MLMC 10-K & 10-Q changes, risk factors and insider trading

Overview.

On September 3, 2015, the Company completed an Acquisition Agreement under which the Company acquired all of the equity interests of Stimulating Software, the acquisition of all the common stock of Inner Four, Inc., and all of the common and preferred stock of Play Celebrity Games, Inc.

On June 30, 2016, the Company closed these subsidiaries as the business model did not prove out as projected under the acquisition agreement.

The Company continues development of its online movie channel which will feature video on demand and a 24 hour a day streaming internet TV station providing limited free content and a subscriber based business model along with potential revenue generating video on demand programming.

The online news and video news bureau in association with Leading Edge Radio Network is advancing on schedule and completion is expected during 2017. Leading Edge Radio TV continues developing a venue for new and experienced radio and TV broadcasters to host their own programs via Internet TV and radio through Mancuso Martin Productions. Leading Edge Radio Network and Mancuso Martin Productions continue strategic partnership opportunities involving radio, Internet TV and movies with the Company. The Company has also entered into discussions with Mancuso Martin Productions for screenplay properties through its production division that include seven screenplays featuring suspense thrillers, horror, comedy, romance and sports themed movies.

The Company currently is developing a weekly television show, “The Car Flip Guys” and two of seven online full-length movies mentioned above. We expect to first air “The Car Flip Guys” during the end of the 2nd quarter or beginning of the 3rd quarter of 2017.

Results of Operations.

The Company had revenue of $39,503 for the twelve months ended December 31, 2016 compared to $18,919 for the twelve months ended December 31, 2015, an increase of $20,584 or approximately 109%. These changes are due to a change in the operation business of the Company.

The Company had general and administrative expenses of $22,617,059 for the twelve months ended December 31, 2016 compared to $2,697,535 for the twelve months ended December 31, 2015, an increase of $19,919,524 or approximately 738%. These increases were mainly due to extra expenses due to the acquisition that failed, and incurring consulting expenses. The Company’s acquisition contingency expense was $2,280,331 for the twelve months ended December 31, 2016 compared to $27,215,905 for the twelve months ended December 31, 2015. The decrease was mainly due to the ending of the 2015 acquisition. The Company has Other Income/Expenses for the twelve months ended December 31, 2016 of $1,730,560 compared to $345,765 for the twelve months ended December 31,2015, an increase of $1,384,795 or approximately 400%. These increases were mainly due to Interest and Finance costs and valuation of derivative related to these finance loans.

The Company had a net loss of $26,588,447 for the twelve months ended December 31, 2016 compared to $34,718,428 for the twelve months ended December 31, 2105, a decrease of $8,129,981 or approximately 23%. This change was due to significant general and administrative expenses and acquisition contingency in 2016 compared to a 2015.

Operating Activities.

The net cash used in operating activities was $269,223 for the twelve months ended December 31, 2016 compared to net cash used in operating activities of $96,770 for the twelve months ended December 31, 2015, a change of $172,453. This change is attributed to many changes from period to period, including a large net loss, common stock issued for various items, and write-off of prepaid consulting fees.

Liquidity and Capital Resources.

As of December 31, 2016, the Company had total current assets of $9,087 and total current liabilities of $1,970,289, resulting in a working capital deficit of $1,961,202. The cash and cash equivalents was $1,497 as of December 31, 2016.

Net cash provided by financing activities was $268,930 for the twelve months ended December 31, 2016 compared to $76,212 for the twelve months ended December 31, 2015, an increase of $192,718 or approximately 253%. This increase resulted primarily from proceeds from notes payable.

On March 17, 2015, the Company entered into a promissory note with Peter Lambert for a loan of $25,000 that became due on June 15, 2015. The loan carries an interest at the rate of $55 per day. On June 12, 2015, the parties amended this promissory note so that the loan was extended and will accrue interest at $55 per day until this note is paid in full. As of December 31, 2016 and 2015, there was $36,184 and $16,136, respectively, of interest accrued on the loan.

As various times between August 5, 2015 and December 30, 2015, Mr. Acunto loaned the Company a total of $51,212. These loans bear interest at the rate of 4% per annum; $637 in interest has been accrued on these loans, bringing the total owed to $51,849.

The Company’s current cash and cash equivalents balance will not be sufficient to fund its operations for the next twelve months. The Company’s ability to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, and to obtain additional financing, and ultimately attain profitability. The Company’s continued operations, as well as the implementation of the Company’s business plan will depend upon its ability to raise additional funds through bank borrowings and equity or debt financing.

Whereas the Company has been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to it and/or that demand for the Company’s common stock will be sufficient to meet its capital needs, or that financing will be available on terms favorable to the Company. If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of the Company’s planned product development and marketing efforts, any of which could have a negative impact on its business and operating results. In addition, insufficient funding may have a material adverse effect on the Company’s financial condition, which could require it to:

To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to the Company’s existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations. Regardless of whether the Company’s cash assets prove to be inadequate to meet its operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to the Company’s existing stockholders.

Inflation.

The impact of inflation on the Company’s costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and the Company does not anticipate that inflationary factors will have a significant impact on future operations.

Off-Balance Sheet Arrangements.

The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.

Critical Accounting Policies.

The SEC has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: (a) use of estimates; and (b) net income (loss) per share. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.

The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that is believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

In accordance with Accounting Standards Codification Topic 360, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. At December 31, 2015, the Company evaluated its long-lived assets and determined that they had been impaired and took a charge to earnings of $4,478,142.

Forward Looking Statements

Information in this Form 10-Q contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended. When used in this Form 10-Q, the words “expects,” “anticipates,” “believes,” “plans,” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements regarding the adequacy of cash, expectations regarding net losses and cash flow, statements regarding growth, the need for future financing, dependence on personnel, and operating expenses.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, those discussed below. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

We are continuing the development of our online movie channel, a 24 hour a day streaming internet TV station, and the further development of our online news and video news bureau in association with Leading Edge Radio Network and Mancuso Martin Productions.

Discussions with Mancuso Martin Productions on a comedy screenplay in development are on schedule as previously reported and the potential acquisition of seven additional screenplays as previously disclosed remains viable and ongoing. We continue to develop revenue share agreements and strategic partnership opportunities with radio, TV, movie and entertainment companies.

In October 2017, we launched XVIINews.com which features news and various video updates featuring Susan Knowles, formerly of the Blaze.

On May 26, 2017, we entered into the Revenue Share Agreement with The Car Flip Guys pursuant to which we received an interest in a weekly internet television show, “The Car Flip Guys” which focuses on how two young guys started and developed their own company with our assistance. Additionally, The Car Flip Guys restoration of a 1971 Ford Mustang is on time and expected to preview the automobile for sale at auction or privately. Previously, we had reported an expectation to report income during the third quarter of 2017 but, due to additional work being required on the vehicle and an unanticipated wait for parts, we now believe we will report income in the fourth quarter from the sale of the vehicle.

Preliminary discussions continue regarding the acquisition of a golf ball and equipment company which is scheduled to debut in 2018. The golf company plans to feature two professional lines of golf balls for amateurs and professionals, golf gloves, golf clubs, golf shoes, apparel and accessories. Although, if the acquisition is completed, we do not have plans to establish a brick and mortar operation, we believe that U.S. and worldwide golf courses, off course pro-shops and various retailers would be interested in picking up the brand, due in part to the science of the golf balls, performance, golf shafts and other components. Additionally, we believe that certain designers who we expect to be involved with us and our unique marketing plan will set us apart from its competitors. Our current CEO is also an experienced former professional golfer with numerous contacts from the various tours including the PGA, Web.com, Champions Tour, and LPGA Tours, respectively.

We believe we will need to attract additional capital in order to pursue our current business plan, including any acquisitions.

(a) Total Revenue

We had revenue of $1,250 for the three months ended September 30, 2017 compared to $3,155 for the three months ended September 30, 2016. We had revenue of $3,347 for the nine months ended September 30, 2017 compared to $35,803 for the nine months ended September 30, 2016. These decreases were due to the refocusing of the Company towards Cloud Television, television production and movie production.

(b) General and Administrative Expenses

(c) Interest and Financing Costs

We had interest and financing costs of $157,644 for the three months ended September 30, 2017 compared to $173,281 for the three months ended September 30, 2016, a decrease of $15,637 or approximately 9.0%. We had interest and financing costs of $906,765 for the nine months ended September 30, 2017 compared to $418,918 for the nine months ended September 30, 2016, an increase of $487,847 or approximately 116.5%. The decrease during the three months ended September 30, 2017 was due to fewer convertible notes issued during the three months ended September 30, 2017 compared to the same period in 2016 that resulted in lower financing costs. The increase during the nine months ended September 30, 2017 was due to the financing costs of $862,710 associated with the new convertible debentures entered into in 2017.

(d) Net Loss

We had a net loss of $29,710 for the three months ended September 30, 2017 compared to $16,230,174 for the three months ended September 30, 2016, a decrease of $16,200,464 or approximately 99.8%. We had a net loss of $1,653,310 for the nine months ended September 30, 2017 compared to $24,307,922 for the nine months ended September 30, 2016, a decrease of $22,654,612 or approximately 93.2%. These decreases were due to factors described above.

Operating Activities

Financing Activities

As of September 30, 2017, we had total current assets of $20,345 and total current liabilities of $1,098,235, resulting in a working capital deficit of $1,077,890. The cash and cash equivalents were $1,345 as of September 30, 2017.

(a) Use of Estimates

(b) Impairment of Long-Lived Assets

(c) Derivative Financial Instruments