Globe Photos, Inc. (Form: 10-Q, Received: 08/13/2019 17:16:55)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended June 30, 2019

[_]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to__________

Commission File Number: 000-55370

Globe Photos, Inc.

(Exact name of registrant as specified in its charter)


Delaware	27-0746744
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

6445 South Tenaya Way, B-130 Las Vegas, Nevada 89113
(Address of principal executive offices)

702-722-6113
(Registrant’s telephone number)
_______________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: none

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [_] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


[_] Large accelerated filer	[_] Accelerated filer
[X] Non-accelerated filer	[X] Smaller reporting company
	[X] Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [_] Yes [X] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 8,588,679 shares of common stock as of August 6, 2019.

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TABLE OF CONTENTS
		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	1
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4:	Controls and Procedures	27
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	28
Item 1A:	Risk Factors	28
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3:	Defaults Upon Senior Securities	28
Item 4:	Mine Safety Disclosures	28
Item 5:	Other Information	28
Item 6:	Exhibits	30

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Our unaudited consolidated financial statements included in this Form 10-Q are as follows:

Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 (unaudited);	2
Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018 (unaudited);	3
Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018 (unaudited);	4
Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 (unaudited); and	5
Notes to Consolidated Financial Statements (unaudited).	6

These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, 2019 are not necessarily indicative of the results that can be expected for the full year.

GLOBE PHOTOS, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2019			December 31, 2018
		Unaudited
Assets

Current Assets
Cash	$	272,842		$	304,267
Accounts receivable, net		434,908			559,255
Prepaid expenses		45,574			21,513
Total Current Assets		753,324			885,035

Right of use asset		154,347			–
Property and equipment, net		5,096,282			5,533,680
Security deposit		19,528			11,306
Intangible Assets, net		15,054,453			15,793,346

Total Assets	$	21,077,934		$	22,223,367

Liabilities and Stockholders' Equity

Current Liabilities
Accounts payable and accrued liabilities	$	3,041,804		$	2,462,563
Contingent purchase consideration		2,500,000			2,500,000
Payable to Photo file, Inc		631,634			686,943
Payable to Globe Photo, Inc.		10,000			10,000
Due to related parties		284,455			287,455
Lease liability		69,808			–
Notes payable - related parties		628,195			635,675
Notes payable, net of debt discount		185,000			185,000
Loans payable, net of unamortized discounts		486,338			481,784
Convertible Notes, net of debt discount and issuance costs		3,933,100			1,655,700
Total Current Liabilities		11,770,334			8,905,120

Contingent purchase consideration		3,779,000			3,779,000
Lease liability - long-term		109,010			–
Total Long-term Liabilities		3,888,010			3,779,000

Total Liabilities		15,658,344			12,684,120

Stockholders' Equity
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; none issued and outstanding at June 30, 2019 and December 31, 2018		–			–
Common stock par value $0.0001: 450,000,000 shares authorized; 8,576,179 and 8,161,679 issued and outstanding as of June 30, 2019 and December 31, 2018		857			816
Additional paid in capital		13,202,328			10,145,902
Accumulated deficit		(11,011,785	)		(4,016,630	)
Stockholders' equity attributable to Globe Photos, Inc.		2,191,400			6,130,088
Non controlling interest		3,228,190			3,409,159
Stockholders' Equity		5,419,590			9,539,247

Total Liabilities and Stockholders' Equity	$	21,077,934		$	22,223,367

The accompanying notes are an integral part of these unaudited consolidated financial statements

GLOBE PHOTOS, INC.

Consolidated Statements of Operations

Unaudited

	For the three months ended						For the six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018

License revenue	$	79,211		$	83,818		$	197,498		$	314,593
Image revenue		1,528,058			120,614			2,887,223			439,660
Total revenue		1,607,269			204,432			3,084,721			754,253

Cost of revenue		1,733,041			190,329			3,160,526			486,472

Gross margin (loss)		(125,772	)		14,103			(75,805	)		267,781

Operating expenses
Product development, sales and marketing		259,356			108,632			416,146			113,164
General and administrative		2,203,524			208,252			4,106,732			365,699
Depreciation and amortization		25,658			11,221			34,184			17,935

Total operating expenses		2,488,538			328,105			4,557,062			496,798


Loss from operations		(2,614,310	)		(314,002	)		(4,632,867	)		(229,017	)

Other income (expenses)

Loss in settlement of accrued liabilities		(10,000	)		(208,322	)		(10,000	)		(208,322	)
Interest expense		(847,519	)		(145,715	)		(2,512,115	)		(164,079	)
Change in fair value of derivative liabilities		–			4,810			–			9,195
Other income (expenses)		(857,519	)		(349,227	)		(2,522,115	)		(363,206	)


Net loss	$	(3,471,829	)	$	(663,229	)	$	(7,154,982	)	$	(592,223	)

Net loss attributable to non controlling interest		(90,994	)		–			(180,969	)		–

Net loss attributable to Globe Photos, Inc.	$	(3,380,835	)	$	(663,229	)	$	(6,974,013	)	$	(592,223	)

Per-share data
Basic and diluted loss per share	$	(0.41	)	$	(0.08	)	$	(0.85	)	$	(0.07	)

Weighted average number of common shares outstanding		8,278,108			8,130,543			8,221,685			8,132,204

The accompanying notes are an integral part of these unaudited consolidated financial statements

GLOBE PHOTOS, INC.

Consolidated Statements of Stockholders’ Equity

Unaudited

	Common Stock						Additional Paid-in			Treasury			Accumulated			Non controlling			Total Stockholders'
	Shares			Amount			Capital			Stock			(deficit)			interest			Equity

Balance, December 31, 2017		8,139,263		$	814		$	4,155,986		$	(88,000	)	$	(3,522,655	)		–		$	546,145
Repurchase and cancellation of shares		(8,235	)		(1	)		(111,999	)		88,000			–			–			(24,000	)
Net Income		–			–			–			–			71,006			–			71,006
Balance, March 31, 2018		8,131,028		$	813		$	4,043,987			–		$	(3,451,649	)		–		$	593,151

Repurchase and cancellation of shares		(589	)		–			(8,000	)		–			–			–			(8,000	)
Stock options issued for services		–			–			14,999			–			–			–			14,999
Stock options issued for debt settlement		–			–			312,489			–			–			–			312,489
Net Income		–			–			–			–			(663,229	)		–			(663,229	)
Balance, June 30, 2018		8,130,439		$	813		$	4,363,475			–		$	(4,114,878	)		–		$	249,410

Balance, December 31, 2018		8,161,679		$	816		$	10,145,902			–		$	(4,016,630	)	$	3,409,159		$	9,539,247
Cumulative effect adjustment of Topic 842		–			–			–			–			(21,142	)		–			(21,142	)
Warrants issued for services		–			–			312,000			–			–			–			312,000
Stock option expense		–			–			297,800			–			–			–			297,800
Beneficial conversion feature		–			–			572,924			–			–			–			572,924
Net loss		–			–			–			–			(3,593,178	)		(89,975	)		(3,683,153	)
Balance, March 31, 2019		8,161,679		$	816		$	11,328,626			–		$	(7,630,950	)	$	3,319,184		$	7,017,676

Stock issued for cash		407,500			41			1,291,244			–			–			–			1,291,285
Shares issued for services		5,000			–			99,600			–			–			–			99,600
Shares issued for settlement of accrued liabilities		2,000			–			18,000			–			–			–			18,000
Stock option expense		–			–			464,858			–			–			–			464,858
Net loss		–			–			–			–			(3,380,835	)		(90,994	)		(3,471,829	)
Balance, June 30, 2019		8,576,179		$	857		$	13,202,328			–		$	(11,011,785	)	$	3,228,190		$	5,419,590

The accompanying notes are an integral part of these unaudited consolidated financial statements

GLOBE PHOTOS, INC.

Consolidated Statements of Cash Flows

Unaudited

	For the six months ended
	June 30, 2019			June 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,154,982	)	$	(592,223	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,320,361			228,441
Amortization of debt discount		2,284,418			4,597
Noncash operating lease expense		31,903			–
Stock option expense		762,658			14,999
Shares issued for services		99,600			–
Warrants issued for services		312,000			–
Loss in settlement of accrued liabilities		10,000			208,322
Change in fair value of embedded derivative		–			(9,195	)
Changes in operating assets and liabilities:
Accounts receivable		124,347			14,818
Prepaid expenses		(24,061	)		(22,817	)
Deposits		(8,222	)		–
Deferred revenue		–			(200,000	)
Repayment of lease liability		(32,082	)		–
Accounts payable and accrued liabilities		590,749			153,622
Net Cash Used In Operating Activities		(1,683,311	)		(199,436	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of archive images		(112,500	)		(12,922	)
Purchase of software		(31,570	)		–
Payment of liability related to acquisition of Photo File, Inc.		(485,000	)		–
Net Cash Provided By (Used In) Investing Activities		(629,070	)		(12,922	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable		–			150,000
Repayment of loans payable		(2,464	)		(3,984	)
Proceeds from related party advances		–			147,342
Repayment of note payable - related party		(7,480	)		(24,980	)
Proceeds from convertible notes payable, net		572,924			–
Advances from related party		426,691			–
Proceeds from the sale of common stock, net of issuance costs		1,291,285			–
Purchase of treasury stock		–			(32,000	)
Net Cash Provided By Financing Activities		2,280,956			236,378

Net Change in Cash		(31,425	)		24,020

Cash - Beginning of Period		304,267			1,297

Cash - End of Period	$	272,842		$	25,317

SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Interest	$	5,646		$	11,219

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Beneficial conversion feature on convertible debt	$	572,924		$	–
Options issued to settle accrued liabilities	$	8,000		$	104,167
Purchase of third party notes by related party	$	–		$	212,500
Assets acquired under operating leases	$	186,250		$	–

The accompanying notes are an integral part of these unaudited consolidated financial statements

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

1.	ORGANIZATION AND BUSINESS OPERATIONS

Globe Photos, Inc. (“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.

On June 6, 2018, we filed a Certificate of Merger with the Secretary of State of Delaware in order to effectuate a merger with our wholly-owned subsidiary, Globe Photos, Inc. Shareholder approval was not required pursuant to the Delaware General Corporation Law. As part of the merger, our board of directors authorized a change in our name to “Globe Photos, Inc.” and our Certificate of Incorporation has been amended to reflect this name change.

On October 11, 2018, we acquired substantially all of the assets of Photo File, Inc. (“Photo File”), a New York corporation, a 30-year-old New York-based licensed sports photography company. As part of the Photo File transaction, we acquired licenses to produce and sell licensed sports prints, lithographs and other related items for major U.S. sports leagues, including the NFL, NBA, MLB, and NHL Properties and their respective player associations, as well as most major college sports teams. We also gained licenses from thousands of individuals and organizations, including Babe Ruth, Joe Namath, Vince Lombardi, Marvel Entertainment, Nickelodeon and others. The acquisition also significantly expanded our collection of company-owned iconic sports photography.

Going Concern

The accompanying unaudited 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 June 30, 2019, the Company had $272,842 cash on hand. At June 30, 2019 the Company has an accumulated deficit of $11,011,785. For the six months ended June 30, 2019, the Company had a net loss of $6,974,013 and cash used in operations of $1,683,311. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

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.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

2.	SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in the consolidated financial statements for the three and six months ended June 30, 2019 should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Form 10-K for the Company’s fiscal year ended December 31, 2018, as filed with the SEC.

The consolidated balance sheet as of December 31, 2018, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the year ending December 31, 2019.

The accompanying unaudited consolidated financial statements represent the results of operations, financial position and cash flows of the Company 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, Globe Photos, LLC, and Photo File, LLC. All inter-company balances and transactions have been eliminated.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

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.

Revenue Recognition

On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

We did not have a cumulative impact as of January 1, 2018 due to the adoption of Topic 606 and there was not an impact to our consolidated statement of operations for the year ended December 31, 2018 as a result of applying Topic 606.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five basic criteria be met before revenue can be recognized: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

Revenue recognition occurs at the time product is shipped to customers, when control transfers to customers, provided there are no material remaining performance obligations required of the Company or any matters of customer acceptance. We only record revenue when collectability is reasonably assured.

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.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018.

We adopted ASC 842 effective January 1, 2019 using the optional transition method of recognizing a cumulative-effect adjustment to the opening balance of retained earnings on January 1, 2019. Therefore, comparative financial information was not adjusted and continues to be reported under the prior lease accounting guidance in ASC 840. We elected the transition relief package of practical expedients, and as a result, we did not assess 1) whether existing or expired contracts contain embedded leases, 2) lease classification for any existing or expired leases, and 3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less, as well as the land easement practical expedient for maintaining our current accounting policy for existing or expired land easements.

In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting," which modifies the accounting for share-based payment awards issued to nonemployees to largely align it with the accounting for share-based payment awards issued to employees. ASU 2018-07 is effective for us for annual periods beginning January 1, 2019. Management evaluated ASU 2018-07 and determined that the adoption of this new accounting standard did not have a material impact on the Company’s consolidated financial statements.

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.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

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 June 30, 2019 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 June 30, 2019 and December 31, 2018.

4.	PHOTO FILE ASSET PURCHASE AGREEMENT

On October 11, 2018, the Company entered into a definitive Asset Purchase Agreement with Photo File, Inc., a New York corporation along with it related entity Sportphotos.com and Charles Singer, its CEO and principal shareholder (collectively, the “Seller”) wherein the Company acquired certain assets and assumed certain liabilities of the Seller in exchange for $2,000,000. In connection with the agreement, the Company paid $1,515,000 to the Seller as of December 31, 2018 toward the purchase price of the Asset Purchase Agreement. The final payment of $485,000 which was recorded as a payable to Photo File, Inc. as of December 31, 2018 in the consolidated balance sheet was paid during the three month period end June 30, 2019. The Company has also recorded an additional liability due to the Seller related to a final working capital adjustment of the acquisition as of June 30, 2019 and December 31, 2018 in the amount of $631,634 and $201,943, respectively.

As additional consideration the seller also received the following:

	·	A royalty to Seller that commences upon the initial $6,000,000 in sales from the Nevada subsidiary, with a fair value of $4,279,000.

	·	10% interest in the Nevada subsidiary that we have formed to house the assets

Additionally, the seller will endeavor to sell its Vintage Photographic Collection over time after Closing. If at the completion of the sale of the Vintage Photographic Collection, proceeds from net sales but before any expenses other than commissions are less than $2,000,000, the Company will pay the difference between the proceeds and $2,000,000 within 30 days. Any proceeds above $2,000,000 will be divided equally between Seller and the Company with the Seller remitting 50% of the net proceeds after expenses of those sales within 30 days of their receipt. As of December 31, 2018, the Company has recorded the entire $2,000,000 as a contingent purchase consideration. This remains outstanding as of June 30, 2019.

The transaction was deemed to be an acquisition of a business and was accounted for under the acquisition method of accounting in accordance with the guidance in ASC 805 - “Business Combinations”.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

The following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired and liabilities assumed.

Cash	$	2,000,000
10% noncontrolling interest in subsidiary		2,750,000
Royalty payments		4,279,000
Contingent consideration		2,000,000
Total Purchase Price		11,029,000

Accounts Receivable		313,257
Memorabilia		3,600,000
Copyright Image library		4,100,000
Trade name		340,000
Non-Compete agreement		90,000
Outbound license agreement		9,000,000
Customer relationships		2,330,000
Total Identifiable assets		19,773,257

Liabilities		(1,447,491	)
Total liabilities assumed		(1,447,491	)

Total net assets acquired	$	18,325,766

Total bargain purchase gain	$	(7,296,766	)

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

Pro Forma

The following table below shows the unaudited pro-forma information which assumes that the acquisition had been completed as of January 1, 2018.

	For the three months ended
	June 30, 2018

Total revenue	$	1,808,147
Cost of revenue		974,348
Gross margin		833,799
Total operating expenses		(1,337,833	)
Other income (expenses)		(354,134	)
Net loss	$	(858,168	)

	For the six months ended
	June 30, 2018

Total revenue	$	4,702,788
Cost of revenue		2,427,534
Gross margin		2,275,254
Total operating expenses		(2,486,794	)
Other income (expenses)		(380,209	)
Net loss	$	(591,749	)

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

PROPERTY AND EQUIPMENT, NET

	June 30,			December 31,			Estimated
	2019			2018			Useful Lives
Frank Worth Collection	$	2,770,000		$	2,770,000		10 years
Other archival images		4,689,268			4,576,768		5-10 years
Leasehold improvements		12,446			12,446		7 years
Computer and other equipment		72,687			72,687		3 – 5 years
Furniture and fixtures		83,666			83,666		7 years
		7,628,067			7,515,567
Less accumulated deprecation		(2,531,785	)		(1,981,887	)
Total property and equipment, net	$	5,096,282		$	5,533,680

Depreciation expense was $549,898 and $206,691 for the six months ended June 30, 2019 and 2018, respectively, of which $518,648 and $188,756 are reported in cost of revenue, respectively.

INTANGIBLE ASSETS, NET

	June 30, 2019						December 31, 2018
	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	$	160,000	$	240,000	$	400,000	$	140,000	$	260,000
Copyrights		35,000		14,000		21,000		35,000		12,250		22,750
Internal use software		58,666		2,934		55,732		27,096		–		27,096
Copyrighted Image Library		4,100,000		305,534		3,794,466		4,100,000		102,500		3,997,500
Non-Compete and Non-Solicitation Covenants		90,000		22,356		67,644		90,000		7,500		82,500
Trade name		340,000		–		340,000		340,000		–		340,000
License agreements		9,000,000		447,123		8,552,877		9,000,000		150,000		8,850,000
Customer relationships		2,330,000		347,266		1,982,734		2,330,000		116,500		2,213,500
Total	$	16,353,666	$	1,299,213	$	15,054,453	$	16,322,096	$	528,750	$	15,793,346

Total amortization expense for the six months ended June 30, 2019 and 2018 was $770,463 and $21,750, respectively of which $767,529 and 21,750 is included in cost of sales in the consolidated statements of operations, respectively. Estimated amortization expense over the next five years is $1,561,233 per year.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

NOTES PAYABLE

On April 1, 2016, the Company entered into an unsecured promissory note agreement with unrelated parties for working capital purposes for total proceeds of $25,000. The promissory notes matured on December 1, 2017 and on March 30, 2018 was extended through June 30, 2018 and on June 30, 2018 was further extended to December 31, 2018, and on December 31, 2018, the note was further extended to June 30, 2019. The note and accrued interest was paid in full subsequent to this filing (See note 12). The notes bear interest at the rate of 6% per annum. Accrued interest payable due under the unsecured note agreement was $4,880 and $3,380 as of June 30, 2019 and December 31, 2018, respectively.

On December 20, 2017, the Company entered into an on demand unsecured note with an unrelated party for working capital purposes for total proceeds of $10,000. As of June 30, 2019, the note was still outstanding.

On April 13, 2018, the Company entered into an unsecured promissory note agreement with an unrelated party for total proceeds of $150,000 of which is still outstanding as of June 30, 2019. The note is due upon demand and carried an interest rate of 15% and is guaranteed by a shareholder and director of the Company. Accrued interest payable due under the unsecured note agreement was $22,500 and $22,500 as of June 30, 2019 and December 31, 2018, respectively.

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.

8.	CONVERTIBLE NOTES

From July 2018 to December 31, 2018, we issued convertible promissory notes in the aggregate principal amount of $2,782,050 to several accredited investors through a private placement. This includes the convertible note of $50,000 issued to settle an existing account payable. During the six months ended June 30, 2019, we issued an additional $651,050 notes under the same private placement.

The convertible notes bear interest at a rate of 10% per annum, matured on April 30, 2019, are payable within ten days of written notice, and are secured by certain archival images owned by the Company. The notes and accrued interest are convertible at the option of the noteholder into our common stock at $4.00 per share but will mandatorily convert to common stock at the same price upon an up list to a national exchange and will have piggyback registration rights to register the shares of common stock underlying the conversion of the notes.

The Company evaluated the convertible debentures under ASC 470-20 and recognized a debt discount of $3,029,628 related to the beneficial conversion feature (“BCF”), of which $572,924 was recorded during the six months ended June 30, 2019, with a corresponding credit to additional paid-in capital. The debt discount is being accreted to interest expense over the term of the notes.

As part of the private placement, the Company paid a consultant financing fees equivalent to 12% of the gross proceeds received from the issuance of convertible notes or $403,472, of which $78,126 was recorded during the six months ended June 30, 2019 and was recorded as a debt discount and accreted to interest expense over the term of the notes.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

During the six months ended June 30, 2019 and 2018, the Company recorded interest expense of $2,207,023 of which $2,043,937 was related to the accretion of the debt discount and financing cost. As of June 30, 2019, the convertible notes are shown net of unamortized debt discount and financing cost of $0.

On August 16, 2018, we issued a convertible promissory note with a principal amount of $500,000 to a company managed by one of our former directors. The note bear interest at a rate of 10% per annum, matured on April 30, 2019, payable within ten days of written notice and is secured by certain archival images owned by the Company. The note and accrued interest are convertible at the option of the noteholder into our common stock at $4.00 per share but will mandatorily convert to common stock at the same price upon an up list to a national exchange and will have piggyback registration rights to register the shares of common stock underlying the conversion of the notes.

The Company evaluated the convertible debentures under ASC 470-20 and recognized a debt discount of $500,000 related to the BCF with a corresponding credit to additional paid-in capital. The debt discount is being accreted to interest expense over the term of the note.

During the six months ended June 30, 2019, the Company recorded interest expense of $258,258 related to this note, of which $233,463 was related to the accretion of the debt discount. As of June 30, 2019, the convertible note is shown net of unamortized discount of $0.

RELATED PARTY TRANSACTIONS

Notes payable to related parties

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 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 and under the same terms as the first note. As of June 30, 2019, and December 31, 2018, a balance of $162,500 on these two notes remains outstanding. 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 $58,787 and $34,412 as of June 30, 2019 and December 31, 2018, respectively. The notes matured on December 31, 2017; however, on January 22, 2018, the outstanding balance on the notes was purchased by a related party (ICONZ Art, LLC, beneficial interest shareholder) and the notes were extended to June 30, 2018 and on June 30, 2018 was extended indefinitely and will now be considered due on demand. All the accrued interest through December 31, 2017, was still due to the original noteholder.

On April 5, 2016, the Company entered into an unsecured promissory note agreement with unrelated parties for working capital purposes for total proceeds of $50,000. The promissory notes matured in December 2017 and bear interest at the rate of 6% per annum. However, on January 22, 2018, the outstanding balance on the notes was purchased by a related party and the notes were extended to June 30, 2018 and on June 30, 2018 was extended indefinitely and will now be considered due on demand. Accrued interest payable due under the unsecured note agreement was $9,727 and $8,277 as of June 30, 2019 and December 31, 2018, respectively. All the accrued interest through December 31, 2017, was still due to the original noteholder.

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. During the six months ended June 30, 2019, the Company made payment of $7,480. As of June 30, 2019, and December 31, 2018, $38,695 and $46,175 was outstanding under the unsecured promissory note agreement, respectively. Interest expense for the six months ended June 30, 2019 and 2018 was $967 and $1,341 respectively. The loan matured on July 14, 2014 and was extended to July 31, 2016. Effective March 30, 2018, the note agreement was extended to June 30, 2018 and on June 30, 2018, the note was further extended to December 31, 2018 and on February 11, 2019 the note was further extended to December 31, 2019.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

On September 11, 2014, the Company entered into an unsecured promissory note agreement for $20,500 with Dino Satallante, a beneficial interest shareholder which bear interest at a rate of 6% per annum. Total interest expense in connection with the secured promissory note agreement for the six months ended June 30, 2019 and 2018 is $615. The loan matured on September 10, 2015 and has been extended multiple times up to December 31, 2018. On February 11, 2019, the note was further extended to December 31, 2019.

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 matured 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 six months ended June 30, 2019 and 2018 is $9,600. Effective March 30, 2018 the note was extended to June 30, 2018, and on June 30, 2018, the note was further extended to December 31, 2018, and on February 11, 2019 the note was further extended to December 31, 2019.

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 matured on April 1, 2017. On March 30, 2018, the note was extended to June 30, 2018 and on June 30, 2018 was extended indefinitely and will now be considered due on demand. Interest expense on the note was 2,600 each of the six months ended June 30, 2019 and 2018, respectively.

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 matured on December 15, 2017, however, on January 22, 2018, the outstanding balance on the notes was purchased by another related party (ICONZ Art, LLC, beneficial interest shareholder) and the notes were extended to June 30, 2018 and on June 30, 2018 was extended indefinitely and will now be considered due on demand. Interest expense was $1,500 for each of the six months ended June 30, 2019 and 2018, respectively. All the accrued interest through December 31, 2017, was still due to the original noteholder.

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 matured on December 31, 2017, however, on January 22, 2018, the outstanding balance on the notes was purchased by another related party (ICONZ Art, LLC, beneficial interest shareholder) and the notes were extended to June 30, 2018 and on June 30, 2018 was extended indefinitely and will now be considered due on demand. Interest expense was $1,500 for each of the six months ended June 30, 2019 and 2018, respectively.

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 matured on December 31, 2017, however, on January 22, 2018, the outstanding balance on the notes was purchased by another related party (ICONZ Art, LLC, beneficial interest shareholder) and the notes were extended to June 30, 2018 and on June 30, 2018 was extended indefinitely and will now be considered due on demand. Interest expense was $945 for each of the six months ended June 30, 2019 and 2018, respectively.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

Due to Related Parties

The following table summarizes amounts due to related parties for expenses paid for on the behalf of the Company as of June 30, 2019 and December 31, 2018. The amounts due are non-interest bearing and due upon demand. These amounts have been included in the consolidated balance sheets as current liabilities due to related parties, respectively.

	June 30,		December 31,
	2019		2018
Due to related parties:
ICONZ Art, LLC, beneficial interest shareholder	$	256,423	$	259,423
MSN Holding Co., beneficial interest shareholder		12,947		12,947
Premier Collectibles, beneficial interest shareholder		15,085		15,085
Total due to related parties	$	284,455	$	287,455

10.

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 over a period ranging from 1 to 2 years.

The Company accounted for the 50% profit consideration for the above agreement in accordance with ASC 470-10-25 and 470-10-35 which requires amounts recorded as debt to be amortized under the interest method as described in ASC 835-30, Interest Method. 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 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 six months ended June 30, 2019 and 2018, interest expense related to these loans amounted to $7,018 and $14,597, respectively, which has been included in interest expense and a corresponding increase in loans payable. During the six months ended June 30, 2019 and 2018, the Company made payments of $2,464 and $3,984 to the loan holders, respectively. As of June 30, 2019, loan payable net of unamortized debt discount amounted to $286,338.

Asset purchase agreement

On March 3, 2017, the Company entered into an agreement to sell 20% of its ownership in a certain photographic archive asset for $200,000. As part of the agreement the buyer received preferential distributions of their entire purchase price of the asset. If, however the entire purchase price is not paid back after 24 months then all net revenues from the Company will be paid to the buyer until the full purchase price has been paid. On March 30, 2018, the Company entered into an addendum to the agreement to remove the preferential distributions clause from the agreement. Additionally, on May 1, 2018, the Company entered into a second addendum to the agreement whereby the Company agreed to repay the seller the total purchase price of $200,000 and 25,000 shares of common stock within 120 days of the effective date of the agreement. The Company valued the 25,000 shares at $100,000 as of the agreement date and recorded the value as interest expense during the year ended December 31, 2018.

The Company accounted for the above transaction as debt and recognized the amount received as a loan payable. As of June 30, 2019, other debt, net of unamortized debt discount amounted to $200,000.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

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. As of June 30, 2019, the Company has paid $45,000 toward the guaranteed royalties associated with these agreements.

With the acquisition of the assets of Photo File, Inc we acquired multiple license agreement with royalty rates rating between 6 – 16% and terms extending through December 31, 2021. As of June 30, 2019, the Company has incurred $580,746 in royalty expenses associated with these agreements which has been included in cost of sales.

Operating Lease Agreements

The Company has entered into lease agreements as a lessee for the use of land and office space. These lease agreements are classified as operating leases and the liability and right-of-use asset are recognized on the balance sheet at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term. As a result of the adoption of ASC 842, the Company recognized an operating lease liability of $112,480 and a corresponding right-of-use asset of $87,830, net of deferred rent of $3,508 and the cumulative effect adjustment to retained earnings of $21,142 as a result of applying hindsight in determining the lease term.

The Company determines whether or not a contract contains a lease based on whether or not it provides the Company with the use of a specifically identified asset for a period of time, as well as both the right to direct the use of that asset and receive the significant economic benefits of the asset. The Company elected the transition relief package of practical expedients, and as a result, we did not assess 1) whether existing or expired contracts contain embedded leases, 2) lease classification for any existing or expired leases, and 3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less, as well as the land easement practical expedient for maintaining our current accounting policy for existing or expired land easements.

The discount rate utilized for classification and measurement purposes as of the inception date of the lease is based on each company's collateralized incremental interest rate to borrow of 10%, as the rate implicit in the lease is not determinable.

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. On February 19, 2019 the Company extended the operating lease agreement for the lease originally entered into September 6, 2012 for an additional 24 months. During the six months ended June 30, 2019, the Company recorded noncash lease expense associated with the right of use asset of $15,500 and made payment on the lease liability of $17,152.

On February 26, 2019 the Company entered into a 24-month operating lease agreement for approximately 4,672 square foot warehouse and office facilities located in Las Vegas, NV. Monthly base rent due under the agreement is $4,437, plus common area maintenance fees. The agreement calls for 3% annual increase in base rental payments. The Company determined this lease to be an operating lease and recorded a right-of-use asset and lease liability during the six month period ended June 30, 2019 of $98,420 for this new lease. During the six months ended June 30, 2019, the Company recorded noncash lease expense associated with the right to use asset of $16,403 and made payments on the lease liability of $14,930.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

Undiscounted Cash Flows

As of June 30, 2019, the right of use asset and lease liability were shown on the consolidated balance sheet at $154,347 and $178,818, respectively. The table below reconciles the fixed component of the undiscounted cash flows and the total remaining years to the operating lease liability recorded on the consolidated balance sheet as of June 30, 2019:

Amounts due as of June 30, 2019	Operating Leases
2019	$	48,901
2020		100,088
2021		43,234
Total minimum lease payments	$	192,223
Less: effect of discounting		(13,405	)
Present value of future minimum lease payments	$	178,818
Less: current obligations under leases		(69,808	)
Long-term lease obligations	$	109,010

The Company also 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.

As part of our acquisition of Photo File, while we did not assume the lease we assumed its existing lease payments as follows: we will pay 100% of the lease payments through December 31, 2018, and after December 31, 2018 we will pay 50% of the lease until the end of the lease term or until the lease may be terminated. The Company paid $352,920 in rent related to the lease for the six months ended June 30, 2019.

Total rent expense for the six months ended June 30, 2019 and 2018 was $369,947 and $27,442, respectively, in connection with short term operating lease agreements.

11.

SHAREHOLDERS’ 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 June 30, 2019, there were no shares of Preferred Stock issued and outstanding.

Common Stock

On June 18, 2018, the Company’s stockholders voted to give discretionary authority to the Board of Directors of the Company, to effect a reverse split of our issued and outstanding common stock in a range of not less than 1-for-5 and not more than 1-for- 500, Effective as of June 6, 2019, FINRA approved the effectiveness of a 1-for-40 reverse stock split of the Company’s common stock. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto, have been retroactively adjusted for the Reverse Stock Split as if such Reverse Stock Split occurred on the first day of the first period presented.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

The Company is authorized to issue up to 450,000,000 shares of common stock with a par value of $0.0001. As of June 30, 2019, and December 31, 2018, there were 8,576,179 and 8,161,679 shares of common stock (post-split) issued and outstanding, respectively.

On June 4, 2019, the Company sold 407,500 shares of common stock for net proceeds of $1,291,285.

On April 22, 2019, the Company issued 5,000 shares for services with a fair value of $99,600.

On May 23, 2019, the Company issued 2,000 shares of common stock valued at $18,000 for the settlement of $8,000 in accrued liabilities. The Company recorded the difference between the fair value of common stock and accrued liability as loss on settlement of accrued liabilities in the amount of $10,000.

STOCK WARRANTS

On January 30, 2019, we granted 20,000 5-year warrants with exercise prices of $4.00 valued at $312,000 for services. The warrants above 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 $15.60; b) risk-free rate of 2.49%; c) volatility factor of 521.46%; d) dividend yield of 0%.

The following is a summary of stock warrant activity during the six months ended June 30, 2019.

	Number of Shares		Weighted Average Exercise Price
Balance, December 31, 2018		162,500	$	4.00
Warrants granted and assumed		20,000	$	4.00
Warrants expired		–		–
Warrants canceled		–		–
Warrants exercised		–		–
Balance outstanding, June 30, 2019		182,500	$	4.00
Balance exercisable, June 30, 2019		182,500	$	4.00

As of June 3, 2019, the outstanding warrants have a weighted average remaining term of was 1.79 years and an intrinsic value of $1,725,000.

STOCK OPTIONS

On June 24, 2019, we granted, 12,500 5-year options with an exercise price of $7.00 valued at $92,629 for services. The options above 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 $9.00; b) risk-free rate of 1.92%; c) volatility factor of 254.67%; d) dividend yield of 0%.

During the six months ended June 30, 2019, the Company recognized stock option expense of $670,029 for options granted in the prior year.

Globe Photos, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

(Unaudited)

The following is a summary of stock option activity during the year ended June 30, 2019:

	Number of Shares		Weighted Average Exercise Price
Balance, December 31, 2018		500,833	$	2.80
Options granted and assumed		12,500	$	7.00
Options expired		–		–
Options canceled		–		–
Options exercised		–		–
Balance outstanding, June 30, 2019		513,333	$	3.03
Balance exercisable, June 30, 2019		473,333	$	2.82

As of June 30, 2019, the outstanding options have a weighted average remaining term of was 7.88 years and an intrinsic value of $3,063,167.

12.

SUBSEQUENT EVENTS

On July 29, 2019, the Company issued 12,500 shares of common stock for services.

Subsequent to June 30, 2019, the Company received a $100,000 advance from a related party Dino Satallante. The advance bears no interest and is due upon demand.

On April 1, 2016, the Company entered into an unsecured promissory note agreement with unrelated parties for working capital purposes for total proceeds of $25,000. Subsequent to June 30, 2019, the note and accrued interest was paid in full.

On August 8, 2019, the Board approved and authorized the Company to borrow up to an aggregate principal amount of One Million Dollars ($1,000,000.00) in the form of a Note and Warrant Purchase Agreement.

Pursuant to the Agreement, an investor shall purchase from the Company (i) a secured convertible promissory note for the principal amount set forth therein (the “Note”), and (ii) a warrant to purchase common stock of the Company equivalent to twenty-five percent (25%) of the principal amount of the Note purchased by the investor (the “Warrant”).

The Note bears interest at a rate of 12% per annum,and is secured by the Company’s assets. The Note matures on October 31, 2019. The principal and accrued interest therein is convertible at the option of the noteholder into the Company’s common stock at $6.00 per share, subject to certain price adjustments as set forth in the Note. The proceeds from the Note are to be used for general working capital purposes.

The Warrant allows the investor to purchase shares of common stock of the Company at $6.00 per share, subject to certain price adjustments as set forth in the Warrant,and shall be exercisable for a period of three (3) years from the anniversary of the grant date of such Warrant. Cashless exercise is available under the terms of the Warrant.

The Company has received $260,000 in proceeds under this offering subsequent to June 30, 2019.

On August 8, 2019, the Board approved the extension of certain existing secured convertible promissory notes which had a maturity date of April 30, 2019 to October 31, 2019. In connection with such extension, the Board approved the issuance of warrants to such noteholders as consideration for agreeing to the extension.

The Extension Warrants allow the existing noteholders to purchase shares of common stock of the Company equivalent to (i) twenty-five percent (25%) of the principal and accrued interest of the Prior Notes purchased by the noteholders, and (ii) shares of common stock currently held by such noteholders. The exercise price for the warrants is $9.00 per share, subject to certain price adjustments as set forth in the warrant agreement, and shall be exercisable for a period of three (3) years from the anniversary of the grant date of such warrants. The Extension Warrants are exercisable for cash and do not have a cashless exercise feature.

On August 8, 2019, the Board appointed Shamar Tobias as the Company’s interim Chief Financial Officer to fill the vacancy left by Mr. Evan Bedell.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

The Company was originally incorporated on September 20, 2004 in the State of Delaware under the name “Blog8.” Since incorporation, we have changed our name a number of times, having been named “Securiteyes,” “Medify Solutions Limited,” “Petel Incorporated” and “Gleeworks, Inc.” and “Capital Art, Inc.” On June 6, 2018, we filed a Certificate of Merger with the Secretary of State of Delaware in order to effectuate a merger with our wholly-owned subsidiary, Globe Photos, Inc. As part of the merger, our board of directors authorized a change in our name from “Capital Art, Inc.” to “Globe Photos, Inc.” and our Certificate of Incorporation has been amended to reflect this name change.

We are currently engaged in the business of acquiring, selling, licensing and merchandising classic and contemporary photographic images and reproductions. Over the last few years, we have been in a developmental phase, focused mostly on acquiring ownership or rights to collections of rare or unpublished negatives and photographs of iconic celebrity images.

We have been taking advantage of a new market dynamic, where aging celebrities, retiring photographers, and image rights holders (i.e., family estates) are finally offering their exclusive photographic collections up for sale. We seized this opportunity to acquire these historic archives over the last few years, including the acquisition of other companies that have been quietly collecting these rare archives.

We believe we have now assembled one of largest collections of iconic pop culture imagery photography in the world. It is comprised of more than 25 million images taken by more than 3,500 photographers from around the world over the last century. It features iconic personalities and seminal moments from the worlds of entertainment, sports, history and politics. Our branded archives include Frank Worth collection, Movie Star News, and Globe Photos Agency (from the original Globe Photos founded in 1939).

Archived and stored at our Company’s secured warehouse, these collections include never before seen negatives, one-of-a kind prints and other memorabilia. They include rare images of celebrity icons, such as Elvis Presley, James Dean, Marilyn Monroe, Humphry Bogart, Frank Sinatra, the Beatles and more, as well as many contemporary personalities, performing artists and star athletes.

More recently we have been focused on acquiring assets that would provide us the ability to sell and merchandise licensed sports photography, as well as an operational platform for monetizing the photographic assets and associated memorabilia that we have acquired. This effort culminated on October 11, 2018 with the acquisition of substantially all of the assets of Photo File, Inc. (“Photo File”), a 30-year-old New York-based licensed sports photography company with more than 50 employees engaged in the licensing, production, marketing and sales of sports imagery and related collectibles.

As part of the Photo File transaction, we acquired licenses to produce and sell licensed sports prints, lithographs and other related items for major U.S. sports leagues, including NFL, NBA, MLB, and NHL Properties and their respective player associations, as well as most major college sports teams. We also gained licenses with thousands of individuals and organizations, including Babe Ruth, Joe Namath, Vince Lombardi, Marvel Entertainment, and others. The acquisition also significantly expanded our collection of company-owned iconic sports photography.

In addition to valuable licenses and photo assets, the Photo File transaction has provided us access to its well-established sales and marketing organization, and it has opened new distribution channels for our existing product lines.

We also expect to benefit from Photo File’s reputation for excellent customer service, as well as its strong ties to its professional and collegiate sports leagues and large retail customers. This will be important as we further develop relationships with top retail clients and distributors including Costco, Walmart, Target, Bed Bath and Beyond, USPS, Scheels and others.

Prior to the Photo File transaction, we had taken preliminary steps to monetize the value of our collection by establishing various sales channels and marketing methodologies. We have been selling some of our photographic images and reproductions on a limited basis through auctions, third-party galleries, art consultants, interior decorators, brick and mortar locations, specialty and big box retailers, as well as through various online outlets, including Amazon and 1stdibs, and directly to end consumers via our Globe Photos website. We have been experimenting with various ways to reach customers through diverse marketing channels, including our websites, events and interactive campaigns.

In many respects, the Company believes it has turned the corner with the Photo File transaction, allowing us to emerge from our development stage into a full-scale commercialization phase and take advantage of the growing market demand for pop culture and sports imagery and related memorabilia.

Our mission is to operate as a global marketplace for licensed sports and pop culture imagery, which includes both sold physical prints as well as licensed digital photography that our customers can use in their communications, such as social media, websites, digital and print marketing materials, books and publications.

Through our online and in-store platforms and manufacturing processes, consumers are able to customize, personalize, share, print and download licensed prints and physical products both for personal use and for creating thoughtful and personalized gifts. These may include such photo-based products as framed photos, canvases, books, calendars, greeting cards, mugs, bags, and apparel. There are numerous ways for our customers to avail themselves of our vast library of digital images.

As part of increasing our product offerings, we plan to continue our search for photographic archives that are undervalued by the market. These archives may be acquired outright, or we may enter into representation or consignment agreements with the owners of the archives. These opportunities are typically (1) aging photographers who are looking to monetize their archive while still alive via a single large transaction, or (2) media companies that have aggregated assets (or rights to assets) and are seeking to dispose of the archive or a partner who can help them grow cash flows related to the archive. These opportunities exist both in the United States and abroad and we continue to search for value on a global basis.

Our principal place of business is located at 6445 South Tenaya Way, Suite B-130, Las Vegas, NV 89113. General information about us can be found at www.globephotos.com

Asset Purchase Agreement with Photo File

In 1987, the year it was founded, Photo File was awarded a license for photography by Major League Baseball and the MLB Players Association, becoming the first company to be given a license for photography by any major sport in the United States. Photo File is also licensed by thousands of individuals and organizations, including Muhammad Ali, Babe Ruth, Joe Namath, Vince Lombardi, and Marvel Entertainment. Photo File had become one of the nation’s leading manufacturers of sports photography, with licenses from the NFL, MLB, NBA, NHL, Collegiate Licensing Company (CLC), and their respective player associations.

Besides photos in sizes up to 30"x 40", Photo File offered a full range of framed and matted products, plaques, photo sculptures, ceramics tiles, key chains and event covers. Photo File also produced a line of licensed Framed Gold Records featuring top recording artists, including Elvis Presley, KISS and many others.

At the time of the asset purchase by Globe Photos, Photo File employed 54 people, including its owners. The staff was comprised of 51 full-time and three part-time employees. Photo File’s 43,000 square foot facility, located in Mount Kisco, NY, included a printing lab, a graphics department, framing operation and sales and marketing divisions.

On October 11, 2018, the Company entered into a definitive Asset Purchase Agreement with Photo File, Inc., a New York corporation along with it related entity Sportophotos.com and Charles Singer, its CEO and principal shareholder (collectively, the “Seller”) wherein the Company acquired certain assets and assumed certain liabilities of the Seller in exchange for $2,000,000. In connection with the agreement, the Company paid $2,000,000 to the Seller as of June 30, 2019 toward the purchase price of the Asset Purchase Agreement. The final payment of $485,000 was paid during the three months ended June 30, 2019.

As additional consideration the seller also received the following:

•	A royalty to Seller that commences upon the initial $6,000,000 in sales from the Nevada subsidiary, with a fair value of $4,279,000.

•	10% interest in the Nevada subsidiary that we have formed to house the assets

Additionally, the seller has the endeavor to sell its Vintage Photographic Collection over time after Closing. If at the completion of the sale of the Vintage Photographic Collection, proceeds from net sales but before any expenses other than commissions are less than $2,000,000, the Company will pay the difference between the proceeds and $2,000,000 within 30 days. Any proceeds above $2,000,000 will be divided equally between Seller and the Company with the Seller will remitting 50% of the net proceeds after expenses of those sales within 30 days of their receipt. As of December 31, 2018, the Company recorded the entire $2,000,000 as a contingent purchase consideration. As of June 30, 2019, the $2,000,000 remains on the books as a contingent purchase consideration.

Assets acquired in the Photo File transaction included more than 1 million sports negatives, 1,000+ autographed lithographs and memorabilia, as well as printing and packaging equipment. Per the terms of the Purchase Agreement, we have created a new Nevada subsidiary called Photo File, LLC to hold the assets we have acquired from Photo File.

Post-Acquisition Plans

We see Photo File as a classic turnaround situation, during 2017 Photo File alone presented annual revenues of approximately $6.7 million and losses of approximately $1 million, but at one time having generated more than $20 million in annual revenues. Of the approximately $7 million in revenue generated during 2017, only about 8% is generated online. We believe this represents a substantial opportunity to leverage the latest advances in e-Commerce technology and services to grow sales. Through our experience and our review of successful models of other major sports retailers, we determined that more than 80% of the business revenue should be generated by online, print-on-demand or direct-to-consumer sales.

We are also currently executing a plan to right size the organization and move forward efficiently and effectively. In conjunction with this analysis, we have evaluated areas and processes such as printing, production and fulfillment to reduce inefficiencies and further reduce overhead, along with expanding capacities. This review and integration will take place over a measured period as to not disrupt current operations and production. We have identified several viable options to outsource printing and grow the business by including individuals and companies currently working within the industry.

We believe the inclusion of a sports channel is complementary to our existing business and allows us to piggy back the photo assets of Globe Photos onto Photo File’s existing clients and retail opportunities. We plan to leverage the long-term distributor relationships Photo File has developed over the last 30 years to increase the sales of our existing Globe Photos library.

Results of Operations

Revenues

Our total revenue reported for the three months ended June 30, 2019 was $1,607,269, compared with $204,432 for the three months ended June 30, 2018. Our total revenue reported for the six months ended June 30, 2019 was $3,084,721, compared with $754,253 for the six months ended June 30, 2018.

The total increase in revenue is primarily a result the increase in merchandise sales associated with our acquisition of the assets of Photo File, Inc. (“Photo File”).

We have instituted direct-to-consumer marketing and implemented programs with third-party re-sellers, brick and mortars and online retailers. We have also continued to enhance and market our licensing division, Globe Photos LLC. Additionally, we have invested considerable time and expense in the development of software designed to more efficiently process digitized images, and push them through to our retail and licensing channels, to help scale each division significantly.

Cost of Revenues

Our cost of revenues consists primarily of royalties, depreciation, and amortization expense. For the three months ended June 30, 2019, cost of revenues increased to $1,733,041, compared with $190,329 for the three months ended June 30, 2018. For the six months ended June 30, 2019, cost of revenues increased to $3,160,526, compared with $486,472 for the six months ended June 30, 2018. The change is primarily a result additional royalty and production cost associated with our acquisition of the assets of Photo File.

Operating Expenses

Operating expenses increased to $2,488,538 for the three months ended June 30, 2019 from $328,105 for the three months ended June 30, 2019. Operating expenses increased to $4,557,062 for the six months ended June 30, 2019 from $496,798 for the six months ended June 30, 2019.

	For the three months ended				For the six months ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Product development, sales and marketing	$	259,356	$	108,632	$	416,146	$	113,164
General and administrative		2,203,524		208,252		4,106,732		365,699
Depreciation and amortization		25,658		11,221		34,184		17,935

Total operating expenses	$	2,488,538	$	328,105	$	4,557,062	$	496,798

The main reason for the overall increase in operating expenses for the quarter ended June 30, 2019 was an increase in general and administrative expenses associated with the purchase of the Photo File assets.

Product development, sales and marketing expenses increased by $150,274 and $302,982 for the three and six months ended June 30, 2019, respectively as a result of the purchase of the Photo file assets. Product development, sales and marketing expenses primarily consists of website development costs, sales- and marketing-related salaries, as well as other expenses associated with marketing. We continue to utilize our working capital resources in sales and marketing in order to increase the distribution and demand for our products and to add content to our product lines along with adding additional channels of distribution.

General and administrative costs increased by $1,995,272 and $3,741,033 for the three and six months ended June 30, 2019, respectively, primarily associated with an increase in stock-based compensation and additional insurance and salary expenses associated with the acquisition of Photo File.

Total depreciation expense increased by $14,437 and $16,249 for the three and six months ended June 30, 2019. The increase is the result of additional assets being depreciated during the current compared to the previous three and six month periods ended June 30, 2018.

Other Expenses/Other Income

We had other expenses of $857,519 and $2,522,115 for the three and six months ended June 30, 2019, respectively, as compared to $349,227 and $363,206 for the same period ended 2018. The increase in other expenses is a result increased interest expense and the amortization of debt discount and financing fees associated our debt offering.

Net Loss

We finished the three and six months ended June 30, 2019 with a net loss of $3,471,829 and $7,154,982, respectively as compared to net losses of $663,229 and $592,223 during the same three and six month periods ended 2018. The increases in net loss from the prior year are primarily a result of the increased interest expense and stock-based compensation expenses incurred during 2019.

Liquidity and Capital Resources

As of June 30, 2019, we had total current assets of $753,324 and current liabilities of $11,770,334, resulting in a working capital deficit of $11,017,010. This compares with the working capital deficit of $ 8,020,085 at December 31, 2018. This increase in working capital deficit, as discussed in more detail below, is primarily the result of increased current debt resulting from our convertible note offering.

Our operating activities used $1,683,311 during the six months ended June 30, 2019 as compared with $199,436 used in operating activities in the six months ended June 30, 2018. Our negative operating cash flow in 2019 was largely the result of our net loss for the period.

Investing activities used $629,070 in the six months ended June 30, 2019 compared with $12,922 in the six months ended June 30, 2018. Our negative investing cash flow in 2019 is largely the result of the purchase of image archives and internal use software and payment for the Photo file assets.

Financing activities provided $2,280,956 in the six months ended June 30, 2019 compared with $236,378 provided in the six months ended June 30, 2018. Our positive financing cash flow in 2019 was largely the result of our offering and sale of convertible notes and net proceeds from the sale of common stock,

There is no guarantee we will generate sufficient revenues to continue operations. Our management estimates we will need approximately $10,000,000 in annual revenues to continue operations at our current operating level, without consideration given to investment in new sales and marketing channels. For the immediate future we plan to achieve this revenue target by ramping up fees earned from licensing imagery to media companies growing a network of global sales agents. There is no guarantee that we will generate sufficient revenues to continue operations. We expect to continue incurring significant operating losses for the near future. If we are not successful in achieving revenues required to continue operations at our current operating levels within three to four months, or obtaining additional financing, our operations will be significantly negatively impacted, and we will need to significantly scale back our operations or liquidate all or a portion of our collections.

We believe that our principal difficulty in our ability to successfully generate profits has been the lack of available capital to operate and expand our business. We believe we need a minimum of approximately $6,000,000 in additional working capital to be utilized for key archive acquisitions, inventory management software, technology development, additional staffing and working capital. As of the date of this report, we have no commitment from any investor or investment-banking firm to provide us with the necessary funding and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits in the future.

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the six month period ended June 30, 2019.

Critical Accounting Polices

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are disclosed in Note 2 of our audited consolidated financial statements included in the Form 10-K filed with the Securities and Exchange Commission.

Off Balance Sheet Arrangements

As of June 30, 2019, there were no off balance sheet arrangements.

Recent Accounting Pronouncements

The recent accounting pronouncements that are material to our financial statements are disclosed in Note 2 of our consolidated audited financial statements included in the Form 10-K filed with the Securities and Exchange Commission and in Note 2 of our unaudited consolidated financial statements included herein.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer (CEO) and the Interim Chief Financial Officer (CFO), with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of June 30, 2019 and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the first quarter of fiscal 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2018, we began implementing a remediation plan to address the material weaknesses mentioned above. The weaknesses will not be considered remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of 2019.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any material pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

ITEM 1A: RISK FACTORS

A description of the risk factors associated with our business is included in the Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission on April 16, 2019, as updated by our subsequent filings under the Exchange Act. There have been no material changes to such risk factors as previously reported. In evaluating our business, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K, as updated by our subsequent filings under the Exchange Act. The occurrence of any of the risks discussed in such filings, or other events that we do not currently anticipate or that we currently deem immaterial, could harm our business, prospects, financial condition and results of operations. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933, as amended.

On June 4, 2019, the Company sold 407,500 shares of common stock for net proceeds of $1,291,285.

On April 22, 2019, the Company issued 5,000 shares of common stock for services with a fair value of $99,600.

On May 23, 2019, the Company issued 2,000 shares of common stock valued at $18,000 for the settlement of $8,000 in accrued liabilities.

On June 24, 2019, we granted, 12,500 options to purchase shares of our common stock with a 5-year term and an exercise price of $7.00 valued at $92,629 for services.

Except as otherwise noted, these securities were issued pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Convertible Note and Warrant Financing

The Note bears interest at a rate of 12% per annum, and is secured by the Company’s assets. The Note matures on October 31, 2019. The principal and accrued interest therein is convertible at the option of the noteholder into the Company’s common stock at $6.00 per share, subject to certain price adjustments as set forth in the Note. The proceeds from the Note are to be used for general working capital purposes.

The Warrant allows the investor to purchase shares of common stock of the Company at $6.00 per share, subject to certain price adjustments as set forth in the Warrant, and shall be exercisable for a period of three (3) years from the anniversary of the grant date of such Warrant. Cashless exercise is available under the terms of the Warrant.

Forms of the Agreement, Note and Warrant are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively.

To date, $260,000 in Notes have been sold under this offering.

Extension of Maturity Date on Prior Secured Convertible Notes and Issuance of Related Warrants

On August 8, 2019, the Board approved the extension of certain existing secured convertible promissory notes (the “Prior Notes”) which had a maturity date of April 30, 2019 to October 31, 2019. In connection with such extension, the Board approved the issuance of warrants to such noteholders as consideration for agreeing to the extension (the “Extension Warrants”).

The form of Extension Warrant is attached hereto as Exhibit 10.4.

Appointment of Shamar Tobias as Interim CFO

On August 8, 2019, the Board appointed Shamar Tobias as the Company’s interim Chief Financial Officer to fill the vacancy left by Mr. Evan Bedell.

Mr. Tobias, age 36, had previously served as the Company’s Chief Financial Officer from November 2018 through April 2019. Mr. Tobias currently serves as the managing partner of Blue Chip Accounting, LLC, a certified public accounting and consulting firm located in Henderson, NV and has done so since 2013. In his role as managing partner, he served as a financial consultant for several companies in the public, private, and governmental sectors. Prior to founding Blue Chip Accounting, Mr. Tobias served as a consulting partner at a PCAOB registered accounting firm also located in Henderson, NV. Mr. Tobias earned a Bachelor of Science in Accounting and a Masters of Accountancy from the University of Nevada - Las Vegas and also holds a Certified Public Accountant designation in the State of Nevada.

Mr. Tobias does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.

There were no arrangements or understandings between Mr. Tobias and any other persons pursuant to which he was selected as interim Chief Financial Officer.

ITEM 6. EXHIBITS

Exhibit Number	Description of Exhibit
10.1*	Form of Note and Warrant Purchase Agreement
10.2*	Form of Secured Convertible Note
10.3*	Form of Warrant
10.4*	Form of Extension Warrant
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 INS	XBRL Instance Document
101 SCH	XBRL Schema Document
101 CAL	XBRL Calculation Linkbase Document
101 LAB	XBRL Labels Linkbase Document
101 PRE	XBRL Presentation Linkbase Document
101 DEF	XBRL Definition Linkbase Document
*	These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GLOBE PHOTOS, INC.

Date: August 13, 2019	By: /s/ Stuart Scheinman Stuart Scheinman Title: Chief Executive Officer (Principal Executive Officer)

Date: August 13, 2019

	By: /s/Shamar Tobias Shamar Tobias Title: Interim Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.1

GLOBE PHOTOS, INC.

NOTE AND WARRANT PURCHASE AGREEMENT

This Note and Warrant Purchase Agreement (this “ Agreement ”), dated as of _______________, 2019, is entered into by and among Globe Photos, Inc., a Delaware corporation (the “ Company ”), and the persons and entities listed on the schedule of investors attached hereto as Schedule I (each an “ Investor ” and, collectively, the “ Investors ”).

RECITALS

A. On the terms and subject to the conditions set forth herein, each Investor is willing to purchase from the Company, and the Company is willing to sell to such Investor, a promissory note in the principal amount set forth opposite such Investor’s name on Schedule I hereto and a warrant to purchase common stock equivalent to twenty-five percent of the principal amount of the promissory note purchased by such Investor.

B. Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Note (as defined below) attached hereto as Exhibit A .

AGREEMENT

NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Issuance of Notes and Warrants.

(a) Issuance of Notes . At the Closing (as defined below), the Company agrees to issue and sell to each of the Investors, and, subject to all of the terms and conditions hereof, each of the Investors severally agrees to purchase a secured convertible promissory note in the form of Exhibit A hereto (each, a “ Note ” and, collectively, the “ Notes ”) in the principal amount set forth opposite the respective Investor’s name on Schedule I hereto. The obligations of the Investors to purchase Notes are several and not joint.

(b) Issuance of Warrants . Subject to the terms and conditions of this Agreement, at the Closing (as defined below), the Company shall issue and deliver to each Investor participating in the Closing, a common stock purchase warrant (each such warrant, a “ Warrant ” and collectively, the “ Warrants ”, and together with the Notes and the shares of stock issuable upon exercise of the Warrants, the “ Securities ”) providing each Investor the right to purchase that number of shares of the Company’s common stock equal to twenty-five percent (25%) of said Investor’s Note as “warrant coverage.” The Warrants shall each be in substantially the form of Exhibit B attached hereto.

(c) Bonus Perks . As an additional bonus “perk”, each Investor that purchases a Note of $75,000 or more in connection with this Agreement shall receive an authenticated original picture of Marilyn Monroe from her official photographer. The original picture has the provenance of notes from the photographer and original stamps on the back of the photos. These photos come from the archives of the Company.

(d) Delivery . The sale and purchase of the Securities shall take place at a closing (the “ Closing ”) to be held at such place and time as the Company and the Investors may determine (the “ Closing Date ”). At the Closing, the Company will deliver to each of the Investors the respective Note and Warrant to be purchased by such Investor, against receipt by the Company of the corresponding purchase price set forth on Schedule I hereto (the “ Purchase Price ”). Each of the Notes and Warrants will be registered in such Investor’s name in the Company’s records.

(e) Use of Proceeds . The proceeds of the sale and issuance of the Securities shall be used for general corporate purposes.

(f) Payments . The Company will make all cash payments due under the Notes in immediately available funds by 11:00 a.m. Pacific time on the date such payment is due in the manner and at the address for such purpose specified below each Investor’s name on Schedule I hereto, or at such other address as a Investor or other registered holder of a Note may from time to time direct in writing.

2. Representations and Warranties of the Company . The Company represents and warrants to each Investor that:

(a) Due Incorporation, Qualification, etc . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect.

(b) Authority . The execution, delivery and performance by the Company of each Transaction Document to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

(c) Enforceability . Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(d) Non-Contravention . The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s Certificate of Incorporation or Bylaws ) (“ Charter Documents ”) or any judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien upon any property, asset or revenue of the Company or in the suspension, revocation, impairment, forfeiture, or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

(e) Approvals . No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby.

(f) No Violation or Default . The Company is not in violation of or in default with respect to (i) its Charter Documents or any judgment, order, writ, or decree, or any material statute, rule or regulation applicable to such Person; or (ii) any mortgage or indenture, or any material agreement, instrument or contract to which such Person is a party or by which it is bound (nor is there any waiver in effect which, if not in effect, would result in such a violation or default).

(g) Litigation . No actions (including, without limitation, derivative actions), suits, proceedings or investigations are pending or, to the knowledge of the Company, threatened against the Company at law or in equity in any court or before any other governmental authority.

(h) Title . The Company owns and has good and marketable title in fee simple absolute to, or a valid leasehold interest in, all its real properties and good title to its other assets and properties. Such assets and properties are subject to no Lien other than any Lien arising or permitted under the Transaction Documents.

(i) Intellectual Property . To its knowledge, the Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business as now conducted and as proposed to be conducted without any conflict with, or infringement of the rights of, others. Such intellectual property rights are subject to no Lien other than any Lien arising or permitted under the Transaction Documents.

3. Representations and Warranties of Investors . Each Investor, for that Investor alone, represents and warrants to the Company upon the acquisition of the Securities as follows:

(a) Binding Obligation . Such Investor has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Each of this Agreement, the Note and the Warrant issued to such Investor is a valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(b) Securities Law Compliance . Such Investor has been advised that the Securities have not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Such Investor is aware that, the Company is under no obligation to effect any such registration with respect to the Securities or to file for or comply with any exemption from registration. Such Investor has not been formed solely for the purpose of making this investment and is purchasing the Securities to be acquired by such Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. Such Investor has such knowledge and experience in financial and business matters that such Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time. Such Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act, and explained in Schedule II hereto.

(c) Access to Information . Such Investor acknowledges that the Company has given such Investor access to the corporate records and accounts of the Company and to all information in its possession relating to the Company, has made its officers and representatives available for interview by such Investor, and has furnished such Investor with all documents and other information required for such Investor to make an informed decision with respect to the purchase of the Securities.

4. Conditions to Closing of the Investors . Each Investor’s obligations at the Closing are subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by all of the Investors:

(a) Representations and Warranties . The representations and warranties made by the Company in Section 2 hereof shall have been true and correct when made, and shall be true and correct on the Closing Date.

(b) Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Securities.

(c) Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Securities shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.

(d) Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Investors.

(e) Transaction Documents . The Company shall have duly executed and delivered to the Investors this Agreement and each Note issued hereunder.

(f) Corporate Documents . The Company shall have delivered to the Investors each of the following: a Certificate of Incorporation of the Company, certified as of a recent date prior to the Closing Date by the Secretary of State of Delaware.

5. Conditions to Obligations of the Company . The Company’s obligation to issue and sell the Securities at the Closing is subject to the fulfillment, on or prior to the Closing Date, of the following conditions, any of which may be waived in whole or in part by the Company:

(a) Representations and Warranties . The representations and warranties made by the Investors in Section 3 hereof shall be true and correct when made, and shall be true and correct on the Closing Date.

(d) Purchase Price . Each Investor shall have delivered to the Company the Purchase Price in respect of the Note being purchased by such Investor referenced in Section 1(b) hereof.

6. Miscellaneous .

(a) Registration Rights . Whenever the Company proposes to register any of its securities under the Securities Act of 1933, as amended (other than pursuant to a registration primarily for sales of securities to employees of the Company under Form S-8), the Company will give prompt written notice to the Investors of its intention to effect such a registration and will include in such registration all the shares held by Investors (a "Piggyback Registration") with respect to which the Company has received written requests for inclusion therein within five (5) business days after the receipt of the Company's notice.

(b) Lock-Up . Each Investor hereby agrees that, if they elect to exercise their Piggyback Registration Rights set forth in Section 6(a) above, they will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s registered offering and ending on the date specified by the Company and the managing underwriter (such period not to exceed ninety (90) days) (the “Lock-Up Period), directly or indirectly, (1) offer, sell, assign, transfer, pledge, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option for sale (including any short sale), right or warrant to purchase, lend, establish an open “put equivalent position” (within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise dispose of, or enter into any transaction which is designed to or could be expected to result in the disposition of, any shares of common stock or securities convertible into or exercisable or exchangeable for any equity securities of the Company (including, without limitation, shares of common stock or any such securities which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated by the Securities and Exchange Commission from time to time (such shares or securities, the “Beneficially Owned Shares”)), or publicly announce any intention to do any of the foregoing, (2) enter into any swap, hedge or other agreement or arrangement that transfers in whole or in part, the economic risk of ownership of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for any equity securities of the Company, or (3) engage in any short selling of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for any equity securities of the Company, whether any such transaction described in clause (1), (2) or (3) above is to be settled by delivery of shares of Common Stock or such other securities, in cash or otherwise. The underwriters in connection with the registration are intended third party beneficiaries of this Section 6 (b) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Investor further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with the registration that are consistent with this Section 6(b) or that are necessary to give further effect thereto.

(c) Waivers and Amendments . Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and Investors holding a Majority in Interest of the Notes.

(d) Governing Law . This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of law provisions of the State of Nevada or of any other state.

(e) Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

(f) Successors and Assigns . Subject to the restrictions on transfer described in Sections 6(g) and 7(h) below, the rights and obligations of the Company and the Investors shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

(g) Registration, Transfer and Replacement of the Securities . The Securities issuable under this Agreement shall be registered on the books and records of the Company. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Securities. Prior to presentation of any Note for registration of transfer, the Company shall treat the Person in whose name such Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in any Note, the holder of any Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s chief executive office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor one or more new Note(s), each in the principal requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such Person or Persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of such Note.

(h) Assignment by the Company . The rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Investors holding a Majority in Interest of the Notes.

(i) Entire Agreement . This Agreement together with the other Transaction Documents constitute and contain the entire agreement among the Company and Investors and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

(j) Notices . All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall in writing and faxed, mailed or delivered to each party as follows: (i) if to a Investor, at such Investor’s address or facsimile number set forth in the Schedule of Investors attached as Schedule I , or at such other address as such Investor shall have furnished the Company in writing, or (ii) if to the Company, at 6445 South Tenaya Way, B-130, Las Vegas, NV 89113, or at such other address or facsimile number as the Company shall have furnished to the Investors in writing. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class with postage prepaid.

(k) Separability of Agreements; Severability of this Agreement . The Company’s agreement with each of the Investors is a separate agreement and the sale of the Securities to each of the Investors is a separate sale. Unless otherwise expressly provided herein, the rights of each Investor hereunder are several rights, not rights jointly held with any of the other Investors. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, by any Investor whether arising by reason of the law of the respective Investor’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to other Investors. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(l) Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. Facsimile copies of signed signature pages will be deemed binding originals.

The parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

	COMPANY:

	GLOBE PHOTOS, INC.
	a Delaware corporation

	By: _____________________
	Stuart Scheinman, CEO

	INVESTOR:

	By:_____

ÿ By checking this box, Investor represents and warrants to the Company that the Investor is an "Accredited Investor" as such term is defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended (the "Act"). The Investor acknowledges having reviewed and considered the definition of “Accredited Investor” attached to hereto as Schedule II.

SCHEDULE I

Name and Address	Cash	Loan Conversion	Total Note Amount

All payments on account of the No tes shall be made by bank wire transfer of immediately available funds to:

SCHEDULE II

The Investor will be an "Accredited Investor" as such term is defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended (the "Act") if the Investor is any of the following:

1. Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

2. Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

3. Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

4. Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

5. Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000, exclusive of the value of such person’s primary residence;

6. Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

7. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) and

8. Any entity in which all of the equity owners are accredited investors.

Exhibit A

FORM OF NOTE

Exhibit B

FORM OF WARRANT

Exhibit 10.2

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

SECURED CONVERTIBLE PROMISSORY NOTE

US $______________

Las Vegas, Nevada

_______, _________, 2019

For good and valuable consideration, Globe Photos, Inc. , a Delaware corporation, (“ Maker ”), hereby makes and delivers this Promissory Note (this “ Note ”) in favor of ____________ or its assigns (“ Holder ”), and hereby agrees as follows:

1. Principal Obligation and Interest . For value received , Maker promises to pay to Holder at such place as Holder may designate in writing, in currently available funds of the United States, the principal sum of ___________________ Dollars ($ ) . Maker’s obligation under this Note shall accrue interest at the rate of twelve percent (12%) per annum from the date hereof until paid in full. Interest shall be computed on the basis of a 365-day year or 366-day year, as applicable and actual days lapsed.

Payment Terms .

Maker agrees to remit payment in full of all principal and interest due hereunder to Holder on or before October 31, 2019 (“ Maturity ”).

Accrued interest on this Note shall be payable at Maturity to the Holder.

Maker shall have the right to prepay this Note at any time by paying all of the principal and accrued interest owing under the Note at the time of prepayment upon provide the Holder ten (10) days advanced written notice, during which time, the Holder may exercise its conversion rights hereunder.

All payments shall be applied first to late charges, then to interest, then to principal and shall be credited to the Maker's account on the date that such payment is physically received by the Holder.

Conversion.

a. Voluntary Conversion . Holder may, at its sole option, convert all or any portion of the accrued interest and unpaid principal balance of this Note into fully paid and non- assessable shares of common stock of the Maker at the conversion price of $6.00 per share, subject to adjustment as described herein (the “ Conversion Price ”). The number of shares of common stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion given by Holder (the “ Notice of Conversion ”), delivered to the Maker by the Holder on such conversion date (the “ Conversion Date ”). The term “ Conversion Amount ” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date.

b. Penalty Conversion . In the event that the Company has not consummated an uplist to a national stock exchange as of the Maturity, the Conversion Price shall automatically be adjusted to $2.00 per share.

4. Security Interest .

a. Grant . As collateral security for the prompt, complete, and timely satisfaction of all present and future indebtedness, liabilities, duties, and obligations of Maker to Holder evidenced by or arising under this Note, and including, without limitation, all principal and interest payable under this Note, any future advances added to the principal amount due hereunder (collectively, the “ Obligations ”), the Maker hereby pledges, assigns and grants to Investor a continuing security interest and lien in all of the Maker’s right, title and interest in and to the property, whether now owned or hereafter acquired by Maker and whether now existing or hereafter coming into existence or acquired, including the proceeds of any disposition thereof, described on Exhibit “A” attached hereto and incorporated herein by this reference (collectively, the “ Collateral ”) on a pari passu basis with existing secured convertible promissory notes. As applicable, the terms of this Note with respect to the Maker’s granting of a security interest in the Collateral to Investor shall be deemed to be a security agreement under applicable provisions of the Uniform Commercial Code (“ UCC ”), with Maker as the debtor and Holder as the secured party.

b. Perfection . Upon the execution and delivery of this Note, Maker authorizes Holder to file such financing statements and other documents in such offices as shall be necessary or as Holder may reasonably deem necessary to perfect and establish the priority of the liens granted by this Note, including any amendments, modifications, extensions or renewals thereof. Maker agrees, upon Holder’s request, to take all such actions as shall be necessary or as Investor may reasonably request to perfect and establish the priority of the liens granted by this Note, including any amendments, modifications, extensions or renewals thereof.

5. Representations and Warranties of Maker . Maker hereby represents and warrants the following to Holder:

a. Maker and those executing this Note on its behalf have the full right, power, and authority to execute, deliver and perform the obligations under this Note, which are not prohibited or restricted under the articles of incorporation or bylaws of Maker. This Note has been duly executed and delivered by an authorized officer of Maker and constitutes a valid and legally binding obligation of Maker enforceable in accordance with its terms.

b. The execution of this Note and Maker’s compliance with the terms, conditions and provisions hereof does not conflict with or violate any provision of any agreement, contract, lease, deed of trust, indenture, or instrument to which Maker is a party or by which Maker is bound, or constitute a default thereunder or result in the imposition of any lien, charge, encumbrance, claim or security interest of any nature whatsoever.

6. Defaults . The following shall be events of default under this Note:

a. Maker’s failure to remit any payment under this Note on or before the date due, if such failure is not cured in full within ten (10) days of written notice of default;

b. If Maker is dissolved, whether pursuant to any applicable articles of incorporation or bylaws, and/or any applicable laws, or otherwise;

c. The entry of a decree or order by a court having jurisdiction in the premises adjudging the Maker bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Maker under the federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee or trustee of the Maker, or any substantial part if its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of twenty (20) days; or

d. Maker’s institution of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or its filing of a petition or answer or consent seeking reorganization or relief under the federal Bankruptcy Code or any other applicable federal or state law, or its consent to the filing of any such petition or to the appointment of a receiver, liquidator, assignee or trustee of the company, or of any substantial part of its property, or its making of an assignment for the benefit of creditors or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Maker in furtherance of any such action.

7. Rights and Remedies of Holder . Upon the occurrence of an event of default by Maker under this Note or at any time before default when the Holder reasonably feels insecure, then, in addition to all other rights and remedies at law or in equity, Holder may exercise any one or more of the following rights and remedies:

a. Accelerate the time for payment of all amounts payable under this Note by written notice thereof to Maker, whereupon all such amounts shall be immediately due and payable.

b. Pursue any other rights or remedies available to Holder at law or in equity.

8. Interest To Accrue Upon Default . Upon the occurrence of an event of default by Maker under this Note, the balance then owing under the terms of this Note shall accrue interest at the rate of fifteen percent (15%) per annum, from the date of default until Holder is satisfied in full.

9. Representation of Counsel . Maker acknowledges that it has consulted with or have had the opportunity to consult with Maker’s legal counsel prior to executing this Note. This Note has been freely negotiated by Maker and Holder and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Note.

10. Choice of Laws; Actions . This Note shall be constructed and construed in accordance with the internal substantive laws of the State of Nevada, without regard to the choice of law principles of said State. Maker acknowledges that this Note has been negotiated in Clark County, Nevada. Accordingly, the exclusive venue of any action, suit, counterclaim or cross claim arising under, out of, or in connection with this Note shall be the state or federal courts in Clark County, Nevada. Maker hereby consents to the personal jurisdiction of any court of competent subject matter jurisdiction sitting in Clark County, Nevada.

11. Usury Savings Clause. Maker expressly agrees and acknowledges that Maker and Holder intend and agree that this Note shall not be subject to the usury laws of any state other than the State of Nevada. Notwithstanding anything contained in this Note to the contrary, if collection from Maker of interest at the rate set forth herein would be contrary to applicable laws of such State, then the applicable interest rate upon default shall be the highest interest rate that may be collected from Maker under applicable laws at such time.

12. Costs of Collection . Should the indebtedness represented by this Note, or any part hereof, be collected at law, in equity, or in any bankruptcy, receivership or other court proceeding, or this Note be placed in the hands of any attorney for collection after default, Maker agrees to pay, in addition to the principal and interest due hereon, all reasonable attorneys’ fees, plus all other costs and expenses of collection and enforcement, including any fees incurred in connection with such proceedings or collection of the Note and/or enforcement of Holder’s rights.

13. Miscellaneous .

a. This Note shall be binding upon Maker and shall inure to the benefit of Holder and its successors, assigns, heirs, and legal representatives.

b. Any failure or delay by Holder to insist upon the strict performance of any term, condition, covenant or agreement of this Note, or to exercise any right, power or remedy hereunder shall not constitute a waiver of any such term, condition, covenant, agreement, right, power or remedy.

c. Any provision of this Note that is unenforceable shall be severed from this Note to the extent reasonably possible without invalidating or affecting the intent, validity or enforceability of any other provision of this Note.

d. This Note may not be modified or amended in any respect as provided in that certain Note and Warrant Purchase Agreement executed concurrently herewith.

e. Time is of the essence.

14. Notices . All notices required to be given under this Note shall be given at such address as a party may designate by written notice to the other party.

Notices may be transmitted by facsimile, certified mail, private delivery, or any other commercially reasonable means, and shall be deemed given upon receipt by the Party to whom they are addressed.

15. Waiver of Certain Formalities . All parties to this Note hereby waive presentment, dishonor, notice of dishonor and protest. All parties hereto consent to, and Holder is hereby expressly authorized to make, without notice, any and all renewals, extensions, modifications or waivers of the time for or the terms of payment of any sum or sums due hereunder, or under any documents or instruments relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof or the taking. Any such action taken by Holder shall not discharge the liability of any party to this Note.

IN WITNESS WHEREOF, this Note has been executed effective the date and place first written

above.

“Maker”: Globe Photos, Inc.

By: ________________________________

Its: ________________________________

Print Name: _________________________

Date: ______________________________

Exhibit “A”

Collateral

Each and all of the following in which Globe Photos, Inc., a Delaware Corporation, has any right, title, or interest, regardless of the manner in which such items are formally held or titled; all as defined in the Nevada Uniform Commercial Code - Secured Transactions (Nevada Revised Statutes (“NRS”) §§ 104.9101 et. seq.) as of the date of the Note, and as the same may be amended hereafter:

Inventory, as defined in NRS 104.9102(1)(uu)

Exhibit 10.3

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.

		Las Vegas, Nevada
Date of Issuance: ____ __, 2019		Void after: ____ __, 2022

WARRANT TO PURCHASE COMMON STOCK

GLOBE PHOTOS, INC.

This Warrant to Purchase Common Stock of Globe Photos, Inc. (this “ Warrant ”), is issued to [_______] (and, together with its permitted successors and assigns, the “ Holder ”) by Globe Photos, Inc., a Delaware corporation (the “ Company ”). This Warrant is issued as part of a series of similar warrants (the “ Warrants ”) to certain persons and entities (the “ Holders ”).

1. Purchase of Shares .

(a) Number of Shares . Subject to the terms and conditions set forth herein, as further consideration for the extension for investment in the Company pursuant to that certain Convertible Promissory Note, by and between the Holder and Company issued as part of a series of similar notes to the Holders (the “ Note ”) concurrently herewith, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the Holder in writing), to purchase from the Company [______] fully paid and nonassessable shares of the Company’s Common Stock (the “ Common Stock ”), which represents an amount equivalent to twenty five percent (25%) of the convertible number of shares of Common Stock the Holder is entitled pursuant to the Note as of the date hereof.

(b) Exercise Price . The exercise price for the shares of Common Stock issuable pursuant to Section 1(a) of this Warrant (the “ Warrant Shares ”) shall be $6.00 per share (the “ Exercise Price ”). The Warrant Shares and the Exercise Price shall be subject to adjustment pursuant to Section 8 hereof.

2. Exercise Period . This Warrant shall be exercisable beginning on the date of this Warrant and ending at 5:00 p.m. Pacific time on the three (3) year anniversary of the date hereof (the “ Exercise Period ”); provided, however , that this Warrant shall no longer be exercisable and become null and void upon the consummation of a Change of Control. In the event of a Change of Control, the Company shall notify the Holder at least ten (10) days prior to the consummation of such Change of Control. For the purposes hereof, a “ Change of Control ” shall mean (i) the direct or indirect sale or transfer, in a single transaction or a series of related transactions, by the stockholders of the Company of voting securities, in which the holders of the outstanding voting securities of the Company immediately prior to such transaction or series of transactions hold, as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such transaction or series of related transactions; (ii) a merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation; (iii) a reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or (iv) the sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s). Notwithstanding the foregoing or anything herein contained to the contrary, the following shall not be deemed to constitute a Change in Control: (A) a merger effected exclusively for the purpose of changing the domicile of the Company; or (B) a transaction or series of related transactions in which the stockholders of the Company immediately following such transaction or series of related transactions own 50% or less of the voting power of the Company if such transactions were undertaken wholly or primarily for capital raising purposes.

3. Method of Exercise .

(a) While this Warrant remains outstanding and exercisable in accordance with Section 2 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby. Such exercise shall be effected by:

(i) the surrender of the Warrant, together with a duly executed copy of the Notice of Exercise attached hereto, to the Secretary of the Company at its principal office (or at such other place as the Company shall notify the Holder in writing); and

(ii) the payment in cash to the Company of an amount equal to the aggregate Exercise Price for the number of Warrant Shares being purchased.

(b) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant is surrendered to the Company as provided in Section 3(a) above. At such time, the person or persons in whose name or names any certificate for the Warrant Shares shall be issuable upon such exercise as provided in Section 3(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificate.

(c) As soon as practicable after the exercise of this Warrant in whole or in part, the Company at its expense will cause to be issued in the name of, and delivered to, the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct:

(i) a certificate or certificates for the number of Warrant Shares to which such Holder shall be entitled, and

(ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal to the number of such Warrant Shares described in this Warrant minus the number of such Warrant Shares purchased by the Holder upon all exercises made in accordance with Section 3(a) above or Section 4 below.

4. Net Exercise . In lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with notice of such election (a “Net Exercise”). A Holder who Net Exercises shall have the rights described in Sections 3(b) and 3(c) hereof, and the Company shall issue to such Holder a number of Shares computed using the following formula:

Where

X =

The number of Shares to be issued to the Holder.

Y =

The number of Shares purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being cancelled (at the date of such calculation).

A =

The fair market value of one (1) Share (at the date of such calculation).

B =

The Exercise Price (as adjusted to the date of such calculation).

For purposes of this Section 4, the fair market value of a Share shall mean the average of the closing prices of the Shares (or equivalent shares of Common Stock underlying this Warrant) quoted in the over-the-counter market in which the Shares (or equivalent shares of Common Stock underlying the Warrant) are traded or the closing price quoted on any exchange or electronic securities market on which the Shares (or equivalent shares of Common Stock underlying the Warrant) are listed, whichever is applicable, as published in The Wall Street Journal for the thirty (30) trading days prior to the date of determination of fair market value (or such shorter period of time during which such Shares were traded over-the-counter or on such exchange). In the event that this Warrant is exercised pursuant to this Section 4 in connection with the consummation of the Company’s sale of its Common Stock or other securities pursuant to a registration statement under the Act (other than a registration statement relating either to sale of securities to employees of the Company pursuant to its stock option, stock purchase or similar plan or a SEC Rule 145 transaction) (the “ Public Offering ”), the fair market value per Share shall be the product of (a) the per share offering price to the public of the Public Offering, and (b) the number of shares of Common Stock into which each Share is convertible at the time of such exercise. If the Shares are not traded on the over-the-counter market, an exchange or an electronic securities market, the fair market value shall be the price per Share that the Company could obtain from a willing buyer for Shares sold by the Company from authorized but unissued Shares, as such prices shall be determined in good faith by the Company’s Board of Directors.

5. Warranties and Covenants of the Company.

(a) In connection with the transactions provided for herein, the Company hereby represents and warrants to the Holder that the Warrant Shares, when issued, sold, and delivered in accordance with the terms of the Warrants for the consideration expressed therein, will be (i) duly and validly issued, fully paid and nonassessable, (ii) free from all taxes, liens and charges with respect to the issuance thereof, and (iii) based in part upon the representations and warranties of the Holders in this Warrant, will be issued in compliance with all applicable federal and state securities laws.

(b) The Company covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of the Company’s Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

(c) In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Company shall mail to the Holder, at least 10 days prior to the date of such record, a notice specifying the date on which such record is to be taken for the purpose of such dividend or distribution.

6. Representations and Warranties of the Holder . In connection with the transactions provided for herein, the Holder hereby represents and warrants to the Company that:

(a) Authorization . Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(b) Purchase Entirely for Own Account . The Holder acknowledges that this Warrant is entered into by the Holder in reliance upon such Holder’s representation to the Company that the Warrant and the Warrant Shares (collectively, the “ Securities ”) will be acquired for investment for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Holder has no present intention of selling, granting any participation in or otherwise distributing the same. By acknowledging this Warrant, the Holder further represents that the Holder does not have any contract, undertaking, agreement, or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Securities.

(c) Disclosure of Information . The Holder acknowledges that it has received all the information it considers necessary or appropriate for deciding whether to acquire the Securities. The Holder further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities.

(d) Investment Experience . The Holder acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Holder also represents it has not been organized solely for the purpose of acquiring the Securities.

(e) Accredited Investor . The Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D, as presently in effect, as promulgated by the Securities and Exchange Commission (the “ SEC ”) under the Act.

(f) Restricted Securities . The Holder understands that the Securities are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Act, only in certain limited circumstances. In this connection, each Holder represents that it is familiar with Rule 144, as presently in effect, as promulgated by the SEC under the Act (“ Rule 144 ”), and understands the resale limitations imposed thereby and by the Act.

(g) Further Limitations on Disposition . Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of the Shares unless and until the transferee has agreed in writing for the benefit of the Company to be bound by the terms of this Warrant, including, without limitation, this Section 6, Section 19, and:

(i) there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(ii) the Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in extraordinary circumstances.

(h) Legends . It is understood that the Securities may bear the following legend, or substantially similar legends:

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.”

7. Intentionally Omitted .

8. Adjustment of Exercise Price and Number of Shares . The number and kind of Warrant Shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

(a) Subdivisions, Combinations and Other Issuances . If the Company shall at any time after the issuance but prior to the expiration of this Warrant subdivide its Common Stock, by split-up or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock or Common Stock as a dividend with respect to any shares of its Common Stock, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price payable per share, but the aggregate Exercise Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 8(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

(b) Reclassification, Reorganization and Consolidation . In case of any reclassification, capital reorganization or change in the capital stock of the Company (other than as a result of a subdivision, combination or stock dividend provided for in Section 8(a) above), then, as a condition of such reclassification, reorganization or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities or property receivable in connection with such reclassification, reorganization or change by a holder of the same number and type of securities as were purchasable as Warrant Shares by the Holder immediately prior to such reclassification, reorganization or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities or property deliverable upon exercise hereof, and appropriate adjustments shall be made to the Exercise Price per Share payable hereunder, provided the aggregate Exercise Price shall remain the same.

(c) Notice of Adjustment . When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the Holder of such event and of the number of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

(d) Conversion of Common Stock . In the event that all outstanding shares of Common Stock are converted to any other security, this Warrant shall become exercisable for such other security.

9. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall round up to the nearest whole share.

10. No Stockholder Rights . Prior to exercise of this Warrant, the Holder shall not be entitled to any rights of a stockholder with respect to the Warrant Shares, including (without limitation) the right to vote such Warrant Shares, receive dividends or other distributions thereon, exercise preemptive rights or be notified of stockholder meetings, and, except as otherwise provided in this Warrant, such Holder shall not be entitled to any stockholder notice or other communication concerning the business or affairs of the Company.

11. Governing Law; Venue . This Warrant shall be governed by and construed under the laws of the State of Nevada as applied to agreements among Nevada residents, made and to be performed entirely within the State of Nevada. The parties agree that any dispute arising in connection with the interpretation or validity of, or otherwise arising out of, this Warrant, will be subject to the exclusive jurisdiction of the Nevada State and Federal Courts in and for Clark County, Nevada. The parties hereby agree to submit to the personal and exclusive jurisdiction and venue of such courts and agree that process may be served in the manner provided herein for the giving of notices or otherwise as allowed by applicable law. Each party hereto waives any defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto.

12. Successors and Assigns . The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the holders hereof and their respective successors and permitted assigns.

13. Titles and Subtitles . The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

14. Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at addresses set forth on the signature pages hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 14).

15. Expenses . If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

16. Entire Agreement; Amendments and Waivers . This Warrant and any other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. Nonetheless, any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the consent of the Holders of at least a majority of the outstanding Warrants (the “ Majority Holders ”).

17. Loss or Mutilation . Upon receipt of evidence reasonably satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu thereof a new Warrant of like tenor as the lost, stolen, destroyed or mutilated Warrant.

18. Severability . If any provision of this Warrant is held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

[ Remainder of page intentionally left blank ]

IN WITNESS WHEREOF, the parties have executed this Warrant as of the date first written above.

	GLOBE PHOTOS, INC.


	By: ____________________________
	Name: Stuart Scheinman
	Title: Chief Executive Officer

	Address: 6445 South Tenaya Way, B-130
	Las Vegas, NV 89113

ACKNOWLEDGED AND AGREED:

[Name of Holder]

By: ________________________

Name: _____________________

Title: ______________________

NOTICE OF EXERCISE

GLOBE PHOTOS, INC.

Attention: Corporate Secretary

The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant, as follows:

_____________ shares of Common Stock pursuant to the terms of the attached Warrant, and tenders herewith payment in cash of the Exercise Price of such Warrant Shares in full, together with all applicable transfer taxes, if any.

Net Exercise the attached Warrant with respect to __________ Shares.

The undersigned hereby represents and warrants that Representations and Warranties in Section 6 hereof are true and correct as of the date hereof.

	HOLDER:

Date:___________________	By: ______________________

	Address: ___________________
	___________________
	___________________

Name in which Warrant Shares should be registered:
_________________ _

Exhibit 10.4

		Las Vegas, Nevada
Date of Issuance: ____ __, 2019		Void after: ____ __, 2022

WARRANT TO PURCHASE COMMON STOCK

GLOBE PHOTOS, INC.

1. Purchase of Shares .

(a) Number of Shares . Subject to the terms and conditions set forth herein, in consideration for the extension of the maturity date under the terms of that certain Convertible Promissory Note, by and between the Holder and Company issued as part of a series of similar notes to the Holders (the “ Note ”), the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the Holder in writing), to purchase from the Company [______] fully paid and nonassessable shares of the Company’s Common Stock (the “ Common Stock ”), which represents an amount equivalent to twenty five percent (25%) of (i) the convertible number of shares of Common Stock the Holder is entitled pursuant to the Note as of the date hereof and (ii) those certain shares of Common Stock held by the Holder which were acquired pursuant to a Regulation S transaction in or about May 2019.

(b) Exercise Price . The exercise price for the shares of Common Stock issuable pursuant to Section 1(a) of this Warrant (the “ Warrant Shares ”) shall be $9.00 per share (the “ Exercise Price ”). The Warrant Shares and the Exercise Price shall be subject to adjustment pursuant to Section 8 hereof.

3. Method of Exercise .

(ii) the payment in cash to the Company of an amount equal to the aggregate Exercise Price for the number of Warrant Shares being purchased.

(i) a certificate or certificates for the number of Warrant Shares to which such Holder shall be entitled, and

4. Intentionally omitted .

5. Warranties and Covenants of the Company.

6. Representations and Warranties of the Holder . In connection with the transactions provided for herein, the Holder hereby represents and warrants to the Company that:

(i) there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(h) Legends . It is understood that the Securities may bear the following legend, or substantially similar legends:

7. Registration Rights . Whenever the Company proposes to register any of its securities under the Securities Act of 1933, as amended (other than pursuant to a registration primarily for sales of securities to employees of the Company under Form S-8 or pursuant to a business combination under Form S-4), the Company will include in such registration all Warrants and Warrant Shares held by the Holders (a " Piggyback Registration ").

(d) Conversion of Common Stock . In the event that all outstanding shares of Common Stock are converted to any other security, this Warrant shall become exercisable for such other security.

13. Titles and Subtitles . The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

19. “Market Stand-Off” Agreement . The Warrant Shares issuable upon exercise of this Warrant is subject to that certain Lock-up Agreement previously executed by Holder. The Holder, or a transferee thereof, shall not, directly or indirectly, sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any capital stock acquired through the exercise of this Warrant without the prior written consent of the Company or its managing underwriter. Such restriction (the “ Market Stand-Off ”) shall be in effect for such period of time set forth in the Lock-up Agreement. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section 19.

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IN WITNESS WHEREOF, the parties have executed this Warrant as of the date first written above.

	GLOBE PHOTOS, INC.


	By: ___________________
	Name: Stuart Scheinman
	Title: Chief Executive Officer

	Address: 6445 South Tenaya Way, B-130
	Las Vegas, NV 89113

ACKNOWLEDGED AND AGREED:

[Name of Holder]

By: _________________________

Name: ______________________

Title: ______________________

NOTICE OF EXERCISE

GLOBE PHOTOS, INC.

Attention: Corporate Secretary

The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant, as follows:

The undersigned hereby represents and warrants that Representations and Warranties in Section 6 hereof are true and correct as of the date hereof.

	HOLDER:

Date:___________________	By: ______________________

	Address: ___________________
	___________________
	___________________

Name in which Warrant Shares should be registered:
_________________

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stuart Scheinman, certify that;

I have reviewed this quarterly report on Form 10-Q for the three months ended June 30, 2019 of Globe Photos, Inc. (the “registrant”);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2019

/s/ Stuart Scheinman

By: Stuart Scheinman

Title: Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shamar Tobias, certify that;

I have reviewed this annual report on Form 10-Q for the three months ended June 30, 2019 of Globe Photos, Inc. (the “registrant”);

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2019

/s/ Shamar Tobias

By: Shamar Tobias

Title: Interim Chief Financial Officer

(Interim Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly Report of Globe Photos, Inc. (the “Company”) on Form 10-Q for the three months ended June 30, 2019 filed with the Securities and Exchange Commission (the “Report”), I, Stuart Scheinman, Chief Executive Officer, and I, Shamar Tobias, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

By:	/s/ Stuart Scheinman
Name:	Stuart Scheinman
Title:	Principal Executive Officer
Date:	August 13, 2019

By:	/s/ Shamar Tobias
Name:	Shamar Tobias
Title:	Interim Principal Financial Officer
Date:	August 13, 2019