ALL FOR ONE MEDIA CORP. Forward Looking Statements
Except for historical information, the following Management's Discussion and
Analysis contains forward-looking statements based upon current expectations
that involve certain risks and uncertainties. Such forward-looking statements
include statements regarding, among other things, (a) discussions about the
entertainment industry and trends, (b) our projected sales and profitability,
(c) our growth strategies, (d) anticipated trends in our industry, (e) our
future financing plans, (f) our anticipated needs for working capital, (g) our
lack of operational experience and (h) the benefits related to ownership of our
common stock. Forward-looking statements, which involve assumptions and describe
our future plans, strategies, and expectations, are generally identifiable by
use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend," or "project" or the negative of these words or other
variations on these words or comparable terminology. This information may
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, performance, or achievements to be materially different from
the future results, performance, or achievements expressed or implied by any
forward-looking statements. These statements may be found under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Description of Business," as well as in this Report generally. Actual events or
results may differ materially from those discussed in forward-looking statements
as a result of various factors, including, without limitation, the following:
economic, social and political conditions, global economic downturns resulting
from extraordinary events such as the COVID-19 pandemic and other securities
industry risks; interest rate risks; liquidity risks; credit risk with clients
and counterparties; systems failures, delays and capacity constraints; network
security risks; competition; reliance on external service providers; new laws
and regulations affecting our business; net capital requirements; extensive
regulation, regulatory uncertainties and legal matters; failure to maintain
relationships with employees, customers, business partners or governmental
entities; the inability to achieve synergies or to implement integration plans
and other consequences associated with risks and uncertainties detailed in our
filings with the
Overview
On
The film, Drama Drama, was released on
This first window in the release process was SVOD (Streaming) as discussed above
and the second window the release process will be by International Sales, Cable
and Broadcast TV. In addition, the Drama Drama Official Soundtrack has been
released through all major music streaming platforms on
As previously discussed, Drama Drama, the motion picture, has tested well with our target tween and teen demographic in its own right, but has also been designed to serve as a 100-minute launch vehicle for Drama Drama, the girl group.
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Our goal is to generate revenues related to the Drama Drama franchise from the movie, music, merchandising, live concert performances, and additional sources.
On
Results of Operations
Comparison for the Three and Nine Months Ended
Net Revenues
The Company principally engaged in content development of media targeted at the "tween" demographic consisting of children between the ages of seven and fourteen.
· During the three months endedJune 30, 2022 and 2021 we generated minimal revenues of$3,244 and$2,355 , respectively, from streaming music sales · During the nine months endedJune 30, 2022 and 2021 we generated minimal revenues of$6,727 and$7,116 , respectively, from streaming music sales Operating Expenses For the three and nine months endedJune 30, 2022 and 2021, operating expenses consisted of the following: Three Months Ended Nine Months Ended June 30, June 30, 2022 2021 2022 2021
Compensation and related expenses
- - - 160,003
General and administrative expenses 27,542 66,577 200,808 107,968
Total $ 84,862 $ 116,143 $ 434,330 $ 385,401
Compensation expense:
· During the three months ended June 30, 2022 and 2021, compensation and
related expense decreased by $56 or 0.2% The decrease was due to
decrease in the grant date fair value of the stock-based compensation
in 2022.
· During the nine months ended June 30, 2022 and 2021, compensation and
related expense decreased by $132or 0.2%. The decrease was due to
decrease in the grant date fair value of the stock-based compensation
in 2022.
Professional and consulting expense:
· During the three months endedJune 30, 2022 and 2021, professional and consulting expense increased by$7,810 or 31%. The increase was attributable to an increase in consulting fees of$16,668 which was primarily attributable to stock-based compensation related to consulting fees offset by a decrease in accounting fees of$6,032 and a decrease in other professional services of$2,826 . · During the nine months endedJune 30, 2022 and 2021, professional and consulting expense increased by$116,224 or 257%. The increase was attributable to an increase in consulting fees of$26,428 which was primarily attributable to marketing strategy services in 2022, an increase in investor relations fee of$28,423 which was primarily attributable to services for creating social media and online presence, an increase in stock-based compensation related to consulting fees of$23,334 , an increase in accounting fee of$37,190 and an increase in other professional services of$849 . 33 Table of Contents License fees: · During the three months endedJune 30, 2022 and 2021, there were no license fees incurred. · During the nine months endedJune 30, 2022 and 2021, license fees decreased by$160,003 or 100%. This was due to the payment of license fee paid to the song writers in 2021 for to the songs used in the movie "Drama Drama".
General and administrative expense:
· During the three months endedJune 30, 2022 and 2021, general and administrative expense decreased by$39,035 or 59%. The decrease was primarily attributable to a decrease in marketing expense of$31,498 and a decrease in travel and entertainment expense of$6,495 and a decrease in other office expense of$1,042 . · During the nine months endedJune 30, 2022 and 2021, general and administrative expense increased by$92,840 or 86%. The increase was primarily attributable to an increase in marketing expense of$73,837 , an increase in public company filing fees of$8,334 and an increase in other office expense of$10,669 . Other Income (Expenses), net · During the three months endedJune 30, 2022 and 2021, we had total other income, net of$4,688,657 and total other (expense), net of$(903,928) respectively, an increase in total other income, net of$5,592,585 or 619%. The increase in total other total income, net was primarily due an increase in loss on change in fair value of derivative liabilities of$4,651,536 and an increase in gain from debt extinguishment of$383,941 , offset by a decrease on initial derivative expense of$381,137 , a decrease in interest expense of$175,971 resulting from a reduction in debt in 2022. · During the nine months endedJune 30, 2022 and 2021, we had total other income, net of$6,869,895 and$1,938,418 , a decrease of$4,931,477 or 254%. The decrease was primarily due to a decrease in initial derivative expense of$1,493,410 resulting from a reduction of new debt in 2022, a decrease in gain on loss from debt extinguishment of$3,326,439 offset by an increase in gain on change in fair value of derivative liabilities of$6,180,364 , an increase in gain on debt modification of$764,999 due to forgiveness of default penalty and an increase in interest expense of$180,857 .
Loss of Equity Method Investee
· During the three months endedJune 30, 2022 and 2021, we had loss of equity method investee loss of$7,500 and$0 , respectively, an increase of$7,500 or 100%. The increase was due to the loss recognized from our equity method investee in 2022. · During the nine months endedJune 30, 2022 and 2021, we had loss of equity method investee loss of$7,500 and$0 , respectively, an increase of$7,500 or 100%. The increase was due to the loss recognized from our equity method investee in 2022. Net Income (Loss) · During the three months endedJune 30, 2022 , net income attributable toAll For One Media Corp. amounted to$4,605,319 or$0.00 per share (basic and diluted), compared to net (loss) attributable toAll For One Media Corp. of$(1,016,305) or$0.00 and$(0.00) per share, basic and diluted, respectively, for the three months endedJune 30, 2021 , an increase in net income of$5,621,624 or 553% resulting from changes discussed above. · For the nine months endedJune 30, 2022 , net income attributable toAll For One Media Corp. amounted to$6,451,551 or$0.00 and$(0.00) per share, basic and diluted, respectively, compared to$1,564,296 or$0.00 and$(0.00) per share, basic and diluted, respectively, for the nine months endedJune 30, 2021 , a decrease of$4,887,255 or 312% resulting from changes discussed above.
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its needs for cash requirements. We had a working capital deficit of
September 30, Percentage
June 30, 2022 2021 Change Change
Working capital deficit:
Total current assets $ 36,310 $ 122,622 $ (86,312 ) 70 %
Total current liabilities (11,265,185 ) (18,614,047 ) 7,348,862 39 %
Working capital deficit: $ (11,228,875 ) $ (18,491,425 ) $ 7,262,550 39 %
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The decrease in working capital deficit was primarily attributable to a decrease
in current assets of
Cash Flows
Changes in our cash balance are summarized as follows:
Nine Months Ended
June 30,
2022 2021
Net cash used in operating activities
(7,500 ) -
Net cash provided by financing activities 326,250 516,263 Net change in cash
$ (80,316 ) $ 84,974
Net cash used in operating activities for nine months ended
· Net cash used in operating activities for the nine months endedJune 30, 2022 primarily reflected our net income of$6,441,042 adjusted for the add-back on non-cash items such as amortization of debt discounts of$801,211 , stock-based compensation expense of$61 , amortization of common stock issued for prepaid services of$20,000 , common stock issued to consultants of$3,334 , loss from extinguishment of debt of$512,257 , gain on change in fair value of derivative liabilities of$7,047,656 , gain on debt modification of$764,999 , non-cash interest expense of$5,950 , initial derivative expense of$135,670 , loss of equity investee of$1,250 and changes in operating asset and liabilities consisting primarily of a decrease in prepaid and other current assets of$5,996 , decrease in accounts payable and accrued liabilities of$1,352 offset by an increase in accounts payable and accrued liabilities - related party of$500 and increase in accrued interest of$512,184 . · Net cash used in operating activities for the nine months endedJune 30, 2021 primarily reflected our net income of$1,560,133 adjusted for the add-back on non-cash items such as amortization of debt discounts of$400,364 , stock-based compensation expense of$220 , gain from extinguishment of debt of$3,838,696 , gain on change in fair value of derivative liabilities of$867,292 , non-cash interest expense of$2,000 , initial derivative expense of$1,629,080 and changes in operating asset and liabilities consisting primarily of an increase in prepaid and other current assets of$14,903 , increase in accounts payable and accrued liabilities - related party of$44,000 and increase in accrued interest of$676,738 offset by a decrease in accounts payable and accrued liabilities of$22,733 .
Net cash used in investing activities for nine months ended
· Net cash used by investing activities for nine months endedJune 30, 2022 , resulted from contributions toBoss Music and Entertainment in aggregate amount of$7,500 , which is an investment accounted for using the equity method.
Net Cash Provided by Financing Activities
Net cash provided in financing activities for nine months endedJune 30, 2022 and 2021 were$326,250 and$516,263 , respectively, a decrease of$190,013 or 37%. · Net cash provided by financing activities for nine months endedJune 30, 2022 , consisted of net proceeds from convertible notes payable of$276,250 , proceeds from loan payable of$50,000 and net proceeds from a note payable of$50,000 , offset by repayment of loan payable of$50,000 . · Net cash provided by financing activities for nine months endedJune 30, 2021 , consisted of proceeds from advance from a related party of$5,316 , net proceeds from convertible notes payable of$1,125,000 offset by repayments of convertible notes of$614,053 . 35 Table of Contents Cash Requirements
We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital. We expect to require additional financing to fund our current operations for fiscal 2022. There is no assurance that we will be able to obtain additional financing on acceptable terms or at all.
If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
Going Concern
The accompanying condensed consolidated financial statements are prepared on a
going concern basis which contemplates the realization of assets and
satisfaction of liabilities and commitments in the normal course of business. As
reflected in the accompanying condensed consolidated financial statements, the
Company had a net income and net cash (used in) operations of
The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues, there can be no assurances to that effect.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with
Use of Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet, and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include but are not limited to the recoverability of the equity method investment, fair value of common stock issued, the valuation of derivative liabilities, the valuation of stock-based compensation and the valuation of deferred tax assets.
Fair Value of Financial Instruments
FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. FASB ASC 820 requires disclosures about the fair value of all
financial instruments, whether or not recognized, for financial statement
purposes. Disclosures about the fair value of financial instruments are based on
pertinent information available to the Company on
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The three levels of the fair value hierarchy are as follows:
Level 1: Inputs are unadjusted quoted prices in active markets for identical
assets or liabilities available at the measurement date.
Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and
liabilities in markets that are not active, inputs other than quoted
prices that are observable, and inputs derived from or corroborated by
observable market data.
Level 3: Inputs are unobservable inputs which reflect the reporting entity's own
assumptions on what assumptions the market participants would use in
pricing the asset or liability based on the best available information.
The carrying amounts reported in the consolidated balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities approximate their fair market value based on the short-term maturity of these instruments.
Film Production Costs
The Company capitalizes costs which were used in the production of films
according to ASC 926, Entertainment - Films. For films produced by the Company,
capitalized costs include all direct production and financing costs, capitalized
interest and production overhead. Production overhead includes the costs of
individuals or departments with exclusive or significant responsibility for the
production of films. Production overhead does not include general and
administrative expenses and marketing, selling and distribution costs.
Capitalization of interest costs should generally commence when a film is set
for production and end when a film is substantially complete and ready for
distribution. Filming the Movie was completed in
Pursuant to ASC 926-20-35, the Company will begin to amortize capitalized film cost when a film is released, and it begins to recognize revenue from the film. These costs for an individual film are amortized and participation costs (see below) are accrued to direct operating expenses in the proportion that current year's revenues bear to management's estimates of the ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of such film. Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture.
Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed. Participation costs are typically recognized evenly as the ultimate revenues are earned.
Unamortized film costs are tested for impairment when there is an indication that the fair value of the film may be less than unamortized costs. Consistent with the rules for recognizing impairment of long-lived assets in ASC 926, the standard sets forth examples of events or changes in circumstances that indicate that the entity must assess whether the fair value of the film (whether it has been completed or is still in production) is less than the carrying amount of its unamortized film costs.
1. An adverse change in the expected performance of the film prior to its
release,
2. Actual costs substantially in excess of budgeted costs,
3. Substantial delays in completion or release schedules,
4. Changes in release plans, such as a reduction in the initial release
pattern,
5. Insufficient funding or resources to complete the film and to market it
effectively,
6. Actual performance subsequent to release fails to meet prerelease
expectations. (ASC 926-20-35-12)
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Derivative Liabilities
The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 - Derivative and Hedging - Contract in Entity's Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.
In
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718,
Share-Based Payment, which requires recognition in the financial statements of
the cost of employee and director services received in exchange for an award of
equity instruments over the period the employee or director is required to
perform the services in exchange for the award (presumptively, the vesting
period). The
The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.
Revenue Recognition
ASU Topic 606 - Revenue from Contracts with Customers ("ASU 606"), the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company markets their master song recordings through online music streaming websites and recognizes revenues on a net basis once the songs are downloaded by the customer and the performance obligation is satisfied.
Recent Accounting Pronouncements
In
In
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In
The amendments in ASU 2022-01 clarify the accounting for and promote consistency in the reporting of hedge basis adjustments applicable to both a single hedged layer and multiple hedged layers as follows:
1. An entity is required to maintain basis adjustments in an existing hedge
on a closed portfolio basis (that is, not allocated to individual assets).
2. An entity is required to immediately recognize and present the basis
adjustment associated with the amount of the dedesignated layer that was
breached in interest income. In addition, an entity is required to
disclose that amount and the circumstances that led to the breach.
3. An entity is required to disclose the total amount of the basis
adjustments in existing hedges as a reconciling amount if other areas of
GAAP require the disaggregated disclosure of the amortized cost basis of
assets included in the closed portfolio.
4. An entity is prohibited from considering basis adjustments in an existing
hedge when determining credit losses.
For public business entities, amendments in ASU 2022-01 are effective for fiscal
years beginning after
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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