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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/19/22 VNUE, Inc. 10-Q 6/30/22 60:4.2M Empire Filings/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.19M
2: EX-31.1 Certification -- §302 - SOA'02 HTML 23K
3: EX-32.1 Certification -- §906 - SOA'02 HTML 18K
9: R1 Cover HTML 65K
10: R2 Consolidated Balance Sheets (Unaudited) HTML 110K
11: R3 Consolidated Balance Sheets (Unaudited) HTML 40K
(Parenthetical)
12: R4 Consolidated Statements of Operations (Unaudited) HTML 95K
13: R5 Condensed Consolidated Statements of Changes in HTML 78K
Stockholders' Deficit (Unaudited)
14: R6 Consolidated Statements of Cash Flows (Unaudited) HTML 89K
15: R7 Organization and Basis of Presentation HTML 25K
16: R8 Going Concern HTML 23K
17: R9 Significant and Critical Accounting Policies and HTML 55K
Practices
18: R10 Prepaid Expense HTML 21K
19: R11 Related Party Transactions HTML 27K
20: R12 Business Acquisition HTML 50K
21: R13 Intangible Assets HTML 21K
22: R14 Accounts Payable and Accrued Liabilities HTML 31K
23: R15 Purchase Liability HTML 23K
24: R16 Shares to Be Issued HTML 22K
25: R17 Notes Payable HTML 21K
26: R18 Convertible Notes Payable HTML 52K
27: R19 Stockholders? Deficit HTML 69K
28: R20 Commitment and Contingencies HTML 29K
29: R21 Subsequent Events HTML 21K
30: R22 Significant and Critical Accounting Policies and HTML 79K
Practices (Policies)
31: R23 Significant and Critical Accounting Policies and HTML 21K
Practices (Tables)
32: R24 Business Acquisition (Tables) HTML 42K
33: R25 Accounts Payable and Accrued Liabilities (Tables) HTML 28K
34: R26 Convertible Notes Payable (Tables) HTML 29K
35: R27 Stockholders? Deficit (Tables) HTML 32K
36: R28 Organization and Basis of Presentation (Details HTML 20K
Narrative)
37: R29 Going Concern (Details Narrative) HTML 27K
38: R30 Disclosure -SIGNIFICANT AND CRITICAL ACCOUNTING HTML 22K
POLICIES AND PRACTICES (Details)
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Practices (Details Narrative)
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46: R38 Accounts Payable and Accrued Liabilities (Details) HTML 25K
47: R39 Purchase Liability (Details Narrative) HTML 23K
48: R40 Shares to Be Issued (Details Narrative) HTML 24K
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50: R42 Convertible Notes Payable (Details) HTML 75K
51: R43 Convertible Notes Payable (Details Narrative) HTML 50K
52: R44 Stockholders' Deficit (Details) HTML 31K
53: R45 Stockholders? Deficit (Details Narrative) HTML 107K
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55: R47 Subsequent Events (Details Narrative) HTML 25K
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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
i ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended i June 30, 2022
i ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. i 000-53462
| i VNUE, INC. |
| (Name of Registrant in its Charter) |
| i Nevada | i 98-0543851 | |
(State or Other Jurisdiction of incorporation or organization) |
(I.R.S. Employer I.D. No.) |
i 104 West 29th Street, i 11th Floor, i New York, i NY i 10001
(Address of Principal Executive Offices)
(Registrant’s telephone number, including area code)
Securities registered under Section 12 (b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically 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 and post such files.) i 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| i Non-accelerated filer | ☒ | Smaller reporting company | i ☒ |
| Emerging growth company | i ☐ |
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 ☐ i No ☒
The number of shares of registrant’s common stock outstanding as of August 19, 2022 was .
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VNUE, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
The following unaudited interim financial statements of VNUE, Inc. (referred to herein as the “Company,” “we,” “us” or “our”) are included in this quarterly report on Form 10-Q:
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C: 1
CONSOLIDATED BALANCE SHEETS
(unaudited)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | i 31,659 | $ | i 36,958 | ||||
| Prepaid expenses | i 100,000 | i 464,336 | ||||||
| Total current assets | i 131,659 | i 501,294 | ||||||
| Fixed assets, net | i 27,060 | i - | ||||||
| Goodwill | i 10,400,000 | - | ||||||
| Intangible Assets | i 2,275,000 | - | ||||||
| Total assets | $ | i 12,833,719 | $ | i 501,294 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | i 2,742,490 | $ | i 923,781 | ||||
| Shares to be issued | i 1,038,469 | i 247,707 | ||||||
| Accrued payroll-officers | i 243,250 | i 233,750 | ||||||
| Advances from officer | i 10,000 | i 10,000 | ||||||
| Dividends payable | i 82,984 | - | ||||||
| Notes payable | i 1,145,542 | i 869,157 | ||||||
| Deferred revenue | i 851,730 | i 74,225 | ||||||
| Convertible notes payable, net | i 470,714 | i 635,714 | ||||||
| Purchase liability | i 7,979,984 | i 300,000 | ||||||
| Total current liabilities | i 14,565,164 | i 3,294,334 | ||||||
| Total liabilities | i 14,565,164 | i 3,294,334 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred A stock, par value $: shares authorized; and issued and outstanding as of June 30, 2022 and December 31, 2021 | i 425 | i 425 | ||||||
| Preferred B stock, par value $: shares authorized; and -- issued and outstanding as of June 30, 2022, and December 31, 2021 | - | - | ||||||
| Preferred C stock, par value $: shares authorized; and -- issued and outstanding as of June 30, 2022, and December 31, 2021 | - | - | ||||||
| Common stock, par value $, shares authorized; and and shares issued and outstanding, as of June 30, 2022, and December 31, 2021, respectively | i 147,448 | i 141,177 | ||||||
| Additional paid-in capital | i 29,364,119 | i 10,900,652 | ||||||
| Accumulated deficit | ( i 31,243,437 | ) | ( i 13,835,294 | ) | ||||
| Total stockholders’ deficit | ( i 1,731,445 | ) | ( i 2,793,040 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | i 12,833,719 | $ | i 501,294 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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2
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For
the three months | For
the six months | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues – related party | $ | i 1,440 | $ | i 4,320 | $ | i 6,489 | $ | i 6,581 | ||||||||
| Revenue, net | i 91,581 | - | i 128,202 | - | ||||||||||||
| Total revenue | i 93,021 | i 4,320 | i 134,691 | i 6,581 | ||||||||||||
| Direct costs of revenue | i 112,213 | i 66 | i 152,726 | i 66 | ||||||||||||
| Gross margin (loss) | ( i 19,192 | ) | i 4,254 | ( i 18,036 | ) | i 6,515 | ||||||||||
| Operating expenses: | ||||||||||||||||
| Stock based compensation -related party | i 15,300,000 | - | i 15,300,000 | - | ||||||||||||
| General and administrative expense | i 57,109 | i 14,282 | i 120,311 | i 31,354 | ||||||||||||
| Payroll expenses | i 125,279 | i 67,000 | i 246,830 | i 132,750 | ||||||||||||
| Professional fees | i 129,925 | i 79,604 | i 481,878 | i 170,809 | ||||||||||||
| Amortization of intangible assets | i 216,667 | - | i 325,000 | - | ||||||||||||
| Total operating expenses | i 15,828,980 | i 160,886 | i 16,474,019 | i 334,913 | ||||||||||||
| Operating loss | ( i 15,848,173 | ) | ( i 156,632 | ) | ( i 16,492,055 | ) | ( i 328,398 | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Change in fair value of derivative liability | - | i 812,349 | - | i 3,156,582 | ||||||||||||
| Other income | - | i 1,172,782 | - | i 1,172,782.00 | ||||||||||||
| Loss on the extinguishment of debt | ( i 154,200 | ) | ( i 80,227 | ) | ( i 154,200 | ) | ( i 80,227 | ) | ||||||||
| Financing costs | ( i 160,749 | ) | ( i 24,169 | ) | ( i 678,905 | ) | ( i 205,535 | ) | ||||||||
| Other income (expense), net | ( i 314,949 | ) | i 1,880,735 | ( i 833,105 | ) | i 4,043,602 | ||||||||||
| Net income (loss) | $ | ( i 16,163,122 | ) | $ | i 1,724,103 | ( i 17,325,160 | ) | $ | i 3,715,204 | |||||||
| Preferred B Stock dividends | ( i 51,915 | ) | - | ( i 82,984 | ) | - | ||||||||||
| Net income (loss) available to common shareholders | $ | ( i 16,215,037 | ) | $ | i 1,724,103 | ( i 17,408,143 | ) | $ | i 3,715,204 | |||||||
| Net income (loss) per common share - basic and diluted | $ | ( i 0.01 | ) | $ | i 0.00 | $ | ( i 0.01 | ) | $ | i 0.00 | ||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic and diluted | i 1,470,664,691 | i 1,243,610,132 | i 1,443,141,667 | i 1,227,641,362 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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3
(UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Unaudited)
| Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
| Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | ||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2020 | i 4,126,776 | $ | i 413 | - | $ | - | - | $ | - | i 1,211,495,162 | $ | i 121,149 | $ | i 8,386,593 | ( i 16,755,676 | ) | ( i 8,247,521 | ) | ||||||||||||||||||||||||||
| Beneficial conversion feature of convertible notes | i 111,765 | i 111,765 | ||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | i 1,991,101 | i 1,991,101 | ||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | i 4,126,776 | $ | i 413 | - | $ | - | - | $ | - | i 1,211,495,162 | $ | i 121,149 | $ | i 8,498,358 | $ | ( i 14,764,575 | ) | $ | ( i 6,144,656 | ) | ||||||||||||||||||||||||
| Shares issued upon conversion of convertible notes payable | i 123,803 | i 12 | i 75,195,174 | i 7,520 | i 1,273,991 | i 1,281,523 | ||||||||||||||||||||||||||||||||||||||
| Net income | - | - | i 1,724,104 | i 1,724,104 | ||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | i 4,250,579 | $ | i 425 | - | $ | - | - | $ | - | i 1,286,690,336 | $ | i 128,669 | $ | i 9,772,348 | $ | ( i 13,040,472 | ) | $ | ( i 3,139,030 | ) | ||||||||||||||||||||||||
| Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
| Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | ||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2021 | i 4,250,579 | $ | i 425 | - | $ | - | - | $ | - | i 1,411,779,497 | $ | i 141,177 | $ | i 10,900,652 | $ | ( i 13,835,294 | ) | $ | ( i 2,793,040 | ) | ||||||||||||||||||||||||
| Issuance of Preferred B Shares for cash | i 1,500 | i 1,500,000 | i 1,500,000 | |||||||||||||||||||||||||||||||||||||||||
| Financing fee paid in Preferred B shares | i 35 | i 42,000 | i 42,000 | |||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( i 31,068 | ) | ( i 31,068 | ) | ||||||||||||||||||||||||||||||||||||||||
| Beneficial conversion feature of Preferred B shares | i 300,000 | i 300,000 | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | i 6,000,000 | i 600 | i 56,200 | i 56,800 | ||||||||||||||||||||||||||||||||||||||||
| Acquisition shares issued for Stage It purchase | i 41,476,963 | i 4,148 | i 414,770 | i 418,917 | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( i 1,162,038 | ) | ( i 1,162,038 | ) | ||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2022 | i 4,250,579 | $ | i 425 | i 1,535 | $ | - | - | $ | - | i 1,459,256,460 | $ | i 145,925 | $ | i 13,213,621 | $ | ( i 15,028,400 | ) | $ | ( i 1,668,428 | ) | ||||||||||||||||||||||||
| Issuance of Preferred B Shares for cash | i 280 | i 280,000 | i 280,000 | |||||||||||||||||||||||||||||||||||||||||
| Financing fee paid in Preferred B shares | i 10 | i 12,000 | i 12,000 | |||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( i 51,915 | ) | ( i 51,915 | ) | ||||||||||||||||||||||||||||||||||||||||
| Beneficial conversion feature of Preferred B shares | i 87,000 | i 87,000 | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to Preferred B shares | i 266 | i 319,200 | i 319,200 | |||||||||||||||||||||||||||||||||||||||||
| Issuance of Preferred C shares to related parties | i 3,000 | i 15,300,000 | i 15,300,000 | |||||||||||||||||||||||||||||||||||||||||
| Acquisition shares issued for Stage It purchase | i 15,229,726 | i 1,523 | i 152,297 | i 153,820 | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | ( i 16,163,122 | ) | ( i 16,163,122 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2022 | i 4,250,579 | $ | i 425 | i 2,091 | $ | - | i 3,000 | $ | - | i 1,474,486,186 | $ | i 147,448 | $ | i 29,364,118 | $ | ( i 31,243,437 | ) | $ | ( i 1,731,445 | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
The accompanying notes are an integral part of these consolidated financial statements.
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5
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
History and Organization
VNUE, Inc. (formerly Tierra Grande Resources, Inc.) (“VNUE”, “TGRI”, or the “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 technology-driven solutions for Artists, Venues, and Festivals to automate the capturing, publishing, and monetization of their content, as well as protection of their rights.
On February 13, 2022, 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 for the purposes of satisfying 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. See Note 5. for additional information
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The accompanying 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 consolidated financial statements as of June 30, 2022, the Company had $ i 31,659 in cash on hand, had negative working capital of $ i 14,433,505 and had an accumulated deficit of $ i 31,243,437. Additionally for the six months ended June 30, 2022, the Company used $ i 557,538 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 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 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 June 30, 2022, 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.
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NOTE 3 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
i
The accompanying 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 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.
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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 on 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 June 30, 2022 and December 31, 2021 deferred revenue amounted to $ i 851,730 and $ i 74,225, respectively.
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Management’s Representation of Interim Financial Statements
The accompanying unaudited financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.
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The preparation of the 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 assumptions used for the determination of goodwill and intangible assets, the valuation allowance for the deferred tax asset and the accruals for potential liabilities. Actual results could differ from these estimates.
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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 Company’s Own Stock, Distinguishing Liabilities from Equity.
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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 an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. 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.
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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 i i no / derivative liabilities outstanding as of June 30, 2022 and December 31, 2021
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Basic net income (loss) per share is 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 warrants 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 June 30, 2022, because their impact was anti-dilutive. As of June 30, 2022, the Company had outstanding warrants and shares related to convertible notes payables respectively, which were excluded from the computation of net loss per share.
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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 threshold for depreciating office equipment is $ i 200, and $ i 1,000 for furniture and fixtures maintenance and repairs are charged to expense as incurred. 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:
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| Schedule of Property Plant Equipment Estimated Useful Lives | |||
| Computers, software, and office equipment | i 3 years | ||
| Furniture and fixtures | i 7 years |
As of June 30, 2022, the Company’s property, which consisted solely of computers, amounted to $ i 27,060 and - i 0-, respectively. Depreciation expense for the six months ended June 30, 2022, and 2021, amounted to $ i 1,880 and $ i 9,822 respectively.
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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 capital asset pricing model approach, which includes an assessment of the 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 a 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.
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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 a material effect on the Company’s financial statements and financial statement disclosures.
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As of June 30, 2022 and December 31, 2021, the balances in prepaid expenses was $ i 100,000 and $ i 464,336.
$ i 100,000 of the prepaid expense in both periods relates to a January 9, 2020 agreement entered into by the 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 i 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. This tour which has been delayed due to Covid-19 is expected to commence in summer of 2022.
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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 $ i 6,489 and $ i 6,581 for the periods ended June 30, 2022, and 2021, respectively, were recorded using the assets licensed under this agreement. For the periods ended June 30, 2022, and 2021 the fees would have amounted to $ i 324 and $ i 329, respectively. The Company’s Chief Executive Officer agreed to waive the right to receive these license fees for both years and has never taken any fees pursuant to this agreement.
Accrued Payroll to Officers
Accrued payroll to two officers was $ i 243,250 and $ i 233,750 respectively, as of June 30, 2022, and December 31, 2021, respectively. The Chief Executive Officer’s compensation is $ per year.
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 CEO advanced $ i 10,000 to the Company on an interest-free basis. That amount remained outstanding as of June 30, 2022.
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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.
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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
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| 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 | $ | i 418,917 | ||
| Common stock issuable, 93,523,037 shares of the Company’s restricted common stock valued at $0.0101 per share | i 944,583 | |||
| Net liabilities assumed | i 2,871,066 | |||
| Earnout liability | i 7,679,984 | |||
| Cash paid | i 1,085,450 | |||
| Fair value of total consideration paid | $ | i 13,000,000 |
Net assets acquired and liabilities assumed
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The Company has allocated the fair value of the total consideration paid of $ i 10,400,000 to goodwill and $ i 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. The Company’s accounting for the acquisition of Stage It is incomplete. Management is performing a valuation study to calculate the fair value of the acquired intangible assets, which it plans to complete within the one-year measurement period.
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As of June 30, 2022, the balance of intangible assets was $ i 2,275,000. During the year the three-month period ended June 30, 2022, the Company recorded $ i 108,333 in amortization expense. As discussed in Note 6, the intangible assets have been valued based on provisional estimates of fair value and are subject to change as the Company completes its valuation assessment by the completion of the one-year measurement period. Remaining amortization as of June 30, 2022 for the following fiscal years is: 2022 - $ i 325,000; 2023 - $ i 866,666; and 2024 - $ i 866,666, 2025 -$ i 216,668.
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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 June 30, 2022, and December 31, 2021:
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The balance of the company’s Purchase Liability at June 30, 2022, and December 31, 2021 was $ i 7,979,984 and $ i 300,000, respectively.
Under the terms of the business acquisition of Stage It described in Note 6, during the three months ended June 30, 2022 the Company had a contingent Earnout Liability of $ i 7,679,984 due to the shareholders of Stage It if Stage It operations achieve certain operating milestones. This liability will be subject to quarterly analysis.
On October 16, 2017, the Company entered into an agreement with PledgeMusic, Inc. (the “Seller”), whereby the Company acquired the digital live music distribution platform “Set.fm” from PledgeMusic. The purchase price for the acquisition was comprised of $ i 50,000 paid in cash, and a purchase liability of $ i 300,000.
The purchase liability was payable on the net revenues derived from VNUE’s live recording and content business and must be paid in full to the Seller no later than the three (3) year anniversary of the date of the agreement, or October 16, 2020. If the Company fails to pay the Seller the purchase liability on time, the Seller may request at any time within one hundred eighty days (180) days following the (3) year anniversary of the asset purchase agreement, that the Company immediately forfeit, convey, assign, and transfer to the Seller all or any of the Purchased Assets so requested by the Seller for no additional consideration. The Company has had no correspondence regarding this liability with Pledge Music who declared bankruptcy in 2019.
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As of June 30, 2022 and December 31, 2021 the balances of shares to be issued were $ i 1,038,469 and $ i 247,707. The balance as of June 30, 2022 is comprised of the following
| ● | As of December 31, 2021 the Company had not yet issued shares of common stock with a value of $ i 247,707 for past services provided and for an acquisition in previous years. |
| ● | During the six months ended June 30, 2022, pursuant to the acquisition of Stage It described throughout this Report, an additional shares remain issuable to Stage It shareholders valued at $ i 790,762. |
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The balance of the Notes Payable outstanding as of June 30, 2022, and December 31, 2021, was $ i 1,142,542 and $ i 869,157, respectively. The balances as of December 31, 2021 were comprised of two notes amounting to $ i 12,000 and an i 8% note for $ i 857,157 due to Ylimit payable on September 30, 2022. The two notes for $12,000 are past due an continue to accrue interest.
During the six months ended June 30, 2022, the Company added $ i 273,385 in note liabilities pursuant to the Stage It acquisition. These notes currently are not accruing interest.
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NOTE 12 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
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| Schedule of Convertible notes payable | ||||||||
| June 30, 2022 | December 31, 2021 | |||||||
| Various Convertible Notes | $ | i 43,500 | i 43,500 | |||||
| Golock Capital, LLC Convertible Notes (a) | i 339,011 | i 339,011 | ||||||
| Other Convertible Notes (b) | i 88,203 | i 253,203 | ||||||
| Total Convertible Notes | $ | i 470,714 | i 635,714 | |||||
| (a) | On February 2, 2018, the Company issued a convertible note to Golock Capital, LLC (“Lender”) in the principal amount of $ i 40,000 with an interest rate at i 10% per annum and a maturity date of i 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 $ i 0.015 per share. As additional consideration for the Lender to enter into this agreement with the Company, the Company issued warrants to the Lender to acquire in the aggregate shares of the Company’s common stock at an exercise price of $ i 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 $ i 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 i 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 the Lender requests conversion. This feature gave rise to a derivative liability of $ i 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 $ i 43,250 was added to principal, which was recorded to financing costs. The aggregate balance of the notes outstanding, and the related debt discount was $ i 302,067 and $ i 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. i 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 the Lender requested conversion. During the year ending December 31, 2019, the Company issued new notes payable of $ i 53,331 and $ i 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 $ i 339,010. As of December 31, 2019, $ i 285,679 of these notes were past due. As of June 30, 2022 all of the Golock notes amounting to $ i 339,011 were past due.
As a result Golock has assessed the Company additional penalties and interest of $ i 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 the period ended 2021. Subsequent 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.
| (b) | During the year ended December 31, 2021, GHS Investments funded an i 8%, $ i 165,000 convertible promissory note maturing on i November 16, 2021. This note was converted to equity during the three months ended June 30, 2022. As of June 30, 2022, $ i 73,204 of these notes due to one lender are past due. This lender is associated with Golock and the Company is disputing the validity of this note. |
Summary
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 Consolidated Statement of Operations.
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NOTE 13 – STOCKHOLDERS’ DEFICIT
Common stock
The Company has authorized shares of $ par value common stock. As of June 30, 2022, and December 31, 2021, there were and shares of common stock issued and outstanding respectively.
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 i 2,000,000,000 shares of Common Stock and shares of Preferred Stock, of which, i 5,000,000 were designated as Series A Convertible Preferred Stock.
As of June 30, 2022 and 2021 the Company had shares of $ par value preferred stock authorized and there were shares of Series A Preferred Stock issued and outstanding.
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 i 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 June 30, 2022, and December 31, 2021, there were shares of Series A Preferred issued and outstanding.
Preferred Stock Series B
On January 3, 2022, the Company authorized and designated a class of i 1,600 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”).
During the three months ended March 31, 2022 the Company issued restricted shares of Series B Preferred Stock to GHS Investments (“GHS”) in return for $ i 1,500,000 (less $130,000 in fees) in financing provided to the Company.
Pursuant to the Series B Designation, each share of Series B Preferred Stock may be converted into $ i 1,200 of common stock of the Company. In connection with the issuance of the Series B Preferred Stock, the Company recorded $ i 42,000 in financing fees and a $ i 300,000 expense for the beneficial conversion feature of Series B Preferred stock.
During the three months ended June 30, 2022 the Company issued an additional Series B Preferred Shares. of these shares were issued for gross cash proceeds of $ i 280,000. of these shares were issued as a commitment fee, and of these shares were issued to retire debt. In connection with these issuances the Company recorded $ i 12,000 in financing fees, a beneficial conversion feature of $ i 87,000 and a loss of $ i 154,200 on the retirement of debt.
As of June 30, 2022, and December 31, 2021, there were and -- shares of Series B Preferred outstanding, respectively.
Preferred Stock Series C
On May 25, 2022 the Company authorized and designated a class of i 10,000 shares of Series C Preferred Stock, par value $ i 0.0001. i 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, CEO & Chairman, Anthony Cardenas, CCO and Director, and Lou Mann, EVP and Director, 1,000 shares of this newly created Series C Preferred Stock for services rendered. i These share which represented 3,000,000,000 (billion) votes was value 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 $ i 15,300,000 on its Statement of Operation for the three months ended June 30, 2022.
As of June 30, 2022 and December 31, 2021, there were and -- shares of Series C Preferred Stock outstanding.
Warrants
In connection with the issuance of Series B Preferred Stock to the Company described in Note 14, the Company issued i 133,689,840 warrants, with a five year life, at a strike price of $ i 0.01122.
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A summary of warrants is as follows:
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| Schedule of warrants | ||||||||
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of Warrants | Weighted Average Exercise | |||||||
| Balance outstanding, December 31, 2020 | i 23,805,027 | - | ||||||
| Warrants expired or forfeited | ( i 8,004,708 | ) | - | |||||
| Balance outstanding and exercisable, December 31, 2021 | i 15,800,319 | $ | i 0.00475 | |||||
| Warrants granted during the six months ended June 30, 2022 | i 215,467,618 | $ | i 0.00885 | (a) | ||||
| Balance outstanding and exercisable, June 30, 2022 | i 231,267,937 | - | ||||||
| (a) | The strike price is subject to adjustment based on the market price of the company’s stock price |
Information relating to outstanding warrants on June 30, 2022, summarized by exercise price, is as follows:
The weighted-average remaining contractual life of all warrants outstanding and exercisable on June 30, 2022 is approximately years. The outstanding and exercisable warrants outstanding on June 30, 2022, had i i no / intrinsic value.
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NOTE 14 – COMMITMENT AND CONTINGENCIES
Joint Venture Agreement – Music Reports, Inc.
On September 1, 2018, the Company entered into an initial joint venture (“JV”) agreement with Music Reports, Inc., (“MRI”). Music Reports (musicreports.com) will initially partner with VNUE to provide Performing Rights Organization (PRO) data to VNUE’s Soundstr MRT (music recognition technology) platform through its extensive Songdex database, and will eventually work with VNUE to integrate the automated direct licensing capability and royalty payment and distribution into the Soundstr platform. i The initial term of the JV is for nine (6) months and requires the Company to Pay MRI fifty percent (50%) of net revenue every quarter. As of June 30, 2022, no net revenue was generated from the JV.
Artist Agreement
On October 27, 2015, the Company entered into an Artist Agreement with I Break Horses, a Swedish duo based in Stockholm. The Artist Agreement is effective October 27, 2015, and has a term lasting as long as I Break Horses artist recordings are available via the VNUE Service. i Under the terms of the Artist Agreement, the Company shall handle rights clearing and distribution for I Break Horses recordings and receive 30% of the Net Income generated thereby. As of June 30, 2022, the Company had not earned any revenue under this agreement.
Litigation
Legal Matters
DBW Investments, LLC et al
As disclosed in greater detail in the Company’s Form 10-Q, filed May 23, 2022, the Company remains in active litigation with DBW Investments, LLC (“DBW”) and Golock Capital, LLC (“Golock”). The remainder of this disclosure will address all material updates since the aforementioned Form 10-Q.
On May 6, 2022, the Company filed a motion for leave to amend its answer, affirmative defenses, and counterclaims. As of the date hereof, the Company’s motion is fully submitted to the Court, but no decision has been made.
On August 17, 2022, the Company was informed that the case was reassigned from Judge Vernon S. Broderick to Judge Denise L. Cote.
The Company remains committed to vigorously defending itself against DBW and Golock
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LG Capital, LLC et al
On June 15, 2022, the Company commenced an action against LG Capital, LLC (“LG Capital”), Joseph Lerman (“Lerman”), Boruch Greenberg (“Greenberg”), and Daniel Gellman (“Gellman”) (LG, Lerman, Greenberg, and Gellman, together, the “LG Defendants”) in the U.S. District Court for the Eastern District of New York.
The Company’s complaint alleges that: (i) LG is an unregistered dealer acting in contravention of federal securities laws and, thus, the Company is entitled to rescission—pursuant to Section 29(b) of the Securities Exchange Act of 1934—of all unlawful securities transactions by and between the Company and LG, including the Convertible Promissory Note, dated October 23, 2018 (the “Note”), the Securities Purchase Agreement, dated October 23, 2018 (“SPA”), and all conversions made pursuant to the Note (“Conversions”); (ii) Lerman, Greenberg, and Gellman are liable to the Company as control persons of LG Capital for its violations of federal securities laws; (iii) LG Capital is a RICO enterprise, that Lerman, Greenberg, and Gellman are RICO culpable persons who controlled LG Capital, and the LG Defendants violated RICO by engaging in unlawful debt collection through the Note and Conversions; (iv) Lerman, Greenberg, and Gellman conspired to violate RICO through unlawful debt collection; (v) the LG Defendants have been unjustly enriched at the expense of the Company through the Note, SPA, and Conversions; and (vi) a constructive trust be imposed against the LG Defendants.
The LG Defendants are obligated to answer or otherwise respond to the Company’s complaint on or before August 30, 2022.
The Company remains committed to vigorously asserting its legal claims against the LG Defendants.
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On July 14, 2022, the Company issued shares related to the Stage IT transaction. Additionally the Company raised net proceeds of $ i 20,851 from the sale of shares to GHS Investments.
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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.
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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 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 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 which 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 agreement with certain bands and artists, and record labels if a particular artist 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, their social media platforms, their 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 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 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”).
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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 March 31,, 2022 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 issue the initial 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, and 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 most 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 directly from 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 air every Thursday night, starting September 1, 2022, from 8PM to 10PM, 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 which 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 full bands, will be featured every week, and will each be interviewed on-site in the RockHouse Live Rock Room, in front of a live audience. Each artist will also take the stage, 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 consideration.
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Results of Operations for the three and six months ended June 30, 2022, and 2021
The following discussion and analysis of our results of operations and financial condition for the three and six months ended June 30, 2022, and 2021, should be read in conjunction with our condensed consolidated financial statements and related notes included in this report.
Revenues
In the six months ended June 30, 2022, we had revenue of $134,691 compared to $6,581 for the six months ended June 30, 2021, representing an increase of $128,110. For the three months compared for each year, it represented an increase of $88,701. The increase in revenue is primarily attributable to the inclusion of Stage It revenues in the three and six months ended June 30, 2022 compared to zero during the same periods ended June 30, 2021.
We expect that our revenues will increase in future quarters as a result of the decreased 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
In the six months ended June 30, 2022, we had direct costs of revenue of $152,726 compared to $66 for the six months ended June 30, 2021, representing an increase of $152,660. For the three months compared for each year, it represented an increase of $112,147.
The increase in costs is attributable to Stage It. We expect to generate positive gross margins from higher sales volumes in the future, although there can be no assurances.
Operating Expenses
We incurred operating expenses in the amount of $16,474,019 for the six months ended June 30, 2022, as compared with $334,913 for the same period ended June 30, 2021, primarily as a result of $15,300,000 representing the fair market value of the Series C Preferred Stock voting stock received as compensation by our management. We do not expense to have this expense in future quarters.
The balance of our operating expenses for all periods consisted of the following for the six months ended June 30, 2022 and 2021.
| Six
Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| General and administrative expenses | $ | 120,311 | $ | 31,354 | ||||
| Payroll expenses | $ | 246,830 | $ | 132,750 | ||||
| Professional Fees | $ | 481,878 | $ | 170,809 | ||||
| Amortization of intangible assets | $ | 325,000 | $ | — | ||||
The increase of $88,957 in our general and administrative expenses for the six months ended June 30, 2022 versus the same period ended 2021 is largely the result of the inclusion of Stage It expenses in 2022 compared to $-0- in the prior year. We expect our general and administrative expenses to increase in future quarters with our reporting obligations with the SEC and the increased expenses associated with increased activity with StageIt operations, which is expected for the balance of the year.
The increase of $114,080 in our payroll expenses for the six months ended June 30, 2022 versus the same period ended 2021 is largely the result salaries, wages, benefits and other human resource related costs due to the acquisition of StageIt and the team to support additional growth.
We expect that our payroll will increase in future quarters as we take on more operations that require most human resources.
The increase of $311,069 in our professional fees for the six months ended June 30, 2022 versus the same period ended 2021 is largely the result of the added cost of legal and accounting compliance in connection with the merger with StageIt and the increased costs associated with our newly acquired subsidiary.
We recorded amortization and intangible expense of $325,000 for the six months ended June 30, 2022 with none in the same period ended June 30, 2021 as a result of the acquisition of Stage It.
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Other Income / Expenses, Net
We recorded other expense of $833,105 for the six months ended June 30, 2022, compared to other income of $4,043,602 for the six months ended June 30, 2021. Our other expenses in the 2022 period was mainly attributable to financing costs and a loss on the extinguishment of debt. Our other income in the 2021 period was mainly attributable to a change in the fair market value of a derivative liability and from other income.
We expect to incur other expenses in future quarters as a result of financing transactions.
Net Income (Loss)
As a result of the foregoing we recorded a net loss available to common shareholders of $17,408,143 for the six months ended June 30, 2022, compared with net income available to common shareholders of $3,715,204 for the six months ended June 30, 2021.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
The accompanying 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 consolidated financial statements, during the six months ended June 30, 2022, the Company used cash in operations of $557,538, and as of June 30, 2022, had a stockholders’ deficit of $31,243,437 and negative working capital of $ 14,433,505. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the 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 financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On June 30, 2022, the Company had cash on hand of $31,659, as compared with cash on hand of $36,958 as of December 31, 2021.
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.
More recently, the Company has been relying on issuances of its preferred stock and its equity line 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 new opportunities to fund the Company to supplement our 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 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.
On January 3, 2022 and on April 19, 2022, the Company executed Securities Purchase Agreements with GHS whereby GHS agreed to purchase, in tranches, shares of our Series B Convertible Preferred Stock. The Company been able to raise $1,750,000 from the sale of 1,795 shares of Series B Convertible Preferred Stock with 100% warrant coverage.
On June 3, 2022, the Company entered into an Exchange Agreement with GHS, whereby GHS agreed to purchase 266 shares of the Company’s Series B Convertible Preferred Stock in exchange for retiring two convertible promissory notes held in our Company with principal and accrued but unpaid interest of $267,194. This reduced the debt in our Company by the same amount.
On June 29, 2022, the Company entered a Securities Purchase Agreement with GHS Investments, LLC (“GHS”) dated June 22, 2022, whereby GHS agreed to purchase, $30,000 of the Company’s Series B Convertible Preferred Stock in exchange for 32 shares of Series B Convertible Preferred Stock with 100% warrant coverage.
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The Company has agreed to register the shares of common stock underlying the 2,093 shares of Series B Preferred Stock and 203,467,618 shares of common stock underlying warrants. GHS has agreed to a one time waiver of the registration requirement for these shares of common stock, provided that we increase our authorized common stock and register the common shares at a later date when enough authorized stock is available for such purpose.
On August 8, 2022, we filed an amendment to our Articles of Incorporation to increase our authorized shares of common stock from 2,000,000,000 to 4,000,000,000 shares with par value remaining at $0.0001 per share. There was no change to the number of our authorized preferred stock.
We filed the amendment, after approval of our board and shareholders, to reserve sufficient shares of our common stock for issuance upon conversion or exercise of our outstanding debt and equity securities and to provide us with greater flexibility for future financings and potential acquisitions. As a result of the amendment, we are now able to supply shares of common stock to update our reserve commitments and we are now able to utilize the equity line that we recently entered into with GHS.
Also on June 6, 2022, the Company entered into an Equity Financing Agreement (“Financing Agreement”) and Registration Rights Agreement (“Registration Agreement”) with GHS. Under the terms of the Financing Agreement, GHS agreed to provide the Company with up to $10,000,000 upon effectiveness of a registration statement filed with the U.S. Securities and Exchange Commission.
Following effectiveness of the registration statement, the Company shall have the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, in an amount equaling less than ten thousand dollars ($10,000) or greater than five hundred thousand dollars ($500,000). Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s common stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Financing Agreement). Following an up-list to the NASDAQ or an equivalent national exchange by the Company, the Purchase price shall mean ninety percent (90%) of the Market Price, subject to a floor of $.0001 per share. Puts may be delivered by the Company to GHS until the earlier of twenty-four (24) months after the effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $10,000,000 worth of common stock under the terms of the Equity Financing Agreement.
Additionally, concurrently with the execution of definitive agreements, the Company has issued to GHS 29,069,768 commitment shares that were not issued prior by the Company, but have now been issued that the amendment to increase the Company’s authorized common stock has been filed.
The Registration Agreement provides that the Company shall (i) use its best efforts to file with the Commission the Registration Statement within 30 days of the date of the registration rights Agreement; and (ii) have the registration statement declared effective by the Commission within 30 days after the date the registration statement is filed with the Commission, but in no event more than 90 days after the Registration Statement is filed.
The Company has filed the registration statement as required by the Registration Agreement.
During the three months ended June 30, 2022, the Company did not utilize equity line of credit and currently does not have enough cash on hand to operate longer than the next two months unless it is able to utilize its Financing Agreement.
Notwithstanding, given the volume limitations imposed by the Financing Agreement, where we may not put shares over 200% of the Company’s average trading volume, with a maximum amount of $500,000 per put, 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.
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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 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 1 - Significant and Critical Accounting Policies and Practices in the Company’s Form 10-K for the period ended December 31, 2021 filed with the SEC on April 15, 2022.
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.
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 the 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 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 the 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-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’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.
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Recent Accounting Pronouncements
See Note 2 of the Condensed 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”)) as of June 30, 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 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 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
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 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 June 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.
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c) Changes in Internal Controls over Financial Reporting
During the fiscal quarter ended June 30, 2022, 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.
d) 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.
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From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Please see section titled “Liquidity and Capital Resources” above for unregistered sales of equity issuances.
In August 2022, the Company issued 29,069,768 shares of common stock to GHS under the Financing Agreement as commitment shares.
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 June 30, 2022.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
There is no other information required to be disclosed under this item which was not previously disclosed.
Exhibits
Exhibit Number |
Description of Exhibits | |
| 31.1* | Certification of the Chief Executive Officer and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 32.1* | Certification of the Chief Executive Officer and Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
| * | 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: August 19, 2022 | By: | /s/ Zach Bair |
| Zach Bair | ||
Chief Executive Officer (Principal Executive Officer and Principal Accounting Officer) |
||
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| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/31/22 | ||||
| 12/15/22 | ||||
| 9/30/22 | ||||
| 9/1/22 | ||||
| 8/30/22 | ||||
| Filed on: | 8/19/22 | |||
| 8/17/22 | ||||
| 8/8/22 | ||||
| 7/14/22 | CORRESP, S-1/A, UPLOAD | |||
| For Period end: | 6/30/22 | NT 10-Q | ||
| 6/29/22 | 8-K | |||
| 6/22/22 | ||||
| 6/15/22 | S-1/A | |||
| 6/6/22 | 8-K | |||
| 6/3/22 | ||||
| 5/25/22 | 8-K | |||
| 5/23/22 | 10-Q | |||
| 5/6/22 | ||||
| 4/19/22 | 8-K | |||
| 4/15/22 | 10-K | |||
| 3/31/22 | 10-Q, NT 10-K, NT 10-Q | |||
| 2/14/22 | 8-K, S-1 | |||
| 2/13/22 | 8-K | |||
| 1/3/22 | 8-K | |||
| 12/31/21 | 10-K, NT 10-K | |||
| 11/16/21 | ||||
| 9/30/21 | 10-Q | |||
| 6/30/21 | 10-Q | |||
| 3/31/21 | 10-Q, NT 10-K, NT 10-Q | |||
| 12/31/20 | 10-K, NT 10-K, SC 13G/A | |||
| 10/16/20 | ||||
| 3/4/20 | ||||
| 1/9/20 | ||||
| 12/31/19 | 10-K, 10-K/A, NT 10-K | |||
| 7/31/19 | ||||
| 7/2/19 | 8-K | |||
| 5/22/19 | 8-K | |||
| 4/29/19 | ||||
| 12/31/18 | 10-K, NT 10-K | |||
| 11/5/18 | ||||
| 11/2/18 | ||||
| 10/23/18 | ||||
| 9/1/18 | ||||
| 2/2/18 | ||||
| 10/16/17 | 8-K | |||
| 7/10/17 | 8-K | |||
| 7/21/16 | ||||
| 10/27/15 | 8-K | |||
| 5/29/15 | 3, 8-K, 8-K/A | |||
| 4/4/06 | ||||
| List all Filings | ||||