SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2025

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company's consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in U.S. dollars. The Company uses the accrual basis of accounting and has adopted a December 31 fiscal year-end.

Principles of Consolidation

The accompanying consolidated financial statements include all the accounts of the Company and its wholly owned subsidiary, Maybacks Global Entertainment. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and investments in money market funds. The Company considers all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

Advances

Advances were provided to Inventel Products LLC for the production of vinyl records that were to be sold through the Company’s joint venture. During 2024, Company management has determined that the advances were uncollectible and has charged Other Expense in its statement of operations as reported for the year ended December 31, 2024.

Equipment

Property and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets as follows:

Equipment		5 Years
Furniture and Fixtures		7 Years
Forklift		3 Years

	June 30,			December 31,
	2025			2024
Furniture and Equipment	$	215,665		$	215,665
Forklift		20,433			20,433
Camera		4,022			4,022
Trident		733			733
		240,853			240,853
Less accumulated depreciation		(240,853	)		(240,853	)
Total Property and equipment, net of depreciation	$	-		$	-

Depreciation expenses amounted to $0 and $21,567 for the six months ended June 30, 2025 and 2024, respectively.

The long-lived assets of the Company are reviewed for impairment under ASC 360, “Property, Plant and Equipment” (“ASC 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the six months that ended June 30, 2025, and during the year ended December 31, 2024, no impairment losses have been identified.

Intangible Assets

The Company accounts for intangible assets (including trademarks, website and license agreements) under ASC 350 “Intangibles-Goodwill and Other” (“ASC 350”). ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. In addition, ASC 350 requires that intangible assets be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including identifying reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include assessing future cash flows and determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to differ from such estimates materially and affect the determination of fair value and goodwill impairment at future reporting dates.

The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology, and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed, and lives of intangible assets with determinable lives may be adjusted.

We amortize the cost of our intangible assets over the 5 to 15-year estimated useful life on a straight-line basis.

On June 20, 2023, the Company signed an Asset Purchase Agreement with Goliath Motion Picture Promotions. Since execution, however, the fulfillment of the Asset Agreement had not been possible because the Assets could not be entirely conveyed to Buyer as intended by the parties. Therefore, on May 10, 2024, the parties entered into an Amended Asset Purchase Agreement, to be effective as of December 31, 2023, to convert the purchase of Assets to a license to use those Assets for a period of 10 years in consideration for 100,000 shares of Series D Preferred Stock of the Company.

On April 29, 2025, the Company signed and closed an Asset Purchase Agreement (the “Purchase Agreement”) with Goliath Motion Picture Promotions to formally acquire the assets previously licensed. In consideration therefore, the Purchase Agreement provided that the Goliath shall exchange its 100,000 shares of Series D Preferred Stock for 100,000 shares of the Company’s newly established Series F Preferred Stock.

On the Closing Date, pursuant to the Purchase Agreement, the Company acquired various full-length motion pictures and serial television shows (the “Assets”). As a result of the Purchase Agreement and the acquisition of the Assets, the Company plans to market its television shows and movie library on both Over the Air and Streaming Platforms in conjunction with a comprehensive marketing effort to create both content and distribution partnerships.

In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, the Company evaluated whether the acquired group of assets and liabilities (the acquired set) meets the definition of a business. If so, the transaction is accounted for as a business combination; if not, it must be accounted for as an asset acquisition or recapitalization. The Company assessed the following:

	·	Whether substantially all the value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, and
	·	Whether the acquired set includes the required elements of a business under the framework in ASC 805

As the entire asset purchase was a single asset, the Goliath Motion Picture Library, the Company concluded that the acquisition was an asset acquisition.

Under ASC 805-50, Asset acquisitions shall be recorded at the cost to the acquiring entity. As the consideration given by the Company was preferred stock, and thus not cash, the cost of the acquisition is the fair value of the preferred stock consideration.

The Company has determined the value of the consideration paid for the Assets to be $10,790,000,

The following table sets forth the amortization for the intangible assets on June 30, 2025 and December 31, 2024:

	June 30,			December 31,
	2025			2024
Goliath movie library	$	10,790,000		$	-
License agreement - Goliath		-			5,000,000
License agreement - John Legend		5,000			-
License agreement - Salci Sports		15,000			15,000
Customer lists		7,000			7,000
Patent		12,406			12,406
Websites		13,090			11,690
Royalties		125,000			125,000
		10,967,496			5,171,096
Less accumulated amortization		(155,798	)		(886,911	)
	$	10,811,698		$	4,284,185

During the six months ended June 30, 2025, the Company entered into a license agreement with John Legend for a cash payment of $5,000, and, incurred $1,400 in cash payments for website buildout costs.

During 2024, the Company entered into a license agreement with the Salci Sports and Entertainment Group for a cash payment of $15,000 and acquired a website from Authentic Heroes for a cash payment of $1,000.

Amortization expense amounted to $185,554 and $251,224 during six months ended June 30, 2025 and 2024, respectively. The Goliath Movie Library assets are not being depreciated or amortized.

Revenue Recognition

The Company recognizes revenue from its customer contracts following ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

Revenue related to contracts with customers is evaluated utilizing the following steps:

	1.	Identify the contract, or contracts, with a customer.
	2.	Identify the performance obligations in the contract.
	3.	Determine the transaction price.
	4.	Allocate the transaction price to the performance obligations in the contract.
	5.	Recognize revenue when the Company satisfies a performance obligation.

The Company earns revenue from the sale of advertising on our owned Maybacks network. The Company recognizes revenue through two channels:

The Company has contracted with an agent who manages the contracting, billing and placement of ads. We have determined that a contract exists for our advertising sales arrangements once all terms and conditions are agreed upon, typically when the number of advertising units is specifically identified and scheduled by our agent. As the placement of ads is managed by an independent agent, revenue from these arrangements is recognized upon collection and remittance by our agent.

The Company has contracted with various advertising agencies, with whom the Company directly bills for ads placed. The Company tracks the ad placement and bills the advertising agencies monthly. Revenues are recognized for these ads upon completion of the ad on the Company’s network.

The Company recorded revenue of $250,477 and $67,527 during the six months ended June 30, 2025 and 2024, respectively.

Accounts Receivable

Accounts receivable are recorded following ASC 310,” Receivables.” Accounts receivables are recorded at the invoiced amount and do not bear interest. The Company has no amount recorded as an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of probable credit losses in its existing accounts receivable. Based on management’s estimate and all charges being current, the Company has not deemed it necessary to reserve for doubtful accounts at this time.

On June 30, 2025 and December 31, 2024, the Company’s accounts receivable balances totaled $94,201 and $201,628, respectively. During the six months ended June 30, 2025, the Company recorded an allowance for bad debts of $11,480.

Leases

Effective October 1, 2019, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, the “new leases standard”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing essential information about leasing arrangements. The Company adopted the new lease standard utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated for contracts existing at the time of adoption. The Company currently does not have any operating lease over one year term to require accessing (i) whether any are or contain leases, (ii) lease classification and (iii) initial direct costs.

Income Taxes

Income taxes are accounted for under the asset and liability method stipulated by ASC 740 “Income Taxes.” Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases and operating loss, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized using a valuation allowance. A valuation allowance is applied when in management’s view, it is more likely than not that such deferred tax asset will be unable to be utilized.

The Company adopted specific provisions under ASC Topic 740, which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company’s adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial statements as a component of income taxes.

The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2017 through 2021. In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment had to be made to a taxing authority and the amount is reasonably estimated. As of June 30, 2025, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities.

Stock-based Compensation

We account for stock-based awards at fair value on the grant date and recognize compensation over the service period they are expected to vest. Using the Black-Scholes option pricing model, we estimate the fair value of stock options and stock purchase warrants. The estimated value of the portion of a stock-based award that is ultimately expected to vest, considering estimated forfeitures, is recognized as expense over the requisite service periods. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of other comparative securities, equal to the weighted average life of the options. The estimate of stock awards that will ultimately vest requires judgment. To the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted for as a cumulative adjustment to compensation expenses and recorded in the period that estimates are revised. For the six months ended June 30, 2025 and 2024, the Company incurred $0 and $0 for stock-based compensation, respectively.

Debt Issue Costs

The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not, or with other considerations. These costs are recorded as debt discounts and are amortized over the life of the obligation to the statement of operations as amortization of debt discount.

Original Issue Discount

In the event that the Company issues a note with an original issue discount, the original issue discount is recorded as a debt discount, reducing the face amount of the note. It is amortized over the life of the note to the statement of operations as amortization of debt discount. If the underlying note is converted, a proportionate share of the unamortized amount of the original issue discount is immediately expensed.

Research and Development Expenses

Expenditures for research and development are expensed as incurred. Research and development expenses consist of expenses paid to outside contractors related to the development of the Company’s NFT platform.

Use of Accounting 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 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. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation of stock-based awards issued and derivatives embedded in financial instruments. Assessments are used to determine depreciation, the valuation of non-cash issuances of common stock, stock options, and warrants, and valuing convertible notes for beneficial conversion features, among others.

Fair Value

FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

Level 1—Quoted market prices for identical assets or liabilities in active markets or observable inputs.

Level 2—Significant other observable inputs that observable market data can corroborate; and

Level 3—Significant unobservable inputs that observable market data cannot corroborate.

The following table summarizes fair value measurements by level on June 30, 2025 and December 31, 2024, measured at fair value on a recurring basis:

June 30, 2025	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	1,449,801	$	1,449,801

December 31, 2024	Level 1		Level 2		Level 3		Total
Liabilities
Derivative Liabilities	$	-	$	-	$	1,137,119	$	1,137,119

The Concentration of Credit Risk

The carrying value of short-term financial instruments, including cash, restricted cash, trade accounts receivable, accounts payable, accrued expenses, and short-term debt, approximates the fair value of these instruments. These financial instruments generally expose the Company to limited credit risk and have no stated maturity or have short-term maturities and carry interest rates that approximate the market. The Company maintains cash balances at financial institutions insured by the FDIC. On June 30, 2025, and December 31, 2024, the Company had no amounts above the FDIC limit.

New Accounting Pronouncements

The Company assesses new accounting standards on an ongoing basis.

In 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands the segment reporting disclosures and requires disclosure of segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, amounts and description of its composition for other segment items, and interim disclosure of a reportable segment’s profit or loss and assets. Additionally, the amendments require the disclosure of the title and position of the CODM and an explanation of how CODM uses the reported measure(s) of segment profit or loss in assessing performance and deciding how to allocate resources. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. The Company has adopted this ASU and has included the required disclosures within these financial statements. See Note12, Segment Reporting for additional information.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Authentic Holdings, Inc. 10-Q