American Picture House Corp 10-Q

Item 1. Financial Statements. AMERICAN PICTURE HOUSE CORPORATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF June 30, 2024 INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets, June 30, 2024 (unaudited) and December 31, 2023 F-2 Condensed Consolidated Statements of Operations, for the three and six months ended June 30, 2024 and 2023 F-3 Condensed Consolidated Statements of Changes in Deficit, for the three and six months ended June 30, 2024 and 2023 F-4 Condensed Consolidated Statements of Cash Flows, for the six months ended June 30, 2024 and 2023 F-6 Notes to Condensed Consolidated Financial Statements F-7 F- 1 Table of Contents AMERICAN PICTURE HOUSE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2024 December 31, 2023 (Unaudited) * ASSETS Current Assets Cash and cash equivalents $ 8,058 $ 203,971 Accounts receivable 38,713 31,948 Prepaid expenses 9,601 29,185 Receivable - related party - 1,349 Total Current Assets 56,372 266,453 Produced and licensed content costs 346,556 210,633 Loans receivable, film financing arrangements 396,200 - Intangible assets, net of accumulated amortization of $ 7,583 and $ 1,000 as of June 30, 2024 and December 31, 2023, respectively. 87,281 71,864 IMM loans receivable, net of allowance of $ 366,387 - - TOTAL ASSETS 886,409 548,950 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable and accrued expenses 209,482 90,377 Deferred revenue, current portion 50,000 - Interest payable 1,798 - Interest payable - related party 4,846 - Interest payable 4,846 - Interest payable - EIDL loan 10,799 11,580 Note payables - related party 293,108 - Commercial Line of Credit 113,448 - Total Current Liabilities 683,481 101,957 Economic injury disaster loan, non-current 149,900 149,900 Total Liabilities 833,381 251,857 Stockholders’ Equity (Deficit): Common Stock $ 0.0001 par value. 1,000,000,000 authorized. 111,399,325 and 109,790,991 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively. 11,140 10,979 Preferred Stock $ 0.0001 par value. 1,000,000 authorized. 3,829 issued and outstanding as of June 30, 2024 and December 31, 2023. - - Additional paid in capital 6,964,142 5,307,810 Accumulated deficit ( 6,922,254 ) ( 5,021,696 ) Total Stockholders’ Equity (Deficit) 53,028 297,093 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 886,409 $ 548,950 * Derived from audited information The accompanying notes are an integral part of these unaudited interim consolidated financial statements. F- 2 Table of Contents AMERICAN PICTURE HOUSE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited ) 2024 2023 2024 2023 Three Months ended June 30, Six Months ended June 30, 2024 2023 2024 2023 Consulting revenues $ - $ - $ 23,003 $ 169,111 Cost of revenues - - - 36,701 Gross profit - - 23,003 132,410 Operating Expenses: General and administrative: 380,082 395,120 1,882,014 578,723 Research and development expenses 703 - 703 - Sales and marketing 11,350 - 25,325 - Total Operating Expenses 392,135 395,120 1,908,042 578,723 Net Operating Loss ( 392,135 ) ( 395,120 ) ( 1,885,039 ) ( 446,313 ) Other Income (Expenses): Interest income 384 1,712 486 2,453 Interest expense ( 12,820 ) ( 2,054 ) ( 16,005 ) ( 3,941 ) Net Other Income (Expenses) ( 12,436 ) ( 342 ) ( 15,519 ) ( 1,488 ) Loss before income taxes ( 404,571 ) ( 395,462 ) ( 1,900,558 ) ( 447,801 ) Income taxes - - - - Net loss $ ( 404,571 ) $ ( 395,462 ) $ ( 1,900,558 ) $ ( 447,801 ) Net loss per common share - Basic and Diluted $ ( 0.00 ) $ ( 0.00 ) $ ( 0.02 ) $ ( 0.00 ) Weighted average shares used in per share computation - Basic and Diluted 111,272,856 100,733,620 110,568,929 100,754,390 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. F- 3 Table of Contents AMERICAN PICTURE HOUSE CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) For the six months ended June 30, 2023 (Unaudited) Shares Par Value Shares Amount Capital Deficit Receivable (Deficit) Common Stock Preferred Stock Additional Paid In Accumulated Stock Subscription Total Stockholders’ Equity Shares Par Value Shares Amount Capital Deficit Receivable (Deficit) Balance, December 31, 2022 100,735,159 $ 10,979 3,829 $ - $ 3,576,643 $ ( 3,655,378 ) - $ ( 67,756 ) Conversion of accrued liabilities totaling $ 105,000 into options to purchase 1,160,221 shares of Common Stock - - - - 105,000 - - 105,000 Net Loss - - - - - ( 52,339 ) - ( 52,339 ) Balance, March 31, 2023 100,735,159 $ 10,979 3,829 $ - $ 3,681,643 $ ( 3,707,717 ) $ - $ ( 15,095 ) Common stock issued for services at $ 0.15 /share 166,667 17 - - 24,983 - - 25,000 Issuance of Common Stock 3,333,328 334 - - 499,666 - ( 40,166 ) 459,834 Net Loss - - - - - ( 395,462 ) - ( 395,462 ) Balance, June 30, 2023 104,235,154 $ 11,330 3,829 $ - $ 4,206,292 $ ( 4,103,179 ) $ ( 40,166 ) $ 74,277 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. F- 4 Table of Contents AMERICAN PICTURE HOUSE CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) For the six months ended June 30, 2024 (Unaudited) Common Stock Preferred Stock Additional Paid In Accumulated Stock Subscription Total Stockholders’ Equity Shares Par Value Shares Amount Capital Deficit Receivable (Deficit) Balance, December 31, 2023 109,790,991 $ 10,979 3,829 $ - $ 5,307,810 $ ( 5,021,696 ) $ - $ 297,093 Issuance of Common Stock at $ 0.20 /share 75,000 8 - - 14,992 - - 15,000 Stock option compensation - - - - 1,258,160 - - 1,258,160 Net Loss - - - - - ( 1,495,987 ) - ( 1,495,987 ) Balance, March 31, 2024 109,865,991 $ 10,987 3,829 $ - $ 6,580,962 $ ( 6,517,683 ) $ - $ 74,266 Balance 109,865,991 $ 10,987 3,829 $ - $ 6,580,962 $ ( 6,517,683 ) $ - $ 74,266 Common stock issued for services at $ 0.25 /share 917,334 91 - - 229,242 - - 229,333 Common stock issued for services 917,334 91 - - 229,242 - 229,333 Issuance of Common Stock at $ 0.25 /share 616,000 62 - - 153,938 - - 154,000 Issuance of Common Stock 616,000 62 - - 153,938 - 154,000 Net Loss - - - - - ( 404,571 ) - ( 404,571 ) Balance, June 30, 2024 111,399,325 $ 11,140 3,829 $ - $ 6,964,142 $ ( 6,922,254 ) $ - $ 53,028 Balance 111,399,325 $ 11,140 3,829 $ - $ 6,964,142 $ ( 6,922,254 ) $ - $ 53,028 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. F- 5 Table of Contents AMERICAN PICTURE HOUSE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 2024 2023 Six Months ended June 30, 2024 2023 Cash Flows from Operating Activities: Net Income (Loss) $ ( 1,900,558 ) $ ( 447,801 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Flows from Operating Activities: Reserve for uncollectible receivable - 193,932 Expiration of produced and licensed costs 15,000 - Stock option expense 1,258,159 - Common stock issued for services 86,000 25,000 Amortization expense 6,583 - Change in operating assets and liabilities: Accounts receivable ( 6,765 ) 150,992 Prepaid expenses 19,584 ( 3,351 ) Other receivables - ( 26,440 ) Receivables - related party 1,349 - Loans receivable, film financing arrangements ( 396,200 ) - Accounts payable and accrued expenses 119,106 ( 48,914 ) Payable to related party - ( 130,000 ) Interest payable 1,798 - Interest payable - related parties 4,846 763 Interest payable 4,846 763 Interest payable - EIDL loan ( 781 ) 2,787 Deferred revenue 50,000 ( 35,000 ) Net Cash Flows from Operating Activities ( 741,879 ) ( 318,032 ) Cash Flows from Investing Activities: Produced and licensed costs ( 7,590 ) ( 10,195 ) Intangible assets ( 22,000 ) - Net Cash Flows from Investing Activities ( 29,590 ) ( 10,195 ) Cash Flows from Financing Activities: Proceeds from debt borrowings - related parties 318,408 178,500 Repayment of debt borrowings - related parties ( 25,300 ) ( 75,981 ) Proceeds from commercial line of credit 142,500 - Repayment of commecial line of credit ( 29,052 ) - Proceeds from sale of Common Stock 169,000 459,834 Net Cash Flows from Financing Activities 575,556 562,353 Net Increase (Decrease) in Cash and Cash Equivalents ( 195,913 ) 234,126 Cash and Cash Equivalents, Beginning of Period 203,971 31,573 Cash and Cash Equivalents, End of Period $ 8,058 $ 265,699 Non-cash Financing and Investing Activities: Conversion of accrued expenses into options to purchase Common Stock $ - $ 105,000 The accompanying notes are an integral part of these unaudited interim consolidated financial statements. F- 6 Table of Contents AMERICAN PICTURE HOUSE CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – Organization And Description Of Business American Picture House Corporation. (“the Company,” “we” “us”) was incorporated in the State of Nevada on September 21, 2005, originally under the corporate name of Servinational, Inc. The Company subsequently changed its name to Shikisai International, Inc. in November 2005 and then to Life Design Station, Intl., Inc. in August 2007. The Company changed its state of domicile from Nevada to Wyoming on October 13, 2020. On December 4, 2020, the Company changed its name to American Picture House Corporation. The Company’s year-end is December 31. NOTE 2 – Summary Of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2024. These unaudited consolidated financial statements and related notes should be read in conjunction with our financial statements for the year ended December 31, 2023. Principles of Consolidation The condensed consolidated financial statements of the Company include the accounts of American Picture House Corporation and its wholly owned subsidiaries, Devil’s Half-Acre, LLC and Ask Christine Productions, LLC. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and 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. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amount of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Cash and cash equivalents Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired. The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”) and/or by the Securities Investor Protection Corporation (the “SIPC”). The Company may periodically have cash balances in financial institutions in excess of the FDIC and SIPC insurance limits of $ 250,000 and $ 500,000 , respectively. The Company has not experienced any losses to date resulting from this policy. F- 7 Table of Contents Accounts receivable Accounts receivable primarily consist of trade receivables due from customers for consulting services and from fees derived from licensing of IP to content providers worldwide. As of June 30, 2024, $ 35,000 ( 90 %) of accounts receivable were related to the grant of a producer credit in a proposed future film. As of December 31, 2023, 100 % of accounts receivable were due from the BUFFALOED CAMA (see Assigned Rights to feature film, BUFFALOED below). Schedule of Accounts Receivable June 30, 2024 December 31, 2023 Accounts receivable, trade $ 35,000 $ - Accounts receivable, related party 3,713 - Accounts receivable, CAMA - 31,948 Accounts receivable $ 38,713 $ 31,948 Allowance for doubtful accounts The allowance for doubtful accounts is determined with respect to amounts the Company has determined to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past experience with customers, the length of time that the balance is past due, the customer’s current ability to pay and available information about the credit risk on such customers. In 2023, the Company wrote off $ 193,932 of receivables as bad debt based on a review of the customer’s ability to pay, the customer’s Managing Director resigning, and the customer ceasing operations. There was no bad debt expense during the quarter ended March 31, 2024. During the quarter ended June 30, 2023, the Company wrote off $ 193,932 of receivables as bad debt based on a review of the customer’s ability to pay. In June 2023 their Managing Director resigned and the customer ceased operations. Consequently, in the second quarter of 2023 management established an allowance for this receivable and subsequently determined that the monies due were uncollectable and therefore was written off. Management determined that no allowance for doubtful accounts is necessary at June 30, 2024 or December 31, 2023. Prepaid expenses At June 30, 2024, prepaid expenses consisted of prepaid insurance, prepaid licenses, and prepaid services. Prepaid expenses are amounts paid to secure the use of assets or the receipt of services at a future date or continuously over one or more future periods. When the prepaid expenses are eventually consumed, they are charged to expense. The Company had $ 9,601 and $ 29,185 in prepaid expenses as of June 30, 2024 and December 31, 2023, respectively. Produced and Licensed Content Costs Capitalized production costs, whether produced or acquired/ licensed rights, include development costs, direct costs and production overhead. These amounts and licensed content are included in “Produced and Licensed Content Costs” on the balance sheet as follows: Schedule of Produced and Licensed Content Costs June 30, 2024 December 31, 2023 Films in development and pre-production stage $ 346,556 $ 210,633 $ 346,556 $ 210,633 During the quarter ended June 30, 2024, the Company capitalized $ 143,333 of stock-based compensation to two consultants for services to be rendered on one of the films in pre-production. Impairment Assessment for Investment in Films and Licensed Program Rights A film group or individual film is evaluated for impairment when an event or change in circumstances indicates that the fair value of an individual film or film group is less than its unamortized cost. During the quarter ended March 31, 2024, the Company allowed options to two screenplays to expire and wrote-off $ 15,000 of previously capitalized option costs. F- 8 Table of Contents Assigned rights to the feature film, BUFFALOED. In November 2022, the Company obtained certain limited rights to the feature film BUFFALOED from Bold Crayon, Inc. (“BC”), including a secured position of a one million three hundred eighty-thousand-dollar ($ 1,380,000.00 USD) receivable against the film’s revenues as per the film’s Cash Asset Management Agreement (“CAMA”) and a 35 % share of the profits generated thereafter (“the BC Assets”). During the quarters ended June 30, 2024 and 2023, the Company reported revenues of $ 0 and $ 0 , respectively, from the CAMA. During the six months ended June 30, 2024 and 2023, the Company reported revenues of $ 23,003 and $ 0 , respectively, from the CAMA. Inception to date, the Company has received $ 304,875 under the CAMA. Due to uncertainties of any future revenue, if any, no value has been assigned to any potential future revenues. As partial consideration for the BC Assets being acquired by APH hereunder, APHP agreed to pay BC the first one hundred thirty thousand dollars ($ 130,000.00 USD) that APHP collected from the BUFFALOED and to deliver one Preferred Share to BC for each ten thousand dollars ($ 10,000.00 USD), in value paid to the APHP from the BUFFALOED receivable above the one hundred thirty thousand dollars ($ 130,000.00 USD), not to exceed one hundred twenty-five ( 125 ) Preferred Shares. As of June 30, 2024, Bold Crayon was due to receive 17 Preferred Shares of APHP. Intangible assets The Company’s intangible assets include in-service and under-development websites and licensed internal use software. During the year ended December 31, 2023 the Company developed an external website that was placed in service during the third quarter of 2023. Additionally, during the fourth quarter of 2023 the Company began developing additional aspects of its website that went live in April 2024. During the fourth quarter of 2023, the Company licensed rights to new internal use software, but subsequently placed that project on hold and has not established a timeline for placing the software in service. The capitalized costs of the Company’s websites placed into service were subject to straight-line amortization over a three-year period. Amortization expense totaled $ 5,833 and $ 0 for the quarters ended June 30, 2024 and 2023, respectively. Amortization expense totaled $ 6,583 and $ 0 for the six months ended June 30, 2024 and 2023, respectively. Deferred Revenue Deferred revenue represents the amount billed to clients that has not yet been earned, pursuant to agreements entered into in current and prior periods. As of June 30, 2024 and December 31, 2023, total net deferred revenue was $ 50,000 and $ 0 , respectively. As previously noted, the $ 50,000 in deferred revenue at June 30, 2024, relates to the grant of a producer credit to a proposed film. Revenues and Costs from Services and Products – Historically, Company’s revenue comes from contracts with customers for consulting services and from the licensing and distribution of film and other entertainment rights. The consulting services typically relate to development of business strategy and monetization of intellectual property rights. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the party are identified, the contract has economic substance, and collectability of the contract is considered probable. Historically, the term of these consulting agreements has been approximately three to six months in duration. The Company’s revenue is measured based on considerations specified in the contract with each customer. Accounting Standards Codification (“ASC”) 606 allows for adoption of an “as invoiced” practical expedient that allows companies to recognize revenue in the amount to which the entity has a right to invoice when they have a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. The Company has elected to adopt this practical expedient with regards to its consulting services revenue. Revenues for the three months ended June 30, 2024 and 2023 totaled $ 0 . Revenues for the six months ended June 30, 2024 and 2023 totaled $ 0 and $ 165,000 , respectively. As discussed in Note 10 – Related Party Transactions, $ 35,000 of the revenue for the six months ended June 30, 2023 was from Ribo Music and the remaining $ 135,000 was from a second customer. The Company did not have any consulting revenues during the first six months of 2024. F- 9 Table of Contents Revenues from Films and Licensed Rights , are calculated based on expected ultimate revenues estimated over a period not to exceed ten years following the date of initial release of the motion picture. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition. Revenue derived from the BUFFALOED CAMA totaled $ 0 and $ 0 for the quarters ended June 30, 2024 and 2023, respectively. Revenue derived from the BUFFALOED CAMA totaled $ 23,003 and $ 0 for the six months ended June 30, 2024 and 2023, respectively. Fair Value Measurements – The Company measures and discloses fair value in accordance with the ASC Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount 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. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 - unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Level 2 - pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Level 3 - pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Level 3 inputs are considered as the lowest priority within the fair value hierarchy. The valuation of the right to obtain control over affiliated company, right to acquire shares of other companies, contingent consideration to be paid upon achieving of performance milestone, certain convertible bridge loans (following the maturity date and thereafter) and certain freestanding stock warrants and bifurcated convertible feature of convertible bridge loans issued to the units’ owners, fall under this category. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The fair value of cash and cash equivalents is based on its demand value, which is equal to its carrying value. Additionally, the carrying value of all other short-term monetary assets and liabilities are estimated to be equal to their fair value due to the short-term nature of these instruments. Valuation of Long-Lived Assets – The Company evaluates whether events or circumstances have occurred which indicate that the carrying amounts of long-lived assets (principally produced and licensed content costs) may be impaired or not recoverable. The significant factors that are considered that could trigger an impairment review include: changes in business strategy, market conditions, or the manner of use of an asset; underperformance relative to historical or expected future operating results; and negative industry or economic trends. In evaluating an asset for possible impairment, management estimates that asset’s future undiscounted cash flows and appraised values to measure whether the asset is recoverable. The Company measures the impairment based on the projected discounted cash flows of the asset over its remaining life. F- 10 Table of Contents Stock-Based Compensation – The Company follows U.S. GAAP, which requires all stock-based compensation to employees, including the grant of employee stock options, to be recognized in the statement of operations based on its fair value. Awards outstanding are accounted for using the accounting principles originally applied to the award. The expense associated with share-based compensation is recognized on a straight-line basis over the service period of each award. Refer to Note 8 for additional information related to this stock-based compensation plan. Income taxes The Company accounts for income taxes under FASB ASC 740, “ Accounting for Income Taxes” . Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “ Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit. Net Loss per Share Basic (loss) income per share is computed by dividing net (loss) income available to Common Stockholders by the weighted average number of common shares outstanding during the period. Diluted (loss) income per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in the (loss) income of the Company. In computing diluted (loss) income per share, the treasury stock method assumes that outstanding instruments are exercised/converted, and the proceeds are used to purchase Common Stock at the average market price during the period. Instruments may have a dilutive effect under the treasury stock method only when the average market price of the Common Stock during the period exceeds the exercise price/conversion rate of the instruments. The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive: Schedule of Anti-dilutive Securities Excluded from Computation of Weighted Average Common Shares Outstanding June 30, 2024 December 31, 2023 Convertible Preferred Stock 382,900,000 382,900,000 Options to Purchase Common Stock 4,583,471 - 387,483,471 382,900,000 Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. For the period of these financial statements, the CEO of the Company was the CODM. The Company views its operations and manages its business as one operating and reporting segment. F- 11 Table of Contents New accounting standards The Company’s management has evaluated all the recently issued, but not yet effective, accounting standards and guidance that have been issued or proposed by the FASB or other standards-setting bodies through the filing date of these financial statements and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s financial position and results of operations. Note 3 – Liquidity and Going Concern The Company’s financial statements are prepared using account principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of June 30, 2024, the Company had a working capital deficit of ($ 627,109 ) and an accumulated deficit of $ 6,922,254 . These factors, among others, raise doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern. The Company has a limited operating history, which makes it difficult to evaluate current business and future prospects. During the first six months of 2024, the Company reported $ 0 of service revenues. During 2023, the Company reported $ 169,111 of service revenues, down from $ 461,174 in 2022 and no revenues in 2021 and 2020. Management expects the Company to incur further losses in the foreseeable future due to costs associated with content acquisition and production, the cost of on-going litigation, and costs associated with being a public company. There can be no assurance that our operations will ever generate sufficient revenues to fund continuing operations, or that we will ever generate positive cash flow from our operations, or that we will attain or thereafter sustain profitability in any future period. To mitigate this situation, the Company has loan agreements with the Company’s CEO and the Noah Morgan Private Family Trust, a trust controlled by the Company’s CEO, to fund its month-to-month cash flow needs. During the first six months of 2024, the Company borrowed $ 318,408 from and repaid $ 25,300 to the Noah Morgan Private Family Trust pursuant to a master loan agreement. The master note agreements accrue interest at a rate of 4.4 % due and payable in a lump sum upon maturity of the obligation. These notes are not convertible. Additionally, during the quarter ended June 30, 2024, the Company borrowed $ 142,500 under a commercial line of credit at interest rates ranging from 16.09 % to 34.3 %. Subsequent to June 30, 2024, the Company was found to be in default under this line of credit and is actively working to restructure the repayment terms. Mr. MacGregor has personally guaranteed this line of credit. NOTE 4. Film Production Loans Senior Mezzanine Loan Agreement with Barron’s Cove Movie, LLC In February 2024, the Company loaned $ 200,000 to Barron’s Cove Movie, LLC pursuant to a Senior Mezzanine Loan Agreement. $ 20,000 of the loan proceeds will be used to pay producer fees, including $ 10,000 to Mr. MacGregor. The $200,00 loan, plus a premium of twenty percent (20%), is due and payable on that date which is the earlier of either (a) twelve (12) months from the date of the loan, or (b) from allocable proceeds received by Barron’s Cove Movie, LLC related to the movie, whichever occurs first. Senior Loan Agreement with PNP Movie, LLC In February 2024, the Company agreed to loan PNP Movie, LLC $ 97,475 to be used solely in connection with a named feature length motion picture. In April 2024, the loan agreement was amended whereby the Company agreed to lend an additional $ 42,525 and to use best efforts to increase the aggregate financing to $ 597,475 . As of June 30, 2024, a total of $ 196,200 had been advanced to PNP Movie, LLC. These loans, plus a premium of twenty percent (20%), is due and payable on that date which is the earlier of either (a) twelve (12) months from the date of the loan, or (b) from allocable proceeds received by PNP Movie, LLC related to the movie, whichever occurs first. Additionally, the agreement states that Mr. MacGregor shall be entitled to a producer fee based on work to be performed and that Mr. MacGregor will receive a “Producer” credit and his son a “Co-Producer” credit on the film. F- 12 Table of Contents NOTE 5. Intangible Assets The identifiable intangible assets consist of the following assets: Schedule of Intangible Assets June 30, 2024 December 31, 2023 Website placed in service $ 70,000 $ 9,000 Website - under development - 42,000 Software – predeployment 24,864 21,864 Intangible assets, gross 94,864 72,864 Accumulated amortization ( 7,583 ) ( 1,000 ) Intangible assets, net $ 87,281 $ 71,864 There were no impairment charges associated with the Company’s identifiable intangible assets during the three or six-month periods ended June 30, 2024 and 2023. Amortization expense totaled $ 5,833 and $ 6,583 for the three and six months ended June 30, 2024, respectively. The Company did not have any intangible assets as of June 30, 2023. Note 6 – Notes Payable Note Payable – Mr. MacGregor During the quarters ended March 31 and June 30, 2023, the Company borrowed $ 125,500 and $ 53,500 , respectively, from Mr. MacGregor pursuant to a master loan agreement dated March 1, 2023. During the quarters ended June 30 and September 30, 2023, the Company repaid the 2023 borrowings in full plus accrued interest. During the quarter ended June 30, 2024, the Company borrowed $ 38,408 , and subsequently repaid $ 25,300 , under the same master loan agreement. The master note agreement accrues interest at a rate of 4.4 % due and payable in a lump sum upon maturity of the obligation. This note is not convertible. Noah Morgan Private Family Trust Loan Agreement (“NMPFT”) On February 6, 2024, the Company entered into a master loan agreement with the NMPFT. The master note agreement accrues interest at a rate of 4.68 %. Also, during February 2024, the Company borrowed $ 250,000 pursuant to this loan agreement with this amount due and payable in a lump sum on February 6, 2025 . During the quarter ended June 30, 2024, the trust loaned the Company an additional $ 30,000 . This note is not convertible. $ 200,000 of these loan proceeds were used to fund the senior mezzanine loan to Barron’s Cove Movie, LLC as more fully described in Note 4 above. Economic Injury Disaster Loan In March 2021, the Company executed an Economic Injury Disaster Loan (“EIDL ”) secured loan with the U.S. Small Business Administration under the EIDL program in the amount of $ 149,900 . The loan is secured by all tangible and intangible assets of the Company and payable over 30 years at an interest rate of 3.75 % per annum. Interest only installment payments commenced in September 2023. Commercial Line of Credit During April 2024, the Company entered into a line of credit agreement with American Express. During the three months ended June 30, 2024, the Company borrowed a total of $ 142,500 under the line and repaid principal of $ 29,052 resulting in a June 30, 2024 balance due on the line of $ 113,448 . The borrowings on the line of credit bear interest at rates ranging from 16.09 % to 34.3 %. Subsequent to June 30, 2024, the Company was found to be in default under this line of credit and is actively working to restructure the repayment terms. Mr. MacGregor has personally guaranteed these loans. F- 13 Table of Contents Note 7 – Equity Common Stock The Company has 1,000,000,000 common shares authorized. As of August 12, 2024, the Company has 111,399,325 shares issued and outstanding. As of August 12, 2024, the total number of shareholders of record was 331 . The Common Stock has a one share one voting right with no other rights. There are no provisions in the Company’s Articles of Incorporation, Articles of Amendment, or By-laws that would delay or prevent a change of control. The Board may from time to time declare, and the Company may pay, dividends on its shares in cash, property, or its own shares, except when the Corporation is insolvent, when the payment thereof would render the Company insolvent, subject to any preferential dividend rights of outstanding shares of preferred shares or when the declaration or payment thereof would be contrary to any other state law restrictions. Preferred Stock The Preferred Stock consists of 1,000,000 preferred shares authorized, of which 100,000 preferred shares have been designated as Series A Convertible Preferred Stock (“Series A preferred shares” herein). At present, 3,829 Series A preferred shares are issued and outstanding. The Series A preferred shares have the following rights: (i.) a first position lien against all of the Company’s assets including but not limited to the Company’s IP (“Intellectual Property”), (ii.) is convertible at a ratio of 1 to 100,000 so that each one share of Series A preferred stock may be exchanged for 100,000 Common Stock shares, (iii.) and that each share of Series A preferred stock shall carry superior voting rights to the Company’s Common Stock and that each share of Series A preferred stock shall be counted as 1,000,000 votes in any Company vote and (iv.) and any other benefits as deemed necessary and appropriate at the time of such issuance. The Preferred shares do not have any specific redemption rights or sinking fund provisions. The “Liquidation Preference” with respect to a share of Series A preferred stock means an amount equal to the ratio of (i.) the total amount of the Company’s assets and funds available for distribution to the Series A preferred shares to (ii.) the number of shares of Series A preferred stock outstanding. The Series A preferred stock has a liquidation preference equal to $ 12.02 per preferred share. Dividend Provisions Subject to preferential dividend rights, if any, of the holders of Preferred Stock, dividends on the Common Stock may be declared by the Board of Directors and paid out of any funds legally available therefor at such times and in such amounts as the Board of Directors shall determine. Common Stock Activity During the quarter ended June 30, 2023, the Company sold 3,333,328 shares of Common Stock at $ 0.15 per share to new investors resulting in total proceeds of $ 500,000 . $ 40,166 of the $ 500,000 is reported as a subscription receivable as of June 30, 2023 and was subsequently collected in July 2023. Also, during June 2023, the Company issued 166,667 shares of Common Stock pursuant to an advisory agreement. During the three and six months ended June 30, 2024, the Company sold 616,000 and 691,000 shares of Common Stock at $ 0.25 per share resulting in total proceeds of $ 154,000 and $ 169,000 , respectively. Also, during the quarter ended June 30, 2024, the Company issued 917,334 shares of Common Stock pursuant to advisory agreements. As stated above in Note 2, the Company capitalized $ 143,333 of this stock-based compensation to two consultants for consulting services to be rendered on one of the films in pre-production. The Company also recorded stock-based compensation expense totaling $ 86,000 to a third consultant that is included in General and Administrative Expenses. F- 14 Table of Contents Note 8– Equity Based Compensation The American Picture House Corporation 2023 Directors, Employees and Advisors Stock Incentive and Compensation Plan (the “Plan”) was established in January 2023 to create an additional incentive to promote the financial success and progress of the Company. The Plan shall be administered by the Board of Directors and may grant options to purchase shares of the authorized but unissued Common Stock of the Company. The options may be either incentive stock options or nonqualified stock options. The options granted under the Plan expire on the date determined by the Board of Directors and may not extend more than 10 years. Under the Plan, unless the board specifies otherwise, stock options must be granted at an exercise price not less than the fair value of the Company’s Common Stock on the grant date. The aggregate fair value of incentive stock options held by any optionee shall not exceed $ 100,000 . The Board of Directors shall determine the terms and conditions of the options. The vesting requirements of all awards under the Plan may be time or event based and vary by individual grant. The incentive stock options and nonqualified stock options generally become exercisable over a two-year period. Vested and unexercised options may be available to be exercised no later than three months after termination of employment (or such longer period as determined by the Board of Directors). Stock Option Grants On February 8, 2024, the Company’s Board of Directors authorized the issuance of 250,000 options to each of its nine board members, 1,673,250 options to advisors, 662,983 options to Mr. Macgregor, and 497,238 options to Mr. Blanchard for an aggregate of 5,083,471 options with the rights to purchase common shares of the Company at an exercise price of $ 0.0125 per share. As all of the options vested 100 % upon grant, the Company recorded $ 1,258,160 of stock option compensation expense in the quarter ended March 31, 2024. Share-based compensation expense is reported within General and Administrative expenses. During the quarter ended June 30, 2024, options to purchase 500,000 shares of Common Stock were forfeited. Note 9 – Contingencies and Uncertainties Risks and Uncertainties – The Company’s operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure. The Company does not have employment contracts with its key employees, including the controlling shareholders who are officers of the Company. Note 10 – Related Party Transactions The Company has agreed to indemnify Mr. MacGregor for all legal and professional costs originating from the lawsuit Randall S. Sprung v. Bannor Michael MacGregor, Jeffery Katz, and Life Design Station International, Inc. – Supreme Court of New York, County of Kings, Index No.: 504677/2019. During the three months ended June 30, 2024 and 2023, the Company incurred approximately $ 45,000 and $ 30,000 , respectively, of professional fees to a legal firm affiliated with a member of the Board of Directors. During the six months ended June 30, 2024 and 2023, the Company incurred approximately $ 90,000 and $ 60,000 , respectively, of professional fees to a legal firm affiliated with a member of the Board of Directors. As of June 30, 2024 and December 31, 2023, $ 5,000 and $ 0 , respectively, were unpaid. F- 15 Table of Contents The Company has consulting services relationships with members of the Board whereby they were compensated a total of $ 15,000 and $ 21,000 during the three months ended June 30, 2024 and 2023, respectively. Consulting services provided by Board members totaled $ 30,000 and $ 47,000 during the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, $ 5,000 and $ 20,000 , respectively, were accrued and unpaid. The consulting services are provided as requested by management and may be terminated at any time with no penalty. On January 1, 2023, the $ 105,000 of 2022 accrued consulting fees were exchanged for options to purchase 1,160,221 shares of Common Stock at $ 0.125 per share. During 2022, the Company entered into consulting agreements with Ribo Music LLC aka Ribo Media (“Ribo Media”) whereby the Company assisted Ribo Media in developing an online media platform to deliver music and eventually movies directly to consumers via their smart devices. Revenues from the Ribo Media consulting services totaled $ 0 and $ 0 , for the three months ended June 30, 2024 and 2023, respectively. Revenues from the Ribo Media consulting services totaled $ 0 and $ 35,000 , for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, accounts receivable from Ribo Media totaled $ 3,713 and $ 0 , respectively. Michael Blanchard, a director and shareholder of the Company and Timothy Battles, a director and shareholder of the Company, are both Managing Members and controlling shareholders in Ribo Media. In August 2022, the Company funded Devil’s Half-Acre Productions, LLC owned by John Luessenhop to produce the feature film Devil’s Half-Acre written and directed by Dashiell Luessenhop, a son of A. John Luessenhop, a former Board member. In July 2023 APH obtained 100 % ownership of Devil’s Half-Acre Productions, LLC and executed a new option agreement with the writer. In September 2023, APH paid a Five Thousand-Dollar ( 5,000 ) option fee to the writer. This option entitles APH to produce the film by July 2024, with the ability to extend the option for an additional two (2) years. As of June 30, 2024, the Company has capitalized $ 149,094 of production costs associated with this film. During 2022, the Company entered into definitive agreements to secure Bold Crayon Corporation (“Bold Crayon” or “BC”) as a development partner and purchased certain assets from Bold Crayon, including a portion of the rights to a feature film, and copyrights on six film titles. The Parties agree that APHP will designate BC as a “Content Partner”, wherein BC will develop content and present APHP with a first opportunity to co-finance and/or coproduce content developed by BC subject to a mutually agreed upon Content Partner Agreement and BC will accept such designation. The Company anticipates any rights and obligations between APH and BC to be effective upon the greenlighting of a specific film or show by Mr. MacGregor, CEO and a director of the Company, Mr. MacGregor is also the CEO and a director of Bold Crayon and effectively controls Bold Crayon as a managing manager of the trustee of the trust that owns the majority ownership interest in Bold Crayon. Mr. Michael Blanchard was a past Director and Secretary/Treasurer of Bold Crayon and is a director of APHP. The transaction between the parties has been consummated and all IP and copyrights have been transferred. During the quarters ended June 30, 2024 and 2023, the Company reported revenues of $ 0 and $ 0 , respectively, from the CAMA. During the six months ended June 30, 2024 and 2023, the Company reported revenues of $ 23,003 and $ 0 , respectively, from the CAMA. Inception to date, the Company has received $ 304,875 under the CAMA. As partial consideration for the BC Assets being acquired by APH hereunder, APHP agreed to pay BC the first one hundred thirty thousand dollars ($ 130,000.00 USD) that APHP collected from the BUFFALOED and to deliver one Preferred Share to BC for each ten thousand dollars ($ 10,000.00 USD), in value paid to the APHP from the BUFFALOED receivable above the one hundred thirty thousand dollars ($ 130,000.00 USD), not to exceed one hundred twenty-five ( 125 ) Preferred Shares. As of June 30, 2024, Bold Crayon was due to receive 17 Preferred Shares of APHP. On November 10, 2022, the Company approved the optioning of MIDNIGHT’S DOOR written by Kirsten Elms from Mr. Luessenhop for $ 12,700 (provided the Company produces MIDNIGHT’S DOOR as a feature film and further subject to producer agreements with Luessenhop and MacGregor). Mr. Luessenhop was a director of the Company and owned 2.005 % of the Company at the time of this transaction. The Company elected to allow this option to expire during the first quarter of 2024 resulting in the expensing of $ 7,500 of previously capitalized costs. On November 10, 2022 the Company entered into an additional agreement regarding THE DEVIL’S HALF-ACRE to extend additional financing in an undetermined amount to the film in exchange among other things for increased equity in the film. At the time, DEVIL’S HALF-ACRE was controlled by Mr. Luessenhop. F- 16 Table of Contents During the three and six months ended June 30, 2023, the Company borrowed $ 53,500 and $ 178,500 respectively, from Mr. MacGregor pursuant to a master loan agreement that is due and payable in 2024. During the three and six months ended June 30, 2023, the Company also repaid $ 75,981 of these related party borrowings. During the three months ended June 30, 2024, the Company borrowed $ 38,408 from Mr. MacGregor pursuant to the same master loan agreement. The master note agreement accrues interest at a rate of 4.4 % due and payable in a lump sum upon maturity of the obligation. During the quarter ended June 30, 2024, the Company repaid $ 25,300 of these related party borrowings. This note is not convertible During the quarter ended June 30, 2024, the Company borrowed an additional $ 30,000 from a trust managed by Mr. MacGregor pursuant to a master loan agreement dated February 6, 2024. In total, during the first six months of 2024, the Company borrowed $ 280,000 from the Noah Morgan Private Family Trust. The master note agreement accrues interest at a rate of 4.68 % due and payable in a lump sum upon maturity of the obligation. This note is not convertible. NOTE 11 – SUBSEQUENT EVENTS In accordance with FASB ASC 855-10, Subsequent Events , the Company has analyzed its operations subsequent to June 30, 2024, to the date these consolidated financial statements were issued. Except as noted below, management has determined that it does not have any material subsequent events to disclose in these consolidated financial statements. Sales of Common Stock During the period July 1, 2024 to present, the Company sold 0 shares of Common Stock. Line of Credit Modification During July and August 2024, the Company failed to make its required monthly payments on the American Express line of credit (see Note 6) and was notified that it was in default of the loan agreement. In August, the line of credit was modified to a 21 month term as opposed to 12 months. F- 17 Table of Contents