Quarterly report pursuant to Section 13 or 15(d)

Consolidated Balance Sheets (Unaudited)

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Consolidated Balance Sheets (Unaudited) - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Current Assets:    
Cash and Cash Equivalents $ 4,938,720 $ 5,187,620
Accounts Receivable, net 340,126 171,867
Inventory, net 6,562 7,080
Prepaid and Other Assets 211,098 65,464
Total Current Assets 5,496,506 5,432,031
Property and Equipment, net 119,426 150,948
Film and Television Costs, net 1,250,352 1,003,546
Intangible Assets, net 1,883,690 1,918,206
Goodwill 10,365,805 10,365,805
Total Assets 19,115,779 18,870,536
Current Liabilities:    
Accounts Payable 492,502 359,433
Accrued Expenses 303,110 509,477
Deferred Revenue 352,744 305,850
Accrued Salaries and Wages 116,385 96,385
Disputed Trade Payable [1] 925,000 925,000
Service Advance - Current Portion [2] 1,489,583 0
Short Term Debt - Related Party 0 410,535
Total Current Liabilities 3,679,324 2,606,680
Long Term Liabilities:    
Deferred Revenue 2,747,235 652,689
Services Advance [2] 0 1,489,583
Total Liabilities 6,426,559 4,748,952
Stockholders' Equity:    
Series A Preferred Stock, $0.001 par value, 10,000,000 share authorized, respectively; 4,955 and 5,290 shares issued and outstanding, respectively 5 6
Common Stock, $0.001 par value, 700,000,000 shares authorized, respectively; 11,938,133 and 11,259,450 shares issued and outstanding, respectively $ 11,939 $ 11,260
Common Stock to Be Issued 71 71
Additional Paid in Capital $ 42,891,483 $ 41,156,023
Accumulated Deficit (30,213,445) (27,045,776)
Accumulated Other Comprehensive Income (Loss) (833) 0
Total Stockholders' Equity 12,689,220 14,121,584
Total Liabilities & Stockholders' Equity $ 19,115,779 $ 18,870,536
[1] As part of the Merger, the Company assumed certain liabilities from a previous member of A Squared which has claimed certain liabilities totaling $925,000. The Company disputes the basis for this liability. As of June 30, 2016, the Company believes that the statute of limitations applicable to the assertion of any legal claim relating to the collection of these liabilities has expired and therefore believes this liability is uncollectible. The Company is working with the counterparty to extinguish this liability.
[2] During the first quarter of 2014, the Company entered into an exclusive three-year agreement with Sony DADC, the optical disc manufacturing and fulfillment arm of Sony, to provide all CD, DVD and BD replication, packaging and distribution to the Company’s direct customers. Under the terms of the long-term, exclusive supply chain services agreement, the Company will order a minimum level of disc replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from Sony DADC. As consideration for these minimum order levels, the Company received a total of $1,500,000, $750,000 during the first quarter of 2014 and $750,000 during the first quarter of 2015. At the end of the term, the Company is obligated to repay a pro-rata portion of the advance if it has not ordered a minimum number of DVD/CD units during the term.