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OFFON

ALMOST NEVER FILMS INC.

(HLWD)
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ALMOST NEVER FILMS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

09/01/2021 | 03:24pm EDT

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.




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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.



Overview


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

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

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

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

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

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




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On 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
30, 2019



                                 Years Ended
                                   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 Service Agreements.

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.




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Liquidity and Capital Resources



Working Capital



                       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 capital expenditures.

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.



Cash Flows



                                                         Years Ended
                                                          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.



Financing Activities


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 concern.




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

Off-balance sheet arrangements

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

Critical Accounting Policies, Estimates, and Judgments

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

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 - - -
Net income 2021 -0,13 M - -
Net Debt 2021 0,08 M - -
P/E ratio 2021 -5,90x
Yield 2021 -
Capitalization 0,67 M 0,67 M -
EV / Sales 2020 2,86x
EV / Sales 2021 -
Nbr of Employees -
Free-Float 44,3%
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Managers and Directors
Danny Chan Director, Chief Executive & Financial Officer
Daniel T. Roth Chief Operating & Creative Officer
Mike Zhou Investor Relations Contact
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