10-K: Authentic Holdings Inc. Reports Full Year 2023 Results, Cites Going Concern Uncertainty

Authentic Holdings Inc.'s 2023 annual report reveals a net loss, an accumulated deficit, and substantial doubt about the company's ability to continue as a going concern.

Summary

• Authentic Holdings Inc. reported a net loss of $1,658,455 for the year ended December 31, 2023, compared to a net loss of $1,157,783 in 2022.
• The company's accumulated deficit reached $38,038,768 as of December 31, 2023, up from $36,380,313 the previous year.
• Operating expenses increased to $660,910 in 2023 from $415,048 in 2022, driven by higher depreciation, amortization, and professional fees.
• The company had a working capital deficit of $4,998,581 as of December 31, 2023, and limited cash resources.
• The report expresses substantial doubt about the company's ability to continue as a going concern due to its financial condition.
• The company intends to fund operations through increased sales, debt, and equity financing, but there is no assurance of success.
• Authentic Holdings acquired Maybacks Global Entertainment and licensed content from Goliath Motion Picture Promotions during the year.
• The company plans to tokenize 14,000+ motion pictures and TV shows from the Goliath license and market them on its platforms.

Sentiment

Score: 2

Explanation: The document paints a very negative picture of the company's financial health and future prospects. The going concern warning, significant losses, and lack of revenue generate a very low sentiment score.

Positives

• The company acquired Maybacks Global Entertainment, expanding its media presence.
• The company secured a license for a large library of motion pictures and TV shows from Goliath Motion Picture Promotions.
• The company is developing an NFT platform and a new platform to help NFT investors.
• Maybacks has grown from a 25-channel network to a 56-channel network in the past year.

Negatives

• The company has incurred significant losses and has an accumulated deficit of $38,038,768.
• The company has a working capital deficit of $4,998,581.
• The company has limited cash resources and no cash on hand as of December 31, 2023.
• The company's independent auditors have expressed substantial doubt about its ability to continue as a going concern.
• The company has not generated significant revenues from its operations.
• The company is dependent on external financing to continue operations.

Risks

• The company's ability to continue as a going concern is uncertain due to its financial condition.
• The company may not be able to secure additional financing on favorable terms.
• The company faces intense competition in the media and merchandising industries.
• The company's success depends on the appeal of its content to distributors and subscribers.
• The company is subject to risks related to intellectual property, liability claims, and piracy.
• The company's business is subject to regulatory constraints.
• The company is dependent on key executives and may be harmed by their departure.
• The company's stock is a penny stock and subject to specific rules governing its sale.
• The company has material weaknesses in its internal controls over financial reporting.
• The company has a history of losses, deficits and negative operating cash flows.

Future Outlook

The company intends to fund operations through increased sales and debt and/or equity financing arrangements, and plans to tokenize its licensed content and develop its NFT platform. The company expects to announce the completion of a new NFT platform project in late June and potentially launch it in late August of 2024.

Management Comments

• Management believes that the company's business is operated in material compliance with all regulations.
• Management intends to continue to grow other debt and equity until the Company has positive cash flows from an operating company.
• Management is committed to improving its internal controls.

Industry Context

The company operates in the competitive media and merchandising industries, facing competition from larger companies with greater resources. The company is attempting to capitalize on the 'cutting the cord' phenomenon with its Maybacks TV network and is also exploring opportunities in the NFT space.

Comparison to Industry Standards

• The company's financial performance is significantly weaker than industry leaders like Lionsgate, New Line Pictures, Universal Films, Fanatics, Nike and Mitchell and Ness, which have greater financial resources, longer operating histories, and larger customer bases.
• The company's lack of profitability and substantial accumulated deficit are not in line with industry standards for established media and merchandising companies.
• The company's reliance on external financing and its going concern uncertainty are significant deviations from the norm for publicly traded companies in these sectors.
• The company's plan to tokenize its licensed content is an innovative approach, but its success is uncertain and not yet a standard practice in the industry.

Legal Proceedings

• The company is involved in three pending litigation matters related to unpaid rent and wages from a previous business.
• The company is unable to hire outside counsel for two of the litigation matters due to cash flow constraints.

Related Party Transactions

• The company received net cash proceeds of $23,290 from related parties for operating expenses during the year ended December 31, 2023.
• The company has outstanding promissory notes and loans payable to related parties.
• The company entered into a license agreement with its CEO, Paul Serbiak, for intellectual property rights.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial condition and going concern uncertainty.
• Employees may be impacted by the company's financial instability and potential restructuring.
• Customers may be affected by the company's ability to deliver its products and services.
• Creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company plans to start the tokenization process of its licensed content within 30 days of the filing.
• The company intends to have the Alpha version of its tokenized platform completed within 90 days from its start date.
• The company plans to market its tokenized platform to other TV networks and film production companies.
• The company plans to seek additional financing through private equity offerings.
• The company expects to announce the completion of a new NFT platform project in late June and potentially launch it in late August of 2024.

Key Dates

Keywords

Authentic Holdings, Maybacks Global Entertainment, Goliath Motion Picture Promotions, NFT, tokenization, media, merchandising, going concern, financial results, convertible debt, preferred stock, intellectual property, OTC, annual report