American Picture House Corp 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s discussion and analysis of financial condition and results of operations The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10-K. General American Picture House Corporation (“APHP”) is an entertainment company focused on the development, packaging, financing and production of feature films and limited series. During 2025, we pivoted away from third-party consulting to concentrate on internally developed projects and selective strategic partnerships. We generally pursue two complementary approaches to participating in projects: (i) structured film finance and senior or priority recoupment positions, including senior secured production lending and first-priority receipt or recoupment structures designed to prioritize return of capital; and (ii) building an owned or controlled content library over time by acquiring or optioning intellectual properties and, where appropriate, obtaining negative ownership or other control rights in projects. These structures and strategies are intended to reduce exposure relative to subordinated equity participation but do not eliminate risk, and our financial results will depend on project performance, distribution outcomes, and the timing and amount of receipts. We seek to apply disciplined underwriting and structured deal terms to the independent film market, including through defined revenue waterfalls and priority receipt positions where available. Our portfolio includes projects in various stages of release and post-production, and our ability to generate revenues sufficient to achieve profitability depends on the successful commercial exploitation of our projects, including the timing and amount of receipts under applicable distribution and revenue-sharing arrangements. From time to time, we may issue equity or equity-linked instruments in connection with financings or as compensation for services, which may be dilutive to existing stockholders. 20 Our ability to generate any revenue sufficient to achieve profitability will depend on the successful development, production, and distribution of motion pictures. We reported net losses of $534,440 and $2.3 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of approximately $7.8 million. We expect to continue to incur significant expenses and may continue to incur operating losses until we generate sufficient revenues to support our operations. We expect that our expenses and capital expenditures will increase substantially in connection with our ongoing activities including, but not limited to the following: ● Development and production of current and future film properties; ● Potential acquisition of additional intellectual property rights and/or acquisition of intellectual property and production companies in the entertainment industry; ● Add development and production personnel to support our film production activities; and ● Add operational, legal, compliance, financial, investor relations, and management information systems personnel to support our development and production and operations as a new public company. Liquidity and Capital Resources Over the next twelve months management plans to use borrowings and the sale of Common Stock to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when required, will be available on commercially reasonable terms. In addition, certain financings may include convertible or equity-linked features (including variable conversion pricing and share reservation mechanics) that could result in significant dilution to existing stockholders and downward pressure on our stock price. Subsequent to year end, on January 20, 2026, the Company completed a convertible note financing with Labrys Fund II, L.P. for a cash purchase price of $150,000, of which $114,000 was disbursed to the Company (net of placement agent fees, legal fees, and a repayment to the investor). Recent Developments (2025 and early 2026) SSS Entertainment Agreement / POSE option extension and BARRON’S COVE acquisition. On August 1, 2025, the Company entered into an agreement with SSS Entertainment, LLC to extend to December 31, 2025 its option to acquire a 24% ownership interest in POSE for $725,000 and to acquire all rights, title and interest in the feature film BARRON’S COVE and related secured assets. As consideration, the Company issued 500,000 shares of its common stock, allocated equally between the option extension and asset acquisition. The agreement also set forth an inter-party revenue collection and allocation structure for BARRON’S COVE and included a potential revenue-to-equity conversion feature, in each case subject to the terms of the agreement. As described below, the parties amended the revenue collection and allocation structure on December 29, 2025. SSS Entertainment amendment (Dec. 29, 2025). On December 29, 2025, the Company entered into Amendment No. 1 to its August 1, 2025 agreement with SSS Entertainment, LLC, which (i) extended the Company’s option relating to POSE through March 31, 2026, and (ii) revised the inter-party revenue collection and allocation structure for BARRON’S COVE by providing the Company a first-priority right to receive Net Revenues until the Company has received $1,150,000, followed by an 85%/15% Net Revenue split to SSS and the Company, respectively, until SSS has received the agreed recoupment amount, with all subsequent Net Revenues retained by the Company. The amendment also acknowledges uncertainties associated with the bankruptcy proceedings involving Yale Entertainment LLC and the potential impact on enforcement, priority, and timing of collections. SSS Entertainment multi-film arrangement / Board approval (Jan. 27 / Mar. 12, 2026). Effective as of January 27, 2026, the Company and SSS Entertainment, LLC entered into a Multi-Film Investment and Compensation Agreement that revised the parties’ commercial arrangement with respect to POSE , contemplated Company funding relating to MOTION , and contemplated a potential additional investment in an untitled SSS-produced motion picture, in each case subject to the terms of the agreement and applicable approvals. Under that agreement, the parties converted the prior POSE option-based payment structure into a fixed payment structure consisting of a $175,000 partial payment and a $575,000 remaining payable due on or before January 31, 2027; contemplated a $500,000 funding amount relating to MOTION in exchange for an assigned economic interest; and contemplated a $200,000 investment in an untitled SSS-produced picture, subject to mutually agreed definitive documentation. The agreement also contemplated certain equity-based consideration and incentive arrangements, including credit-based share incentives and an option grant under the Company’s equity incentive plan, each subject to applicable approvals and the terms of the agreement. On March 12, 2026, the Board of Directors approved the Company’s entry into the Multi-Film Investment and Compensation Agreement and ratified Amendment No. 1 effective December 29, 2025. See Note 13 - Subsequent Events. Leadership updates. On August 30, 2025, Jonathan Sanger resigned as President. On September 16, 2025, Donald J. Harris resigned from the Board of Directors. Equity Line of Credit. On September 12, 2025, we entered into an Equity Line of Credit (“ELOC”) with RH2 Equity Partners, L.P., and a related Registration Rights Agreement. Under the ELOC, we may, at our election and subject to specified conditions, sell newly issued shares of our common stock to the investor over a 24-month period in an amount up to the lesser of $100 million or the “Maximum Common Stock Issuance” (as defined in the ELOC). As of December 31, 2025, we had not sold any shares under the ELOC and had not received proceeds. Labrys Fund II promissory note. On September 22, 2025, the Company issued an unsecured promissory note to Labrys Fund II, L.P. with an original principal amount of $115,000 and a twelve-month maturity. The note includes customary covenants and events of default and provides for amortization beginning March 23, 2026, subject to the note’s terms. Subsequent to year end, the Company completed an additional financing with Labrys Fund II, L.P. on January 20, 2026; see Note 13 - Subsequent Events. A related Current Report on Form 8-K had not been filed as of the date of this Annual Report and is being filed separately. 21 Components of Our Results of Operations Revenue The Company’s revenue comes from contracts with customers for consulting services and from the licensing and distribution of film and other entertainment 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. Cost of Revenues Cost of revenues includes only those costs directly related to the services being rendered. A majority of the consulting services were performed by management and members of the Board of Directors with no separate compensation due or payable to these individuals. Operating Expenses General and Administrative Expenses General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our executives and other administrative functions. General and administrative expenses include legal fees, accounting, auditing, consulting, and tax services; insurance costs; investor relations and transfer agent fees; travel expenses; and facility costs. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our projects. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance, and investor and public relations expenses associated with operating as a public company. Other Income (Expense) Interest Income . Interest income consists of interest earned on our cash balances. Interest Expense . Interest expenses consist of interest on the Company’s Economic Injury Disaster Loan (“EIDL ”); credit cards, and related party debt. Income Taxes Since our inception, we have not recorded any income tax benefits for the net losses we have incurred or for the research and development tax credits earned in each year and interim period, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carry forwards and tax credit carryforwards will not be realized. 22 Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Change $ Revenues $ 853,017 $ 52,677 $ 800,340 Cost of revenues - - - 853,017 52,677 800,340 Operating Expenses: General and administrative 1,403,010 2,252,130 (849,120 ) Research and development - 703 (703 ) Sales and marketing 10,576 25,947 (15,371 ) Total Operating Expenses 1,413,586 2,278,780 (865,194 ) Net Operating Loss (560,569 ) (2,226,103 ) 1,665,534 Other Income (Expenses): Interest income 97,027 1,974 95,053 Interest expense (70,898 ) (46,129 ) (24,769 ) Net Other Income (Expenses) 26,129 (44,155 ) 70,284 Loss before income taxes (534,440 ) (2,270,258 ) 1,735,818 Income taxes - - - Net loss $ (534,440 ) $ (2,270,258 ) $ 1,735,818 The year-over-year change in results also reflects the Company’s 2025 full write-off of its PNP Movie, LLC loan receivable as an impairment loss. Revenues During 2025, the Company’s revenues were derived from amounts collected on receivables related to loans and other project-level financing provided in connection with the production of the feature film BARRON’S COVE . See Note 2, “Accounts receivable,” for discussion of the year-end $1,150,000 BARRON’S COVE -related priority receivable arising from the Company’s contractual revenue collection rights under Amendment No. 1 dated December 29, 2025. During the year ended December 31, 2024, the Company reported revenues of approximately $53,000 from the licensed film BUFFALOED . General and Administrative Expenses General and administrative expenses for the year ended December 31, 2025, were approximately $1,403,000 compared to approximately $2,252,000 for the year ended December 31, 2024, a decrease of approximately $849,000. The decrease was primarily attributable to the Company recording approximately $379,000 of stock option expense in 2025 as compared to $1,258,000 in 2024. We expect to see general and administrative expenses to increase as we grow our operations in future periods. Other Income (Expense) Interest Income. Interest income for the years ended December 31, 2025 and 2024 was approximately $97,000 and $2,000, respectively. The 2025 period is primarily due to interest earned on the loan agreement with Barron’s Cove Movie, LLC. Interest Expense. Interest expense for the years ended December 31, 2025 and 2024 was approximately $71,000 and $46,000, respectively. Liquidity and Capital Resources As indicated in the accompanying financial statements, we had an accumulated deficit of approximately $7.8 million, incurred a net loss of approximately $534,000 and cash outflow from operations of approximately $406,000 as of and for the year ended December 31, 2025. Further, we expect to continue to incur significant costs in the pursuit of our business plans. We cannot assure you that our plans to raise capital or to complete our film development and production activities and commercially release our products will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. 23 In addition, on December 31, 2025, the Company’s Chief Executive Officer delivered a letter confirming a cash salary waiver (effective January 1, 2025 through March 31, 2026) and a temporary standstill on transfers or conversions of his preferred shares during the same period. Since inception, we have incurred operating losses and expect to continue to incur expenses as we pursue our business plan, including development, packaging, financing, production, distribution, and commercialization of our film and content portfolio, and as we operate as a public reporting company. To date, we have funded operations primarily through equity issuances and debt financings (including related party borrowings). Our ability to improve operating results depends on the successful commercial exploitation of our projects, including the timing and amount of receipts under applicable distribution and revenue-sharing arrangements, and there can be no assurance that additional capital will be available on acceptable terms, or at all. As of December 31, 2025, we had cash and cash equivalents of $124. Operating Activities During the year ended December 31, 2025, operating activities used approximately $405,000 of cash, primarily resulting from our net loss of approximately $534,000, partially offset by non-cash. During the year ended December 31, 2024, operating activities used approximately $805,000 of cash, primarily resulting from our net loss of approximately $2.3 million, partially offset by non-cash charges of approximately $1.4 million. Investing Activities During the years ended December 31, 2025 and 2024, net cash used by financing activities was approximately $0 and $22,000, respectively comprised of investment in intangible assets. Financing Activities During the year ended December 31, 2025, net cash provided by financing activities was approximately $406,000, consisting primarily of $115,000 of proceeds from issuance of note payable, $381,822 of proceeds from debt borrowings - related parties, $(92,234) of repayments of debt borrowings - related parties, and $1,050 of proceeds from a commercial line of credit. During the year ended December 31, 2024, net cash provided by financing activities was approximately $623,000, consisting primarily of $387,931 of proceeds from debt borrowings - related parties, $(30,310) of repayments of debt borrowings - related parties, $142,600 of proceeds from a commercial line of credit, $(45,745) of repayments on the commercial line of credit, and $169,000 of proceeds from the sale of common stock. Funding Requirements We expect our expenses to increase substantially in connection with our ongoing film development and production activities. In addition, as a public reporting company, we expect to continue to incur increased reporting, compliance, legal, accounting and other administrative costs. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of such stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures, or declaring dividends. 24 Critical Accounting Policies and Significant Judgments and Estimates Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these financial statements, the most significant estimates and assumptions include (i) determining the need for an allowance for doubtful accounts (ii) impairment of long-lived assets; (iii) deferred income taxes and (iv) measurement of the fair value of equity awards. Off-Balance Sheet Arrangements During the periods presented, we did not have and we do not currently have any significant off-balance sheet arrangements, as defined in the rules and regulations of the SEC. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. 25