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We have served as the Company’s auditor since 2024. | |
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(PCOAB ID | |
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November 8, 2024, except for the Balance Sheets, Statements of Stockholders’ Equity, Note 1, Note 3, Note 8, and Note 10 which are as of June 9, 2025 |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
(MARK ONE)
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or
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For the transition period from
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(
(
(
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
OTC pkn |
Securities registered pursuant to section 12(g) of the Act
Common Stock $0.001 Par Value
(NONE)
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [_]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [_]
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.
Persons who respond to the collection of information contained in this form are not
required to respond unless the form displays a currently valid OMB control number.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [_]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” non-accelerated filer “smaller reporting company” or “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| Large accelerated filer | [_] | Accelerated filer | [_] |
| [X] | Smaller reporting company | ||
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| Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant
to §240.10D-1(b). [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the outstanding common equity held by non-affiliates of the Registrant as of the last business day of the Registrant’s most recent completed second fiscal quarter was approximately $
As of November 1, 2024, a total of
Explanatory Note
This Amendment No. 1 to Form 10-KT (this "Form 10-KT/A") amends the Transition Report on Form 10-KT of Rivulet Entertainment, Inc., a Nevada corporation (the "Company," "we," "us," and "our," as applicable), for the transition period ended June 30, 2024, that we originally filed with the Securities and Exchange Commission (the "SEC") on November 27, 2024 (the "Original Filing"). We are filing this Form 10-KT/A to restate the financial statements due to an error relating to how the Company recognized its equity prepayment made to Rivulet Media in anticipation of the pending merger (as of June 30, 2024). We have also revised certain information in i) Management's Discussion and Analysis and ii) the Controls and Procedures section that was impacted by the restatement. No other sections in the original Form 10-KT were materially impacted by the restatement and, as such, they were not included in the amended filing.
Rivulet Entertainment, Inc.
TABLE OF CONTENTS
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 1 |
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this Transition Report on Form 10-KT/A. This document contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans, objectives, expectations and intentions. When used in this document, the words "expects", "anticipates", "intends" and "plans" and similar expressions are intended to identify certain of these forward-looking statements. The cautionary statements made in this document should be read as being applicable to all related forward-looking statements wherever they appear in this document. Our actual results could differ materially from those discussed in this document.
Liquidity and Capital Resources
At June 30, 2024, we had current assets of $2,988,365 and current liabilities of $192,654 as compared to current assets of $480 and $138 and current liabilities of $350,196 and $343,731 as of December 31, 2023 and December 31, 2022, respectively.
Because of our history of losses, net capital deficit and lack of assurance of additional financing, the audit report on our financial statements contains a "going concern" opinion regarding doubt about our ability to continue as a going concern.
Our president and CEO, Walter Geldenhuys, has loaned or advanced to us funds for working capital on an "as needed" basis. There is no assurance that these loans or advances will continue in the future. At June 30, 2024 we had accrued payroll of $192,654. Further, as of December 31, 2023 and December 31, 2022, we owed our officers accrued payroll of $219,677 and $162,380, respectively. As of December 31, 2023, and 2022, Walter Geldenhuys, who is our President and Chief Executive Officer, and who serves as a member of our Board of Directors advanced the Company $12,500 and $6,000, respectively. Our Secretary / Treasurer advanced the Company a total of $0 and $38,188 during the years ended December 31, 2023 and December 31, 2022, respectively. All of the related party loans were paid in full as of June 30, 2024.
In addition to the related party loans noted above, we have also made sales of our common stock in private transactions as follows:
During March of 2024, the Company entered into a Subscription Agreement with one private investor. Pursuant to the Subscription Agreement, the Company sold 7,500,000 shares of common stock at a purchase price of $0.40 per share for a total of $3,000,000. The funds were used to pay the Company's debts and contribute to the Acquisition costs. To that extent, the Company distributed to Rivulet Media $2,950,000 as a portion of the acquisition cost as of June 30, 2024. The Company paid no underwriting discounts or commissions.
During the year ended December 31, 2022, the Company entered into a Stock Purchase Agreement for the private sale of 3,333 shares of our common stock for gross proceeds of $5,000 . On December 29, 2022, the Company entered into an Escrow agreement for the purchase of 2,625,797shares of the Company's Common Stock. The shares were in Escrow until full payment was received on April 19, 2023. and released to JJW Investments, LLC ("JJW"). On April 19, 2023, payment of $305,683 was received from JJW for the 2,625,797, shares of the Company's Common Stock representing 48% of the Company's issued and outstanding common stock. JJW purchased an additional 170,000 shares representing 3% of the Company's issued and outstanding common stock for a total of 51% of the Company.
Because of our history of losses, and lack of assurance of additional financing, the audit reports on our financial statements as of June 30, 2024 and December 31, 2023 and 2022 contained a "going concern" opinion regarding doubt about our ability to continue as a going concern.
We will require additional debt or equity financing or a combination of both in order to carry out our business plan. We plan to raise additional funds through future sales of our securities, until such time as our revenues are sufficient to meet our cost structure, and ultimately achieve profitable operations. There is no assurance we will be successful in raising additional capital or achieving profitable operations. Our board of directors may attempt to use non-cash consideration to satisfy obligations that may consist of restricted shares of our common stock. These actions would result in dilution of the ownership interests of existing shareholders and may further dilute our common stock book value.
As discussed throughout the filing, the Company entered into an asset purchase agreement with Rivulet Media during March of 2024. As part of the agreement, the Company agreed i) to issue approximately 90 million shares and ii) make a $10,000,000 payment to the shareholders of Rivulet Media. As of June 30, 2024, the Company had transferred approximately 67 million shares and made a payment of approximately $3,000,000, which have been recognized as an approximately $3 million asset purchase deposit on our balance sheet. The acquisition closed during July of 2024 and will be accounted for as a reverse acquisition due to the Rivulet Media shareholders obtaining control of the combined Company. During May of 2025, the asset purchase agreement was amended to reduce the cash portion of the purchase price from $10,000,000 to $6,450,000.
1
To obtain sufficient funds to meet our future needs for capital, we will from time to time, evaluate opportunities to raise financing through some combination of the private sale of equity, or issuance of convertible debt securities. However, future equity or debt financing may not be available to us at all, or if available, may not be on terms acceptable to us. We do not intend to pay dividends to shareholders in the foreseeable future.
In order for our operations to continue, we will need to generate revenues from our intended operations sufficient to meet our anticipated cost structure. We may encounter difficulties in establishing these operations due to our inability to successfully prosecute any patent enforcement actions or our inability to effectively execute our business plan.
Cash Flows
The following tables summarize the results of our cash flows for the below respective periods:
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Net cash provided by (used in): |
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Operating activities |
| $ | (80,220 | ) |
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Investing activities |
| $ | (2,949,499 | ) |
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Financing activities |
| $ | 3,067,604 |
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Change in cash |
| $ | 37,885 |
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1 Pursuant to exchange Act Rule 13a-10, the Company is not required to provide cash flow information for the six-month period ended June 30, 2023
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Net cash provided by (used in): |
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Operating activities |
| $ | (348,216 | ) |
| $ | (46,499 | ) |
Investing activities |
| $ | (1,052 | ) |
| $ | - |
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Financing activities |
| $ | 349,610 |
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| $ | 34,489 |
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Change in cash |
| $ | 342 |
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| $ | (12,010) |
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Operating Activities
Net cash used in operating activities was ($80,220) for the six months ended June 30, 2024. The net loss for the six months ended June 30, 2024 was ($54,677), which was primarily increased by a gain on salary forgiveness of ($123,827) and offset by the change in accounts payable and accrued liabilities of $96,302.
Net cash used in operating activities was ($348,216) for the fiscal year ended December 31, 2023. The net loss for the fiscal year ended December 31, 2023 was ($310,877), which was primarily offset by non-cash interest expense of $7,019 and increased by the change in accounts payable and accrued liabilities of $44,481.
Net cash used in operating activities was ($46,499) for the fiscal year ended December 31, 2022. The net loss for the fiscal year ended December 31, 2022 was ($48,589), which was primarily offset the change in accounts payable and accrued liabilities of $2,090.
Investing Activities
Net cash used in investing activities was ($2,949,499) for the six months ended June 30, 2024 and relates solely to the transfer of consideration to Rivulet Media shareholders stemming from asset purchase agreement.
Net cash used in investing activities was ($1,052) for the fiscal year ended December 31, 2023 and relates solely to the purchase of computer equipment. There were no investing activities for the fiscal year ended December 31, 2022.
2
Financing Activities
Net cash from financing activities was $3,067,604 for the six months ended June 30, 2024 and primarily consisted of proceeds from our common stock offerings of $3,200,000 somewhat offset by a payment for a related party advance of approximately ($140,000).
Net cash from financing activities was $349,610 for the fiscal year ended December 31, 2023 and primarily consisted of proceeds from a release from escrow of common stock of approximately $305,000 and related party advance of approximately $123,500 somewhat offset by a payment of the related party advance of approximately ($60,000) and a note payable payment of approximately ($20,000).
Net cash from financing activities was $34,489 for the fiscal year ended December 31, 2022 and consisted of proceeds from a common stock offering of $5,000 and a related party advance of $29,489.
Results of Operation
The Company did not have material results of operation during either the six-month period ended June 30, 2024 or two-year period ended December 31, 2023. To that extent, the Company incurred a net loss of $54,677 and $47,230 during the six months ended June 30, 2024 and June 30, 2023, respectively. The increased net loss in fiscal year 2023 (as compared to fiscal year 2022) was primarily due to increased compensation expense of $173,030 as compared to the same period in prior year.
Critical Accounting Estimates
Due to our limited operations as of June 30, 2024, the Company does not make any estimates like those outlined in Item 303(b)(3) of Regulation S-K.
3
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Audit Committee of
Rivulet Entertainment Inc.
7659 East Wood Drive
Scottsdale, AZ 85260
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Rivulet Entertainment Inc. (the “Company”) as of June 30, 2024, December 31, 2023 and 2022, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the periods ended June 30, 2024, December 31, 2023 and 2022 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024, December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the periods then ended, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has incurred net losses and working capital deficits. These factors, and the need for additional financing in order for the Company to meet its business plans raises substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified with respect to that matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Fair Value of Consideration for Asset Purchase
As described in Note 8 to the Company’s financial statements, the Company adheres to ASC 820, Fair Value Measurement. When the Company issued shares for the asset purchase agreement, they utilized the share price based on its most recent sale of unregistered securities.
4
We identified the Company’s application of the accounting for the fair value of consideration given for the asset purchase agreement as a critical audit matter. The principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the Company’s judgments in determining the qualitative factors. Auditing these judgments and assumptions by the Company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
The primary procedures we performed to address these critical audit matters included the following:
·We obtained the asset purchase agreement and memo of management’s accounting treatment for the transaction, and subscription agreement for unregistered sale of securities and performed the following procedures:
-Reviewed agreements for all relevant terms.
-Tested management’s identification and treatment of agreement terms.
-Recalculated management’s fair value based on the terms in the agreements.
-Assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of the fair value of consideration.
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We have served as the Company’s auditor since 2024. | |
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(PCOAB ID | |
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November 8, 2024, except for the Balance Sheets, Statements of Stockholders’ Equity, Note 1, Note 3, Note 8, and Note 10 which are as of June 9, 2025 |
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5
Rivulet Entertainment, Inc.
Balance Sheets
(In United States dollars, except for shares data)
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| December 31, |
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CURRENT ASSETS |
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Asset purchase deposit |
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NONCURRENT ASSETS |
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CURRENT LIABILITIES |
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STOCKHOLDERS' DEFICIT |
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Accumulated deficit |
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Total liabilities & stockholders' equity (deficit) |
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The accompanying notes are an integral part of these financial statements.
Note-On July 5, 2023 the Company authorized a 1 for 100 reverse share split. All share information presented in the financial statements is reflective of the share split
6
Rivulet Entertainment, Inc.
Statements of Operations
(In United States dollars)
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Net loss |
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The accompanying notes are an integral part of these financial statements.
7
Rivulet Entertainment, Inc.
Statements of Stockholders’ Equity (Deficit)
For the Six Months Ended June 30, 2024 and two years ended December 31, 2023
(In United States dollars, except Unit data)
(restated)
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Balance, December 31, 2021 |
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Balance, December 31, 2022 |
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Balance, December 31, 2023 |
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Balance, June 30, 2024 |
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The accompanying notes are an integral part of these financial statements.
Note-Presentation of prior year periods has been adjusted to align with the current year presentation. The adjustment to prior year periods did not materially impact the statement of stockholders equity (deficit).
8
Rivulet Entertainment, Inc.
Statements of Cash Flows
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Cash paid for interest |
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Non-cash investing and financing activities: |
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Equity pre-payment for acquisition (1) |
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(1)
The accompanying notes are an integral part of these financial statements.
Note-Presentation of prior year periods has been adjusted to align with the current year presentation. The adjustment to prior year periods did not materially impact the statement of cash flows.
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Rivulet Entertainment, Inc.
Notes to Financial Statements
Note 1. Nature of Operations
Company Overview
The operations of Rivulet Entertainment, Inc. (the “Company”) commenced in 1994 with a predecessor entity called NCC, Inc. NCC, Inc. was incorporated on March 15, 1994, in the State of Ohio. NCC, Inc. operated as a software and hardware development company that marketed voice recognition and transcription products for commercial applications.
In May 2000, WG Investments, LLC acquired the assets of NCC, Inc. and subsequently changed its name to NCC, LLC. NCC, LLC (also a predecessor to Rivulet Entertainment, Inc.) continued the operations of NCC, Inc. until approximately December 31, 2001, when shifts in the industry’s markets caused NCC, LLC to suspend its operations.
Advanced Voice Recognition Systems, Inc (n/k/a) Rivulet Entertainment, Inc. was incorporated in the State of Colorado on
Rivulet Entertainment, Inc.is a software development company specializing in speech recognition technologies. Rivulet Entertainment, Inc. has successfully obtained patent protection of its proprietary technology. The Company continues to explore all options to monetize and enforce our patent portfolio through patent enforcement and licensing of the six patents issued.
Reverse Stock Split
The Company effected a 1-for 100 reverse stock split of its outstanding shares of common stock on July 3, 2023. The reverse stock split did not change the number of authorized shares of common stock or par value. All references in these financial statements to share, share prices, and other per share information in all periods have been adjusted, on a retrospective basis, to reflect the reverse stock split.
Asset Purchase Agreement (restated)
During March of 2024 the Company entered into an asset purchase agreement with Rivulet Media, a film production company, whereby the Company agreed to purchase the assets of the entity for consideration of approximately 90 million shares and $10,000,000. The acquisition closed during July of 2024 leading to a change in control whereby the shareholders of Rivulet Media gained a controlling financial interest in the combined Company (as that concept has been defined by Accounting Standards Codification 810). Thus, starting with the Form 10-Q for the period ended September 30, 2024, the historical results presented will be those of Rivulet Media. As of June 30 2024, the Company had transferred (as a prepayment) approximately 67 million shares and approximately $3 million. The cash prepayment was recognized as an "asset purchase deposit" on the face of the balance sheet and was classified as a current asset as of June 30, 2024. Further, in accordance with ASC 505-10 and SAB Topic 4.E, the equity prepayment has been presented as a deduction from stockholders equity (deficit). Refer to Note 3 for additional information.
Change in Fiscal Year End
On July 7, 2024 the Company announced that it was changing its fiscal year end from December 31 to June 30. In accordance with the requirements outlined in Exchange Act Rule 13a-10 and the staff interpretive guidance provided in Section 1360 of the Financial Reporting Manual (the “FRM”), this transition report includes the audited transition period for the six months ended June 30, 2024 and two years ended December 31, 2023. In addition, in accordance with 1365.1 of the FRM, the Company has also provided unaudited financial information for the six-month period ended June 30, 2023 in the notes to the financial statements.
Litigation
From time to time, we may become involved in legal proceedings or other litigation that we consider to be a part of the ordinary course of our business. Presently, we are not involved in any litigation and to the best knowledge of management, there are no legal proceedings pending or threatened against the Company.
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Note 2. Significant Accounting Policies
Principles of Consolidation
The Company is currently comprised of a single legal entity. Thus, our financial statements do not represent the consolidation of multiple legal entities.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company continually evaluates estimates used in the preparation of the financial statements for reasonableness.
Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had cash and cash equivalents of $
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less when acquired to be cash equivalents. The Company had cash at June 30, 2024, December 31, 2023, and December 31, 2022 of $38,365, $480 and $138, respectively.
Related Party Disclosures
The Company considers the guidance in Accounting Standards Codification ASC 850-Related Party Disclosures when determining whether a transaction constitutes a related party transaction. Further, when a related party transaction is identified, the Company i) provides the information required by ASC 850-10-50 and ii) presents the transaction on the face of its financial statements in accordance with Rule 4-08(k) of Regulation S-X.
Commitments and Contingencies
The Company recognizes contingencies in accordance with ASC 450 Contingences. We recognize loss contingencies when they are both probable and estimable. To that extent, the Company was not involved in any litigation or other matters as of June 30, 2024 that could potentially require the need to recognize a loss contingency.
Earnings Per Share
The Company determines earnings per shares ("EPS") in accordance with ASC 260. Basic income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution assuming common shares were issued upon the exercise of outstanding options and the proceeds thereof were used to purchase outstanding common shares. Dilutive potential common shares include outstanding stock options, warrants and restricted stock and performance share awards. For the six months ended June 30, 2024 and the two years ended December 31, 2023, basic and diluted earnings per share was the same as the Company recognized a net loss in all of those periods and the inclusion of diluted shares would have been anti-dilutive. To that extent, the Company did not have any outstanding financial instruments, such as warrants, options or convertible debt, that could potentially be dilutive to its EPS during any of the periods included in the filing.
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Income Taxes
The Company uses the asset and liability method of accounting for deferred income taxes. Deferred income taxes are measured by applying enacted statutory rates to net operating loss carryforwards and to the differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets are reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company recognizes uncertainty in income taxes in the financial statements using a recognition threshold and measurement attribute of a tax position taken or expected to be taken in a tax return. The Company applies the “more-likely-than-not” recognition threshold to all tax positions, commencing at the adoption date of the applicable accounting guidance, which resulted in no unrecognized tax benefits as of such date.
Property, Plant and Equipment
Property, plant and equipment (“PP&E”) is recorded at cost, net of accumulated depreciation. Depreciation and amortization are recognized using the straight-line method over the estimated useful lives of the assets. The Company’s PP&E was comprised solely of computer equipment, with a five year estimated useful life, as of both June 30, 2024 and December 31, 2023. The Company did not own any PP&E as of December 31, 2022.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires additional operating segment disclosures in annual and interim financial statements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and for interim periods beginning after December 15, 2024 on a retrospective basis, with early adoption permitted.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax-related disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a retrospective or prospective basis.
The Company has assessed the impact of both pronouncements and does not believe they will have a material impact on their financial statements.
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Note 3. Restatement of Previously Issued Financial Statements
In accordance with ASC 250 and SAB99, the Company determined that the financial statements included in its Form 10-KT previously filed with the Securities and Exchange Commission on November 12, 2024 were materially misstated. Specifically, the previously filed financial statements presented the $26.9 million equity prepayment to Rivulet Media as an asset instead of a deduction from stockholder's equity (deficit). In order to correct the error, the Company has restated its financial statements to reclassify $26.9 million from current assets to a deduction in stockholders' equity (deficit). The restatement had the following impact on the financial statement line items included in the Company's balance sheet and statement of shareholders equity (deficit), respectively as follows:
TABLE 1 | |||
Balance Sheet | |||
Form 10-KT | Adjustment | Form 10-KT/A | |
Asset Purchase Deposit | $ | $ ( | $ |
Current Assets | $ | $ ( | $ |
Total Assets | $ | $ ( | $ |
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Additional Paid in Capital | $ | $ ( | $ |
Total stockholders' equity (defiict) | $ | $ ( | $ |
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Total liabilities and stockholders equity | $ | $ ( | $ |
TABLE 2 | |||
Statement of Shareholders Equity (deficit) | |||
Share issuance - acquisition prepayment | $ | $ ( | $ |
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Balance, June 30, 2024 | $ | $ ( | $ |
The error did not materially impact either the statement of operations or statement of cash flows.
Note 4. Unaudited Comparative Period Information
Pursuant to the requirements in Exchange Act Rule 13-10(b) the Company is providing the following unaudited financial information for the six-month period ended June 30, 2023. The unaudited financial information has been derived from the Company's Form 10-Q for the period ended June 30, 2023 that was filed with the SEC on August 14th, 2023.
| Six Month Ended |
| June 30, 2023 |
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Revenues | $ |
Gross profits | |
Income taxes | |
Loss from continuing operations | ( |
Net Loss | ( |
Basic and diluted earnings per share |
Note 5. Property, Plant, and Equipment
Computer equipment, net, consisted of the following as of June 30, 2024 and December 31, 2023:
Ended June 30, 2024 | Carrying Value |
| Depreciation |
| Balance |
Computer equipment | $ |
| $( |
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Ended December 31, 2023 | Carrying Value |
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Computer equipment | $ |
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Further, depreciation expense was $105 and $123 for the six-month transition period ended June 30, 2024 and fiscal year ended December 31, 2023, respectively. The Company did not own any property, plant and equipment as of December 31, 2022, and, as such did not recognize any depreciation expense during its annual period ended December 31, 2022.
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Note 6. Related Party Transactions
Indebtedness
On
On
On
On
On
On
On
On March 4, 2024, the advances and notes issued by related parties during the year ended December 31, 2023 were paid in full. The payments consisted of payment to our CEO for advances in the amount $14,500 and payment to a related party in the amount of $124,896.
On March 11, 2024, Chung Cam, our CFO, waived his accrued salary. The amount of forgiveness and related payroll taxes of $
Properties
Rivulet’s principal executive office is provided free of charge by Diana Jakowchuk, the Company’s secretary and treasurer.
The above transactions, including the related party loans and property agreement, are not necessarily what unrelated third parties would have agreed to in the normal course of business.
Note 7. Income Taxes
A reconciliation of the U.S. statutory federal income tax rate to the effective rate is as follows:
INCOME TAXES | |||
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December 31, 2023 |
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U.S. federal statutory graduated rate |
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State income tax rate, net of federal benefit |
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Contributed services |
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Costs capitalized under Section 195 | ( |
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Effective rate |
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The Company is considered a start-up company for income tax purposes. As of June 30, 2024, the Company had not commenced its trade operations, so all costs were capitalized under Section 195 of the internal revenue code. Accordingly, the Company had no net operating loss carry forwards, or corresponding deferred tax assets, as of either June 30, 2024, December 31, 2023 or December 31, 2022. Further, the Company did not have any uncertain tax positions as of June 30, 2024.
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Note 8. Asset Purchase Agreement (restated)
On March 1, 2024, the Company and Rivulet Media, Inc., a Delaware corporation (Rivulet), entered into an Asset Purchase Agreement whereby the Company agreed to purchase, with stock and cash, in the amount of 90,784,800 shares of common stock of the Company and $10,069,000, the assets of Rivulet. The acquisition closed during July of 2024 upon receipt of regulatory approval.
As a result of the issuance of common stock, the Rivulet Media shareholders gained a controlling financial interest in the combined Company. As such, the Company determined that there was a change in control and that the transaction should be accounted for as a reverse merger with Rivulet Media being considered the accounting acquirer/legal acquiree and the Company being considered the accounting acquiree/legal acquirer.
During the six months ended June 30, 2024, the Company transferred $2,950,000 and 67,361,602 shares to Rivulet Media shareholders in anticipation of the merger closing. The cash payment and transferred shares were recognized as a current asset and deduction from equity, respectively.
The Company noted that because its shares are thinly traded on the over-the-counter ("OTC") market it would not be appropriate to utilize its share price (as quoted on the OTC market) to determine the fair value of the issues shares. Rather, in accordance with the guidance in ASC 820, the Company utilized the share price based on its most recent sale of unregistered equity securities that occurred prior to the share transfer on April 1, 2024. Specifically, during March of 2024 the Company sold 7,500,000 shares at $0.40 per share for gross proceeds of $3,000,000. Based on the $0.40 sale price, the Company determined that that fair value of the 67,361,602 issued shares was approximately $26,944,640.
The $2,950,000 in transferred cash was recognized as a current asset on the Company's balance sheet. Further, in accordance with ASC 505-10-45 and SAB Topic 4.E, the Company recognized the fair value of the transferred shares as a deduction to equity (refer to Note 3 for additional information).
Note 9. Shareholders Equity
During the fiscal year ended December 31, 2022, the Company sold
As discussed in Note 8, the Company entered into an asset purchase agreement with Rivulet Media during March of 2024. While the transaction did not close until July of 2024, the Company transferred approximately 67,000,000 shares to Rivulet Media during April of 2024.
Note 10. Subsequent Events (restated)
In accordance with ASC 855, the Company performed an evaluation of subsequent events through the date these financial statements were issued. There were no material subsequent events which affected, or could affect, the amounts or disclosures in the financial statements, other than those as described below.
Closing of Asset Purchase Agreement
Addendums to the Asset Purchase Agreement
On September 11, 2024 the
On September 26, 2024 the
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amended as to the stock amount by increasing the number of shares by 1,698,209 for a total of 96,722,950 shares. All other terms and conditions of the Purchase Agreement shall remain in full force and effect.
On October 15, 2024 the
On May 19, 2025 the
Secured Promissory Notes
On October 21, 2024, the
On October 22, 2024,
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Item 9A.Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) and pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of June 30, 2024. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms, and that such information is accumulated and is communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on our review and evaluation, our chief executive officer concluded that our disclosure controls and procedures were not effective. The evaluation of our disclosure controls and procedures and the conclusion as to their adequacy and effectiveness, included consideration of the deficiency noted below.
We have identified, as of June 30, 2024, a lack of segregation of duties in accounting and financial reporting activities, which we believe is a material weakness. The size of our business necessarily imposes practical limitations on the effectiveness of those internal control practices and procedures that rely on the segregation of duties.
Management believes this lack of segregation of duties in accounting and financial reporting did not result in material inaccuracies or omissions of material fact and, to the best of its knowledge, believes that the financial statements for the transition period ended June 30, 2024 and two years ended December 31, 2023 fairly present in all material respects the financial condition and results of operations for the Company in conformity with US GAAP. There is, however, a reasonable possibility that a material misstatement of our annual or financial statements would not have been prevented or detected as a result of this material weakness.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
(1)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of its management and directors; and
(3)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Our management assessed the effectiveness of its internal control over financial reporting as of June 30, 2024. We have identified, as of June 30, 2024, a lack of segregation of duties in accounting and financial reporting activities, which we believe is a material weakness. The size of our business necessarily imposes practical limitations on the effectiveness of those internal control practices and procedures that rely on the segregation of duties.
The Company has already undertaken certain plans in order to remediate the material weakness. Specifically, the Company has brought in an outside consulting firm to assist with i) SEC reporting requirements and ii) segregation of duties. However, as a result of the material weakness and restatement of our financial statements included in our previously filed Form 10-KT, the Company has concluded that our internal controls over financial reporting were not effective as of June 30, 2024.
This Transition Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm as we are a non-accelerated filer.
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Changes in internal control over financial reporting.
We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
There were no changes in our internal controls over financial reporting that occurred during the period covered by this Transition Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART IV
Item 15. Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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RIVULET ENTERTAINMENT, INC.
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Dated June 09, 2025 | By: | /s/ Walter Geldenhuys |
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| Walter Geldenhuys |
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| President, chief executive officer and chief financial officer |
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