FEARLESS FILMS, INC. - Quarter Report: 2020 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-31441

FEARLESS FILMS, INC.

(Exact name of registrant as specified in its charter)

Nevada		33-0921357
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

467 Edgeley Blvd., Unit 2, Concord, ON L4K 4E9

(Address of principal executive offices)

(888) 928-0184

(Registrant’s telephone number, including area code)

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X] No []

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.

`Large accelerated filer`[ ]		`Accelerated filer`[ ]
`Non-accelerated filer`[ ]		`Smaller reporting company` ☒
(Do not check if a smaller reporting company)		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 ☐ No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

ClassOutstanding as of November 20, 2020

Common Stock, $0.001 par value 322,944,837

TABLE OF CONTENTS

Heading		Page

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	5

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10

Item 4.	Controls and Procedures	10

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	11

Item 1A.	Risk Factors	11

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11

Item 3.	Defaults Upon Senior Securities	11

Item 4.	Mine Safety Disclosures	12

Item 5.	Other Information	12

Item 6.	Exhibits	12

	Signatures	13

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited balance sheet of Fearless Films, Inc. at September 30,2020, related to the unaudited statements of operations and statements of cash flows for the three and nine months ended September 30, 2020 and 2019, have been prepared by management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto included in the company’s December 31, 2019 financial statements included in the company’s 10-K Annual Report filed with the SEC on May 29, 2020 and amended June 2, 2020. Operating results for the period ended September 30, 2020, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2020, or any other subsequent period.

Consolidated Financial Statements (Unaudited)

Fearless Films, Inc.

For the three and nine months ended September 30, 2020 and 2019

Fearless Films, Inc.

Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019

Table of contents

Consolidated Balance Sheets	2

Consolidated Statements of Operations and Comprehensive Income (Loss)	3

Consolidated Statements of Stockholders’ Deficiency	4

Consolidated Statements of Cash Flows	5

Notes to Consolidated Financial Statements	6-15

Fearless Films, Inc.

CONSOLIDATED BALANCE SHEETS

AS AT SEPTEMBER 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019 (AUDITED)

(Expressed in US dollars)


	As at	As at
	September 30,	December 31,
	2020	2019
	$	$
ASSETS

Cash	10,739	2,779
Prepaid expenses	10,919	1,000
Total current assets	21,658	3,779

Intangible Assets [Note 5]	88,400	-
Total assets	110,058	3,779

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Liabilities
Accounts payable [Note 6]	379,841	417,199
Accrued liabilities	29,426	24,045
Loan payable [Note 7]	366,742	339,248
Convertible note payable - net of debt discount [Note 8]	-	41,555
Total current liabilities	776,009	822,047
Total liabilities	776,009	822,047

Stockholders deficiency
Preferred stock, $0.001 par value, 20,000,000 authorized. 1,000,000 shares issued and outstanding as at September 30, 2020 and December 31, 2019 respectively [Note 9]	1,000	1,000
Common stock, $0.001 par value, 500,000,000 authorized, 322,944,835 and 316,543,317 shares issued and outstanding as at September 30, 2020 and December 31, 2019 respectively [Note 9]	322,945	316,543
Common stock to be issued [Note 9]	717,880	-
Additional paid-in-capital	3,308,039	2,576,812
Accumulated other comprehensive income	291,357	396,853
Accumulated deficit	(5,307,172)	(4,109,476)
Total stockholders deficiency	(665,951)	(818,268)
Total liabilities and stockholders deficiency	110,058	3,779

Going Concern [Note 3]
Subsequent events [Note 12]

See accompanying notes

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Fearless Films, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(Expressed in US dollars)


	Three months	Three months	Nine months	Nine months
	ended	ended	ended	ended
	September 30,	September 30,	September 30,	September 30,
	2020	2019	2020	2019
	$	$	$	$

REVENUE	-	-	-	-

EXPENSES
General and administrative	1,376	9,243	3,500	34,109
Consulting Expenses [Note 11]	200,000	-	800,000	-
Management fees [Note 10]	39,377	39,635	118,506	118,713
Professional fees [Note 11]	574,331	13,441	1,266,605	36,740
Total operating expenses	815,084	62,319	2,188,611	189,562

(Loss) / Gain on settlement of payables [Note 8 & 11]	914,008	-	914,008	-
Interest Expense [Note 7]	(5,021)	(1,940)	(16,695)	(5,330)
Amoritization of debt discount [Note 8]	-	-	(8,445)	-
Exchange (Loss) / Gain	98,768	(1,066)	102,047	(740)
Net (loss) income before income taxes	192,671	(65,325)	(1,197,696)	(195,632)

Income taxes	-	-	-	-
Net (loss) income	192,671	(65,325)	(1,197,696)	(195,632)

Foreign currency translation adjustment	(105,435)	1,142	(105,496)	(900)
Comprehensive (loss) income	87,236	(64,183)	(1,303,192)	(196,532)

(Loss) earnings per share - basic and diluted	0.00	(0.00)	(0.00)	(0.00)

Weighted average number of common shares - basic	318,820,870	316,543,317	317,308,043	316,543,317


See accompanying notes

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Fearless Films, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY (UNAUDITED)

(Expressed in US dollars)


	Preference stock		Common stock		Common stock to be issued		Additional	Accumulated
	Shares	Amount	Shares	Amount	Shares	Amount	paid-in	other	Accumulated	Total
							capital	comprehensive	deficit
								income
		$		$		$	$	$	$	$
As at December 31, 2018	1,000,000	1,000	316,543,317	316,543	-	-	2,566,812	398,489	(3,462,572)	(179,728)

Foreign currency translation	-	-	-	-	-	-	-	(23,310)	-	(23,310)
Net loss for the period	-	-	-	-	-	-	-	-	(32,896)	(32,896)
As at March 31, 2019	1,000,000	1,000	316,543,317	316,543	-	-	2,566,812	375,179	(3,495,468)	(235,934)

Foreign currency translation	-	-	-	-	-	-	-	21,268	-	21,268
Net loss for the period	-	-	-	-	-	-	-	-	(97,411)	(97,411)
As at June 30, 2019	1,000,000	1,000	316,543,317	316,543	-	-	2,566,812	396,447	(3,592,879)	(312,077)

Foreign currency translation	-	-	-	-	-	-	-	1,142	-	1,142
Net loss for the period	-	-	-	-	-	-	-	-	(65,325)	(65,325)
As at September 30, 2019	1,000,000	1,000	316,543,317	316,543	-	-	2,566,812	397,589	(3,658,204)	(376,260)

Foreign currency translation	-	-	-	-	-	-	-	(736)	-	(736)
Debt Discount - BCF on convertible note payable	-	-	-	-	-	-	10,000	-	-	10,000
Net loss for the period	-	-	-	-	-	-	-	-	(451,272)	(451,272)
As at December 31, 2019	1,000,000	1,000	316,543,317	316,543	-	-	2,576,812	396,853	(4,109,476)	(818,268)

Foreign currency translation	-	-	-	-	-	-	-	4,676	-	4,676
Net loss for the period	-	-	-	-	-	-	-	-	(397,730)	(397,730)
As at March 31, 2020	1,000,000	1,000	316,543,317	316,543	-	-	2,576,812	401,529	(4,507,206)	(1,211,322)

Share Subscription for cash	-	-	-	-	3,701,520	555,228	-	-	-	555,228
Foreign currency translation	-	-	-	-	-	-	-	(4,737)	-	(4,737)
Net loss for the period	-	-	-	-	-	-	-	-	(992,637)	(992,637)
As at June 30, 2020	1,000,000	1,000	316,543,317	316,543	3,701,520	555,228	2,576,812	396,792	(5,499,843)	(1,653,468)

Share Subscription for cash	-	-	3,701,518	3,702	1,084,349	162,652	551,527	-	-	717,881
Shares issued for acquisition of intangible assets	-	-	1,700,000	1,700	-	-	86,700	-	-	88,400
Shares issued for repayment of convertible notes	-	-	1,000,000	1,000	-	-	93,000	-	-	94,000
Foreign currency translation	-	-	-	-	-	-	-	(105,435)	-	(105,435)
Net loss for the period	-	-	-	-	-	-	-	-	192,671	192,671
As at September 30, 2020	1,000,000	1,000	322,944,835	322,945	4,785,869	717,880	3,308,039	291,357	(5,307,172)	(665,951)


See accompanying notes

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Fearless Films, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Expressed in US dollars)


	Nine months	Nine months
	ended	ended
	September 30,	September 30,
	2020	2019
	$	$

OPERATING ACTIVITIES
Net (loss) income	(1,197,696)	(195,632)

*Adjustments to reconcile net income (loss) to net cash used in operations:*
Loss/(Gain) on settlement of accounts and loans payables	(914,008)	-
Amortization of debt discount	8,445	-

*Changes in operating assets and liabilities:*
Prepaid expenses	(9,946)	16,688
Accounts payable	918,658	115,257
Accrued liabilities	5,763	(1,403)
Cash used in operating activities	(1,188,784)	(65,090)

FINANCING ACTIVITIES
Issue of Shares for cash	1,273,108	-
Proceeds from Loans Payable	28,001	64,103
Cash provided by financing activities	1,301,109	64,103

Net increase (decrease) in cash during the period	112,325	(987)

Effect of foreign currency translation	(104,365)	(1,589)

Cash at beginning	2,779	3,700
Cash at end	10,739	1,124


*Non Cash Transactions*
Settlement of convertible note through issuance of common shares	50,000	-

*Additional cash flow information*
Interest paid	-	-
Taxes paid	-	-

See accompanying notes

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

1. NATURE OF OPERATIONS

Fearless Films, Inc. (the "Company ") was incorporated in the State of Nevada as MYG Corp. on July 06, 2000. The Company changed its name from time to time and its latest name change was from Paw4mance Pet Products International, Inc. to Fearless Films, Inc. effective from November 19, 2014.

Pursuant to Share Exchange Agreement dated August 5, 2014 and its subsequent amendments effective from that date, the Company acquired 100% of the issued and outstanding shares of a Canadian based entity, Fearless Films Inc. (“Fearless”) in exchange for 1,000,000 Preferred Shares and 30,000,000 Common Shares of the Company. As a result of the Share Exchange, Fearless is now a wholly-owned subsidiary of the Company. This transaction was accounted for as a reverse merger. Consequently, the assets and liabilities and the historical operations reflected in the consolidated financial statements for the periods prior to August 5, 2014 are those of Fearless and are recorded at the historical cost basis. After August 5, 2014, the Company’s consolidated financial statements include the assets and liabilities of both Fearless and the Company and the historical operations of both after that date as one entity. Fearless was incorporated on January 23, 2008 under the laws of the Province of Ontario, Canada. The Company is engaged in providing post production facilities and services and on-site and off-site off-line suites for television series and feature films. Both the Companies did not have any revenue since inception, as these were primarily engaged in the business development activities.

Pursuant to Share Exchange Agreement as explained above, the Company also effected a reverse split of its common stock by 1 share for 1,000 shares.

2. BASIS OF PRESENTATION, MEASUREMENT AND CONSOLIDATION

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in United States dollars (“USD”).

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair statement of the financial position, results of operations and cash flows for the three months ended September 30, 2020 and 2019 have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for any subsequent interim period or for the year ending December 31, 2020.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Fearless. Significant intercompany accounts and transactions have been eliminated. The financial statements should be read in conjunction with the financial statements for the year ended December 31, 2019.

3. GOING CONCERN

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses from operations and as at September 30, 2020 and December 31, 2019, had a working capital deficiency of $754,351 and $818,268, respectively and an accumulated deficit of $5,307,172 and $4,109,476, respectively. Management anticipates the Company will attain profitable status and improve its liquidity through continued business development and additional debt or equity investment in the Company. Management is pursuing various sources of financing.

The Company’s continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance that the necessary debt or equity financing will be available or will be available on terms acceptable to the Company, in which case there may be substantial doubt that the Company will be able to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

3. GOING CONCERN (continued)

normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in the consolidated financial statements. The consolidated financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary should the Company be unable to continue in existence.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash includes cash on hand and balances with banks.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant estimates and assumptions include, fair value of stock options or services offered, deferred income tax assets and related valuation allowance, and accruals. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

Earnings (Loss) Per Share

The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260-10 which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. Series A are convertible into common, and potentially dilutive.

Foreign Currency Translation

The functional currency of the parent Company is United States dollar and the functional currency of the subsidiary is Canadian dollar. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net loss for the year. In translating the financial statements of the Company’s Canadian subsidiary from its functional currency into the Company’s reporting currency of United States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

During the three months ended September 30, 2020, the Company identified certain eliminating adjustments related to the translations and remeasurements of its intercompany accounts that were included in Accumulated Other Comprehensive Income, but should have been recognized within Comprehensive Income, resulting in a reclassification of $93,974 between Accumulated Other Comprehensive Income and Exchange (Loss)/Gain.

Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred. During the three and nine months ended September 30, 2020, the Company incurred $288 and $940 respectively (2019: $1,042 and $5,066 respectively) in advertising and marketing costs included in General and Administrative costs.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the updated guidance effective January 1, 2018 using the full retrospective method.

Under ASC 606, in order to recognize revenue, the Company is required to identify an approved contract with commitments to preform respective obligations, identify rights of each party in the transaction regarding goods to be transferred, identify the payment terms for the goods transferred, verify that the contract has commercial substance and verify that collection of substantially all consideration is probable. The adoption of ASC 606 did not have an impact on the Company’s operations or cash flows since the Company has not started earning any revenue.

Fair Value of Financial Instruments

ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

●Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.

●Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.

●Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates.

These financial instruments include cash and accounts payable. The Company's cash, which is carried at fair value, is classified as a Level 1 financial instrument. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.

Intangible Assets

Intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment within one year of acquisitions or annually and whenever indicators of impairment exist. The fair value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which the carrying amount exceeds its fair value. The Company considers the intangibles acquired as assets with indefinite life and so not amortized.

Convertible Notes Payable

The Company accounted for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free-standing derivative financial instruments. ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are deemed to be conventional, as defined by ASC 815-40.

The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt.

Stock Based Compensation

The Company accounts for share-based payments in accordance with the provision of ASC 718, which requires that all share-based payments issued to acquire goods or services, including grants of employee stock options, be recognized in the consolidated statement of operations based on their fair values, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to share-based awards is recognized over the requisite service period, which is generally the vesting period.

The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the guidelines in ASC 718. The Company issues compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company has adopted this pronouncement effective January 1, 2020 with no material impact for the Company on the consolidated financial statements given no fair value measurements at this time.

In June 2018, the FASB issued an accounting pronouncement (FASB ASU 2018-07) to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company has adopted this pronouncement effective January 1, 2019 with no material impact for the Company on the consolidated financial statements given no outstanding equity awards.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2022

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance revises the accounting related to leases by requiring lessees to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is an emerging growth company and, under the optional 1-year deferral, the Company has adopted this pronouncement effective January 1, 2020 with no material impact for the Company on the consolidated financial statements given no leases at this time.

5. INTANGIBLE ASSETS

Intangible assets were comprised of the following at:

	September 30, 2020 $	December 31, 2020 $

Rights to an online film marketplace	52,000	-
Rights and interests in Films	20,800	-
Film Scripts	15,600	-

Net carrying value	88,400	-

All intangible assets are considered to be indefinite life assets and not amortized.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

6. ACCOUNTS PAYABLE

As at September 30, 2020, total accounts payable include $268,237 payable to directors of the Company.

7. LOANS PAYABLE

During the nine months ended September 30, 2020, the Company entered into loan agreements with third parties and shareholders and raised in total gross proceeds of $28,001 (September 30, 2019: $64,103).

All loans are unsecured, interest free and repayable on demand within 180 days of written notice of such demand. Implied interest at the rate of 5% per annum has been accrued on all loans outstanding as of September 30, 2020. As at September 30, 2020, accrued liabilities include implied interest on loans payable of $22,799.

8. CONVERTIBLE NOTES PAYABLE

On December 3, 2019 the Company issued a $50,000 convertible promissory note to Crown Bridge Partners, LLC as a commitment fee in connection with an Equity Purchase Agreement as explained in Note 9. The convertible promissory note matures, in six months from date of issue, on June 3, 2020 may not be prepaid, bears interest at the rate of ten percent (10%) per annum, and is convertible at any time by the holder for all or any part of the outstanding principal amount and accrued interest into shares of the Company’s common stock at the conversion price of $0.25 per share. Any outstanding principal amount and accrued interest as at maturity date bears interest at the rate of twelve percent (12%) per annum. The note bears a beneficial conversion feature given the conversion price of the note is below market price at time of issue. The total discount of $10,000 is to be amortized over the term of the note. During the three and six months ended June 30, 2020, $3,390 and $8,445 respectively, (2019: $nil and $nil respectively) has been amortized to the statement of operations.

Due to the uncertain future term in which the equity line would be utilized, the full value of the convertible note of $50,000 was expensed as a financing cost on the date of issuance of note.

On July 23, 2020, the Company issued 1,000,000 shares of common stock pursuant to a settlement agreement for the outstanding convertible note. The common shares were issued in consideration of the outstanding principal amount of the note and accrued interest and fair valued at $94,000 resulting in a loss on settlement of $40,992.

9. STOCKHOLDERS’ DEFICIENCY

Share Exchange Agreement

As explained in Note 1 to the consolidated financial statements, on August 5, 2014 the Company acquired 100% of the issued and outstanding shares of Fearless Films Inc. (“Fearless”) in exchange for 1,000,000 Preferred Shares and 30,000,000 Common Shares of the Company. As a result, Fearless became a wholly owned subsidiary of the Company.

Authorized stock

The Company is authorized to issue 500,000,000 common shares with a par value of $0.001 and 20,000,000 preferred shares with a par value of $0.001.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

9. STOCKHOLDERS’ DEFICIENCY (continued)

Common Stock

As explained in Note 1 to the consolidated financial statements, on September 23, 2014, the Board of Directors and stockholders of the Company approved a Certificate of Amendment to its Articles of Incorporation for a 1:1000 Reverse split of its Common Stock with shares rounded up to the nearest whole number. The Reverse split solely effected the issued and outstanding Common Stock and did not have any effect on the Authorized Common Stock. As a result of the Reverse split, the issued and outstanding Common Stock of the Company decreased from 155,085,275 shares prior to the Reverse split to 155,289 shares following the Reverse split.

On December 3, 2019 the Company entered into a $5,000,000 equity purchase agreement with Crown Bridge Partners and this was finalized on December 12, 2019. Under the terms of the agreement, the Company may put to the investor shares of the Company common stock in minimums of $10,000 to maximums of either $175,000 or 200% of the average trading volume, whichever is less. The agreement may be terminated at any time by the Company or when the total commitment of shares is sold by the Company to the investor. As part of the agreement, the Company issued a $50,000 convertible promissory note convertible at $0.25 per share as a commitment fee (Note 8).

On June 1, 2020, the Company entered into private placement agreements with shareholders for issue of 6,666,667 shares at a price of $0.15 per common share for a total of $1,000,000 gross proceeds. As at September 30, 2020 gross proceeds received are $541,650. As at September 30, 2020, 3,379,000 shares have been issued and 232,000 shares are included in common stock to be issued.

On June 15, 2020, the Company announced their decision to purchase the film “The Lunatic” from the President and CEO of the operating subsidiary. The purchase price will be in the form of common shares and the number of shares will be set by an independent appraisal of the film expected to take place during the fourth quarter of 2020.

On June 17, 2020, the Company announced the acquisition of FilmOla.com, a website for aficionados of film and which can provide a platform for distribution for the Company’s media properties. Payment for this acquisition was in the form of 1,000,000 common shares of the Company. As at September 30, 2020, these shares have been issued and fair valued at $52,000 based on market price at the time of issue and included in intangible assets.

On June 24, 2020, the Company announced the acquisition of rights to the film, Only Minutes, an addition to the company's growing library of media titles. Payment for this acquisition was in the form of 200,000 common shares of the Company. As at September 30, 2020, these shares have been issued and fair valued at $10,400 based on market price at the time of issue and included in intangible assets.

On July 1, 2020, the Company entered into private placement agreements with shareholders for issue of 3,333,333 shares at a price of $0.15 per common share for a total of $500,000 gross proceeds. As at September 30, 2020 gross proceeds received are $297,415 and the respective 1,982,767 shares are included in common stock to be issued.

On July 1, 2020, the Company entered into a private placement agreement with a third party for issue of 3,333,333 shares at a price of $0.15 per common share for a total of $500,000 gross proceeds of. As at September 30, 2020 gross proceeds received are $434,043. As at September 30, 2020, 322,520 shares have been issued and 2,571,102 shares are included in common stock to be issued.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

9. STOCKHOLDERS’ DEFICIENCY (continued)

On July 28, 2020, the Company announced the acquisition of rights to the film, In the Lair, an addition to the company's growing library of media titles. Payment for this acquisition was in the form of 200,000 common shares of the Company. As at September 30, 2020, these shares have been issued and fair valued at $10,400 based on market price at the time of issue and included in intangible assets.

On August 24, 2020, the Company announced the acquisition of film script Dead Bounty, another significant addition to the company's growing portfolio of films and intellectual property. Payment for this acquisition was in the form of 300,000 common shares of the Company. As at September 30, 2020, these shares have been issued and fair valued at $15,600 based on market price at the time of issue and included in intangible assets.

As at September 30, 2020, the Company has 322,944,835 (December 31, 2019: 316,543,317) shares issued and outstanding common stock (comprising 228,996,031 restricted stock and 93,948,804 unrestricted stock).

Preference Stock

On June 25, 2014, the Board of Directors authorized the following designations for the class of 20,000,000 Preference Shares of the Company of $ 0.001 par value per share:

·10,000,000 Shares shall be designated “Series A”

Each Preference Share of Series A shall have 100 votes over that of each Common share and shall have rights convertible to 10 Common Shares.

·10,000,000 Shares shall be designated “Series B”

Each Preference Share of Series B shall have no voting rights or power and shall have rights convertible to 10 Common Shares

On August 5, 2014, the Company issued 1,000,000 Preference Stock Series “A” pursuant to Share Exchange Agreement.

As at September 30, 2020 and December 31, 2019, the Company has 1,000,000 outstanding restricted Preference Stock.

10. RELATED PARTY TRANSACTIONS AND BALANCES

The Company’s transactions with related parties were carried out on normal commercial terms and in the course of the Company’s business. Other than those disclosed elsewhere in the financial statements, the related party transactions and balances are as follows:

On April 1, 2017, the Company entered into a consulting agreement with a shareholder. Pursuant to this agreement, the compensation is $8,200 per month and the duration of the of the agreement is open until terminated by either party. These fees are included in the Management Fees. As at September 30, 2020, this agreement is terminated.

On January 1, 2019, the Company entered into a consulting agreement with a shareholder. Pursuant to this agreement, the compensation is $5,000 per month and the duration of the agreement is open until terminated by either party. These fees are included in the Management Fees.

On October 1, 2019, the Company entered into a loan agreement for $99,000 with a shareholder who is also the brother of the President and CEO of the operating subsidiary. Pursuant to the loan agreement, the loan is unsecured, interest free and repayable on demand within 180 days of written notice of such demand.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

10. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

On November 1, 2019, the Company entered into a loan agreement for $85,000 with a shareholder who is also the brother of the President and CEO of the operating subsidiary. Pursuant to the loan agreement, the loan is unsecured, interest free and repayable on demand within 180 days of written notice of such demand.

On January 1, 2020, the Company entered into a loan agreement for $28,000 with a shareholder who is also the brother of the President and CEO of the operating subsidiary. Pursuant to the loan agreement, the loan is unsecured, interest free and repayable on demand within 180 days of written notice of such demand.

On June 1, 2020, the Company entered into a share subscription agreement for 2,333,333 common shares of the Company at $0.15 per share for a total of $350,000, with a shareholder who is also the brother of the President and CEO of the operating subsidiary. As at September 30, 2020 gross proceeds received are $47,000 and 313,333 shares have been issued.

Management fees for the three and nine months ended September 30, 2020 represent charges from directors of $39,377 and $118,506 respectively (2019: $39,635 and $118,713 respectively). Accounts payable as at September 30, 2020 and December 31, 2019 include $268,237 and $211,698, respectively, due to the directors in connection with management fees.

As at September 30, 2020, all loans from related parties remain unpaid.

11. COMMITMENTS

On September 25, 2019, the Company entered into an agreement with a company who is to provide business advisory and consulting services to the Company for $100,000 per month. The initial term of the agreement was for a period beginning October 7, 2019 and ending November 6, 2019. At the end of each month, the contract shall renew for an additional month unless terminated prior to the 1st of that month. Either party may terminate the agreement prior to the expiration of the term upon written notice to the other party.

During the three and nine months ended September 30, 2020, the Company incurred $200,000 and $800,000 respectively (2019: $nil and $nil respectively) in business advisory and consulting services costs included in Consulting Expenses.

On September 15, 2020, the Company entered into a Termination Agreement effective January 31, 2020. Pursuant to the termination agreement, the Company will not be liable to make any payments subsequent to January 31, 2020, all prior payments would be deemed full and final for services under the agreement and any unpaid fees as of January 31, 2020 are deemed satisfied and paid in full, resulting in a gain on settlement of $955,000.

On May 11, 2020, the Company entered into an agreement with a company who is to assist with investor relations efforts aimed at increasing the investment community’s awareness of Fearless Films (OTC: FERL). Fees for these services are to be mutually agreed as and when services are provided, and the agreement will remain valid unless terminated prior to the 1st of any month. Either party may terminate the agreement upon written notice to the other party. As at September 30, 2020, the contract has not been terminated.

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Fearless Films, Inc.

Notes to Consolidated Financial Statements

For the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(Expressed in US dollars)

11. COMMITMENTS (continued)

During the three and nine months ended September 30, 2020, the Company incurred $543,270 and $1,159,270 respectively in investor relations costs included in professional fees. As at September 30, 2020, $30,850 remains unpaid and included in accounts payable.

12. SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events up to November 23, 2020, the date the consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following material subsequent events:

On October 14, 2020, the Company announced that together with an established Hollywood film media research company it is in the process of developing a marketing model for the film, YOUNG GANGSTERS OF AMERICA. The completed marketing research will provide the Company the asset value necessary to establish production based on the film's projected budget of USD $30 Million.

The company is negotiating a financial guarantee from an institution enabling funding to be provided by a bank. Completion of marketing model and funding is expected during the final quarter of 2020. Upon funding, the Company will begin initial stage preproduction of the film.

The occurrence of the COVID-19 pandemic may negatively affect our business, financial condition and results of operations. We are in the early stages of developing our business plan of building a revenue-producing film service business and becoming an independent producer of television and movie content. Because our business is customer driven, our revenue requirements will be reviewed and adjusted based on future revenues. Expenses associated with operating as a public company are included in management’s budget. The occurrence of an uncontrollable event such as the COVID-19 pandemic is likely to negatively affect our operations. A pandemic such as COVID-19 can result in social distancing, travel bans and quarantines, which can lead to limited access to customers, management, support staff, consultants and professional advisors. These, in turn, will not only impact our operations, financial condition and demand for our services and products, but our overall ability to react timely to mitigate the impact of the event. It may also substantially hamper our efforts to provide investors with timely information and our ability to comply with filing obligations with the SEC.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.

Fearless Films, Inc. (“Fearless Films” or the “company”) was organized as MYG Corp. under the laws of the State of Nevada on July 6, 2000 and underwent name changes to BisAssist, Inc. on December 21, 2000 and to Cody Ventures Corporation on October 11, 2004. On April 7, 2011, the company changed its name to Paw4mance Pet Products International, Inc. to reflect the business of distributing natural based pet foods and treats. On September 26, 2014, we changed our name to Fearless Films, Inc. in anticipation of the acquisition of Fearless Films (Canada). On November 14, 2014, the company completed the acquisition of Fearless Films (Canada), which became a wholly-owned subsidiary of the company. The intent of the acquisition was to engage in the business of providing professional services for short film and full-length feature film productions and related services.

Our subsidiary, Fearless Films (Canada), is an independent full-service production company and has been positioning itself to ultimately produce top quality entertainment. We intend to specialize in short film and feature film production in addition to script writing, copywriting, fulfillment and distribution. Because of a lack of adequate funding, we have not realized revenues since our acquisition, but management believes we are in a position to become fully operational with the infusion of new capital. We currently do not have definite plans for securing adequate funding, but are working diligently to be able to fund our operations. Since inception and prior to our acquisition, Fearless Films (Canada) has produced more than ten films and also a pilot for a series, The My Ciccio Show.

During the third fiscal quarter of 2020 we made announcements regarding acquisitions:

On July 28, 2020 we announced that we had acquired the short film In The Lair from its creator. Our strategy behind these acquisitions is to build our media library and distribution capabilities so as to create a more substantial asset base for the company while we work on developing further productions. Payment for this acquisition was made in the form of shares and these shares were issued during the third quarter of 2020.

On August 24, 2020 we announced that we had acquired all rights and interests to the script entitled Dead Bounty. This complements the company’s library of completed films by giving the company a pipeline of projects in its intellectual property portfolio.

Our independent auditors have expressed a going concern modification to their report to our financial statements. To date we have incurred substantial losses and will require financing for working capital to meet future obligations. We anticipate needing additional financing on an ongoing basis for the foreseeable future unless our operations provide adequate funds, of which there can be no assurance. We most likely will satisfy future financial needs through the sale of equity securities, although we could possibly consider debt securities or promissory notes. We believe the most probable source of funds will be from existing stockholders and/or management, although there are no formal agreements to do so. If we are unable to sustain a public trading market for our shares, it will be more difficult to raise funds though the sale of common stock. We cannot assure you that we will be able to obtain adequate financing, achieve profitability, or to continue as a going concern in the future.

Results of Operations

For the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

We did not realize revenues from operations during the three months ended September 30, 2020 and September 30, 2019. We have been working towards developing our business as a provider of video production services to professional video production companies and to develop our own film projects. However, we have not had sufficient capital to begin full activities or to complete projects that have been initiated. We are hopeful that with the restructuring of our debt we will be able to attract new financing that will enable us to complete our existing projects and develop our marketing.

During the three months ended September 30, 2020, total operating expenses were $815,084 compared to $62,319 in the same period in 2019. Operating expenses are reported in three categories. General and administrative expenses were $1,376 in the three months ended September 30, 2020 compared to $9,243 in the same period one year earlier. Consulting fees were $200,000 in the three months ended September 30, 2020 compared to nil in the three months ended September 30, 2019. The increase was due to a services consulting contract that was signed in Q4 of 2019. Management fees were $39,377 during the three months ended September 30, 2020 versus $39,635 in the three months of ended September 30, 2019, essentially unchanged. Professional fees during the three months ended September 30, 2020 were $574,331, compared to $13,441 in the three months ended September 30, 2019. The increase was due to an investor relations services consulting contract signed in Q2 of 2020.

During the three months ended September 30,2020 we recorded an interest expense of $5,021, compared to an interest expense of $1,940 in the three months ended September 30, 2019. The interest expense reflects the fact that implied interest at the rate of 5% per annum has been accrued on all loans outstanding as of September 30, 2020.

During the three months ended September 30, 2020, we recorded a gain on exchange of $98,768 compared to a loss of $1,066 in the same three-month period in 2019. The functional currency of the parent Company is United States dollar and the functional currency of the subsidiary is Canadian dollar. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net loss for the year. In translating the financial statements of the Company’s Canadian subsidiary from its functional currency into the Company’s reporting currency of United States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

On September 15, 2020, we entered into a Termination Agreement, whereby the Company would not be liable for any payments subsequent to January 31, 2020 under a business advisory and consulting agreement. The Termination Agreement also provided that all prior payments would be deemed full and final for services provided and any unpaid fees as of January 31, 2020 are deemed satisfied and paid in full. As a result of effecting the Termination Agreement, we reported a gain on settlement of payables of $955,000 for Q3 of 2020. On July 23, 2020, the Company issued 1,000,000 shares of common stock pursuant to a settlement

agreement for the outstanding convertible note. The common shares were issued in consideration of the outstanding principal amount of the note and accrued interest and fair valued at $94,000 resulting in a loss on settlement of $40,992. The result of these we reported a net Gain/(Loss) on settlement of payables of $914,008.

As a result of the above, we reported a net income of $192,671 for the three months ended September 30, 2020 compared to a net loss of $65,325 for the same period in 2019. The net income in Q3 is primarily attributed to the gain on settlement of payables during the quarter. We recorded a foreign currency translation adjustment loss of $105,435 for the three months ended September 30, 2020 compared to a foreign currency translation gain of $1,142 for the three months ended September 30, 2019. The functional currency of the parent Company is United States dollar and the functional currency of the subsidiary is Canadian dollar. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net loss for the year. In translating the financial statements of the Company’s Canadian subsidiary from its functional currency into the Company’s reporting currency of United States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Thus, after the foreign currency translation adjustment, our comprehensive income for the three months ended September 30, 2020 was $87,236 ($0.00 per share), compared to a comprehensive loss for the same three months of 2019 of $64,183 ($0.00 per share). Comprehensive income and loss per share calculations are diluted and made giving effect to the share amounts of common stock to be issued.

For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

We did not realize revenues from operations during the nine months ended September 30, 2020 and September 30, 2019. During the nine months ended September 30, 2020, total operating expenses were $2,188,611 compared to $189,562 in the same nine-month period in 2019. Operating expenses are reported in three categories. General and administrative expenses were $3,500 in the nine months ended September 30, 2020 compared to $34,109 in the same period one year earlier. Consulting fees were $800,000 in the nine months ended September 30, 2020 compared to nil in the nine months ended September 30, 2019. The increase was due to a services consulting contract that was signed in Q4 of 2019. Management fees were $118,506 during the nine months ended September 30, 2020 versus $118,713 in the nine months of ended September 30, 2019, essentially unchanged. Professional fees during the nine months ended September 30, 2020 were $1,266,605, compared to $36,740 in the nine months ended September 30, 2019. The increase was due to an investor relations services consulting contract signed in Q2 of 2020.

During the nine months ended September 30,2020 we recorded an interest expense of $16,695, compared to an interest expense of $5,330 in the nine months ended September 30, 2019. The interest expense reflects the fact that implied interest at the rate of 5% per annum has been accrued on all loans outstanding as of September 30, 2020. During the nine months ended September 30, 2020, we recorded a gain on exchange of $102,047 compared to a loss of $740 in the same nine-month period in 2019. The functional currency of the parent Company is United States dollar and the functional currency of the subsidiary is Canadian dollar.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net loss for the year. In translating the financial statements of the Company’s Canadian subsidiary from its functional currency into the Company’s reporting currency of United States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

During the nine months ended September 30, 2020 we recorded a debt discount expense of $8,445 to reflect the terms of the Equity Line financing entered into during the fourth quarter of 2019. On December 23, 2019 the Company entered into an Equity Purchase Agreement with Crown Bridge Partners, LLC. This agreement is explained in Notes 8 and 9 of our financial statements.

As a result of the above, we reported a net loss of $1,197,696 for the nine months ended September 30, 2020 compared to a net loss of $195,632 for the same nine-month period in 2019. The net loss for the nine months ended September 30, 2020 was partially offset by the $914,008 gain on settlement of payables reported in Q3 of 2020.

We recorded a foreign currency translation adjustment loss of $105,496 for the nine months ended September 30, 2020 compared to a foreign currency translation loss of $900 for the nine months ended September 30, 2019. Because the functional currency of our parent, Fearless Films, is United States dollars and the functional currency of our subsidiary, Fearless Films (Canada), is Canadian dollars, an adjustment is necessary. The functional currency of the parent Company is United States dollar and the functional currency of the subsidiary is Canadian dollar. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net loss for the year. In translating the financial statements of the Company’s Canadian subsidiary from its functional currency into the Company’s reporting currency of United States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholders’ equity. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Thus, after the foreign currency translation adjustment, our comprehensive loss for the nine months ended September 30, 2020 was $1,303,192 ($0.00 per share), compared to a comprehensive loss for the same nine months of 2019 of $196,532 ($0.00 per share). Comprehensive income and loss per share calculations are diluted and made giving effect to the share amounts of common stock to be issued.

Liquidity and Capital Resources

At September 30, 2020, we had total assets of $110,058, consisting of $10,739 in cash, prepaid expenses of $10,919 and intangible assets of $88,400. At December 31, 2019, we had total assets of $3,779, comprised of $2,779 in cash and $1,000 in prepaid expenses. The increase in prepaid expenses is attributed to prepaid OTCQB annual fees. The increase in intangible assets reflects the purchase price of Films, scripts and the FilmOla website purchased during the first nine months of 2020. Total current liabilities at September 30, 2020 were $776,009, compared to $822,047 at December 31. 2019. Included in current liabilities are accounts payable that decreased from $417,199 at December 31, 2019 to $379,841 at September 30, 2020, and loans payable that increased from $339,248 at December 31, 2019 to $366,742 at September 30, 2020. The decrease in accounts payable was due to accruals for consulting services that were settled during Q3 of 2020. The increase in loans payable during the first nine months of 2020 was attributed to the company entering into loan agreements with third parties raising total gross proceeds of $28,000 during the period. Additionally, accrued liabilities increased from $24,045 at December 31, 2019 to $29,426 at September 30, 2020 due to the increase in accrued implied interest.

At September 30, 2020 we had a working capital deficit of $754,351 compared to a working capital deficit of $818,268 December 31, 2019. The company has incurred recurring losses from operations and as at September 30, 2020 and December 31, 2019 had an accumulated deficit of $5,307,172 and $4,109,476, respectively. We continue to seek additional funding, most likely through the sale of securities or securing additional debt, although currently we have no definite agreement of arrangement for additional funding.

Plan of Operation

We are a television and movie production company providing production services to film producers and others. Over the next 12 to 24 months, we have plans to undertake production of a full-length feature film under our own name, based on a script that we will select.

During the next 12 months we intend to concentrate our efforts in two areas; (i) administration, and (ii) film development. Administrative costs will include the expense of maintaining our public company status, including legal and accounting fees, as well expenses for maintaining our principal place of business and other operating facilities, for salaries and compensation for key personnel. We estimate these costs to be approximately $275,000, of which $100,000 will be costs for reporting and compliance with public company obligations. Our film development budget is expected to be between $3.0 million and $5.0 million. Typical film budgets break down along the lines of; (i) 10% for writing, (ii) 20% for the cast, (iii) 50% for production, (iv) 15% for post-production, and (v) 5% for other costs.

We anticipate that our first planned production will be based on the following time and cost estimates: (i) Script development – approximately three months at a cost of $75,000; (ii) Storyboarding – approximately two months for a cost of $10,000; (iii) Pre-production, including sourcing equipment and talent – approximately two months and $1.0 million; Production – approximately three months and $2.0 million; and (v) Post-production – approximately four months and $2.0 million.

At this time management is not able to predict when it will identify our first project and precisely how financing will be secured. Management continues to explore and investigate potential projects and a final decision will be based on the perceived potential merit of the project and the feasibility of securing necessary funding.

Management anticipates that it will be able to use its network of contacts and industry relationships as a potentials sales team. As future revenue increases, we plan to hire a sales team, but currently there are no agreements or arrangements in place for the sales team.

We expect that financing to fund our future plans will come from private issuances of our securities, debt and/or equity. There can be no assurances that the company will be able to raise the necessary funds when needed.

Impact of COVID-19

The occurrence of the COVID-19 pandemic may negatively affect our business, financial condition and results of operations.

We are in the early stages of developing our business plan of building a revenue-producing film service business and becoming an independent producer of television and movie content. Because our business is customer-driven, our revenue requirements will be reviewed and adjusted based on future revenues. Expenses associated with operating as a public company are included in management’s budget. The occurrence of an uncontrollable event such as the COVID-19 pandemic is likely to negatively affect our operations. A pandemic such as COVID-19 can result in social distancing, travel bans and quarantines, which can lead to limited access to customers, management, support staff, consultants and professional advisors. These, in turn, will not only impact our operations, financial condition and demand for our services and products, but our overall ability to react timely to mitigate the impact of the event. It may also substantially hamper our efforts to provide investors with timely information and our ability to comply with filing obligations with the SEC.

Forward-Looking and Cautionary Statements

This report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will” “should," “expect," "intend," "plan," anticipate," "believe," "estimate," "predict," "potential," "continue," or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Although forward-looking statement, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. We believe the expectations reflected in these forward-looking statements are reasonable, however such expectations cannot guarantee future results, levels of activity, performance or achievements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

This item is not required for a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to

management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our management, including our principal executive officer and principal accounting officer, concluded that, as of September 30, 2020, our disclosure controls and procedures were not effective due to a lack of adequate segregation of duties and the absence of an audit committee.

Changes in Internal Control Over Financial Reporting. Management has evaluated whether any change in our internal control over financial reporting occurred during the third quarter of fiscal 2020. Based on its evaluation, management, including the chief executive officer and principal accounting officer, has concluded that there has been no change in our internal control over financial reporting during the third quarter of fiscal 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

Item 1A. Risk Factors

Not required for a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the third quarter of 2020 the company issued 6,401,520 Common shares. Of these, 3,701,520 were issued for cash at $0.15 per share, 1,700,000 were issued as payment for intangible assets acquired and 1,000,000 shares of common stock pursuant to a settlement agreement for an outstanding convertible note. The Use of Proceeds for the cash consideration is general corporate purposes. The intangible assets included the acquisition of the website FilmOla.com, the films Only Minutes, and In the Lair, and the movie script Dead Bounty The securities were issued to persons in private transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

This Item is not applicable.

Item 4. Mine Safety Disclosures

This Item is not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit 31.1	Certification of C.E.O. and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1	Certification of C.E.O. and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101*	Interactive Data File

*In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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.

FEARLESS FILMS, INC.

Date: November 23, 2020	By:	/S/ VICTOR ALTOMARE
		Victor Altomare
		Interim Chief Executive Officer and Director
		(Interim Principal Accounting Officer)