Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Platinum Studios, Inc. (1410132) 10-Q published on Nov 17, 2011 at 12:59 pm
Reporting Period: Sep 29, 2011
In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company will adopt the ASU as required. It will have no affect on the Company’s results of operations, financial condition or liquidity.
The exercise price and the number of shares underlying the warrants are subject to anti-dilution adjustments from time to time if the Company issues common stock at below the exercise price at that time for the warrants. The dilutive issuances provisions of the warrants and convertible notes were triggered during the second quarter of 2011 due to issuances of common stock pursuant to the Dutchesss Opportunity Fund Agreement. As of June 30, 2011, the revised pricing on the warrants and conversions was set at $0.0121. The revised pricing was reduced further during the third quarter of 2011 due to conversions of debt by holders of convertible notes. As of September 30, 2011, the revised pricing on the warrants and conversion is now set at $0.0044 for the warrants that were issued originally and as part of the first debt modification.
Franklin v Platinum (and a derivative action, by Franklin, against Scott Rosenberg) During mid-September 2011, Jeff Franklin, an independent contractor with the Company, was terminated, and, after settlement discussions as to his termination payments broke down, Franklin initiated arbitration, under his January 2010 written agreement, against Platinum on October 5, 2011. Franklin is seeking approximately $350,000 in cash, 10% of the Company in an equity position, and 25% of all intellectual property rights on certain film projects for the next five years. The Company has countered with a claim for a return of approximately $80,000 that it believes was over-paid to Franklin against commissions due under the written agreement.
Pursuant to the terms of a Registration Rights Agreement, dated July 25, 2011, between Dutchess and us, we are obligated to file one or more registration statements with the SEC to register the resale by Dutchess of shares of common stock issued or issuable under the Investment Agreement. We must file with the SEC an initial registration statement on Form S-1 of which this prospectus forms a part, in order to access the credit line, covering the resale of the 98,000,000 shares of common stock which is less than one-third (1/3) of our current public float (where "public float" shall be derived by subtracting the number of shares of common stock held by our officers, directors and "affiliates" (as such term is defined in Rule 144(a)(1) of the 1933 Act) from the total number of shares of our common stock then outstanding). After the later of (i) sixty (60) days after the time that Dutchess shall have resold substantially all of the shares registered for resale under the initial registration statement, or (ii) six (6) months after the effective date of the initial registration statement, we are obligated to register for resale another portion of the credit line amount, utilizing available equity equal to one-third (1/3) of our then outstanding public float. This registration process will continue until such time as all of the dollar amounts available under the credit line, using shares of common stock issuable under the Investment Agreement, have been registered for resale on effective registration statements. In no event will we be obligated to register for resale more than $10,000,000 in value of shares of common stock.
Operating expenses increased $359,138 or 55% for the three months ended September 30, 2011 to $1,009,398 as compared to $650,260 for the three months ended September 30, 2010. This increase was related to an increase in marketing and promotional entertainment expenses of $44,000 as the Company promoted “Cowboys and Aliens,” an increase in commissions of $53,000 related to “Dylan Dog: Dead of Night” and on licensing agreement revenues from “Cowboys and Aliens,” an increase in legal fees of $178,000 due to lawsuits and new licensing contracts, an increase in consulting fees of $173,000 as the Company used consultants instead of hiring more permanent staff, an increase in insurance of $17,000 due to increases in group health insurance costs and the addition of D&O coverage and an increase in foreign withholding taxes of $22,000 related to foreign licensing revenues on “Dylan Dog: Dead of Night,” and These increases were offset by a decrease in salaries of $34,000 and a decrease in stock option expense of $154,000