UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 Form 10-Q

 

(Mark One)

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED: March 31, 2018

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-53049

 

ALMOST NEVER FILMS INC.

(Exact name of registrant as specified in its charter)

 

Nevada		26-1665960
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

8605 Santa Monica Blvd #98258

West Hollywood, CA 90069-4109

(Address of principal executive offices, Zip Code)

 

(213) 296-3005

(Registrant’s telephone number, including area code)

 

___________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

 

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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

The number of shares of registrant’s common stock outstanding as of May 18, 2018 was 5,203,765.

 

FORM 10-Q

ALMOST NEVER FILMS INC.

(F/K/A SMACK SPORTSWEAR)

March 31, 2018

TABLE OF CONTENTS

 

			Page No.
PART I. - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2018 (Unaudited) and June 30, 2017		4
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended March 31, 2018 and 2017.		5
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2018 and 2017.		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		20
Item 4.	Controls and Procedures		20
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		21
Item 1A	Risk Factors		21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3.	Defaults Upon Senior Securities		21
Item 4.	Mine Safety Disclosures		21
Item 5.	Other Information		21
Item 6.	Exhibits		22
	Signature		23

 

2

 

FORWARD LOOKING STATEMENTS

 

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 8-K which was filed with the SEC on January 20, 2016 (the “Super 8-K”), in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

 

We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

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PART I. FINANCIAL INFORMATION

 

Almost Never Films Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

		March 31,				June 30,
		2018				2017
		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	97,762			$	91,590
Interest receivable			-				5,159
Promissory notes receivable			350,000				400,000
Prepaid expenses and deposits			38,826				16,607
Loan Receivable			32,000				-
Total Current Assets			518,588				513,356
Film costs			967,249				-
TOTAL ASSETS		$	1,485,837			$	513,356
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accrued liabilities		$	68,657			$	41,436
Interest payable			55,755				17,068
Note payable			66,613				66,613
Promissory Note Payable			780,000				200,000
Promissory note payable - related party			-				200,000
Total Current Liabilities			971,025				525,117
Long-term Liabilities
Promissory note payable - related party			350,000				-
TOTAL LIABILITIES			1,321,025				525,117
Stockholders’ Equity
Preferred stock: no par value, 5,000,000 authorized; Series A Preferred stock: 2,000,000 authorized; No shares issued and outstanding			-				-
Common stock: 25,000,000 authorized; $0.001 par value 4,670,049 and 4,755,524 shares issued and outstanding respectively.			4,670				4,756
Additional paid in capital			908,826				928,740
Stock subscription			386,000				-
Accumulated deficit			(1,134,684	)			(945,257
Total Stockholders’ Equity			164,812				(11,761
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	1,485,837			$	513,356

  

The accompanying notes are an integral part of these unaudited condensed financial statements.

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Almost Never Films Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

		Three Months Ended								Nine Months Ended
		March 31,								March 31,
		2018				2017				2018				2017
Revenues		$	10,000				-			$	10,000			$	-
Operating Expenses
General and administration			47,905				13,208				95,011				23,132
Professional fees			5,309				12,468				60,570				58,798
Total operating expenses			53,214				25,676				155,581				81,930
Loss from operations			(43,214	)			(25,676	)			(145,581	)			(81,930	)
Other (Expense) Income
Interest income			-				-				4,841				-
Interest expense			(26,147	)			(1,643	)			(48,687	)			(5,001	)
Total other income (expense)			(26,147	)			(1,643	)			(43,846	)			(5,001	)
Net loss before income taxes			(69,361	)			(27,319	)			(189,427	)			(86,931	)
Provision for income taxes			-				-				-				-
Net loss		$	(69,361	)			(27,319	)		$	(189,427	)		$	(86,931	)
Net Loss Per Common Share – Basic and Diluted		$	(0.01	)			(0.01	)		$	(0.04	)		$	(0.02	)
Weighted Average Common Shares Outstanding - Basic and Diluted			4,670,049				4,755,191				4,670,049				4,591,500

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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Almost Never Films Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		Nine Months Ended
		March 31,
		2018				2017
Cash Flows from Operating Activities:
Net loss		$	(189,427	)		$	(86,931	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest receivable			(5,159	)			-
Prepaid expenses and deposits			(22,219	)			(21,721	)
Accrued liabilities			27,222				18,362
Interest payable			49,005				-
Film costs			(967,249	)			-
Net Cash Used in Operating Activities			(1,107,828	)			(90,290	)
Cash Flows from Investing Activities:
Issuance of Promissory note receivable			(350,000	)			-
Collection of Promissory note receivable			400,000				-
Loan receivable			(32,000	)			-
Net Cash Provided by Investing Activities			18,000				-
Cash Flows from Financing Activities:
Proceeds from common stock subscribed			386,000				-
Retirement of Common Stock			(20,000	)			-
Promissory note payable			1,130,000				-
Payment of Promissory note payable			(200,000	)			-
Payment of Promissory note payable - related party			(200,000	)			-
Proceeds from issuance of stock			-				115,000
Net Cash Provided By Financing Activities			1,096,000				115,000
Net Increase in Cash and Cash Equivalents			6,172				24,710
Cash and Cash Equivalents, beginning of period			91,590				84,967
Cash and Cash Equivalents, end of period		$	97,762			$	109,677
Supplemental Disclosure Information:
Cash paid for interest		$	10,000			$	-
Cash paid for income taxes		$	-			$	-

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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Almost Never Films Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

(Unaudited)

 

NOTE 1 - ORGANIZATION, OPERATIONS AND BASIS OF ACCOUNTING

 

Nature of the Business

 

Almost Never Films Inc. (the “Company”) was originally incorporated in Nevada in October 2007 as Smack Sportswear (“Smack”), which originally manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. The Company is now an independent film company focused on film production, finance and production related services for movies under budgets of $35 million.

 

Share Exchange and Recapitalization

 

On January 15, 2016, Smack entered into a share exchange agreement with Almost Never Films Inc., a private company incorporated in Indiana on July 8, 2015, and its two shareholders, Danny Chan and Derek Williams.

 

Pursuant to the agreement, Smack issued 1,000,000 shares of our Series A Convertible Preferred Stock to Mr. Chan and Mr. Williams in exchange for all 2,500,000 shares of issued and outstanding common stock of Almost Never Films Inc. (Indiana). As a result of the share exchange, Almost Never Films Inc. (Indiana) became Smack’s wholly-owned subsidiary, and Mr. Chan and Mr. Williams acquired a controlling interest in the Company.

 

The share exchange was accounted for as a “reverse acquisition,” and resulted in a recapitalization. Almost Never Films Inc. (Indiana) is deemed to be the acquirer for accounting purposes. The assets acquired and liabilities assumed were $6,566 and $598,869, respectively. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the share exchange will be those of Almost Never Films Inc. (Indiana) and will be recorded at the historical cost basis of Almost Never Films Inc. (Indiana), and the combined financial statements after completion of the share exchange include the assets and liabilities of Almost Never Films Inc. (Indiana), historical operations of Almost Never Films Inc. (Indiana), and operations of Almost Never Films Inc. (Indiana) from the closing date of the share exchange. As a result of the issuance of the shares of our Series A Convertible Preferred Stock pursuant to the share exchange, a change in control of the Company occurred as of the date of consummation of the share exchange. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. The Company has not yet generated any revenue since inception.

 

On February 29, 2016, the stockholders of Smack voted to amend the Articles of Incorporation of the Company to (i) increase the authorized capital of the Company to 5,000,000 shares of common stock and (ii) to change the name of the Company to “Almost Never Films Inc.” which took effect on March 2, 2016.

 

On August 9, 2017, the Company has approved a 1 for 40 reverse split of its issued and outstanding common stock. The common stock accounts and all share related balances have been be applied retroactively for all periods presented.

 

The new symbol of the Company is HLWD in OTCQB.

 

Going Concern

 

The accompanying unaudited 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 unaudited consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. During the nine months ended March 31, 2018, the Company had a net loss from operations of $189,427 and net cash outflows from operating activities of $1,107,828. As of March 31, 2018, the Company has an accumulated deficit of $1,134,684. 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 has reviewed the entity’s financial condition, and has improved the Company’s working capital during the past fiscal year. Management believes the Company will be able to fund operations for the next year through cash on hand, and further potential equity and debt offerings. There are no other significant conditions or events that management has identified that will adversely affect the Company’s ability to meet its obligations over the next year of operations.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Team Sports Superstore (Inactive) and Almost Never Films Inc. (Indiana) and FWIL, LLC (Indiana), and its 90 % owned subsidiaries, One HLWD KY LLC (Kentucky), Two HLWD KY LLC (Kentucky) and Three HLWD KY (Kentucky), LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

 

Basis of Presentation

 

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the nine months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2018.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended June 30, 2017, which were included in the Company’s 2017 Annual Report on Form 10-K. The accompanying condensed consolidated balance sheet as of June 30, 2017, has been derived from the Company’s audited consolidated financial statements as of that date.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the fair value of common stock issued for services, film costs, among others. Actual results could differ from these estimates.

 

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Cash

 

Cash includes demand deposits with banks or other financial institutions. All cash balances are hold by major banking institutions. The Company maintains its cash with a financial institution, and at times, amounts may exceed federally insured limits. Currently the FDIC insurance coverage limit is $250,000, and the Company is potentially exposed to no un-insured cash balances. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

 

Film Costs

 

The Company records film costs in accordance with ASC – 926 - Entertainment – Films. Film costs include direct production costs, production overhead and acquisition costs for both motion picture and television productions and are stated at the lower of unamortized cost or estimated fair value and classified as noncurrent assets. Estimates used in calculating the fair value of the film costs are based upon assumptions about future demand and market conditions and are reviewed on a periodic basis.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

As of March 31, 2018, the balance reported for cash approximates its fair value because of its short maturities. Notes payable are recorded at agreed values. Debt balances are stated at historical amounts less principal payments, which approximate fair market value. Promissory notes receivable and payable are stated at historical amounts less principal payments. The Company believes interest rates in its debt agreements are commensurate with lender risk profiles for similar companies.

 

Revenue Recognition

 

The Company recognizes revenue from the sale of services in accordance with ASC 926 - 605 – Entertainment - Films. Revenue is recognized only when all of the following criteria have been met: (i) persuasive evidence of a sale or licensing agreement with a customer exists; (ii) the film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery; (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale; (iv) the arrangement fee is fixed or determinable; and (v) collection of the arrangement fee is reasonably assured.

 

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Stock Repurchase and Cancellation

 

During the nine months ended March 31, 2018, the Company repurchased and cancelled 85,475 shares of common stock. The Company accounted for the transaction in accordance with ASC 505 – Equity – 30 Treasury Stock, Purchase of Treasury Shares or Stock Rights.

 

Stock Subscription Receivable

 

The Company has accounted for Stock Subscription Receivable in accordance with ASC – 505 – Equity – 10, and has included the Stock Subscription Receivable balance in equity.

 

Loss per Share Calculations

 

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended March 31, 2018, and 2017, as there are no potential shares outstanding that would have a dilutive effect.

 

Recently Issued Accounting Pronouncements

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which supersedes nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States of America. The core principle of this ASU is that revenue should be recognized for the amount of consideration expected to be received for promised goods or services transferred to customers. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and assets recognized for costs incurred to obtain or fulfill a contract. ASU 2014-09 was scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date,” which deferred the effective date of ASU 2014-09 by one year and allowed entities to early adopt, but no earlier than the original effective date. ASU 2014-09 is now effective for public business entities for the annual reporting period beginning December 15, 2017. This update allows for either full retrospective or modified retrospective adoption. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” which amends guidance previously issued on these matters in ASU 2014-09. The effective date and transition requirements of ASU 2016-10 are the same as those for ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients,” which clarifies certain aspects of the guidance, including assessment of collectability, treatment of sales taxes and contract modifications, and providing certain technical corrections. The effective date and transition requirements of ASU 2016-12 are the same as those for ASU 2014-09.

 

The Company will adopt the new guidance as of July 1, 2018. The Company has evaluated the new guidance and the adoption is not expected to have a significant impact on the Company’s financial statements and a cumulative effect adjustment under the modified retrospective method of adoption will not be necessary. There will be no change to the Company’s accounting policies.

 

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

 

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NOTE 3 – PROMISSORY NOTES RECEIVABLE

 

On June 7, 2017, the Company received a 2.5% promissory note in exchange for lending $200,000 to a third party. The principal of $200,000 is due to the Company forty-five (45) days from receipt of the funds.

 

On June 12, 2017, the Company received a 2.5% promissory note in exchange for lending $200,000 to a third party. The principal of $200,000 is due to the Company forty-five (45) days from receipt of the funds.

 

The proceeds from the two Promissory Notes Receivable were utilized in order to provide a Bridge Loan to a third party in connection with the productions of the certain motion pictures.

 

During the three and nine months ended March 31, 2018, a total amount of $0 and $4,841, respectively was recorded as interest income.

 

The Company received full payments for the two Promissory Notes Receivable and $10,000 of interest income related to the two Promissory Notes Receivable during the nine months ended March 31, 2018.

 

On December 14, 2017, the Company entered into a promissory note agreement for $450,000, for the borrower to utilize the funds for production costs of a motion picture with a non-related party. As of March 31, 2018, the Company had provided the borrower with $350,000. Per the terms of the promissory note, the security for the promissory note is the tax credits and tax credit proceeds of the motion picture. The promissory note is non-interest bearing, and no terms of repayment. The Company expects to collect the full balance by August 2018.

 

NOTE 4 – FILM COSTS

 

Film costs are comprised of the following:

 

		March 31, 2018				June 30, 2017
Motion picture and television productions			967,249				-
Film Costs			967,249				-

 

Film costs include salaries and wages, and all other direct costs associated with the motion pictures and television productions.

 

As of March 31, 2018, the Company performed fair value measurements related to film costs and determined that there were no indicators of impairment. During the nine months ended March 31, 2018, the Company did not recognize impairment loss.

 

On November 10, 2017 the Company executed a First Amendment Agreement to its 6x picture Production and Distribution Agreement between Big Film Factory LLC (“Big Film” or “Prodco”) and Pure Flix Entertainment LLC (“PFE”), (the “Agreement”). The Agreement memorializes the understanding with respect to the development, packaging, production, post-production and worldwide distribution of the films intended for initial and primary worldwide exhibition. The Company, a Nevada corporation, will be added as a party to the initial agreement by and between Big Film and PFE, wherever Big Film is referenced in connection with providing production services in conjunction with Big Film as well as providing production capital and cash following each of the first six (6) films produced under the Agreement (“6 Pictures”). Both Prodco and PFE agree to expand the defined role of “Prodco” in the Agreement, to add the Company to that definition, and grant the Company equally the same role and responsibilities heretofore only held by Big Film in connection with the 6 Pictures.

 

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NOTE 5 – PROMISSORY NOTES PAYABLE

 

On June 6, 2017, the Company issued a 2.5% promissory note in exchange for receiving $200,000 to an unrelated third party. The principal of $200,000 is due to the lender ninety (90) days from receipt of the funds. The promissory note payable, was fully paid along with interest payable as of March 31, 2018.

 

During the three and nine months ended March 31, 2018, a total amount of $0 and $2,396 was recorded as interest expense, respectively.

 

On October 11, 2017, the Company issued a $150,000 Promissory Note in exchange for receiving $150,000 proceeds. The principal of $150,000 is due fourteen (14) months from the receipt of the funds, and a total interest charge of ten percent, or $15,000 is to be recorded over the term of the loan. An interest payable of $6,035 has been recorded as of March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $3,176 and $6,035 was recorded, respectively. The proceeds will be used by the Company to fund the motion picture known as One HLWD KY LLC.

 

On December 17, 2017, the Company issued a $300,000 Promissory Note in exchange for receiving $300,000 proceeds. The principal of $300,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. An interest payable of $8,548 has been recorded as of March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $7,188 and $8,530 was recorded, respectively. The proceeds will be used by the Company to fund the motion picture known as River Runs Red.

 

On January 4, 2018, the Company issued a $80,000 Promissory Note in exchange for receiving $80,000 proceeds. The principal of $80,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. An interest payable of $1,885 has been recorded as of March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $1,885 was recorded. The proceeds will be used by the Company to fund the motion picture known as River Runs Red.

 

On February 6, 2018, the Company issued a $100,000 Promissory Note in exchange for receiving $100,000 proceeds. The principal of $100,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. An interest payable of $1,452 has been recorded as of March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $1,452 was recorded. The proceeds will be used by the Company to fund the motion picture known as River Runs Red.

 

On February 7, 2018, the Company issued a $150,000 Promissory Note in exchange for receiving $150,000 proceeds. The principal of $150,000 is due twelve (12) months from the receipt of the funds, and bears interest at 10% per annum. An interest payable of $2,137 has been recorded as of March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $2,137 was recorded. The proceeds will be used by the Company to fund the motion picture known as River Runs Red.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

On June 9, 2017, the Company issued a 2.5% promissory note in exchange for receiving $200,000 to William R. Kruse, one of the Company’s principle owners. The principal of $200,000 was due to the lender ninety (90) days from receipt of the funds. The note was fully paid along with interest of $5,000, during the nine months ended March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $0 and $2,708, respectively, was recorded.

 

On September 19, 2017 the company issued a 10% Promissory Note in exchange for receiving $350,000 to Kruse Farms, LP., a Company owned by one of the Company’s principle owners. The principal of $350,000 is due to the lender in twenty four (24) months from receipt of the funds. An interest payable of $18,507 has been recorded as of March 31, 2018. During the three and nine months ended March 31, 2018, interest expense of $8,630 and $18,507, respectively, was recorded. The proceeds will be used by the Company to fund production of a motion picture.

 

During the nine months ended March 31, 2018, the Company advanced $20,000 to the Company’s Chief Creative Officer. The loan receivable bears no interest and is due on March 28, 2019.

 

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NOTE 7 – NOTE PAYABLE

 

In August 2015, Smack entered into an unsecured promissory note agreement with an individual. The agreement allowed for Smack to borrow up to $66,613 at an interest rate of 10 percent per year. This $66,613 note was assumed by the Company during the recapitalization. The outstanding principal balance under the agreement at March 31, 2018 was $66,613. The outstanding principal amount and all accrued and unpaid interest was due by August 2016 and is currently delinquent. As of March 31, 2018 and June 30, 2017 amounts of $17,209 and $12,172 have recorded as interest payable. For the three and nine months ended March 31, 2018, interest expense of $1,679 and $5,037 was recorded, respectively. For the three and nine months ended March 31, 2017, interest expense of $1,661 and $5,001 was recorded, respectively.

 

NOTE 8 – SHARE CAPITAL

 

Common Stock

 

On August 9, 2017, the Company has approved a 1 for 40 reverse split of its issued and outstanding common stock. The common stock accounts and all share related balances have been applied retroactively for all periods presented.

 

On September 11, 2017, the Company amended the Articles of Incorporation to increase the authorized capital to 25,000,000 shares of common stock.

 

During the nine months ended March 31, 2018, the company entered into three share purchase agreements with three investors for 386,000 shares at $1 per share. The company has received a $386,000 and has recorded as stock subscription of $386,000.

 

On July 5, 2017, the Company repurchased and cancelled 85,475 shares of common stock of the company for $20,000.

 

There were 4,670,049 shares of common stock issued and outstanding as of March 31, 2018.

 

NOTE 9 – INCOME TAXES

 

The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

On December 22, 2017, the U.S. enacted the 2017 Tax Cuts and Jobs Act which contains several key tax provisions that affect the Company, including, but not limited to, a one-time mandatory transition tax on accumulated foreign earnings, changes in the sourcing and calculation of foreign income, and a reduction of the corporate income tax rate to 21% effective January 1, 2018.

 

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate to the net loss before provision for income taxes for the following reasons:

 

		Three months ended								Nine months ended
		March 31,								March 31,
		2018				2017				2018				2017
Federal income tax benefit attributable to:
Net operating loss		$	(18,173	)		$	9,289			$	22,650			$	29,557
Less: valuation allowance			18,173				(9,289	)			(22,650	)			(29,557	)
Net provisions for Federal income taxes		$	-			$	-			$	-			$	-

 

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

 

		As of
		March 31,				June 30,
		2018				2017
Deferred tax asset attributable to:
Net operating loss carryover		$	67,451			$	44,801
Less: valuation allowance			(67,451	)			(44,801	)
Net deferred tax asset		$	-			$	-

 

The following table reconciles the US statutory rates to the Company’s effective tax rate for the nine months ended March 31, 2018 and 2017:

 

		Three months								Nine months ended
		March 31,								March 31,
		2018				2017				2018				2017
Effective tax rate attributable to:
US statutory rate			21	%			34	%			21	%			34	%
Less: change in unrecognized tax benefit from uncertain tax provision			-21	%			-34	%			-21	%			-34	%
Tax per Financial Statements			-				-				-				-

 

In accordance with Income Tax laws of United States of America, net operating loss carry forwards of $321,194 which expire commencing in fiscal 2036, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.

 

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

The Company neither owns nor leases any real or personal property. The Company’s officers have provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.

 

On December 12, 2016, the Company entered into an agreement with Saisam Entertainment, LLC to develop, finance, and produce a motion picture project. Per the terms of the agreement, the Company will provide or source equity financing for the project in the amount of approximately $1,300,000. Per the terms of the agreement, the Company and Saisam Entertainment, LLC will create an LLC or other entity for the project currently entitled “Love is not Easy”. Saisam Entertainment, LLC owns and controls the rights to the screenplay, and will assign all rights in and to the project, pursuant to the terms of an option purchase agreement between the two parties, which includes an initial option fee of $10,000 for an option period of 18 months, a lien for all of the Company’s out of pocket costs, and will assist in additional funding. The Company will make or source financial contributions in accordance with the terms of the agreement, assist in the raising of additional financing, and will participate in the development and production. The Company and Saisam Entertainment, LLC will own an undivided 50% interest in the LLC or entity that is formed. The Company will be the managing member of the LLC or entity. The approved budget for the project is approximately $2,000,000. In consideration, the Company will receive a return of 20% of its investment, and will subsequently receive its portion of the net profits per the terms of the agreement. The LLC or entity has not been formed to date.

 

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NOTE 11 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date these financial statements were issued. Based on our evaluation no additional events have occurred that require disclosure, other than those disclosed below.

 

Subsequent to March 31, 2018, the Company issued 43,894 shares of common stock to settle accounts payable of $43,894.

 

On April 27, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Christmas Camp LLC.’ The Production Services Agreement will run from April 9, 2018 to August 27, 2018.

 

On April 27, 2018, the Company entered into a Production Services Agreement with MVE Productions, LLC to provide production services for a film. In relation to the film, the Company created a Limited Liability Corporation, ‘Last Vermont Christmas LLC.’ The Production Services Agreement will run from April 9, 2018 to September 28, 2018.

 

On April 26, 2018, the Company filed a registration statement which included the below shares issued subsequent to March 31, 2018:

 

	·	the Company issued 83,822 shares of common stock to settle an outstanding note payable of $66,613, and interest of $17,209.
	·	the Company issued 386,000 shares to unrelated parties at $1 per share.
	·	the Company entered into a stock purchase agreement to issue 20,000 shares of common stock for proceeds of $20,000.

 

The registration statement became effective on May 9, 2018.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Business Development

 

SMACK Sportswear (“SMACK or the Company”) was originally incorporated in Nevada in October 2007. Through June 30, 2016, we were a manufacturer and seller of performance and lifestyle based indoor and sand volleyball apparel and accessories. As of July 31, 2015, we completed the disposition of certain assets of the Company to William Sigler, a former director of the Company; in connection with said transactions Mr. Sigler resigned and agreed to sell all his shares of common stock in the Company. As a result of the sale of certain inventory from the Company to Mr. Sigler, the Company was considered a “shell company” (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended).

 

On January 15, 2016, pursuant to the share exchange agreement, among Almost Never Films Inc. f/k/a Smack Sportswear (the “Company”, “we,” “our” or “us”), Almost Never Films Inc. (“ANF”), an Indiana corporation, and the two shareholders of ANF (the “ANF Shareholders”), we issued to the ANF Shareholders, 1,000,000 shares of our Series A Convertible Preferred Stock (the “Series A Preferred Stock”), par value $0.001 per share in exchange for all 100,000,000 shares of the issued and outstanding common stock of ANF (the “Share Exchange”). As a result of the Share Exchange, ANF became our wholly-owned subsidiary, and our business has become the business of ANF, effective January 15, 2016.

 

The share exchange was accounted for as a “reverse acquisition,” and resulted in a recapitalization. Almost Never Films Inc. (Indiana) is deemed to be the acquirer for accounting purposes. The assets acquired and liabilities assumed were $6,566 and $598,869, respectively. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the share exchange will be those of Almost Never Films Inc. (Indiana) and will be recorded at the historical cost basis of Almost Never Films Inc. (Indiana), and the combined financial statements after completion of the share exchange include the assets and liabilities of Almost Never Films Inc. (Indiana), historical operations of Almost Never Films Inc. (Indiana), and operations of Almost Never Films Inc. (Indiana) from the closing date of the share exchange. As a result of the issuance of the shares of our Series A Convertible Preferred Stock pursuant to the share exchange, a change in control of the Company occurred as of the date of consummation of the share exchange. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. The Company has not yet generated any revenue since the reverse acquisition.

 

On February 29, 2016, the stockholders of Smack voted to amend the Articles of Incorporation of the Company to (i) increase the authorized capital of the Company to 200,000,00 shares of common stock and (ii) to change the name of the Company to “Almost Never Films Inc.” which took effect on March 2, 2016.

 

The Company has 5,000,000 authorized preferred shares with no par value.

 

Smack issued 1,000,000 shares of our Series A Convertible Preferred Stock to the Mr. Chan and Mr. Williams in exchange for all 100,000,000 shares of issued and outstanding common stock of Almost Never Films Inc. (Indiana), with a value of $10,000.

 

On March 4, 2016, all 1,000,000 preferred shares were converted into 100,000,000 common shares.

 

There were no shares of preferred stock issued and outstanding as of March 31, 2018.

 

On November 16, 2016, the Company entered into a collaboration agreement with Konwiser Brothers Media. At this point, the Company ceased being a “shell company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934.

 

On March 16, 2017, the Board of Directors of the Company approved a 1:40 reverse stock split of our issued and outstanding shares of common stock (the “Reverse Stock Split”) and an adjustment in the authorized common stock of the Company to 25,000,000 (the “Authorized Adjustment”). The Majority Stockholders approved the Reverse Stock Split and the Authorized Adjustment by written consent in lieu of a meeting on March 16, 2017. The Authorized Adjustment and the Reverse Stock Split became effective on September 13, 2017.

 

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Criteria

 

The Company was originally incorporated in Nevada in October 2007 as Smack Sportswear (“Smack”), which originally manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. The Company is now an independent film company focused on film production and production related services in connection with genre specific motion pictures with production costs in the $5.0 million to $50.0 million range.

 

History

 

As described above, we were incorporated in Nevada in October 2007 under the name SMACK Sportswear under which we manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. As a result of the sale of certain inventory from the Company to Mr. Sigler in July 2015, the Company became a “shell company” (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). As a result of the Share Exchange, we acquired the proposed business of Almost Never.

 

Almost Never, our wholly-owned subsidiary upon the closing of Share Exchange, was incorporated in the State of Indiana on March 31, 2017. As a result of the Share Exchange, the Company amended its Articles of Incorporation to change its name from “Smack Sportswear” to “Almost Never Films Inc.” to more accurately reflect its new business. We also request changed the Company’s OTCQB trading symbol to “HLWD”

 

We currently have authorized 30,000,000 shares of capital stock, consisting of (i) 25,000,000 shares of Common Stock, and (ii) 5,000,000 shares designated as preferred stock containing such rights, privileges and designations as our Board of directors may, from time to time, determine. As of the date of this Report, an aggregate of 5,203,765shares of our Common Stock and no shares of our Series A Convertible Preferred Stock are issued and outstanding.

 

Our principal executive office is located at 8605 Santa Monica Blvd #98258, West Hollywood, CA 90069-4109.

 

Our Business

 

We are an independent film company focused on film production and production related services in connection with genre specific motion pictures with production costs in the $5.0 million to $50.0 million range.

 

Our business is to facilitate relationships (and as such, provide production related services) between creative talent (including writers, actors and directors) and companies who produce, finance and distribute motion pictures. We intend to acquire or license rights to materials upon which we believe motion pictures can be based (screenplays, books, short stories etcetera, which are referred to within the entertainment industry as the “underlying property”). We may further develop an underlying property by contracting for additional writing services and/or by bringing in new writers to perform “polishes” or “rewrites” on a particular underlying property.

 

If we are satisfied with the creative state of the underlying property, we then intend to make offers to directors and/or actors, to perform services in connection with a particular motion picture based on that underlying property. These offers are very often contingent and subject to the satisfaction of certain production elements, such as financier approval of the screenplay and the financier’s selection of a start date for principal photography.

 

If a director or actors accepts one of our offers, the director or actors are said to be “attached” to the motion picture project. Armed with the underlying property and the attached creative element(s) (these elements are often called the “package” in Hollywood), we may then approach third party financiers seeking financing as well as distribution for the potential motion picture. Another approach that we may take is to contact the financiers first, seeking first to produce the film, and then with a finished (or nearly finished) motion picture product, obtain distribution for the picture.

 

We entered into our first two collaboration agreements to produce the films “Field Trip” and “Love is not Easy” during the quarter ended December 31, 2016.

 

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Critical accounting policies and estimates

 

Our condensed consolidated financial statements are prepared in accordance with GAAP. 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. 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.

 

Going Concern

 

The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to our ability to continue as a going concern.

 

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

 

Results of Operations

 

For the three months ended March 31, 2018 compared to March 31, 2017

 

During the three months ended March 31, 2018, the Company had $10,000 in revenue and incurred $47,905 on general and administrative expenses and $5,309 on professional fees. The Company’s professional fees were primarily for ongoing regulatory requirements. During the three months ended March 31, 2017, the Company had no revenue and incurred $13,208 on general and administrative expenses and $12,468 on professional fees.

 

Other Expense

 

During the three months ended March 31, 2018, the Company incurred interest expenses of $26,147 relating to an unsecured promissory note payable. During the three months ended March 31, 2017, the Company incurred interest expenses of $1,643, relating to an unsecured promissory note payable.

 

Net Loss

 

The Company’s net loss for the three months ended March 31, 2018 was $69,361. The Company’s net loss for the three months ended March 31, 2017 was $27,319.

 

For the nine months ended March 31, 2018 compared to March 31, 2017

 

During the nine months ended March 31, 2018, the Company had $10,000 in revenue and incurred $95,011 on general and administrative expenses and $60,570 on professional fees. The Company’s professional fees were primarily for ongoing regulatory requirements and the negotiation of the collaborations entered into by the Company. During the nine months ended March 31, 2017, the Company had no revenue and incurred $23,132 on general and administrative expenses and $58,798 on professional fees. The Company’s professional fees were primarily for ongoing regulatory requirements.

 

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Other Expense

 

During the nine months ended March 31, 2018, the Company incurred interest expenses of $48,687, relating to an unsecured promissory note payable. During the nine months ended March 31, 2017, the Company incurred interest expenses of $5,001, relating to promissory notes payable.

 

Net Loss

 

The Company’s net loss for the nine months ended March 31, 2018 was $189,427. The Company’s net loss for the nine months ended March 31, 2017 was $86,931. The increase in the net loss was due primarily to increased expenses general and administrative expenses in developing the Company's business plan and increased professional fees due to ongoing regulatory reporting and developing its business plan.

 

Liquidity and Capital Resources

 

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 March 31, 2018, we had a cash balance of $97,762. As of June 30, 2017, we had a cash balance of $91,590. 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.

 

Financing Activities

 

During the nine months ended March 31, 2017, the Company received $115,000 for the issuance of common stock, which were then registered in a registration statement on Form S-1, that was declared effective by the Securities and Exchange Commission on December 9, 2016. During the nine months ended March 31, 2018, the Company received $386,000 in proceeds for common stock subscribed., the Company registered 514,822 shares in a registration statement on Form S-1, that was declared effective by the Securities and Exchange Commission on May 10, 2018.

 

Going Concern Consideration

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. During the nine months ended March 31, 2018, the Company incurred a net loss from continuing operations of $189,427 and cash used in operating activities was $189,427. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion and an identification of new business opportunities. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on operations, in the case of debt financing, or cause substantial dilution for our stock holders, in case of equity financing.

 

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We do not have any material commitments for capital expenditures during the next twelve months. Although our proceeds from the issuance of debt and our offering of shares of common stock is currently sufficient to fund our operating expenses, we anticipate we will need to raise additional funds in the future so that we can expand our operations. Therefore, our future operations are dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

 

Off-balance sheet arrangements

 

During the nine months ended March 31, 2018, we did not have any “off-balance sheet arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K).

 

Recent accounting pronouncements

 

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and the Company’s Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of March 31, 2018. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2018 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

 

Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in the reports that we file or submit under the Exchange Act have been recorded, processed, summarized and reported accurately. Our management intends to develop procedures to address the current deficiencies to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

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PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

Incorporated by Reference

Exhibit No.

Description

Form

SEC File No.

Exhibit

Filing Date

Filed Herewith

3.1

Articles of Incorporation of the Company

SB2

333-148510

3.1

1/7/2008

3.2

Amendment to Articles of Incorporation of the Company

8-K

000-53049

3.2

4/13/2012

3.3

Amendment to Articles of Incorporation of the Company

8-K

000-53049

3.1

2/29/2016

3.4

Bylaws of the Company

SB2

333-148510

3.2

1/7/2008

4.1

Certificate of Designation of Series A Convertible Preferred Stock

8-K

000-53049

4.1

1/18/2016

10.1

Share Exchange Agreement dated January 15, 2016 by and among SMACK Sportswear, Inc., Almost Never Films Inc., and the Shareholders of Almost Never Films Inc.

8-K

000-53049

2.1

1/18/2016

31.1

Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

x

31.2

Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

x

101.INS

XBRL Instance Document.*

101.SCH

XBRL Taxonomy Extension Schema.*

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.*

101.DEF

XBRL Taxonomy Extension Definition Linkbase.*

101.LAB

XBRL Taxonomy Extension Label Linkbase.*

101.PRE

XBRL Extension Presentation Linkbase.*

___________________ 

*

Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheet, (ii) the Condensed Consolidated Statement of Operations, (iii) the Condensed Consolidated Statement of Cash Flows, and (iv) Notes to Combined Financial Statements.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	ALMOST NEVER FILMS INC.
Date: May 21, 2018	By:	/s/ Danny Chan
		Danny Chan, Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial and accounting officer)

 

 

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