Forward Looking Statements
Except for historical information, the following Management's Discussion and
Analysis contains forward-looking statements based upon current expectations
that involve certain risks and uncertainties. Such forward-looking statements
include statements regarding, among other things, (a) discussions about the
entertainment industry and trends, (b) our projected sales and profitability,
(c) our growth strategies, (d) anticipated trends in our industry, (e) our
future financing plans, (f) our anticipated needs for working capital, (g) our
lack of operational experience and (h) the benefits related to ownership of our
common stock. Forward-looking statements, which involve assumptions and describe
our future plans, strategies, and expectations, are generally identifiable by
use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend," or "project" or the negative of these words or other
variations on these words or comparable terminology. This information may
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, performance, or achievements to be materially different from
the future results, performance, or achievements expressed or implied by any
forward-looking statements. These statements may be found under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Description of Business," as well as in this Report generally. Actual events or
results may differ materially from those discussed in forward-looking statements
as a result of various factors, including, without limitation, the following:
economic, social and political conditions, global economic downturns resulting
from extraordinary events such as the COVID-19 pandemic and other securities
industry risks; interest rate risks; liquidity risks; credit risk with clients
and counterparties; systems failures, delays and capacity constraints; network
security risks; competition; reliance on external service providers; new laws
and regulations affecting our business; net capital requirements; extensive
regulation, regulatory uncertainties and legal matters; failure to maintain
relationships with employees, customers, business partners or governmental
entities; the inability to achieve synergies or to implement integration plans
and other consequences associated with risks and uncertainties detailed in our
filings with the
Overview
On
On
In
33 Table of Contents
The Company expects to generate revenues from movie receipts, sales, downloads and streaming of original recorded music, videos, motion pictures, music publishing, live performances, licensed merchandise and corporate sponsorships.
On
On
The film, Drama Drama, was released on
This first window in the release process was SVOD (Streaming) as discussed above
and the second window the release process will be by International Sales, Cable
and Broadcast TV. In addition, the Drama Drama Official Soundtrack has been
released through all major music streaming platforms on
As previously discussed, Drama Drama, the motion picture, has tested well with our target tween and teen demographic in its own right, but has also been designed to serve as a 100-minute launch vehicle for Drama Drama, the girl group.
Our goal is to generate revenues related to the Drama Drama franchise from the movie, music, merchandising, live concert performances, and additional sources.
We are currently exploring opportunities to expand the Drama Drama brand and has
held several talks about a short or long form sequels well as new Drama Drama
recordings and Music Videos. In FY 2022, the Company released the song and Dance
Video Snoochie Boochie which was written by Billboard award winning song writer
The Company plans on introducing a new music platform in 2023 with the release of two new singles and accompanied by Music Videos.
In addition, the Company is developing a new Screen Play, with the expectation
that it will be produced in FY 2023 and completing a sizzle reel for the
Results of Operations
Comparison for the Three Months Ended
Net Revenues
The Company principally engaged in content development of media targeted at the "tween" demographic consisting of children between the ages of seven and fourteen.
· During the three months endedDecember 31, 2022 and 2021, we generated minimal revenues of$2,402 and$2,313 , respectively, from streaming music sales. 34 Table of Contents Operating Expenses For the three months endedDecember 31, 2022 , and 2021, operating expenses consisted of the following: For the Three Months Ended December 31, 2022 2021 Compensation expense$ 24,006 $ 24,040 Professional and consulting expense 65,261 79,220 General and administrative expense 37,863 92,384 Total$ 127,130 $ 195,644 Compensation expense: · For the three months endedDecember 31, 2022 , compensation expense decreased by$34 , or less than 1%, as compared to the three months endedDecember 31, 2021 . The decrease was primarily attributable to a decrease in stock-based compensation.
Professional and consulting expense:
· For the three months endedDecember 31, 2022 , professional and consulting expense decreased by$13,959 , or 17.6%, as compared to the three months endedDecember 31, 2021 . The decrease was primarily attributable to a decrease in investors relations of$26,302 , a decrease in consulting fees of$22,434 , and a decrease in legal fees of$2,913 , offset by an increase in stock-based consulting fees of$15,000 , and an increase in accounting fees of$22,690 .
General and administrative expense:
· For the three months endedDecember 31, 2022 , general and administrative expense decreased by$54,521 , or 59.0%, as compared to the three months endedDecember 31, 2021 . The decrease was primarily attributable to a decrease in marketing expense of$55,137 . Other Income (Expenses), net
· For the three months ended
of$882,063 as compared to total other income, net of$5,535,629 for the three months endedDecember 31, 2021 , a decrease of$4,653,566 , or 84.1%. This decrease was primarily due to a decrease in gain on change in fair value of derivative liabilities of$4,268,604 and a decrease in gain on debt modification of$764,999 , offset by a decrease in initial derivative expense of$123,743 , a decrease in loss on extinguishment of debt of$41.450 , and a decrease in interest expense of$214,844 . Net Income
· For the three months ended
as compared to net income of$5,342,298 for the three months endedDecember 31, 2021 , a decrease of$4,584,963 , or 85.8% resulting from changes discussed above. For the three months endedDecember 31, 2022 , net income attributable toAll For One Media Corp. amounted to$758,467 , or$0.00 per share (basic and diluted), compared to net income attributable toAll For One Media Corp. of$5,343,417 or$0.00 per share (basic and diluted) for the three months endedDecember 31, 2021 , a decrease of$4,584,950 , or 85.1% resulting from changes discussed above.
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its needs for cash requirements. We had a working capital deficit of
December 31, September 30, Percentage 2022 2022 Change Change
Working capital deficit:
Total current assets
5.7 % Working capital deficit:$ (14,770,520 ) $ (15,587,845 ) $ 817,325 5.2 % 35 Table of Contents
The decrease in working capital deficit was primarily attributable to a decrease
in current assets of
As of
Cash Flows
Changes in our cash balance are summarized as follows:
Three Months EndedDecember 31, 2022 2021
Net cash used in operating activities
- 224,000 Net change in cash$ (83,230 ) $ 12,172
Net cash used in operating activities was
· Net cash used in operating activities for the three months ended
2022 primarily reflected our net income of$757,335 adjusted for the add-back on non-cash items such as amortization of debt discounts of$64,519 , stock-based compensation expense of$6 , stock-based professional fees of$15,000 , loss from extinguishment of debt of$7,120 , gain on change in fair value of derivative liabilities of$1,116,376 , and non-cash interest expense of$700 , and changes in operating asset and liabilities consisting primarily of a decrease in prepaid expenses of$332 , increase in accounts payable and accrued liabilities of$26,160 , and an increase in accrued interest of$161,974 .
· Net cash used in operating activities for the three months ended
2021 primarily reflected our net income of$5,342,298 adjusted for the add-back on non-cash items such as amortization of debt discounts of$273,310 , stock-based compensation expense of$49 , loss from extinguishment of debt of$48,570 , gain on change in fair value of derivative liabilities of$5,384,980 , gain on debt modification of$764,999 , non-cash interest expense of$2,100 , initial derivative expense of$123,743 and changes in operating asset and liabilities consisting primarily of an increase in prepaid and other current assets of$12,168 , increase in accounts payable and accrued liabilities - related party of$500 and increase in accrued interest of$166,626 offset by a decrease in accounts payable and accrued liabilities of$6,877 .
Net Cash Provided by Financing Activities
Net cash provided by financing activities was
· Net cash provided by financing activities for three months ended
2021, consisted of net proceeds from convertible notes payable of$224,000 and proceeds from note payable of$50,000 offset by payments of note payable of$50,000 . Cash Requirements
We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital. We require additional financing to fund our current operations for fiscal 2023. There is no assurance that we will be able to obtain additional financing on acceptable terms or at all.
If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
36 Table of Contents Going Concern
The accompanying unaudited consolidated financial statements are prepared on a
going concern basis which contemplates the realization of assets and
satisfaction of liabilities and commitments in the normal course of business. As
reflected in the accompanying unaudited consolidated financial statements, the
Company had net income loss of
The unaudited consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues, there can be no assurances to that effect.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with
Use of Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet, and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include but are not limited to the fair value of common stock issued for services, the valuation of derivative liabilities, the valuation of stock-based compensation and the valuation of deferred tax assets.
Fair Value Measurements and Fair Value of Financial Instruments
FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. FASB ASC 820 requires disclosures about the fair value of all
financial instruments, whether or not recognized, for financial statement
purposes. Disclosures about the fair value of financial instruments are based on
pertinent information available to the Company on
The three levels of the fair value hierarchy are as follows:
Level 1: Inputs are unadjusted quoted prices in active markets for identical
assets or liabilities available at the measurement date.
Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3: Inputs are unobservable inputs which reflect the reporting entity's own
assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. 37 Table of Contents
The carrying amounts reported in the unaudited consolidated balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities approximate their fair market value based on the short-term maturity of these instruments.
In
Derivative Liabilities
The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 - Derivative and Hedging - Contract in Entity's Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.
In
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718,
Share-Based Payment, which requires recognition in the financial statements of
the cost of employee and director services received in exchange for an award of
equity instruments over the period the employee or director is required to
perform the services in exchange for the award (presumptively, the vesting
period). The
The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.
Revenue Recognition
The Company adopted and implemented on
Upon implementation of ASU 606, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
38 Table of Contents
Recent Accounting Pronouncements
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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