business in New York City and is subject to New York City Unincorporated Business tax.

The Company complies with GAAP, which requires an asset and liability approach to financial reporting of income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.

In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce members’ equity. The Company is subject to potential examination by jurisdiction authorities in the areas of income taxes for all periods subsequent to 2015. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent

F-8

assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Foreign Currency Translation

In accordance with GAAP, the Company complies with accounting for foreign affiliates and subsidiaries whose functional currency is the local currency. Assets and liabilities are translated using the published exchange rate in effect at the consolidated balance sheet date. Results of operations are translated using an approximated weighted average exchange rate for the period. Resulting translation adjustments are recorded as a component of accumulated other comprehensive loss.

Recently issued but not yet effective accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases. The update requires that, at lease inception, a lessee recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. The ASU also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statement of operations, while for operating leases, such amounts should be recognized as a combined expense in the statement of operations. In addition, ASU 2016-02 requires expanded disclosures about the nature and terms of lease agreements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. The Company is currently evaluating the impact of the future adoption of ASU 2016-02 on the Company’s consolidated financial statements.

3. Costs, estimated earnings and billings on uncompleted contracts

At March 31, 2019 and December 31, 2018, contract assets and liabilities consisted of the following:

	2019			2018
Costs incurred to date on uncompleted contracts	$	8,961,678		$	6,531,664
Estimated earnings		5,470,537			3,254,430
		14,432,215			9,786,094
Billings to date		(14,882,151	)		(10,938,435	)
	$	(449,936	)	$	(1,152,341	)

The above amounts are included in the accompanying consolidated balance sheets under the following captions:

	2019			2018
Contract assets consist of costs and estimated earnings in excess of billings	$	1,384,542		$	572,429
Contract liabilities consist of billings in excess of costs and estimated earnings		(1,834,478	)		(1,724,770	)
	$	(449,936	)	$	(1,152,341	)

4. Bank debt

On April 23, 2015, the Company Amended and Restated its Loan Agreement (“Credit Facility”). The Credit Facility consisted of three Term Loans with an original principal aggregate amount of $5,250,000, a $1,000,000 Line of Credit and a $1,500,000 Letter of Credit Facility for the issuance of Standby Letters of Credit. During 2016, the Letter of Credit Facility was increased to $2,000,000. During 2018, the Line of Credit was increased to $3,000,000.

F-9

Term Loan B in the amount of $1,000,000 matured March 2018 bore interest at 5.75% per annum and was payable in 60 consecutive equal monthly installments of principal and interest in the amount of $18,836.84.

Term Loan C in the amount of $3,000,000 matures April 2019 and was payable in 12 consecutive equal monthly installments of interest only of approximately $11,000 per month from May 1, 2015 through April 1, 2016 and bore interest during such period at 4.25% per annum. Beginning May 1, 2016, Term Loan C is payable in 36 consecutive equal monthly installments of principal and interest in the amount of $88,838 and bears interest at the prime rate in effect as of May 1, 2016 which was 3.5% plus 1% per annum. Therefore, the interest rate at March 31, 2019 and December 31, 2018 was 4.5%. At March 31, 2019 and December 31, 2018, the balance outstanding under Term Loan C is $0 and $352,302, respectively.

The Line of Credit matures annually on June 30 of each year and bears interest at a rate per annum equal to the greater of (i) the Prime Rate plus one percent (1.0%) or (ii) four and one-half percent (4.5%). On May 31, 2018, the Line of Credit was increased from $1,000,000 to $3,000,000. At March 31, 2019, the Company had $2,000,000 available under the Line of Credit with $1,000,000 outstanding. At December 31, 2018, the Company had available under the Line of Credit $3,000,000 with no amounts outstanding.

At March 31, 2019 and December 31, 2018, the Company, in connection with two of its production facilities has issued its landlords irrevocable, unconditional, and non-transferable letters of credit for an aggregate amount of $1,104,500 as a security deposit under its $2,000,000 Letter of Credit Facility.

The Credit Facility is collateralized by all the assets of the Company and its’ Operating Subsidiaries who are Guarantors (the “Guarantors”). The Company and the Guarantors are subject to certain annual financial covenants that must be maintained under the Credit Facility. As of December 31, 2018, the Company was in violation of its financial covenants. The Company subsequently received a waiver from its Bank for such violation.

5. Other notes payable

Redemption of membership units

In April 2017, the Company purchased 85,000 Class B-2 units from a unit holder for $1,200,000. The $1,200,000 will be paid in four equal annual installments of $300,000 beginning March 15, 2018 and ending of March 15, 2021.

In May 2017, the Company purchased 225,000 Class B-1 units from a unit holder for $3,500,000. The $3,500,000 will be paid as follows, $500,000 in May 2017, $500,000 in March 2018, $750,000 in March 2019, $750,000 in March 2020 and $1,000,000 in March 2021. The Company renegotiated the $750,000 due March 2019 and such amount will be paid as follows, $250,000 in April 2019 and $100,000 each month from May 2019 to September 2019. The note bears interest at a rate of 3% per annum. From April 2019 to September 2019, the interest rate is 10% per annum. Beginning October 2019, the interest rate will revert to 3% per annum.

Equity method investment

On April 10, 2018, the Company acquired a 40% interest in Broken Bone Club Limited, a private limited company incorporated in England and Wales (the “investee”) for $1,775,375. The amount paid at closing was $355,075 and the remaining $1,420,300 will be paid in 48 equal monthly installments of approximately $29,000, bearing interest at 3% per annum, beginning May 10, 2018.

F-10

The following table summarizes the financial position and results of operations for Broken Bone Club as of and for the three months ended March 31, 2019.

Current assets	$	1,856,200
Non-current assets		154,311
Current liabilities		527,369
Non-current liabilities		35,727
Revenue		823,435
Gross profit		240,277
Net income		7,393

The difference between the Company’s carrying value for this equity investment of approximately $1,940,000 and our 40% interest in the net assets of $570,607 is being treated by the Company as equity method goodwill pending the final determination of the valuation of Broken Bone Club.

Future principal payments due on Other Note Payables for years ending December 31 are as follows:

2019 (after March 31)	$	994,186
2020	$	1,375,581
2021	$	1,625,581
2022	$	108,525
	$	4,103,873

6. Accounts payable and other current liabilities

Accounts payable and other current liabilities consist of the following at March 31, 2019 and December 31, 2018:

	2019		2018
Accounts payable	$	1,807,781	$	2,345,993
Accrued salaries and related expenses		548,852		1,729,252
Accrued commissions		314,020		536,901
Subcontractors payable		1,018,497		575,091
Other accrued expenses		567,690		799,157
	$	4,256,840	$	5,986,394

7. Other long term liabilities

Other long term liabilities consist of the following at March 31, 2019 and December 31, 2018:

	2019		2018
Deferred rent liability	$	1,410,319	$	1,419,507
Security deposit liabilities		334,067		334,067
	$	1,744,386	$	1,753,574

F-11

8. Contingencies

Other

The Company has various representation agreements with third parties that provide business referrals to the Company for commissions. Accordingly, the Company is obligated to pay such commissions on certain contracts that are entered into, via the third parties’ business referral efforts. Commission expense amounted to approximately $297,000 and $329,000 for the three months ended March 31, 2019 and 2018, respectively.

The Company is, from time to time, involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

9. Concentrations

The Company had two (2) customers that accounted for 31% of contract revenues during the three months ended March 31, 2019. The Company had four (4) customers that accounted for 61% of contract revenues during the three months ended March 31, 2018.

Three (3) customers accounted for 71% of gross accounts receivable as of March 31, 2019. Three (3) customers accounted for 52% of gross accounts receivable as of December 31, 2018.

10. Related party transactions

Under the Company’s Production and Representation Agreement with Golden Wolf, Ltd a wholly owned subsidiary of Broken Bone Club Limited, which is 40% owned by the Company, the Company recognized third party revenues of approximately $541,000 and recorded expenses of approximately $400,000 relating to Golden Wolf’s services and approximately $50,000 related to other third-party expenses.

F-12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers

Psyop Media Company, LLC and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Psyop Media Company, LLC and Subsidiaries (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of operations and comprehensive income (loss), changes in members’ equity and cash flows for each of the years in the two-year period ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 audit 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.

We have served as the Company’s auditor since 2018.

New York, New York

April 12, 2019

F-13

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2018			2017
ASSETS
Current assets
Cash	$	4,033,604		$	6,240,967
Accounts receivable, less allowance for doubtful accounts of $0 and $26,113 in 2018 and 2017, respectively		4,020,506			5,389,567
Costs and estimated earnings in excess of billings on uncompleted contracts		572,429			1,068,418
Prepaid expenses		653,238			611,801
Total current assets		9,279,777			13,310,753
Property and equipment, net		3,530,641			4,643,403
Deferred tax asset		157,555			73,465
Equity method investment		1,942,699			-
Other assets		333,003			725,518
Total assets	$	15,243,675		$	18,753,139
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities
Accounts payable and other current liabilities	$	5,986,394		$	5,862,153
Bank note payable, current portion		352,302			1,099,023
Other notes payable, current portion		1,368,353			800,000
Billings in excess of costs and estimated earnings on uncompleted contracts		1,724,770			1,960,364
Total current liabilities		9,431,819			9,721,540
Bank note payable, less current portion		-			352,152
Other notes payable, less current portion		3,092,825			3,400,000
Other long term liabilities		1,753,574			1,441,238
Total liabilities		14,278,218			14,914,930
Commitments and contingencies
Members’ equity
Members’ equity		1,935,981			4,768,005
Due from member		(809,030	)		(777,347	)
Accumulated other comprehensive loss		(161,494	)		(152,449	)
Total members’ equity		965,457			3,838,209
Total liabilities and members’ equity	$	15,243,675		$	18,753,139

See accompanying notes to consolidated financial statements.

F-14

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Years Ended December 31,
	2018			2017
Contract revenues	$	57,367,290		$	61,962,243
Cost of contract revenues		45,395,033			45,272,623
Gross profit		11,972,257			16,689,620
Selling, general and administrative expenses		14,212,034			16,184,145
Operating income (loss)		(2,239,777	)		505,475
Other income (expense)
Interest income		25			7,162
Interest expense		(138,683	)		(160,788	)
Other expense		(77,406	)		(137,076	)
		(216,064	)		(290,702	)
Income (loss) before income tax benefit (expense)		(2,455,841	)		214,773
Income tax benefit (expense)		116,088			(16,618	)
Income from equity method investment		218,867			-
Net income (loss)		(2,120,886	)		198,155
Other comprehensive income
Foreign currency translation gain (loss)		(9,045	)		18,157
Comprehensive income (loss)	$	(2,129,931	)	$	216,312

See accompanying notes to consolidated financial statements.

F-15

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

Years Ended December 31, 2018 and 2017

	Members’ Equity			Accumulated Other Comprehensive Loss			Due From Member			Total Members’ Equity
Balances, December 31, 2016	$	9,185,173		$	(170,606	)	$	(777,347	)	$	8,237,220
Foreign currency translation adjustment					18,157						18,157
Net income		198,155									198,155
Equity based compensation		84,677									84,677
Repurchase of membership units		(4,700,000	)								(4,700,000	)
Balances, December 31, 2017	$	4,768,005		$	(152,449	)	$	(777,347	)	$	3,838,209
Member advance								(31,683	)		(31,683	)
Foreign currency translation adjustment					(9,045	)					(9,045	)
Net loss		(2,120,886	)								(2,120,886	)
Distributions to Members		(711,138	)								(711,138	)
Balances, December 31, 2018	$	1,935,981		$	(161,494	)	$	(809,030	)	$	965,457

See accompanying notes to consolidated financial statements.

F-16

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2018			2017
Cash flows from operating activities
Net income (loss)	$	(2,120,886	)	$	198,155
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income tax benefit		(84,090	)		(25,465	)
Deferred rent		262,082			263,187
Depreciation and amortization		1,311,913			1,706,389
Bad debt expense (recovery)		(26,080	)		-
Loss on disposal of assets		-			1,003
Equity based compensation		-			84,677
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Accounts receivable		1,395,141			(2,127,143	)
Costs and estimated earnings in excess of billings on uncompleted contracts		495,989			(537,959	)
Prepaid expenses		(41,437	)		209,045
Other assets		143,648			69,109
Accounts payable and other current liabilities		124,241			355,648
Billings in excess of costs and estimated earnings on uncompleted contracts		(235,594	)		(68,085	)
Other long term liabilities		50,254			283,812
Net cash provided by operating activities		1,275,181			412,373
Cash flows from investing activities
Acquisition of property and equipment		(169,151	)		(324,675	)
Investment in equity method investee		(718,950	)		-
Purchase of intangible asset		-			(300,000	)
Net cash used in investing activities		(888,101	)		(624,675	)
Cash flows from financing activities
Principal payments on bank note payable		(1,098,874	)		(1,267,839	)
Payment for repurchase of membership units		(800,000	)		(500,000	)
Payment for member		(31,683	)		-
Distributions to members		(711,138	)		-
Net cash used in financing activities		(2,641,695	)		(1,767,839	)
Effect of exchange rate changes on cash		47,252			15,157
Net (decrease) in cash		(2,207,363	)		(1,964,984	)
Cash, beginning of year		6,240,967			8,205,951
Cash, end of year	$	4,033,604		$	6,240,967
Supplemental disclosures of cash flow information, cash paid during the year:
Income taxes, net	$	15,000		$	-
Interest	$	122,588		$	109,111
Non-cash financing activities:
Issuance of other notes payable in connection with repurchase of membership units	$	-		$	4,700,000
Issuance of other notes payable in connection with purchase of equity method investment	$	1,775,375		$	-

See accompanying notes to consolidated financial statements.

F-17

PSYOP MEDIA COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations

Psyop Media Company, LLC and its wholly-owned subsidiaries, (collectively, “the Company”) is a media company that creates innovative and award-winning content for some of the world’s most well-known brands. The Company creates content for commercials, television series, digital and social media, experiential and influencer platforms and virtual reality (VR) and augmented reality (AR) experiences. The Company operates as a single operating segment from its offices in New York, NY and Los Angeles, CA.

2. Summary of significant accounting policies

Principles of Consolidation

The accompanying consolidated financial statements as of and for the years ended December 31, 2018 and 2017 include the accounts of the Psyop Media Company, LLC and its wholly-owned subsidiaries. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Equity Method Investments

The equity method is used to account for investment in entities in which the Company has an ownership interest of less than 50% and has significant influence, or joint control by contractual arrangement over the operating and financial policies of the affiliate. The Company currently has one equity investment and it is reflected in investment in equity method investee.

Revenue Recognition

The Company recognizes revenues using the percentage-of-completion method of accounting in accordance with GAAP which provides for the recognition of revenue when (1) persuasive evidence of a final agreement exists, (2) delivery has occurred or services have been rendered, (3) the selling price is fixed or determinable, and (4) collectability is reasonably assured. Accordingly, earnings are recognized on a contract-by-contract basis in the ratio that actual costs incurred bear to total estimated costs, as determined by management (the cost-to-cost method). Using the cost-to-cost method, revenues are recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs, multiplied by the total estimated contract revenue, less accumulated revenue recognized in prior periods. Adjustments to cost estimates are made periodically, based upon the specific circumstances affecting each contract in progress. Losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined.

The aggregate of costs incurred and earnings recognized on uncompleted contracts in excess of related billings is shown as a current asset, and the aggregate of billings on uncompleted contracts in excess of related costs incurred and earnings recognized is shown as a current liability.

Cost Recognition

Contract costs include all labor, subcontractors and other direct costs related to contract performance such as equipment rental, supplies and other production costs. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

F-18

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under GAAP approximate the carry amounts presented in the consolidated balance sheets.

Cash

The Company considers all investment instruments with original maturities of three months or less to be cash equivalents. The Company has a credit risk as at various times during the years, balances of cash at financial institutions exceeded the federally insured limit. The Company has not experienced any losses in such accounts, and the Company had no holdings in cash equivalents during the years ended December 31, 2018 and 2017.

Accounts Receivable

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, management evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. Accounts are written off once management has determined the balances will not be collected. Specific allowances for doubtful accounts in the amounts of $0 and $26,113 were recorded for customers’ balances at December 31, 2018 and 2017, respectively.

Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation and amortization. Costs of additions and substantial improvements to property and equipment are capitalized, while maintenance and repairs are charged to operations as incurred. Asset and related accumulated depreciation and amortization amounts are relieved from the accounts for retirements or dispositions.

Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets ranging from three to five years, while leasehold improvements are amortized, using the straight line method, over the shorter of either their economic useful lives or the term of the respective leases.

Impairment of Long-Lived Assets

In accordance with GAAP, the Company periodically assesses the recoverability of the carrying amounts of long-lived assets whenever events or changes in circumstances occur that indicate the carrying value may not be recoverable. An impairment loss is recognized when expected undiscounted future cash flows are less than the carrying amount of the asset. The impairment loss is the difference by which the carrying amount of the asset exceeds its fair value. At December 31, 2018 and 2017, there was no impairment loss on the Company’s long-lived assets.

Income taxes

The Company is a limited liability company and treated as a partnership for income tax purposes and is not subject to federal or state taxes. As such, income or loss of the Company, in general, is allocated to the members for inclusion in their personal income tax return. The Company conducts business in New York City and is subject to New York City Unincorporated Business tax.

The Company complies with GAAP, which requires an asset and liability approach to financial reporting of income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.

F-19

In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce members’ equity. The Company is subject to potential examination by jurisdiction authorities in the areas of income taxes for all periods subsequent to 2015. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Foreign Currency Translation

In accordance with GAAP, the Company complies with accounting for foreign affiliates and subsidiaries whose functional currency is the local currency. Assets and liabilities are translated using the published exchange rate in effect at the consolidated balance sheet date. Results of operations are translated using an approximated weighted average exchange rate for the year. Resulting translation adjustments are recorded as a component of accumulated other comprehensive loss.

Recently issued but not yet effective accounting pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The update applies to contracts with customers to transfer goods or services and contracts to transfer nonfinancial assets unless those contracts are within the scope of other standards (for example, lease transactions). The update supersedes the revenue recognition requirements in FASB ASC 605, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance is that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. This Standard is effective for annual periods beginning after December 15, 2018. The Company is continuing its evaluation of the expected impact of ASU 2014-09 but does not expect it to have a material impact on the Company’s consolidated financial statements. The Company will adopt ASU 2014-09 using the modified retrospective method (i.e. applied prospectively effective January 1, 2019 without revising prior periods). The Company expects, at a minimum, the adoption will require expanded disclosures that will enable users to better understand the nature, amount, timing and uncertainty, if any, of revenues and cash flows arising from contracts with customers.

In February 2016, the FASB issued ASU 2016-02, Leases. The update requires that, at lease inception, a lessee recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. The ASU also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statement of operations, while for operating leases, such amounts should be recognized as a combined expense in the statement of operations. In addition, ASU 2016-02 requires expanded disclosures about the nature and terms of lease agreements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. The Company is currently evaluating the impact of the future adoption of ASU 2016-02 on the Company’s consolidated financial statements.

F-20

Reclassifications

Certain 2017 amounts have been reclassified to conform to the 2018 presentation.

3. Costs, estimated earnings and billings on uncompleted contracts

At December 31, 2018 and 2017, costs, estimated earnings and billings on uncompleted contracts consisted of the following:

	2018			2017
Costs incurred to date on uncompleted contracts	$	6,531,664		$	6,641,810
Estimated earnings		3,254,430			3,385,789
		9,786,094			10,027,599
Billings to date		(10,938,435	)		(10,919,545	)
	$	(1,152,341	)	$	(891,946	)

The above amounts are included in the accompanying consolidated balance sheets under the following captions:

	2018			2017
Costs and estimated earnings in excess of billings on uncompleted contracts	$	572,429		$	1,068,418
Billings in excess of costs and estimated earnings on uncompleted contracts		(1,724,770	)		(1,960,364	)
	$	(1,152,341	)	$	(891,946	)

4. Property and equipment

Property and equipment consists of the following at December 31:

	2018			2017
Audio visual equipment	$	75,514		$	69,006
Computer equipment		3,739,107			3,704,985
Computer software		88,460			104,792
Furniture and fixtures		484,920			478,995
Leasehold improvements		4,572,456			4,489,477
		8,960,457			8,847,255
Less: accumulated depreciation and amortization		(5,429,816	)		(4,203,852	)
	$	3,530,641		$	4,643,403

Depreciation and amortization expense was $1,281,913 and $1,706,389 for the years ended December 31, 2018 and 2017, respectively.

5. Bank debt

On April 23, 2015, the Company amended and restated its Loan Agreement (“Credit Facility”). The Credit Facility consisted of three Term Loans with an original principal aggregate amount of $5,250,000, a $1,000,000 Line of Credit and a $1,500,000 Letter of Credit Facility for the issuance of Standby Letters of Credit. During 2016, the Letter of Credit Facility was increased to $2,000,000. During 2018, the Line of Credit was increased to $3,000,000.

F-21

Term Loan A in the amount of $1,250,000 matured in March 2017 and bore interest at 5.75% per annum and was payable in 60 consecutive equal monthly installments of principal and interest in the amount of $24,024.

Term Loan B in the amount of $1,000,000 matured March 2018, bore interest at 5.75% per annum and was payable in 60 consecutive equal monthly installments of principal and interest in the amount of $18,836. At December 31, 2018 and 2017, the balance outstanding under Term Loan B is $0 and $74,532, respectively.

Term Loan C in the amount of $3,000,000 matures April 2019 and was payable in 12 consecutive equal monthly installments of interest only of approximately $11,000 per month from May 1, 2015 through April 1, 2016 and bore interest during such period at 4.25% per annum. Beginning May 1, 2016, Term Loan C is payable in 36 consecutive equal monthly installments of principal and interest in the amount of $88,838 and bears interest at the prime rate in effect as of May 1, 2016 which was 3.5% plus 1% per annum. Therefore, the interest rate at December 31, 2018 and 2017 was 4.5%. At December 31, 2018 and 2017, the balance outstanding under Term Loan C is $352,302 and $1,376,643, respectively.

The Line of Credit matures annually on June 30 of each year and bears interest at a rate per annum equal to the greater of (i) the Prime Rate plus one percent (1.0%) or (ii) four and one-half percent (4.5%). On May 31, 2018, the Line of Credit was increased from $1,000,000 to $3,000,000. At December 31, 2018, the Company had $3,000,000 available under the Line of Credit with no amounts outstanding.

At December 31, 2018 and 2017, the Company, in connection with two of its production facilities has issued its landlords irrevocable, unconditional, and non-transferable letters of credit for an aggregate amount of $1,104,500 as a security deposit under its $2,000,000 Letter of Credit Facility.

The Credit Facility is collateralized by all the assets of the Company and its’ Operating Subsidiaries who are Guarantors (the “Guarantors”). The Company and the Guarantors are subject to certain financial covenants that must be maintained under the Credit Facility. As of December 31, 2018, the Company was in violation of its financial covenants. The Company subsequently received a waiver from its Bank for such violation. As of December 31, 2017, the Company was in compliance with all of its financial covenants.

Future principal payments due on Term Loan C for years ending December 31 are as follows:

2019 $ 352,152

6. Other notes payable

Redemption of membership units

In April 2017, the Company purchased 85,000 Class B-2 units from a unit holder for $1,200,000. The $1,200,000 will be paid in four equal annual installments of $300,000 beginning March 15, 2018 and ending of March 15, 2021.

In May 2017, the Company purchased 225,000 Class B-1 units from a unit holder for $3,500,000. The $3,500,000 will be paid as follows, $500,000 in May 2017, $500,000 in March 2018, $750,000 in March 2019, $750,000 in March 2020 and $1,000,000 in March 2021. The note bears interest at a rate of 3% per annum.

Equity method investment

On April 10, 2018, the Company acquired a 40% interest in Broken Bone Club Limited, a private limited company incorporated in England and Wales (the “investee”) for $1,775,375. The amount paid at closing was $355,075 and the remaining $1,420,300 will be paid in 48 equal monthly installments of approximately $29,000, bearing interest at 3% per annum, beginning May 10, 2018.

F-22

The following table summarizes the financial position and results of operations for Broken Bone Club as of December 31, 2018.

Current assets	$	1,695,526
Non-current assets		163,671
Current liabilities		397,710
Non-current liabilities		34,970
Revenue		3,717,774
Gross profit		1,552,344
Net income		335,998

The difference between the Company’s carrying value for this equity investment of approximately $1,940,000 and our 40% interest in the net assets of $570,607 is being treated by the Company as equity method goodwill pending the final determination of the valuation of Broken Bone Club.

Future principal payments due on Other Note Payables for years ending December 31 are as follows:

2019	$	1,368,353
2020		1,368,353
2021		1,618,353
2022		106,119
	$	4,461,178

7. Accounts payable and other current liabilities

Accounts payable and other current liabilities consist of the following at December 31:

	2018		2017
Accounts payable	$	2,345,993	$	1,483,021
Accrued salaries and related expenses		1,729,252		2,711,049
Income tax payable		-		7,269
Accrued commissions		536,901		635,855
Subcontractors payable		575,091		700,624
Other accrued expenses		799,157		324,335
	$	5,986,394	$	5,862,153

F-23

8. Income taxes

The components of the Company’s net deferred tax asset at December 31 are as follows:

	2018			2017
Depreciation	$	45,345		$	35,246
Software maintenance contracts		(6,774	)		6,243
Straight-lining of rent expense		28,390			23,149
Paid time off accrual		5,268			5,794
Organizational costs		2,294			2,511
Section 754 Adjustment		83,032
Bad debt reserve		-			522
Net deferred tax asset	$	157,555		$	73,465

The components of income tax expense (benefit) for the years ended December 31 are as follows:

	2018			2017
Current
State and local	$	(31,997	)	$	42,083
Deferred
State and local		(84,091	)		(25,465	)
	$	(116,088	)	$	16,618

As the Company is a limited liability company, it is not subject to federal or state taxes. The Company conducts business in New York City and is subject to the New York City UBT, which has a tax rate of 4%, which is about half of the New York City corporate tax rate.

9. Retirement plan

The Company has a defined contribution retirement plan (the “Plan”) under the provisions of Section 401(k) of the Internal Revenue Code (“IRC”) that covers all eligible employees as defined in the Plan. Participants may elect to contribute up to 100% of pre-tax annual compensation, as defined by the Plan, up to a maximum prescribed by the IRC. The Company may make a discretionary matching contribution equal to or a percent of employee contributions. The Company, at its discretion, may make additional contributions subject to certain limitations.

On January 1, 2015, the Company incorporated the Safe Harbor 401(k) provisions to the Plan. As a result, the Company matched 100% of the first 3% and 50% of the next 2% of participant contributions during 2018 and 2017. For the years ended December 31, 2018 and 2017, the Company made contributions of $355,599 and $353,646, respectively.

10. Members Equity

During 2013, the Company issued a total of 552,000 Class A-2 units to a new member (the “Member”) in exchange for $8,000,000. The Class A-2 Units initially had rights as Class A-2 “Non-Participating Units” and, at the election of the Member; the Member may convert all of the “Non-Participating” Class A-2 units to Class A-2 “Participating Units” until March 31, 2016. On August 1, 2014, the member converted its 552,000 “Non-Participating” Class A-2 units to 190,476 Class A-2 Participating Units.

F-24

During 2017, the Company repurchased 85,000 Class B-2 units from a unit holder for $1,200,000 and repurchased 225,000 Class B-1 units from a different unit holder for $3,500,000.

During 2017, the Company issued 37,370 Class C units to certain employees and recognized equity based compensation expense of approximately $85,000 representing 100% of the fair value of the Class C units issued as the vesting period and the dollar value of the unvested amount as of December 31, 2017 was approximately $10,000 and considered immaterial. The fair value of the Class C units was determined using the Black Scholes Option Allocation Model and reflects the contractual terms of the Class C units with a time horizon of 2.5 years for a transaction to occur, calculated using the risk free rate of return of 1.94%, volatility of 40.7% and a 27% discount for lack of marketability in arriving at the $85,000 value of the Class C units. During 2018, the Company issued 25,760 Class C units to its Chief Executive Officer. Such units vest upon the consummation of an initial public offering. The fair value of the Class C units was determined using the Black Scholes Option Allocation Model and reflects the contractual terms of the Class C units with a time horizon of 2 years for a transaction to occur, calculated using the risk free rate of return of 2.48%, volatility of 40% and a 27.5% discount for lack of marketability. The resulting fair value was less than $10,000 and deemed immaterial.

As a result of the transactions above as of December 31, 2018, the Company has Member Units outstanding of 923,606, of which (i) 80,000 were denominated as “Class A-1 Units,” (ii) 190,476 were denominated as “Class A-2 Units,” (iii) 565,996 were denominated as “Class B-3 Units” (iv) 24,004 were denominated as “Class B-4 Units.” and (v) 63,130 were denominated as “Class C Units.” In addition, the Company has 124,647 Class C Units reserved for future issuance.

In the event of a transaction not in the ordinary course of business (an “Extraordinary Event”), which results in the Company’s receipt of cash or other consideration, including, without limitation, (i) the dissolution of the Company; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets or the sale of a division of the Company; or (iii) the consummation of a merger or consolidation of the Company with any other business entity where a change in control occurs, such consideration shall be distributed to the Unit Holders in the following order of priority:

(a) First, eighty four percent (84%) to the Class A-1 Unit Holders in proportion to their respective Class A-1 Units and sixteen percent (16%) to the Class A-2 Unit Holders in proportion to their respective Class A-2 Units, until the Class A-1 Unit Holders have collectively received Twelve Million Eight Hundred Seventy Five Thousand Dollars ($12,875,000).

(b) Second, eighty four percent (84%) to the Class A-1, Class B-3, Class B-4 and Class C Unit Holders in proportion to their respective Residual Interests with each respective Class C Unit Holder included at its respective Class C Unit Distribution Amount and sixteen percent (16%) to the Class A-2 Unit Holders until the Unrecovered Contribution Accounts of the Class A-2 Unit Holders are reduced to zero.

(c) Third, eighty four percent (84%) to the Class A-1, Class B-3, Class B-4 and Class C Unit Holders in the ratio of their respective Residual Interests with each respective Class C Unit Holder included at its respective Class C Unit Distribution Amount and sixteen percent (16%) to the Class A-2 and Class C Unit Holders in the ratio of their respective Residual Interests with each respective Class C Unit Holder included at its respective Class C Unit Distribution Amount.

11. Other long term liabilities

Other long term liabilities consist of the following at December 31:

	2018		2017
Deferred rent liability	$	1,419,507	$	1,157,425
Security deposit liabilities		334,067		283,813
	$	1,753,574	$	1,441,238

F-25

12. Commitments and contingencies

Facilities

The Company leases production and corporate headquarters facilities pursuant to various non-cancellable operating leases expiring through March 31, 2025. The leases provide for the Company to pay various executory costs such as real estate taxes, insurance and repairs. In connection with two of its production facilities, the Company has issued its landlords irrevocable, unconditional, and non-transferable letters of credit for an aggregate amount of $1,104,500 as a security deposit.

The Company sublets three of its facilities to various lessees expiring through January 31, 2021. The leases provide for the lessees to pay various executory costs such as real estate taxes, insurance and repairs. The Company has received $334,067 in security deposits from lessees which are recorded as Other long term liabilities.

Future minimum annual rental payments are required as follows:

	Lease		Sublease
2019	$	3,307,731	$	(1,016,994	)
2020		3,302,356		(759,380	)
2021		3,218,821		(12,935	)
2022		3,286,478		-
2023		2,171,845		-
Thereafter		2,856,384		-
	$	18,143,615	$	(1,789,309	)

Rent expense amounted to $2,724,186 and $3,105,831 for the years ended December 31, 2018 and 2017, respectively net of sublet income of $836,600 and $1,075,417 in 2018 and 2017, respectively.

Other

The Company has various representation agreements with third parties that provide business referrals to the Company for commissions. Accordingly, the Company is obligated to pay such commissions on certain contracts that are entered into, via the third parties’ business referral efforts. Commission expense amounted to $1,096,993 and $1,439,604 for the years ended December 31, 2018 and 2017, respectively

On December 7, 2018, Hunt Ramsbottom entered into an employment agreement with Psyop Productions, LLC and Psyop Media Company, LLC to serve as the President and Chief Executive Officer. If the Company successfully completes an initial public offering of its securities (the “offering”), whereby a minimum of 20% of the Company’s outstanding common stock is sold at an enterprise valuation of greater than or equal to $30,000,000, Mr. Ramsbottom will receive an additional cash bonus equal to $350,000, payable within 15 calendar days following the consummation of such offering.

In connection with entering into this employment agreement, Mr. Ramsbottom is entitled to the grant of an incentive award of Class C units in Psyop Media, LLC equal to 3% of the fully diluted outstanding units of Psyop Media, LLC as of the date of grant (the “Class C Unit Award”). The Class C Unit Award will vest in full upon the consummation of the offering, subject to Mr. Ramsbottom’s continued service through this offering. Further, under this employment agreement and following the completion of this offering, Mr. Ramsbottom will be issued an option (the “IPO Option”) to purchase a number of shares of our common stock covering 4% of our fully diluted capitalization (but excluding any warrants and/or stock options that have an exercise or strike price greater than or

F-26

equal to the public offering price per share of common stock) as of the closing of this offering. This IPO Option will vest and become exercisable based on the attainment of certain price-per-share goals, subject to Mr. Ramsbottom’s continued employment through the applicable vesting date.

The Company is, from time to time, involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

13. Concentrations

The Company had two (2) customers that accounted for 26% of contract revenues during the year ended December 31, 2018. Three (3) customers accounted for 52% of gross accounts receivable as of December 31, 2018.

The Company had two (2) customers that accounted for 29% of contract revenues during the year ended December 31, 2017. Four (4) customers accounted for 64% of gross accounts receivable as of December 31, 2017.

14. Related party transactions

Psyop, Inc. is a related party to the Company through common ownership. At December 31, 2018 and December 31, 2017, the Company has a receivable from Psyop, Inc. of $809,030 and $777,347, respectively. During 2018, the Company has paid $31,191 to tax authorities for prior periods on behalf of Psyop, Inc. increasing the receivable. There were no related party transactions between Psyop, Inc. and the Company during the year ended December 31, 2017.

The Company entered into a Production and Representation Agreement with Golden Wolf, Ltd a wholly owned subsidiary of Broken Bone Club Limited, which is 40% owned by the Company. Under this agreement, the Company is Golden Wolf’s exclusive sales representative for all of North America. Accordingly, the Company negotiates on behalf of Golden Wolf to secure projects with potential clients whereby Golden Wolf will lead and direct its own work. Golden Wolf bids each project to cover its costs as well as a markup to manage its business and provides such bid to the Company. The Company adds to Golden Wolf’s budget a 17.5% markup for its project management, lead generation, brand awareness, market positioning and client retention services and executes the contract with the client. The Company bills and collects the monies due under the contract and pays Golden Wolf for its portion of the contract after receiving collection from the customer. During 2018, the Company recognized revenue under such contracts of approximately $2,391,000 and Golden Wolf invoiced the Company approximately $1,880,000 for their portion of the contracts.

F-27

2,500,000 Units

PCI Media, Inc.

Roth Capital Partners

Through and including                      ,        (the 25th day after the date of this prospectus), all dealers effecting transactions in our securities, whether or not participating in our initial public offering, may be required to deliver a prospectus. This delivery requirement is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses to be paid by us, other than underwriting discounts and commissions, upon completion of this offering. All amounts shown are estimates except for the SEC registration fee and the FINRA filing fee.

SEC registration fee	$	6,958
FINRA filing fee	$	9,112
Exchange listing fee	$	5,000
Printing and engraving expenses	$	300,000
Legal fees and expenses	$	920,000
Accounting fees and expenses	$	400,000
Transfer agent and registrar fees	$	10,000
Miscellaneous expenses	$	148,930
Total	$	1,800,000

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law authorizes the board of directors of a corporation to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.

We expect to adopt an amended and restated certificate of incorporation, which will become effective immediately prior to the completion of this offering, and which will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:

● any breach of their duty of loyalty to our company or our stockholders;

● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

● unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

● any transaction from which they derived an improper personal benefit.

Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.

In addition, our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective immediately prior to the completion of this offering, will provide that we will indemnify and hold harmless, to the fullest extent permitted by the Delaware General Corporation Law, any director or officer who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether

II-1

civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the corporation or, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees and other amounts) reasonably incurred. Our amended and restated bylaws will also provide that we must pay the expenses (including attorneys’ fees) incurred by a director or officer in defending any proceeding in advance of its final disposition, provided that such payment of expenses in advance of the final disposition of the proceeding will be made only upon receipt of an undertaking by such director or officer to repay all amounts advanced if it is ultimately determined that the director or officer is not entitled to be indemnified.

Further, we have entered into or will enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in any such action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

The limitation of liability and indemnification provisions that are expected to be included in our amended and restated certificate of incorporation, amended and restated bylaws and in indemnification agreements that we have entered into or will enter into with our directors and executive officers may discourage stockholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.

Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our board of directors.

The underwriting agreement to be filed as Exhibit 1.1 to this registration statement will provide for indemnification by the underwriters of us and our officers and directors for certain liabilities arising under the Securities Act or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On October 1, 2018, the registrant agreed to issue a single share of common stock, par value $0.001 per share, which will be redeemed upon the closing of this offering, to an officer of the registrant in exchange for $0.001. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving any public offering.

II-2

In June 2019, we entered into a Contribution Agreement with each of the members of Psyop Media Company, LLC (other than Psyop, Inc. and All Asia Digital Entertainment Inc.) and Merger Agreements with Psyop, Inc. and All Asia Digital Entertainment Inc. Pursuant to the Merger Agreements, prior to the closing of this offering, each of Psyop, Inc. and All Asia Digital Entertainment Inc. will be merged with and into PCI Media, Inc., and the issued and outstanding capital stock of each of Psyop, Inc. and All Asia Digital Entertainment Inc. will be converted in the right to receive shares of common stock of PCI Media, Inc. Pursuant to the Contribution Agreement, prior to the closing of this offering, the members of Psyop Media Company, LLC (other than Psyop, Inc. and All Asia Digital Entertainment Inc.) will contribute their membership interests in Psyop Media Company, LLC to PCI Media, Inc. in exchange for shares of common stock of PCI Media, Inc., and Psyop Media Company, LLC will become a wholly owned subsidiary of PCI Media, Inc. We issued such shares of common stock of PCI Media, Inc. in reliance upon Section 4(a)(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits. See the Exhibit Index attached to this registration statement, which is incorporated by reference herein.

(b) Financial Statement Schedules. All financial statement schedules are omitted because the information called for is not required or is shown either in the consolidated financial statements or in the notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

II-3

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in this registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(6) To provide the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(7) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(8) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

EXHIBIT INDEX

Exhibit Number	Exhibit Description
1.1**	Form of Underwriting Agreement.
3.1**	Form of Amended and Restated Certificate of Incorporation, to be in effect prior to the consummation of this offering.
3.2**	Form of Amended and Restated Bylaws, to be in effect prior to the consummation of this offering.
4.1**	Form of Common Stock Certificate.
4.2**	Form of Warrant to be issued to Roth Capital Partners, LLC in connection with this offering.
4.3**	Form of Unit Certificate.
4.4**	Form of Warrant Certificate (included in Exhibit 4.5).
4.5**	Form of Warrant Agreement.
5.1	Opinion of Latham & Watkins LLP.
10.1**+	2019 Incentive Award Plan.
10.2**	Form of Contribution Agreement.
10.3**	Form of Merger Agreement with Psyop, Inc.
10.4**	Form of Merger Agreement with All Asia Digital Entertainment Inc.
10.5**	Form of Stockholders’ Agreement.
10.6**+	Form of Indemnification Agreement between PCI Media, Inc. and each of its directors and executive officers.
10.7**+	Employment Agreement, by and between Psyop Media Company, LLC, Psyop Productions, LLC and D. Hunt Ramsbottom, dated December  7, 2018.
10.8**+	Executive Employment Agreement, by and between Psyop Productions, LLC, Psyop Media Company, LLC and Thomas Boyle, dated January  1, 2012.
10.9**+	2019 Employee Stock Purchase Plan.
10.10**+	Director Compensation Program.
10.11**	Amended and Restated Loan Agreement, by and between Psyop Media Company, LLC and Community National Bank, dated April 23, 2015.
10.12**	First Amendment to Loan Documents, by and between Psyop Media Company, LLC and Bridgehampton National Bank, dated December  15, 2015.
10.13**	Waiver and Second Amendment to Loan Documents, by and between Psyop Media Company, LLC and Bridgehampton National Bank, dated December 10, 2016.
10.14**	Waiver and Third Amendment to Loan Documents, by and between Psyop Media Company, LLC and BNB Bank, dated April 10, 2018.
10.15**	Waiver and Fourth Amendment to Loan Documents, by and between Psyop Media Company, LLC and BNB Bank, dated May 31, 2018.
10.16**	Standard Form of Office Lease, by and between The A.J.D. Building LLC and Psyop Media Company, LLC, dated October 1, 2014.
10.17**	Lease, by and between Santa Clara, LLC and Psyop, Inc., dated November 1, 2007.
10.18**	First Amendment to Lease, by and between Santa Clara, LLC and Psyop, Inc., dated January 23, 2008.

II-5

Exhibit Number	Exhibit Description
10.19**	Second Amendment to Lease, by and between Santa Clara, LLC and Psyop Media Company, LLC, dated April 13, 2017.
10.20**	Share Purchase Agreement, by and between Mark Stewart Graham and Psyop Media Company UK Limited, dated April 10, 2018.
10.21**+	Form of Employment Agreement, to be in effect at the consummation of this offering.
10.22**+	Form of Service Agreement, to be in effect at the consummation of this offering.
10.23	Covenant Breach Letter, by and between Psyop Media LLC and Bridgehampton National Bank, dated April 4, 2019.
10.24+	Form of Director RSU Award Agreement.
10.25+	Form of Employee RSU Award Agreement.
10.26+	Form of Restricted Stock Agreement.
10.27+	Form of Option Agreement.
21.1**	List of Subsidiaries of the Registrant.
23.1	Consent of Citrin Cooperman & Company, LLP, Independent Registered Public Accounting Firm.
23.2	Consent of Latham & Watkins LLP (included in Exhibit 5.1).
24.1**	Power of Attorney.
99.1	Sandy Grushow Consent to be Named as a Director.
99.2	David Sanderson Consent to be Named as a Director.
99.3	Marc Stapley Consent to be Named as a Director.

** Previously filed

+ Management contract or compensatory plan or arrangement.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Amendment No. 2 to registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Venice, California, on the 6th day of June, 2019.

PCI Media, Inc.
By:	/s/ D. Hunt Ramsbottom Jr.
	D. Hunt Ramsbottom Jr. Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 2 to Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ D. Hunt Ramsbottom Jr. D. Hunt Ramsbottom Jr.	Chief Executive Officer and Director (Principal Executive Officer)	June 6, 2019
/s/ Thomas Boyle Thomas Boyle	Chief Financial Officer (Principal Financial and Accounting Officer)	June 6, 2019

II-7

EX-5.1

Exhibit 5.1

	355 South Grand Avenue, Suite 100
	Los Angeles, California 90071-1560
	Tel: +1.213.485.1234 Fax: +1.213.891.8763
	www.lw.com
	FIRM / AFFILIATE OFFICES
	Beijing	Moscow
	Boston	Munich
	Brussels	New York
	Century City	Orange County
	Chicago	Paris
	Dubai	Riyadh
June 6, 2019	Düsseldorf	San Diego
	Frankfurt	San Francisco
	Hamburg	Seoul
	Hong Kong	Shanghai
	Houston	Silicon Valley
	London	Singapore
	Los Angeles	Tokyo
	Madrid	Washington, D.C.
	Milan

PCI Media, Inc.

523 Victoria Avenue

Venice, California 90291

Re: Form S-1 Registration Statement File No. 333-229248

Initial Public Offering of up to 2,875,000 Units of PCI Media, Inc.

Ladies and Gentlemen:

We have acted as special counsel to PCI Media, Inc., a Delaware corporation (the “Company”), in connection with the proposed issuance of (i) up to 2,875,000 units (including units subject to the underwriters’ option to purchase additional shares) (the “Units”), with each Unit consisting of one share of common stock, par value $0.001 per share (each, a “Share”), and one warrant to purchase a Share (each, a “Warrant”) and (ii) a warrant to purchase up to 230,000 Units (the “Representative Warrant”) to be issued to Roth Capital Partners, LLC (“Roth”), in each case, pursuant to an underwriting agreement to be entered into by and between the Company and Roth, as representative of the several underwriters. The Units and Representative Warrant are included in a registration statement on Form S-1 under the Securities Act of 1933, as amended (the “Act”), filed with the Securities and Exchange Commission (the “Commission”) on January 14, 2019 (Registration No. 333-229248) (as amended, the “Registration Statement”). The terms “Units”, “Shares,” “Warrants” and “Representative Warrant” shall include any additional such securities registered by the Company pursuant to Rule 462(b) under the Act in connection with the offering contemplated by the Registration Statement. This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or related prospectus (the “Prospectus”), other than as expressly stated herein with respect to the issuance of the Units, the Shares, the Warrants and the Representative Warrant.

As such counsel, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of this letter. With your consent, we have relied upon certificates and other assurances of officers of the Company and others as to factual matters without having independently verified such factual matters. We are opining herein as to the internal laws of the State of New York and the General Corporation Law of the State of Delaware (the “DGCL”), and we express no opinion with respect to any other laws.

June 6, 2019

Page 2

Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof:

1. When the Units shall have been duly registered on the books of the transfer agent and registrar therefor in the name or on behalf of the purchasers and have been issued by the Company against payment therefor in the circumstances contemplated by the form of underwriting agreement most recently filed as an exhibit to the Registration Statement (the “Underwriting Agreement”), the issue and sale of the Shares will have been duly authorized by all necessary corporate action of the Company, and the Shares will be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL.

2. When the Units shall have been duly registered on the books of the transfer agent and registrar therefor in the name or on behalf of the purchasers and have been issued by the Company against payment therefor in the circumstances contemplated by the Underwriting Agreement, the issue and sale of the Warrants will have been duly authorized by all necessary corporate action of the Company, and the Warrants will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

3. When the Units shall have been duly registered on the books of the transfer agent and registrar therefor in the name or on behalf of the purchasers and have been issued by the Company against payment therefor in the circumstances contemplated by the Underwriting Agreement, assuming issuance of the Shares initially issuable upon exercise of the Warrants (the “Warrant Shares”) on the date hereof in accordance with the terms of the Underwriting Agreement and the Warrants, the Warrant Shares would be duly authorized by all necessary corporate action of the Company, and the Warrant Shares would be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL.

4. When the Representative Warrant has been issued by the Company to Roth in the circumstances contemplated by the Underwriting Agreement, the issue and sale of the Representative Warrant will have been duly authorized by all necessary corporate action of the Company, and the Representative Warrant will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

5. When the Representative Warrant has been issued by the Company to Roth in the circumstances contemplated by the Underwriting Agreement, assuming issuance of the Units initially issuable upon exercise of the Representative Warrant (the “Representative Units”) on the date hereof in accordance with the terms of the Underwriting Agreement and the Representative Warrant, the issue and sale of the Shares included in Representative Units would be duly authorized by all necessary corporate action of the Company, and such Shares will be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL.

June 6, 2019

Page 3

6. When the Representative Warrant has been issued by the Company to Roth in the circumstances contemplated by the Underwriting Agreement, assuming issuance of the Representative Units on the date hereof in accordance with the terms of the Underwriting Agreement and the Representative Warrant, the issue and sale of the Warrants included in Representative Units would be duly authorized by all necessary corporate action of the Company, and such Warrants will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

7. When the Representative Warrant has been issued by the Company to Roth in the circumstances contemplated by the Underwriting Agreement, assuming issuance of the Representative Units on the date hereof in accordance with the terms of the Underwriting Agreement and the Representative Warrant, and assuming the issuance of the Warrant Shares initially issuable upon exercise of the Warrants included in the Representative Units on the date hereof in accordance with the Underwriting Agreement and such Warrants, the issue and sale of such Warrant Shares would be duly authorized by all necessary corporate action of the Company, and such Warrant Shares would be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL.

Our opinions set forth in numbered paragraphs 2, 4 and 6 are subject to: (i) the effect of bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws relating to or affecting the rights and remedies of creditors; (ii) the effect of general principles of equity, whether considered in a proceeding in equity or at law (including the possible unavailability of specific performance or injunctive relief), concepts of materiality, reasonableness, good faith and fair dealing, and the discretion of the court before which a proceeding is brought; (iii) we express no opinion as to (a) any provision for liquidated damages, monetary penalties or other economic remedies to the extent such provisions are deemed to constitute a penalty, (b) consents to, or restrictions upon, governing law, jurisdiction, venue, arbitration, remedies, or judicial relief, (c) waivers of rights or defenses, (d) any provision requiring the payment of attorneys’ fees, where such payment is contrary to law or public policy, (e) advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing, evidentiary requirements, statutes of limitation, trial by jury or at law, or other procedural rights, (f) waivers of broadly or vaguely stated rights, (g) provisions for exclusivity, election or cumulation of rights or remedies, (h) provisions authorizing or validating conclusive or discretionary determinations, (i) proxies, powers and trusts, (j) provisions prohibiting, restricting, or requiring consent to assignment or transfer of any right or property, and (k) the severability, if invalid, of provisions to the foregoing effect.

With your consent, we have assumed (a) that the Warrants, the Representative Warrant and the Warrants underlying the Representative Units have been or will be duly authorized, executed and delivered by the parties thereto other than the Company, (b) that such securities constitute or will constitute legally valid and binding obligations of the parties thereto other than the Company, enforceable against each of them in accordance with their respective terms, and (c) that the status

June 6, 2019

Page 4

of such securities as legally valid and binding obligations of the parties will not be affected by any (i) breaches of, or defaults under, agreements or instruments, (ii) violations of statutes, rules, regulations or court or governmental orders, or (iii) failures to obtain required consents, approvals or authorizations from, or to make required registrations, declarations or filings with, governmental authorities.

This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” We further consent to the incorporation by reference of this letter and consent into any post-effective amendment to the Registration Statement filed pursuant to Rule 462(b) with respect to the Units, the Shares, the Warrants and the Representative Warrant. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ Latham & Watkins LLP

EX-10.23

Exhibit 10.23

April 4, 2019

Thomas Boyle, CFO

Psyop Media Company

45 Howard Street FL 5

New York, NY 10013

RE: Loans 2015040008, 2012020012

Dear Tom:

You have made us aware that the financial results for Fiscal Year ended 12/31/18 revealed that you are in violation of financial covenant requirements of your Loan Documents. Psyop Media Company, LLC and Subsidiaries on a combined basis have violated the following covenants:

● maintain a Minimum Debt Service Coverage Ratio (“DSCR”), as defined in your Loan Documents of at least 1.25x

● maintain a maximum Leverage Ratio (“MLR”), as defined in your Loan Documents of no more than 2.00x

The breach of this covenant is an Event of Default under your Loan Documents. Upon the existence of any Event of Default, Bridgehampton National Bank (“BNB”) may impose the Default Interest Rate until the Event of Default is cured or the entire debt is repaid. Although BNB has elected not to impose the Default Interest Rate of interest at this time, this action shall not be deemed a waiver of BNB’s rights to declare a future default, to impose the Default Interest Rate or to Demand and Accelerate the full amount of the remaining Obligation in the future, for this or any other Event of Default under the Loan Documents or any other obligation you may have to BNB. Nothing contained herein shall be deemed a waiver or limitation of BNB’s rights or remedies under the applicable Loan Documents executed by you or any of your Guarantors or under applicable law, including BNB’s right to take any action with respect to any collateral securing your liabilities as may be permitted.

This letter is without prejudice to, and fully and specifically reserves, any and all of the rights and remedies of BNB, under the Loan Documents, at law or otherwise. Any agreement, commitment or assurance or intention of BNB with respect to any aspect of the Loan Documents shall be effective only if in writing and duly executed by BNB.

BNB hereby agrees to waive the above cited violation(s), subject to the conditions that:

1. The waiver set forth in this letter is specifically limited to the violation(s) cited above and does not constitute an amendment of the Covenants for any other period or of any other provision of any Loan document;

2. BNB specifically reserves the right to enforce the Loan Documents with respect to any future violation of the Covenants cited above or any other covenant or any other provision of any Loan Document;

1

3. All other terms and conditions of the Loan documents remain in full force and effect; and

4. After giving effect to the waiver herein no Default or Event of Default presently exists.

If you have any questions, please contact me.

Sincerely,

/s/ JoAnn Bello

JoAnn Bello, SVP

Commercial Lending

2

EX-10.24

Exhibit 10.24

PCI MEDIA, INC.

2019 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT GRANT NOTICE

PCI Media, Inc., a Delaware corporation (the “Company”), has granted to the participant listed below (“Participant”) the Restricted Stock Units (the “RSUs”) described in this Restricted Stock Unit Grant Notice (this “Grant Notice”), subject to the terms and conditions of the PCI Media, Inc. 2019 Incentive Award Plan (as amended from time to time, the “Plan”) and the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

Participant:
Grant Date:
Number of RSUs:
Vesting Commencement Date:
Vesting Schedule:	[To be specified]

By accepting (whether in writing, electronically or otherwise) the RSUs, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

PCI MEDIA, INC.	PARTICIPANT
By:
Name:	[Participant Name]
Title:

Exhibit A

RESTRICTED STOCK UNIT AGREEMENT

Capitalized terms not specifically defined in this Restricted Stock Unit Agreement (this “Agreement”) have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

ARTICLE I.

GENERAL

1.1    Award of RSUs and Dividend Equivalents.

(a)    The Company has granted the RSUs to Participant effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”). Each RSU represents the right to receive one Share as set forth in this Agreement. Participant will have no right to the distribution of any Shares until the time (if ever) the RSUs have vested.

(b)    The Company hereby grants to Participant, with respect to each RSU, a Dividend Equivalent for ordinary cash dividends paid to substantially all holders of outstanding Shares with a record date after the Grant Date and prior to the date the applicable RSU is settled, forfeited or otherwise expires. Each Dividend Equivalent entitles Participant to receive the equivalent value of any such ordinary cash dividends paid on a single Share. The Company will establish a separate Dividend Equivalent bookkeeping account (a “Dividend Equivalent Account”) for each Dividend Equivalent and credit the Dividend Equivalent Account (without interest) on the applicable dividend payment date with the amount of any such cash paid. Any Dividend Equivalents granted in connection with the RSUs issued hereunder, and any amounts that may become distributable in respect thereof, shall be treated separately from such RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A.

1.2    Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

1.3    Unsecured Promise. The RSUs and Dividend Equivalents will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.

ARTICLE II.

VESTING; FORFEITURE AND SETTLEMENT

2.1    Vesting; Forfeiture. The RSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an RSU that would otherwise be vested will be accumulated and will vest only when a whole RSU has accumulated. In addition, the RSUs will vest in accordance with the Company’s Non-Employee Director Compensation Program. In the event of Participant’s Termination of Service for any reason, all unvested RSUs (after taking into consideration any accelerated vesting which may occur in connection with such Termination of Service) will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company. Dividend Equivalents (including any Dividend Equivalent Account balance) will vest or be forfeited, as applicable, upon the vesting or forfeiture of the RSU with respect to which the Dividend Equivalent (including the Dividend Equivalent Account) relates.

1

2.2    Settlement.

(a)    RSUs will be paid in Shares, and Dividend Equivalents (including any Dividend Equivalent Account balance) will be paid in cash or Shares at the Company’s option. The Shares subject to the RSUs and the corresponding Dividend Equivalents will be delivered on the thirtieth (30^th) day following the earliest to occur of: (i) the date of Participant’s “separation from service” within the meaning of Section 409A, (ii) a “change in control event” within the meaning of Section 409A with respect to the Company and (iii) the three-year anniversary of the Grant Date (each, a “Distribution Event”). Notwithstanding anything to the contrary contained herein, the exact payment date of any RSUs shall be determined by the Company in its sole discretion (and Participant shall not have a right to designate the time of payment). If and to the extent that any outstanding RSUs [and corresponding Dividend Equivalents] remain unvested as of a Distribution Event (after taking into consideration any accelerated vesting which may occur in connection with the occurrence of such Distribution Event), then such RSUs [and corresponding Dividend Equivalents] will (to the extent not forfeited in connection with such distribution) be distributed to Participant as Restricted Stock (or a right to receive the cash equivalent thereof), and the vesting schedule that applied to such RSUs [and corresponding Dividend Equivalents] immediately prior to such distribution will continue to apply to such Restricted Stock (or cash equivalent right).

(b)    Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation (in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)); provided the Company reasonably believes the delay will not result in the imposition of excise taxes under Section 409A.

(c)    If a Dividend Equivalent is paid in Shares, the number of Shares paid with respect to the Dividend Equivalent will equal the quotient, rounded down to the nearest whole Share, of the Dividend Equivalent Account balance divided by the Fair Market Value of a Share on the day immediately preceding the payment date.

ARTICLE III.

TAXATION AND TAX WITHHOLDING

3.1    Representation. Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this Award and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

3.2    Tax Withholding.

(a)    The Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Award (including the RSUs or Dividend Equivalents) in satisfaction of any applicable withholding tax obligations. The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a Fair Market Value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income.

(b)    Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs and the Dividend Equivalents, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the RSUs or Dividend Equivalents. Neither the Company nor any Subsidiary makes any representation

2

or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the Dividend Equivalents or the subsequent sale of Shares. The Company and its Subsidiaries do not commit and are under no obligation to structure the RSUs or Dividend Equivalents to reduce or eliminate Participant’s tax liability.

ARTICLE IV.

OTHER PROVISIONS

4.1    Adjustments. Participant acknowledges that the RSUs, the Shares subject to the RSUs and the Dividend Equivalents are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

4.2    Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (of, if Participant is then deceased, to the Designated Beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

4.3    Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

4.4    Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

4.5    Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

4.6    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement, the RSUs and the Dividend Equivalents will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

4.7    Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

4.8    Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

3

4.9    Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs and Dividend Equivalents, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the RSUs and Dividend Equivalents, as and when settled pursuant to the terms of this Agreement.

4.10    Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

4.11    Section 409A. Notwithstanding anything to the contrary in this Agreement, no amounts shall be paid to Participant under this Agreement during the six-month period following Participant’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code) to the extent that the Administrator determines that Participant is a “specified employee” (within the meaning of Section 409A) at the time of such separation from service and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code. If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes), the Company shall pay to Participant in a lump-sum all amounts that would have otherwise been payable to Participant during such six (6)-month period under this Agreement.

4.12    Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

* * * * *

4

EX-10.25

Exhibit 10.25

PCI MEDIA, INC.

2019 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT GRANT NOTICE

PCI Media, Inc., a Delaware corporation (the “Company”), has granted to the participant listed below (“Participant”) the Restricted Stock Units (the “RSUs”) described in this Restricted Stock Unit Grant Notice (this “Grant Notice”), subject to the terms and conditions of the PCI Media, Inc. 2019 Incentive Award Plan (as amended from time to time, the “Plan”) and the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

Participant:
Grant Date:
Number of RSUs:
Vesting Commencement Date:
Vesting Schedule:	[To be specified]

By accepting (whether in writing, electronically or otherwise) the RSUs, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

PCI MEDIA, INC.	PARTICIPANT
By:
Name:	[Participant Name]
Title:

Exhibit A

RESTRICTED STOCK UNIT AGREEMENT

Capitalized terms not specifically defined in this Restricted Stock Unit Agreement (this “Agreement”) have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

ARTICLE I.

GENERAL

1.1    Award of RSUs and Dividend Equivalents.

(a)    The Company has granted the RSUs to Participant effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”). Each RSU represents the right to receive one Share as set forth in this Agreement. Participant will have no right to the distribution of any Shares until the time (if ever) the RSUs have vested.

(b)    The Company hereby grants to Participant, with respect to each RSU, a Dividend Equivalent for ordinary cash dividends paid to substantially all holders of outstanding Shares with a record date after the Grant Date and prior to the date the applicable RSU is settled, forfeited or otherwise expires. Each Dividend Equivalent entitles Participant to receive the equivalent value of any such ordinary cash dividends paid on a single Share. The Company will establish a separate Dividend Equivalent bookkeeping account (a “Dividend Equivalent Account”) for each Dividend Equivalent and credit the Dividend Equivalent Account (without interest) on the applicable dividend payment date with the amount of any such cash paid. Any Dividend Equivalents granted in connection with the RSUs issued hereunder, and any amounts that may become distributable in respect thereof, shall be treated separately from such RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A.

1.2    Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

1.3    Unsecured Promise. The RSUs and Dividend Equivalents will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.

ARTICLE II.

VESTING; FORFEITURE AND SETTLEMENT

2.1    Vesting; Forfeiture. The RSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an RSU that would otherwise be vested will be accumulated and will vest only when a whole RSU has accumulated. In the event of Participant’s Termination of Service for any reason, all unvested RSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company. Dividend Equivalents (including any Dividend Equivalent Account balance) will vest or be forfeited, as applicable, upon the vesting or forfeiture of the RSU with respect to which the Dividend Equivalent (including the Dividend Equivalent Account) relates.

2.2    Settlement.

(a)    RSUs will be paid in Shares, and Dividend Equivalents (including any Dividend Equivalent Account balance) will be paid in cash or Shares at the Company’s option, in each case as soon as administratively practicable after the vesting of the applicable RSU, but in no event more than sixty (60) days after the RSU’s vesting date.

1

(b)    Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation (in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)); provided the Company reasonably believes the delay will not result in the imposition of excise taxes under Section 409A.

(c)    If a Dividend Equivalent is paid in Shares, the number of Shares paid with respect to the Dividend Equivalent will equal the quotient, rounded down to the nearest whole Share, of the Dividend Equivalent Account balance divided by the Fair Market Value of a Share on the day immediately preceding the payment date.

ARTICLE III.

TAXATION AND TAX WITHHOLDING

3.1    Representation. Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this Award and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

3.2    Tax Withholding.

(a)    The Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Award (including the RSUs or Dividend Equivalents) in satisfaction of any applicable withholding tax obligations. The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a Fair Market Value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income.

(b)    Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs and the Dividend Equivalents, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the RSUs or Dividend Equivalents. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the Dividend Equivalents or the subsequent sale of Shares. The Company and its Subsidiaries do not commit and are under no obligation to structure the RSUs or Dividend Equivalents to reduce or eliminate Participant’s tax liability.

ARTICLE IV.

OTHER PROVISIONS

4.1    Adjustments. Participant acknowledges that the RSUs, the Shares subject to the RSUs and the Dividend Equivalents are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

4.2    Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number. Any notice to be given under the

2

terms of this Agreement to Participant must be in writing and addressed to Participant (of, if Participant is then deceased, to the Designated Beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

4.3    Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

4.4    Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

4.5    Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

4.6    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement, the RSUs and the Dividend Equivalents will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

4.7    Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

4.8    Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

4.9    Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs and Dividend Equivalents, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the RSUs and Dividend Equivalents, as and when settled pursuant to the terms of this Agreement.

4.10    Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are

3

hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

4.11    Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

* * * * *

4

EX-10.26

Exhibit 10.26

PCI MEDIA, INC.

2019 INCENTIVE AWARD PLAN

RESTRICTED STOCK GRANT NOTICE

PCI Media, Inc., a Delaware corporation (the “Company”) has granted to the participant listed below (“Participant”) the shares of Restricted Stock (the “Restricted Shares”) described in this Restricted Stock Grant Notice (the “Grant Notice”), subject to the terms and conditions of the PCI Media, Inc. 2019 Incentive Award Plan (as amended from time to time, the “Plan”) and the Restricted Stock Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

Participant:
Grant Date:
Number of Restricted Shares:
Vesting Commencement Date:
Vesting Schedule:	[To be specified]

By accepting (whether in writing, electronically or otherwise) the Restricted Shares, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

PCI MEDIA, INC.	PARTICIPANT
By:
Name:	[Participant Name]
Title:

Exhibit A

RESTRICTED STOCK AGREEMENT

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

ARTICLE I.

GENERAL

1.1    Issuance of Restricted Shares. The Company will issue the Restricted Shares to Participant effective as of the Grant Date set forth in the Grant Notice and will cause (a) a stock certificate or certificates representing the Restricted Shares to be registered in Participant’s name or (b) the Restricted Shares to be held in book-entry form. If a stock certificate is issued, the certificate will be delivered to, and held in accordance with this Agreement by, the Company or its authorized representatives and will bear the restrictive legends required by this Agreement. If the Restricted Shares are held in book-entry form, then the book-entry will indicate that the Restricted Shares are subject to the restrictions of this Agreement.

1.2    Incorporation of Terms of Plan. The Restricted Shares are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

ARTICLE II.

VESTING, FORFEITURE AND ESCROW

2.1    Vesting. The Restricted Shares will become vested Shares (the “Vested Shares”) according to the vesting schedule in the Grant Notice except that any fraction of a Share that would otherwise become a Vested Share will be accumulated and will become a Vested Share only when a whole Vested Share has accumulated.

2.2    Forfeiture. In the event of Participant’s Termination of Service for any reason, Participant will immediately and automatically forfeit to the Company any Shares that are not Vested Shares (the “Unvested Shares”) at the time of Participant’s Termination of Service (after taking into consideration any accelerated vesting which may occur in connection with such Termination of Service), except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company. Upon forfeiture of Unvested Shares, the Company will become the legal and beneficial owner of the Unvested Shares and all related interests and Participant will have no further rights with respect to the Unvested Shares.

2.3    Escrow.

(a)    Unvested Shares will be held by the Company or its authorized representatives until (i) they are forfeited, (ii) they become Vested Shares or (iii) this Agreement is no longer in effect. By accepting this Award, Participant appoints the Company and its authorized representatives as Participant’s attorney(s)-in-fact to take all actions necessary to effect any transfer of forfeited Unvested Shares (and Retained Distributions (as defined below), if any, paid on such forfeited Unvested Shares) to the Company as may be required pursuant to the Plan or this Agreement and to execute such representations or other documents or assurances as the Company or such representatives deem necessary or advisable in connection with any such transfer. The Company, or its authorized representative, will not be liable for any good faith act or omission with respect to the holding in escrow or transfer of the Restricted Shares.

(b)    All cash dividends and other distributions made or declared with respect to Unvested Shares (“Retained Distributions”) will be held by the Company until the time (if ever) when the

1

Unvested Shares to which such Retained Distributions relate become Vested Shares. The Company will establish a separate Retained Distribution bookkeeping account (“Retained Distribution Account”) for each Unvested Share with respect to which Retained Distributions have been made or declared in cash and credit the Retained Distribution Account (without interest) on the date of payment with the amount of such cash made or declared with respect to the Unvested Share. Retained Distributions (including any Retained Distribution Account balance) will immediately and automatically be forfeited upon forfeiture of the Unvested Share with respect to which the Retained Distributions were paid or declared.

(c)    As soon as reasonably practicable following the date on which an Unvested Share becomes a Vested Share, the Company will (i) cause the certificate (or a new certificate without the legend required by this Agreement, if Participant so requests) representing the Share to be delivered to Participant or, if the Share is held in book-entry form, cause the notations indicating the Share is subject to the restrictions of this Agreement to be removed and (ii) pay to Participant the Retained Distributions relating to the Share.

2.4    Rights as Stockholder. Except as otherwise provided in this Agreement or the Plan, upon issuance of the Restricted Shares by the Company, Participant will have all other rights of a stockholder with respect to the Restricted Shares, including the right to vote such Restricted Shares and to receive dividends or other distributions paid or made with respect to the Restricted Shares.

ARTICLE III.

TAXATION AND TAX WITHHOLDING

3.1    Representation. Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of the Restricted Shares and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

3.2    Section 83(b) Election. If Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Shares as of the date of transfer of the Restricted Shares rather than as of the date(s) upon which Participant would otherwise be taxable under Section 83(a) of the Code, Participant hereby agrees to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

3.3    Tax Withholding.

(a)    The Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Award in satisfaction of any applicable withholding tax obligations. The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income.

(b)    Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Restricted Shares, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Restricted Shares. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the Restricted Shares or the subsequent sale of the Restricted Shares. The Company and the Subsidiaries do not commit and are under no obligation to structure this Award to reduce or eliminate Participant’s tax liability.

2

ARTICLE IV.

RESTRICTIVE LEGENDS AND TRANSFERABILITY

4.1    Legends. Any certificate representing a Restricted Share will bear the following legend until the Restricted Share becomes a Vested Share:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

4.2    Transferability. The Restricted Shares and any Retained Distributions are subject to the restrictions on transfer in the Plan. Any attempted transfer or disposition of Unvested Shares or related Retained Distributions prior to the time the Unvested Shares become Vested Shares will be null and void. The Company will not be required to (a) transfer on its books any Restricted Share that has been sold or otherwise transferred in violation of this Agreement or (b) treat as owner of such Restricted Share or accord the right to vote or pay dividends to any purchaser or other transferee to whom such Restricted Share has been so transferred. The Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, or make appropriate notations to the same effect in its records.

ARTICLE V.

OTHER PROVISIONS

5.1    Adjustments. Participant acknowledges that the Restricted Shares are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

5.2    Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Designated Beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

5.3    Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

5.4    Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

5.5    Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

3

5.6    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Restricted Shares will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

5.7    Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

5.8    Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

5.9    Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Award.

5.10    Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

5.11    Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

* * * * *

4

EX-10.27

Exhibit 10.27

PCI MEDIA, INC.

2019 INCENTIVE AWARD PLAN

STOCK OPTION GRANT NOTICE

PCI Media, Inc., a Delaware corporation (the “Company”) has granted to the participant listed below (“Participant”) the stock option (the “Option”) described in this Stock Option Grant Notice (the “Grant Notice”), subject to the terms and conditions of the PCI Media, Inc. 2019 Incentive Award Plan (as amended from time to time, the “Plan”) and the Stock Option Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

Participant:
Grant Date:
Exercise Price per Share:
Shares Subject to the Option:
Final Expiration Date:
Vesting Commencement Date:
Vesting Schedule:	[To be specified]
Type of Option

By accepting (whether in writing, electronically or otherwise) the Option, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

PCI MEDIA, INC.	PARTICIPANT
By:
Name:	[Participant Name]
Title:

Exhibit A

STOCK OPTION AGREEMENT

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

ARTICLE I.

GENERAL

1.1    Grant of Option. The Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the “Grant Date”).

1.2    Incorporation of Terms of Plan. The Option is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

ARTICLE II.

PERIOD OF EXERCISABILITY

2.1    Commencement of Exercisability. The Option will vest and become exercisable according to the vesting schedule in the Grant Notice (the “Vesting Schedule”) except that any fraction of a Share as to which the Option would be vested or exercisable will be accumulated and will vest and become exercisable only when a whole Share has accumulated. Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, unless the Administrator otherwise determines, the Option will immediately expire and be forfeited as to any portion that is not vested and exercisable as of Participant’s Termination of Service for any reason (after taking into consideration any accelerated vesting and exercisability which may occur in connection with such Termination of Service).

2.2    Duration of Exercisability. The Vesting Schedule is cumulative. Any portion of the Option which vests and becomes exercisable will remain vested and exercisable until the Option expires. The Option will be forfeited immediately upon its expiration.

2.3    Expiration of Option. The Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:

(a)    The final expiration date in the Grant Notice; provided, however, such final expiration date may be extended pursuant to Section 5.3 of the Plan;

(b)    Except as the Administrator may otherwise approve, the expiration of three months from the date of Participant’s Termination of Service, unless Participant’s Termination of Service is for Cause (as defined below) or by reason of Participant’s death or disability;

(c)    Except as the Administrator may otherwise approve, the expiration of one year from the date of Participant’s Termination of Service by reason of Participant’s death or disability; and

(d)    Except as the Administrator may otherwise approve, Participant’s Termination of Service for Cause.

As used in this Agreement, “Cause” means (i) if Participant is a party to a written employment or consulting agreement with the Company or a Subsidiary in which the term “cause” is defined (a “Relevant Agreement”), “Cause” as defined in the Relevant Agreement, and (ii) if no Relevant Agreement exists, (A) the Administrator’s determination that Participant failed to substantially perform Participant’s duties (other

1

than a failure resulting from Participant’s disability); (B) the Administrator’s determination that Participant failed to carry out, or comply with any lawful and reasonable directive of the Board or Participant’s immediate supervisor; (C) Participant’s conviction, plea of nolo contendere, or imposition of unadjudicated probation for any felony or indictable offense or crime involving moral turpitude; (D) Participant’s unlawful use (including being under the influence) or possession of illegal drugs on the premises of the Company or any of its Subsidiaries or while performing Participant’s duties and responsibilities for the Company or any of its Subsidiaries; or (E) Participant’s commission of an act of fraud, embezzlement, misappropriation, misconduct, or breach of fiduciary duty against the Company or any of its Subsidiaries.

ARTICLE III.

EXERCISE OF OPTION

3.1    Person Eligible to Exercise. During Participant’s lifetime, only Participant may exercise the Option. After Participant’s death, any exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participant’s Designated Beneficiary as provided in the Plan.

3.2    Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised, in whole or in part, according to the procedures in the Plan at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.

3.3    Tax Withholding.

(a)    The Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Option in satisfaction of any applicable withholding tax obligations. The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income.

(b)    Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Option. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.

ARTICLE IV.

OTHER PROVISIONS

4.1    Adjustments. Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

4.2    Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Designated Beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly

2

given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

4.3    Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

4.4    Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

4.5    Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

4.6    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

4.7    Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

4.8    Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

4.9    Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Option, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.

4.10    Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

3

4.11    Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

4.12    Incentive Stock Options. If the Option is designated as an Incentive Stock Option:

(a)    Participant acknowledges that to the extent the aggregate fair market value of shares (determined as of the time the option with respect to the shares is granted) with respect to which stock options intended to qualify as “incentive stock options” under Section 422 of the Code, including the Option, are exercisable for the first time by Participant during any calendar year exceeds $100,000 or if for any other reason such stock options do not qualify or cease to qualify for treatment as “incentive stock options” under Section 422 of the Code, such stock options (including the Option) will be treated as non-qualified stock options. Participant further acknowledges that the rule set forth in the preceding sentence will be applied by taking the Option and other stock options into account in the order in which they were granted, as determined under Section 422(d) of the Code. Participant also acknowledges that if the Option is exercised more than three months after Participant’s Termination of Service, other than by reason of death or disability, the Option will be taxed as a Non-Qualified Stock Option.

(b)    Participant will give prompt written notice to the Company of any disposition or other transfer of any Shares acquired under this Agreement if such disposition or other transfer is made (a) within two years from the Grant Date or (b) within one year after the transfer of such Shares to Participant. Such notice will specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.

* * * * *

4

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the inclusion in this Registration Statement on Form S-1 of our report dated April 12, 2019, with respect to the consolidated balance sheets of Psyop Media Company, LLC and Subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations and comprehensive income (loss), changes in members’ equity and cash flows for each of the years in the two-year period ended December 31, 2018, and to the reference to us under the heading “Experts” in the Prospectus, which is part of this Registration Statement.

/s/ Citrin Cooperman & Company, LLP

New York, New York

June 6, 2019

EX-99.1

Exhibit 99.1

Consent to be Named as a Director

In connection with the filing by PCI Media, Inc. of the Registration Statement (No. 333-229248) on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named to the board of directors of PCI Media, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 6, 2019

/s/ Sandy Grushow

Name: Sandy Grushow

EX-99.2

Exhibit 99.2

Consent to be Named as a Director

In connection with the filing by PCI Media, Inc. of the Registration Statement (No. 333-229248) on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named to the board of directors of PCI Media, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 6, 2019

/s/ David Sanderson

Name: David Sanderson

EX-99.3

Exhibit 99.3

Consent to be Named as a Director

In connection with the filing by PCI Media, Inc. of the Registration Statement (No. 333-229248) on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named to the board of directors of PCI Media, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 6, 2019

/s/ Marc Stapley

Name: Marc Stapley