Quarterly report pursuant to Section 13 or 15(d)

Consolidated Balance Sheets (Unaudited)

Consolidated Balance Sheets (Unaudited) - USD ($)
Jun. 30, 2017
Dec. 31, 2016
Current Assets:    
Cash and Cash Equivalents $ 2,986,528 $ 1,887,921
Restricted Cash 1,000,000 1,000,000
Accounts Receivable, net 302,031 122,910
Inventory, net 19,880 6,562
Prepaid and Other Assets 380,995 359,395
Total Current Assets 4,689,434 3,376,788
Property and Equipment, net 86,003 90,461
Film and Television Costs, net 3,806,578 2,260,964
Intangible Assets, net 1,814,638 1,845,650
Goodwill 10,365,805 10,365,805
Total Assets 20,762,458 17,939,668
Current Liabilities:    
Accounts Payable 302,737 648,638
Accrued Expenses 258,680 249,482
Deferred Revenue 554,739 410,662
Accrued Salaries and Wages 165,544 132,827
Disputed Trade Payable [1] 925,000 925,000
Service Advance [2],[3],[4] 0 1,489,583
Total Current Liabilities 2,206,700 3,856,192
Long Term Liabilities:    
Deferred Revenue 4,465,768 2,695,946
Production Facility 2,697,048 1,332,004
Total Liabilities 9,369,516 7,884,142
Stockholders' Equity:    
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; 3,710 and 4,895 shares issued and outstanding, respectively 4 5
Common Stock, $0.001 par value, 233,333,334 shares authorized; 5,897,091 and 4,010,649 shares issued and outstanding, respectively 5,898 4,011
Common Stock to Be Issued 24 24
Additional Paid in Capital 50,602,674 46,697,005
Accumulated Deficit (39,210,540) (36,642,761)
Accumulated Other Comprehensive Loss (5,118) (2,758)
Total Stockholders' Equity 11,392,942 10,055,526
Total Liabilities & Stockholders' Equity $ 20,762,458 $ 17,939,668
[1] As part of the Merger in 2013, 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, 2017, 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 DADC to provide all CD, DVD and Blu-ray 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 disk replication, packaging and distribution services for its content across all physical media, including DVD, CD, and Blu-ray from 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.
[3] In connection with such transaction, we issued Sony 301,231 shares of our Common Stock at $4.945 per share, Sony's exclusive territory for exercising its home entertainment distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the Distribution Agreement was increased by the amount of the payment to DADC.
[4] On January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement with Sony pursuant to which, among other things, Sony paid DADC $1,489,583, which was the total sum owed and payable by us to DADC for the disk replication, packaging and distribution services.