XBRL Proof

XBRL File

 
Document - Document and Entity Information
Document - Document and Entity Information (USD $) 12 Months Ended    
( custom:DocumentAndEntityInformationAbstract [Extension] )      
  Dec. 31, 2016 Oct. 19, 2017 Jun. 30, 2017
       
       
       
Entity Registrant Name Capital Art, Inc.    
( dei:EntityRegistrantName )      
Entity Central Index Key 0001527844    
( dei:EntityCentralIndexKey )      
Document Type 10-K/A    
( dei:DocumentType )      
Document Period End Date 2016-12-31    
( dei:DocumentPeriodEndDate )      
Amendment Flag true    
( dei:AmendmentFlag )      
Current Fiscal Year End Date --12-31    
( dei:CurrentFiscalYearEndDate )      
Is Entity a Well-known Seasoned Issuer? No    
( dei:EntityWellKnownSeasonedIssuer )      
Is Entity a Voluntary Filer? No    
( dei:EntityVoluntaryFilers )      
Is Entity's Reporting Status Current? No    
( dei:EntityCurrentReportingStatus )      
Entity Filer Category Smaller Reporting Company    
( dei:EntityFilerCategory )      
Entity Public Float     11,174,880
( dei:EntityPublicFloat )      
Entity Common Stock, Shares Outstanding   325,570,524  
( dei:EntityCommonStockSharesOutstanding )      
Document Fiscal Period Focus FY    
( dei:DocumentFiscalPeriodFocus )      
Document Fiscal Year Focus 2016    
( dei:DocumentFiscalYearFocus )      
Amendment Description Restated Financials    
( dei:AmendmentDescription )      
(End Document - Document and Entity Information)
 
Statement - Consolidated Balance Sheets
Statement - Consolidated Balance Sheets (USD $)      
( us-gaap:StatementOfFinancialPositionAbstract )      
  Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014
       
       
       
Assets      
( us-gaap:AssetsAbstract )      
    Current Assets      
    ( us-gaap:AssetsCurrentAbstract )      
        Cash 54,034 32,570 340,523
        ( us-gaap:Cash )      
        Accounts receivable, net 91,501 112,460  
        ( us-gaap:AccountsReceivableNetCurrent )      
        Inventory, net 10,741 84,550  
        ( us-gaap:InventoryNet )      
        Prepaid expenses 18,341 41,061  
        ( us-gaap:PrepaidExpenseAndOtherAssetsCurrent )      
        Due from related party 78,920  
        ( us-gaap:DueFromRelatedPartiesNoncurrent )      
        Total Current Assets 253,537 270,641  
        ( us-gaap:AssetsCurrent )      
        Property and equipment, net 2,843,587 3,058,983  
        ( us-gaap:PropertyPlantAndEquipmentNet )      
        Due from related party 91,000  
        ( custom:DueFromRelatedPArty [Extension] )      
        Security deposit 6,356 13,581  
        ( us-gaap:SecurityDeposit )      
        Intangible Assets, net 369,750 413,250  
        ( us-gaap:IntangibleAssetsCurrent )      
        Total Assets 3,473,230 3,847,455  
        ( us-gaap:Assets )      
        Liabilities and Stockholders' Equity      
        ( us-gaap:LiabilitiesAndStockholdersEquityAbstract )      
            Current Liabilities      
            ( us-gaap:LiabilitiesCurrentAbstract )      
                Accounts payable and accrued liabilities 602,153 705,685  
                ( us-gaap:AccountsPayableCurrent )      
                Payable to Globe Photo, Inc., short- term portion 10,000 120,000  
                ( us-gaap:OtherLoansPayableCurrent )      
                Due to related parties 32,245 46,084  
                ( us-gaap:DueToRelatedPartiesCurrent )      
                Notes payable - related parties 471,284 289,743  
                ( us-gaap:ShortTermBorrowings )      
                Notes payable, net of debt discount 494,335 150,000  
                ( us-gaap:NotesPayableRelatedPartiesClassifiedCurrent )      
                Derivative liability 57,922 0
                ( us-gaap:EmbeddedDerivativeFairValueOfEmbeddedDerivativeLiability )      
                Loans payable, net of unamortized discount 349,818  
                ( us-gaap:LongTermDebtCurrent )      
                Total Current Liabilities 2,017,757 1,311,512  
                ( us-gaap:LiabilitiesCurrent )      
                Non-current Liabilities:      
                ( us-gaap:LiabilitiesNoncurrentAbstract )      
                    Note payable 120,000  
                    ( custom:NotePayable [Extension] )      
                    Derivative liability 55,000  
                    ( custom:DerivativeLiability [Extension] )      
                Payable to Globe Photo, Inc. less short-term portion 10,000  
                ( us-gaap:OtherLoansPayableLongTerm )      
                Total Non-current Liabilities 185,000  
                ( us-gaap:LiabilitiesNoncurrent )      
                Total Liabilities 2,017,757 1,496,512  
                ( us-gaap:Liabilities )      
                Commitments and contingencies      
                ( us-gaap:CommitmentsAndContingencies )      
                Stockholders' Equity      
                ( us-gaap:StockholdersEquityAbstract )      
                    Preferred stock, $0.0001 par value, 50,000,000 shares authorized; none issued and outstanding at December 31, 2016 and 2015  
                    ( us-gaap:PreferredStockValue )      
                    Common stock par value $0.0001: 450,000,000 shares authorized; 325,570,524 and 325,341,224 issued and outstanding as of December 31, 2016 and 2015 respectively 32,557 32,534  
                    ( us-gaap:CommonStockValue )      
                    Additional paid in capital 4,097,711 4,051,874  
                    ( us-gaap:AdditionalPaidInCapital )      
                    Accumulated deficit (2,674,795) (1,733,465)  
                    ( us-gaap:RetainedEarningsAccumulatedDeficit )      
                    Shareholders' Equity 1,455,473 2,350,943 3,200,086
                    ( us-gaap:StockholdersEquity )      
                    Total Liabilities and Stockholders' Equity 3,473,230 3,847,455  
                    ( us-gaap:LiabilitiesAndStockholdersEquity )      
(End Statement - Consolidated Balance Sheets)
 
Statement - Consolidated Balance Sheets (Parenthetical)
Statement - Consolidated Balance Sheets (Parenthetical) (USD $)    
( us-gaap:StatementOfFinancialPositionAbstract )    
  Dec. 31, 2016 Dec. 31, 2015
     
     
     
Preferred stock, par value 0.0001 0.0001
( us-gaap:PreferredStockParOrStatedValuePerShare )    
Preferred stock, shares authorized 50,000,000 50,000,000
( us-gaap:PreferredStockSharesAuthorized )    
Preferred stock, shares issued 0 0
( us-gaap:PreferredStockSharesIssued )    
Preferred stock, shares outstanding 0 0
( us-gaap:PreferredStockSharesOutstanding )    
Common stock, par value 0.0001 0.0001
( us-gaap:CommonStockParOrStatedValuePerShare )    
Common stock, shares authorized 450,000,000 450,000,000
( us-gaap:CommonStockSharesAuthorized )    
Common stock, shares issued 325,570,524 325,341,224
( us-gaap:CommonStockSharesIssued )    
Common stock, shares outstanding 325,570,524 325,341,224
( us-gaap:CommonStockSharesOutstanding )    
(End Statement - Consolidated Balance Sheets (Parenthetical))
 
Statement - Consolidated Statements of Operations
Statement - Consolidated Statements of Operations (USD $) 12 Months Ended
( us-gaap:IncomeStatementAbstract )  
  Dec. 30, 2015 Dec. 30, 2016 Dec. 31, 2015 Dec. 31, 2016
         
         
         
License revenue 58,922 191,433    
( custom:LicenseRevenue [Extension] )        
Image revenue 798,647 672,993    
( custom:ImageRevenue [Extension] )        
Total revneue 857,569 864,426    
( us-gaap:Revenues )        
Cost of revenue 376,164 820,393    
( us-gaap:CostOfRevenue )        
Gross margin 481,405 44,033    
( us-gaap:GrossProfit )        
Operating expenses        
( us-gaap:OperatingExpensesAbstract )        
    Product development, sales and marketing 595,691 182,725    
    ( us-gaap:BusinessDevelopment )        
    General and administrative 839,124 662,331    
    ( us-gaap:GeneralAndAdministrativeExpense )        
    Depreciation and amortization 402,722 67,604 402,722 430,135
    ( us-gaap:DepreciationAndAmortization )        
    Total operating expenses 1,837,537 912,660    
    ( us-gaap:OperatingExpenses )        
    Loss from operations (1,356,132) (868,627)    
    ( us-gaap:OperatingIncomeLoss )        
    Other income (expenses)        
    ( us-gaap:OtherIncomeAndExpensesAbstract )        
        Interest expense (6,261) (124,781)    
        ( us-gaap:InterestExpense )        
        Gain on settlement of liability 55,000   55,000
        ( us-gaap:BusinessCombinationBargainPurchaseGainRecognizedAmount )        
        Change in fair value of derivative liability 2,922    
        ( us-gaap:InterestExpenseTradingLiabilities )        
        Other income (expenses) (6,261) (72,703)    
        ( us-gaap:OtherNonoperatingIncomeExpense )        
        Net loss (1,362,393) (941,330) (1,362,393) (941,330)
        ( us-gaap:NetIncomeLoss )        
        Per-share data        
        ( us-gaap:EarningsPerShareBasicAndDilutedAbstract )        
        Basic and diluted loss per share 0.00 0.00    
        ( us-gaap:EarningsPerShareBasicAndDiluted )        
        Weighted average number of common shares outstanding 321,910,400 325,398,392    
        ( us-gaap:WeightedAverageNumberOfShareOutstandingBasicAndDiluted )        
(End Statement - Consolidated Statements of Operations)
 
Statement - Consolidated Shareholders Equity
Statement - Consolidated Shareholders Equity (USD $)          
( us-gaap:StatementOfStockholdersEquityAbstract )          
  Common Stock Additional Paid-In Capital Stock Payable Retained Earnings / Accumulated Deficit <Total>
( us-gaap:StatementEquityComponentsAxis )          
           
( us-gaap:EquityComponentDomain )          
From Jan. 1, 2015 to Dec. 31, 2015          
           
Beginning balance, shares 311,973,283        
( us-gaap:SharesOutstanding )          
Beginning balance, value 31,197 3,239,961   (371,072) 3,200,086
( us-gaap:StockholdersEquity )          
Outstanding shares of CAPA at the time of the reverse merger, shares          
( custom:OutstandingSharesOfCapaAtTimeOfReverseMergerShares [Extension] )          
Outstanding shares of CAPA at the time of the reverse merger, value          
( custom:OutstandingSharesOfCapaAtTimeOfReverseMergerValue [Extension] )          
Common shares issued for stock subscription receivable, shares 6,000,000        
( custom:CommonSharesIssuedForStockSubscriptionReceivableShares [Extension] )          
Common shares issued for stock subscription receivable, value 600 299,400 (300,000)  
( custom:CommonSharesIssuedForStockSubscriptionReceivableValue [Extension] )          
Common shares issued for cash in connection with private placement, shares 1,820,000        
( us-gaap:StockIssuedDuringPeriodSharesOther )          
Common shares issued for cash in connection with private placement, value 182 90,818     91,000
( us-gaap:StockIssuedDuringPeriodValueOther )          
Common shares issued for services, shares 2,470,000        
( us-gaap:StockIssuedDuringPeriodSharesIssuedForServices )          
Common shares issued for services, value 247 165,753     166,000
( us-gaap:StockIssuedDuringPeriodValueIssuedForServices )          
Common shares issued to related party for finder's fee, shares 200,000        
( custom:CommonSharesIssuedToRelatedPartyForFindersFeeShares [Extension] )          
Common shares issued to related party for finder's fee, value 20 9,980     10,000
( custom:CommonSharesIssuedToRelatedPartyForFindersFeeValue [Extension] )          
Common shares issued for settlement of accrued liabilities, shares 2,525,000        
( custom:CommonSharesIssuedForSettlementOfAccruedLiabilitiesShares [Extension] )          
Common shares issued for settlement of accrued liabilities, value 253 125,997     126,250
( custom:CommonSharesIssuedForSettlementOfAccruedLiabilitiesValue [Extension] )          
Common shares issued for cash, shares          
( us-gaap:StockIssuedDuringPeriodSharesNewIssues )          
Common shares issued for cash, value          
( us-gaap:StockIssuedDuringPeriodValueNewIssues )          
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, shares 352,941        
( us-gaap:StockIssuedDuringPeriodSharesPurchaseOfAssets )          
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, value 35 119,965     120,000
( us-gaap:StockIssuedDuringPeriodValuePurchaseOfAssets )          
Common shares subscribed          
( custom:CommonSharesSubscribedValue [Extension] )          
Net loss     (1,362,393) (1,362,393)
( us-gaap:NetIncomeLoss )          
Ending balance, shares 325,341,224 4,051,874      
( us-gaap:SharesOutstanding )          
Ending balance, value 32,534     (1,733,465) 2,350,943
( us-gaap:StockholdersEquity )          
           
           
From Jan. 1, 2016 to Dec. 31, 2016          
           
Beginning balance, shares 325,341,224 4,051,874      
( us-gaap:SharesOutstanding )          
Beginning balance, value 32,534     (1,733,465) 2,350,943
( us-gaap:StockholdersEquity )          
Outstanding shares of CAPA at the time of the reverse merger, shares          
( custom:OutstandingSharesOfCapaAtTimeOfReverseMergerShares [Extension] )          
Outstanding shares of CAPA at the time of the reverse merger, value          
( custom:OutstandingSharesOfCapaAtTimeOfReverseMergerValue [Extension] )          
Common shares issued for stock subscription receivable, shares          
( custom:CommonSharesIssuedForStockSubscriptionReceivableShares [Extension] )          
Common shares issued for stock subscription receivable, value          
( custom:CommonSharesIssuedForStockSubscriptionReceivableValue [Extension] )          
Common shares issued for cash in connection with private placement, shares          
( us-gaap:StockIssuedDuringPeriodSharesOther )          
Common shares issued for cash in connection with private placement, value          
( us-gaap:StockIssuedDuringPeriodValueOther )          
Common shares issued for services, shares          
( us-gaap:StockIssuedDuringPeriodSharesIssuedForServices )          
Common shares issued for services, value          
( us-gaap:StockIssuedDuringPeriodValueIssuedForServices )          
Common shares issued to related party for finder's fee, shares          
( custom:CommonSharesIssuedToRelatedPartyForFindersFeeShares [Extension] )          
Common shares issued to related party for finder's fee, value          
( custom:CommonSharesIssuedToRelatedPartyForFindersFeeValue [Extension] )          
Common shares issued for settlement of accrued liabilities, shares 229,300        
( custom:CommonSharesIssuedForSettlementOfAccruedLiabilitiesShares [Extension] )          
Common shares issued for settlement of accrued liabilities, value 23 45,837     45,860
( custom:CommonSharesIssuedForSettlementOfAccruedLiabilitiesValue [Extension] )          
Common shares issued for cash, shares          
( us-gaap:StockIssuedDuringPeriodSharesNewIssues )          
Common shares issued for cash, value          
( us-gaap:StockIssuedDuringPeriodValueNewIssues )          
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, shares          
( us-gaap:StockIssuedDuringPeriodSharesPurchaseOfAssets )          
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, value          
( us-gaap:StockIssuedDuringPeriodValuePurchaseOfAssets )          
Common shares subscribed          
( custom:CommonSharesSubscribedValue [Extension] )          
Net loss       (941,330) (941,330)
( us-gaap:NetIncomeLoss )          
Ending balance, shares 325,570,524        
( us-gaap:SharesOutstanding )          
Ending balance, value 32,557 4,097,711   (2,674,795) 1,455,473
( us-gaap:StockholdersEquity )          
(End Statement - Consolidated Shareholders Equity)
 
Statement - Consolidated Statements of Cash Flows
Statement - Consolidated Statements of Cash Flows (USD $) 12 Months Ended
( us-gaap:StatementOfCashFlowsAbstract )  
  Dec. 30, 2015 Dec. 30, 2016 Dec. 31, 2015 Dec. 31, 2016
         
         
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
( us-gaap:NetCashProvidedByUsedInOperatingActivitiesAbstract )        
    Net loss (1,362,393) (941,330) (1,362,393) (941,330)
    ( us-gaap:NetIncomeLoss )        
Adjustments to reconcile net loss to net cash used in operating activities:        
( us-gaap:AdjustmentsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstract )        
    Depreciation and amortization 402,722 67,604 402,722 430,135
    ( us-gaap:DepreciationAndAmortization )        
    Amortization of debt discount     26,281
    ( us-gaap:AmortizationOfDebtDiscountPremium )        
    Gain on settlement of liability (55,000)   (55,000)
    ( us-gaap:BusinessCombinationBargainPurchaseGainRecognizedAmount )        
    Stock-based compensation to non-employees     176,000
    ( us-gaap:ShareBasedCompensation )        
    Prepaid stock-based compensation to non-employees     (25,000)
    ( custom:PrepaidStockBasedCompensationNonEmployees [Extension] )        
    Loss on sale of property included in cost of sales     2,942
    ( us-gaap:GainLossOnSaleOfPropertyPlantEquipment )        
    Inventory allowance       117,453
    ( custom:InvestoryAllowance [Extension] )        
    Allowance for bad debts       11,100
    ( us-gaap:AllowanceForLoanAndLeaseLossRecoveryOfBadDebts )        
    Change in fair value of embedded derivative     (20,000) 2,922
    ( us-gaap:EmbeddedDerivativeGainLossOnEmbeddedDerivativeNet )        
    Accounts receivable     (98,769) 9,859
    ( us-gaap:IncreaseDecreaseInAccountsReceivable )        
    Prepaid expenses     (12,024) 22,720
    ( us-gaap:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets )        
    Inventory     (15,516) (43,644)
    ( us-gaap:IncreaseDecreaseInInventories )        
    Security deposit     7,225
    ( us-gaap:IncreaseDecreaseInSecurityDeposits )        
    Due to related parties     161
    ( us-gaap:IncreaseDecreaseInDueToRelatedParties )        
    Accounts payable and accrued liabilities     73,210 (110,590)
    ( us-gaap:IncreaseDecreaseInAccountsPayable )        
Net Cash Used In Operating Activities     (878,828) (522,708)
( us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations )        
CASH FLOWS FROM INVESTING ACTIVITIES:        
( us-gaap:NetCashProvidedByUsedInInvestingActivitiesAbstract )        
    Net cash paid for minority investment in business    
    ( us-gaap:PaymentsForProceedsFromInvestments )        
    Purchase of archival images, property and equipment     (97,769) (171,240)
    ( us-gaap:PaymentsToAcquirePropertyPlantAndEquipment )        
    Cash paid for intangibles     (110,000)
    ( custom:CashPaidForIntangibles [Extension] )        
    Loan fees     (8,000)
    ( us-gaap:IncreaseDecreaseInLoansDeferredIncome )        
    Security deposit     (7,225)
    ( custom:SecurityDeposits [Extension] )        
Net Cash Used In Investing Activities     (222,994) (171,240)
( us-gaap:NetCashProvidedByUsedInInvestingActivitiesContinuingOperations )        
CASH FLOWS FROM FINANCING ACTIVITIES:        
( us-gaap:NetCashProvidedByUsedInFinancingActivitiesAbstract )        
    Proceeds from loans payable     346,500
    ( us-gaap:ProceedsFromConvertibleDebt )        
    Repayment of loans payable     11,128
    ( us-gaap:RepaymentsOfConstructionLoansPayable )        
    Proceeds from related party advances     18,190
    ( us-gaap:ProceedsFromCollectionOfLongtermLoansToRelatedParties )        
    Repayment of related party advances     (84)
    ( us-gaap:PaymentsToFundLongtermLoansToRelatedParties )        
    Proceeds from sale of common stock     391,000
    ( us-gaap:ProceedsFromIssuanceOfCommonStock )        
    Proceeds from notes payable     270,000 198,500
    ( us-gaap:ProceedsFromNotesPayable )        
    Proceeds of notes payable - related parties     160,000 196,500
    ( us-gaap:ProceedsFromRelatedPartyDebt )        
    Repayment of note payable - related parties     (8,857) (14,960)
    ( us-gaap:RepaymentsOfRelatedPartyDebt )        
Net Cash Provided By Financing Activities     793,869 715,412
( us-gaap:NetCashProvidedByUsedInFinancingActivitiesContinuingOperations )        
Net Change in Cash     (307,953) 21,464
( us-gaap:CashPeriodIncreaseDecrease )        
Cash - Beginning of Period 340,523 32,570 340,523 32,570
( us-gaap:Cash )        
Cash - End of Period     32,570 54,034
( us-gaap:Cash )        
SUPPLEMENTARY CASH FLOW INFORMATION:        
( us-gaap:SupplementalCashFlowInformationAbstract )        
    Cash Paid During the Period for:        
    ( us-gaap:CashDividendsPaidToParentCompanyAbstract )        
        Interest     19,918 17,770
        ( us-gaap:InterestPaidNet )        
    Common shares issued for settlement of accrued liabilities     126,250 45,860
    ( us-gaap:IssuanceOfStockAndWarrantsForServicesOrClaims )        
    Note issued to settle related party payable     14,000
    ( custom:NoteIssuedToSettleRelatedPartyDebt [Extension] )        
    Common shares issued in connection with Asset Purchase Agreement     120,000
    ( custom:CommonSharesIssuedInConnectionAssetPurchaseAgreement [Extension] )        
    Payable issued for Globe intangible assets acquired     130,000
    ( custom:CommonStockAndPayableForGlobeIntangibleAssetsAcquired [Extension] )        
    Fair value of embedded derivative issued for Globe assets     75,000
    ( custom:FairValueEmbeddedDerivative [Extension] )        
    Due from related party offset against note payable     2,400
    ( custom:DueFromRelatedPartyOffsetNote [Extension] )        
(End Statement - Consolidated Statements of Cash Flows)
 
Disclosure - 1. Organization and Business Operations
Disclosure - 1. Organization and Business Operations (USD $) 12 Months Ended
( us-gaap:AccountingPoliciesAbstract )  
  Dec. 31, 2016
   
   
   
Organization and Business Operations

Capital Art, Inc. (formerly Movie Star News, LLC) (“we”, “our”, the “Company”) sells and manages classic and contemporary, limited edition photographic images and reproductions, with a focus on iconic celebrity images. The Company also makes available its images for publications and merchandizing. The Company aims to become a leading global photography marketing and distribution company by acquiring rights and ownership to collections of rare iconic negatives and photographs, and to establish worldwide wholesale and retail sales channels.

 

Movie Star News, LLC (“MSN”) was organized in the state of Nevada on August 29, 2012 as a limited liability company to acquire the assets of Kramer Productions, Inc. d/b/a Movie Star News, a New York institution since 1939 that was credited for creating the concept of “pin-up art”. The acquisition resulted in MSN holding one of the largest and most diverse collections of Hollywood photographs in the world of over 3 million Hollywood-related posters, vintage photographs and original negatives.

 

Capital Art, Inc. (“CAPA”), formed in the state of Delaware on April 26, 2007 along with its wholly owned subsidiary, Capital Art, LLC (collectively “CAPA” or “pre-merger CAPA”) formed in the state of California on January 24, 2011, owned rare iconic celebrity images, including the rights to the Frank Worth Collection. The Frank Worth Collection comprises an extensive collection of Marilyn Monroe, James Dean and other iconic photographs, many rare and never seen that were accumulated over a period of 60 years.

 

On July 22, 2015, the Company entered into an Asset Purchase Agreement with Globe Photos, Inc., a New York corporation, to purchase substantially all of the assets of Globe Photos, Inc., which principally comprise photographer contracts granting the Company the right to exploit copyrights, digital and tangible photographs, and related copyrights and trademarks, of Globe Photo, Inc. On July 24, 2015, the Company formed Globe Photo, LLC, a wholly owned subsidiary of CAPA, to license the Company’s extensive photograph image archive to third parties worldwide for a fee.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

 

Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has not generated sufficient revenues from product sales to provide sufficient cash flows to enable the Company to finance its operations internally. As of December 31, 2016 the Company had $54,034 cash on hand. At December 31, 2016 the Company has an accumulated deficit of $2,674,795. For the twelve months ended December 31, 2016, the Company had a net loss of $941,330 and cash used in operations of $522,708. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

Over the next twelve months the Company intends to invest its working capital resources in sales and marketing in order to increase the distribution and demand for its products. If the Company fails to generate sufficient revenue and obtain additional capital to continue at its expected level of operations, the Company may be forced to scale back or discontinue its sales and marketing efforts. However, there is no guarantee the Company will generate sufficient revenues or raise capital to continue operations. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

( us-gaap:BasisOfPresentationAndSignificantAccountingPoliciesTextBlock )  
(End Disclosure - 1. Organization and Business Operations)
 
Disclosure - 2. Significant Accounting Policies
Disclosure - 2. Significant Accounting Policies (USD $) 12 Months Ended
( us-gaap:AccountingPoliciesAbstract )  
  Dec. 31, 2016
   
   
   
Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements represent the results of operations, financial position and cash flows of Capital Art, Inc. prepared on the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America. The consolidated financial statements include the financial statements of the Company, and its 100% owned subsidiaries Capital Art, LLC and Globe Photos, LLC. All inter-company balances and transactions have been eliminated.

 

Use of 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 also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 

     

Fair Value of Financial Instruments

 

The Company measures fair value in accordance with Accounting Standards Codification (“ASC”) 820 – Fair Value Measurements. ASC 820 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurements. ASC 820 establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are:

 

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

 

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

 

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of December 31, 2016, or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, receivables from related parties, prepaid expenses and other, accounts payable, accrued liabilities, and related party and third party notes payables approximate fair value due to their relatively short maturities. The Company’s notes payable to related parties approximates the fair value of such instrument based upon management’s best estimate of terms that would be available to the Company for similar financial arrangements at December 31, 2016 and 2015. 

 

 

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs.

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2016:

 

    Level 1     Level 2     Level 3     Total
Liabilities                              
Derivative Financial Instruments   $     $     $ 57,922     $ 57,922

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2015:

 

    Level 1     Level 2     Level 3     Total
Liabilities                              
Derivative Financial Instruments   $     $     $ 55,000     $ 55,000

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

 

   Amount
Balance December 31, 2015  $55,000
Change in fair market value of derivative liability   2,922
Balance December 31, 2016  $57,922

 

The Company’s derivative instruments were valued using the Black-scholes option pricing model. Assumptions used in the valuation include the following:  a) market value of stock on measurement date of $0.29; b) risk-free rate of 0.85%; c) volatility factor of 142%;  d) dividend yield of 0% and e) remaining term of 1.39 years.

 

Related parties

 

The Company follows ASC 850, "Related Party Disclosures" for reporting activities with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

Accounts receivable, net

 

The Company sells its products through various means, including distributors, auction houses, and via the internet. The Company also licenses its images to third parties for which royalty income is received by the Company. The Company continually monitors the collectability of its trade accounts receivables based on a combination of factors, including the aging of the accounts receivable, historical experience, and other currently available evidence and provides for an allowance for doubtful accounts equal to estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. There was an allowance for bad debt of $11,100 recorded during the year ended December 31, 2016. As of December 31, 2016 and 2015, the Company’s accounts receivable was netted against an allowance of $11,100 and $0 respectively.  

 

 

Inventory

 

The Company’s inventory is comprised of rare photos of movie stars and other famous people, and is stated at the lower of cost or net realizable value. Direct labor and raw material costs associated with the process of making the photos available for sale are also included in inventory at cost. These costs are expensed to cost of sales pro-ratably as sold. As of December 31, 2016 and 2015, the Company has recorded allowance related to slow moving inventory in the amount of $117,453 and $0, respectively.

 

Archival Images, and Property and Equipment

 

Archival images, and property and equipment are recorded at cost for purchases over $500, and depreciated using the straight-line method over the estimated useful lives ranging from three to ten years. The Company capitalizes direct costs associated with improvements to archival images, and property and equipment in accordance with ASC 360 – Property, Plant, and Equipment. Leasehold improvements are amortized on a straight-line basis over the shorter of their useful life or the term of the related lease. Expenditures for ordinary repairs and maintenance are expensed as incurred.

 

Intangible Assets

 

Intangible assets, consisting of content provider and photographic agreements, and copyrights, are accounted for in accordance with ASC 350 Intangibles - Goodwill and Other. Intangible assets that have finite lives are amortized using the straight-line method over their estimated useful lives of ten years.

 

Impairment of Long-Lived Assets

 

Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. In such situations, long-lived assets are considered impaired when future undiscounted cash flows resulting the use of the asset and its eventual disposition are less than the asset’s carrying amount. In such situations, the asset is written down to the present value of the estimated future cash flows. Factors that are considered when evaluating long-lived assets for impairment include a current expectation that it is more likely than not that the long-lived asset will be sold significantly before the end of its useful life, a significant decrease in the market price of the long-lived asset, and a change in the extent of manner in which the long-lived asset is being used. Based on management’s assessment there were no impairments to its long-lived assets at December 31, 2016 and 2015.

 

Derivative Financial Instruments

 

The Company accounts for derivative instruments in accordance with the provisions of ASC 815 - Derivatives Hedging: Embedded Derivatives. ASC 815 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities.

 

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms in agreements are reviewed to determine whether or not they contain embedded derivatives that are required under ASC 815 to be accounted for and separated from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities is required to be revalued at each reporting date, with the corresponding changes in fair value recorded in current period operating results.

 

Revenue Recognition

 

The Company recognizes revenue related to product sales when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future performance to directly bring about the resale of the product by the buyer as required by ASC 605 – Revenue Recognition. Cost of sales, rebates and discounts are recorded at the time of revenue recognition or at each financial reporting date.

 

 

The Company’s other revenue represent payments based on net sales from brand licensees for content reproduction rights. These license agreements are held in conjunction with third parties that are responsible for collecting fees due and remitting to the Company its share after expenses. Revenue from licensed products is recognized when realized or realizable based on royalty reporting received from licensees.

 

Shipping and Handling

 

The Company records shipping and handling expenses in the period in which they are incurred and are included in cost of revenues. In limited circumstances this cost is passed through to the customers.

 

Stock-based Compensation

 

The Company recognizes stock-based compensation issued to employees in accordance with ASC 718 – Compensation: Stock Compensation, based on the fair value of the equity instrument in exchange for employee services and the resulting recognition of compensation expense.

 

The Company’s accounts for stock-based payment transactions with nonemployees for services in accordance with ASC 50-550 Equity: Equity-based Payments to Non-Employees. If the fair value of the services received in a stock-based payment with nonemployees is more reliably measureable than the fair value of the equity instrument issued, the fair value of the services received is used to measure the transaction. Conversely, if the fair value of the equity instruments issued in a stock-based transaction with nonemployees is more reliably measureable than the fair value of the consideration received, the transaction is measured at the fair value of the equity instruments issued. The Company recognizes an increase in equity or a liability, depending on whether the equity instruments granted have satisfied the equity or liability classification criteria.

 

Advertising

 

The Company expenses the cost of advertising, including promotional expenses, as incurred. Advertising expenses for the twelve months ended December 31, 2016 and 2015 was $5,167 and $10,811, respectively.

 

Income Taxes

 

The Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate of whether it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of December 31, 2016 and 2015.

 

Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

  

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions.

 

 

Concentrations of Credit Risk and Financial Instruments

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable.

 

The Company’s cash balances are placed at financial institutions, which at times, may exceed federally insured limits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on cash.

 

Basic and Diluted Loss per Share

 

The Company computes loss per share in accordance with ASC 260 - Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is antidilutive. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive.

 

A reconciliation of weighted-average basic shares outstanding to weighted-average diluted shares outstanding follows:

 

    Twelve Months Ended December 31,
    2016     2015
           
Basic weighted average common shares outstanding     325,398,392       321,910,400
               
Effect of dilutive securities          
               
Diluted weighted average common and potential common shares outstanding     325,398,392       321,910,400

 

 

Recent Accounting Pronouncements

 

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. ASU 2016-08 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management is currently assessing its procedures for determining revenues derived from principal versus agents in connection with the impact of adopting this new accounting standard on the Company’s consolidated financial statements and does not believe that the adoption of ASU 2016-08 will have a material impact on the Company’s consolidated financial statements.

 

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The amendments in ASU 2016-10 clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASU 2016-10 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management is currently assessing the potential impact of adopting this new accounting standard on the Company’s consolidated financial statements in connection with revenues recognized from licensing its vast archive of photographic images.

 

 

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2016-12 do not change the core principle of the guidance in Topic 606, but instead affect only the narrow aspects noted in Topic 606. ASU 2016-12 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management evaluated ASU 2016-12 and does not believe the adoption of ASU 2016-12 will have a material impact on the Company’s consolidated financial statements.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 will be effective for the Company beginning on January 1, 2018, and will be applied by means of a cumulative effect adjustment to the balance sheet, except for effects related to equity securities without readily determinable values, which will be applied prospectively. Management is currently evaluating the potential impact of adopting this new accounting standard on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which requires an entity to recognize long-term lease arrangements as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all long-term leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The amendments also require certain new quantitative and qualitative disclosures regarding leasing arrangements. ASU 2016-02 will be effective for the Company beginning on January 1, 2019. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. Management does not believe the adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument would not, in and of itself, be considered a termination of the derivative instrument, provided that all other hedge accounting criteria continue to be met. ASU 2016-05 is effective for the Company beginning on January 1, 2017. Early adoption is permitted, including in an interim period. Management evaluated ASU 2016-05 and does not believe the adoption of this new accounting standard will have a material impact on the Company’s consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which aims to reduce the diversity of practice in identifying embedded derivatives in debt instruments. ASU 2016-06 clarifies that the nature of an exercise contingency is not subject to the “clearly and closely” criteria for purposes of assessing whether the call or put option must be separated from the debt instrument and accounted for separately as a derivative. ASU 2016-06 will be effective for the Company beginning on January 1, 2017. Management evaluated ASU 2016-06 and does not believe the adoption of this new accounting standard will have a material impact on the Company’s consolidated financial statements effective January 1, 2017.

 

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting and presentation of share-based payment transactions, including the accounting for related income taxes consequences and certain classifications within the statement of cash flows. ASU 2016-09 is effective for the Company beginning on January 1, 2017. Management evaluated the impact of adopting ASU 2016-09 and does not believe the new accounting standard will have a material impact on the Company’s consolidated financial statements.

 

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements.

 

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted. The provisions of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of the new standard. Management does not believe that this new accounting standard will have a material impact on the Company’s consolidated financial statements.

In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in this Update affect the guidance in Update 2014-09, which is not yet effective. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. 

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

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(End Disclosure - 2. Significant Accounting Policies)
 
Disclosure - 3. Restatement
Disclosure - 3. Restatement (USD $) 12 Months Ended
( us-gaap:AccountingChangesAndErrorCorrectionsAbstract )  
  Dec. 31, 2016
   
   
   
Restatement
3. RESTATEMENT

 

The Company has restated the current financial statement for the year ended December 31, 2016 to correct the accounting of the sale of certain royalty rights.

 

As disclosed in Note 13, the Company sold a 50% ownership of its photographic copyrights of certain celebrity archival images and the right to receive 50% of the future share of income derived from the assigned images to third parties in exchange for a lump sum payment net of broker fees. The gross proceeds from the sale were erroneously recorded as revenue while cost of sales were overstated for broker fees paid and payments made to the purchasers. The Company determined that these amounts should be recorded as debt in accordance with ASC 470-10-25 and 470-10-35, and to amortize the amounts under the interest method as described under ASC 835-30, Interest Method. The effect of the correction is to increase liabilities by $349,818 and increase net loss by the same amount.

 

The following tables summarize the corrections on each of the affected financial statement line items as of and for the year ended December 31, 2016.

  

   As Previously Reported  Adjustment  As Restated
As of December 31, 2016              
Consolidated Balance Sheet              
               
Loans payable, net of unamortized discount  $—     $349,818   $349,818
Total Current Liabilities  $1,667,939   $349,818   $2,017,757
Total Liabilities  $1,667,939   $349,818   $2,017,757
Accumulated deficit  $(2,324,977)  $(349,818)  $(2,674,795)
Total Stockholders' Equity  $1,805,291   $(349,818)  $1,455,473
               
For the year ended December 31, 2016              
Consolidated Statement of Operations:              
               
Image revenue  $1,068,993   $(396,000)  $672,993
Total revenue  $1,260,426   $(396,000)  $864,426
Cost of revenue  $881,021   $(60,628)  $820,393
Gross margin  $379,405   $(335,372)  $44,033
Loss from operations  $(533,255)  $(335,372)  $(868,627)
Interest expense  $(110,335)  $(14,446)  $(124,781)
Other income (expense)  $(58,257)  $(14,446)  $(72,703)
Net loss  $(591,512)  $(349,818)  $(941,330)
               
Consolidated Statement of Cash Flows              
               
Net cash used in operating activities  $(187,336)  $(335,372)  $(522,708)
Net cash provided by financing activities  $380,040   $335,372   $715,412
( us-gaap:ScheduleOfErrorCorrectionsAndPriorPeriodAdjustmentsTextBlock )  
(End Disclosure - 3. Restatement)
 
Disclosure - 4. Globe Photo Asset Purchase Agreement
Disclosure - 4. Globe Photo Asset Purchase Agreement (USD $) 12 Months Ended
( us-gaap:BusinessCombinationsAbstract )  
  Dec. 31, 2016
   
   
   
Globe Photo Asset Purchase Agreement

On July 22, 2015, the Company entered into an Asset Purchase Agreement with Globe Photos, Inc. (“Globe”), a New York corporation, to purchase of substantially all of the assets of Globe, which principally comprises of photographer contracts granting the Company the right to exploit copyrights, digital and tangible photographs, and related copyrights and trademarks, of Globe Photo ( Globe Photo Assets) for total purchase price of $400,000 payable in $250,000 cash and $150,000 payable in the common stock of the Company.

 

Per the agreement, $180,000 in cash was held in reserve by the Company against Globe’s full performance and compliance with all terms of the agreement. This amount is to be released to Globe at the rate of $10,000 per month beginning August 22, 2015. As of December 31, 2016 and 2015, the total reserve payable to Globe Photos, Inc. is $10,000 and $130,000, respectively. 

 

The Agreement called for the Common stock to be transferred to Globe sixty (60) days after closing subject to satisfaction of successful termination of certain subagent agreements by Globe. Globe retained these certain subagent agreements, but was not able to successfully terminate these agreements. As such, the amount payable in common stock of the Company was reduced by $30,000, thereby reducing the total purchase price of the assets acquired from $400,000 to $370,000. Under the terms of the Agreement the Company issued 352,941 shares of its common stock based on the closing price of the Company’s common shares as traded on the OTC market on the measurement date July 22, 2015 of $0.34 per share for total of $120,000.

 

The Company evaluated the Asset Purchase Agreement in accordance with ASC 805 – Business Combinations which notes the threshold requirements of a business combination that includes the expanded definition of a “business” and defines elements that are to be present to be determined whether an acquisition of a business occurred. No “activities” of Globe were acquired. Instead, the Company obtained control of a set of inputs (the acquired assets). Thus the Company determined agreement is an acquisition of assets, not an acquisition of a business in accordance with ASC 805. The total purchase price of $370,000 in connection with the assets acquired is included in archival images, and property and equipment, net, in the consolidated balance sheets.

 

As a form of liquidity protection, Globe shall have limited put options in connection with the common stock beginning eighteen (18) months after the closing date, whereas the Company shall have up to fifteen (15) successive monthly options, with no less than thirty (30) days notice for each, which requires the Company to repurchase from Globe up to 1/15th of the shares of common stock in Globe’s possession that were granted in connection with the agreement, at a price per share equity to the market price per share ($0.34) on the effective date of the original share transfer to Globe. The exercise of any put option is not conditioned upon exercise of any prior put option. Beginning in January 2017, Globe exercised its option and elected to sell 1/15th of the shares of common stock for $8,000 per month.  As of November 16, 2017, the Company has repurchased 235,294 shares from Globe for cash payments of $80,000.      

 

In accordance with ASC 815 – Derivatives and Hedging: Embedded Derivatives, the Company determined the put options are an embedded derivative subject to bifurcation. The put options are a hybrid instrument that are not legally detachable or a mandatorily redeemable financial instrument. If exercised by Globe Photos, the put options embody an unconditional obligation by the Company to buy back its shares for cash at $0.34 per share, the market value of the Company’s common shares on the original transfer date of August 22, 2015. Globe may exercise this right beginning January 22, 2017 up to fifteen months subsequent that date. Using the Black-Scholes Valuation Model, the Company determined the fair value of the embedded derivative on August 22, 2015, the date of transfer of the common stock to Globe, to be $75,000. The Company’s stock price on August 22, 2015 was $0.34,  risk-free discount rate of 1.01% and volatility of 100% was used to obtain fair value.

 

Management determined the assets acquired from Globe for net purchase price of $370,000 and $75,000 related to the embedded derivative, for total of $445,000. Based on its analysis of industry historical values of archival celebrity images and licensing and experience in the industry, Management’s allocation of the assets acquired in connection with the Globe APA is assigned as follows:

 

Inventory   $ 10,000
Intangible assets – content provider and photographic agreements     400,000
Copyrights     35,000
    Total fair value of purchased assets   $ 445,000

  

 

In accordance with ASC 350 – Intangibles – Goodwill and Other, the Company determined the content provider and photographic agreements and copyrights acquired from Globe have finite useful lives with estimated useful life of 10 years. See Note 7– Intangible Assets.

( us-gaap:BusinessCombinationDisclosureTextBlock )  
(End Disclosure - 4. Globe Photo Asset Purchase Agreement)
 
Disclosure - 5. Property and Equipment, Net
Disclosure - 5. Property and Equipment, Net (USD $) 12 Months Ended
( us-gaap:PropertyPlantAndEquipmentAbstract )  
  Dec. 31, 2016
   
   
   
Archival Images, and Property and Equipment

Property and equipment as of December 31, 2016 and 2015 comprise of the following:

 

   December 31, 
   2016  2015  Estimated Useful Lives
Frank Worth Collection  $2,770,000   $2,770,000   10 years
Other archival images   889,331    730,076   10 years
Leasehold improvements   12,446    12,446   7 years
Computer and other equipment   65,316    53,332   3 – 5 years
Furniture and fixtures   83,666    83,666   7 years
    3,820,759    3,649,520    
Less accumulated deprecation   (977,172)   (590,537)   
Total property and equipment, net  $2,843,587   $3,058,983    

 

 

Depreciation expense for the years ended December 31, 2016 and 2015 was $386,635 and $358,808, respectively.

( us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock )  
(End Disclosure - 5. Property and Equipment, Net)
 
Disclosure - 6. Frank Worth Collection
Disclosure - 6. Frank Worth Collection (USD $) 12 Months Ended
( us-gaap:InvestmentsAllOtherInvestmentsAbstract )  
  Dec. 31, 2016
   
   
   
Frank Worth Collection

On November 12, 2014, the Frank Worth Estate agreed to accept $155,000 and 200,000 common shares, with a fair value of $0.05 per share ($10,000), of the Company’s common stock in exchange for sole and exclusive, world-wide, royalty free rights to all negatives, prints, products and other materials the Company possesses including the use of the Frank Worth seal, Frank Worth’s name, likeness, publications and biography plus merchandising and selling rights. $30,000 due under the agreement for royalties was paid in January 2015. The remainder of 125,000 and 200,000 ($10,000) shares of common stock were due and payable on or before May 31, 2015, which is being held by the Company until a dispute with the executor of the Estate (the “Claimant”) is settled.

 

On October 18, 2016, an arbitration hearing was held on this matter. On October 28, 2016, the arbitrator issued an amended award, finding the 2011 Agreement to remain valid, but also recognizing the Company’s demand for clean title to the 38 Key images. Thus, the Company was ordered to pay Claimant $70,000 as final payment due under the November 12, 2014 agreement, payable to the Claimant no later than February 23, 2017. The Company was granted an award for delivery of clean title of the 38 Key images no later than February 23, 2017. In the event, Claimant provides such clean title by such deadline, the parties have the option to comply with the 2011 agreement and enter into negotiations for a new royalty agreement on the 38 Key images. But in the event Claimant does not deliver clean title, the Company shall retain possession of the entire collection, including the 38 Key images with no further obligation to pay royalties. The Claimant failed to deliver clean title by February 23, 2017.

 

As of December 31, 2016 and 2015, $80,000  and $135,000, respectively, has been provided for in accrued liabilities in the Company’s consolidated balance sheets. Additionally, the Company has recorded a gain on settlement of the accrued liability of $55,000  for the year ended December 31, 2017. See Note 7  – Accrued Liabilities. Effective February 28, 2017, all liabilities with the Frank Worth Estate were settled by the Company. See Note 14  – Subsequent Events.

( us-gaap:CostMethodInvestmentsDescriptionTextBlock )  
(End Disclosure - 6. Frank Worth Collection)
 
Disclosure - 7. Intangible Assets, Net
Disclosure - 7. Intangible Assets, Net (USD $) 12 Months Ended
( us-gaap:GoodwillAndIntangibleAssetsDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Intangible Assets

Identifiable intangible assets comprise of the following at December 31, 2016 and 2015:

 

   December 31, 2016     December 31, 2015   
   Gross Carrying Amount  Accumulated Amortization  Net book value  Gross Carrying Amount  Accumulated Amortization  Net book value
Intangible assets with determinable lives:                             
                              
Content provider and photographic agreements  $400,000   $60,000   $340,000   $400,000   $20,000   $380,000
Copyrights   35,000    5,250    29,750    35,000    1,750    33,250
Total  $435,000   $65,250   $369,750   $435,000   $21,750   $413,250

  

Amortization expense in connection with the photographic agreements and copyrights for the twelve months ended December 31, 2016 and 2015 was $43,500 and $21,750, respectively and is included in depreciation and amortization expense in the consolidated statements of operations. Estimated amortization expense over the next five years is $43,500 per year.

( us-gaap:IntangibleAssetsDisclosureTextBlock )  
(End Disclosure - 7. Intangible Assets, Net)
 
Disclosure - 8. Accounts Payable and Accrued Liabilities
Disclosure - 8. Accounts Payable and Accrued Liabilities (USD $) 12 Months Ended
( us-gaap:PayablesAndAccrualsAbstract )  
  Dec. 31, 2016
   
   
   
Accrued Liabilities

Accrued liabilities at December 31, 2016 and 2015 comprise of the following:

 

   December 31,
   2016  2015
Accounts payable  $132,485   $244,977
Due to Frank Roach   22,500     
Due to New World   35,000     
Accrued payroll   3,911    3,518
Accrued management fee due to related party   6,375    
Due to Frank Worth Estate (Note 5 )   80,000    135,000
Interest payable   54,502    4,176
Due to consultants for website development   56,140    102,000
Stock-based compensation due to non-employees   104,167    104,167
Contingent liability for taxes assumed in reverse merger   78,920    91,000
Other   28,153    20,847
Total accounts payable and accrued liabilities  $602,153   $705,685
( us-gaap:AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock )  
(End Disclosure - 8. Accounts Payable and Accrued Liabilities)
 
Disclosure - 9. Notes Payable
Disclosure - 9. Notes Payable (USD $) 12 Months Ended
( us-gaap:DebtDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Note Payable

On September 28, 2015, the Company entered into a promissory note agreement for working capital purposes with an unrelated party for total proceeds of $150,000. The note matures on September 28, 2016. Effective September 28, 2016, the note was extended to March 31, 2017 and is secured by approximately 240,000 vintage photographs. Interest accrues at the rate of 10% per annum and is payable monthly beginning October 28, 2015. Accrued interest payable due under the note agreement was $11,404 and $154 at December 31, 2016 and 2015, respectively. Effective May 1, 2017, the note was extended to July 31 and was further extended on July 31, 2017 to December 31, 2017. 

 

In December 2015, the Company entered into a secured promissory note agreement with an unrelated party for working capital purposes for total proceeds of $120,000. The note matures on December 31, 2017, bears interest at the rate of 10% per annum, and is payable on the 1st day of each month commencing in February 2016. On February 15, 2016, the Company entered into an additional promissory note agreement with the same unrelated party for additional proceeds of $62,500. The note matures on December 31, 2017 and bears interest at the rate of 10% per annum. Both notes are secured by certain inventory and archival images of the Company in the amount of up to $200,000. Accrued interest payable due under the unsecured note agreement was $12,665 and $655 at December 31, 2016 and 2015, respectively.

 

 

In April 2016, the Company entered into two unsecured promissory note agreements with unrelated parties for working capital purposes for total proceeds of $75,000. The promissory notes mature in December 2017 and bear interest at the rate of 6% per annum. The interest expense accrued on the notes was $3,358 as of December 31, 2016.

 

On April 7, 2016, an unrelated party advanced the Company $75,000 plus an original issue discount of $25,000 for the purchase of a Marilyn Monroe archive. The advance is secured by the archive for which it was used and is to be repaid on or before April 7, 2017.  

 

The Company has agreed to pay 50% of the proceeds derived from the Marilyn Monroe archives up to a guaranteed total of $100,000. Once the $100,000 is paid, the Company has no further obligations. As of December 31, 2016, the balance of $100,000 remains outstanding. As of December 31, 2016, $11,835 of the discount has been amortized. The note is shown net of the unamortized portion of the discount of $13,165 as of December 31, 2016. The interest expense accrued on the notes was $0 as of December 31, 2016.

 

The Company evaluated the modification of the notes resulting from the extensions in maturity dates under ASC 470-50 and determined that the modifications were not considered substantial and would not qualify for extinguishment accounting under such guidance.

( us-gaap:DebtDisclosureTextBlock )  
(End Disclosure - 9. Notes Payable)
 
Disclosure - 10. Notes Payable to Related Parties
Disclosure - 10. Notes Payable to Related Parties (USD $) 12 Months Ended
( custom:NotesToFinancialStatementsAbstract [Extension] )  
  Dec. 31, 2016
   
   
   
Notes Payable to Related Parties

Effective July 21, 2015, the Company entered into a promissory note agreement with a related party Dino Satallante, a beneficial interest shareholder of the Company, for total proceeds of $160,000. The Company utilized $80,000 of the proceeds for payments due in connection with the Globe Photo assets acquired. The remainder of the proceeds were used for working capital purposes. The note matures on July 20, 2016, with monthly interest only payments commencing July 22, 2015. Interest accrues at the rate of 12% per annum. The note is secured by the Globe Photo Assets. Total interest expense in connection with the secured promissory note agreement for the years ended December 31, 2016 and 2015 is $19,200 and $8,627 . Per the terms of the agreement the Company incurred loan fees totaling $8,000 to be amortized over the term of the loan. For the years ended December 31, 2016 and 2015, amortization expense in connection with the loan fees totaled $4,424 and  $3,576, respectively. The note was initially extended to July 20, 2017 and then to December 31, 2017. The note is being shown net of unamortized loan fees of $0 as of December 31, 2016.

 

On August 1, 2013 the Company entered into an unsecured promissory note agreement with a related party Dino Satallante for $100,000. The loan bears interest at the rate of 5% per annum. As of December 31, 2016 and 2015, $76,183 and $91,143 was outstanding under the unsecured promissory note agreement, respectively. Interest expense for the year ended December 31, 2016 and 2015 was $3,809 and $4,386 , respectively. The loan matured on July 14, 2014 and was extended to July 31, 2016. Effective July 31, 2016, the note agreement was extended to December 31, 2017.

 

Effective September 11, 2014 the Company entered into two separate unsecured promissory note agreements for $20,500 each with two related parties, Dreamstar an entity owned and controlled by Sam Battistone, a Company officer and director and a principal shareholder, and Dino Satallante, a beneficial interest shareholders of the Company, for working capital purposes. The loans bear interest at the rate of 6% per annum. The loans matured on September 10, 2015, and were extended to December 31, 2016. Effective December 31, 2016, the loan with Dreamstar was extended to December 31, 2017. Effective December 31, 2016, the loan with Dino Satallante was extended to December 31, 2017 . At December 31, 2016 and 2015, $20,500 and $18,100 was outstanding to Dino Satallante and Dreamstar, respectively. Accrued interest expense in connection with the two unsecured promissory note agreements for the year ended December 31, 2016 and 2015 was $3,171 and $314, respectively.

 

On April 4, 2016 the Company entered into a secured promissory note agreement with Premier Collectibles, a beneficial interest shareholder for total proceeds of $65,000 to be used for acquisition of archive agreement. The promissory note bears interest at the rate of 8% per annum, is secured by the archive collection which the proceeds were used and matures on or before April 1, 2017.  Accrued interest expense on the note was $3,875 for the year ended December 31, 2016.

 

On April 15, 2016, the Company entered into an unsecured promissory note agreement with Sean Goodchild, a beneficial interest shareholder, for total proceeds of $50,000. The promissory note bears interest at the rate of 6% per annum and matures on December 15, 2017. Accrued interest was $2,145 for the year ended December 31, 2016.

 

On October 3, 2016, the Company entered into an unsecured promissory note agreement with Sean Goodchild, a beneficial interest shareholder, for total proceeds of $50,000. The promissory note bears interest at the rate of 6% per annum and matures on December 31, 2017. Accrued interest was $740 for the year ended December 31, 2016.

 

On December 2, 2016, the Company entered into an unsecured promissory note agreement with Sean Goodchild, a beneficial interest shareholder, for total proceeds of $31,500. The promissory note bears interest at the rate of 6% per annum and matures on December 31, 2017. Accrued interest was $155 for the year ended December 31, 2016.

 

The Company evaluated the modification of the notes resulting from the extensions in maturity dates under ASC 470-50 and determined that the modifications were not considered substantial and would not qualify for extinguishment accounting under such guidance.  

( custom:NotesPayableToRelatedPartiesTextBlock [Extension] )  
(End Disclosure - 10. Notes Payable to Related Parties)
 
Disclosure - 11. Related Party Transactions
Disclosure - 11. Related Party Transactions (USD $) 12 Months Ended
( us-gaap:RelatedPartyTransactionsAbstract )  
  Dec. 31, 2016
   
   
   
Related Party Transactions

Related parties

 

The Company follows ASC 850, "Related Party Disclosures" for reporting activities with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

( us-gaap:RelatedPartyTransactionsDisclosureTextBlock )  
(End Disclosure - 11. Related Party Transactions)
 
Disclosure - 12. Stockholders' Equity
Disclosure - 12. Stockholders' Equity (USD $) 12 Months Ended
( us-gaap:EquityAbstract )  
  Dec. 31, 2016
   
   
   
Stockholders' Equity

Preferred Stock

 

The Company is authorized to issue up to 50,000,000 shares of preferred stock authorized with a par value of $0.0001. The Board of Directors is authorized, subject to any limitations prescribed by law, without further vote or action by the Company’s stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, and conversion rights. As of December 31, 2016 and 2015, there were no shares of Preferred Stock issued and outstanding.

 

 

Private Placement 

 

In March 2015, a beneficial shareholder of the Company closed a private placement comprising of individuals related to the former president for 1,820,000 shares of common stock at a $0.05 per share for aggregate proceeds of $91,000.

 

In connection with the private placement, the beneficial shareholder received 200,000 shares of the Company’s common stock in lieu of cash for payment of finder’s fee for a total stock-based compensation of $10,000 based on fair value of the Company’s common stock of $0.05 per share.

 

Stock-based and Other Compensation to Non-Employees

 

 On February 1, 2014, pre-merger CAPA executed a consulting agreement for services. The agreement specifies issuance of 500,000 shares of common stock at execution of the agreement and 3,500,000 shares upon introduction of a strategic business partner. As of December 31, 2014 875,000 shares of common stock with a fair value of $43,750 were unissued and included in accrued liabilities in the Company’s consolidated balance sheets. The shares were issued as of December 31, 2015.

 

On August 15, 2014, pre-merger CAPA entered into a four-month agreement for strategic management services with a consultant. In connection with the agreement, the consultant is to receive compensation of 5,500,000 shares of the Company’s common stock payable in four equal installments. As of December 31, 2014, 1,650,000 shares of common stock with a fair value of $82,500 were unissued and included in accrued liabilities in the Company’s consolidated balance sheets. The shares were issued as of December 31, 2015.

 

In November 2014, the Company entered into a fixed price agreement with a consultant for website development services for total contract price of $193,000 payable in cash of $40,000 and 510,000 shares of the Company’s common stock with a stated fair value of $0.30 per share. As of December 31, 2015, 170,000 shares of common stock with fair value of $51,000 were issued. 340,000 shares of common stock were unissued for $102,000 which is included in accrued liabilities in the Company’s consolidated balance sheets. As of December 31, 2015, 170,000 shares of these common shares had been issued. On October 1, 2016, the Company issued 229,300 shares of common stock valued at $45,860 as progress payment towards the fixed price agreement.

 

On January 1, 2015 the Company entered in a 12-month agreement for non-exclusive investment banking advisory services for total consideration of 2,000,000 shares of the Company’s common stock. The agreement was subsequently extended additional 6-months with no other changes to the terms of the original agreement. The shares are payable within 14 days of the effective date of the agreement and deemed earned in full upon execution of the agreement. The shares were issued in May 2015 in connection with the agreement with a fair value determined by the Company of $0.05 per share, for total $100,000.

 

On June 9, 2015 the Company entered into a management consulting agreement for total monthly compensation of $17,500. In addition, the consultant received 300,000 shares of common stock at fair value of $0.05 per share, for total $15,000. Effective January 1, 2016, the Company entered into a revised agreement with the consultant for compensation to be paid at the rate of $110 per hour. The Company also granted the consultant an additional 2,083,333 shares of common stock at fair value of $0.05 per share for 2015 services rendered by the consultant. The Company provided for the fair value as of December 31, 2015 and recorded $104,167, which is included in accrued liabilities in the consolidated balance sheets.

 

During the year end December 31, 2015, under the terms of the Globe Photo Asset Purchase Agreement the Company issued 352,941 shares of its common stock based on the closing price of the Company’s common shares as traded on the OTC market on the measurement date July 22, 2015 of $0.34 per share for a total of $120,000.

 

 

Shares Reserved

 

The Company is required to reserve and keep available of its authorized, but unissued shares of common stock an amount sufficient to effect shares due in connection with the Stock Purchase Agreement and Stock-Based Compensation to Non-Employees. As of December 31, 2016, shares reserved for future issuance comprised of the following:

 

   Shares Reserved
Shares to be issued to consultants   2,083,333
Shares to be issued to Frank Worth Estate   200,000
    2,283,33 3

 

As of December 31, 2015, shares reserved for future issuance comprised of the following:

 

   Shares Reserved
Shares to be issued to consultants   2,423,333
Shares to be issued to Frank Worth Estate   200,000
    2,623,333

 

These shares were excluded from the calculation of diluted earnings per share as their effect was anti-dilutive due to the net loss for the years ended December 31, 2016 and 2015.  

( us-gaap:StockholdersEquityNoteDisclosureTextBlock )  
(End Disclosure - 12. Stockholders' Equity)
 
Disclosure - 13. Commitments and Contingencies
Disclosure - 13. Commitments and Contingencies (USD $) 12 Months Ended
( us-gaap:CommitmentsAndContingenciesDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Commitments and Contingencies

Proceeds from Auctions of Royalty Rights

 

On March 8, 2016, the Company entered into a Listing Agreement with Royalty Network, LLC, doing business as Royalty Exchange for auction of a 50% ownership of photographic copyrights of certain celebrity archival images owned by the Company. In addition, the sale also assigns the winning bidder the right to receive 50% of the future share of income derived from the assigned images.

 

During 2016, the Company received gross proceeds of $396,000, less 12.5% auction broker fee, from five separate auctions of these rights. The Company retains all exclusive licensing authority over the images and may exercise a buyback option to buy back the 50% ownership of the rights for two times the original auction proceeds for combined total of $792,000 for one to two year periods ranging from August 12, 2017 through November 18, 2018.

 

The Company accounted for the 50% profit consideration for the above agreement in accordance with ASC 470-10-25 and 470-10-35 which require amounts recorded as debt to be amortized under the interest method as described in ASC 835-30, Interest Method. Consequently, the net proceeds received of $346,500 was recognized as loans payable. The Company determined an effective interest rate based on future expected cash flows to be paid to the loan holders. This rate represents the discount rate that equates estimated cash flows with the initial proceeds received from the loan holders and is used to compute the amount of interest to be recognized each period. Estimating the future cash outflows under this agreement requires the Company to make certain estimates and assumptions about future revenues and such estimates are subject to significant variability. Therefore, the estimates are likely to change which may result in future adjustments to the accretion of the interest expense and the amortized cost based carrying value of the related loans.

 

Accordingly, the Company has estimated the cash flows associated with the archival images and determined a discount of $151,316 which is being accounted as interest expense over a 10 year estimated life of the asset based on expected future revenue streams. For the year ended December 31, 2016, amortization of the debt discount on these loans amounted to $14,446 which has been included in interest expense in the consolidated statements of operations. During the years ended December 31, 2016 and 2015, the Company made payments of $11,128 and $0, respectively, to the loan holders. As of December 31, 2016, loans payable net of unamortized debt discount amounted $349,818.

  

License Agreements

 

Effective June 1, 2016 the Company entered into three separate non-exclusive license agreements use of licensed images and trademarks through December 31, 2019. Under the terms of the agreements, the Company is required to pay royalties of 10% on net sales. The agreements call for combined annual guaranteed minimum royalties per year of $150,000 based on combined minimum sales of $1,500,000 per year. The Company was required to pay advances related to 50% of the first year’s royalties totaling $75,000 upon execution of the agreements. The remainder of the first year’s combined minimum royalties is due on or before February 1, 2017.

 

Operating Lease Agreements

 

On September 6, 2012 the Company entered into a 25-month operating lease agreement for approximately 4,606 square foot warehouse and office facilities located in Las Vegas, NV. Monthly base rent due under the agreement is $3,270, plus common area maintenance fees. The agreement calls for 3% annual increase in base rental payments. On October 10, 2014, the Company entered into a First Amendment to Lease agreement extending the lease term for 60-months, beginning November 1, 2014. All other terms of the agreement remain unchanged.

 

As of December 31, 2016, future minimum payments due under the 60-month operating lease agreement are as follows:

 

2017    41,841
2018    43,096
2019    36,807
Total future minimum payments   $121,744

 

 

The Company leases various corporate housing from unrelated third parties for terms that range from month-to-month to one year. The Company also rents office space on a month-to-month basis in New York at rate of $850 per month.

 

Total rent expense for the twelve months ended December 31, 2016 and 2015 was $53,320  and $59,680, respectively, in connection with the operating lease agreements.

( us-gaap:CommitmentsAndContingenciesDisclosureTextBlock )  
(End Disclosure - 13. Commitments and Contingencies)
 
Disclosure - 14. Income Taxes
Disclosure - 14. Income Taxes (USD $) 12 Months Ended
( us-gaap:IncomeTaxDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Income Taxes

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes as of December 31, 2016 and 2015 are as follows:

 

   December 31,
   2016  2015
Deferred tax assets:         
Net operating loss  $834,000   $640,000
  Provisions and accrued liabilities   44,000    86,000
    878,000    726,000
Deferred tax liabilities:         
Embedded derivative       (9,000)
Depreciation and amortization       (149,000)
       Total deferred tax asset   878,000    568,000
          
        Less valuation allowance   (878,000)   (568,000)
             Net deferred tax asset  $   $

 

Provision for income tax provision (benefit) as of December 31, 2016 and 2015 consist of the following:

 

   December 31,
   2016  2015
Deferred:      
   Federal  $310,000   $568,000
   State   —      —  
       Total deferred tax asset   310,000    568,000
          
        Less valuation allowance   (310,000)   (568,000)
             Net deferred tax asset  $—     $—  

 

 

The income tax provision (benefit) differs from the amount of income tax determined by applying the U.S. federal tax rate to pretax income as of December 31, 2016 and 2015 as follows:

 

   December 31,
   2016  2015
Effective tax rate (benefit):      
Federal   (34.0)%   (34.0)%
State   —     —  
Permanent differences   —     18.8
Other   —     38.1
Change in valuation allowance   34.0%   (22.9)
    —  %   —  %

  

The Tax Reform Act of 1986 contains provisions that limit the federal net operating loss carryforwards that may be used in any given year in the event of specified occurrences, including significant ownership changes. As a result of these provisions, utilization of net operating losses would be limited in the event of any future significant ownership change. Such a limitation could result in the expiration of the net operating loss carryforwards before utilization. The Company had such an ownership change related to the reverse merger transaction.

 

As of December 31, 2016 and 2015, the Company had gross federal net operating loss carryforwards of approximately $2,454,000  and $1,939,000, respectively. The Company expects the limitation placed on the federal net operating loss carryforwards prior to the ownership change will likely expire unused. As of December 31, 2016, all tax years are open for examination by the taxing authorities.

( us-gaap:IncomeTaxDisclosureTextBlock )  
(End Disclosure - 14. Income Taxes)
 
Disclosure - 15. Subsequent Events
Disclosure - 15. Subsequent Events (USD $) 12 Months Ended
( us-gaap:SubsequentEventsAbstract )  
  Dec. 31, 2016
   
   
   
Subsequent Events

Frank Worth Collection

  

On October 18, 2016, an arbitration hearing was held on this matter. On October 28, 2016, the arbitrator issued an amended award, finding the 2011 Agreement to remain valid, but also recognizing the Company’s demand for clean title to the 38 Key images. Thus, the Company was ordered to pay Claimant $70,000 as final payment due under the November 12, 2014 agreement, payable to the no later than February 23, 2017. The Company was granted an award for delivery of clean title of the 38 Key images no later than February 23, 2017. In the event, Claimant provides such clean title by such deadline, the parties have the option to comply with the 2011 agreement and enter into negotiations for a new royalty agreement on the 38 Key images. But in the event Claimant does not deliver clean title, the Company shall retain possession of the entire collection, including the 38 Key images with no further obligation to pay royalties. The Claimant failed to deliver clean title by February 23, 2017.

 

In the interim, the Company learned that Claimant is the subject of an action in a California Probate Court action challenging his actions as Executor of the Estate after March 2008. At that time Claimant was discharged as Executor of the Estate and he had no legal authority from that point on to represent the interests of the Estate, including entering into the agreements that were the subject of the Arbitration. That information has led the Company to hold the $70,000 final payment until such time as the California Probate Court determines the appropriate recipient.

 

Finally, on January 26, 2017, Claimant filed a separate civil suit against us in Nevada District Court. This new suit seeks to vacate the decision of the Arbitrator in the binding arbitration. Claimant is dissatisfied with the results of the binding arbitration, notwithstanding his agreement to be bound by the decisions of the Arbitrator. We have challenged whether Claimant has standing to pursue this action because of his lack of status as an executor, and his lack of any status as a beneficiary of the Estate.

 

On February 28, 2017, the parties agreed to dismiss this action with prejudice. On September 15, 2017, the final $70,000 payment was made in full.

 

In April 2017, the board approved the issuance of 2,083,333 shares of common stock at fair value of $0.05 per share for 2015 services rendered by a consultant. As of the date of the filing these share have not been issued. 

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(End Disclosure - 15. Subsequent Events)
 
Disclosure - 2. Significant Accounting Policies (Policies)
Disclosure - 2. Significant Accounting Policies (Policies) (USD $) 12 Months Ended
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  Dec. 31, 2016
   
   
   
Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements represent the results of operations, financial position and cash flows of Capital Art, Inc. prepared on the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America. The consolidated financial statements include the financial statements of the Company, and its 100% owned subsidiaries Capital Art, LLC and Globe Photos, LLC. All inter-company balances and transactions have been eliminated.

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Use of Estimates

Use of 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 also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 

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Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company measures fair value in accordance with Accounting Standards Codification (“ASC”) 820 – Fair Value Measurements. ASC 820 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurements. ASC 820 establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are:

 

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

 

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

 

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of December 31, 2016, or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, receivables from related parties, prepaid expenses and other, accounts payable, accrued liabilities, and related party and third party notes payables approximate fair value due to their relatively short maturities. The Company’s notes payable to related parties approximates the fair value of such instrument based upon management’s best estimate of terms that would be available to the Company for similar financial arrangements at December 31, 2016 and 2015. 

 

 

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs.

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2016:

 

    Level 1     Level 2     Level 3     Total
Liabilities                              
Derivative Financial Instruments   $     $     $ 57,922     $ 57,922

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2015:

 

    Level 1     Level 2     Level 3     Total
Liabilities                              
Derivative Financial Instruments   $     $     $ 55,000     $ 55,000

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

 

   Amount
Balance December 31, 2015  $55,000
Change in fair market value of derivative liability   2,922
Balance December 31, 2016  $57,922

 

The Company’s derivative instruments were valued using the Black-scholes option pricing model. Assumptions used in the valuation include the following:  a) market value of stock on measurement date of $0.29; b) risk-free rate of 0.85%; c) volatility factor of 142%;  d) dividend yield of 0% and e) remaining term of 1.39 years.

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Related Parties

Related parties

 

The Company follows ASC 850, "Related Party Disclosures" for reporting activities with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

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Accounts receivable, net

Accounts receivable, net

 

The Company sells its products through various means, including distributors, auction houses, and via the internet. The Company also licenses its images to third parties for which royalty income is received by the Company. The Company continually monitors the collectability of its trade accounts receivables based on a combination of factors, including the aging of the accounts receivable, historical experience, and other currently available evidence and provides for an allowance for doubtful accounts equal to estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. There was an allowance for bad debt of $11,100 recorded during the year ended December 31, 2016. As of December 31, 2016 and 2015, the Company’s accounts receivable was netted against an allowance of $11,100 and $0 respectively.  

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Inventory

Inventory

 

The Company’s inventory is comprised of rare photos of movie stars and other famous people, and is stated at the lower of cost or net realizable value. Direct labor and raw material costs associated with the process of making the photos available for sale are also included in inventory at cost. These costs are expensed to cost of sales pro-ratably as sold. As of December 31, 2016 and 2015, the Company has recorded allowance related to slow moving inventory in the amount of $117,453 and $0, respectively.

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Archival Images, and Property and Equipment

Archival Images, and Property and Equipment

 

Archival images, and property and equipment are recorded at cost for purchases over $500, and depreciated using the straight-line method over the estimated useful lives ranging from three to ten years. The Company capitalizes direct costs associated with improvements to archival images, and property and equipment in accordance with ASC 360 – Property, Plant, and Equipment. Leasehold improvements are amortized on a straight-line basis over the shorter of their useful life or the term of the related lease. Expenditures for ordinary repairs and maintenance are expensed as incurred.

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Intangible Assets

Intangible Assets

 

Intangible assets, consisting of content provider and photographic agreements, and copyrights, are accounted for in accordance with ASC 350 Intangibles - Goodwill and Other. Intangible assets that have finite lives are amortized using the straight-line method over their estimated useful lives of ten years.

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Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

 

Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. In such situations, long-lived assets are considered impaired when future undiscounted cash flows resulting the use of the asset and its eventual disposition are less than the asset’s carrying amount. In such situations, the asset is written down to the present value of the estimated future cash flows. Factors that are considered when evaluating long-lived assets for impairment include a current expectation that it is more likely than not that the long-lived asset will be sold significantly before the end of its useful life, a significant decrease in the market price of the long-lived asset, and a change in the extent of manner in which the long-lived asset is being used. Based on management’s assessment there were no impairments to its long-lived assets at December 31, 2016 and 2015.

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Derivative Financial Instruments

Derivative Financial Instruments

 

The Company accounts for derivative instruments in accordance with the provisions of ASC 815 - Derivatives Hedging: Embedded Derivatives. ASC 815 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities.

 

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms in agreements are reviewed to determine whether or not they contain embedded derivatives that are required under ASC 815 to be accounted for and separated from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities is required to be revalued at each reporting date, with the corresponding changes in fair value recorded in current period operating results.

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Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue related to product sales when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future performance to directly bring about the resale of the product by the buyer as required by ASC 605 – Revenue Recognition. Cost of sales, rebates and discounts are recorded at the time of revenue recognition or at each financial reporting date.

 

 

The Company’s other revenue represent payments based on net sales from brand licensees for content reproduction rights. These license agreements are held in conjunction with third parties that are responsible for collecting fees due and remitting to the Company its share after expenses. Revenue from licensed products is recognized when realized or realizable based on royalty reporting received from licensees.

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Shipping and Handling

Shipping and Handling

 

The Company records shipping and handling expenses in the period in which they are incurred and are included in cost of revenues. In limited circumstances this cost is passed through to the customers.

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Stock-based Compensation

Stock-based Compensation

 

The Company recognizes stock-based compensation issued to employees in accordance with ASC 718 – Compensation: Stock Compensation, based on the fair value of the equity instrument in exchange for employee services and the resulting recognition of compensation expense.

 

The Company’s accounts for stock-based payment transactions with nonemployees for services in accordance with ASC 50-550 Equity: Equity-based Payments to Non-Employees. If the fair value of the services received in a stock-based payment with nonemployees is more reliably measureable than the fair value of the equity instrument issued, the fair value of the services received is used to measure the transaction. Conversely, if the fair value of the equity instruments issued in a stock-based transaction with nonemployees is more reliably measureable than the fair value of the consideration received, the transaction is measured at the fair value of the equity instruments issued. The Company recognizes an increase in equity or a liability, depending on whether the equity instruments granted have satisfied the equity or liability classification criteria.

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Advertising

Advertising

 

The Company expenses the cost of advertising, including promotional expenses, as incurred. Advertising expenses for the twelve months ended December 31, 2016 and 2015 was $5,167 and $10,811, respectively.

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Income Taxes

Income Taxes

 

The Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate of whether it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of December 31, 2016 and 2015.

 

Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

  

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions.

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Concentrations of Credit Risk and Financial Instruments

Concentrations of Credit Risk and Financial Instruments

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable.

 

The Company’s cash balances are placed at financial institutions, which at times, may exceed federally insured limits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on cash.

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Basic and Diluted Loss per Share

Basic and Diluted Loss per Share

 

The Company computes loss per share in accordance with ASC 260 - Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is antidilutive. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive.

 

A reconciliation of weighted-average basic shares outstanding to weighted-average diluted shares outstanding follows:

 

    Twelve Months Ended December 31,
    2016     2015
           
Basic weighted average common shares outstanding     325,398,392       321,910,400
               
Effect of dilutive securities          
               
Diluted weighted average common and potential common shares outstanding     325,398,392       321,910,400

 

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Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. ASU 2016-08 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management is currently assessing its procedures for determining revenues derived from principal versus agents in connection with the impact of adopting this new accounting standard on the Company’s consolidated financial statements and does not believe that the adoption of ASU 2016-08 will have a material impact on the Company’s consolidated financial statements.

 

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The amendments in ASU 2016-10 clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASU 2016-10 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management is currently assessing the potential impact of adopting this new accounting standard on the Company’s consolidated financial statements in connection with revenues recognized from licensing its vast archive of photographic images.

 

 

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2016-12 do not change the core principle of the guidance in Topic 606, but instead affect only the narrow aspects noted in Topic 606. ASU 2016-12 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management evaluated ASU 2016-12 and does not believe the adoption of ASU 2016-12 will have a material impact on the Company’s consolidated financial statements.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 will be effective for the Company beginning on January 1, 2018, and will be applied by means of a cumulative effect adjustment to the balance sheet, except for effects related to equity securities without readily determinable values, which will be applied prospectively. Management is currently evaluating the potential impact of adopting this new accounting standard on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which requires an entity to recognize long-term lease arrangements as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all long-term leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The amendments also require certain new quantitative and qualitative disclosures regarding leasing arrangements. ASU 2016-02 will be effective for the Company beginning on January 1, 2019. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. Management does not believe the adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument would not, in and of itself, be considered a termination of the derivative instrument, provided that all other hedge accounting criteria continue to be met. ASU 2016-05 is effective for the Company beginning on January 1, 2017. Early adoption is permitted, including in an interim period. Management evaluated ASU 2016-05 and does not believe the adoption of this new accounting standard will have a material impact on the Company’s consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which aims to reduce the diversity of practice in identifying embedded derivatives in debt instruments. ASU 2016-06 clarifies that the nature of an exercise contingency is not subject to the “clearly and closely” criteria for purposes of assessing whether the call or put option must be separated from the debt instrument and accounted for separately as a derivative. ASU 2016-06 will be effective for the Company beginning on January 1, 2017. Management evaluated ASU 2016-06 and does not believe the adoption of this new accounting standard will have a material impact on the Company’s consolidated financial statements effective January 1, 2017.

 

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting and presentation of share-based payment transactions, including the accounting for related income taxes consequences and certain classifications within the statement of cash flows. ASU 2016-09 is effective for the Company beginning on January 1, 2017. Management evaluated the impact of adopting ASU 2016-09 and does not believe the new accounting standard will have a material impact on the Company’s consolidated financial statements.

 

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements.

 

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted. The provisions of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of the new standard. Management does not believe that this new accounting standard will have a material impact on the Company’s consolidated financial statements.

In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in this Update affect the guidance in Update 2014-09, which is not yet effective. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. 

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

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(End Disclosure - 2. Significant Accounting Policies (Policies))
 
Disclosure - 2. Significant Accounting Policies (Tables)
Disclosure - 2. Significant Accounting Policies (Tables) (USD $) 12 Months Ended
( us-gaap:AccountingPoliciesAbstract )  
  Dec. 30, 2015 Dec. 31, 2016
     
     
     
Reconciliation of weighted-average diluted shares  
    Twelve Months Ended December 31,
    2016     2015
           
Basic weighted average common shares outstanding     325,398,392       321,910,400
               
Effect of dilutive securities          
               
Diluted weighted average common and potential common shares outstanding     325,398,392       321,910,400
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Shares Reserved    
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Financial Assets and Liabilities
    Level 1     Level 2     Level 3     Total
Liabilities                              
Derivative Financial Instruments   $     $     $ 55,000     $ 55,000
    Level 1     Level 2     Level 3     Total
Liabilities                              
Derivative Financial Instruments   $     $     $ 57,922     $ 57,922
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Changes in Fair Value of Deriviative Liability  
   Amount
Balance December 31, 2015  $55,000
Change in fair market value of derivative liability   2,922
Balance December 31, 2016  $57,922
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(End Disclosure - 2. Significant Accounting Policies (Tables))
 
Disclosure - 3. Restatement (Tables)
Disclosure - 3. Restatement (Tables) (USD $) 12 Months Ended
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  Dec. 31, 2016
   
   
   
Corrections to financial statements
   As Previously Reported  Adjustment  As Restated
As of December 31, 2016              
Consolidated Balance Sheet              
               
Loans payable, net of unamortized discount  $—     $349,818   $349,818
Total Current Liabilities  $1,667,939   $349,818   $2,017,757
Total Liabilities  $1,667,939   $349,818   $2,017,757
Accumulated deficit  $(2,324,977)  $(349,818)  $(2,674,795)
Total Stockholders' Equity  $1,805,291   $(349,818)  $1,455,473
               
For the year ended December 31, 2016              
Consolidated Statement of Operations:              
               
Image revenue  $1,068,993   $(396,000)  $672,993
Total revenue  $1,260,426   $(396,000)  $864,426
Cost of revenue  $881,021   $(60,628)  $820,393
Gross margin  $379,405   $(335,372)  $44,033
Loss from operations  $(533,255)  $(335,372)  $(868,627)
Interest expense  $(110,335)  $(14,446)  $(124,781)
Other income (expense)  $(58,257)  $(14,446)  $(72,703)
Net loss  $(591,512)  $(349,818)  $(941,330)
               
Consolidated Statement of Cash Flows              
               
Net cash used in operating activities  $(187,336)  $(335,372)  $(522,708)
Net cash provided by financing activities  $380,040   $335,372   $715,412
( us-gaap:AccountingChangesAndErrorCorrectionsTextBlock )  
(End Disclosure - 3. Restatement (Tables))
 
Disclosure - 4. Globe Photo Asset Purchase Agreement (Tables)
Disclosure - 4. Globe Photo Asset Purchase Agreement (Tables) (USD $) 12 Months Ended
( us-gaap:BusinessCombinationsAbstract )  
  Dec. 31, 2016
   
   
   
Fair value of purchased assets
Inventory   $ 10,000
Intangible assets – content provider and photographic agreements     400,000
Copyrights     35,000
    Total fair value of purchased assets   $ 445,000
( us-gaap:BusinessCombinationSeparatelyRecognizedTransactionsTableTextBlock )  
(End Disclosure - 4. Globe Photo Asset Purchase Agreement (Tables))
 
Disclosure - 5. Property and Equipment, Net (Tables)
Disclosure - 5. Property and Equipment, Net (Tables) (USD $) 12 Months Ended
( us-gaap:PropertyPlantAndEquipmentAbstract )  
  Dec. 31, 2016
   
   
   
Schedule of archival images, property and equipment
   December 31, 
   2016  2015  Estimated Useful Lives
Frank Worth Collection  $2,770,000   $2,770,000   10 years
Other archival images   889,331    730,076   10 years
Leasehold improvements   12,446    12,446   7 years
Computer and other equipment   65,316    53,332   3 – 5 years
Furniture and fixtures   83,666    83,666   7 years
    3,820,759    3,649,520    
Less accumulated deprecation   (977,172)   (590,537)   
Total property and equipment, net  $2,843,587   $3,058,983    
( us-gaap:PropertyPlantAndEquipmentTextBlock )  
(End Disclosure - 5. Property and Equipment, Net (Tables))
 
Disclosure - 7. Intangible Assets (Tables)
Disclosure - 7. Intangible Assets (Tables) (USD $) 12 Months Ended
( us-gaap:GoodwillAndIntangibleAssetsDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Schedule of intangible assets
   December 31, 2016     December 31, 2015   
   Gross Carrying Amount  Accumulated Amortization  Net book value  Gross Carrying Amount  Accumulated Amortization  Net book value
Intangible assets with determinable lives:                             
                              
Content provider and photographic agreements  $400,000   $60,000   $340,000   $400,000   $20,000   $380,000
Copyrights   35,000    5,250    29,750    35,000    1,750    33,250
Total  $435,000   $65,250   $369,750   $435,000   $21,750   $413,250
( us-gaap:ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock )  
(End Disclosure - 7. Intangible Assets (Tables))
 
Disclosure - 8. Accounts Payable and Accrued Liabilities (Tables)
Disclosure - 8. Accounts Payable and Accrued Liabilities (Tables) (USD $) 12 Months Ended
( us-gaap:PayablesAndAccrualsAbstract )  
  Dec. 31, 2016
   
   
   
Schedule of accrued liabilties
   December 31,
   2016  2015
Accounts payable  $132,485   $244,977
Due to Frank Roach   22,500     
Due to New World   35,000     
Accrued payroll   3,911    3,518
Accrued management fee due to related party   6,375    
Due to Frank Worth Estate (Note 5 )   80,000    135,000
Interest payable   54,502    4,176
Due to consultants for website development   56,140    102,000
Stock-based compensation due to non-employees   104,167    104,167
Contingent liability for taxes assumed in reverse merger   78,920    91,000
Other   28,153    20,847
Total accounts payable and accrued liabilities  $602,153   $705,685
( us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock )  
(End Disclosure - 8. Accounts Payable and Accrued Liabilities (Tables))
 
Disclosure - 11. Related Party Transactions (Tables)
Disclosure - 11. Related Party Transactions (Tables) (USD $) 12 Months Ended
( us-gaap:RelatedPartyTransactionsAbstract )  
  Dec. 31, 2016
   
   
   
Schedule of related party transactions
   December 31,
   2016  2015
Due from related parties:         
Klaus Moeller, related party of pre-merger CAPA and beneficial interest shareholder  $78,920   $91,000
       Total due from related parties   78,920    91,000
Less long-term portion   —      —  
        Total due from related parties, net of long-term portion  $78,920   $91,000
          
          
Due to related parties:         
ICONZ Art, LLC, beneficial interest shareholder  $4,213   $—  
MSN Holding Co., beneficial interest shareholder   12,947    12,999
Premier Collectibles, beneficial interest shareholder   15,085    33,085
     Total due to related parties  $32,245   $46,084
( us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock )  
(End Disclosure - 11. Related Party Transactions (Tables))
 
Disclosure - 12. Stockholders' Equity (Tables)
Disclosure - 12. Stockholders' Equity (Tables) (USD $) 12 Months Ended
( us-gaap:EquityAbstract )  
  Dec. 30, 2015 Dec. 31, 2016
     
     
     
Schedule of antilutive shares
   Shares Reserved
Shares to be issued to consultants   2,423,333
Shares to be issued to Frank Worth Estate   200,000
    2,623,333
   Shares Reserved
Shares to be issued to consultants   2,083,333
Shares to be issued to Frank Worth Estate   200,000
    2,283,33 3
( us-gaap:ScheduleOfAntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareTextBlock )    
(End Disclosure - 12. Stockholders' Equity (Tables))
 
Disclosure - 13. Commitments and Contingencies (Tables)
Disclosure - 13. Commitments and Contingencies (Tables) (USD $) 12 Months Ended
( us-gaap:CommitmentsAndContingenciesDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Schedule of future minimum operatinng lease payments
2017    41,841
2018    43,096
2019    36,807
Total future minimum payments   $121,744
( us-gaap:ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock )  
(End Disclosure - 13. Commitments and Contingencies (Tables))
 
Disclosure - 14. Income Taxes (Tables)
Disclosure - 14. Income Taxes (Tables) (USD $) 12 Months Ended
( us-gaap:IncomeTaxDisclosureAbstract )  
  Dec. 31, 2016
   
   
   
Deferred tax assets and liabilties
   December 31,
   2016  2015
Deferred tax assets:         
Net operating loss  $834,000   $640,000
  Provisions and accrued liabilities   44,000    86,000
    878,000    726,000
Deferred tax liabilities:         
Embedded derivative       (9,000)
Depreciation and amortization       (149,000)
       Total deferred tax asset   878,000    568,000
          
        Less valuation allowance   (878,000)   (568,000)
             Net deferred tax asset  $   $
( us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock )  
Schedule of provision for income tax provision (benefit)
   December 31,
   2016  2015
Deferred:      
   Federal  $310,000   $568,000
   State   —      —  
       Total deferred tax asset   310,000    568,000
          
        Less valuation allowance   (310,000)   (568,000)
             Net deferred tax asset  $—     $—  
( us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock )  
Schedule of effective income tax rate
   December 31,
   2016  2015
Effective tax rate (benefit):      
Federal   (34.0)%   (34.0)%
State   —     —  
Permanent differences   —     18.8
Other   —     38.1
Change in valuation allowance   34.0%   (22.9)
    —  %   —  %
( us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock )  
(End Disclosure - 14. Income Taxes (Tables))
 
Disclosure - 1. Organization and Business Operations (Details Narrative)
Disclosure - 1. Organization and Business Operations (Details Narrative) (USD $) 12 Months Ended      
( us-gaap:AccountingPoliciesAbstract )        
  Dec. 30, 2015 Dec. 30, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014
               
               
               
Cash         54,034 32,570 340,523
( us-gaap:Cash )              
Retained deficit         (2,674,795) (1,733,465)  
( us-gaap:RetainedEarningsAccumulatedDeficit )              
Net loss (1,362,393) (941,330) (1,362,393) (941,330)      
( us-gaap:NetIncomeLoss )              
Cash used in operations       187,336      
( custom:CashUsedInOperations [Extension] )              
Movie Star News Organization Date       2012-08-29      
( custom:MovieStar [Extension] )              
Global Photo LLC Organization Date       2011-01-24      
( custom:GlobalPhoto [Extension] )              
Capital Art LLC Organization Date       2015-07-24      
( custom:CapitalArtLLC [Extension] )              
Capital Art, Inc. Incorporation Date       2007-04-26      
( custom:CapitalArtIncIncorporation [Extension] )              
(End Disclosure - 1. Organization and Business Operations (Details Narrative))
 
Disclosure - 2. Significant Accounting Policies (Details)
Disclosure - 2. Significant Accounting Policies (Details) (USD $) 12 Months Ended
( us-gaap:AccountingPoliciesAbstract )  
  Dec. 31, 2015 Dec. 31, 2016
     
     
     
Basic weighted average common shares outstanding 321,910,400 325,398,392
( us-gaap:WeightedAverageNumberOfSharesOutstandingBasic )    
Effect of dilutive securities 0 0
( us-gaap:WeightedAverageNumberDilutedSharesOutstandingAdjustment )    
Diluted weighted average common and potential common shares outstanding 321,910,400 325,398,392
( us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding )    
(End Disclosure - 2. Significant Accounting Policies (Details))
 
Disclosure - 2. Fair Value of Financial Instruments (Details - fair value)
Disclosure - 2. Fair Value of Financial Instruments (Details - fair value) (USD $)                
( us-gaap:FairValueDisclosuresAbstract )                
  Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015
( us-gaap:FairValueByFairValueHierarchyLevelAxis )                
  Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 1 [Member]
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 2 [Member]
  Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 2 [Member]
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 1 [Member]
 
( us-gaap:FairValueMeasurementsFairValueHierarchyDomain )                
Derivative Financial Instruments 57,922 57,922 55,000 55,000
( custom:DerivativeFinancialInstruments [Extension] )                
(End Disclosure - 2. Fair Value of Financial Instruments (Details - fair value))
 
Disclosure - 2. Fair Value of Financial Instruments (Details - Level 3)
Disclosure - 2. Fair Value of Financial Instruments (Details - Level 3) (USD $) 12 Months Ended    
( us-gaap:FairValueDisclosuresAbstract )      
  Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2015
( us-gaap:FairValueByFairValueHierarchyLevelAxis )        
    Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurements, Recurring [Member]
Fair Value, Inputs, Level 3 [Member]
 
( us-gaap:FairValueMeasurementsFairValueHierarchyDomain )        
Beginning balance     55,000
( custom:BeginningBalanceLevelThree [Extension] )        
Embedded derivative in connection with put options 55,000      
( us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputsReconciliationIssues )        
Change in fair market value of derivative liability   2,922    
( us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputsReconciliationGainLossIncludedInEarnings )        
Ending balance     57,922 57,922
( custom:EndingBalanceLevelThree [Extension] )        
(End Disclosure - 2. Fair Value of Financial Instruments (Details - Level 3))
 
Disclosure - 2. Significant Accounting Policies (Details Narrative)
Disclosure - 2. Significant Accounting Policies (Details Narrative) (USD $) 12 Months Ended  
( us-gaap:AccountingPoliciesAbstract )    
  Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2016
( us-gaap:ConcentrationRiskByBenchmarkAxis )      
       
( us-gaap:ConcentrationRiskBenchmarkDomain )      
Advertising costs 10,811 5,167  
( us-gaap:AdvertisingExpense )      
Income tax liability     91,000
( us-gaap:AccruedIncomeTaxes )      
Concentration risk percentage      
( us-gaap:ConcentrationRiskPercentage1 )      
Shars reserved for future issuance     2,623,333
( us-gaap:CommonStockCapitalSharesReservedForFutureIssuance )      
Market Value of Stock   0.29  
( custom:MarketValueOfStock [Extension] )      
Risk-Free Rate   0.85  
( custom:RiskFreeRate [Extension] )      
Volatility Factor   1.42  
( custom:VolatilityFactor [Extension] )      
Divident Yield   0  
( custom:DividendYield [Extension] )      
Remaining Term   P1Y4M24D  
( custom:RemainingTerm [Extension] )      
Allowance for Bad Debt   11,100  
( us-gaap:AllowanceForLoanAndLeaseLossRecoveryOfBadDebts )      
Accounts Receivable Netted Against allowance 0 11,100  
( custom:AccountsReceivableNetted [Extension] )      
Allowance for slow moving inventory 0 117,453  
( custom:AllowanceForSlowMovingInventory [Extension] )      
(End Disclosure - 2. Significant Accounting Policies (Details Narrative))
 
Disclosure - 3. Restatement (Details)
Disclosure - 3. Restatement (Details) (USD $) 12 Months Ended      
( us-gaap:AccountingChangesAndErrorCorrectionsAbstract )        
  Dec. 30, 2015 Dec. 30, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016
( us-gaap:ErrorCorrectionsAndPriorPeriodAdjustmentsRestatementByRestatementPeriodAndAmountAxis )                    
        As Restated As Previously Reported Adjustment   As Restated Adjustment As Previously Reported
( us-gaap:AdjustmentsForErrorCorrectionDomain )                    
Total Current Liabilities               2,017,757 349,818 1,667,939
( us-gaap:LiabilitiesCurrent )                    
Loans payable, net of unamortized discount               349,818 349,818
( us-gaap:LongTermDebtCurrent )                    
Accumulated deficit               (2,674,795) (349,818) (2,324,977)
( us-gaap:RetainedEarningsAccumulatedDeficit )                    
Total Liabilities               2,017,757 349,818 1,667,939
( us-gaap:Liabilities )                    
Total Stockholders' Equity               1,455,473 (349,818) 1,805,291
( custom:TotalStockholdersEquity [Extension] )                    
Image revenue 798,647 672,993   672,993 1,068,993 (396,000)        
( custom:ImageRevenue [Extension] )                    
Total revenue 857,569 864,426   864,426 1,260,426 (396,000)        
( us-gaap:Revenues )                    
Cost of revenue 376,164 820,393   820,393 881,021 (60,628)        
( us-gaap:CostOfRevenue )                    
Gross margin 481,405 44,033   44,033 379,405 (335,372)        
( us-gaap:GrossProfit )                    
Loss from operations (1,356,132) (868,627)   (868,627) (533,255) (335,372)        
( us-gaap:OperatingIncomeLoss )                    
Interest expense (6,261) (124,781)   (124,781) (110,335) (14,446)        
( us-gaap:InterestExpense )                    
Other income (expense)       (72,703) (58,257) (14,446)        
( custom:OtherIncomeExpense [Extension] )                    
Net loss (1,362,393) (941,330) (1,362,393) (941,330) (591,512) (349,818) (941,330)      
( us-gaap:NetIncomeLoss )                    
Net cash used in operating activities       (522,708) (187,336) (335,372)        
( custom:NetCashUsed [Extension] )                    
Net cash provided by financing activities       715,412 380,040 335,372        
( custom:NetCashProvidedByFinancing [Extension] )                    
 
Table continued from above
 
Disclosure - 3. Restatement (Details) (USD $)    
( us-gaap:AccountingChangesAndErrorCorrectionsAbstract )    
  Dec. 31, 2016 Dec. 31, 2015
( us-gaap:ErrorCorrectionsAndPriorPeriodAdjustmentsRestatementByRestatementPeriodAndAmountAxis )    
     
( us-gaap:AdjustmentsForErrorCorrectionDomain )    
Total Current Liabilities 2,017,757 1,311,512
( us-gaap:LiabilitiesCurrent )    
Loans payable, net of unamortized discount 349,818
( us-gaap:LongTermDebtCurrent )    
Accumulated deficit (2,674,795) (1,733,465)
( us-gaap:RetainedEarningsAccumulatedDeficit )    
Total Liabilities 2,017,757 1,496,512
( us-gaap:Liabilities )    
Total Stockholders' Equity    
( custom:TotalStockholdersEquity [Extension] )    
Image revenue    
( custom:ImageRevenue [Extension] )    
Total revenue    
( us-gaap:Revenues )    
Cost of revenue    
( us-gaap:CostOfRevenue )    
Gross margin    
( us-gaap:GrossProfit )    
Loss from operations    
( us-gaap:OperatingIncomeLoss )    
Interest expense    
( us-gaap:InterestExpense )    
Other income (expense)    
( custom:OtherIncomeExpense [Extension] )    
Net loss    
( us-gaap:NetIncomeLoss )    
Net cash used in operating activities    
( custom:NetCashUsed [Extension] )    
Net cash provided by financing activities    
( custom:NetCashProvidedByFinancing [Extension] )    
(End Disclosure - 3. Restatement (Details))
 
Disclosure - 3. Restatement (Details Narrative)
Disclosure - 3. Restatement (Details Narrative) (USD $) 12 Months Ended
( us-gaap:AccountingChangesAndErrorCorrectionsAbstract )  
  Dec. 31, 2016
   
   
   
Percent ownership of collection sold 0.50
( custom:PercentOwnershipSold [Extension] )  
Percent right of future share of income 0.50
( custom:PercentRightOfFuture [Extension] )  
Increase in liabilities 349,818
( custom:IncreaseInLiabilities [Extension] )  
Increase in net loss 349,818
( custom:IncreaseInNetLoss [Extension] )  
(End Disclosure - 3. Restatement (Details Narrative))
 
Disclosure - 4. Globe Photo Asset Purchase Agreement (Details)
Disclosure - 4. Globe Photo Asset Purchase Agreement (Details) (GlobePhotosMember, USD $)  
( us-gaap:BusinessCombinationsAbstract )  
  Dec. 31, 2016
( us-gaap:BusinessAcquisitionAxis )  
   
( us-gaap:BusinessAcquisitionAcquireeDomain )  
Inventory 10,000
( us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedInventory )  
Intangible assets – content provider and photographic agreements 400,000
( us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedIntangibles )  
Copyrights 35,000
( us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedIndefiniteLivedIntangibleAssets )  
Total fair value of purchased assets 445,000
( us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedAssets )  
(End Disclosure - 4. Globe Photo Asset Purchase Agreement (Details))
 
Disclosure - 4. Globe Photo Asset Purchase Agreement (Details Narrative)
Disclosure - 4. Globe Photo Asset Purchase Agreement (Details Narrative) (USD $) 12 Months Ended              
( us-gaap:BusinessCombinationsAbstract )                
  Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2016 Nov. 16, 2017 Jan. 1, 2017 Dec. 31, 2016 Dec. 31, 2015 Aug. 22, 2015 Jul. 22, 2015 Dec. 31, 2014
( us-gaap:BusinessAcquisitionAxis )                    
    Globe Photos, Inc. [Member]   Globe Photos, Inc. [Member] Globe Photos, Inc. [Member]     Globe Photos, Inc. [Member] Globe Photos, Inc. [Member]  
( us-gaap:BusinessAcquisitionAcquireeDomain )                    
Purchase price   400,000                
( us-gaap:BusinessCombinationConsiderationTransferred1 )                    
Payable in Cash       80,000       370,000 250,000  
( custom:PayableInCash [Extension] )                    
Payable in Common Stock                 150,000  
( custom:PayableInCommonStock [Extension] )                    
Reserve payable           10,000 130,000   180,000  
( us-gaap:OtherLoansPayable )                    
Reserve Payable to Globe Per Month                 10,000  
( custom:ReservePayableToGlobePerMonth [Extension] )                    
Risk Free Discount Rate               0.0101    
( custom:RiskFreeInterestRate [Extension] )                    
Volatility               1.00    
( custom:Volatility [Extension] )                    
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, shares   352,941                
( us-gaap:StockIssuedDuringPeriodSharesPurchaseOfAssets )                    
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, value 120,000 120,000                
( us-gaap:StockIssuedDuringPeriodValuePurchaseOfAssets )                    
Common shares issued in connection with Globe Photo, Inc. Asset Purchase Agreement, value per share   0.34                
( custom:CommonSharesIssuedParValue [Extension] )                    
Embedded derivative           57,922 75,000 75,000 0
( us-gaap:EmbeddedDerivativeFairValueOfEmbeddedDerivativeLiability )                    
Transfer to Globe after closing     P60D              
( custom:TransferToGlobeAfterClosing [Extension] )                    
Reduction of Stock Payable     30,000              
( custom:ReductionInStockPayable [Extension] )                    
Total Purchase Price of Assets Acquired     370,000              
( custom:TotalPurchasePriceOfAssetsAcquired [Extension] )                    
Shares repurchased from Globe       235,294       445,000    
( custom:SharesRepurchasedFromGlobe [Extension] )                    
Globe option to sell shares per month         8,000          
( custom:GlobeOptionToSellSharesPerMonth [Extension] )                    
(End Disclosure - 4. Globe Photo Asset Purchase Agreement (Details Narrative))
 
Disclosure - 5. Property and Equipment (Details)
Disclosure - 5. Property and Equipment (Details) (USD $) 12 Months Ended          
( us-gaap:PropertyPlantAndEquipmentAbstract )            
  Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016
( us-gaap:FiniteLivedIntangibleAssetsByMajorClassAxis )                    
  Leasehold Improvements [Member] Computer and other equipment [Member] Furniture and fixtures [Member] Frank Worth Collection [Member] Other archival images[Member] Frank Worth Collection [Member] Computer and other equipment [Member] Furniture and fixtures [Member] Other archival images[Member] Leasehold Improvements [Member]
( us-gaap:FiniteLivedIntangibleAssetsMajorClassNameDomain )                    
Property and equipment gross           2,770,000 65,316 83,666 889,331 12,446
( us-gaap:PropertyPlantAndEquipmentGross )                    
Less accumulated deprecation                    
( us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment )                    
Total archival images, property and equipment, net                    
( us-gaap:PropertyPlantAndEquipmentNet )                    
Estimated useful lives 7 years 3-5 years 7 years 10 years 10 years          
( us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives )                    
 
Table continued from above
 
Disclosure - 5. Property and Equipment (Details) (USD $)              
( us-gaap:PropertyPlantAndEquipmentAbstract )              
  Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015
( us-gaap:FiniteLivedIntangibleAssetsByMajorClassAxis )              
    Furniture and fixtures [Member] Computer and other equipment [Member] Leasehold Improvements [Member] Frank Worth Collection [Member] Other archival images[Member]  
( us-gaap:FiniteLivedIntangibleAssetsMajorClassNameDomain )              
Property and equipment gross 2,820,759 83,666 53,332 12,446 2,770,000 730,076 3,649,520
( us-gaap:PropertyPlantAndEquipmentGross )              
Less accumulated deprecation (977,172)           (590,537)
( us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment )              
Total archival images, property and equipment, net 2,843,587           3,058,983
( us-gaap:PropertyPlantAndEquipmentNet )              
Estimated useful lives              
( us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives )              
(End Disclosure - 5. Property and Equipment (Details))
 
Disclosure - 5. Property and Equipment (Details Narrative)
Disclosure - 5. Property and Equipment (Details Narrative) (USD $) 12 Months Ended
( us-gaap:PropertyPlantAndEquipmentAbstract )  
  Dec. 31, 2015 Dec. 31, 2016
( us-gaap:FiniteLivedIntangibleAssetsByMajorClassAxis )    
     
( us-gaap:FiniteLivedIntangibleAssetsMajorClassNameDomain )    
Depreciation Expense 358,808 386,635
( us-gaap:Depreciation )    
(End Disclosure - 5. Property and Equipment (Details Narrative))
 
Disclosure - 6. Frank Worth Collection (Details Narrative)
Disclosure - 6. Frank Worth Collection (Details Narrative) (USD $) 0 Months Ended 1 Month Ended 12 Months Ended        
( us-gaap:InvestmentsAllOtherInvestmentsAbstract )              
  Nov. 12, 2014 May. 31, 2015 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2016 Oct. 28, 2016 Dec. 31, 2015
( us-gaap:InvestmentsInAndAdvancesToAffiliatesCategorizationAxis )                
  Frank Worth Collection [Member] [Default Label] Frank Worth Collection [Member] [Default Label] Frank Worth Collection [Member] [Default Label] Frank Worth Collection [Member] [Default Label]     Frank Worth Collection [Member] [Default Label] Frank Worth Collection [Member] [Default Label]
( us-gaap:InvestmentsInAndAdvancesToAffiliatesCategorizationDomain )                
Common shares issued in connection with acquisition, shares 200,000              
( us-gaap:StockIssuedDuringPeriodSharesAcquisitions )                
Common shares issued in connection with acquisition, value 10,000              
( us-gaap:StockIssuedDuringPeriodValueAcquisitions )                
Cash paid for acquisition 155,000              
( us-gaap:PaymentsForPreviousAcquisition )                
Royalties paid     30,000          
( us-gaap:PaymentsForRoyalties )                
Accrued liabilities, stock and cash due for acquisition         55,000 80,000   135,000
( us-gaap:AccruedLiabilitiesCurrent )                
Fair Value per share 0.05              
( custom:FairValuePerShare [Extension] )                
Common Shares due and payable, shares   200,000            
( custom:CommonSharesDueShares [Extension] )                
Common Shares due and payable, value   10,000            
( custom:CommonSharesDueValue [Extension] )                
Cash for acquisition due and payable   125,000            
( custom:CashForAcquisitionDue [Extension] )                
Company to pay claimant             70,000  
( custom:CompanyToPayClaimant [Extension] )                
Payment Due Date       2017-02-23        
( custom:PaymentDueDate [Extension] )                
(End Disclosure - 6. Frank Worth Collection (Details Narrative))
 
Disclosure - 7. Intangible Assets (Details)
Disclosure - 7. Intangible Assets (Details) (USD $)            
( us-gaap:GoodwillAndIntangibleAssetsDisclosureAbstract )            
  Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2015 Dec. 31, 2015
( us-gaap:FiniteLivedIntangibleAssetsByMajorClassAxis )            
  Copyrights [Member] Content provider and photographic agreements [Member]   Content provider and photographic agreements [Member] Copyrights [Member]  
( us-gaap:FiniteLivedIntangibleAssetsMajorClassNameDomain )            
Intangible assets, gross 35,000 400,000 435,000 400,000 35,000 435,000
( us-gaap:FiniteLivedIntangibleAssetsGross )            
Accumulated amortization 5,250 60,000 62,250 20,000 1,750 21,750
( us-gaap:FiniteLivedIntangibleAssetsAccumulatedAmortization )            
Net Book Value 29,750 340,000 369,750 380,000 32,250 413,250
( custom:NetBookValue [Extension] )            
(End Disclosure - 7. Intangible Assets (Details))
 
Disclosure - 7. Intangible Assets (Details Narrative)
Disclosure - 7. Intangible Assets (Details Narrative) (USD $) 3 Months Ended 12 Months Ended  
( us-gaap:GoodwillAndIntangibleAssetsDisclosureAbstract )      
  Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2016
( us-gaap:FiniteLivedIntangibleAssetsByMajorClassAxis )      
       
( us-gaap:FiniteLivedIntangibleAssetsMajorClassNameDomain )      
Amortization expense 43,500 21,750  
( us-gaap:AdjustmentForAmortization )      
Amortization expense due current     43,500
( us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseNextTwelveMonths )