VNUE, Inc 10-Q for FY2020 Q2
VNUE, Inc. (RDCT)
About this 10-Q
VNUE, Inc filed this 10-Q on August 11, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).
Headline figures
Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $141.14K
- compared with a net loss of $1.67M a year earlier
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2020
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission File No. 000-53462
| VNUE, INC. |
| (Name of Registrant in its Charter) |
| Nevada |
| 98-0543851 |
| (State or Other Jurisdiction of incorporation or organization) |
| (I.R.S. Employer I.D. No.) |
104 West 29th Street, 11th Floor, New York, NY 10001
(Address of Principal Executive Offices)
(833) 937-5493
(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. 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.) 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 | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
|
|
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of registrant’s common stock outstanding as of August 10, 2020, was 1,149,756,152.
VNUE, INC.
QUARTERLY REPORT ON FORM 10-Q
June 30, 2020
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
| June 30, 2020 |
|
| December 31, 2019 |
| ||
|
|
| (Unaudited) |
|
|
| |||
| Assets | ||||||||
| Current assets: |
|
|
|
|
|
| ||
| Cash |
| $ | 8,323 |
|
| $ | 52,096 |
|
| Prepaid expenses |
|
| 100,000 |
|
|
| - |
|
| Total current assets |
|
| 108,323 |
|
|
| 52,096 |
|
| Total assets |
| $ | 108,323 |
|
| $ | 52,096 |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
| $ | 1,090,696 |
|
| $ | 976,895 |
|
| Shares to be issued |
|
| 247,707 |
|
|
| 247,707 |
|
| Accrued payroll-officer |
|
| 159,250 |
|
|
| 109,250 |
|
| Advances from former officer |
|
| 720 |
|
|
| 720 |
|
| Notes payable |
|
| 34,000 |
|
|
| 34,000 |
|
| Deferred revenue |
|
| 74,225 |
|
|
| - |
|
| Convertible notes payable, net |
|
| 1,787,444 |
|
|
| 1,486,067 |
|
| Purchase liability |
|
| 300,000 |
|
|
| 300,000 |
|
| Derivative liability |
|
| 816,447 |
|
|
| 922,509 |
|
| Total current liabilities |
|
| 4,510,489 |
|
|
| 4,077,148 |
|
| Total liabilities |
|
| 4,510,489 |
|
|
| 4,077,148 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' Deficit |
|
|
|
|
|
|
|
|
| Preferred stock, par value $0.0001: 20,000,000 shares authorized 4,126,776 issued and outstanding |
|
| 413 |
|
|
| 413 |
|
| Common stock, par value $0.0001, 2,000,000,000 shares authorized; 1,149,756,152 and 770,883,602 shares issued and outstanding, respectively |
|
| 114,975 |
|
|
| 77,088 |
|
| Additional paid-in capital |
|
| 8,182,767 |
|
|
| 8,099,346 |
|
| Accumulated deficit |
|
| (12,700,321 | ) |
|
| (12,201,899 | ) |
| Total stockholders' deficit |
|
| (4,402,166 | ) |
|
| (4,025,052 | ) |
| Total Liabilities and Stockholders' Deficit |
| $ | 108,323 |
|
| $ | 52,096 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
| Table of Contents |
(UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
| For the Three Months |
|
| For the Three Months |
|
| For the Six Months |
|
| For the Six Months |
| ||||
|
|
| Ended |
|
| Ended |
|
| Ended |
|
| Ended |
| ||||
|
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenues -related party |
| $ | 6,127 |
|
| $ | 64,544 |
|
| $ | 18,186 |
|
| $ | 88,100 |
|
| Direct costs of revenue |
|
| - |
|
|
| 39,530 |
|
|
| 8,509 |
|
|
| 97,968 |
|
| Gross margin (loss) |
|
| 6,127 |
|
|
| 25,014 |
|
|
| 9,677 |
|
|
| (9,868 | ) |
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and development |
|
| - |
|
|
| 3,746 |
|
|
| - |
|
|
| 5,827 |
|
| General and administrative |
|
| 193,843 |
|
|
| 706,503 |
|
|
| 370,031 |
|
|
| 832,071 |
|
| Total costs and expenses |
|
| 193,843 |
|
|
| 710,249 |
|
|
| 370,031 |
|
|
| 837,898 |
|
| Operating loss |
|
| (187,716 | ) |
|
| (685,235 | ) |
|
| (360,354 | ) |
|
| (847,766 | ) |
| Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Change in fair value of derivative liability |
|
| 396,924 |
|
|
| (645,834 | ) |
|
| 106,062 |
|
|
| 377,006 |
|
| Loss on the extinguishment of debt |
|
| - |
|
|
| (204,002 | ) |
|
| (72,709 | ) |
|
| (387,375 | ) |
| Gain on settlement of obligations |
|
| - |
|
|
| 12,046 |
|
|
| - |
|
|
| 9,143 |
|
| Financing costs |
|
| (68,073 | ) |
|
| (151,002 | ) |
|
| (171,421 | ) |
|
| (451,493 | ) |
| Other income (expense), net |
|
| 328,852 |
|
|
| (988,792 | ) |
|
| (138,068 | ) |
|
| (452,719 | ) |
| Net income (loss) |
| $ | 141,135 |
|
| $ | (1,674,028 | ) |
| $ | (498,422 | ) |
| $ | (1,300,485 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per common share - basic and diluted |
| $ | 0.00 |
|
| $ | (0.01 | ) |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
| 1,149,756,152 |
|
|
| 322,251,427 |
|
|
| 1,089,508,907 |
|
|
| 245,570,640 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
| Table of Contents |
(UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
|
|
|
|
|
|
| Par value $0.001 |
|
| Additional |
|
|
|
|
|
|
| ||||||||||||
|
|
| Preferred Shares |
|
| Common Shares |
|
| Paid- in |
|
|
|
|
| |||||||||||||||
|
|
| Number |
|
| Amount |
|
| Number |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Balance - December 31, 2018 |
|
| - |
|
|
| - |
|
|
| 105,635,816 |
|
|
| 10,563 |
|
|
| 6,493,070 |
|
|
| (10,801,801 | ) |
|
| (4,298,168 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares returned from former officer |
|
|
|
|
|
|
|
|
|
| (4,555,918 | ) |
|
| (456 | ) |
|
| 456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares issued in settlement of accounts payable to former officer |
|
|
|
|
|
|
|
|
|
| 11,428,571 |
|
|
| 1,143 |
|
|
| 29,714 |
|
|
|
|
|
|
| 30,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares issued on conversion of accrued payroll to officer |
|
|
|
|
|
|
|
|
|
| 15,057,143 |
|
|
| 1,506 |
|
|
| 39,149 |
|
|
|
|
|
|
| 40,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gain on extinguishment of accrued payroll to officers recorded as contributed capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,046 |
|
|
|
|
|
|
| 12,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares issued on conversion of notes payable |
|
|
|
|
|
|
|
|
|
| 127,152,659 |
|
|
| 12,715 |
|
|
| 388,232 |
|
|
|
|
|
|
| 400,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 373,543 |
|
|
| 373,543 |
|
| March 31, 2019 |
|
| - |
|
| $ | - |
|
|
| 254,718,271 |
|
| $ | 25,471 |
|
| $ | 6,962,666 |
|
| $ | (10,428,258 | ) |
| $ | (3,440,121 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuance of Series A Preferred Stock |
|
| 4,127,776 |
|
|
| 413 |
|
|
|
|
|
|
|
|
|
|
| 589,716 |
|
|
|
|
|
|
| 590,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares issued on conversion of notes payable |
|
|
|
|
|
|
|
|
|
| 128,851,891 |
|
|
| 12,885 |
|
|
| 282,568 |
|
|
|
|
|
|
| 295,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuance of warrants for financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 36,533 |
|
|
|
|
|
|
| 36,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,674,028 | ) |
|
| (1,674,028 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, June 30, 2019 |
|
| 4,127,776 |
|
| $ | 413 |
|
|
| 383,570,162 |
|
| $ | 38,356 |
|
| $ | 7,871,483 |
|
| $ | (12,102,286 | ) |
| $ | (4,192,034 | ) |
|
|
|
|
|
|
| Par value $0.001 |
|
| Additional |
|
|
|
|
|
|
| ||||||||||||
|
|
| Preferred Shares |
|
| Common Shares |
|
| Paid- in |
|
|
|
|
| |||||||||||||||
|
|
| Number |
|
| Amount |
|
| Number |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Balance - December 31, 2019 |
|
| 4,126,776 |
|
| $ | 413 |
|
|
| 770,883,602 |
|
| $ | 77,088 |
|
| $ | 8,099,346 |
|
| $ | (12,201,899 | ) |
| $ | (4,025,052 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares issued on conversion of notes payable |
|
|
|
|
|
|
|
|
|
| 378,872,550 |
|
|
| 37,887 |
|
|
| 83,421 |
|
|
|
|
|
|
| 121,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (639,557 | ) |
|
| (639,557 | ) |
| Balance, March 31, 2020 |
|
| 4,126,776 |
|
| $ | 413 |
|
|
| 1,149,756,152 |
|
| $ | 114,975 |
|
| $ | 8,182,767 |
|
| $ | (12,841,456 | ) |
|
| (4,543,301 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 141,135 |
|
|
| 141,135 |
|
| Balance, June 30, 2020 |
|
| 4,126,776 |
|
| $ | 413 |
|
|
| 1,149,756,152 |
|
| $ | 114,975 |
|
| $ | 8,182,767 |
|
| $ | (12,700,321 | ) |
| $ | (4,402,166 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
| Table of Contents |
(UNAUDITED) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
| For the Six |
|
| For the Six |
| ||
|
|
| Months Ended |
|
| Months Ended |
| ||
|
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||
| Cash Flows From Operating Activities: |
|
|
|
|
|
| ||
| Net income (loss) |
| $ | (498,422 | ) |
| $ | (1,300,485 | ) |
| Adjustments to reconcile net income to net cash |
|
|
|
|
|
|
|
|
| provided by (used for) operating activities |
|
|
|
|
|
|
|
|
| Change in the fair value of derivatives |
|
| (106,062 | ) |
|
| (377,006 | ) |
| Derivative value considered financing costs |
|
| 48,599 |
|
|
| 69,759 |
|
| Gain on the settlement of vendor obligations |
|
| - |
|
|
| (9,143 | ) |
| Loss on the extinguishment of debt |
|
| 72,709 |
|
|
| 387,375 |
|
| Amortization of debt discount |
|
| 69,669 |
|
|
| 253,035 |
|
| Amortization of intangible assets |
|
| - |
|
|
| 50,516 |
|
| Warrants issued for financing costs |
|
| - |
|
|
| 36,533 |
|
| Financing cost for the extension of the maturity date of convertible note |
|
| - |
|
|
| 30,428 |
|
| Stock-based compensation |
|
| - |
|
|
| 590,129 |
|
| Shares issued for financing costs |
|
| - |
|
|
| 3,500 |
|
| Shares issued for services |
|
| - |
|
|
| 184 |
|
| Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
| Prepaid expenses |
|
| (100,000 | ) |
|
| 667 |
|
| Accounts payable and accrued interest |
|
| 72,551 |
|
|
| 42,772 |
|
| Shares to be issued |
|
|
|
|
|
|
|
|
| Deferred revenue |
|
| 74,225 |
|
|
|
|
|
| Accrued payroll officers |
|
| 91,250 |
|
|
| 30,000 |
|
| Net cash (used in) operating activities |
|
| (275,481 | ) |
|
| (191,736 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash Flows From Investing Activities: |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
| Proceeds from notes payable |
|
| - |
|
|
| 25,000 |
|
| Payoff of convertible note |
|
| (53,000 | ) |
|
| - |
|
| Proceeds from the issuance of convertible notes |
|
| 284,708 |
|
|
| 173,000 |
|
| Net cash provided by investing activities |
|
| 231,708 |
|
|
| 198,000 |
|
|
|
|
|
|
|
|
|
|
|
| Net Increase (Decrease) In Cash |
|
| (43,773 | ) |
|
| 6,264 |
|
| Cash At The Beginning Of The Period |
|
| 52,096 |
|
|
| 18,191 |
|
| Cash At The End Of The Period |
| $ | 8,323 |
|
| $ | 24,455 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
| Cash paid for interest |
| $ | - |
|
| $ | - |
|
| Cash paid for income taxes |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
| Common shares issued upon conversion of notes payable and accrued interest |
| $ | 121,308 |
|
| $ | 696,400 |
|
| Common shares issued in settlement of accounts payable and accrued expenses |
| $ | - |
|
| $ | 30,587 |
|
| Common shares issued upon conversion of accrued payroll |
| $ | - |
|
| $ | 40,654 |
|
| Fair value of derivative created upon issuance of convertible debt recorded as debt discount |
| $ | - |
|
| $ | 82,306 |
|
| Capital contribution upon conversion of accrued payroll for officer/shareholder |
| $ | - |
|
| $ | 12,046 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
| Table of Contents |
| SIX MONTHS ENDED JUNE 30, 2020 AND 2019 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of VNUE, Inc., a Nevada corporation (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. Such reclassifications did not affect the Company’s financial position, results of operations, or cash flows.
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 which, all of the outstanding shares of any class or series of VNUE Washington were exchanged for an aggregate of 50,762,987 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.
Overview of Business
We are a music technology company, that offers a suite of products and services that monetize and monitor music for artists, labels, performing rights organizations, publishers, writers, radio stations, venues, restaurants, bars, and other stakeholders in music.
| 7 |
| Table of Contents |
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, during the six months ended June 30, 2020, the Company incurred an operating loss of $498,422, used cash in operations of $275,481 and had a stockholders’ deficit of $4,402,166. 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 December 31, 2019, consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.
On June 30, 2020, the Company had cash on hand of $8,323. Subsequent to June 30, 2020, we raised $40,000 from the issuance of three convertible notes to an accredited investor (see Note 10, Subsequent Events). Management estimates that the current funds on hand will be sufficient to continue operations through August 31, 2020. 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. 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 2 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Consolidation
The Company consolidates all wholly-owned and majority-owned subsidiaries in which the Company’s power to control exists. The Company consolidates the following subsidiaries and/or entities:
| Name of consolidated subsidiary or Entity |
| State or other jurisdiction of incorporation or organization |
| Date of incorporation or formation (date of acquisition/disposition, if applicable) |
| Attributable interest |
| |
|
|
|
|
|
|
|
|
| |
| VNUE Inc. (formerly TGRI) |
| The State of Nevada |
| April 4, 2006 (May 29, 2015) |
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
| VNUE Inc. (VNUE Washington) |
| The State of Washington |
| October 16, 2014 |
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
| VNUE LLC |
| The State of Washington |
| August 1, 2013 (December 3, 2014) |
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
| VNUE Technology Inc. |
| The State of Washington |
| October 16, 2014 |
|
| 90 | % |
|
|
|
|
|
|
|
|
|
|
| VNUE Media Inc. |
| The State of Washington |
| October 16, 2014 |
|
| 89 | % |
VNUE Technology, Inc. and VNUE Media, Inc. were inactive corporations on June 30, 2020, and 2019, respectively. Inter-company balances and transactions have been eliminated.
| 8 |
| Table of Contents |
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts. The implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements. 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.
The Company recognizes revenue on the sale of vouchers that fans redeem for limited edition CD sets that contain the recording of live concerts and made available to concert attendees immediately after the show and on-line. Revenue is recognized on the sale of a product when the risk of loss transfers to our customers, and the collection of the receivable is reasonably assured, which generally occurs when after the event is held.
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 impairment testing of intangible assets, assumptions used to value the derivative liabilities, the valuation allowance for the deferred tax asset, and the accruals for potential liabilities. Actual results could differ from these estimates.
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 six 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. |
| 9 |
| Table of Contents |
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 fair value of the derivative liabilities of $816,447 and $922,509 on June 30, 2020, and December 31, 2019, respectively, were valued using Level 3 inputs.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.
Income (Loss) per Common Share
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 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, 2020, because their impact was anti-dilutive. As of June 30, 2020, the Company had 23,805,027 outstanding warrants and 4,618,024,788 shares related to convertible notes payables respectively, which were excluded from the computation of net loss per share.
Intangible Assets
The Company accounts for intangible assets in accordance with the authoritative guidance issued by the FASB. Intangibles are valued at their fair market value and are amortized taking into account the character of the acquired intangible asset and the expected period of benefit. The Company evaluates intangible assets for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated undiscounted future cash flows. Recoverability of intangible assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends, and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.
| 10 |
| Table of Contents |
The Company had intangible assets with a carrying value of $-0- and $-0- as of June 30, 2020, and December 31, 2019, respectively. In accordance with ASC Topic 350 – Goodwill and Other Intangible Assets, the Company assesses the carrying value of its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable and records an impairment charge if the carrying value of such intangible assets is not recoverable and if it exceeds its fair value. While our fiscal year-to-date financial performance has not met our expectations, and the enterprise value of the Company based on the current price of our common stock may fluctuate at or near the recorded level of finite-lived intangible assets, management does not consider these to be events requiring the performance of an impairment test. The Company will continue to monitor its operating results for indicators of impairment and perform additional tests as necessary, which could result in an impairment charge to intangible assets.
On December 31, 2019, we conducted an impairment analysis and although we believe that we will be able to generate revenues in the future from our Sounstr asset, based on the lack of any historical sales to date or lack of any pending contracts, we determined that we could not substantiate any anticipated future revenues, and determined that the remaining book value of the intangible of $132,397 should be impaired as of December 31, 2019.
Recently Issued Accounting Pronouncements
Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 – RELATED PARTY TRANSACTIONS
DiscLive Network
On July 10, 2017, the Company entered into a Licensing Agreement with RockHouse Live Media Productions, Inc., DBA “DiscLive” or “DiscLive Network” (“DiscLive”) to formalize the terms of the Strategic Alliance entered into by the Company with DiscLive on July 21, 2016. VNUE has acquired an exclusive license from DiscLive, for six 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 $18,186 and $88,100 and direct cost of revenues of $8,509 and $97,968 during the six months ended June 30, 2020, and 2019, respectively, were recorded using the assets licensed under this agreement. Our Chief Executive Officer agreed to waive the right to receive these license fees for both years.
Accrued Payroll to Officers
Accrued payroll due to two officers was $159,250 and $109,250 respectively, as of June 30, 2020, and December 31, 2019, respectively.
During the six months ended June 30, 2019, the Company entered into a conversion and cancellation of a debt agreement with its Chief Executive Officer, Zach Bair. The Company agreed to convert accrued payroll of $52,700 into 15,057,143 shares of the Company’s stock, valued at $40,654 using the closing market price of the Company’s stock on the date of the conversion and cancellation of debt agreements. The difference between the total accrued payroll converted of $52,700, and the market value of the shares issued of $40,654, was recorded as contributed capital of $12,046 in the condensed consolidated statements of stockholders’ deficit for the six months ended June 30, 2019. The Chief Executive Officers’ compensation is $170,000 per year, and, as of June 30, 2020, and December 31, 2019, the amounts due to Mr. Bair were 88,000 and $68,000, respectively.
| 11 |
| Table of Contents |
On September 15, 2017, the Company entered into an Advisory Agreement with Louis Mann (“MANN”) for MANN’s continued and ongoing advisory services to the Company’s as Executive Vice President and director for six (6) months and with automatic six (6) months renewals unless terminated in accordance with the agreement. MANN is to receive $5,000 per month. This agreement was renewed on October 1, 2019, and on April 1, 2020. $15,000 in compensation was expensed during the six months ended June 30, 2020, and June 30, 2019.
As of June 30, 2020, and December 31, 2019, the amounts due to Mr. Mann were $71,250 and $41,250, respectively
Advances from Employees
From time to time, stockholders of the Company advance funds to the Company for working capital purposes. The advances are unsecured, non-interest bearing, and due on demand. On December 31, 2018, advances from employees were $14,720. During the year ended December 31, 2019, a former employee and stockholder agreed to forgive $14,000 owed by the Company. The Company recorded the $14,000 as a gain on the settlement of debt, leaving a remaining balance of $720 on June 30, 2020, and December 31, 2019.
NOTE 4 – NOTE PAYABLE
On December 17, 2015, the Company issued a Promissory Note in the principal amount of $9,000. The note became due within 10 business days of the Company receiving notice of the effectiveness of its Form S-1 filed on February 22, 2016. Failure to make payment during that 10 business day period shall constitute an Event of Default, as a result of which the note will become immediately due and payable and the balance will bear interest at 7%. The Company’s Form S-1 was declared effective on March 8, 2016, and payment was due before March 22, 2016. The Company did not repay the note before March 22, 2016; therefore, the note is in default with an interest rate of 7%.
On April 30, 2019, the Company issued an unsecured Promissory Note in the principal amount of $25,000. The Note was due and payable on August 30, 2019, along with $5,000 worth of interest. The Company continues to accrue interest on this note at the rate of $1,250 per month. The Promissory Note is past due, however, the maker of the Note has verbally agreed not to call a default.
During the six months ended June 30, 2020, the Company recorded $7,815 accrued interest expense on these two Notes.
The balance of the Notes Payable outstanding was $34,000 and $34,000 as of June 30, 2020, and December 31, 2019, respectively.
NOTE 5 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
|
|
| June 30, |
|
| December 31, |
| ||
|
|
| 2020 |
|
| 2019 |
| ||
| Various Convertible Notes(a) |
| $ | 43,500 |
|
| $ | 43,500 |
|
| Ylimit, LLC Convertible Notes(b) |
|
| 1,167,208 |
|
|
| 882,500 |
|
| Golock Capital, LLC Convertible Notes(c) |
|
| 339,011 |
|
|
| 339,011 |
|
| Other Convertible Notes(d) |
|
| 246,069 |
|
|
| 299,069 |
|
| Total Convertible Notes |
|
| 1,795,788 |
|
|
| 1,564,080 |
|
| Debt discount |
|
| (8,344 | ) |
|
| (78,013 | ) |
| Convertible notes, net |
| $ | 1,787,444 |
|
| $ | 1,486,057 |
|
_____________
(a) In August 2014, the Company issued a series of convertible notes with various interest rates ranging up to 10% per annum. The Note Conversion Price is determined as follows: (a) if the Note is converted upon the Next Equity Financing, an amount equal to 80% of the price paid per share paid by the investors in the Next Equity Financing; (b) if the Note is converted in the event of a Corporate Transaction, a price per share derived by dividing a “pre-money” valuation of $8,000,000 by the number of shares outstanding immediately prior to the time of such conversion, on a fully diluted basis; or (c) if the Note is converted as part of a Maturity Conversion, a price per unit derived by dividing a “pre-money” valuation of $8,000,000 by the total number of units (restricted and non-restricted) outstanding immediately prior to the time of such conversion, on a fully diluted basis. The notes are due and payable on demand at any time after the earlier of (i) 36 months following the note issuance or (ii) the consummation of a corporate transaction if not previously converted. The balance of the notes outstanding was $45,000 as of December 31, 2018. On March 4, 2019, a note holder elected to forgive and cancel their outstanding convertible note balance of $1,500, which the Company recorded as a gain on extinguishment of debt in the accompanying consolidated statement of operations. The balance of the notes outstanding was $43,500 as of June 30, 2020, and December 31, 2019, respectively, of which $28,500 was due to related parties.
| 12 |
| Table of Contents |
(b) On May 9, 2016, the Company issued a convertible note to YLimit, LLC in the principal amount of $100,000 with interest at 10% per annum and due on May 9, 2018. The note is secured by the Company’s rights, titles, and interests in all the Company’s tangible and intangible assets, including intellectual property and proprietary software whether existing now or created in the future. On August 25, 2017, the Note was amended to authorize total borrowings on this Note to $517,000, The balance of the notes outstanding was $517,000 as of December 31, 2017, and the balance of the debt discount was $137,358.
On April 12, 2018, and again on August 15, 2018, the Company and Ylimit, LLC entered into an amendment to the original secured convertible promissory note. The amendments increased the borrowing limits by $190,500 to a total of $707,500 and extended the maturity date to May 9, 2019. The amendment on April 12, 2018, further modified the conversion feature to state that all borrowings under the note will be converted at 75% of the per-share stock price in the equity funding, but in no event shall the conversion price be less than $0.035 per share. This feature gave rise to a derivative liability of $135,900 during the period ended December 31, 2018, that is discussed below. During the year ended December 31, 2018, the Company borrowed an additional $190,500. The balance of notes outstanding was $707,500 as of December 31, 2018, and the balance of the debt discount was $70,078.
On November 9, 2019, the Company and Ylimit, LLC entered into an amendment (“Ylimit Amendment One”) to the original secured convertible promissory note dated May 9, 2016, along with subsequent amendment and fundings that followed. Under the terms of Ylimit Amendment One, Ylimit extended maturity date of all outstanding convertible debt due to them by the company, to a new maturity date of February 09, 2020. Ylimit received no consideration for this amendment.
By verbal agreement, Ylimit increased the Company’s borrowing limits by $175,000 and extended this amount of additional funding to the Company during the last six months of 2019 bring the total convertible note balance due to YLimit to a total of $882,500 as of December 31, 2019. All note discount related to Ylimit was fully amortized as of December 31, 2019.
On February 9, 2020, the Company entered into another amendment with Ylimit (“Ylimit Amendment Two”) to further extend the maturity date of all of the Company’s outstanding debt to August 9, 2020, including the $175,000 that Ylimit funded in the fourth quarter of 2019. Ylimit received no consideration for the Ylimit Amendment Two. On July 16, 2020, the maturity date of all Ylimit Notes was extended to February 9, 2021.
During the six months ended June 30, 2020, Ylimit provided another $284,708 in funding to the Company bringing their balance to $1,167,208 as of June 30, 2020
(c) From September 1, 2017, to December 31, 2017, the Company issued convertible notes to Golock Capital, LLC (“Lender”) in the aggregate principal amount of $191,750 with an interest rate at 10% per annum and maturity dates between June 1, 2018, and August 31, 2018. The notes are convertible into shares of the Company’s common stock at prices between $0.015 and $0.02 per share. As additional consideration for the Lender to enter into these agreements with the Company, the Company issued warrants to the Lender to acquire in the aggregate 4,804,708 shares of the Company’s common stock at a weighted average exercise price of $0.014 per share. In addition, the Lender shall have the first right of refusal as to any future funding of Borrower in that Lender shall have the right to provide all or a portion of the funding upon the same terms as those offered in writing by any third party or contained in any private placement of borrower. The Lender, upon conversion, shall have piggyback registration rights for all of its common stock shares in any registration or post-effective amendment to any registration initiated by Borrower with the Securities and Exchange Commission. The balance of the notes outstanding and the related debt discount was $191,750 and $19,652, respectively, as of December 31, 2017.
| 13 |
| Table of Contents |
On February 2, 2018, the Company issued a convertible note to Golock Capital, LLC (“Lender”) in the principal amount of $40,000 with an interest rate of 10% per annum and a maturity date of November 2, 2018. The note included an original issue discount of $5,000. The note is convertible into shares of the Company’s common stock at $0.015 per share. As additional consideration for the Lender to enter into this agreement with the Company, the Company issued warrants to the Lender to acquire in the aggregate 2,500,000 shares of the Company’s common stock at an exercise price of $0.015 per share that expire six years from the date of grant. The relative fair value of the warrants, the original issue discount, and the beneficial conversion feature totaling $40,000 was recorded as a debt discount and will be amortized to interest expense over the term of the note. On November 5, 2018, the Company amended the notes above by changing the conversion feature for the aggregate notes to be convertible into shares of common stock of the Company at the lower of (i) $0.015 per share or, (ii) 58% of the lowest closing bid price in the 20 trading days prior to the day that the Lender requests conversion. This feature gave rise to a derivative liability of $553,000 at the date of issuance as discussed below. The amendment also increased the principal face amount of notes to include accrued interest, and an additional $43,250 was added to the principal, which was recorded to financing costs. The aggregate balance of the notes outstanding and the related debt discount was $302,067 and $0, respectively, as of December 31, 2018.
On April 29, 2019, Golock entered into an amendment with the Company to extend the maturity of the Notes until July 31, 2019. In return, Golock received several concessions. They received (a) a warrant to purchase 12,833,333 shares of the Company’s common stock for 48 months exercisable at a strike price of $.00475. The Company recorded a financing charge of $28,227 related to these warrants and (b) the conversion noted above was changed from 58% to 50% of the lowest closing bid price in the 20 trading days prior to that day that the Lender request conversion. During the year ending December 31, 2019, the Company issued new notes payable of $53,331 and $23,102 of notes and accrued interest were converted into 100,000,000 shares of common stock. The balance of the notes outstanding on June 30, 2020, and December 31, 2019, respectively, was $339,010. As of June 30, 2020, $285,679 of these notes were past due.
(d) As of December 31, 2017, the Company had an outstanding convertible note payable of $61,000. During the year ended December 31, 2018, the Company entered into additional notes of $369,250. The convertible notes have interest rates ranging from 8% to 12% per annum, maturity dates ranging from August 21, 2018, to June 19, 2020, and are convertible into shares of common stock of the Company at discount rates between 38% and 50% of the lowest trading price for the Company s common stock during the prior twenty (20) trading day period, and for one lender, no lower than $0.035 per share. The issuance of notes with conversion features gave rise to derivative liabilities of $559,397 (see discussion below). As of December 31, 2018, the aggregate convertible notes balance to the five lenders was $426,964 and the related debt discount was $179,162.
During the year ended December 31, 2019, the Company entered into additional notes of $256,000, with interest rates from 10% to 12%, and maturity dates ranging from January 22, 2020, to August 2, 2020, at conversion terms comparable to the terms above. The issuance of notes with conversion features gave rise to derivative liabilities of $357,465 (see discussion below). In addition, On April 29, 2019, one of the lenders entered into an amendment with the Company to extend the maturity of the Notes until July 31, 2019. In return, the Company issued (a) a warrant to purchase 2,966,986 shares of the Company’s common stock for a period of 48 months exercisable at a strike price of $.00475 with a fair value of $5,934, and (b) the conversion price of outstanding notes was changed from $.015 to 50% of the lowest closing bid price in the 20 trading days prior to that day that the Lender request conversion. During the year ended December 31, 2019, convertible notes of $388,207 and accrued interest were converted into 540,276,078 shares of common stock. As of December 31, 2019, the aggregate convertible notes balance to the five lenders was $299,069 and the related debt discount was $ 33,667. As of December 31, 2019, $96,069 of these notes were past due.
During the six months ended June 30, 2020, $48,600 of the principal balance was converted to 378,872,550 shares of common stock. The Company recorded a loss on the extinguishment of this debt of $72,708.82. Additionally, the Company paid $4,400 to reduce the principal balance. These were the only note conversions during the six months ended June.
| 14 |
| Table of Contents |
Summary
On June 30, 2020, the aggregate balance of the fair value of all convertible notes outstanding was 1,795,788 and the related debt discount was $8,344, or a net balance of $1,787,444 Of this amount, $381,749 in principal was past due. As of June 30, 2020, the above notes are convertible into 4,618,024,788 shares of common stock.
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. The discount is being amortized using the effective interest rate method over the life of the debt instruments.
NOTE 6 – DERIVATIVE LIABILITY
The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion prices of the Notes described in Note 5 were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or they were variable. Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
As of June 30, 2020, and December 31, 2019, the derivative liabilities were valued using a probability-weighted average Black-Scholes-Merton pricing model with the following assumptions:
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|
| June 30, 2020 |
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| Issued During 2019 |
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|
|
|
|
| ||||
| Exercise Price |
| $ | 0.0003–0.035 |
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| $ | 0.001–0.035 |
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| Stock Price |
| $ | 0.0003 |
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| $ | 0.020-0.004 |
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| Risk-free interest rate |
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| .17 | % |
| 2.41–1.85 |
| |
| Expected volatility |
|
| 248.7 | % |
| 385%-388 | % | |
| Expected life (in years) |
|
| 1.00 |
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| 1.00–1.36 |
| |
| Expected dividend yield |
|
| 0 | % |
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| 0 | % |
| Fair Value: |
| $ | 491,217 | (a) |
| $ | 479,987 |
|
________
| (a) | Represents the total amount of principal and accrued interest subject to derivative calculations as of June 30, 2020. |
The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future.
During the six months ended June 30, 2020, the Company recognized a net gain of $106,062 as other income, which represented the net change in the value of the derivative liability at December 31, 2019, plus new derivative liabilities, less the gain on the extinguishment of derivative liabilities.
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NOTE 7 – SHARES TO BE ISSUED
As of December 31, 2018, the Company had not yet issued 3,964,352 shares of common stock with a value of $243,839. During the year ended December 31, 2019, the Company became obligated to issue an additional 60,000 shares of common, valued at $184, per the terms of a consulting agreement and 1,000,000 shares of common stock valued at $3,500, as consideration for amending an existing convertible note. As of June 30, 2020, and December 31, 2019, the Company had not yet issued a total of 5,204,352 shares of common stock with a value of $247,707.
NOTE 8 – STOCKHOLDERS’ DEFICIT
Common stock
The Company has 2,000,000,000 shares of $0.0001 par value per share of common stock authorized. As of June 30, 2020, and December 31, 2019, the Company had 1,149,756,152 and 770,883,602 shares of common stock issued and outstanding, respectively.
2020 Common Stock Transactions from January 1, 2020, through June 30, 2020
During the six months ended June 30, 2020, convertible noteholders converted $48,600 of principal into 378,872,550 shares of common stock. The Company recorded a loss on the extinguishment of this debt amounting to $72,709.
2019 Common Stock Transactions from January 1, 2019, through June 30, 2019
During the six months ended June 30, 2020, convertible noteholders converted $175,233 of principal and $11,341 of interest into 127,152,659 shares of common stock. The Company recorded a loss on the extinguishment of this debt amounting to $198,873.
On March 13, 2019, a former Company director voluntarily returned 4,555,918 shares of Company common stock to Treasury.
During the six months ended June 30, 2019, the Company entered into a conversion and cancellation of a debt agreement with its Chief Executive Officer. The Company agreed to convert accrued payroll of $52,700 into 15,057,143 shares of the Company’s stock, valued at $40,654 using the closing market price of the Company’s stock on the date of the conversion and cancellation of debt agreements. The difference between the total accrued payroll converted of $52,700, and the market value of the shares issued of $40,654.
On March 4, 2019, the Company and entered into a conversion and cancellation of a debt agreement with a former officer relating to the $40,000 cash compensation balance outstanding on December 31, 2018. The Company issued 11,428,571 shares of common stock, at $0.0035 per share, as payment in full for the $40,000 balance. The difference between the total vendor obligations converted of $40,000, and the market value of the shares issued of $30,857, was recorded as a gain on settlement of obligations of $9,143.
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Preferred stock
On July 2, 2019, the Company filed a Certificate of Amendment (the “Charter Amendment”) to the Company’s Articles of Incorporation (as amended to date, the “Articles of Incorporation”) with the Secretary of State of the State of Nevada. The Charter Amendment increased the Company’s capitalization to 2,000,000,000 shares of Common Stock and 20,000,000 shares of Preferred Stock, of which, 5,000,000 were designated as Series A Convertible Preferred Stock.
On May 22, 2019, the “Company” issued 4,126,776 restricted shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) to various employees and service providers to compensate and reward them for past services and to incentivize them to provide continued service to the Company. The Series A Preferred Stock will receive relative rights and preferences under terms and conditions outlined in the Certificate of Designation of the Preferred Stock.
In connection with the Series A Designation, the Company authorized 5,000,000 shares of its Series A 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 shall have no liquidation or redemption rights.
As of June 30, 2020, and December 31, 2019, the Company had 4,126,776 shares of Series A par value $0.0001, preferred shares outstanding.
NOTE 9 – 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 automated direct licensing capability and royalty payment and distribution into the Soundstr platform. The initial term of the JV was for six (6) months and requires the Company to Pay MRI fifty percent (50%) of net revenue every quarter. As of June 30, 2020, no net revenue was generated from the JV.
Litigation
On November 27, 2018, Stout Law Group, P.A., the former counsel for the company and an affiliate of Matheau J. Stout, filed a Federal Complaint in the United States District Court for the District of Maryland (Stout Law Group, PA, v. VNUE, Inc.”, Civil Action No 1:18-CV-03614 JKB) for outstanding legal fees and other damages for work provided during the 2015 and 2016 fiscal years. The Company denies any liability therein and after negotiation with the plaintiff, the foregoing action was voluntarily withdrawn on February 27, 2019, by the plaintiff. The Company has a recorded liability of approximately $72,000 as of June 30, 2020, and December 31, 2019, to Stout Law Group, S.A. for services rendered which are the subject of settlement negotiations.
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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. 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, 2020, the Company did not earn any revenue under this agreement.
COVID-19
The outbreak of communicable diseases, such as a new virus known as the Coronavirus (COVID-19), could result in a widespread health crisis that could adversely affect general commercial activity and our business. An outbreak of communicable diseases in the region that we operate or regions from which our customers travel from or through, or the perception that such an outbreak could occur, and the measures taken by the governments of countries affected, including restricting air travel and other means of transportation, imposing quarantines and curfews and requiring the closure of our offices or other businesses, including office buildings, theatres, retail stores, and other commercial venues, could adversely affect our business, financial condition or results of operations.
NOTE 10 – SUBSEQUENT EVENTS
During the period subsequent to June 30, 2020, the Company received $40,000 in proceeds from the issuance of three, seven month maturity, unsecured 10% convertible notes to one accredited investor. These notes are convertible into common stock at a current conversion rate of $0.001.
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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.
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 annual report, the terms “we”, “us”, “our” and the “Company” mean VNUE, Inc. and its subsidiaries, unless the context requires otherwise.
All dollar amounts in this annual report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a Nevada corporation on April 4, 2006.
Overview of our Current Business
The live music and entertainment space is constantly searching for new monetization outlets. Music licensing and royalties are particular “hot button” issues in the industry. We believe that we have developed solutions that create new revenue streams, and simultaneously helps to protect the rights of the creators and will help ensure they are properly compensated. This befits not only artists, labels, publishers, and live venues but the fans as well.
Through VNUE, Inc., our wholly-owned subsidiary, we now carry on business as a live entertainment music technology company that offers a suite of products and services which monetize and monitor music for artists, labels, performing rights organizations, publishers, writers, radio stations, venues, restaurants, bars, and other stakeholders in music. Our two main product lines are:
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| • | Set.fm™ / DiscLive Network™ - Our consumer app platform that allows fans to purchase the concert they just experienced instantly on their mobile device, and “instant” physical collectible products are recorded and sold at shows and online through the company’s exclusive partner DiscLive Network™, the 15-year pioneer in “instant live” recording. |
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| • | Soundstr™ - Our technology which is a comprehensive music identification and rights management Cloud platform that, 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, and will help to ensure the correct stakeholders are paid through the use of our “big data” collection. |
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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 or 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.
On Jan 9th, 2020, the Company entered into an agreement with recording and performance artist, Matchbox Twenty “MT Agreement”), to record its 2020 tour and sell limited edition double CD sets, download cards, and digital downloads. As part of the deal, the Company agreed to pay an advance of $100,000 against sales, to MT and its affiliated companies, which was paid in full in installments, with the last installment of $40,000 paid on March 4th.
Also as part of the transaction, Ticketmaster agreed to include the option for their customers to pre-purchase a double CD set at checkout, for a price to the customer of $25.00, resulting in a net payment to VNUE of approximately $20 after Ticketmaster’s fees and taxes. Additionally, Wonderful Union, the VIP package sales company utilized by MT agreed to buy 5000 digital download cards from VNUE for $7 each (to include in VIP packages that they send to fans) for $35,000 which has been paid full. As of May 11, 2020, Ticketmaster has paid via wire $40,378 toward the aforementioned pre-sales.
The following discussion and analysis of our results of operations and financial condition for the six months ended June 30, 2020, and 2019, should be read in conjunction with our condensed consolidated financial statements and related notes included in this report. We are in the process of completing the development of our products and services and therefore had minimal revenues during this quarter.
Three Months Ended June 30, 2020, Compared to the Three Months Ended June 30, 2019
Revenues
Our revenues for the three months ended June 30, 2020, and 2019, was $6,127 and $64,544 respectively. Our revenues have been severely impacted by COVID 19 which makes it nearly impossible to hold live concert events anywhere worldwide. Historically, we have derived substantially all of our revenue from live concert events.
Impact of Current Coronavirus (COVID-19) Pandemic on the Company
While the COVID-19 pandemic had an affect on our ability to complete our financial statements in a timely manner we do not believe that it will have a material adverse effect on our business at this time as we are currently scheduled to roll out our products in the third quarter of 2020. Nonetheless a material portion of our future set.fm and DiscLive business is dependent on the success of public events and gatherings. If quarantine and social distancing rules or even social fears continue through such time then we will be materially adversely affected, as these gatherings will see fewer attendees. However, as Soundstr is rolled out, we do not expect to have a materially adverse effect, as our devices will be rolled out to radio stations initially, which do not depend upon attendees. We also do not anticipate expending material costs on implementing social distancing or similar measures in our business.
Direct Costs of Revenues
Our direct costs of revenues for the three months ended June 30, 2020, and 2019, was $-0- and $39,530 respectively. The cost of sales was zero during the 2020 due to the low sales volume and due to COVID when we were shut down during this period.
General and Administrative Expenses
Our general and administrative expenses for the three months ended June 30, 2020, and 2019, was $193,843 and $706,503 respectively, a decrease of $512,660. The decrease in general and administrative expenses is primarily attributable to a one-time non-charge in 2019 for stock-based compensation related to the issuance of preferred stock amounting to $590,129. Excluding the one-time charge in 2019, G&A expenses were $116,374. The increase in G&A expense in the 2020 period compared to 2019 after excluding the stock-based compensation was $77,649, and was primarily attributable to an increase in professional fees.
Other Income (Expenses), Net
We recorded other income net, of $328,852 for the three months ended June 30, 2020, compared to other (expense) net of $(988,782) for the three months ended June 30, 2019. The significant increase in other income net, for the three months in 2020 was primarily attributable to a decrease in the fair value of derivative liabilities of $1,042,758 in the 2020 period, compared to the 2019 period; and due to a reduction in financing costs and loss on the extinguishment of debt of approximately $275,000 in the 2020 period compared to the same period in 2019.
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Six Months Ended June 30, 2020, Compared to the Six Months Ended June 30, 2019
Revenues
Our revenues for the six months ended June 30, 2020, and 2019, was $18,186 and $88,100 respectively. During the six months ended June 30, 2020, we entered into an agreement with Matchbox Twenty (“MT Agreement”) to record its 2020 tour and sell limited edition double CD sets, download cards, and digital downloads. As part of the deal, the Company agreed to pay an advance of $100,000 against sales, to MT and its affiliated companies, which was paid in full in installments, with the last installment of $40,000 paid on March 4th.
Also as part of the transaction, Ticketmaster agreed to include the option for their customers to pre-purchase a double CD set at checkout, for a price to the customer of $25.00, resulting in a net payment to VNUE of approximately $20 after Ticketmaster’s fees and taxes. Additionally, Wonderful Union, the VIP package sales company utilized by MT agreed to buy 5000 digital download cards from VNUE for $7 each (to include in VIP packages that they send to fans). Due to the onset of COVID-19 the tour has been postponed until the summer of 2021. As a result, $74,225 from advanced CD set has and download card sales been recorded as deferred revenue and will be recorded as revenue after tour occurs.
Direct Costs of Revenues
Our direct costs of revenues for the six months ended June 30, 2020, and 2019, was $8,509 and $97,968 respectively. The significant reduction in direct costs of revenue is attributable to lower sales volumes caused by the onset of COVID-19.
General and Administrative Expenses
Our general and administrative expenses for the six months ended June 30, 2020, and 2019, was $370,031 and $832,071 respectively, a decrease of $462,040 in the 2020 period. The decrease in general and administrative expenses in the six months ended June 30, 2019, is primarily attributable to a one-time charge for stock-based compensation of $590,129 in the 2019 period, offset by an increase in professional fees in the six months ended June 30, 2019.
Other Income (Expenses), Net
We recorded other (expense) net, of $(138,068) for the six months ended June 30, 2020, compared to other expense, net of $(452,719) for the six months ended June 30, 2019. The decrease in other (expense) net, in 2020 was primarily attributable to a decrease in the fair value of derivative liabilities of $(270,944) in the 2020 period compared to the 2019 period.
Net Income (Loss)
As a result of the foregoing revenues, direct costs of revenues, research and development expenses, general and administrative expenses, and other income (expenses), net, our net loss for the six months ended June 30, 2020, was $(498,422) compared to a net loss of $(1,300,485) for the six months ended June 30, 2019.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
As of June 30, 2020, we had current assets consisting of cash and cash equivalents of $8,323.
We had negative cash flows from operating activities of $275,481 for the six months ended June 30, 2020, compared with negative cash flows from operating activities of $191,736 for the six months ended June 30, 2019. The increase in our negative cash flows from operations was primarily attributable to an increase in prepaid expenses of $100,000 in 2020.
We generated cash flows from financing activities of $231,708, for the six months ended June 30, 2020, as compared to $198,000 for the six months ended June 30, 2019. The increase in net cash provided by financing operations was due to an increase in the proceeds from the sale of convertible notes, net of repayments of approximately $38,000.
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, during the six months ended June 30, 2020, the Company incurred an operating loss from operations of $498,422, used cash in operations of $275,481 and had a stockholders’ deficit of $4,402,166. 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 December 31, 2019, consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.
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On June 30, 2020, the Company had cash on hand of $8,323. Subsequent to June 30, 2020, we raised $40,000 from the issuance of convertible notes. Management estimates that the current funds on hand will be sufficient to continue operations through August 31, 2020. 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. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our 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 2 - Significant and Critical Accounting Policies and Practices herein).
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include the assumptions used to 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.
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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.
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, 2020. 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.
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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
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 June 30, 2020, 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 June 30, 2020, 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. |
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| 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. |
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| 4. | Lack of independent board member(s) |
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| 5. | Lack of independent audit committee |
Management is currently evaluating remediation plans for the above control deficiencies.
In light of the existence of these material weaknesses, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. As a result, management has concluded that the Company did not maintain effective internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control-Integrated Framework issued by COSO.
c) Changes in Internal Controls over Financial Reporting
During the fiscal quarter ended June 30, 2020, 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.
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OTHER INFORMATION
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
During the six months ended June 30, 2020, we issued $284,708 of unsecured 10% convertible notes to one investor Ylimit, on terms comparable to previous fundings, see Note 5. Convertible Notes. These notes mature at various times during six months ending on June 30, 2021. These notes are convertible into common stock at a current conversion rate of $0.001, into 284,708,000 shares. All the above securities issued were offered and issued in reliance upon the exemption from registration pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Regulation S promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the period ended June 30, 2020.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
There is no other information required to be disclosed under this item which was not previously disclosed.
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Exhibits
| Exhibit Number |
| Description of Exhibits |
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| 101.INS* |
| XBRL Instance Document |
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| 101.SCH* |
| XBRL Taxonomy Schema |
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| 101.CAL* |
| XBRL Taxonomy Calculation Linkbase |
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| 101.DEF* |
| XBRL Taxonomy Definition Linkbase |
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| 101.LAB* |
| XBRL Taxonomy Label Linkbase |
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| 101.PRE* |
| XBRL Taxonomy Presentation Linkbase |
___________
| * | 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. |
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| Date: August 11, 2020 | By: | /s/ Zach Bair |
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| Zach Bair |
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| Chief Executive Officer (Principal 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: |
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| 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; |
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| 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; |
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| 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 |
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| 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): |
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| 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 |
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| 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. |
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| Date: August 11, 2020 | By: | /s/ Zach Bair |
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| Zach Bair |
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| Principal Executive Officer and Principal Accounting Officer |
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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 June 30, 2020 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:
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| (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 |
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| (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. |
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| Date: August 11, 2020 | By: | /s/ Zach Bair |
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| Zach Bair |
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| Principal Executive Officer and Principal Accounting Officer |
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