VNUE, Inc 10-Q for FY2024 Q3
VNUE, Inc. (RDCT)
About this 10-Q
VNUE, Inc filed this 10-Q on November 19, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $57.67K
- down 70.7% from $196.52K a year earlier
- Net loss
- $1.31M
- compared with a net loss of $305.53K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of each Exchange on which registered | ||
| N/A | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act: Common stock, $.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ | Large accelerated filer | ☐ | Accelerated filer |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
The number of shares of registrant’s common stock outstanding as of November 19, 2024 was .
VNUE, INC.
QUARTERLY REPORT ON FORM 10-Q
SEPTEMBER 30, 2024
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
VNUE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued expenses other | ||||||||
| Shares to be issued | ||||||||
| Accrued payroll-officers | ||||||||
| Dividends payable | ||||||||
| Notes payable | ||||||||
| Deferred revenue | ||||||||
| Convertible notes payable | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred A stock, par value $: shares authorized; and issued and outstanding as of September 30, 2024 and December 31, 2023 | ||||||||
| Preferred B stock, par value $: shares authorized; and issued and outstanding as of September 30, 2024 and December 31, 2023 | ||||||||
| Preferred C stock, par value $: 0 shares authorized; and -- issued and outstanding as of September 30, 2024 and December 31, 2023 | ||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, as of September 30, 2024, and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total stockholders’ deficit | ( |
) | ( |
) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended |
For the nine months ended |
|||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues - related party | $ | $ | $ | $ | ||||||||||||
| Revenue, net | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Direct costs of revenue | ||||||||||||||||
| Gross profit (loss) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Payroll expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other (expense), | ||||||||||||||||
| Financing costs | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other (expense) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net (loss) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Preferred B Stock dividends | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net (loss) available to common shareholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
| Preferred A | Preferred B | Preferred C | Par value $0.0001 | Additional | ||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Shares | Common Shares | Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Issuance of preferred B shares for Cash | ||||||||||||||||||||||||||||||||||||||||||||
| Financing fees paid in Preferred B shares | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Shares issued from the Company’s equity line for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Issuance of Preferred B Shares for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Financing fee paid in Preferred B shares | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Shares issued from the Company’s equity line for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Conversion of Series A Preferred stock to common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Shares issued from the Company's equity line for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Series B Dividends | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Balance. September 30, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Preferred A | Preferred B | Preferred C | Par value $0.0001 | Additional | ||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Shares | Common Shares | Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Shares issued in escrow related to Stage It transaction | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Shares issued from the Company’s equity line for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Shares issued from the Company’s equity line for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the nine months ended |
||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net (loss) | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net income to net cash used in operating activities | ||||||||
| Depreciation | ||||||||
| Beneficial conversion feature of Preferred B stock | ||||||||
| Shares issued for financing costs | ||||||||
| Shares issued for services | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue | ( |
) | ||||||
| Accrued payroll officers | ( |
) | ||||||
| Net cash (used in) operating activities | ( |
) | ( |
) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Net cash used in investing activities | ||||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from the Company’s equity line from the sale of common stock | ||||||||
| Proceeds from the sale of Series B Preferred Stock | ||||||||
| Proceeds from the issuance of promissory notes | ||||||||
| Net cash provided by investing activities | ||||||||
| Net (Decrease) In Cash | ( |
) | ( |
) | ||||
| Cash At The Beginning Of The Period | ||||||||
| Cash At The End Of The Period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash information: | ||||||||
| Common shares issued for the Stage It acquisition | $ | $ | ||||||
| Reduction of convertible notes due to litigation settlement | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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VNUE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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”).
On February 13, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company contracted to acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”). At the same time, Stage It and several of the shareholders of Stage It entered into a voting agreement concerning the Merger.
Pursuant to the Merger Agreement, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) were converted into the right to receive the applicable portion of the Merger Consideration. $
The Merger Agreement provides for the issuance of earnout shares which the company estimates will not be achieved.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial shares and paid certain amounts to Stage It vendors.
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NOTE 2 – GOING CONCERN
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements as of September 30, 2024, the Company had $
The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the Company has been able to fund its operations from the proceeds of notes payable and convertible notes. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.
NOTE 3 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company consolidates its results with its wholly-owned subsidiary, Stage It Corp.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Stage It receives revenue through a percentage of ticket sales and tipping. This show-based revenue creates a pool that is shared with the performing artist. Once a show is completed the revenue that has been created through tickets and tips is allocated. Typically, Stage It retains 23% of the revenue as an agent and the artist receives 77% 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 23% portion, less direct expenses such as broadcast costs, merchant processing fees, bank services charges, license fees and the cost of production.
6
The Company also recognizes revenue from the sale of CDs and USB drives that contain the recording of live concerts and are made available to concert attendees immediately after the show and online. Revenue is recognized on the sale of a product when our performance obligation is completed which is when the risk of loss transfers to our customers and the collection of the receivable is reasonably assured, which generally occurs when the product is purchased.
As of September 30, 2024 and December 31, 2023 deferred revenue amounted to $
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates include the 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.
Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.
Fair Value of Financial Instruments
The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars that would be received for 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.
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
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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 September 30, 2024 and September 30, 2023, because their impact would have been anti-dilutive.
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows:
| Schedule of property plant equipment estimated useful lives | |||
| Computers, software, and office equipment | |||
| Furniture and fixtures |
As of September 30, 2024 and December 31, 2023, the Company’s property, which consisted solely of computers at its Stage It subsidiary was fully depreciated and amounted to $-
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
There no recent accounting pronouncement that would impact the Company’s financial statements or disclosures.
NOTE 4 – 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 $
NOTE 5 – BUSINESS ACQUISITION
On February 13, 2022, VNUE, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back to satisfy certain contingent obligations of Stage It.
The Merger Agreement also allows for the issuance of earn-out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On February 13, 2022, the Company, Stage It and the shareholders of Stage It entered into a voting agreement concerning the Merger.
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On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial shares and paid certain amounts as detailed under the 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. Stage It did not meet its EBITA targets to issue Earn Out shares.
For the acquisition of Stage It the following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired and liabilities assumed:
Consideration paid
| Schedule of fair value of consideration | ||||
| Common stock issued, 41,476,963 shares of the Company’s restricted common stock valued at $0.0101 per share | $ | |||
| Common stock issuable, 93,523,037 shares of the Company’s restricted common stock valued at $0.0101 per share | ||||
| Net liabilities assumed | ||||
| Cash paid | ||||
| Fair value of total consideration paid | $ |
Net assets acquired and liabilities assumed
| Schedule of net asset acquired and liabilities assumed | ||||
| Cash and cash equivalents | $ | |||
| Computer equipment | ||||
| Total assets | ||||
| Accounts payable and accrued liabilities | ||||
| Notes payable | ||||
| Deferred revenue | ||||
| Total liabilities | $ | |||
| Net liabilities assumed | $ |
The Company has allocated the fair value of the total consideration paid of $
On December 31, 2022 the Company, based on its internal analysis estimated that its Stage It subsidiary would not achieve its Earnout and that all of the goodwill and intangible assets relating to the acquisition of Stage It was fully impaired. As a result the Company recorded an impairment of goodwill and intangible assets charge net of the earnout reversal of $
The amount of $4,262,683 was calculated as follows:
| Schedule of net impairment | ||||
| Goodwill impairment | $ | |||
| Intangible assets impairment | ||||
| Reversal of Earnout liability | ( |
) | ||
| Net impairment | $ |
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NOTE 6 – DEFERRED REVENUE
As of September 30, 2024 and December 31, 2023 deferred revenue amounted to $
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable are recognized initially at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. Accrued expenses are recognized based on the expected amount required to settle the obligation or liability.
The following table sets forth the components of the Company’s accrued liabilities on September 30, 2024, and December 31, 2023:
| Schedule of accrued liabilities | ||||||||
|
September 30, 2023 |
December 31, 2023 |
|||||||
| Accounts payable and accrued expense (a) | $ | $ | ||||||
| Accrued interest | ||||||||
| Soundstr Obligation | ||||||||
| Total accounts payable and accrued liabilities | $ | $ | ||||||
| (a) |
As of September 30, 2024 and December 31, 2023 the balances of shares to be issued were $
During the three months ended March 31, 2024 the Company issued shares valued at $
NOTE 9 – NOTES PAYABLE
The balance of the notes payable outstanding as of September 30, 2024, and December 31, 2023, was $
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NOTE 10 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
| Schedule of convertible notes payable | ||||||||
| September 30, 2023 |
December 31, 2023 |
|||||||
| Various Convertible Notes | $ | $ | ||||||
| Golock Capital, LLC Convertible Notes (a) | ||||||||
| Other Convertible Notes | ||||||||
| Total Convertible Notes | $ | $ | ||||||
| (a) |
NOTE 11 – STOCKHOLDERS’ DEFICIT
Common stock
The Company has authorized shares of $ par value common stock. As of September 30, 2024, and December 31, 2023, 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
As of September 30, 2024 and December 31, 2023 the Company had shares of $ par value preferred stock authorized and there were and 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
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.
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Preferred Stock Series B
On January 3, 2022, the Company authorized and designated a class of
No Preferred B shares have issued during 2024.
During the year ended December 31, 2023 the Company issued Preferred B shares to GHS. These share shares were valued as follows:
During the year ended December 31, 2022 the Company issued Preferred B shares to GHS. These share shares were valued as follows:
| ● | shares were used to raise $ |
| ● | shares were used to retire $ in debt |
| ● |
As of September 30, 2024 and December 31, 2024 there were Preferred B shares issued and outstanding.
Warrants
In connection with the issuance of Series B Preferred Stock to the Company the Company has issued
A summary of warrants is as follows:
| Schedule of warrants | ||||
| Number of Warrants |
||||
| Balance outstanding and exercisable, December 31, 2021 | ||||
| Warrants exercised or forfeited | ( |
) | ||
| Warrants granted during the year ended December 31, 2022 | ||||
| Balance outstanding and exercisable, December 31, 2022 | ||||
| Warrants exercised or forfeited | ||||
| Warrants granted during the year ended December 31, 2023 | ||||
| Balance outstanding and exercisable, December 31, 2023 | ||||
| Warrants exercised or forfeited | ||||
| Warrants granted during the three months ended September 30, 2024 | ||||
| (a) | The strike price on these warrants range between $0.00264 and $0.01122 and are subject to adjustment based on the market price of the Company’s stock price. |
Information relating to outstanding warrants on September 30, 2024, summarized by exercise price, is as follows:
The weighted-average remaining contractual life of all warrants outstanding and exercisable on September 30, 2024 is approximately years. As of September 30, 2024 these warrants had no intrinsic value.
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Preferred Stock Series C
On May 25, 2022 the Company authorized and designated a class of shares of Series C Preferred Stock, par value $.
As of September 30, 2024 and December 31, 2023, the were shares of Series C Preferred Stock outstanding.
NOTE 12 – COMMITMENT AND CONTINGENCIES
Litigation
Legal Matters
Golock Capital, LLC and DBW Investments, LLC
On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (together, the “Lenders”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Lenders alleged that the Company was in breach of certain convertible promissory notes, securities purchase agreements and common stock warrants.
Following a bench trial, on June 1, 2023, the District Court ruled in the Lenders’ favor on its breach of contract claims and against the Company. On the same day, the Company appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit (“Second Circuit”).
On June 16, 2023, the
On July 5, 2023, the
On May 24, 2024, the Second Circuit affirmed the District Court’s judgment.
The Company is currently negotiating and exploring terms of settlement with the Lenders.
LG Capital Funding, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman
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On June 15, 2022, the Company commenced an action against LG Capital Funding, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman (collectively, “LG Defendants”) in the United States District Court for the Eastern District of New York. The Company’s complaint alleges that the LG Defendants (1) violated the Racketeer Influenced and Corrupt Organizations Act through the collection of an unlawful debt imposed under a certain convertible promissory note, and (2) were unjust enriched by their collections of a certain convertible promissory note.
On March 7, 2023, the Company filed an amended complaint against the LG Defendants. The amended complaint raises the same claims for relief as the initial complaint.
On March 30, 2024, the District Court adopted the Magistrate Judge’s recommendation and denied the LG Defendants’ motion to dismiss.
On April 21, 2024, the LG Defendants filed their Answer with Affirmative Defenses. Shortly thereafter, the parties began to engage in the discovery process.
The Company remains committed to vigorously pursuing its claims for monetary damages and/or equitable relief.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual 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-15c and 15d-15c under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.
Based on that evaluation, and the material weaknesses outlined below under Internal Control Over Financial Reporting, our principal executive officer and principal accounting officer concluded, as of September 30, 2024, due to weaknesses in our internal controls described below, our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our principal executive officer and principal accounting officer to allow timely decisions regarding required disclosures.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our principal executive officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2024 using the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim 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 September 30, 2024, 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 material weaknesses.
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In light of the existence of these material weaknesses, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. As a result, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2023 based on criteria established in Internal Control-Integrated Framework issued by COSO.
Changes in Internal Control
During the three months ended September 30, 2024, there were no other changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.
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PART III
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements in this quarterly report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also, look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business. Some forward-looking statements that we may use include, without limitation, those statements that relate to:
| ● | Competition and market acceptance of our product, | |
| ● | Other risks and uncertainties related to the music industry and our business strategy and the impact of the Covid-19 pandemic on our operations, | |
| ● | Our ability to penetrate the market and continually innovate useful technologies, | |
| ● | Our ability to negotiate and enter into license agreements, | |
| ● | Our ability to raise capital, and | |
| ● | Our ability to protect our intellectual property rights. |
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.
Presentation of Information
As used in this quarterly report, the terms “we”, “us”, “our” and the “Company” mean VNUE, Inc. and its subsidiaries unless the context requires otherwise.
All dollar amounts in this annual report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a Nevada corporation on April 4, 2006. We are a music technology company that utilizes our platforms to record live concerts and then sell the content to consumers. We make the content we record available to the set.fm platform, as well as our website, immediately after the show is finished. Our technology helps artists and record labels generate alternative income from the recorded content. We also offer high-end collectible products such as CDs, USB drives and laminates, which feature our fully mixed and mastered live concert content.
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Until the acquisition of Stage It, described below, we had two products:
| ● | Set.fm™ / DiscLive Network™ - Our consumer app platform allows customers to download and purchase, via their individual mobile device, the concert they just attended. There are also physical collectible products that are recorded and sold at shows as well as online through the Company’s exclusive partner DiscLive Network™. The app itself is free to download and allows for in-app purchases regarding the content. (Currently, this is the only platform that generates any revenue for the Company.) |
| ● | Soundstr™ - a comprehensive music identification and rights management Cloud platform that we are developing, when fully deployed, can accurately track and audit public performances of music, creating a more transparent ecosystem for general music licensing and associated royalty payments, which will help ensure the correct stakeholders are compensated through the use of our “big data” collection. |
While Set.fm™ and Soundstr™ are proprietary marks of the Company, DiscLive, and its related marks and names are not owned by the Company and are owned and utilized by RockHouse Live Media Productions, Inc. The Company has not filed any formal trademark applications relating to Set.fm™ with the United States US Patent and Trademark Office but has been using these marks openly since 2017 and claims common law rights to them.
The Company currently only generates revenue from Set.fm and from DiscLive by (a) recording the audio of live concerts and then selling the content “instantly” through its set.fm website, as well as the IOS Set.fm mobile application, and (b) selling content on physical products such as CDs, which are burned on-site where customers can purchase them. Our customers are fans of live music and the bands which we record.
Customers want to “take home” their experience of the concerts they attend. Our Company enters into agreements with certain bands and artists and record labels if a particular artist is under contract with the label. Our teams then follow that artist or band while they are on tour and record every show on that tour. Our Company uses its own recording and sound equipment while recording concerts.
As we partner with both artists and labels, we market our services on their websites, social media platforms, and mailing lists, as well as our own websites and social networks. Furthermore, partnerships with companies similar to Ticketmaster allow us to market to customers when they buy tickets to see certain artists in concert.
On February 13, 2022, the Company entered into an 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”).
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.
With the addition of Stage It (Stage It.com), VNUE will have the ability to livestream concerts and other events, adding to the pool of other live music-focused technology services. Stage It is an established platform where concerts or other live events may be ticketed (just like an in-person event), and fans who pay for tickets may enjoy a performance or other engagement by watching digital video as it occurs on their web browser. For example, an artist can create an event through the platform, then, in advance, let their fans know they can purchase the ability to view the concerts on the Stage It platform. Fans then buy the ability to access these concerts, and at the designated time, the fan may then observe the live performance on Stage It.com.
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Recent Developments
Last year, 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 brought on local resources to have “boots on the ground” for the rollout. The effort is continuing, yet at a slower pace due to lack of meaningful funding.
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.
The Company has also installed Soundstr devices in Jackson, TN; Los Angeles, CA; Memphis, TN; Southaven, MS; Olive Branch, MS; Clearwater, FL; and Tampa, FL.
The Company has also signed a MOU with Eyeora, an innovative “XR” metaverse company. The Company sees a benefit in working with Eyeora as it relates to extending the Stage It experience and introducing additional revenue streams to the company. Eyeora is fully developed and commercialized. Users don 3D goggles to enter this metaverse world and can experience musical artists in 3D and as avatars.
Also recently, the Company announced the addition of veteran record company executive Jody Best to its extended team, providing record promotion services for VNUE’s Artist Services Division. VNUE has been working to build out a full suite of services for interested artists, leveraging VNUE staff’s record label, digital, marketing, and promotional experience
Results of Operations for the three months ended September 30, 2024, and 2023
The following discussion and analysis of our results of operations and financial condition for the three months ended September 30, 2024, and 2023, should be read in conjunction with our condensed consolidated financial statements and related notes included in this report. The following discussion and analysis of our results of operations and financial condition for the three months ended September 30, 2024, and 2023, should be read in conjunction with our condensed consolidated financial statements and related notes included in this Report.
Revenues
For the three months ended September 30, 2024, we had revenue of $57,670 compared to $196,522 in revenue for the same period ended September 30, 2023, a decrease of $138,853. The decrease in revenue for the period is primarily attributable to decreased revenues at our Stage It subsidiary and by a reduction in revenue at VNUE because Matchbox Twenty was not on tour during this period. 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.
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Direct Costs of Revenues
For the three months ended September 30, 2024, we had direct costs of revenue of $26,670 compared to $143,500 for the same period ended September 30, 2023.
Operating Expenses
We incurred operating expenses of $1,321,752 for the three months ended September 30, 2024, as compared with $330,132 for the same three month period ended September 30, 2023, an increase of $1,021,621. The increase in operating expenses in the 2024 period compared to 2023 is attributable to a net litigation judgement expense of $1,306,775 (see Note 12) offset by decreases in professional fees and payroll expenses.
Other Expense
We recorded other expenses of $23,798 for the three months ended September 30, 2024, compared to other expenses of $58,335 for the same period ended September 30, 2023. The decrease is attributable to lower levels of debt resulting in lower interest expense
Net Income (Loss)
As a result of the foregoing, we recorded a net loss available to common shareholders of $1,384,506 for the three months ended September 30, 2024, compared with a net loss available to common shareholders of $375,480 for the same period ended September 30, 2023.
Results of Operations for the nine months ended September 30, 2024, and 2023
Revenues
For the nine months ended September 30, 2024, we had revenue of $251,796 compared to $428,552 in revenue for the same period ended September 30, 2023, a decrease of $176,756. The decrease in revenue for the period is primarily attributable to a reduction in revenue at VNUE. 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
For the nine months ended September 30, 2024, we had direct costs of revenue of $122,836 compared to $292,859 for the same period ended September 30, 2023.
Operating Expenses
We incurred operating expenses of $1,802,158 for the nine months ended September 30, 2024, as compared with $1,060,773 for the same period ended September 30, 2023. The increase in operating expenses in the 2024 period compared to 2023 is attributable to a net litigation judgement expense of $1,306,775 (see Note 12) offset by decreases in professional fees and payroll expenses.
21
Other Expense
We recorded other expenses of $105,715 for the nine months ended September 30, 2024, compared to other expenses of $198,948 for the same period ended September 30, 2023 a decrease of $93,233. The decrease in other expenses in the 2024 period compared to 2023 is solely attributable to lower levels of draws on the Company’s equity line in 2024 compared to 2023.
Net Income (Loss)
As a result of the foregoing, we recorded a net loss available to common shareholders of $1,778,912 for the nine months ended September 30, 2024, compared with a net loss available to common shareholders of $1,124,028 for the same period ended September 30, 2023.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, during the nine months ended September 30, 2024, the Company used cash in operations of $269,641 and, as of September 30, 2024, had an accumulated deficit of $40,222,569 and negative working capital of $7,677,294. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the condensed consolidated financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On September 30, 2024, the Company had cash on hand of $3,416 as compared with cash on hand of $25,430 as of December 31, 2023.
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.
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During the nine months ended September 30, 2024, the Company utilized its equity line of credit and received $103,626 in gross proceeds from the issuance of 169,614,949 shares of common stock. As a result of the Borger Settlement described in Note 13 Subsequent Events the Company can longer use its equity line of credit until it has its condensed financial statements re-audited for the years ended December 31, 2023 and December 31, 2022. The re-audits have been mandated by the SEC in its published guidance on all public companies impacted by the Borgers Settlement.
The Company currently does not have the funding to engage its new auditors to undertake the re-audits described above, and is currently looking for other sources of financing to fund its operation. 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. Failure to obtain new sources of financing will have a material adverse impact on the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in the notes to our condensed consolidated financial statements appearing elsewhere in this prospectus, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because the information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations. (See Note 1 - Significant and Critical Accounting Policies and Practices in the Company’s Form 10-K for the period ended December 31, 2023, filed with the SEC on April 17, 2023.)
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.
23
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 a 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.
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.
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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 September 30, 2024. 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 condensed consolidated financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of September 30, 2024, 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.
Changes in Internal Controls over Financial Reporting
During the fiscal quarter ended September 30, 2024, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Golock Capital, LLC and DBW Investments, LLC
On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (together, the “Lenders”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Lenders alleged that the Company was in breach of certain convertible promissory notes, securities purchase agreements and common stock warrants.
Following a bench trial, on June 1, 2023, the District Court ruled in the Lenders’ favor on its breach of contract claims and against the Company. On the same day, the Company appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit (“Second Circuit”).
On June 16, 2023, the District Court entered a judgment in the Lenders’ favor and against the Company for: (1) $1,218,897.62 in favor of Golock, and (2) $268,211.18 in favor of DBW.
On July 5, 2023, the District Court entered an amended judgment in favor of the Lenders’ favor and against the Company. In addition to the amounts awarded on June 16, the District Court awarded the Lenders $223,328.20 for the attorney’s fees incurred in connection with this action.
On May 24, 2024, the Second Circuit affirmed the District Court’s judgment.
The Company is currently negotiating and exploring terms of settlement with the Lenders.
LG Capital Funding, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman
On June 15, 2022, the Company commenced an action against LG Capital Funding, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman (collectively, “LG Defendants”) in the United States District Court for the Eastern District of New York. The Company’s complaint alleges that the LG Defendants (1) violated the Racketeer Influenced and Corrupt Organizations Act through the collection of an unlawful debt imposed under a certain convertible promissory note, and (2) were unjust enriched by their collections of a certain convertible promissory note.
On March 7, 2023, the Company filed an amended complaint against the LG Defendants. The amended complaint raises the same claims for relief as the initial complaint.
On March 30, 2024, the District Court adopted the Magistrate Judge’s recommendation and denied the LG Defendants’ motion to dismiss.
On April 21, 2024, the LG Defendants filed their Answer with Affirmative Defenses. Shortly thereafter, the parties began to engage in the discovery process.
The Company remains committed to vigorously pursuing its claims for monetary damages and/or equitable relief.
ITEM 1A. RISK FACTORS
As a smaller reporting company, the Company is not required to disclose material changes to the risk factors.
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.
During the three months ended September 30, 2024 the company issued a total of 44,944,445 shares to four consultants valued at $35,956
During the three months ended June 30, 2024, the Company issued 12,564,224 shares of common stock to GHS Investments, LLC under its equity line of credit and 22,033,333 shares of its common stock for services
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the period ended September 30, 2024.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
During the quarter ended September 30, 2024, no director or officer
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ITEM 6. Exhibits
Exhibits
| * | Filed herein |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: VNUE, INC
Date: November 19, 2024
| By: | /s/ Zach Bair | |
| Zach Bair | ||
| Chief Executive Officer and Principal Accounting Officer |
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Exhibit 31.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL ACCOUNTING OFFICER PURSUANT TO 18
U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14 UNDER THE SECURITIES ACT OF 1934
I, Zach Bair, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of VNUE, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations: and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Registrant | VNUE, Inc. | |
| Date: November 19, 2024 | By: | /s/ Zach Bair |
| Zach Bair | ||
| Principal Executive Officer and Principal Accounting Officer | ||
Exhibit 32.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL ACCOUNTING OFFICER PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of VNUE, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Zach Bair, Chief Executive Officer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Registrant | VNUE, Inc. | |
| Date: November 19, 2024 | By: | /s/ Zach Bair |
| Zach Bair | ||
| Principal Executive Officer and Principal Accounting Officer | ||