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As Of Filer Filing For·On·As Docs:Size Issuer Agent 9/28/18 VidAngel, Inc. 1-SA 6/30/18 1:438K Blueprint/FA |
Document/Exhibit Description Pages Size 1: 1-SA Semi-Annual Report -- Reg. A HTML 148K
Blueprint |
VidAngel, Inc.
|
(Exact
name of registrant as specified in its charter)
|
Delaware
|
|
46-5217451
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification No.)
|
|
For the Period Ended June 30,
|
Change
|
Change
|
||||
|
2018
|
2017
|
2016
|
2018 vs. 2017
|
2017 vs. 2016
|
||
Revenues:
|
|
|
|
|
|
|
|
Revenues
|
$3,133,357
|
$190,666
|
$2,405,430
|
$2,942,691
|
1,543%
|
$(2,214,764)
|
-92%
|
Operating Expenses:
|
|
|
|
|
|
|
|
Cost
of revenues
|
$1,181,625
|
$1,205,428
|
$815,284
|
$(23,803)
|
-2%
|
$390,144
|
48%
|
Sales
and marketing
|
845,244
|
408,926
|
2,836,930
|
436,318
|
107%
|
(2,428,004)
|
-86%
|
General
and administrative
|
841,457
|
910,541
|
525,802
|
(69,084)
|
-8%
|
384,739
|
73%
|
Legal
|
273,528
|
688,745
|
103,318
|
(415,217)
|
-60%
|
585,427
|
567%
|
Research
and development
|
813,685
|
681,281
|
353,904
|
132,404
|
19%
|
327,377
|
93%
|
Total Operating Expenses:
|
3,955,539
|
3,894,921
|
4,635,238
|
60,618
|
2%
|
(740,317)
|
-16%
|
Loss from operations
|
(822,182)
|
(3,704,255)
|
(2,229,808)
|
2,882,074
|
-78%
|
(1,474,447)
|
66%
|
Balance Sheets
|
F-2
|
Statements of Operations
|
F-3
|
Statements of Stockholder’s Equity
|
F-4
|
Statements of Cash Flows
|
F-5
|
Notes to Financial Statements
|
F-6 to F-10
|
|
December
31,
|
|
|
(Unaudited)
|
2017
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$370,883
|
$1,920,052
|
Restricted
cash
|
952,689
|
1,051,727
|
Accounts
receivable
|
187,667
|
8,007
|
Prepaid expenses
and other
|
45,706
|
125,582
|
|
|
|
Total current
assets
|
1,556,945
|
3,105,368
|
|
|
|
Movie
asset
|
1,443,820
|
1,443,820
|
Deposits
|
132,915
|
204,271
|
Property and
equipment, net
|
91,123
|
128,534
|
Note
receivable
|
292,765
|
126,725
|
|
|
|
Total
assets
|
$3,517,568
|
$5,008,718
|
|
|
|
Liabilities and Stockholders' Equity (Deficit)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$266,390
|
$519,187
|
Accrued
expenses
|
323,697
|
510,891
|
Deferred
revenue
|
3,943,313
|
4,184,411
|
|
|
|
Total current
liabilities
|
4,533,400
|
5,214,489
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
Common stock,
$0.001 par value, 25,000,000 shares
|
|
|
authorized;
21,383,449 and 21,377,191 shares issued
|
|
|
and outstanding,
respectively
|
21,384
|
21,377
|
Additional paid-in
capital
|
13,234,921
|
13,231,869
|
Accumulated
deficit
|
(14,272,137)
|
(13,459,017)
|
|
|
|
Total stockholders'
equity (deficit)
|
(1,015,832)
|
(205,771)
|
|
|
|
Total liabilities
and stockholders' equity (deficit)
|
$3,517,568
|
$5,008,718
|
|
||
|
(Unaudited)
|
(Unaudited)
|
|
|
|
Revenues,
net
|
$3,133,357
|
$190,666
|
|
|
|
Operating
expenses:
|
|
|
Cost of
revenues
|
1,181,625
|
1,205,428
|
Selling and
marketing
|
845,244
|
408,926
|
General and
administrative
|
841,457
|
910,541
|
Legal
|
273,528
|
688,745
|
Research and
development
|
813,685
|
681,281
|
|
|
|
Total operating
expenses
|
3,955,539
|
3,894,921
|
|
|
|
Operating
loss
|
(822,182)
|
(3,704,255)
|
|
|
|
Other income
(expense):
|
|
|
Interest
income
|
9,062
|
16,341
|
Interest
expense
|
-
|
(49)
|
Other expense,
net
|
|
-
|
|
|
|
Total other
expense, net
|
9,062
|
16,292
|
|
|
|
Loss before income
taxes
|
(813,120)
|
(3,687,963)
|
|
|
|
Provision for
income taxes
|
-
|
-
|
|
|
|
Net
loss
|
$(813,120)
|
$(3,687,963)
|
|
|
|
|
|
|
Total
|
|
|
Common
Stock
|
Additional
|
|
Stockholders'
|
|
|
Class
A
Shares
|
Class
B
Shares
|
Amount
|
Paid-in
Capital
|
Accumulated
Deficit
|
Equity
(Deficit)
|
|
|
|
|
|
|
|
Balance as of
January 1, 2017
|
18,008,908
|
2,991,752
|
$21,001
|
$12,203,478
|
$(6,737,013)
|
$5,487,466
|
|
|
|
|
|
|
|
Issuance of common
stock,
|
|
|
|
|
|
|
net of
issuance costs of $307,166
|
-
|
321,583
|
321
|
964,838
|
|
965,159
|
|
|
|
|
|
|
|
Stock options
excercised
|
54,948
|
-
|
55
|
27,419
|
-
|
27,474
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
-
|
-
|
-
|
36,134
|
-
|
36,134
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
-
|
(6,722,004)
|
(6,722,004)
|
|
|
|
|
|
|
|
Balance as of
December 31, 2017
|
18,063,856
|
3,313,335
|
21,377
|
13,231,869
|
(13,459,017)
|
(205,771)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
excercised
|
6,258
|
-
|
7
|
3,052
|
-
|
3,059
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
-
|
(813,120)
|
(813,120)
|
|
|
|
|
|
|
|
18,070,114
|
3,313,335
|
$21,384
|
$13,234,921
|
$(14,272,137)
|
$(1,015,832)
|
|
||
|
(Unaudited)
|
(Unaudited)
|
|
|
|
Cash
flows from operating activities:
|
|
|
Net
loss
|
$(813,120)
|
$(3,687,963)
|
Adjustments to
reconcile net loss to net cash
|
|
|
used in operating
activities:
|
|
|
Depreciation and
amortization
|
54,160
|
103,205
|
Decrease (increase)
in:
|
|
|
Restricted
cash
|
99,038
|
455,813
|
Accounts
receivable
|
(179,660)
|
359,232
|
Prepaid expenses
and other assets
|
(14,808)
|
(380,253)
|
Movie
inventory
|
-
|
126,999
|
Increase (decrease)
in:
|
|
|
Accounts payable
and accrued expenses
|
(439,991)
|
(781,782)
|
Deferred
revenue
|
(241,098)
|
(313,339)
|
Escrow
obligation
|
-
|
(456,579)
|
|
|
|
Net cash used in
operating activities
|
(1,535,479)
|
(4,574,667)
|
|
|
|
Cash
flows from investing activities:
|
|
|
Purchase of
property and equipment
|
(16,749)
|
(252,125)
|
|
|
|
Cash
flows from financing activities:
|
|
|
Proceeds from
issuance of common stock, net
|
3,059
|
963,756
|
Exercise of stock
options
|
|
-
|
|
|
|
Net cash provided
by financing activities
|
3,059
|
963,756
|
|
|
|
Net change in cash
and cash equivalents
|
(1,549,169)
|
(3,863,036)
|
|
|
|
Cash and cash
equivalents at beginning of period
|
1,920,052
|
9,084,448
|
|
|
|
Cash and cash
equivalents at end of period
|
$370,883
|
$5,221,412
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
Cash paid for
interest
|
$-
|
$49
|
|
The
accompanying financial statements have been prepared by the
Company, without audit, and reflect all adjustments that are, in
the opinion of management, necessary for a fair statement of the
results for the periods presented. The financial statements have
been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim
financial reporting. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted pursuant to such rules and
regulations. It is the opinion of management that the financial
statements reflect all adjustments necessary for a fair
presentation of the financial position, results of operations, and
cash flows for the periods presented. The results of operations for
the six months ended June 30, 2018, are not indicative of the
results expected for the entire fiscal year.
|
|
|
|
|
2. Description of
Organization
and
Summary
of
Significant
Accounting
Policies
|
|
Organization
VidAngel,
Inc. (the “Company”) was incorporated on November 13,
2013, as a Utah limited liability company. On February 7, 2014, the
Company converted to a Delaware corporation. The Company has
developed, and sells, the most widely used filtering technology
available to give customers the unprecedented ability to remove
objectionable content from motion pictures they watch in their own
homes. The Company also produces its own original comedy series for
fun and family-friendly laughs.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates. Key management estimates include the
estimated life of the customer’s ownership of a disc,
estimated life and salvage value of discs, valuation allowances for
net deferred income tax assets, and valuation of stock-based
compensation.
Cash and Cash Equivalents
The
Company considers all highly liquid investments with original
maturities to the Company of three months or less to be cash
equivalents. As of June 30, 2018, these cash equivalents consisted
of money market accounts.
|
Organization
and
Summary
of
Significant
Accounting
Policies
Continued
|
|
Movie Inventory
Movie
inventory includes DVD and Blu-Ray discs purchased by the Company
for resale, not in excess of realizable value. Movie inventory is
recorded at cost less accumulated depreciation. Depreciation is
calculated using the straight-line method over the estimated
economic useful life of five years. Movie inventory is depreciated
over the estimated economic useful life to the estimated salvage
value. The Company periodically reviews inventories for excess
supply, obsolescence, and valuations above estimated realizable
amounts, and provides a reserve to cover these items. Management
determined that no allowance for obsolete inventory was necessary
as of June 30, 2018.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are
calculated using the straight-line method over the estimated
economic useful lives of the assets or over the related lease terms
(if shorter) as follows:
|
Office
and computer equipment
|
3
years
|
Furniture
and fixtures
|
3
years
|
Production
equipment
|
1
year
|
Leasehold
improvements
|
1
year
|
|
|
Expenditures
that materially increase values or capacities or extend useful
lives of property and equipment are capitalized. Routine
maintenance, repairs, and renewal costs are expensed as incurred.
Upon sale or other retirement of depreciable property, the cost and
accumulated depreciation and amortization are removed from the
related accounts and any gain or loss is reflected in the statement
of operations.
|
|
|
Impairment of Long-Lived Assets
The
Company reviews its property and equipment, and other long-lived
assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may be impaired. If
it is determined that the estimated undiscounted future cash flows
are not sufficient to recover the carrying value of the asset, an
impairment loss is recognized in the statements of operations for
the difference between the carrying value and the fair value of the
asset. Management does not consider any of the Company’s
assets to be impaired as of June 30, 2018.
|
2. Description of
Organization
and
Summary
of
Significant
Accounting
Policies
Continued
|
|
Revenue Recognition (Pre-injunction)
The
Company previously resold Blu-Ray and DVD discs to its customers
for a fixed price of $20. Upon purchase of the disc, customers
agreed to have the Company retain physical custody of the purchased
disc until such a time that they either requested to have the disc
shipped to them directly, or they decided to sell the disc back to
the Company at an agreed price, which reduced $1 per day for DVD
discs, and $2 per day for Blu-Ray discs. While the customer owned
the disc, the Company gave them access to a patented video
streaming technology that permitted them to direct their individual
viewing experience by allowing them to remove certain audio or
video segments containing material they consider distasteful.
Access to this technology was available during the entire period
they owned the disc purchased from the Company and was extinguished
when they sold the disc back to the Company. Revenue was recognized
when all the following criteria were met: (1) persuasive evidence
of an arrangement existed, (2) services had been rendered, (3) the
Company’s price to the buyer was fixed or determinable, and
(4) collectability was reasonably assured.
The
Company separated its revenue transactions into two pools based on
length of time of disc ownership – short-term and long-term
ownership of a disc.
Transactions
that had a short-term ownership of a disc exhibited a very short
ownership time period, and usually on average sold the disc back to
the Company within 5 hours. For these transactions, the
Company recognized revenue on a daily basis, in an amount equal to
the daily reduction in the sell-back price from the customer to the
Company ($1 or $2 per day), and ceased upon the customer’s
sale back of the disc. More than 99% of the Company’s
transactions were short-term.
Transactions
that had a long-term ownership exhibited a longer period of time of
ownership – in excess of 20 days. The majority of the
customers who entered long-term transactions appeared to be
building a library of movie titles and may have owned the
associated discs indefinitely. The Company estimated the
expected period of the long-term transactions, and recognized
revenue based on a subscription model, or ratably over the expected
term.
Cash
received from customers prior to recognition of revenue was
recorded as deferred revenue.
On
December 29, 2016, the Company complied with an injunction and
ceased selling discs and streaming customized versions of the
discs, pending the outcome of certain legal matters; see Note
3.
|
2. Description of
Organization
and
Summary
of
Significant
Accounting
Policies
Continued
|
|
Revenue Recognition (Post-injunction)
Post-injunction
the Company offers its customers filtering subscriptions to use its
proprietary content filtering technology in conjunction with many
of today’s popular streaming services for a fixed rate of
$1.99 - $9.99 per month. Customers are charged the full price at
the start of the subscription period, which is initially recognized
as deferred revenue and recognized as revenue daily as the
subscription service is provided. While customers have an active
subscription, they are provided access to our patented video
streaming technology that permits them to direct their individual
viewing experience by choosing to remove certain audio or video
segments containing material they consider distasteful, in
conjunction with popular video streaming platforms. Access to this
technology is available during the entire subscription period and
is extinguished at the end of any subscription period during which
the customer cancels the subscription.
Advertising
Advertising
costs are expensed as incurred. Advertising expenses totaled
$444,241 for the six months ended June 30, 2018.
|
||
|
|
|
||
3. Commitments
and
Contingncies
|
|
Litigation
The
Company is involved in legal proceedings from time to time arising
in the normal course of business. The Company has received,
and may in the future continue to receive, claims from third
parties. Management, after consultation with legal counsel,
believes that the outcome of these proceedings may have a material
impact on the Company’s financial position, results of
operations, or liquidity.
Litigation is necessary to defend the Company. The results of any
current or future complex litigation matters cannot be predicted
with certainty, and regardless of the outcome, litigation can have
an adverse impact because of defense and settlement costs,
distraction of management and resources, and other factors.
Additionally, these matters may change in the future as the
litigation and factual discovery unfolds. Legal fees are expensed
as incurred. Insurance recoveries associated with legal costs
incurred are recorded when they are deemed probable of
recovery.
The Company assesses whether there is a reasonable possibility that
a loss, or additional losses beyond those already accrued, may be
incurred (“Material Loss”). If there is a reasonable
possibility that a Material Loss may be incurred, the Company
discloses an estimate or range of the amount of loss, either
individually or in the aggregate, or discloses that an estimate of
loss cannot be made. If a Material Loss occurs due to an
unfavorable outcome in any legal matter, this may have an adverse
effect on the financial position, results of operations, and
liquidity of the Company. The Company records a provision for each
liability when determined to be probable, and the amount of the
loss may be reasonably estimated. These provisions are reviewed
annually and adjusted as additional information becomes
available.
|
3.
Commitments
and
Contingncies
Continued
|
|
The
Company is involved in various litigation matters and believes that
any reasonably possible adverse outcome of these matters could
potentially be material, either individually or in the aggregate,
to the Company’s financial position, results of operations
and liquidity. As of the date of this report management has
determined that an adverse outcome on one or more of the claims is
probable, but not estimable, and has not accrued any estimated
losses related to these matters. Expectations may change in the
future as the litigation and events related thereto unfold. For the
six months ended June 30, 2018 the Company incurred $273,528 in
legal and litigation costs, which are included in legal expenses in
the accompanying statements of operations.
On
December 29, 2016, the Company complied with an injunction and
ceased selling discs and streaming customized versions of the
discs, pending the outcome of certain legal matters.
The
Company has determined that an adverse outcome in litigation
brought by Disney Enterprises, Inc., Twentieth Century Fox Film
Corporation, Warner Bros. Entertainment, Inc., LucasFilm Ltd.,
LLC., MVL Film Finance, LLC., New Line Production, Inc., and Turner
Entertainment Co., or, collectively, the Plaintiffs, is probable.
The Plaintiffs are seeking monetary damages, costs, and
attorneys’ fees related to their claims that the Company
violated their exclusive rights under US copyright law. The Company
does not believe that the amount of the loss is reasonably
estimable as required under ASC 450-20-5, and therefore has not
accrued any losses related to the litigation.
|
||
|
|
|
||
4. Related Party
Transactions
|
|
The
Company has a marketing services contract with an entity owned by
one of the Company’s stockholders. For the six months ended
June 30, 2018, the Company incurred expenses of $432,967 to the
related party for marketing services.
|
|
VidAngel, Inc.
|
|
|
|
|
|
|
|
By:
|
/s/
Neal S. Harmon
|
|
|
Name:
|
Neal
S. Harmon
|
|
|
Title:
|
Chief
Executive Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Neal S. Harmon
|
|
Chief
Executive Officer and Director
|
|
September 28, 2018
|
Neal S.
Harmon
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/
Patrick Reilly
|
|
Director
of Finance
|
|
September 28, 2018
|
Patrick
Reilly
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/
Dalton
Wright
|
|
Director
|
|
September 28, 2018
|
Dalton Wright
|
|
|
|
|
|
|
|
|
|
/s/ Paul
Ahlstrom
|
|
Director
|
|
September 28, 2018
|
Paul
Ahlstrom
|
|
|
|
|
This ‘1-SA’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed on: | 9/28/18 | |||
For Period End: | 6/30/18 | |||
4/16/18 | 1-K | |||
12/31/17 | 1-K | |||
10/18/17 | 1-U | |||
9/29/17 | ||||
6/30/17 | 1-SA | |||
6/13/17 | ||||
1/20/17 | ||||
1/1/17 | ||||
12/31/16 | 1-K | |||
12/29/16 | ||||
6/30/16 | ||||
2/7/14 | ||||
11/13/13 | ||||
List all Filings |