Notes
to the Condensed Consolidated Financial Statements
For
the Nine Months Ended September 30, 2017 and 2016
(Unaudited)
Note
1 - Organization and Basis of Operations
Carolco Pictures, Inc. (formerly “Brick
Top Productions, Inc.” or the “Company”) was incorporated under the laws of the State of Florida in February
2009 under the name “York Entertainment, Inc.” The Company changed its name to Brick Top Productions, Inc. in October
2010. In January 2015, the Company changed its name from Brick Top Productions, Inc. to Carolco Pictures, Inc. In addition, in
January 2015, the Company changed its stock symbol from “BTOP” to “CRCO.”
The
accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles
(“GAAP”) as promulgated in the United States of America (“U.S.”) and with instructions to Form 10-Q pursuant
to the rules and regulations of Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and Article 8-03
of Regulation S-X under the Exchange Act. Accordingly, these condensed consolidated financial statements do not include all of
the information and footnotes required by GAAP for complete financial statements. In the opinion of management, we have included
all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for
the nine months ended September 30, 2017 are not indicative of the results that may be expected for the fiscal year ending December
31, 2017. You should read these unaudited condensed consolidated financial statements in conjunction with the audited financial
statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016
filed on April 10, 2017. The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial
statements included in the annual report on Form 10-K for that year.
Going
Concern
The
Company’s condensed consolidated financial statements have been prepared assuming that it will continue as a going concern,
which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the condensed consolidated financial statements, the Company had a stockholders’ deficit of $2,602,000 at
September 30, 2017 and incurred a loss from operations for the three months ended September 30, 2017 of $808,000. These factors
raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the
financial statements are issued. In addition, the Company’s independent public accounting firm in its audit report to the
financial statements included in the 2016 Annual Report expressed substantial doubt about the Company’s ability to continue
as a going concern. The condensed consolidated financial statements do not include any adjustments related to the recoverability
and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
Management
estimates that the current funds on hand and raising capital through proceeds from the sale of common stock subscriptions will
be sufficient to continue operations through 2017. The ability of the Company to continue as a going concern is dependent on the
Company’s ability to execute its strategy and in its ability to raise additional funds. Management is currently seeking
additional funds, primarily through the issuance of equity securities for cash to operate its business. No assurance can be given
that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even
if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt
financing or cause substantial dilution for our stock holders, in case or equity financing.
Note
2 - Summary of Significant Accounting Policies
Reverse
Stock Split
In
January 2017, the Company effected a 1-for-10,000 reverse stock split of the Company’s common stock. All shares and per-share
amounts have been retroactively restated as of the earliest periods presented to reflect the stock split.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Those estimates and assumptions include depreciable lives of property and equipment,
analysis of impairments of recorded goodwill, accruals for potential liabilities, assumptions made in valuing derivative liabilities
and assumptions made in valuing stock instruments issued for services.
Principles
of Consolidation
The
Company’s consolidated subsidiaries and/or entities are as follows:
Name
of consolidated
subsidiary
or entity
|
|
State
or other jurisdiction of incorporation or organization
|
|
Date
of incorporation or formation (date of acquisition, if applicable)
|
|
Attributable
interest
|
|
|
|
|
|
|
|
|
|
York
Productions, LLC
|
|
The
State of Florida
|
|
October
22, 2008 (June 1, 2010)
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
York
Productions II, LLC
|
|
The
State of Florida
|
|
June
13, 2013
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
Recall
Studios, Inc.
|
|
The
State of Nevada
|
|
March
30, 2016 (July 27, 2016)
|
|
|
100
|
%
|
The
accompanying financial statements are consolidated and include the accounts of the Company and its majority owned subsidiaries.
The consolidated accounts include 100% of the assets and liabilities of our majority owned subsidiaries, and the ownership interests
of minority investors are recorded as a minority interest. All inter-company balances and transactions have been eliminated. York
Productions, LLC and York Productions II, LLC are currently inactive. On June 15, 2017, Carolco Pictures, Inc. entered into a
Purchase and Sale Agreement with Metropolitan Sound + Vision LLC, a South Carolina limited liability company. Pursuant to the
Agreement, the Company agreed to sell to Metro all of the shares of common stock of S&G Holdings, Inc., a Tennessee corporation
doing business as High Five Entertainment owned by the Company, which constitute 75% of the issued and outstanding shares of S&G.
Concentrations
During
the nine months ended September 30, 2017, the Company had one customer that accounted for 90% of sales. During the nine months
ended September 30, 2016, the Company had no sales.
Income
(Loss) Per Share
Basic
income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted income (loss) 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 income (loss) of the Company. In computing diluted income
(loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used
to purchase common stock at the average market price during the period. Options and warrants 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
of the options and warrants.
For
the nine months ended September 30, 2017, the dilutive impact of a note payable that can convert into 13 shares of common stock
and warrants exercisable into 239 shares of common stock have been excluded because their impact on the income per share is anti-dilutive.
For the nine months ended September 30 2017, the calculation of diluted earnings per share included convertible Series B Preferred
stock that can convert into 2,000,000 shares of common stock, convertible Series C Preferred stock that can convert into 2,848,982
shares of common stock, and notes that can convert into 2,541,748 shares of common stock. For the nine months ended September
30, 2016, the dilutive impact of 295 warrants, Series B Preferred stock that can convert into 2,000,000 shares of common stock
and notes that can convert into 399,333,333 shares of common stock have been excluded because their impact on the loss per share
is anti-dilutive.
The
following table sets forth the computation of basic and diluted earnings per share:
|
|
Nine
months ended
September 30,
|
|
|
Three
months ended
September
30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Earnings
per share – Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) for the period
|
|
$
|
10,847,000
|
|
|
$
|
(5,103,000
|
)
|
|
$
|
(808,000
|
)
|
|
$
|
(707,000
|
)
|
Basic
average common stock outstanding
|
|
|
32,156,987
|
|
|
|
257,265
|
|
|
|
79,393,777
|
|
|
|
373,961
|
|
Net
earnings per share
|
|
$
|
0.34
|
|
|
$
|
(19.84
|
)
|
|
$
|
(.01
|
)
|
|
$
|
(1.89
|
)
|
|
|
Nine
months ended
September 30,
|
|
|
Three
months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Earnings
per share - Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) for the period
|
|
$
|
10,847,000
|
|
|
$
|
(5,103,000
|
)
|
|
$
|
(808,000
|
)
|
|
$
|
(1,823,000
|
)
|
Basic
average common stock outstanding
|
|
|
32,156,987
|
|
|
|
257,265
|
|
|
|
79,393,777
|
|
|
|
373,961
|
|
Diluted
effect from preferred stock and convertible notes
|
|
|
7,390,730
|
|
|
|
-
|
|
|
|
7,390,730
|
|
|
|
-
|
|
Diluted
average common stock outstanding
|
|
|
39,547,717
|
|
|
|
257,265
|
|
|
|
86,784,507
|
|
|
|
373,961
|
|
Net
earnings per share
|
|
$
|
0.27
|
|
|
$
|
(19.84
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
1.89
|
)
|
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported
in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average
Black-Scholes-Merton models to value the derivative instruments at inception and on subsequent valuation dates through the September
30, 2017, reporting date.
The
classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is
evaluated at the end of each reporting period.
Recently
Issued Accounting Pronouncements
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09,
Revenue from
Contracts with Customers
. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing
revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.
ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in
the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and
cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from
costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December
15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods
therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of
the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements
and disclosures.
In
February 2016, the FASB issued ASU No. 2016-02
, Leases
. ASU 2016-02 requires a lessee to record a right of use asset and
a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective
for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective
transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning
of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company
is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.
July
2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives
and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement
of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 allows companies to exclude a down round feature when
determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock.
As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be
accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered
and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat
the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing
basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities
will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. The guidance in ASU
2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early
adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The Company has early
adopted ASU 2017-11 in the third quarter of 2017 . The adoption of ASU 2017-11 is not expected to have a material impact
on the Company’s financial statements and related disclosures.
Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact
on the Company’s present or future consolidated financial statement presentation or disclosures.
Note
3 – Convertible Notes Payable
On
August 28, 2017, the Company issued a convertible promissory note to Power Up Lending Group in the amount of $40,000. The note
is due on June 10, 2018 and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note.
The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 63% multiplied
by the average of the three lowest trading price during the previous ten (10) day trading period ending on the latest complete
trading day prior to the conversion date. Pursuant to current accounting guidelines, the Company recorded a note discount of $40,000
to account for the note’s derivative liability. On September 29, 2017 the note and all accrued interest was paid off and
the remaining portion of the note discount was amortized.
On
August 29, 2017, the Company issued a convertible promissory note to Crown Bridge Partners in the amount of $35,000. The note
is due on August 29, 2018 and bears interest at 10% per annum. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 55% multiplied by the lowest trading price during the previous twenty (20) day
trading period ending on the latest complete trading day prior to the conversion date. Pursuant to current accounting guidelines,
the Company recorded a note discount of $35,000 to account for the note’s derivative liability.
On
September 5, 2017, the Company issued a convertible promissory note to LG Capital Funding in the amount of $52,500. The note is
due on September 5, 2018 and bears interest at 6% per annum. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 58% multiplied by the lowest trading price during the previous twenty (20) day
trading period ending on the latest complete trading day prior to the conversion date. Pursuant to current accounting guidelines,
the Company recorded a note discount of $52,500 to account for the note’s derivative liability.
On
September 12, 2017, the Company issued a convertible promissory note to EMA Financal in the amount of $100,000. The note is due
on September 5, 2018 and bears interest at 10% per annum. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the lowest trading price during the previous twenty-five (25)
day trading period ending on the latest complete trading day prior to the conversion date. Pursuant to current accounting guidelines,
the Company recorded a note discount of $100,000 to account for the note’s derivative liability.
On
September 22, 2017, the Company issued a convertible promissory note to Essex Global Investment in the amount of $43,000. The
note is due on September 22, 2018 and bears interest at 10% per annum. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 58% multiplied by the lowest trading price during the previous twenty-five
(25) day trading period ending on the latest complete trading day prior to the conversion date. Pursuant to current accounting
guidelines, the Company recorded a note discount of $43,000 to account for the note’s derivative liability.
As
of September 30, 2017, outstanding balance of the notes payable amounted to $231,000, accrued interest of $18,000 and unamortized
note discount of $218,000.
Note
4– Convertible Notes Payable to Related Parties
Chairman
and CEO
In
July 2015, the Company issued convertible promissory notes to Alex Bafer, Chairman and CEO, in exchange for the cancellation of
previously issued promissory notes in the aggregate of $530,000 and accrued interest of $13,000 for a total of $543,000. The notes
are unsecured, bear interest of 5% per annum, matured on October 1, 2015 and are convertible to shares of common stock at a conversion
price equal to the lowest closing stock price during the 20 trading days prior to conversion with a 50% discount.
In
October 2015, the notes matured and became past due. As a result, the stated interest of 5% increased to 22% pursuant to the term
of the notes. In July 2016, the Company and Mr. Bafer agreed to extend the maturity date of these notes to August 1, 2017 and
cure the default. There were no other terms changed and no additional compensation paid. As of September 30, 2017 and December
31, 2016, the total outstanding note balance amounted to $434,000 and $434,000, and accrued interest of $136,000 and $118,000,
respectively. The notes are currently past due.
Shareholder
On
December 28, 2016, the Company issued an unsecured convertible promissory note in the principal amount of $50,000 to a shareholder.
The note bears interest at 5% per annum, is due on March 24, 2017, and is convertible into shares of common stock at a conversion
price of $4,000 per share. The note is currently past due.
Note
5- Derivative Liability
The
FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative
instruments. Certain warrants issued to investors and conversion features of notes payable did not have fixed settlement provisions
because either their exercise prices will be lowered if the Company issues securities at lower prices in the future or the conversion
price is variable. In addition, since the number of shares to be issued is not explicitly limited, the Company is unable to conclude
that enough authorized and unissued shares are available to share settle the conversion option. In accordance with the FASB authoritative
guidance, the conversion feature of the notes was separated from the host contract (i.e., the notes) and the fair value of the
warrants have been recognized as a derivative and will be re-measured at the end of every reporting period with the change in
value reported in the statement of operations.
The
derivative liabilities were valued at the following dates using a probability based weighted-average Black-Scholes-Merton model
with the following average assumptions:
|
|
September
30, 2017
|
|
|
December
31, 2016
|
|
Stock
Price
|
|
$
|
0.51
|
|
|
$
|
4.0
|
|
Risk
free interest rate
|
|
|
0.84
|
%
|
|
|
0.51%
- 0.62
|
%
|
Expected
Volatility
|
|
|
525
|
%
|
|
|
383
|
%
|
Expected
life in years
|
|
|
.92-1.00
|
|
|
|
0.21-0.57
|
|
Expected
dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
Fair
Value – Warrants
|
|
$
|
0
|
|
|
$
|
11,930,000
|
|
Fair
Value – Note Conversion Feature
|
|
|
1,574,000
|
|
|
|
1,055,000
|
|
Total
|
|
$
|
1,574,000
|
|
|
$
|
12,985,000
|
|
The
risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility
of its common stock to estimate the future volatility for its common stock. The expected life of the derivative securities was
determined by the remaining contractual life of the derivative instrument. For derivative instruments that already matured, the
Company used the estimated life. The expected dividend yield was based on the fact that the Company has not paid dividends to
its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.
During
the nine months ended September 30, 2017, the Company recorded $495,000 in derivative liability as a result of conversion features
from the issuance of new convertible notes payables (see Note 3). In addition the Company recorded a gain of $9,331,000
to account for the change in fair value of the derivative liabilities related to the conversion features and warrants from December
31, 2016 to September 30, 2017. Also the Company recorded a gain from various warrants accounted for as derivative liabilities
expired and as such their corresponding fair value at the expiration date of $2,575,000 was extinguished from the derivative liabilities
balance. As of September 30, 2017, the derivative liability amounted to $1,574,000.
Note
6- Stockholders’ Deficit
Issuance
of Common Stock for Cash
During
the nine months ended September 30, 2017, the Company issued 810,000 shares of common stock for proceeds of $152,000.
Issuance
of Common Stock for services
During
the nine months ended September 30, 2017, the Company issued an aggregate of 501,000 shares of common stock valued at $410,000
to five shareholders for services.
Issuance
of Common Stock Upon Conversion of Series C Preferred Stock
During
the nine months ended September 30, 2017, the Company issued 78,175,000 shares of common stock upon the conversion of 39,087,500
shares of Series C Preferred Stock pursuant to the terms of the certificate of designation of the Series C Preferred Stock.
Summary
of the Company’s Stock Warrant Activities
The
following table summarizes information concerning outstanding and exercisable warrants as of September 30, 2017 and December 31,
2016:
|
|
Warrants
|
|
|
Weighted
Average Price
|
|
|
Weighted
Average Remaining Contractual Life
|
|
December
31, 2016
|
|
|
295
|
|
|
$
|
800
|
|
|
|
3.63
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/expired
|
|
|
(56
|
)
|
|
|
10
|
|
|
|
.0
5
|
|
September
30, 2017
|
|
|
239
|
|
|
$
|
1,740
|
|
|
|
3.68
|
|
At
September 30, 2017, the Company’s outstanding and exercisable warrants had no intrinsic value as the exercise price of these
warrants was greater than the market price at September 30, 2017
Note
7- Related Party Transactions
Advances
from Related Party
From
time to time, the CEO of the Company and a shareholder/employee advanced funds to the Company for working capital purposes. Those
advances are unsecured, non-interest bearing and due on demand. As of September 30, 2017 and December 31, 2016 outstanding advances
from related party aggregated to $31,000 and $31,000, respectively.
Accrued
Payroll
During
the nine months ended September 30, 2017, the Company accrued payroll in the aggregate of $191,250 for officers and employees’
salaries. On April 3, 2017, the Company entered into a separation agreement and general release by and between the Company and
David Cohen pursuant to which Mr. Cohen agreed to resign from his officer and director positions with the Company. In consideration
thereof, Mr. Cohen received 1,000 shares of Company common stock valued at $1,000. In addition he released the Company from its
obligation for accrued payroll of $125,000.
As
of September 30, 2017, accrued payroll amounted to $388,000, of which $343,750 pertains to the accrued salary of one officer Mr.
Bafer, Chief Executive Officer.
Note
8 - Contingencies and Litigation
The
Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except
for income tax contingencies (commencing April 1, 2009), the Company records accruals for contingencies to the extent that management
concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated
with the contingency are expensed as incurred.
Note
9 – Discontinued Operations
On
June 15, 2017, the Company entered into a Purchase and Sale Agreement with Metropolitan Sound + Vision LLC, a South Carolina limited
liability company. Pursuant to the Agreement, the Company agreed to sell to Metro all of the shares of common stock of S&G
Holdings, Inc., a Tennessee corporation doing business as High Five Entertainment owned by the Company, which constitute 75% of
the issued and outstanding shares of S&G. Pursuant to current accounting guidelines, the business component is reported as
a discontinued operations.
Pursuant
to the Agreement, at the closing of the Transaction, the Company was to deliver to Metro 100% of the issued and outstanding shares
of common stock of S&G owned by the Company, and Metro was required to pay for such stock as follows: An initial payment of
$10,000 was required to be made at the closing, and thereafter, at the end of each fiscal quarter, beginning at the end the third
fiscal quarter of 2017, Metro shall pay the Company 5% of gross revenues collected during the quarter by Metro via the exploitation
of S&G’s assets, up to a lifetime maximum of $590,000.
The
Agreement requires Metro to use its best professional efforts to generate revenue from the exploitation of S&G’s assets,
and if the Company has not received a total of at least $265,000 of the $590,000 lifetime maximum purchase price from Metro before
July 1, 2022, the Company has the right to repurchase the stock and assets of the S&G from Metro for $10,000.
The
Company recognized a gain on the sale of S&G of $57,000 consisting of the assumption by the buyer of the net liabilities of
S&G of $236,000 offsets by the elimination of the non-controlling interest of S&G of $189,000 and the purchase price consideration
of $10,000. The remainder of the purchase price will be recognized when collectability can be determined.
The
following table summarizes the assets and liabilities of our former subsidiary’s discontinued operations as of December
31, 2016:
|
|
December
31, 2016
|
|
ASSETS:
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
$
|
24,000
|
|
Accounts
receivable
|
|
|
1,000
|
|
Prepaid
expenses and other current assets
|
|
|
3,000
|
|
Total
assets
|
|
$
|
28,000
|
|
|
|
|
|
|
LIABILITIES
:
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
81,000
|
|
Accrued payroll
– officers
|
|
|
36,000
|
|
Advances
from related parties
|
|
|
10,000
|
|
Deferred
revenue
|
|
|
24,000
|
|
Note
payable
|
|
|
75,000
|
|
Total
liabilities
|
|
$
|
226,000
|
|
The
following table summarizes the results of operations of our former subsidiary for the three and nine months ended September 30,
2017 and 2016 and is included in the condensed consolidated statements of operations as discontinued operations:
|
|
For
the Three Months Ended
|
|
|
For
the Nine Months Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
146,000
|
|
|
$
|
49,000
|
|
|
$
|
176,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold
|
|
|
-
|
|
|
|
76,000
|
|
|
|
31,000
|
|
|
|
80,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
-
|
|
|
|
70,000
|
|
|
|
18,000
|
|
|
|
96,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
-
|
|
|
|
77,000
|
|
|
|
76,000
|
|
|
|
152,000
|
|
General
and administrative
|
|
|
-
|
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
51,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
-
|
|
|
|
84,000
|
|
|
|
83,000
|
|
|
|
203,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
-
|
|
|
|
(14,000
|
)
|
|
|
(65,000
|
)
|
|
|
(107,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
(1,000
|
)
|
|
|
(3,000
|
)
|
Other
income (expense)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,000
|
)
|
|
|
-
|
|
Total
Other Income (Expense)
|
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
(3,000
|
)
|
|
|
(3,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
From Operations of Discontinued Business Component
|
|
$
|
-
|
|
|
$
|
(15,000
|
)
|
|
$
|
(68,000
|
)
|
|
$
|
(110,000
|
)
|
Note
10 - Subsequent Events
On August 31, 2017, stockholders holding a
majority of the voting power of our issued and outstanding shares of capital stock executed a written consent approving an
amendment to our articles of incorporation, as amended, pursuant to which our corporate name will change from Carolco Pictures,
Inc. to Recall Studios, Inc. The corporate name change will become effective after the action is approved by FINRA.
In
November 2017 the Company entered into a securities purchase agreement in connection with the issuance of a $110,000 convertible
note. The note carries interest of 12% per year and is due and payable on March 29, 2018. The outstanding amounts under the note
are convertible, at the option of the holder, into shares of common stock of the Company, at a conversion price calculated at
58% of the lowest sale price for the common stock during the 20 consecutive trading days immediately preceding the conversion
date. In addition the Company issued 107,843 shares of the Company’s common stock as a commitment fee and issued warrants
to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.50.