The following management's discussion and analysis should be read in conjunction
with the historical financial statements and the related notes thereto contained
in the exhibits to this Report. The management's discussion and analysis
contains forward-looking statements, such as statements of our plans,
objectives, expectations and intentions. Any statements that are not statements
of historical fact are forward-looking statements. When used, the words
"believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and
the like, and/or future tense or conditional constructions ("will," "may,"
"could," "should," etc.), or similar expressions, identify certain of these
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties, including those under "Risk Factors" commencing on page
17 above, that could cause actual results or events to differ materially from
those expressed or implied by the forward-looking statements. The Company's
actual results and plans could differ materially from those anticipated in these
forward-looking statements as a result of several factors, some of which cannot
be anticipated or predicted. The Company does not undertake any obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of this Report.
Table of Contents
As a result of the Share Exchange and the change in business and operations of
the Company, a discussion of the past financial results of the Company is not
pertinent, and under applicable accounting principles the historical financial
results of Almost Never, the accounting acquirer, prior to the Share Exchange
are considered the historical financial results of the Company.
Upon the completion of the Share Exchange, Almost Never became a wholly-owned
subsidiary of the Company. All references to "Almost Never" shall mean and refer
to Almost Never prior to the Share Exchange and to the Company as well as to the
business of Almost Never (constituting our only business) after the Share
Exchange as required by the context.
The following discussion highlights Almost Never's results of operations and the
principal factors that have affected our financial condition as well as our
liquidity and capital resources for the periods described, and provides
information that management believes is relevant for an assessment and
understanding of the statements of financial condition and results of operations
presented herein. The following discussion and analysis are based on Almost
Never's audited financial statements supplied as exhibits to this Report, which
we have prepared in accordance with United States generally accepted accounting
principles. You should read the discussion and analysis together with such
financial statements and the related notes thereto.
Basis of Presentation
The audited financial statements of Almost Never from June 30, 2019 to June 30,
2020, including a summary of our significant accounting policies and notes
thereto, should be read in conjunction with the discussion below. In the opinion
of management, all material adjustments necessary to present fairly the results
of operations for such periods have been included in these audited financial
statements. All such adjustments are of a normal recurring nature.
Upon the consummation of the transactions contemplated by the Exchange
Agreement, on January 15, 2017, we issued 1,000,000 shares of our Series A
Convertible Preferred Stock to the Almost Never Shareholders in exchange for all
100,000,000 shares of issued and outstanding common stock of Almost Never. As a
result of the Exchange Agreement, Almost Never became our wholly-owned
subsidiary, and the two Almost Never Shareholders have voting power equal to
approximately 80% of the voting power of the Company.
Almost Never Films Inc. was founded as an Indiana corporation in July 2015.
Activities since inception, through October 31, 2015, were devoted primarily to
business development that included meetings with producers, actors, directors
and screenwriters in the film industry to explore various partnerships and other
collaborations. Development consists of meeting with screenwriters, producers,
directors, talent agencies, and other motion picture industry executives.
As part of Share Exchange, Doug Samuelson, our sole officer, resigned from all
his positions with the Company and Danny Chan was elected as our Chief Executive
Officer, Chief Financial Officer and a director on our Board, and Derek Williams
was elected as our Chief Operating Officer. Mr. Chan and Mr. Williams held the
same executive office positions at Almost Never prior to the Share Exchange.
Effectively ten (10) days after the filing and distribution of an Information
Statement on Schedule 14f-1, Mr. Williams became a director on our Board and
Doug Samuelson, a former director, resigned.
On August 2, 2017, Derek Williams presented the Board of Directors of the
Company with his resignation as Chief Operating Officer and a member of the
Board of Directors of the Company. Mr. William's decision to resign was not due
to any disagreement with the Company.
On August 24, 2017, the Board of Directors of the Company appointed Daniel Roth
as Chief Creative Officer of the Corporation and Damiano Tucci as Chief
Operating Officer of the Corporation.
On September 13, 2017, the Company completed a 1 for 40 reverse stock split and
changed the authorized capital of the Company to 25,000,000 shares of common
stock, par value $.001 per share.
Table of Contents
On October 18, 2018, Damiano Tucci presented the Board of Directors of the
Company with his resignation as Chief Operating Officer of the Company. Mr.
Tucci's decision to resign was not due to any disagreement with the Company. On
October 18, 2018, the Board of Directors of the Company accepted Mr. Tucci's
resignation. Accordingly, Damiano Tucci ceased to be the Company's Chief
Operating Officer. Daniel Roth, the Company's current Chief Creative Officer,
accepted the additional position of Chief Operating Officer.
Results of Operations for the year ended June 30, 2020 and the year ended June
June 30, Change
2020 2019 Amount
Revenue $ 343,256 $ 2,526,346 $ (2,183,090 )
Cost of revenue 343,256 2,483,448 (2,140,192 )
Operating expenses 261,037 404,806 (143,769 )
Other income (expenses) (52,025 ) (105,939 ) 53,914
Net loss $ (313,062 ) $ (467,847 ) $ 154,785
Revenue and cost of revenue. During the years ended June 30, 2020 and 2019, the
Company recorded revenue of $343,256 and $2,526,346, respectively. Revenue
during the year ended June 30, 2020 was associated with one film completed under
a Production Service Agreement. Revenue during the year ended June 30, 2019 was
associated with the completion of two independent self-produced films which
generated a total of $700,000 in revenue, the completion of two films completed
under Production Service Agreements which generated a total of $1,778,346, and
$48,000 of revenue associated with producer fees.
Cost of revenue. During the years ended June 30, 2020 and 2019, the Company
incurred cost of revenue of $343,256 and $2,483,448, respectively. Cost of
Revenue during the year ended June 30, 2020 was associated with one film
completed under a Production Service Agreement. Cost of revenue during the year
ended June 30, 2019 was associated with the completion of two independent
self-produced films and the completion of two films completed under Production
Operating Expenses. Operating expenses were $261,037 and $404,806 for the years
ended June 30, 2020, and 2019, respectively. During the years ended June 30,
2020 and 2019, operating expenses mainly consisted of professional fees of
$63,970 and $56,170, respectively; and general administrative expenses of
$197,067 and $348,636 respectively. The decrease in operating expenses during
the year ended June 30, 2020 compared to the prior year were primarily related
to a partial year of amortization of two prepaid consulting contracts, both
expiring during the year compared to a full year in the prior year.
Other Expense. During the year ended June 30, 2020, the Company incurred
interest expenses of $59,807, relating to unsecured promissory notes payable,
bad debt expenses for loan receivable of $12,000 and gain on modification debt
of $19,782. During the year ended June 30, 2019, the Company incurred interest
expenses of $105,939, relating to an unsecured promissory note payable.
Net Loss. For the years ended June 30, 2020, and 2019, we incurred a loss from
operations of $313,062 and $467,847, respectively. The decrease in loss from
operations was attributable to the decrease in our general administrative
expenses and interest expenses.
Table of Contents
Liquidity and Capital Resources
June 30, June 30, Change
2020 2019 Amount
Cash $ 80,510 57,154 23,356
Current Assets $ 100,510 $ 672,487 $ (571,977 )
Current Liabilities 354,879 1,075,927 (721,048 )
Working Capital $ (254,369 ) $ (403,440 ) $ 149,071
Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations, and otherwise operate on an
ongoing basis. Significant factors in the management of liquidity are funds
generated by operations, levels of accounts receivable and accounts payable and
As of June 30, 2020 and 2019, we had a cash balance of $80,510 and $57,154,
respectively. We do not have sufficient funds to operate for the next twelve
months. There can be no assurance that additional capital will be available to
the Company. We currently have no agreements, arrangements or understandings
with any person or entity to obtain funds through bank loans, lines of credit or
any other sources. Since the Company has no such arrangements or plans currently
in effect, its inability to raise funds for the above purposes will have a
severe negative impact on its ability to remain a viable company.
As of June 30, 2020, we had a working capital deficit of $254,369 as compared to
working capital deficit of $403,440 as of June 30, 2019. The decrease in working
capital deficit was mainly due to a decrease in promissory notes payable,
deferred film revenue, accounts receivable, deferred asset and film cost.
June 30, Change
Net Cash Provided by Operating Activities $ 422,559 $ 54,328 $ 368,231
Cash used in Investing Activities
$ - - -
Net Cash Used in Financing Activities $ (399,203 ) $ (268,000 ) (131,203 )
Net Increase (Decrease) in Cash and Cash
Equivalents $ 23,356 $ (213,672 ) $ 237,028
Cash Flows from Operating Activities
During the year ended June 30, 2020, net cash provided by operating activities
was $422,559, compared to $54,328 net cash provided by operating activities for
the year ended June 30, 2019. The increase in net cash provided by operating
activities was mainly due to the decrease in accounts receivable, prepaid
expenses, film cost and deferred revenue.
During the year ended June 30, 2020, net cash used in financing activities was
$399,203, compared to $268,000 for the year ended June 30, 2019. During the
years ended June 30, 2020 and 2019, the Company repaid notes payable of $387,203
and $280,000, respectively. During the year ended June 30, 2020 the Company
repaid $12,000 of advances to a related party. During the year ended June 30,
2019, the Company borrowed $12,000 from a related party.
Going Concern Consideration
The accompanying consolidated financial statements have been prepared on a going
concern basis of accounting, which contemplates continuity of operations,
realization of assets and liabilities and commitments in the normal course of
business. The accompanying consolidated financial statements do not reflect any
adjustments that might result if the Company is unable to continue as a going
concern. During the year ended June 30, 2020, the Company incurred a net loss of
$313,062. As of June 30, 2020, the Company had a working capital deficiency of
$254,369 and an accumulated deficit of $2,068,521. These factors, among others,
raise substantial doubt about the Company's ability to continue as a going
Table of Contents
The ability of the Company to continue as a going concern and appropriateness of
using the going concern basis is dependent upon, among other things, an
additional cash infusion and an identification of new business opportunities.
Management believes that future funding will provide the additional cash needed
to meet the Company's obligations as they become due and will allow it to
continue looking for opportunities to acquire operating companies or merge with
other operational entities. No assurance can be given that any future financing
will be available or, if available, that it will be on terms that are
satisfactory to the Company. Even if the Company is able to obtain additional
financing, it may contain undue restrictions on operations, in the case of debt
financing, or cause substantial dilution for our stockholders, in case of equity
Off-balance sheet arrangements
We have no "off-balance sheet arrangements" (as that term is defined in Item
303(a)(4)(ii) of Regulation S-K).
Critical Accounting Policies, Estimates, and Judgments
Our financial statements are prepared in accordance with accounting principles
that are generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. We continually evaluate our
estimates and judgments, our commitments to strategic alliance partners and the
timing of the achievement of collaboration milestones. We base our estimates and
judgments on historical experience and other factors that we believe to be
reasonable under the circumstances. Materially different results can occur as
circumstances change and additional information becomes known. Besides the
estimates identified above that are considered critical, we make many other
accounting estimates in preparing our financial statements and related
disclosures. All estimates, whether or not deemed critical, affect reported
amounts of assets, liabilities, revenues and expenses, as well as disclosures of
contingent assets and liabilities. These estimates and judgments are also based
on historical experience and other factors that are believed to be reasonable
under the circumstances. Materially different results can occur as circumstances
change and additional information becomes known, even for estimates and
judgments that are not deemed critical.
© Edgar Online, source Glimpses