U. S. UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,
Washington, D.C. 20549
FORM 10-Q
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended September 30, 20172023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-53462
VNUE, INC.
(Exact name of registrant as specified in its charter)
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For the transition period from _________ to _________
Commission File No. 000-53462
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(State or other jurisdiction of | (I.R.S. Employer |
104 West 29th Street, 11th Floor, New York, NY10001
(Address of Principal Executive Offices)
Issuer’s Telephone Number: 857-777-6190833.937.5493
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of each Exchange on which registered | ||
N/A | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act: Common stock, $.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by SectionsSection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx ☑ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 ☑ 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 post such files.) Yes ¨ No x“emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ | Large accelerated filer | ☐ | Accelerated filer |
☒ | Non-accelerated Filer | ☒ | 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 ¨ ☐ Nox ☑
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitionsThe number of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2shares of the Exchange Act. (Check One)registrant’s common stock outstanding as of November 20, 2023 was .
VNUE, INC.
QUARTERLY REPORT ON FORM 10-Q
SEPTEMBER 30, 2023
TABLE OF CONTENTS
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date:
September 30, 2017
Common Voting Stock: 69,244,707
Page
VNUE, INC.
INDEX TO FORM 10-Q FILING
FOR THE PERIOD ENDED SEPTEMBER 30, 2017
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SIGNATURES | 29 |
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PART I - FINANCIAL INFORMATION
PART IItem 1. Condensed Consolidated Financial Statements.
FINANCIAL INFORMATION
The accompanyingfollowing unaudited interim condensed consolidated financial statements have been preparedof VNUE, Inc. (referred to herein as the “Company,” “we,” “us” or “our”) are included in accordance with the instructions tothis quarterly report on Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with 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. Operating results for the interim period ended September 30, 2017 are not necessarily indicative of the results that can be expected for the year ending December 31, 2017.10-Q:
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CONDENSED CONSOLIDATED BALANCE SHEETS
VNUE, Inc.
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 28,433 | $ | 82,807 | ||||
Prepaid expenses | - | 130,000 | ||||||
Total current assets | 28,433 | 212,807 | ||||||
Fixed assets, net | - | 9,134 | ||||||
Total assets | $ | 28,433 | $ | 221,941 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 2,826,672 | $ | 2,817,102 | ||||
Shares to be issued | 975,174 | 975,174 | ||||||
Accrued payroll-officers | 211,438 | 212,250 | ||||||
Dividends payable | 429,145 | 210,486 | ||||||
Notes payable | 1,329,865 | 1,134,262 | ||||||
Deferred revenue | 714,613 | 862,597 | ||||||
Convertible notes payable, net | 470,714 | 470,714 | ||||||
Total current liabilities | 6,957,621 | 6,682,586 | ||||||
Total liabilities | 6,957,621 | 6,682,586 | ||||||
Commitments and Contingencies | ||||||||
Stockholders’ Deficit | ||||||||
Preferred A stock, par value $ | : shares authorized; and issued and outstanding as of September 30, 2023 and December 31, 2022320 | 425 | ||||||
Preferred B stock, par value $ | : shares authorized; and issued and outstanding as of September 30, 2023 and December 31, 2022- | - | ||||||
Preferred C stock, par value $ | : shares authorized; and - - issued and outstanding as of September 30, 2023 and December 31, 2022- | - | ||||||
Common stock, par value $ | , shares authorized; and shares issued and outstanding, as of September 30, 2023, and December 31, 2022, respectively207,730 | 167,601 | ||||||
Additional paid-in capital | 31,013,852 | 30,179,731 | ||||||
Accumulated deficit | (38,151,090 | ) | (36,808,403 | ) | ||||
Total stockholders’ deficit | (6,929,188 | ) | (6,460,646 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 28,433 | $ | 221,941 |
Index to the Condensed Consolidated Financial Statements
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VNUE, Inc.
Condensed Consolidated Balance Sheets
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| September 30, |
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| December 31, 2016 |
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Assets |
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Current Assets |
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Cash |
| $ | 73,195 |
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| $ | 17,952 |
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Prepaid expenses |
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| 2,667 |
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| - |
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Total assets |
| $ | 75,862 |
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| $ | 17,952 |
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Liabilities and Stockholders’ Deficit |
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Current Liabilities |
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Accounts payable and accrued expenses |
| $ | 550,639 |
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| $ | 391,952 |
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Accrued payroll (including $453,585 and $312,710 payable to officers) |
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| 908,263 |
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| 703,138 |
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Advances from stockholders |
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| 14,720 |
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| 14,720 |
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Note payable to officer |
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| 74,131 |
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| 74,131 |
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Notes payable |
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| 9,000 |
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| 34,000 |
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Convertible notes payable, net |
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| 400,033 |
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| 121,865 |
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Convertible notes payable, related parties, net |
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| 30,000 |
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| 22,101 |
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Derivative liabilities |
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| 779,903 |
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| 508,107 |
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Total current liabilities |
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| 2,766,689 |
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| 1,870,014 |
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Commitment and Contingencies |
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Stockholders’ Deficit |
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Preferred stock, par value $0.0001: 20,000,000 shares authorized; none issued |
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| - |
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| - |
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Common stock, par value $0.0001: 750,000,000 shares authorized; 69,244,707 and 64,487,971 shares issued and outstanding, respectively |
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| 6,924 |
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| 6,449 |
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Additional paid-in capital |
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| 4,670,643 |
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| 4,428,357 |
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Common stock to be issued, 4,674,352 shares and 4,674,352 shares, respectively |
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| 903,570 |
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| 903,570 |
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Accumulated deficit |
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| (8,271,964 | ) |
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| (7,190,438 | ) |
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Total Stockholders’ Deficit |
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| (2,690,827 | ) |
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| (1,852,062 | ) |
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Total Liabilities and Stockholders’ Deficit |
| $ | 75,862 |
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| $ | 17,952 |
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SeeThe accompanying notes to theare an integral part of these unaudited condensed consolidated financial statements.
VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues - related party | $ | 53,470 | $ | 3,090 | $ | 182,773 | $ | 9,579 | ||||||||
Revenue, net | 143,052 | 96,090 | 245,779 | 224,292 | ||||||||||||
Total revenue | 196,522 | 99,180 | 428,552 | 233,871 | ||||||||||||
Direct costs of revenue | 143,580 | 72,059 | 292,859 | 224,786 | ||||||||||||
Gross profit (loss) | 52,942 | 27,121 | 135,693 | 9,085 | ||||||||||||
Operating expenses: | ||||||||||||||||
Stock-based compensation | - | - | - | 15,300,000 | ||||||||||||
General and administrative expense | 59,638 | 51,586 | 278,057 | 171,896 | ||||||||||||
Payroll expenses | 105,008 | 172,374 | 321,796 | 419,204 | ||||||||||||
Professional fees | 135,486 | 99,989 | 460,921 | 581,867 | ||||||||||||
Amortization of intangible assets | - | 216,667 | - | 541,667 | ||||||||||||
Total operating expenses | 300,132 | 540,616 | 1,060,774 | 17,014,634 | ||||||||||||
Operating loss | (247,190 | ) | (513,495 | ) | (925,081 | ) | (17,005,549 | ) | ||||||||
Other income (expense), net | ||||||||||||||||
Other income | ||||||||||||||||
Loss on the extinguishment of debt | - | - | (154,200 | ) | ||||||||||||
Financing costs | (58,335 | ) | (98,394 | ) | (198,948 | ) | (777,299 | ) | ||||||||
Other income (expense), net | (58,335 | ) | (98,394 | ) | (198,948 | ) | (931,499 | ) | ||||||||
Net (loss) | $ | (305,525 | ) | $ | (611,889 | ) | $ | (1,124,029 | ) | $ | (17,937,048 | ) | ||||
Preferred B Stock dividends | (69,955 | ) | (62,119 | ) | (218,658 | ) | (145,103 | ) | ||||||||
Net (loss) available to common shareholders | $ | (375,480 | ) | $ | (674,008 | ) | $ | (1,342,687 | ) | $ | (18,082,150 | ) | ||||
Net loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic and diluted |
VNUE, Inc.
Condensed Consolidated Statements of Operations
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| For the Three Months Ended September 30, |
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| For the Three Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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Revenues |
| $ | - |
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| $ | - |
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| $ | 37,825 |
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| $ | - |
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Operating Expenses |
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Direct costs of revenues |
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| - |
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| - |
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| 35,151 |
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| - |
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Software development |
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| 24,778 |
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| 126,838 |
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| 92,905 |
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| 1,033,207 |
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General and administrative |
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| 172,319 |
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| 154,908 |
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| 631,057 |
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| 992,470 |
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Loss from Operations |
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| (197,097 | ) |
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| (281,746 | ) |
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| (721,288 | ) |
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| (2,025,677 | ) |
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Other income/(expenses) |
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Change in fair value of derivative liability |
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| 57,467 |
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| (23,345 | ) |
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| 38,068 |
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| 194,912 |
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Gain on extinguishment of derivative liability |
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| 174,529 |
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| - |
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| 292,838 |
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| 21,308 |
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Financing costs |
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| (342,708 | ) |
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| (214,067 | ) |
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| (691,144 | ) |
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| (332,081 | ) |
Sale of trademark |
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| - |
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| 30,000 |
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| - |
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| 30,000 |
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Other income/(expenses), net |
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| (110,712 | ) |
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| (207,412 | ) |
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| (360,238 | ) |
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| (85,861 | ) |
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Net loss |
| $ | (307,809 | ) |
| $ | (489,158 | ) |
| $ | (1,081,526 | ) |
| $ | (2,111,538 | ) |
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Loss per share |
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-Basic and diluted |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.01 | ) |
| $ | (0.03 | ) |
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Weighted average common shares outstanding |
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-Basic and diluted |
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| 73,919,059 |
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| 68,891,601 |
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| 72,205,256 |
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| 67,591,512 |
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SeeThe accompanying notes to theare an integral part of these unaudited condensed consolidated financial statements.
VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
VNUE, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Deficit
For the Nine Months ended SeptemberFOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 20172023 AND 2022
(Unaudited)
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| Common Stock par value $0.0001 |
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| Additional |
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| Shares |
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| Total |
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| Number of Shares |
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| Amount |
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| Paid-In Capital |
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| to be Issued |
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| Accumulated Deficit |
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| Stockholders’ Deficit |
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Balance, December 31, 2016 |
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| 64,487,971 |
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| $ | 6,449 |
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| $ | 4,428,357 |
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| $ | 903,570 |
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| $ | (7,190,438 | ) |
| $ | (1,852,062 | ) |
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Shares returned by officer |
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| (5,000,000 | ) |
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| (500 | ) |
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| 500 |
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| - |
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| - |
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Shares issued for services |
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| 2,575,000 |
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| 258 |
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| 94,868 |
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| - |
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| - |
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| 95,125 |
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Shares issued for conversion of debt |
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| 7,181,736 |
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| 718 |
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| 62,803 |
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| - |
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| - |
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| 63,521 |
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Fair value of warrants issued related to convertible note payable |
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| 18,261 |
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| 18,261 |
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Beneficial conversion feature on conversion of note |
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| 65,855 |
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| - |
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| - |
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| 65,855 |
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Net loss |
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| (1,081,526 | ) |
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| (1,081,526 | ) |
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Balance, September 30, 2017 (Unaudited) |
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| 69,244,707 |
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| $ | 6,924 |
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| $ | 4,670,643 |
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| $ | 903,570 |
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| $ | (8,271,964 | ) |
| $ | (2,690,827 | ) |
Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | Accumulated | |||||||||||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance - December 31, 2021 | 4,250,579 | $ | 425 | - | $ | - | - | $ | - | 1,411,799,497 | $ | 141,177 | $ | 10,900,652 | $ | (13,835,294 | ) | $ | (2,793,040 | ) | ||||||||||||||||||||||||
Issuance of Preferred B shares | 1,500 | 1,500,000 | 1,500,000 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Pref B shares | 35 | 42,000 | 42,000 | |||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature of Pref B shares convertible notes | 300,000 | 300,000 | ||||||||||||||||||||||||||||||||||||||||||
Shares issued for services | 6,000,000 | 600 | 56,200 | 56,800 | ||||||||||||||||||||||||||||||||||||||||
Shares issued upon conversion of convertible notes payable | 41,476,963 | 4,148 | 414,770 | 418,918 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (1,193,106 | ) | (1,193,106 | ) | ||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | 4,250,579 | $ | 425 | 1,535 | $ | - | - | $ | - | 1,459,276,460 | $ | 145,925 | $ | 13,213,622 | $ | (15,028,400 | ) | $ | (1,668,428 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 280 | - | - | 280,000 | - | 280,000 | ||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 10 | - | - | 12,000 | - | 12,000 | ||||||||||||||||||||||||||||||||||||||
Series B dividends | (51,915 | ) | (51,915 | ) | ||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature of Preferred B shares | 87,000 | 87,000 | ||||||||||||||||||||||||||||||||||||||||||
Conversion of debt to Preferred B shares | 266 | - | - | 319,200 | - | 319,200 | ||||||||||||||||||||||||||||||||||||||
Issuance of Preferred C shares to related parties | 3,000 | 15,300,000 | 15,300,000 | |||||||||||||||||||||||||||||||||||||||||
Acquisition shares issued for Stage It purchase | 15,229,726 | 1,523 | 152,297 | 153,820 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (16,163,122 | ) | (16,163,122 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | 4,250,579 | $ | 425 | 2,091 | $ | - | 3,000 | $ | - | 1,474,506,186 | $ | 147,448 | $ | 29,364,119 | $ | (31,243,437 | ) | $ | (1,731,445 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 164 | 151,600 | 151,600 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 12 | 14,400 | 14,400 | |||||||||||||||||||||||||||||||||||||||||
Shares issued pursuant to the Company’s equity line of credit | 49,451,287 | 4,945 | 119,314 | 124,259 | ||||||||||||||||||||||||||||||||||||||||
Series B dividends | (62,119 | ) | (62,119 | ) | ||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature of Preferred B shares | 45,200 | 45,200 | ||||||||||||||||||||||||||||||||||||||||||
Acquisition shares issued for Stage It purchase | 1,772,076 | 177 | 17,721 | 17,898 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (611,889 | ) | (611,889 | ) | ||||||||||||||||||||||||||||||||||||
Balance September 30, 2022 | 4,250,579 | $ | 425 | 2,267 | $ | - | 3,000 | $ | - | 1,525,729,549 | $ | 152,570 | $ | 29,712,354 | $ | (31,917,445 | ) | $ | (2,052,096 | ) |
SeeVNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (Continued)
(Unaudited)
Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | Accumulated | |||||||||||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance - December 31, 2022 | 4,250,579 | $ | 425 | 2,305 | $ | - | 3,000 | $ | - | 1,676,014,753 | $ | 167,601 | $ | 30,179,731 | $ | (36,808,403 | ) | $ | (6,460,646 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 111 | 111,000 | 111,000 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 6 | 6,000 | 6,000 | |||||||||||||||||||||||||||||||||||||||||
Series B dividends | (65,596 | ) | (65,596 | ) | ||||||||||||||||||||||||||||||||||||||||
Shares issued from the Company’s equity line for cash | 107,494,116 | 10,749 | 247,848 | 258,597 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (373,404 | ) | (373,404 | ) | ||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | 4,250,579 | $ | 425 | 2,422 | $ | - | 3,000 | $ | - | 1,783,508,869 | $ | 178,350 | $ | 30,544,579 | $ | (37,247,403 | ) | $ | (6,524,049 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 73 | 81,012 | 81,012 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 9 | 9,988 | 9,988 | |||||||||||||||||||||||||||||||||||||||||
Series B dividends | (83,107 | ) | (83,107 | ) | ||||||||||||||||||||||||||||||||||||||||
Shares issued from the Company’s equity line for cash | 106,968,935 | 10,697 | 246,144 | 256,841 | ||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | 5,000 | 500 | 18,000 | 18,500 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (445,100 | ) | (445,100 | ) | ||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | 4,250,579 | $ | 425 | 2,504 | $ | - | 3,000 | $ | - | 1,890,477,804 | $ | 189,547 | $ | 30,899,723 | $ | (37,775,610 | ) | $ | (6,685,915 | ) | ||||||||||||||||||||||||
Conversion of Series A Preferred stock to common stock | (1,050,000 | ) | (105 | ) | 52,500,000 | 5,250 | (5,145 | ) | - | |||||||||||||||||||||||||||||||||||
Shares issued from the Company’s equity line for cash | 129,327,061 | 12,933 | 119,274 | 132,207 | ||||||||||||||||||||||||||||||||||||||||
Series B Dividends | (69,955 | ) | (69,955 | ) | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (305,525 | ) | (305,525 | ) | ||||||||||||||||||||||||||||||||||||
Balance. September 30, 2023 | 3,200,579 | $ | 320 | 2,504 | $ | - | 3,000 | $ | - | 2,077,292,582 | $ | 207,730 | $ | 31,013,852 | $ | (38,151,090 | ) | $ | (6,929,188 | ) |
The accompanying notes to theare an integral part of these unaudited condensed consolidated financial statements.
VNUE, INC.
VNUE, Inc.
Condensed Consolidated Statements of Cash FlowsCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Nine Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
Cash Flows From Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | (1,081,526 | ) |
| $ | (2,111,538 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Change in fair value of derivative liabilities |
|
| (38,068 | ) |
|
| (194,912 | ) |
Derivative value in excess of convertible notes |
|
| 291,702 |
|
|
| 90,762 |
|
Note issued for financing costs |
|
| - |
|
|
| 25,000 |
|
Gain on extinguishment of derivative liability |
|
| (292,838 | ) |
|
| (21,308 | ) |
Amortization of debt discount |
|
| 265,828 |
|
|
| 86,113 |
|
Beneficial conversion feature on conversion of note |
|
| 65,855 |
|
|
| - |
|
Original issue discount on convertible note payable |
|
| 9,000 |
|
|
| - |
|
Shares to be issued for financing costs |
|
| - |
|
|
| 41,000 |
|
Shares issued for services |
|
| 95,125 |
|
|
| - |
|
Shares to be issued for services |
|
| - |
|
|
| 730,513 |
|
Shares transferred for financing costs |
|
| - |
|
|
| 108,000 |
|
Shares transferred for compensation |
|
| - |
|
|
| 491,153 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expense |
|
| (2,667 | ) |
|
| 37,500 |
|
Accounts payable and accrued expenses |
|
| 163,707 |
|
|
| 276,217 |
|
Accrued payroll |
|
| 205,125 |
|
|
| 210,912 |
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities |
|
| (318,757 | ) |
|
| (230,587 | ) |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
Advances from (repayment to) stockholders, net |
|
| - |
|
|
| 17,510 |
|
Proceeds from issuance of convertible notes payable |
|
| 407,000 |
|
|
| 250,000 |
|
Repayment of convertible notes payable |
|
| (33,000 | ) |
|
| - |
|
Shares to be issued for proceeds from sale of common shares |
|
| - |
|
|
| 5,000 |
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities |
|
| 374,000 |
|
|
| 272,510 |
|
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
| 55,243 |
|
|
| 41,923 |
|
|
|
|
|
|
|
|
|
|
Cash – Beginning of the Reporting Period |
|
| 17,952 |
|
|
| 7,788 |
|
|
|
|
|
|
|
|
|
|
Cash – End of the Reporting Period |
| $ | 73,195 |
|
| $ | 49,711 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Interest Paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Income Tax Paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
Common shares issued upon conversion of notes payable and accrued interest |
| $ | 63,521 |
|
| $ | 20,385 |
|
Return of common shares by officer |
| $ | (500 | ) |
| $ | - |
|
Note payable converted to convertible note |
| $ | - |
|
| $ | 50,000 |
|
Fair value of derivative created upon issuance of convertible debt recorded as debt discount |
| $ | 311,000 |
|
| $ | 300,000 |
|
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2023 | 2022 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net (loss) | $ | (1,124,029 | ) | $ | (17,937,048 | ) | ||
Adjustments to reconcile net income to net cash provided by (used for) operating activities | ||||||||
Depreciation | 9,134 | 19,725 | ||||||
Amortization of intangible assets | - | 541,667 | ||||||
Loss on the extinguishment of debt | - | 154,200 | ||||||
Beneficial conversion feature of Preferred B stock | 20,000 | 432,200 | ||||||
Issuance of Preferred C voting stock | - | 15,300,000 | ||||||
Shares issued for financing costs | 23,600 | 68,400 | ||||||
Shares issued for services | 18,500 | 56,800 | ||||||
Changes in operating assets and liabilities | ||||||||
Prepaid expenses | 130,000 | 364,336 | ||||||
Accounts payable and accrued interest | 130,172 | 220,455 | ||||||
Deferred revenue | (147,984 | ) | 4,122 | |||||
Accrued payroll officers | (812 | ) | 25,500 | |||||
Net cash (used in) operating activities | (941,419 | ) | (749,643 | ) | ||||
Cash Flows From Investing Activities: | ||||||||
Purchase of fixed assets | - | (940 | ) | |||||
Acquisition of a business net of cash received | - | (977,761 | ) | |||||
Net cash (used in) investing activities | - | (978,701 | ) | |||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from the Company’s equity line from the sale of common stock | 647,645 | - | ||||||
Proceeds from the private placement of common shares | - | 124,259 | ||||||
Payments on promissory notes | - | (255,280 | ) | |||||
Proceeds from the sale of Series B Preferred Stock | 164,400 | 1,931,600 | ||||||
Proceeds from the issuance of promissory notes | 75,000 | 3,000 | ||||||
Net cash provided by investing activities | 887,045 | 1,803,579 | ||||||
Net Increase (Decrease) In Cash | (54,374 | ) | 75,235 | |||||
Cash At The Beginning Of The Period | 82,807 | 36,958 | ||||||
Cash At The End Of The Period | $ | 28,433 | $ | 112,193 | ||||
Supplemental disclosure of non-cash information: | ||||||||
Common shares issued for the Stage It acquisition | $ | - | $ | 572,738 | ||||
Issuance of Preferred C voting shares | $ | - | $ | 15,300,000 | ||||
Preferred B shares issued upon the conversion of debt and accrued interest | $ | - | $ | 176,410 |
See The accompanying notes to theare an integral part of these unaudited condensed consolidated financial statements.
VNUE, INC.
VNUE, Inc.
Three and Nine Months Ended September 30, 2017 and 2016
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NoteNOTE 1 - Organization and Basis of Presentation– ORGANIZATION AND BASIS OF PRESENTATION
History and Organization
VNUE, Inc. (formerly Tierra Grande Resources, Inc.) ("VNUE"(“VNUE”, "TGRI"“TGRI”, or the "Company"“Company”) was incorporated under the laws of the State of Nevada on April 4, 2006.
On May 29, 2015, VNUE, Inc. entered into a merger agreement with VNUE Washington, Inc. Pursuant to the terms of the Merger Agreement, all of the outstanding shares of any class or series of VNUE Washington were exchanged for an aggregate of
shares of TGRI common stock. As a result of the Merger, VNUE Washington became a wholly-owned subsidiary of the Company, and the transaction was accounted for as a reverse merger with VNUE Washington deemed the acquiring company for accounting purposes, and the Company deemed the legal acquirer.The Company is developing a technology driven solutiontechnology-driven solutions for Artists, Venues, and Festivals to automate the capturing, publishing, and monetization of their content.content, as well as protection of their rights.
TheOn February 13, 2022, the Company conductedentered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a reverse stock splitDelaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”).
On February 13, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company contracted to acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”). At the same time, Stage It and several of the shareholders of Stage It entered into a voting agreement concerning the Merger.
Pursuant to the Merger Agreement, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) were converted into the right to receive the applicable portion of the Merger Consideration. $1,085,450 of the Merger Consideration was paid in cash and satisfaction of certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion was paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, was held back for the purposes of satisfying certain contingent obligations of Stage It.
The Merger Agreement provides for the issuance of earnout shares which the company estimates will not be achieved.
On February 14 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial
shares, paid certain amounts to Stage It vendors and will potentially pay additional amounts as detailed under Merger Consideration in the Merger Agreement.NOTE 2 – GOING CONCERN
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements as of September 30, 2023, the Company had $28,433 in cash on hand, had negative working capital of $6,929,188 and had an accumulated deficit of $38,151,090. Additionally, for the nine months ended September 30, 2023, the Company used $941,419 in cash from operating activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the condensed consolidated financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The Company does not have any commitments for additional capital.
The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s September 30, 2023, condensed consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the Company has been able to fund its operations from the proceeds of notes payable and convertible notes. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.
NOTE 3 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”), which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company consolidates its results with its wholly-owned subsidiary, Stage It Corp.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Stage It receives revenue through a percentage of ticket sales and tipping. This show-based revenue creates a pool that is shared with the performing artist. Once a show is completed, the revenue that has been created through tickets and tips is allocated. Typically, Stage It retains 20% of the revenue as an agent and the artist receives 80% of the revenue as the performer; however, there are occasions when the profit split has different ratios. Revenue is recognized once a show is complete and the performance obligation to the consumer has been met. Since Stage It acts as an agent, revenue is recorded on a net basis only on the 20% portion, less direct expenses such as broadcast costs, merchant processing fees, bank services charges, license fees and the cost of production.
The Company also recognizes revenue from the sale of CDs and USB drives that contain the recording of live concerts and are made available to concert attendees immediately after the show and online. Revenue is recognized on the sale of a product when our performance obligation is completed, which is when the risk of loss transfers to our customers and the collection of the receivable is reasonably assured, which generally occurs when the product is purchased.
As of September 30, 2023 deferred revenue amounted to $714,613. As of September 30, 2023, deferred revenue was comprised of unredeemed notes at Stage It that have been purchased by customers but not used toward any events. When these notes are redeemed, on average, the performing artists will receive approximately 80%, and the Company will record 20% of the value of these notes as revenue.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates include the valuation allowance for the deferred tax asset and the accruals for potential liabilities. Actual results could differ from these estimates.
Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a ratio 1Company’s Own Stock, Distinguishing Liabilities from Equity.
Fair Value of Financial Instruments
The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars that would be received for 10an 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. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:
● | Level 1 — Quoted prices in active markets for identical assets or liabilities. | |
● | Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
● | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The carrying amounts of financial instruments, such as cash, and accounts payable and accrued liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of our notes payable approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. There were no derivative liabilities outstanding as of September 30, 2023 and December 31, 2022.
Basic net income (loss) per share issuedis computed by using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed giving effect to all dilutive potential shares of Common Stock that were outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that is then shared in the income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and outstandingwarrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Dilutive potential shares of Common Stock consist of incremental shares of Common Stock issuable upon exercise of stock options. No dilutive potential shares of Common Stock were included in the computation of diluted net loss per share on September 30, 2023, because their impact would have been anti-dilutive.
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows:
Schedule of property plant equipment estimated useful lives | |||
Computers, software, and office equipment | 3 years | ||
Furniture and fixtures | 7 years |
As of September 30, 2023, the Company’s property was fully depreciated. Depreciation expense for the nine months ended September 30, 2023, and 2022, amounted to $9,134 and $19,725, respectively.
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisition is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of customer relationships, trademarks, and product formulations. The useful life of these customer relationships is estimated to be three years.
Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the effective datecapital asset pricing model approach, which includes an assessment of April 15, 2017. The reverse was effective asthe risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures, and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on August 7, 2017. All historical reported share amountsa public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess. As of December 31, 2022, the Company determined that its goodwill and intangibles were fully impaired, and as a result, recorded an impairment of goodwill and intangible assets amounting to $4,261,683 in its Statements Operations for the year ended December 31, 2022.
Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of Topic 326 is not expected to have been adjusteda material effect on the Company’s condensed consolidated financial statements and financial statement disclosures.
NOTE 4 – PREPAID EXPENSE
As of September 30, 2023 and December 31, 2022, the balances in prepaid expenses was $-0- and $130,000.
Schedule of prepaid expense | ||||||||
September 30, 2023 | December 31, 2022 | |||||||
Matchbox Twenty (“MT”) agreement | $ | $ | 100,000 | |||||
Deposit with joint venture partner | 30,000 | |||||||
Total prepaid expenses | $ | $ | 130,000 |
The MT prepaid expense in both periods relates to reflecta January 9, 2020 agreement entered into by the reverse stock split.Company with recording and performance artist, Matchbox Twenty (“MT Agreement”), to record its 2020 tour and sell limited edition double CD sets, download cards, and digital downloads. As part of the deal, the Company agreed to pay an advance of $100,000 against sales to MT and its affiliated companies, which was paid in full in installments, with the last installment of $40,000 paid on March 4, 2020.
NOTE 5 – RELATED PARTY TRANSACTIONS
DiscLive Network
On July 10, 2017, the Company entered into a Licensing Agreement with RockHouse Live Media Productions, Inc., DBA “DiscLive” or “DiscLive Network” (“DiscLive”) to formalize the terms of the Strategic Alliance entered into by the Company with DiscLive on July 21, 2016. VNUE has acquired an exclusive license from DiscLive, for a period of three years unless earlier terminated under the Agreement, for the use of all its assets, including but not limited to the DiscLive brand, website (including eCommerce platform), intellectual property, inventory, equipment, trade secrets and anything related to its business of “instant live” recording. Under the terms of the Agreement, DiscLive granted the Company a worldwide exclusive license.
In exchange for the license, DiscLive will receive a license fee equal to five percent (5%) of any sales derived from the sale and use of the products and services. DiscLive is controlled by our Chief Executive Officer. Revenues of $182,773 and $9,579 for the periods ended September 30, 2023, and 2022, respectively, were recorded using the assets licensed under this agreement. For the periods ended September 30, 2023, and 2022 the fees would have amounted to $9,139 and $479, respectively. The Company’s Chief Executive Officer agreed to temporarily waive the right to receive these license fees for both years and has never taken any fees pursuant to this agreement.
Advances from Officers/Stockholders
From time to time, officers/stockholders of the Company advance funds to the Company for working capital purposes. During the year ended December 31, 2021, the Company’s Chief Executive Officer advanced $10,000 to the Company on an interest-free basis. That amount was repaid in the fourth quarter of 2022.
NOTE 6 – BUSINESS ACQUISITION
On February 13, 2022, VNUE, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back to satisfy certain contingent obligations of Stage It.
The Merger Agreement also allows for the issuance of earn-out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On February 13, 2022, the Company, Stage It and the shareholders of Stage It entered into a voting agreement concerning the Merger.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company will issue the initial
shares and pay certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement.The Merger Agreement has been included to provide investors with information regarding its terms. The representations, warranties, and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Merger Agreement, and may not have been intended to be statements of fact, but rather as a method of allocating risk and governing the contractual rights and relationships among the parties to the Merger Agreement. In addition, such representations, warranties, and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by the Company’s shareholders. None of the Company’s shareholders or any other third party should rely on the representations, warranties, and covenants, or any descriptions thereof, as characterizations of the actual state of facts or conditions of the Company, the Company, Merger Sub, or any of their respective subsidiaries or affiliates
For the acquisition of Stage It, the following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired and liabilities assumed:
Consideration paid
Schedule of fair value of consideration | ||||
Common stock issued, 41,476,963 shares of the Company’s restricted common stock valued at $0.0101 per share | $ | 418,917 | ||
Common stock issuable, 93,523,037 shares of the Company’s restricted common stock valued at $0.0101 per share | 944,583 | |||
Net liabilities assumed | 2,871,066 | |||
Cash paid | 1,085,450 | |||
Fair value of total consideration paid | $ | 5,320,016 |
Net assets acquired and liabilities assumed
Schedule of net asset acquired and liabilities assumed | ||||
Cash and cash equivalents | $ | 107,689 | ||
Computer equipment | 36,882 | |||
Total assets | 144,571 | |||
Accounts payable and accrued liabilities | 1,711,349 | |||
Notes payable | 526,385 | |||
Deferred revenue | 777,903 | |||
Total liabilities | 3,015,637 | |||
Net liabilities assumed | $ | 2,871,066 |
The Company has allocated the fair value of the total consideration paid of $10,400,000 to goodwill and $2,600,000 to intangible assets with a life of three years. The value of goodwill represents Stage It’s ability to generate profitable operations going forward. Management estimated the provisional fair values of the intangible assets and goodwill on March 31, 2022, and did not complete a valuation study with an independent third party. During the year ended December 31, 2022, the Company recorded $758,333 in amortization expense.
On December 31, 2022, the Company, based on its internal analysis, estimated that its Stage It subsidiary would not achieve its Earnout and that all of the goodwill and intangible assets relating to the acquisition of Stage It was fully impaired. As a result, the Company recorded an impairment of goodwill and intangible assets charge net of the earnout reversal of $4,262,683 on its Statements of Operations for the year ended December 31, 2022.
The amount of $4,262,683 was calculated as follows:
Schedule of net impairment | ||||
Goodwill impairment | $ | 10,400,000 | ||
Intangible assets impairment | 1,542,847 | |||
Reversal of Earnout liability | (7,679,984 | ) | ||
Net impairment | $ | 4,262,863 |
NOTE 7 – DEFERRED REVENUE
As of September 30, 2023 deferred revenue amount to $714,613 and was comprised of unredeemed notes at Stage It that have been purchased by customers but not used toward any events. When these notes are redeemed, on average, the performing artists will receive 80%, and the Company will record 20% of the value of these notes as revenue.
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payables are recognized initially at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. Accrued expenses are recognized based on the expected amount required to settle the obligation or liability.
The following table sets forth the components of the Company’s accrued liabilities on September 30, 2023, and December 31, 2022:
Schedule of accrued liabilities | ||||||||
September 30, 2023 | December 31, 2022 | |||||||
Accounts payable and accrued expenses | $ | 2,444,903 | $ | 2,389,231 | ||||
Accrued interest | 236,510 | 282,612 | ||||||
Soundstr Obligation | 145,259 | 145,259 | ||||||
Total accounts payable and accrued liabilities | $ | 2,826,672 | $ | 2,817,102 |
As of September 30, 2023 and December 31, 2022, the balances of shares to be issued were 975,174 and $975,174, respectively. The balance as of September 30, 2023 is comprised of the following:
● | As of December 31, 2022, the Company had not yet issued | shares of common stock with a value of $ for past services provided and for an acquisition in previous years.
● | During the year ended December 31, 2022, pursuant to the acquisition of Stage It described throughout this Report, an additional 727,647. | shares remain issuable to Stage It shareholders valued at $
NOTE 10 – NOTES PAYABLE
The balance of the Notes Payable outstanding as of September 30, 2023, and December 31, 2022, was $1,329,865 and $1,134,262 respectively. The balances as of September 30, 2023, were comprised of numerous 8% notes for $1,052,761 due to Ylimit, payable on September 30, 2023, and $277,104 in notes due to former Stage It shareholders. During the three months ended September 30, 2023 the company entered into a loan modification agreement with Ylimit. Under the terms of the agreement Ylimit converted $102,603 in accrued interest into loan principal, and extended the maturity date of its outstanding promissory note to September 30, 2024. Also during the three months ended September 30, 2023 Ylimit advanced $50,000 to the company. This amount is included in the outstanding balance of $1,052,761.
NOTE 11 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
Schedule of convertible notes payable | ||||||||
September 30, 2023 | December 31, 2022 | |||||||
Various Convertible Notes(a) | $ | 131,703 | $ | 131,703 | ||||
Golock Capital, LLC Convertible Notes(b) | 339,011 | 339,011 | ||||||
Total Convertible Notes | $ | 470,714 | $ | 470,714 |
(a) | This total is comprised of six convertible notes with five different noteholders. With the exception of one note for $28,500 due to a former related party which is interest free, all of the remaining notes at a 10% interest rate are past due their maturity. The Company has not received any default notices on these notes and continues to accrue interest on these notes. Additionally, $73,204 of these notes due to DBW Investments is in dispute. |
(b) | On February 2, 2018, the Company issued a convertible note to Golock Capital, LLC (“Golock”) in the principal amount of $40,000 with an interest rate of 10% per annum and a maturity date of November 2, 2018. The note included an original issue discount of $5,000. The note is convertible into shares of the Company’s common stock at $0.015 per share. As additional consideration for Golock to enter into this agreement with the Company, the Company issued warrants to Golock to acquire in the aggregate shares of the Company’s common stock at an exercise price of $0.015 per share that expire three years from the date of grant. The relative fair value of the warrants, the original issue discount, and the beneficial conversion feature totaling $40,000 was recorded as a debt discount and will be amortized to interest expense over the term of the note. On November 5, 2018, the Company amended the notes above by changing the conversion feature for the aggregate notes to be convertible into shares of common stock of the Company at the lower of (i) $0.015 per share or, (ii) 58% of the lowest closing bid price in the 20 trading days prior to the day that Golock requests conversion. This feature gave rise to a derivative liability of $553,000 at the date of issuance, as discussed below. The amendment also increased the principal face amount of notes to include accrued interest, and an additional $43,250 was added to the principal, which was recorded to financing costs. The aggregate balance of the notes outstanding, and the related debt discount was $302,067 and $0, respectively, as of December 31, 2018. |
On April 29, 2019, Golock entered into an amendment with the Company to extend the maturity of the Notes until July 31, 2019. In return, Golock received several concessions. They received (a) a warrant to purchase 12,833,333 shares of the Company’s common stock for 48 months, exercisable at a strike price of $.00475. The Company recorded a financing charge of $28,227 related to these warrants and (b) the conversion noted above was changed from 58% to 50% of the lowest closing bid price in the 20 trading days prior to that day that Golock requested conversion. During the year ending December 31, 2019, the Company issued new notes payable of $53,331, and $23,102 of notes and accrued interest were converted into shares of common stock. The balance of the notes outstanding on December 31, 2019 was $339,010. As of December 31, 2019, $285,679 of these notes were past due. As of September 30, 2023, all of the Golock notes amounting to $339,011 were past due.
As a result, Golock has assessed the Company additional penalties and interest of $1,172,782. The Company disagrees with the accrued interest and penalties due to Golock. Initially, the Company recorded this amount as a liability on its balance during 2021. Subsequently, during the three-month period ended September 30, 2021, the Company obtained a legal opinion supporting its position that these charges were egregious and reversed the liability on its balance sheet. The Company intends to litigate this amount as well as the validity of the principal and interest outstanding if a settlement on a vastly reduced amount cannot be reached.
NOTE 12 – STOCKHOLDERS’ DEFICIT
Common stock
The Company has authorized 647,645 in gross proceeds.
shares of $ par value common stock. As of September 30, 2023, and December 31, 2022, there were and shares of common stock issued and outstanding, respectively. During the nine months ended September 30, 2023, the Company sold common shares pursuant to the terms of its equity line and raised $Preferred Stock Series A
On July 2, 2019, the Company filed a Certificate of Amendment (the “Charter Amendment”) to the Company’s Articles of Incorporation (as amended to date, the “Articles of Incorporation”) with the Secretary of State of the State of Nevada. The Charter Amendment increased the Company’s capitalization to 2,000,000,000 shares of Common Stock and 20,000,000 shares of Preferred Stock, of which 5,000,000 were designated as Series A Convertible Preferred Stock.
On May 22, 2019, the Company authorized and designated a class of Series A Convertible Preferred Stock (“Series A Preferred Stock”), in accordance with a Certificate of Designation filed with the State of Nevada (the “Series A Designation”). It subsequently issued 4,126,776 restricted shares of Series A Preferred Stock to various employees and service providers to compensate and reward them for services and to incentivize them to provide continued service to the Company. The Series A Preferred Stock receives relative rights and preferences under terms and conditions set forth in the Certificate of Designation of the Preferred Stock.
Pursuant to the Series A Designation, each share of Series A Preferred Stock may be converted into 50 shares of common stock of the Company. The Series A Preferred Stockholders shall be entitled to share among dividends with the common stock shareholders of the Company on an as-converted basis. The Series A Preferred Stockholders shall vote with the common stock as a single class, on a 100 to 1 basis, such that for every share of Series A Preferred Stock held, such shares shall entitle the holder to cast 100 votes. The holders of the Series A Preferred Stock have no liquidation or redemption preference rights but get treated as common stockholders on an as converted basis.
The Company believes that the issuance of the Series A Preferred Stock was exempt from the registration requirements under the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act in that said transaction did not involve a public solicitation and said restricted shares were issued to only a small number of employees and consultants with an ongoing relationship with the Company.
As of September 30, 2023 and 2022 the Company had
shares of $ par value preferred stock authorized and there were and shares of Series A Preferred Stock issued and outstanding, respectively. During the three months ended September 30, 2023 a shareholder converted shares of Series A stock into common shares.Preferred Stock Series B (Update)
On January 3, 2022, the Company authorized and designated a class of
shares, par value $ , of Series B Convertible Preferred Stock (“Series B Preferred Stock”), in accordance with a Certificate of Designation filed with the State of Nevada (the “Series 5 Designation”).As of September 30, 2023 there were
shares of Series B Preferred Stock Outstanding.During the nine months ended September 30, 2023, the Company issued 164,000 in gross proceeds.
Preferred B shares to GHS and raised $Warrants
In connection with the issuance of Series B Preferred Stock to the Company described in Note 14, the Company issued _______ warrants, with a five-year life, at an average strike price of $_________.
A summary of warrants is as follows:
Schedule of warrants | ||||||||
Number of Warrants | Weighted Average Exercise | |||||||
Balance outstanding, December 31, 2020 | 23,805,027 | |||||||
Warrants expired or forfeited | (8,004,708 | ) | - | |||||
Balance outstanding and exercisable, December 31, 2021 | 15,800,319 | |||||||
Warrants exercised or forfeited | (15,800,319 | ) | ||||||
Warrants granted during the year ended December 31, 2022 | 279,655,690 | |||||||
Balance outstanding and exercisable, December 31, 2022 | 279,655,690 | |||||||
Warrants exercised or forfeited | - | |||||||
Warrants granted during the nine months ended September 30, 2023 | - | |||||||
Balance outstanding and exercisable, September 30, 2023 | 335,440,817 | (a) |
(a) | The strike price on these warrants range between $0.01122 and $0.00264 and are subject to adjustment based on the market price of the Company’s stock price. |
Information relating to outstanding warrants on September 30, 2023, summarized by exercise price, is as follows:
The weighted-average remaining contractual life of all warrants outstanding and exercisable on September 30, 2023 is approximately
years. As of September 30, 2023 these warrants has no intrinsic value.Preferred Stock Series C
On May 25, 2022, the Company authorized and designated a class of 10,000 shares of Series C Preferred Stock, par value $0.0001. The holders of the Series C Preferred Stock shall have the right to cast one million (1,000,000) votes for each share held of record on all matters submitted to a vote of holders of the Company’s common stock. On the same date, the Company issued to each of Zach Bair, Chief Executive Officer & Chairman, Anthony Cardenas, Chief Financial Officer and Director, and Lou Mann, Executive Vice President and Director, 1,000 shares of this newly created Series C Preferred Stock for services rendered. These share which represented 3,000,000,000 (billion) votes, was valued at the trading price of the Company’s securities of $0.0051 on the date of Board of Director approval. As a result, the Company recorded a non-cash charge of $15,300,000 on its Statement of Operation for the three months ended September 30, 2022.
As of September 30, 2023 and December 31, 2022, there were
shares of Series C Preferred Stock outstanding.NOTE 13 – COMMITMENT AND CONTINGENCIES
Litigation
Legal Matters
In the matter of VNUE, Inc. v. Power Up Lending Group, Ltd. On October 6, 2021, the Company commenced an action against Power Up Lending Group, Ltd. (“Power Up”) and Curt Kramer (“Kramer”) (Power Up and Kramer together, the “Power Up Parties”) in the United States District Court for the Eastern District of New York. The complaint alleges that: (1) Power Up is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”) and, pursuant to Section 29(b) of the Act, the Company is entitled to recessionary relief from certain convertible promissory notes (“Notes”) and securities purchase agreements (“SPAs”) entered into by the Company and Power Up; (2) Kramer is liable to the Company as the control person of Power Up pursuant to Section 20(a) of the Act; and (3) Power Up is liable to the Company for unjust enrichment arising from the Notes and SPAs.
On December 10, 2021, the Power Up Parties filed their pre-motion conference request letter with the Court regarding their forthcoming motion to dismiss the Company’s complaint. On December 17, 2021, the Company filed its opposition thereto. On January 26, 2022, the Company filed its amended complaint, which asserted the same causes of action set forth in the initial complaint, and further alleged that Power Up made material misstatements in connection with the purchase and sale of the Company’s securities in violation of Section 10(b) of the Act and, thus, the Company is entitled to recessionary relief from the Notes and SPAs pursuant to Section 29(b) of the Act.
On February 9, 2022, the Court ordered an initial conference. The initial conference is currently scheduled for May 16, 2022, at 12:00 p.m. (EST). As of the date hereof, the Company intends to litigate its claims for relief against the Power Up Parties.
On June 7, 2022, the Company filed a voluntary dismissal of the action because the parties reached a confidential settlement.
Golock Capital, LLC and DBW Investments, LLC v. VNUE, Inc. On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (Golock and DBW together, the “Golock Plaintiffs”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Golock Plaintiffs’ complaint alleges that the Company is in breach of certain convertible promissory notes and securities purchase agreements separately entered into with Golock and DBW and seeks declaratory judgment, injunctive relief, and specific performance against the Company.
On December 2, 2021, the Golock Plaintiffs filed their amended complaint, which asserted the same causes of action set forth in the initial complaint and an additional cause of action for unjust enrichment. On January 19, 2022, the Company filed its answer with affirmative defenses to the amended complaint. As to its affirmative defenses, the Company asserted that the Golock Plaintiff’s claims are barred because: (1) the Golock Plaintiffs are unregistered dealers acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”), and, pursuant to Section 29(b) of the Act, that the Company is entitled to recessionary relief from the certain convertible promissory notes and securities purchase agreements at issue in the amended complaint; and (2) that the convertible promissory notes are, in fact, criminally usurious loans that impose interest onto the Company at a rate that violates New York Penal Law § 190.40 and, therefore, the subject convertible notes are void ab initio pursuant to New York’s usury laws.
On January 20, 2022, the Court ordered that the parties submit a joint letter in lieu of a pretrial conference on or before February 3, 2022. As of the date hereof, the Company intends to vigorously defend itself against the Golock Plaintiff’s claims.
On September 1, 2022, the Company filed an amended answer with counterclaims against the Golock Plaintiffs and their control persons asserting claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Act. On September 23, the Golock Plaintiffs filed a motion to dismiss the counterclaims.
On February 14, 2023, the Court granted the motion to dismiss and also dismissed all claims against the Golock Plaintiff’s control persons. The Company remains committed to actively litigating its affirmative defenses under the Act of and RICO.
DBW Investments, LLC et al – Trial Court
As disclosed in greater detail in the Company’s Form 10-Q, filed May 19, 2023, the Company remains in active litigation with DBW Investments, LLC (“DBW”) and Golock Capital, LLC (“Golock”).
On May 22, 2023, a bench trial was held in this dispute. On June 1, 2023, the Court published its opinion and order, wherein the Court found the Company did not successfully establish its criminal usury defense and, thus, ruled in DBW and Golock’s favor on their breach of contract claims.
On June 16, 2023, the Court entered an order awarding (a) $1,218,897.62 in favor of Golock, and (b) $268,211.18 in favor of DBW. On July 5, 2023, the Court entered an order awarding Golock and DBW $223,328.20 in attorney’s fees and costs.
DBW Investments, LLC et al – Circuit Court
On June 2, 2023, the Company appealed the trial court’s decision in favor of DBW Investments, LLC (“DBW”) and Golock Capital, LLC (“Golock”) to the United States Court of Appeals for the Second Circuit, and moved the Second Circuit for a stay of the trial court’s order pending the appeal.
On July 27, 2023, the Second Circuit entered an administrative stay of the trial court’s order pending further review by the Second Circuit.
The Company’s opening memoranda in support of the appeal is currently due September 13, 2023. The Company remains committed to vigorously defending itself against DBW and Golock. The Company believes its appeal will be successful and has not recorded any liability related to this matter in its condensed financial statements.
NOTE 14 – SUBSEQUENT EVENTS
Subsequent to September 30, 2023, the Company sold 34,000 in gross proceeds. Additionally, the Company issued shares to one director of the Company as well as shares to another director of the Company. Also, the company issued a total of shares to two consultants for services.
common shares pursuant to its equity line of credit with GHS and raised approximately $ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements in this quarterly report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also, look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business. Some forward-looking statements that we may use include, without limitation, those statements that relate to:
● | Competition and market acceptance of our product, | |
● | Other risks and uncertainties related to the music industry and our business strategy and the impact of the Covid-19 pandemic on our operations, | |
● | Our ability to penetrate the market and continually innovate useful technologies, | |
● | Our ability to negotiate and enter into license agreements, | |
● | Our ability to raise capital, and | |
● | Our ability to protect our intellectual property rights. |
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.
Presentation of Information
As used in this quarterly report, the terms “we”, “us”, “our” and the “Company” mean VNUE, Inc. and its subsidiaries unless the context requires otherwise.
All dollar amounts in this annual report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a Nevada corporation on April 4, 2006.
Impact of Current Coronavirus (COVID-19) Pandemic on the Company
Covid-19 has had a material adverse effect on our live recording business and the music industry in general. Substantially all of our future set.fm and DiscLive business is dependent on the success of public events and gatherings. We believe that the vaccination efforts throughout the world are having a positive impact on the population that may enable more live music events to be held in the future, which would be beneficial to our business; however, there can be no assurances on the timing of when this may occur or whether it will occur at all.
Overview
Our Business
We are a music technology company that utilizes our platforms to record live concerts and then sell the content to consumers. We make the content we record available to the set.fm platform, as well as our website, immediately after the show is finished. Our technology helps artists and record labels generate alternative income from the recorded content. We also offer high-end collectible products such as CDs, USB drives and laminates, which feature our fully mixed and mastered live concert content.
Until the acquisition of Stage It, described below, we had two products:
● | Set.fm™ / DiscLive Network™ - Our consumer app platform allows customers to download and purchase, via their individual mobile device, the concert they just attended. There are also physical collectible products that are recorded and sold at shows as well as online through the Company’s exclusive partner DiscLive Network™. The app itself is free to download and allows for in-app purchases regarding the content. (Currently, this is the only platform that generates any revenue for the Company.) |
● | Soundstr™ - a comprehensive music identification and rights management Cloud platform that we are developing, when fully deployed, can accurately track and audit public performances of music, creating a more transparent ecosystem for general music licensing and associated royalty payments, which will help ensure the correct stakeholders are compensated through the use of our “big data” collection. |
While Set.fm™ and Soundstr™ are proprietary marks of the Company, DiscLive, and its related marks and names are not owned by the Company and are owned and utilized by RockHouse Live Media Productions, Inc. The Company has not filed any formal trademark applications relating to Set.fm™ with the United States US Patent and Trademark Office but has been using these marks openly since 2017 and claims common law rights to them.
The Company currently only generates revenue from Set.fm and from DiscLive by (a) recording the audio of live concerts and then selling the content “instantly” through its set.fm website, as well as the IOS Set.fm mobile application, and (b) selling content on physical products such as CDs, which are burned on-site where customers can purchase them. Our customers are fans of live music and the bands which we record.
Customers want to “take home” their experience of the concerts they attend. Our Company enters into agreements with certain bands and artists and record labels if a particular artist is under contract with the label. Our teams then follow that artist or band while they are on tour and record every show on that tour. Our Company uses its own recording and sound equipment while recording concerts.
As we partner with both artists and labels, we market our services on their websites, social media platforms, and mailing lists, as well as our own websites and social networks. Furthermore, partnerships with companies similar to Ticketmaster allow us to market to customers when they buy tickets to see certain artists in concert.
On February 13, 2022, the Company entered into an agreementAgreement and Plan of Merger (the “Merger Agreement”) with PledgeMusic,VNUE Acquisition Inc., wherebya Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company agreed to acquire Stage It for $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate to the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back for the purposes of satisfying certain contingent obligations of Stage It. Though the period ended September 30, 2023, the Company has paid approximately $1,568,000 in purchase consideration and expenses related to the acquisition.
The Merger Agreement also allows for the issuance of earn out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company will acquireissue the assetsinitial 135,000,000 shares and pay certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement.
With the addition of Stage It (Stage It.com), VNUE will have the ability to livestream concerts and other events, adding to the pool of other live music-focused technology services. Stage It is an established platform where concerts or other live events may be ticketed (just like an in-person event), and fans who pay for tickets may enjoy a performance or other engagement by watching digital video as it occurs on their web browser. For example, an artist can create an event through the platform, then, in advance, let their fans know they can purchase the ability to view the concerts on the Stage It platform. Fans then buy the ability to access these concerts, and at the designated time, the fan may then observe the live performance on Stage It.com.
Recent Developments
In late July, we announced that the Company is launching an aggressive campaign to deploy its Soundstr Music Recognition Technology in every bar, restaurant and hotel in Key West, FL, and has brought on local resources to have “boots on the ground” for the rollout.
Key West is one of the digital livemost sought-after vacation spots in the world, attracting around five million tourists per year by planes, boats (including cruise ships), and automobiles. It also boasts a large number of businesses that utilize music. In fact, the famed Duval Street is lined with no less than 143 bars – in less than two miles.
Interested businesses may receive the Soundstr Pulse devices for no cost whatsoever. Additionally, in the next several months, VNUE will be offering both playlist functionality – meaning clients will be able to play fully-licensed music distribution platform Set.fmdirectly from PledgeMusic. Additionally,Soundstr – as well as the ability to opt-in for advertising, which will help to offset licensing costs that businesses pay. One of the strongest points about Soundstr Pulse is that it does have high-quality audio output capabilities (for use with advertising and for playlists), as well as Bluetooth beacon technology that will be leveraged for non-invasive advertising.
Also, in late July, we announced the Company is partnering with Key West’s Barefoot Radio 104.9 and RockHouse Live Key West in collaboration on a new music show centered around local artists and those artists who pass through the exotic and beautiful island on tour.
Live and Local at RockHouse Live Key West™ will offer PledgeMusic North America’s full suiteair every Thursday night, starting September 1, 2022, from 8 PM to 10 PM, 100% live from RockHouse Live Key West’s exclusive Rock Room.
In addition to being carried on terrestrial radio by Barefoot 104.9, the show will also air on VNUE’s online and app-based radio station, VNUE Radio, and it will be professionally livestreamed on VNUE’s StageIt.com platform, both of music business tools allowingwhich reach a global audience, and the latter with over a million subscribers. And it will also air on select screens at each of the other RockHouse Live locations in Clearwater Beach, Oxford, MS, and Memphis, TN.
Two musical artists, which will range from solo artists to sell music, merchandisefull bands, will be featured every week, and will each be interviewed on-site in the RockHouse Live Rock Room, in front of a live experiences directly to fans, enhancingaudience. Each artist will also take the Company’s clients’ revenue opportunities on a shared revenue basis. Set.fm is a DIY platform that makes it easystage, and during their performance, the radio station will play recordings by each of the featured artists, as well as other local artists who have submitted material for artists to record and sell their live shows directly to fans’ mobile devices, uploading simultaneously with their performance. The platform, which also features an innovative and easy-to-use studio app, already boasts thousands of artists and tens of thousands of fans using it. VNUE plans to update and improve the existing platform for indie artists and their fans, and to implement pro features for artists that VNUE and its affiliate DiscLive produce.
Basis of Presentationconsideration.
The interim condensed consolidated financial statements included herein reflect all material adjustments (consistingCompany has been working with Matchbox Twenty, a tour that was to commence in 2020 but has been subsequently delayed until this year due to COVID. The tour commenced in May 2023. As of normal recurring adjustmentsJune 30th, the Company had recorded approximately 29 shows (roughly half of the tour) and reclassifications and non-recurring adjustments) which,has been selling limited edition live CD sets. Together with presales enabled with our “upsell” agreement with Ticketmaster, our sales have been along the lines of our expectations, in the opinionarea of management, are ordinary200-300 units per show being sold, sometimes more, not including digital formats which will be introduced for sale upon the completion of the actual tour, and necessary“box sets” which will be offered. Over the course of the tour dates, our crew only encountered a few issues where our services could not be performed, such as weather, or inappropriately excessive fees being imposted by the stagehand union. Overall the tour has been successful.
In Q3 we will be putting digital formats and box sets online for sale from the tour and expect a fair presentationrobust interest in these formats.
Results of resultsOperations for the interim periods. Certain informationnine months ended September 30, 2023, and footnote disclosures required under2022
The following discussion and analysis of our results of operations and financial condition for the accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rulesthree months ended September 30, 2023, and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated balance sheet information as of December 31, 2016 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on April 14, 2017 (the “2016 Annual Report”). These condensed consolidated financial statements2022, should be read in conjunction with the auditedour condensed consolidated financial statements for the year ended December 31, 2016 and related notes thereto included in the 2016 Annual Report. this report.
Revenues
The following discussion and analysis of our results of operations and financial condition for the three and nine months ended September 30, 2017 are not necessarily indicative2023, and 2022, should be read in conjunction with our condensed consolidated financial statements and related notes included in this Report.
Revenues
For the nine months ended September 30, 2023, we had revenue of $428,552 compared to $233,871 in revenue for the same period ended September 30, 2022, an increase of $194,681. The increase in revenue for the period is primarily attributable to a material increase in revenues at VNUE due to the Rob Thomas tour. We expect that our revenues will increase in future quarters as a result of the resultsdecreased impact of Covid-19 and the accompanying lockdowns on businesses, which has been an obstacle for live performances; however, there can be no assurances.
Direct Costs of Revenues
For the nine months ended September 30, 2023, we had direct costs of revenue of $292,859 compared to be expected$224,786 for the entire fiscal year orsame period ended September 30, 2022.
Operating Expenses
We incurred operating expenses of $1,060,774 for anythe nine months ended September 30, 2023, as compared with $17,014,634 for the same period ended September 30, 2022, a decrease of $15,953,860. The operating expense in 2022 include two non- recurring items, $15,300,000 in stock based compensation related to the issuance of Series C voting stock, and $541,667 in amortization of intangible assets. Excluding these two items, the operating expenses in 2022 would have been $1,172,967. The decrease in operating expenses the 2023 period compared to 2022 excluding these two items amounts to $112,193. The decrease in the 2023 period is attributable to decreases in professional fees and payroll expenses, offset by an increase in general and administrative expense.
We expect our general and administrative expenses to increase in future quarters with our reporting obligations and the increased expenses associated with increased activity with Stage It operations.
Other Income / Expenses, Net
We recorded other expenses of $198,948 for the nine months ended September 30, 2023, compared to other expense of $931,499 for the same period ended September 30, 2022, a decrease of $732,551. The material decrease in other expense in the 2023 period compared to 2022 were mainly attributable to a reduction in financing cost of $578,351 in 2023 due to equity based financing in the 2023 period compared to high levels of debt based financing in the 2022 period. Additionally, we incurred a loss of $154,200 from the extinguishment of debt in 2022 compared to zero in 2023 period.
Going ConcernAs a result of the foregoing, we recorded a net loss available to common shareholders of $1,342,687 for the nine months ended September 30, 2023, compared with a net loss available to common shareholders of $18,082,150 for the same period ended September 30, 2022.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
The Company’saccompanying condensed consolidated financial statements have been prepared assuming that it will continue ason a going concern basis, which contemplates continuity of operations,the realization of assets and liquidationthe settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, during the nine months ended September 30, 2023, the Company used cash in operations of $941,419 and, as of September 30, 2023, had a stockholders’ deficit of $2,690,827 at September 30, 2017,$38,151,090_ and incurred a net lossnegative working capital of $1,081,526, and used net cash in operating activities of $318,757 for the reporting period then ended. Certain of the Company’s notes payable are also past due and in default.$6,929,188. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date thatof the financial statements are issued. The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements werebeing issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ended December 31, 2016, has expressed substantial doubt about the Company’s ability to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through June 2018. The ability of the Company to continue as a going concern is dependent onupon the Company’s ability to executeraise additional funds and implement its strategy and inbusiness plan. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On September 30, 2023, the Company had cash on hand of $28,433 as compared with cash on hand of $82,807 as of December 31, 2022.
The continuation of the Company as a going concern is dependent upon its ability to raise additional funds. Management is currently seeking additional funds, primarily throughobtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the issuanceCompany has been able to fund its operations from the proceeds of notes payable and convertible notes.
More recently, the Company has been relying on issuances of its preferred stock and its equity securitiesline of credit with GHS Investments, LLC (“GHS”), described below, to fund its operations. All other financial commitments have been terminated, and we are looking for cashnew opportunities to operatefund the Company to supplement our business.preferred stock and credit line funding. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able tocan obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stock holders,stockholders, in the case orof equity financing.
During the nine months ended September 30, 2023, the Company utilized its equity line of credit and received $647,645 in gross proceeds from the issuance of 343,790,112 shares of common stock. The Company intends to continue to use its credit line to fund its operations, although there can be no assurance that there will be sufficient availability under the terms of the Equity Financing Agreement.
Additionally, the Company issued 199 shares of Preferred B stock to GHS and received $164,000 in gross proceeds.
The Company is currently looking for other opportunities to fund the Company to supplement its credit line. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The preparation of these condensed consolidated financial statements requires us 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 condensed consolidated financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in the notes to our condensed consolidated financial statements appearing elsewhere in this prospectus, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because the information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations. (See Note 21 - Significant and Critical Accounting Policies and Practices in the Company’s Form 10-K for the period ended December 31, 2022, filed with the SEC on April 17, 2023.)
Principles of Consolidation
The Company consolidates all wholly owned and majority-owned subsidiaries in which the Company’s power to control exists. The Company consolidates the following subsidiaries and/or entities:
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VNUE Technology, Inc. and VNUE Media, Inc. were inactive corporations with no operations at September 30, 2017 and 2016, respectively. Inter-company balances and transactions have been eliminated.
Revenue Recognition
The Company recognizes revenue on the sale of digital video disks (DVD) that contain the recording of live concerts and made available to concert viewers immediately after the show and on-line.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include the assumptions used to determine the value of the derivative liabilities, the valuation allowance for the deferred tax asset, and the accruals for potential liabilities.
Fair Value of Financial Instruments
The Company follows the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and to measure the fair value of its financial instruments. The FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy are described below.
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Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts payable, accrued expenses, and other current liabilities, approximate their fair values because of the short maturity of these instruments.
The fair value of the derivative liabilities of $779,903 and $508,107 at September 30, 2017 and December 31, 2016, respectively, were valued using Level 2 inputs.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.
Loss per Common Share
Basic earnings (loss) per share are computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation as their effect is antidilutive.
For the three and nine months ended September 30, 2017 and 2016, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. As of September 30, 2017 and 2016, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive.
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| September 30, |
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| 2017 |
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| 2016 |
| ||
Convertible Notes Payable |
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| 110,015,835 |
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| 15,951,363 |
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Warrants |
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| 1,000,000 |
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| - |
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Total |
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| 111,015,835 |
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| 15,951,363 |
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Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20 all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018.
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.
In March 2016, the FASB issued the ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. The ASU also allows for an employer to repurchase more of an employee's shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The Company plans to adopt ASU 2017-11 in the first quarter of 2018. The adoption of ASU 2017-11 is expected to have a material impact on the Company’s financial statements and related disclosures because derivative liabilities from financial instruments (or embedded conversion features) that have down round features will be reclassified from liabilities to additional paid-in capital, effective as of the beginning of the fiscal year.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.
Note 3 - Related Party Transactions
DiscLive Network
On July 10, 2017, the Company entered into a Licensing Agreement with RockHouse Live Media Productions, Inc., DBA “DiscLive” or “DiscLive Network” (“DiscLive”) to formalize the terms of the Strategic Alliance entered into by the Company with DiscLive on July 21, 2016. VNUE has acquired an exclusive license from DiscLive, for a period of three years unless earlier terminated under the Agreement, for the use of all its assets, including but not limited to the DiscLive brand, website (including eCommerce platform), intellectual property, inventory, equipment, trade secrets and anything related to its business of “instant live” recording. Under the terms of the Agreement, DiscLive granted the Company a worldwide exclusive license. In exchange for the license, DiscLive will receive a license fee equal to five percent (5%) of any sales derived from the sale and use of the products and services. DiscLive is controlled by our Chief Executive Officer. Revenues of $37,825 and cost of revenues of $35,151 during the nine months ended September 30, 2017 resulted from the use of the assets licensed under this agreement.
Advances from Stockholders / Employees
From time to time, employees of the Company advance funds to the Company for working capital purposes. The advances are unsecured, non-interest bearing and due on demand. As of September 30, 2017 and December 31, 2016, the advances from the employees were $14,720 and $14,720, respectively.
Note payable to President and Significant Stockholder
On December 31, 2014 the Company entered into a note payable agreement with its President, and significant stockholder of the Company. The note is unsecured, non-interest bearing and due on December 31, 2024. As of September 30, 2017 and December 31, 2016, the note payable to the officer was $74,131 and $74,131, respectively.
Convertible Notes Payable to the Officers and Directors
In August 2014 the Company issued non-interest bearing convertible notes to certain Officers and Directors of the Company for working capital purposes. The notes are convertible at variable prices and payable on demand at any time after the earlier of (i) 36 months following the note issuance or (ii) the consummation of a corporate transaction if not previously converted. See further discussion in Note 5.
Transactions with Louis Mann
On August 26, 2015, the Company entered into an Advisory Agreement with Louis Mann (“MANN”), a former officer and director with the Company who resigned from his officer and director on August 26, 2015. The Advisory Agreement provided for MANN’s continued and ongoing advisory services to the Company until December 31, 2015 and MANN was to be paid $25,000 for providing such advisory services, which was due and payable on or before December 31, 2015. Such amount is included in accrued expenses at September 30, 2017 and December 31, 2016, respectively.
Note 4 – Notes Payable
Notes payable as of September 30, 2017 and December 31, 2016 consist of the following
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| As of |
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| December 31, |
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Individual |
| (a) |
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| $ | 9,000 |
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| $ | 9,000 |
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Tarpon |
| (b) |
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| - |
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| 25,000 |
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Total |
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| $ | 9,000 |
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| $ | 34,000 |
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Note 5 – Convertible Notes Payable
Convertible notes payable consist of the following:
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| As of |
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| December 31, |
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| 2017 |
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| 2016 |
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Various Convertible Notes |
| (a) |
| $ | 55,000 |
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| $ | 55,000 |
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Tarpon Convertible Note |
| (b) |
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| - |
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| 33,500 |
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Tarpon Convertible Note |
| (c) |
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| - |
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| - |
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Ylimit, LLC Convertible Notes |
| (d) |
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| 517,000 |
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| 300,000 |
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Crossover Capital Fund II, LLC Convertible Notes |
| (e) |
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| 61,000 |
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| - |
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Golock Capital, LLC Convertible Notes |
| (f) |
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| 105,000 |
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| - |
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Total Convertible Notes |
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| 738,000 |
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| 388,500 |
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Discount |
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| (307,967 | ) |
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| (244,534 | ) |
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Convertible notes, net |
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| $ | 430,033 |
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| $ | 143,966 |
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The Company considered the current FASB guidance of “Contracts in Entity’s Own Stock” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability of whether or not within the issuers’ control means the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined that the conversion prices of the Notes were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or the conversion price was variable. As a result, the Company determined that the conversion features of the Notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the Notes, the initial fair value of the embedded conversion feature was recorded as debt discount offsetting the fair value of the Notes and the remainder recorded as financing costs in the Condensed Consolidated Statement of Operations. The discount is being amortized using the effective interest rate method over the life of the debt instruments.
As of December 31, 2016, the unamortized debt discount was $244,534. During the nine months ended September 30, 2017, the Company issued $311,000 of convertible notes subject to a debt discount, and created a derivative liability upon issuance with a fair value of $668,557, of which $311,000 was recorded as a valuation discount, and the remaining $357,557 was recorded as a financing cost. In addition, the Company recorded an additional debt discount of $18,261 related to a warrant issued associated with the issuance of a convertible note during the period. During the nine months ended September 30, 2017, amortization of debt discount was $265,828. The unamortized balance of the debt discount was $307,967 as of September 30, 2017.
For the purposes of Balance Sheet presentation, convertible notes payable have been presented as follows:
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| September 30, |
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| December 31, |
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Convertible notes payable, net |
| $ | 400,033 |
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| $ | 121,865 |
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Convertible notes payable, related party, net |
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| 30,000 |
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| 22,101 |
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Total |
| $ | 430,033 |
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| $ | 143,966 |
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Note 6 – Derivative Liability
The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion prices of the Notes described in Note 5 were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or they were variable. Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
As of September 30, 2017 and December 31, 2016, the derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following assumptions:
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| September 30, 2017 |
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| Issued During 2017 |
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| December 31, |
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Exercise Price |
| $ | 0.002 – 0.108 |
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| $ | 0.005 – 0.026 |
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| $ | 0.013 – 0.116 |
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Stock Price |
| $ | 0.008 |
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| $ | 0.006 - 0.035 |
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| $ | 0.044 |
|
Risk-free interest rate |
| 0.84 – 1.24 | % |
| 0.94 – 1.23 | % |
| 0.59 – 0.85 | % | |||
Expected volatility |
|
| 358 | % |
| 273% - 344 | % |
|
| 243 | % | |
Expected life (in years) |
|
| 1.000 |
|
| 0.792 – 1.292 |
|
| 0.583 – 1.833 |
| ||
Expected dividend yield |
|
| 0 | % |
|
| 0 | % |
|
| 0 | % |
Fair Value: |
| $ | 779,903 |
|
| $ | 594,666 |
|
| $ | 508,107 |
|
The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future.
During the nine months ended September 30, 2017, the Company recognized $38,068 as other income, compared to $194,912 as other income during the nine months ended September 30, 2016, which represented the change in the fair value of the derivative from the respective prior period. In addition, the Company recognized derivative liabilities of $602,702 upon issuance of convertible notes during the period and a gain of $292,838 and $21,308 during the nine months ended September 30, 2017 and 2016, respectively, which represented the extinguishment of derivative liabilities related to both the extinguishment of convertible notes with cash and the conversion of a note to common stock.
Note 7 – Stockholders’ Deficit
Common stock returned by officer
On March 15, 2017, a Company officer voluntarily returned 5,000,000 shares of Common Stock held by him to the Company for no consideration. The shares were subsequently cancelled.
Shares issued for services
During the nine months ended September 30, 2017, the Company issued an aggregate of 2,575,000 shares of its common stock to certain employees and contractors for services valued at $95,125, based upon the closing market price on the date the shares were authorized to be issued.
Warrants
A summary of warrants for the nine months ended September 30, 2017 is as follows:
|
| Number of |
|
| Weighted - Average |
| ||
|
| Shares |
|
| Exercise Price |
| ||
Outstanding at December 31, 2016 |
|
| - |
|
|
| - |
|
Granted |
|
| 1,000,000 |
|
| $ | 0.01 |
|
Forfeited |
|
| - |
|
|
| - |
|
Outstanding at September 30, 2017 |
|
| 1,000,000 |
|
| $ | 0.01 |
|
Exercisable at September 30, 2017 |
|
| 1,000,000 |
|
| $ | 0.01 |
|
On September 1, 2017, the Company issued 1,000,000 warrants to purchase the Company’s common stock as an inducement to enter into a convertible note payable with Golock Capital LLC (See Note 5). The fair value of the warrants granted was determined to be $18,261 and was recorded as a debt discount and being amortized to financing costs over a term of the related convertible note of 12 months. The fair value of the warrant was calculated using the Black-Scholes option pricing model using the following assumptions – stock price of $0.01; exercise price of $0.01; expected life of 1 year; volatility of 358%; no dividend rate and a discount rate of 1.31%.
Additional information regarding warrants outstanding as of September 30, 2017 is as follows:
Warrants Outstanding at September 30, 2017 |
|
| Warrants Exercisable at September 30, 2017 |
| |||||||||||||||||
|
|
|
|
|
| Weighted |
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
| Average |
|
| Weighted |
|
|
|
|
| Weighted |
| |||||
|
|
| Number of |
|
| Remaining |
|
| Average |
|
| Number of |
|
| Average |
| |||||
Range of |
|
| Shares |
|
| Contractual Life |
|
| Exercise |
|
| Shares |
|
| Exercise |
| |||||
Exercise |
|
| Outstanding |
|
| (Years) |
|
| Price |
|
| Exercisable |
|
| Price |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
$ 0.01 |
|
|
| 1,000,000 |
|
|
| 2.92 |
|
| $ | 0.01 |
|
|
| 1,000,000 |
|
| $ | 0.01 |
|
|
|
|
| 1,000,000 |
|
|
|
|
|
|
|
|
|
|
| 1,000,000 |
|
|
|
|
|
The weighted-average remaining contractual life of warrants outstanding and exercisable at September 30, 2017 is 2.92 years.
Note 8 - Commitment and Contingencies
Litigation – Hughes Media Law Group, Inc.
On December 11, 2015, Hughes Media Law Group, Inc. (“HLMG”) filed a lawsuit against VNUE, Inc. in the Superior Court of King County, Washington, under case number 15-2-30108-0. HMLG claims damages of $130,553 for unpaid legal fees HMLG alleges are owed pursuant to an April 4, 2014 agreement with VNUE Washington, for legal work performed by HMLG for VNUE Washington prior to the Merger. The Complaint sets forth no legal basis for a lawsuit against VNUE, Inc. (Nevada) and does not, in fact, sue VNUE Washington, HMLG’s former client. The Company believes that VNUE, Inc. (Nevada) is not the proper party for this lawsuit, and reserves all available defenses and counterclaims. Under Washington Superior Court rules, VNUE, Inc. (Nevada) if service of process takes place outside of Washington, a defendant has Sixty (60) days from the date on which it was served the Complaint, to file a response setting forth its defenses. On July 25, 2016, the court issued judgment awarding HLMG $133,482 with interest at a rate of 12% per annum. The judgment stipulated that $12,000 be paid within five days of the judgment and payments of $4,000 per month to start in October, 2016. The amount of the settlement has been recorded in accounts payable in the accompanying consolidated balance sheets as of September 30, 2017 and December 31, 2016.
Note 9 – Subsequent Events
Asset Acquisition
On October 16, 2017, the Company entered into an agreement with PledgeMusic, Inc., whereby the Company will acquire the assets of the digital live music distribution platform Set.fm from PledgeMusic. Additionally, the Company will offer PledgeMusic North America’s full suite of music business tools allowing artists to sell music, merchandise and live experiences directly to fans, enhancing the Company’s clients’ revenue opportunities on a shared revenue basis.
Set.fm is a DIY platform that makes it easy for artists to record and sell their live shows directly to fans’ mobile devices, uploading simultaneously with their performance. The platform, which also features an innovative and easy-to-use studio app, already boasts thousands of artists and tens of thousands of fans using it. VNUE plans to update and improve the existing platform for indie artists and their fans, and to implement pro features for artists that VNUE and its affiliate DiscLive produce.
PledgeMusic has a growing base of 3 million music fans directly engaging with the artists they love. The platform has launched more than 50,000 campaigns across a wide range of artists with inventive ways to connect with those fans, creating newfound revenue and strategic marketing and engagement opportunities.
Convertible Note Payable
Subsequent to September 30, 2017, the Company received additional borrowings of $50,000 and issued the Lender a warrant to purchase 3,454,708 shares of the Company’s common stock at an exercise price of $0.015 per share.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements in this quarterly report that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business.
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission ("SEC"). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.
Presentation of Information
As used in this annual report, the terms "we", "us", "our" and the "Company" mean VNUE, Inc. and its subsidiaries, unless the context requires otherwise.
All dollar amounts in this annual report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a Nevada corporation on April 4, 2006.
Overview of our Current Business
Through VNUE, Inc., our wholly owned subsidiary, we now carry on business as a live entertainment music technology company which brings bands and fans together by capturing professional quality audio and video recordings of live performances and delivers the experience of a venue to your home and hand.
By streamlining the processes of curation, clearing, capturing, distribution and monetization of music performances, VNUE manages and simplifies the complexities of the music ecosystem.
VNUE produces and captures rich content through its Front of House mobile application and provides world-wide distribution and monetization of live concerts and other events through a suite of mobile, web administration applications, allowing an artist to seamlessly deliver and sell their live performances directly to the fans who attend their shows. Additionally, VNUE will now offer physical products such as limited edition “instant” CD sets, USB drives, and other products, through its strategic partnership and exclusive licensing agreement with RockHouse Live Media Productions, Inc., dba DiscLive, widely known to be the leader and pioneer in the “instant live” space.
While VNUE will primarily be used in live music venues, we are also planning to branch into many other entertainment experiences such as comedy, plays, musicals, university lectures, professional demonstrations and panel discussions, as well as action sports and religious events.
VNUE's business model is based on the production of instant content – available to fans as they leave events, as well as business to business monetization of our back end rights clearing system software, which is currently in development.
We are a relatively new company and to date we have received a minimal amount of revenues from our operations. VNUE, Inc., our wholly owned subsidiary, only recently commenced operations and we have undertaken only organizational activities and software application development. Our independent auditors have raised substantial doubts as to our ability to continue as a going concern without significant additional financing. Accordingly, for the foreseeable future, we will continue to be dependent on additional debt and equity financing in order to maintain our operations and continue with our development activities.
Acquisitions will be pursued where the Directors consider that there is clear value through the addition of expertise, customers, monetization potential or geographic footprint.
Our principal offices are located at 104 W. 29th Street, 11th Floor, New York, NY 10001. Our telephone number is 857-777-6190. The live music and entertainment space is constantly searching for new monetization outlets; VNUE has a solution that melds content and technology in almost any venue in the world. This befits not only artist, labels, publishers and live venues but the fan.
Results of Operations
The following discussion and analysis of our results of operations and financial condition for the three and nine months ended September 30, 2017 should be read in conjunction with our condensed consolidated financial statements and related notes included in this report. We are in the process of completing development of our products and services and therefore had minimal but material revenues during this quarter.
Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016
Software Development
Our software development expenses for the three months ended September 30, 2017 amounted to $24,778 compared to $126,838 for the three months ended September 30, 2016. The decrease in software development expenses relative to last year reflected the decrease in salaries for full time personnel and contract labor.
General and Administrative Expenses
Our general and administrative expenses for the three months ended September 30, 2017 amounted to $172,319 compared to $154,908 for the three months ended September 30, 2016. The increase in general and administrative expenses relative to last year was due primarily to an increase in professional fees.
Other Income (Expenses), Net
We recorded other expense, net for the three months ended September 30, 2017 of $110,712 compared to other expense, net of $207,412 for the three months ended September 30, 2016. The change in other income (expenses), net, was primarily due to the change in the fair value of derivative liabilities of $80,812, increased financing costs of $128,641, offset by the increase in the gain in fair value of derivative liability of $174,529 as compared to last year.
Net Lossfrom Operations
As a result of the foregoing revenues, direct costs of revenues, software development expenses, general and administrative expenses, and other income (expenses), net, our net loss for the three months ended September 30, 2017 was $307,809, compared to our net loss for the three months ended September 30, 2016 of $489,158.
Nine months Ended September 30, 2017 Compared to Nine months Ended September 30, 2016
Revenues
Our revenues for the nine months ended September 30, 2017 amount to $37,825. The Company had no revenues for the nine months ended September 30, 2016. The revenues resulted from the use of the assets licensed from DiscLive.
Direct Costs of Revenues
Our direct costs of revenues for the nine months ended September 30, 2017 amounted to $35,121. The Company had no direct costs of revenues for the nine months ended September 30, 2016. The costs resulted from the use of the assets licensed from DiscLive.
Software Development
Our software development expenses for the nine months ended September 30, 2017 amounted to $92,905 compared to $1,033,207 for the nine months ended September 30, 2016. The decrease in software development expenses relative to last year was due to $730,513 in stock based compensation expense recorded last year relating to shares issued to certain employees and contractors for services received as compared to $18,500 recorded for the nine months ended September 30, 2017. Excluding stock based compensation expense, our software development expenses decreased reflecting the decrease in salaries for full time personnel and contract labor caused by our lack of sufficient working capital.
General and Administrative Expenses
Our general and administrative expenses for the nine months ended September 30, 2017 amounted to $631,057 compared to $992,470 for the nine months ended September 30, 2016. The decrease in general and administrative expenses relative to last year was due primarily to the decrease in stock based compensation expense of $491,123 relating to shares issued to certain employees and contractors for services received. Excluding the difference in stock based compensation expense, our general and administrative expenses increased reflecting an increase in professional fees.
Other Income (Expenses), Net
We recorded other expense, net for the nine months ended September 30, 2017 of $360,238 compared to other expense, net of $85,861 for the nine months ended September 30, 2016. The change in other income (expenses), net, was primarily due to the change in the fair value of derivative liabilities of $156,844, increased financing costs of $359,063, offset by the increase in the gain in fair value of derivative liability of $271,530 as compared to last year.
Net Lossfrom Operations
As a result of the foregoing revenues, direct costs of revenues, software development expenses, general and administrative expenses, and other income (expenses), net, our net loss for the nine months ended September 30, 2017 was $1,081,526, compared to our net loss for the nine months ended September 30, 2016 of $2,111,538.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
As of September 30, 2017, we had cash and cash equivalents of $73,195.
We had negative cash flows from operating activities of $318,757 for the nine months ended September 30, 2017, compared with negative cash flows from operating activities of $230,587 for the nine months ended September 30, 2016. The increase in our negative cash flows from operating activities for the period is primarily due to changes in our working capital accounts.
We had positive cash flows from financing activities of $374,000 for the nine months ended September 30, 2017 as compared to $272,510 for the nine months ended September 30, 2016. The cash flows from financing activities for the nine months ended September 30, 2017 was due to $407,000 in proceeds from convertible notes less repayments of $33,000. The cash flows from financing activities for the nine months ended September 30, 2016 were primarily due to $250,000 in proceeds from a convertible note, $17,510 in advances from a stockholder and $5,000 from the sale of common shares.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Going Concern
The Company’s condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the condensed consolidated financial statements, the Company had a stockholders’ deficit of $2,690,827 at September 30, 2017, and incurred a net loss of $1,081,526, and used net cash in operating activities of $318,757 for the reporting period then ended. Certain of the Company’s notes payable are also past due and in default. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements were issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ended December 31, 2016, has expressed substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through June 2018. The ability of the Company to continue as a going concern is dependent on the Company’s ability to execute its strategy and in its ability to raise additional funds. Management is currently seeking additional funds, primarily through the issuance of equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing.
We have not generated revenues, have incurred losses since our inception, and rely upon the sale of our common stock and loans from related and other parties to fund our operations. We do not anticipate generating any revenues in the foreseeable future, and if we are unable to raise equity or secure alternative financing, we may not be able to pursue our plans and our business may fail.
Application of Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us 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, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this prospectus, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations. See Note 2 - Significant and Critical Accounting Policies and Practices herein.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include the assumptions used to value the derivative liabilities, the valuation allowance for the deferred tax asset and the accruals for potential liabilities.
Internal Software Development Costs
Development costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. The Company considers technological feasibility to be established when all planning, designing, coding and testing has been completed according to design specifications. After technological feasibility is established, any additional costs are capitalized. Through September 30, 2017, technological feasibility of the Company’s software had not been established; and, accordingly, no costs have been capitalized to date.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
Stock-Based Compensation
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by FASB, where the value of the award is measured on the date of grant and recognized as compensation expense on thea straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB, where the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then currentthen-current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
The fair value of the Company'sCompany’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
Recent Accounting Pronouncements
See Note 2 of the condensed consolidated financial statementCondensed Consolidated Financial Statement herein for management’s discussion of recent accounting pronouncements.
Selected Financial Data
Not applicable.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Item 3. Quantitative and Qualitative Disclosures of Market Risk
Not applicable.
Item 4. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this quarterly report, an evaluation was carried out by our management, with the participation of our principal executive officer and principal accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"“Exchange Act”)) as of September 30, 2017.2022. Disclosure controls and procedures 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 the SEC’s rules and forms and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.
Based on that evaluation, and the material weaknesses outlined below under Internal Control Over Financial Reporting, our principal executive officer and principal accounting officer concluded, as of the end of the period covered by this annual report, that, due to weaknesses in our internal controls described below, our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our principal executive officer and principal accounting officer to allow timely decisions regarding required disclosures.
b) Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our principal executive officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2016 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim condensed consolidated financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2016,September 30, 2022, the Company determined that there were deficiencies that constituted material weaknesses, as described below.
1. | Lack of proper segregation of duties due to limited personnel. |
2. | Lack of a formal review process that includes multiple levels of review. |
3. | Lack of adequate policies and procedures for accounting for financial transactions. |
4. | Lack of independent board member(s) |
5. | Lack of independent audit committee |
Management is currently evaluating remediation plans for the above control deficiencies.
In light of the existence of these material weaknesses, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. As a result, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2016 based on criteria established in Internal Control—Integrated Framework issued by COSO.
Weinberg & Company, an independent registered public accounting firm, is not required to and has not issued a report concerning the effectiveness of our internal control over financial reporting as of December 31, 2016 pursuant to rules of the SEC.
Changes in Internal ControlControls over Financial Reporting
During the nine monthsfiscal quarter ended September 30, 2017,2023, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
- OTHER INFORMATION
From time to time, we may bebecome involved in litigation relating to claims arising out of our operationsvarious lawsuits and legal proceedings which arise in the normalordinary course of business. Other than described herein, neither the Company, nor its officersHowever, litigation is subject to inherent uncertainties, and an adverse result in these or directorsother matters may arise from time to time that may harm our business. We are involved in, or the subjectcurrently not aware of any pendingsuch legal proceedings or governmental actions the outcome of which, in management’s opinion, would beclaims that we believe will have a material toadverse effect on our business, financial condition, or results of operations.
On December 11, 2015, Hughes Media Law Group, Inc. filed a lawsuit against VNUE, Inc. in the Superior Court of King County, Washington, under case number 15-2-30108-0. HMLG claims damages of $130,553 for unpaid legal fees HMLG alleges are owed pursuant to an April 4, 2014 agreement with VNUE Washington, for legal work performed by HMLG for VNUE Washington prior to the Merger. The Complaint sets forth no legal basis for a lawsuit against VNUE, Inc. (Nevada) and does not, in fact, sue VNUE Washington, HMLG’s former client. The Company believes that VNUE, Inc. (Nevada) is not the proper party for this lawsuit, and reserves all available defenses and counterclaims. Under Washington Superior Court rules, VNUE, Inc. (Nevada) if service of process takes place outside of Washington, a defendant has Sixty (60) days from the date on which it was served the Complaint, to file a response setting forth its defenses. The lawsuit was amended by HMLG, and now includes VNUE Media, Inc. and VNUE Technology, Inc. as additional parties. On July 25, 2016, the court issued judgment awarding HLMG $133,482 with interest at a rate of 12% per annum. The judgment stipulated that $12,000 be paid within five days of the judgment and payments of $4,000 per month to start in October, 2016. The amount of the settlement has been recorded in accounts payable in the accompanying condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016.operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
None.Please see section titled “Liquidity and Capital Resources” above for unregistered sales of equity issuances.
During the nine months ended September 30, 2023, the Company issued 343,790,112 shares of common stock and 199 shares of Series B Preferred to GHS Investments, LLC under its equity line.
These securities were issued pursuant to Section 4(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
There were no defaults upon senior securities during the period ended September 30, 2017.2023.
ITEM 4. MININGMINE SAFETY DISCLOSURES
N/ANot applicable
The Board of Directors of Vnue, Inc., a Nevada corporation (the “Company”), has approved a reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1 for 10 of each share issued and outstanding on the effective date of April 15, 2017 with the State of Nevada. The reverse became effective with the market on August 7, 2017 after receipt of FINRA's acknowledgement of our corporate action authorizing the reverse split. (the “Reverse Stock Split”).There is no other information required to be disclosed under this item that was not previously disclosed.
Reason for the Reverse Stock SplitITEM 6. Exhibits
The Board of Directors of the Company has determined that it is in the best interests of the Company to reverse split the common stock of the Company on a one (1) for ten (10) basis because the Company’s stock is currently quoted with no Bid and a very low ask affording little or no liquidity for the shareholders. It is the belief of the Board that the reverse split will cause the Bid and Ask prices to increase, creating the possibility for the stock to trade at more reasonable prices and a more reasonable spread between the Bid and Ask prices. The Company would also have sufficient authorized shares to be able to acquire additional capital.
The Board of Directors of the Company have the right to reverse split the stock of the Company in accordance with the Nevada Revised Statutes (NRS Section 78.207 and NRS Section 78.209) to effect a reverse stock split of the Common Stock and the By Laws of the Company do not preclude the Board of Directors from taking such action.
Effects of the Reverse Stock Split
The Company is currently authorized to issue 750,000,000 shares of Common Stock. As a result of the Reverse Stock Split, the authorized shares will not be changed.
As of April 14, 2017 prior to the reverse there were approximately 694,825,747 outstanding. After the 1 for 10 reverse split the number of shares outstanding is 69,482,575.
The Reverse Stock Split became effective with FINRA (the Financial Industry Regulatory Authority) and in the marketplace on August 7, 2017 upon FINRA’s acknowledgement of our corporate action.. As of the market effective date the shares of common stock began trading on a split-adjusted basis and the Company’s trading symbol changed to “VNUED” for a period of 20 business days, after which the “D” will be removed from the Company’s trading symbol, which will revert to the original symbol of “VNUE”. A new CUSIP number has been issued and will be placed on all stock certificates going forward.
Split Adjustment; No Fractional Shares
On the Effective Date with the Nevada Secretary of State, the total number of shares of the Company’s Common Stock held by each stockholder were converted automatically into the number of whole shares of Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by such stockholder immediately prior to the reverse stock split, divided by 10 and (ii) no fractional shares will be issued, and no cash or other consideration will be paid. Instead, the Company will issue one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.
State Filing
The Reverse Stock Split was effected by the Company filing a Certificate of Change (the “Certificate”) pursuant to Nevada Revised Statutes (“NRS”) Section 78.207 and Section 78.209 with the Secretary of State of the State of Nevada on April 4, 2017. The Certificate became effective with the Nevada Secretary of State on April 15, 2017. Under Nevada law, no amendment to the Company’s Articles of Incorporation is required in connection with the Reverse Stock Split.
No Stockholder Approval Required
Under Nevada law, because the Reverse Stock Split was approved by the Board of Directors of the Company in accordance with NRS Section 78.207. No stockholder approval is required. NRS Section 78.207 provides that the Company may affect the reverse stock split without stockholder approval. Company does not pay money or issue scrip to stockholders who would otherwise be entitled to receive a fractional share as a result of the Reverse Stock Split. As described herein, the Company has complied with these requirements.
Capitalization
The Reverse Stock Split does not affect the Company’s authorized preferred stock. There are no outstanding shares of the Company’s preferred stock. After the Reverse Stock Split, the Company’s authorized preferred Stock of 20,000,000 shares will remain unchanged.
Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power will remain virtually unchanged except for minor changes and adjustments that will result from rounding fractional shares into whole shares. The rights and privileges of the holders of shares of Common Stock will be substantially unaffected by the reverse stock split.
All options, warrants and convertible securities of the Company outstanding immediately prior to the Reverse Stock Split that have a fixed conversion price will be appropriately adjusted by dividing the number of shares of Common Stock into which the options, warrants and convertible securities are exercisable or convertible by 10 and multiplying the exercise or conversion price thereof by 10, as a result of the Reverse Stock Split.
Exhibits
Exhibit Number | Description of | |
31.1* | ||
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*Filed herein
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Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant: VNUE, INC
Date: November 20, 2023
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| /s/ Zach Bair | |
Zach Bair | |||
Chief Executive Officer and Principal Accounting Officer |
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