American Picture House Corp 10-Q

Item 2. 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 condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements for a variety of reasons, including those set forth in our Annual Report on Form 10-K and in other filings with the SEC. Overview American Picture House Corporation 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 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. Recent Developments During the Six Months Ended June 30, 2026 ● On January 20, 2026, we completed a convertible note financing with Labrys Fund II, L.P. for a $150,000 purchase price, including $114,000 of cash proceeds to the Company after specified deductions and offsets, together with a 10% promissory note in the original principal amount of $172,500, 200,000 commitment shares, and an initial 12,000,000-share conversion reserve. ● Effective January 27, 2026, we entered into a Multi-Film Investment and Compensation Agreement with SSS Entertainment, LLC that revised our arrangement with respect to POSE , contemplated funding for MOTION , and contemplated an additional investment in an untitled SSS-produced picture, each subject to the terms of the agreement and applicable approvals. ● On March 12, 2026, our Board approved entry into the Multi-Film Agreement and ratified Amendment No. 1 to the APHP/SSS Agreement relating to POSE and BARRON’S COVE , effective December 29, 2025. ● PROTECTOR was released in U.S. theaters on March 6, 2026. ● Effective May 26, 2026, and executed on June 3, 2026, we entered into a Master Investment and Co-Production Agreement, together with related ancillary agreements, with Russ Posternak and Becky III The Movie LLC relating to the motion picture The Last Temptation of Becky (referred to in the agreement as “BECKY 3” ). Under the agreement, we are treated for all economic purposes as having made a $300,000 senior equity investment in the picture without funding any cash, entitling us to recoup 120% of that amount ($360,000) out of the picture waterfall on a senior equity basis, pari passu with up to $300,000 of other senior equity, together with a 10% distribution fee corridor participation, a 10% participation in the producer’s future BECKY -related producer fees and backend, an assignment of certain BARRON’S COVE collateral recovery rights, first look rights on future projects of the producer’s production company, and customary company and individual screen credits. As consideration, we agreed to issue 250,000 shares of common stock and to grant options to purchase 300,000 shares at $0.20 per share. Our obligation to deliver those securities was subject to approval by our Board of Directors and other conditions precedent, which were satisfied subsequent to quarter end. See Note 5, Note 7 and Note 9 to the condensed consolidated financial statements. ● During the six months ended June 30, 2026, we applied $875,000 of amounts otherwise receivable by us toward our funding obligations under the Multi-Film Agreement, in exchange for content interests relating to MOTION and an untitled SSS-produced picture and in partial satisfaction of amounts payable with respect to POSE. The transaction did not involve the receipt or payment of cash. See Note 5 to the condensed consolidated financial statements and “Liquidity and Capital Resources — Produced and Licensed Content Costs” below. ● During the six months ended June 30, 2026, Labrys Fund II, L.P. converted a portion of the January 2026 note into 162,600 shares of common stock. Scheduled amortization payments under the note commenced July 20, 2026. Recent Developments Subsequent to June 30, 2026 ● Effective July 1, 2026, we granted options to purchase an aggregate of 700,000 shares of common stock, at an exercise price of $0.20 per share, to four designees of SSS Entertainment, LLC from the option pool contemplated under the Multi-Film Agreement. ● On July 25, 2026, the picture had its world premiere at the Fantasia International Film Festival in Montreal under the title The Last Temptation of Becky . The picture is to be distributed by Quiver Distribution. As of the date of this report, no theatrical release date had been announced and we had collected no amounts in respect of our senior equity recoupment preference. ● On August 6, 2026, our Board of Directors approved, and we issued, an aggregate of 930,000 shares of common stock, consisting of 500,000 shares to Timothy Battles, a director, and 100,000 shares to Pat Grant, in each case at $0.10 per share for cash; 80,000 shares to Monsour Hanoud in consideration of services; and 250,000 shares to Russell Posternak pursuant to the Master Investment and Co-Production Agreement. On the same date, we granted options to purchase 300,000 shares of common stock at an exercise price of $0.20 per share, with a term expiring May 26, 2028, pursuant to that agreement. ● See Note 9 to the condensed consolidated financial statements for additional information regarding events subsequent to June 30, 2026. Results of Operations Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, 2026 2025 Change $ Revenues $ - $ - $ - Cost of revenues - - - - - - Operating Expenses: General and administrative 56,481 750,406 (693,925 ) Research and development - - - Sales and marketing 2,204 1,369 835 Total Operating Expenses 58,685 751,775 (693,090 ) Net Operating Loss (58,685 ) (751,775 ) 693,090 Other Income (Expenses): Interest income - 44 (44 ) Interest expense (12,773 ) (8,897 ) (3,876 ) Net Other Income (Expenses) (12,773 ) (8,853 ) (3,920 ) Loss before income taxes (71,458 ) (760,628 ) 689,170 Income taxes - - - Net loss $ (71,458 ) $ (760,628 ) $ 689,170 2 Revenues. The Company had no revenues during the three months ended June 30, 2026 and 2025. General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2026 were $56,481, compared with $750,406 for the three months ended June 30, 2025. The 2025 period included $110,000 of stock-based compensation expense to a consultant, the write-off of $196,200 of loans receivable that management determined were uncollectible, and the expiration of rights to a screenplay carried on the books at $150,834. The 2025 period also included $73,000 of stock option expense compared to $0 in the 2026 period. These one-time expenses were offset by lower operational expenses including a $81,000 reduction in legal and professional fees and a $86,000 reduction in consulting fees. Sales and Marketing Expenses. Sales and marketing expenses were $2,204 for the three months ended June 30, 2026, compared with $1,369 for the comparable prior-year period. Interest Expense. Interest expense was $12,773 for the three months ended June 30, 2026, compared with $8,897 for the three months ended June 30, 2025. Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 Change $ Revenues $ 1,220 $ - $ 1,220 Cost of revenues - - - 1,220 - 1,220 Operating Expenses: General and administrative 169,137 1,225,863 (1,056,726 ) Research and development - - - Sales and marketing 3,786 1,830 1,956 Total Operating Expenses 172,923 1,227,693 (1,054,770 ) Net Operating Loss (171,703 ) (1,227,693 ) 1,055,990 Other Income (Expenses): Interest income - 44 (44 ) Interest expense (70,994 ) (21,816 ) (49,178 ) Net Other Income (Expenses) (70,994 ) (21,772 ) (49,222 ) Loss before income taxes (242,697 ) (1,249,465 ) 1,006,768 Income taxes - - - Net loss $ (242,697 ) $ (1,249,465 ) $ 1,006,768 Revenues. During the six months ended June 30, 2026, revenues were $1,220, compared with $0 for the six months ended June 30, 2025. The change was primarily attributable to income from the BUFFALOED CAMA. General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2026 were $169,137, compared with $1,225,863 for the six months ended June 30, 2025. The 2025 period included $110,000 of stock-based compensation expense to a consultant, the write-off of $196,200 of loans receivable that management determined were uncollectible, and the expiration of rights to a screenplay carried on the books at $150,834. The 2025 period also included $306,030 of stock option expense compared to $0 in the 2026 period. These one-time expenses were offset by lower operational expenses including a $159,000 reduction in legal and professional fees and a $190,470 reduction in consulting fees. Sales and Marketing Expenses. Sales and marketing expenses for the six months ended June 30, 2026 were $3,786, compared with $1,830 for the six months ended June 30, 2025. Interest Expense. Interest expense for the six months ended June 30, 2026 was $70,994, compared with $21,816 for the prior-year period, with the change primarily attributable to credit card debt and the Labrys financings. Liquidity and Capital Resources As of June 30, 2026, we had no cash and cash equivalents, a book overdraft of $767 included in accounts payable and accrued expenses, a working capital deficit of $1,517,590, and an accumulated deficit of approximately $8.1 million. These conditions raise substantial doubt about our ability to continue as a going concern. Operating Activities. During the six months ended June 30, 2026, net cash used in operating activities was $51,190, compared with net cash used in operating activities of $244,772 for the same 2025 period. The 2026 period reflects $1,029,404 of collections on amounts due under the Company’s BARRON’S COVE revenue collection rights and $875,000 applied toward funding obligations under the Multi-Film Investment and Compensation Agreement. Investing Activities. The Company had no investing activities during the six months ended June 30, 2026 and 2025. Produced and Licensed Content Costs. During the six months ended June 30, 2026, produced and licensed content costs increased from $300,000 to $1,175,000, and accounts receivable decreased from $1,150,000 to $121,816. The decrease in accounts receivable reflects $1,029,404 of collections on amounts due to the Company under its BARRON’S COVE revenue collection rights, offset by $1,220 of receivables arising during the period. The Company applied $875,000 toward its funding obligations to SSS Entertainment, LLC under the Multi-Film Investment and Compensation Agreement, in exchange for assigned economic interests in the related pictures, which amount is included in produced and licensed content costs. The Company assesses unamortized content costs for impairment in accordance with ASC 926-20 when events or changes in circumstances indicate that the fair value of the content may be less than its unamortized cost. 3 Financing Activities. During the six months ended June 30, 2026, net cash provided by financing activities was $51,066. The 2026 period reflects net proceeds and repayments from promissory notes of $203,750 and $25,000, respectively. Additionally, during the first six months of 2026, the Company borrowed and repaid $2,626 and $130,310 under related party notes payable. During the six months ended June 30, 2025, net cash provided by financing activities was $245,876. The 2025 period reflects $259,906 of borrowings and $15,080 of repayments under notes payable to related parties. Funding Requirements. We expect our expenses to increase in connection with our ongoing film development and production activities and our public-company reporting obligations. We expect to finance operations and investments through a combination of project receipts, debt financings, equity issuances, and strategic transactions, although there can be no assurance that sufficient capital will be available on acceptable terms, or at all. Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. We believe our critical accounting policies and estimates include those related to revenue recognition, collectability of receivables, impairment of produced and licensed content costs and intangible assets, stock-based compensation, accounting for debt and equity-linked instruments, and contingencies. Off-Balance Sheet Arrangements None, except as may be described in the notes to the condensed consolidated financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to provide the information otherwise required by this Item.