U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
FORM 10-Q
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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
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☐ 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, |
(Name of Registrant in its Charter) |
Nevada | 98-0543851 | |
(State | (I.R.S. Employer |
104 West 29th Street, 11th Floor, New York, NY10001
(Address of Principal Executive Offices)
Issuer’s Telephone Number: 857-777-6190(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. Yesx ☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes¨ ☒ No x☐
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 ¨ ☐ Nox ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate theThe number of shares outstanding of each of the Registrant’s classes ofregistrant’s common stock outstanding as of the latest practicable date:November 17, 2022 was .
VNUE, INC.
QUARTERLY REPORT ON FORM 10-Q
September 30, 20172022
Common Voting Stock: 69,244,707
VNUE, INC.
INDEX TO FORM 10-Q FILING
FOR THE PERIOD ENDED SEPTEMBER 30, 2017
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FINANCIAL INFORMATION
The accompanying interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the interim period ended September 30, 2017 are not necessarily indicative of the results that can be expected for the year ending December 31, 2017.
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VNUE, Inc.
Index to the Condensed Consolidated Financial Statements
VNUE, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance SheetsFinancial Statements.
The following unaudited interim financial statements of VNUE, Inc. (referred to herein as the “Company,” “we,” “us” or “our”) are included in this quarterly report on Form 10-Q:
1
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| September 30, |
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| December 31, 2016 |
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Assets |
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Current Assets |
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Cash |
| $ | 73,195 |
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| $ | 17,952 |
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Prepaid expenses |
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| 2,667 |
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| - |
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Total assets |
| $ | 75,862 |
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| $ | 17,952 |
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Liabilities and Stockholders’ Deficit |
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Current Liabilities |
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Accounts payable and accrued expenses |
| $ | 550,639 |
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| $ | 391,952 |
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Accrued payroll (including $453,585 and $312,710 payable to officers) |
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| 908,263 |
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| 703,138 |
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Advances from stockholders |
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| 14,720 |
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| 14,720 |
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Note payable to officer |
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| 74,131 |
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| 74,131 |
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Notes payable |
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| 9,000 |
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| 34,000 |
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Convertible notes payable, net |
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| 400,033 |
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| 121,865 |
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Convertible notes payable, related parties, net |
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| 30,000 |
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| 22,101 |
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Derivative liabilities |
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| 779,903 |
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| 508,107 |
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Total current liabilities |
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| 2,766,689 |
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| 1,870,014 |
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Commitment and Contingencies |
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Stockholders’ Deficit |
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Preferred stock, par value $0.0001: 20,000,000 shares authorized; none issued |
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| - |
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| - |
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Common stock, par value $0.0001: 750,000,000 shares authorized; 69,244,707 and 64,487,971 shares issued and outstanding, respectively |
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| 6,924 |
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| 6,449 |
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Additional paid-in capital |
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| 4,670,643 |
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| 4,428,357 |
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Common stock to be issued, 4,674,352 shares and 4,674,352 shares, respectively |
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| 903,570 |
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| 903,570 |
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Accumulated deficit |
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| (8,271,964 | ) |
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| (7,190,438 | ) |
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Total Stockholders’ Deficit |
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| (2,690,827 | ) |
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| (1,852,062 | ) |
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Total Liabilities and Stockholders’ Deficit |
| $ | 75,862 |
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| $ | 17,952 |
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SeeVNUE, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 112,193 | $ | 36,958 | ||||
Prepaid expenses | 100,000 | 464,336 | ||||||
Total current assets | 212,193 | 501,294 | ||||||
Fixed assets, net | 18,097 | - | ||||||
Goodwill | 10,400,000 | - | ||||||
Intangible Assets | 2,058,333 | - | ||||||
Total assets | $ | 12,688,623 | $ | 501,294 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 2,855,585 | $ | 923,781 | ||||
Shares to be issued | 1,020,571 | 247,707 | ||||||
Accrued payroll-officers | 259,250 | 233,750 | ||||||
Advances from officer | 10,000 | 10,000 | ||||||
Dividends payable | 145,103 | - | ||||||
Notes payable | 1,143,262 | 869,157 | ||||||
Deferred revenue | 856,250 | 74,225 | ||||||
Convertible notes payable, net | 470,714 | 635,714 | ||||||
Purchase liability | 7,979,984 | 300,000 | ||||||
Total current liabilities | 14,740,719 | 3,294,334 | ||||||
Total liabilities | 14,740,719 | 3,294,334 | ||||||
Commitments and Contingencies | ||||||||
Stockholders’ Deficit | ||||||||
Preferred A stock, par value $ : shares authorized; and issued and outstanding as of September 30, 2022 and December 31, 2021 | 425 | 425 | ||||||
Preferred B stock, par value $ : shares authorized; and - - issued and outstanding as of September 30, 2022 and December 31, 2021 | - | - | ||||||
Preferred C stock, par value $: shares authorized; and -- issued and outstanding as of September 30, 2022 and December 31, 2021 | - | - | ||||||
Common stock, par value $ , shares authorized; and and shares issued and outstanding, as of September 30, 2022, and December 31, 2021, respectively | 152,570 | 141,177 | ||||||
Additional paid-in capital | 29,712,354 | 10,900,652 | ||||||
Accumulated deficit | (31,917,445 | ) | (13,835,294 | ) | ||||
Total stockholders’ deficit | (2,052,096 | ) | (2,793,040 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 12,688,623 | $ | 501,294 |
The accompanying notes to the condensedare an integral part of these consolidated financial statements.
2
VNUE, INC.
VNUE, Inc.CONSOLIDATED STATEMENTS OF OPERATIONS
Condensed Consolidated Statements of Operations(unaudited)
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| For the Three Months Ended September 30, |
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| For the Three Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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Revenues |
| $ | - |
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| $ | - |
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| $ | 37,825 |
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| $ | - |
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Operating Expenses |
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Direct costs of revenues |
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| - |
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| - |
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| 35,151 |
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| - |
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Software development |
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| 24,778 |
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| 126,838 |
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| 92,905 |
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| 1,033,207 |
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General and administrative |
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| 172,319 |
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| 154,908 |
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| 631,057 |
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| 992,470 |
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Loss from Operations |
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| (197,097 | ) |
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| (281,746 | ) |
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| (721,288 | ) |
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| (2,025,677 | ) |
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Other income/(expenses) |
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Change in fair value of derivative liability |
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| 57,467 |
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| (23,345 | ) |
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| 38,068 |
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| 194,912 |
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Gain on extinguishment of derivative liability |
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| 174,529 |
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| - |
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| 292,838 |
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| 21,308 |
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Financing costs |
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| (342,708 | ) |
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| (214,067 | ) |
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| (691,144 | ) |
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| (332,081 | ) |
Sale of trademark |
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| - |
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| 30,000 |
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| - |
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| 30,000 |
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Other income/(expenses), net |
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| (110,712 | ) |
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| (207,412 | ) |
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| (360,238 | ) |
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| (85,861 | ) |
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Net loss |
| $ | (307,809 | ) |
| $ | (489,158 | ) |
| $ | (1,081,526 | ) |
| $ | (2,111,538 | ) |
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Loss per share |
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-Basic and diluted |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.01 | ) |
| $ | (0.03 | ) |
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Weighted average common shares outstanding |
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-Basic and diluted |
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| 73,919,059 |
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| 68,891,601 |
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| 72,205,256 |
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| 67,591,512 |
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For the three months | For the nine months | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues - related party | $ | 3,090 | $ | 2,714 | $ | 9,579 | $ | 9,295 | ||||||||
Revenue, net | 96,090 | - | 224,292 | - | ||||||||||||
Total revenue | 99,181 | 2,714 | 233,871 | 9,295 | ||||||||||||
Direct costs of revenue | 72,059 | 5,380 | 224,786 | 5,446 | ||||||||||||
Gross margin (loss) | 27,121 | (2,666 | ) | 9,085 | 3,849 | |||||||||||
Operating expenses: | ||||||||||||||||
Stock based compensation -related party | - | - | 15,300,000 | - | ||||||||||||
General and administrative expense | 51,586 | 90,051 | 171,896 | 121,404 | ||||||||||||
Payroll expenses | 172,374 | 72,370 | 419,204 | 205,120 | ||||||||||||
Professional fees | 99,989 | 117,463 | 581,867 | 288,272 | ||||||||||||
Amortization of intangible assets | 216,667 | - | 541,667 | - | ||||||||||||
Total operating expenses | 540,616 | 279,884 | 17,014,634 | 614,796 | ||||||||||||
Operating loss | (513,495 | ) | (282,550 | ) | (17,005,549 | ) | (610,947 | ) | ||||||||
Other income (expense), net | ||||||||||||||||
Change in fair value of derivative liability | - | - | - | 3,156,582 | ||||||||||||
Other income | - | - | - | 1,172,782 | ||||||||||||
Loss on the extinguishment of debt | - | - | (154,200 | ) | (80,227 | ) | ||||||||||
Financing costs | (98,394 | ) | (82,611 | ) | (777,299 | ) | (288,146 | ) | ||||||||
Other income (expense), net | (98,394 | ) | (82,611 | ) | (931,498 | ) | 3,960,990 | |||||||||
Net income (loss) | $ | (611,889 | ) | $ | (365,161 | ) | (17,937,048 | ) | $ | 3,350,043 | ||||||
Preferred B Stock dividends | (62,119 | ) | - | (145,103 | ) | - | ||||||||||
Net income (loss) available to common shareholders | $ | (674,008 | ) | $ | (365,161 | ) | (18,082,151 | ) | $ | 3,350,043 | ||||||
Net loss per common share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | 0.00 | |||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic and diluted | 1,491,415,223 | 1,341,926,621 | 1,459,409,678 | 1,266,155,076 |
SeeThe accompanying notes to the condensedare an integral part of these consolidated financial statements.
3
VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(unaudited)
Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | ||||||||||||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance - December 31, 2020 | 4,126,776 | $ | 413 | - | $ | - | - | $ | - | 1,211,495,162 | $ | 121,149 | $ | 8,386,593 | (16,755,676 | ) | (8,247,521 | ) | ||||||||||||||||||||||||||
Beneficial conversion feature of convertible notes | 111,765 | 111,765 | ||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | 1,991,101 | 1,991,101 | ||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 4,126,776 | $ | 413 | - | $ | - | - | $ | - | 1,211,495,162 | $ | 121,149 | $ | 8,498,358 | $ | (14,764,575 | ) | $ | (6,144,656 | ) | ||||||||||||||||||||||||
Shares issued upon conversion of convertible notes payable | 123,803 | 12 | 75,195,174 | 7,520 | 1,273,991 | 1,281,523 | ||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | 1,724,104 | 1,724,104 | ||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 4,250,579 | $ | 425 | - | $ | - | - | $ | - | 1,286,690,336 | $ | 128,669 | $ | 9,772,348 | $ | (13,040,472 | ) | $ | (3,139,030 | ) | ||||||||||||||||||||||||
Private placement of common shares | 8,606,685 | 8,607 | 776,323 | 784,930 | ||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | (365,161 | ) | (365,161 | ) | ||||||||||||||||||||||||||||||||||||
Balance September 30, 2021 | 4,250,579 | $ | 425 | - | $ | - | - | $ | - | 1,295,297,021 | $ | 137,276 | $ | 10,548,670 | $ | (13,405,634 | ) | $ | (2,719,262 | ) |
4
VNUE, Inc.
Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | ||||||||||||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance - December 31, 2021 | 4,250,579 | $ | 425 | - | $ | - | - | $ | - | 1,411,779,497 | $ | 141,177 | $ | 10,900,652 | $ | (13,835,294 | ) | $ | (2,793,040 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 1,500 | 1,500,000 | 1,500,000 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 35 | 42,000 | 42,000 | |||||||||||||||||||||||||||||||||||||||||
Series B dividends | (31,068 | ) | (31,068 | ) | ||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature of Preferred B shares | 300,000 | 300,000 | ||||||||||||||||||||||||||||||||||||||||||
Shares issued for services | 6,000,000 | 600 | 56,200 | 56,800 | ||||||||||||||||||||||||||||||||||||||||
Acquisition shares issued for Stage It purchase | 41,476,963 | 4,148 | 414,770 | 418,917 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (1,162,038 | ) | (1,162,038 | ) | ||||||||||||||||||||||||||||||||||||
Balance March 31, 2022 | 4,250,579 | $ | 425 | 1,535 | $ | - | - | $ | - | 1,459,256,460 | $ | 145,925 | $ | 13,213,621 | $ | (15,028,400 | ) | $ | (1,668,428 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 280 | 280,000 | 280,000 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 10 | 12,000 | 12,000 | |||||||||||||||||||||||||||||||||||||||||
Series B dividends | (51,915 | ) | (51,915 | ) | ||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature of Preferred B shares | 87,000 | 87,000 | ||||||||||||||||||||||||||||||||||||||||||
Conversion of debt to Preferred B shares | 266 | 319,200 | 319,200 | |||||||||||||||||||||||||||||||||||||||||
Issuance of Preferred C shares to related parties | 3,000 | 15,300,000 | 15,300,000 | |||||||||||||||||||||||||||||||||||||||||
Acquisition shares issued for Stage It purchase | 15,229,726 | 1,523 | 152,297 | 153,820 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (16,163,122 | ) | (16,163,122 | ) | ||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | 4,250,579 | $ | 425 | 2,091 | $ | - | 3,000 | $ | - | 1,474,486,186 | $ | 147,448 | $ | 29,364,118 | $ | (31,243,437 | ) | $ | (1,731,445 | ) | ||||||||||||||||||||||||
Issuance of Preferred B Shares for cash | 164 | 151,600 | 151,600 | |||||||||||||||||||||||||||||||||||||||||
Financing fee paid in Preferred B shares | 12 | 14,400 | 14,400 | |||||||||||||||||||||||||||||||||||||||||
Shares issued pursuant to the Company’s equity line of credit | 49,451,287 | 4,945 | 119,314 | 124,259 | ||||||||||||||||||||||||||||||||||||||||
Series B dividends | (62,119 | ) | (62,119 | ) | ||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature of Preferred B shares | 45,200 | 45,200 | ||||||||||||||||||||||||||||||||||||||||||
Acquisition shares issued for Stage It purchase | 1,772,076 | 177 | 17,721 | 17,898 | ||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (611,889 | ) | (611,889 | ) | ||||||||||||||||||||||||||||||||||||
Balance September 30, 2022 | 4,250,579 | $ | 425 | 2,267 | $ | - | 3,000 | $ | - | 1,525,709,549 | $ | 152,570 | $ | 29,712,354 | $ | (31,917,445 | ) | $ | (2,052,096 | ) |
Condensed Consolidated Statement of Changes in Stockholders’ Deficit
For the Nine Months ended September 30, 2017
(Unaudited)
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| Common Stock par value $0.0001 |
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| to be Issued |
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| Accumulated Deficit |
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| Stockholders’ Deficit |
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Balance, December 31, 2016 |
|
| 64,487,971 |
|
| $ | 6,449 |
|
| $ | 4,428,357 |
|
| $ | 903,570 |
|
| $ | (7,190,438 | ) |
| $ | (1,852,062 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares returned by officer |
|
| (5,000,000 | ) |
|
| (500 | ) |
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services |
|
| 2,575,000 |
|
|
| 258 |
|
|
| 94,868 |
|
|
| - |
|
|
| - |
|
|
| 95,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for conversion of debt |
|
| 7,181,736 |
|
|
| 718 |
|
|
| 62,803 |
|
|
| - |
|
|
| - |
|
|
| 63,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of warrants issued related to convertible note payable |
|
|
|
|
|
|
|
|
|
| 18,261 |
|
|
|
|
|
|
|
|
|
|
| 18,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature on conversion of note |
|
|
|
|
|
|
|
|
|
| 65,855 |
|
|
| - |
|
|
| - |
|
|
| 65,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,081,526 | ) |
|
| (1,081,526 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2017 (Unaudited) |
|
| 69,244,707 |
|
| $ | 6,924 |
|
| $ | 4,670,643 |
|
| $ | 903,570 |
|
| $ | (8,271,964 | ) |
| $ | (2,690,827 | ) |
SeeThe accompanying notes to the condensedare an integral part of these consolidated financial statements.
5
VNUE, INC.
VNUE, Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS
Condensed Consolidated Statements of Cash Flows(unaudited)
(Unaudited)
For the nine months ended | ||||||||
September | ||||||||
2022 | 2021 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income (loss) | $ | (17,937,048 | ) | $ | 3,350,043 | |||
Adjustments to reconcile net income to net cash provided by (used for) operating activities | ||||||||
Depreciation | 19,725 | - | ||||||
Amortization of intangible assets | 541,667 | - | ||||||
Change in the fair value of derivatives | - | (3,156,582 | ) | |||||
Loss on the extinguishment of debt | 154,200 | 80,227 | ||||||
Beneficial conversion feature of Preferred B stock | 432,200 | - | ||||||
Issuance of Preferred C voting stock | 15,300,000 | - | ||||||
Shares issued for financing costs | 68,400 | - | ||||||
Shares issued for services | 56,800 | - | ||||||
Amortization of debt discount | - | 111,765 | ||||||
Changes in operating assets and liabilities | ||||||||
Prepaid expenses | 364,336 | (195,000 | ) | |||||
Accounts payable and accrued interest | 220,455 | (1,133,919 | ) | |||||
Deferred revenue | 4,122 | - | ||||||
Accrued payroll officers | 25,500 | 30,000 | ||||||
Net cash used in operating activities | (749,643 | ) | (913,466 | ) | ||||
Cash Flows From Investing Activities: | ||||||||
Purchase of fixed assets | (940 | ) | ||||||
Acquisition of a business net of cash received | (977,761 | ) | - | |||||
Net cash used in investing activities | (978,701 | ) | - | |||||
Cash Flows From Financing Activities: | ||||||||
Advances from officers | - | 10,000 | ||||||
Payments on promissory note | (255,280 | ) | (12,000 | ) | ||||
Proceeds from the private placement of common shares | 124,259 | 784,929 | ||||||
Proceeds from the of Series B Preferred Stock | 1,931,600 | - | ||||||
Proceeds from the issuance of convertible notes | 3,000 | 334,000 | ||||||
Net cash provided by investing activities | 1,803,579 | 1,116,929 | ||||||
Net Increase (Decrease) In Cash | 75,235 | 203,463 | ||||||
Cash At The Beginning Of The Period | 36,958 | 4,458 | ||||||
Cash At The End Of The Period | $ | 112,193 | $ | 207,921 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | - | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
Supplemental disclosure of non-cash information: | ||||||||
Common shares issued upon conversion of debt and accrued interest | $ | - | $ | 1,281,523 | ||||
Common shares issued for the Stage It acquisition | $ | 590,636 | $ | - | ||||
Issuance of Preferred C voting shares | $ | 15,300,000 | $ | - | ||||
Preferred B shares issued upon the conversion of debt and accrued interest | $ | 176,410 | $ | - |
|
| For the Nine Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
Cash Flows From Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | (1,081,526 | ) |
| $ | (2,111,538 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Change in fair value of derivative liabilities |
|
| (38,068 | ) |
|
| (194,912 | ) |
Derivative value in excess of convertible notes |
|
| 291,702 |
|
|
| 90,762 |
|
Note issued for financing costs |
|
| - |
|
|
| 25,000 |
|
Gain on extinguishment of derivative liability |
|
| (292,838 | ) |
|
| (21,308 | ) |
Amortization of debt discount |
|
| 265,828 |
|
|
| 86,113 |
|
Beneficial conversion feature on conversion of note |
|
| 65,855 |
|
|
| - |
|
Original issue discount on convertible note payable |
|
| 9,000 |
|
|
| - |
|
Shares to be issued for financing costs |
|
| - |
|
|
| 41,000 |
|
Shares issued for services |
|
| 95,125 |
|
|
| - |
|
Shares to be issued for services |
|
| - |
|
|
| 730,513 |
|
Shares transferred for financing costs |
|
| - |
|
|
| 108,000 |
|
Shares transferred for compensation |
|
| - |
|
|
| 491,153 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expense |
|
| (2,667 | ) |
|
| 37,500 |
|
Accounts payable and accrued expenses |
|
| 163,707 |
|
|
| 276,217 |
|
Accrued payroll |
|
| 205,125 |
|
|
| 210,912 |
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities |
|
| (318,757 | ) |
|
| (230,587 | ) |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
Advances from (repayment to) stockholders, net |
|
| - |
|
|
| 17,510 |
|
Proceeds from issuance of convertible notes payable |
|
| 407,000 |
|
|
| 250,000 |
|
Repayment of convertible notes payable |
|
| (33,000 | ) |
|
| - |
|
Shares to be issued for proceeds from sale of common shares |
|
| - |
|
|
| 5,000 |
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities |
|
| 374,000 |
|
|
| 272,510 |
|
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
| 55,243 |
|
|
| 41,923 |
|
|
|
|
|
|
|
|
|
|
Cash – Beginning of the Reporting Period |
|
| 17,952 |
|
|
| 7,788 |
|
|
|
|
|
|
|
|
|
|
Cash – End of the Reporting Period |
| $ | 73,195 |
|
| $ | 49,711 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Interest Paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Income Tax Paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
Common shares issued upon conversion of notes payable and accrued interest |
| $ | 63,521 |
|
| $ | 20,385 |
|
Return of common shares by officer |
| $ | (500 | ) |
| $ | - |
|
Note payable converted to convertible note |
| $ | - |
|
| $ | 50,000 |
|
Fair value of derivative created upon issuance of convertible debt recorded as debt discount |
| $ | 311,000 |
|
| $ | 300,000 |
|
SeeThe accompanying notes to the condensedare an integral part of these consolidated financial statements.
6
VNUE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSVNUE, Inc.
Three and Nine Months Ended September 30, 2017 and 2016
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NoteNOTE 1 - Organization and Basis of Presentation– ORGANIZATION AND BASIS OF PRESENTATION
History and Organization
VNUE, Inc. (formerly Tierra Grande Resources, Inc.) ("VNUE"(“VNUE”, "TGRI"“TGRI”, or the "Company"“Company”) was incorporated under the laws of the State of Nevada on April 4, 2006.
On May 29, 2015, VNUE, Inc. entered into a merger agreement with VNUE Washington, Inc. Pursuant to the terms of the Merger Agreement, all of the outstanding shares of any class or series of VNUE Washington were exchanged for an aggregate of shares of TGRI common stock. As a result of the Merger, VNUE Washington became a wholly-owned subsidiary of the Company, and the transaction was accounted for as a reverse merger with VNUE Washington deemed the acquiring company for accounting purposes, and the Company deemed the legal acquirer.
The Company is developing a technology driven solutiontechnology-driven solutions for Artists, Venues, and Festivals to automate the capturing, publishing, and monetization of their content.content, as well as protection of their rights.
TheOn February 13, 2022, the Company conductedentered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a reverse stock splitDelaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock at a ratio 1 for 10or preferred stock, with the actual number of each sharesuch shares to be issued and outstanding onreduced by the effective date of April 15, 2017. The reverse was effective as tocash component outlaid in the market on August 7, 2017. All historical reported share amounts within have been adjusted to reflect the reverse stock split.
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 termstransaction. A portion of the Strategic Alliance entered into by the Company with DiscLive on July 21, 2016. VNUE has acquired an exclusive license from DiscLive, for a period of three years unless earlier terminated under the Agreement,Merger Consideration, $1 million, will be held back for the usepurposes 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 businesssatisfying certain contingent obligations of “instant live” recording. Under the terms of theStage It.
The Merger Agreement DiscLive granted the Company a worldwide exclusive license. In exchangealso allows for the license, DiscLive will receive a license fee equalissuance of earn-out shares, not to five percent (5%)exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of any sales derived from the sale and use of the products and services. DiscLive is controlled by our Chief Executive Officer.18 months. See Note 5. for additional information
On October 16, 2017, the Company entered into an agreement with PledgeMusic, Inc., whereby the Company will acquire the assets of the digital live music distribution platform Set.fm from PledgeMusic. Additionally, the Company will offer PledgeMusic North America’s full suite of music business tools allowing artists to sell music, merchandise and live experiences directly to fans, enhancing the Company’s clients’ revenue opportunities on a shared revenue basis. Set.fm is a DIY platform that makes it easy for artists to record and sell their live shows directly to fans’ mobile devices, uploading simultaneously with their performance. NOTE 2 – GOING CONCERN
The platform, which also features an innovative and easy-to-use studio app, already boasts thousands of artists and tens of thousands of fans using it. VNUE plans to update and improve the existing platform for indie artists and their fans, and to implement pro features for artists that VNUE and its affiliate DiscLive produce.
Basis of Presentation
The interim condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under the accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated balance sheet information as of December 31, 2016 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on April 14, 2017 (the “2016 Annual Report”). These condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2016 and notes thereto included in the 2016 Annual Report. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the entire fiscal year or for any other period.
Going Concern
The Company’s condensedaccompanying consolidated financial statements have been prepared assuming that it will continue ason a going concern basis, which contemplates continuity of operations,the realization of assets and liquidationthe settlement of liabilities and commitments in the normal course of business. As reflected in the condensedaccompanying consolidated financial statements as of September 30, 2022, the Company had a stockholders’$112,193 in cash on hand, had negative working capital of $14,528,526 and had an accumulated deficit of $2,690,827 at$31,917,445. Additionally for the nine months ended September 30, 2017, and incurred a net loss of $1,081,526, and2022, the Company used net$749,643 in cash infrom operating activities of $318,757 for the reporting period then ended. Certain of the Company’s notes payable are also past due and in default.activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date thatof the financial statements arebeing issued. The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements were issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ended December 31, 2016, has expressed substantial doubt about the Company’s ability to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through June 2018. The ability of the Company to continue as a going concern is dependent onupon the Company’s ability to executeraise additional funds and implement its strategy andbusiness 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 September 30, 2022, consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon its ability to raise additional funds. Management is currently seeking additional funds, primarily throughobtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the issuanceCompany has been able to fund its operations from the proceeds of equity securities for cash to operate our business.notes payable and convertible notes. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able tocan obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stock holders,stockholders, in the case orof equity financing.
7
Note 2 - Significant and Critical Accounting Policies and PracticesNOTE 3 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
PrinciplesBasis of Consolidation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company consolidates all wholly owned and majority-owned subsidiaries in which the Company’s power to control exists. its results with its wholly-owned subsidiary, Stage It Corp.
Revenue Recognition
The Company consolidatesrecognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the following subsidiaries and/terms of contracts, which includes (1) identifying the contracts or entities:
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| ||||||
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| ||||||
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| ||||||
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| ||||||
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|
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VNUE Technology, Inc.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 VNUE Media, Inc. were inactive corporations with no operations at September 30, 2017 and 2016, respectively. Inter-company balances and transactions have been eliminated.
Revenue Recognition
(5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Stage It receives revenue through a percentage of ticket sales and tipping. This show-based revenue creates a pool that is shared with the performing artist. Once a show is completed the revenue that has been created through tickets and tips is allocated. Typically, Stage It retains 20% of the revenue as an agent and the artist receives 80% of the revenue as the performer, however, there are occasions when the profit split has different ratios. Revenue is recognized once a show is complete and the performance obligation to the consumer has been met. Since Stage It acts as an agent, revenue is recorded on a net basis only on the 20% portion, less direct expenses such as broadcast costs, merchant processing fees, bank services charges, license fees and the cost of production.
The Company also recognizes revenue on the sale of digital video disks (DVD)CDs and USB drives that contain the recording of live concerts and are made available to concert viewersattendees immediately after the show and on-line.online. Revenue is recognized on the sale of a product when our performance obligation is completed which is when the risk of loss transfers to our customers and the collection of the receivable is reasonably assured, which generally occurs when the product is purchased.
Management’s Representation of Interim Financial Statements
The accompanying unaudited financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of AmericaU.S 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 financial statement date of the financial statements and the reported amounts of revenuesrevenue 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 valuefor the derivative liabilities,determination of goodwill and intangible assets, the valuation allowance for the deferred tax asset and the accruals for potential liabilities. Actual results could differ from these estimates.
8
Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.
Fair Value of Financial Instruments
The Company follows the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and to measuredetermines the fair value of its financial instruments. The FASB Accounting Standards Codification establishesassets and liabilities based on the exchange price in U.S. dollars that would be received for an asset or paid to transfer a fair value hierarchy which prioritizesliability (an exit price) in the inputs to valuationprincipal 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 into three broad levels.maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value hierarchy are described below.value:
● | Level 1 | — Quoted | ||
● | Level 2 |
| ||
|
| |||
● | 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. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The carrying amounts of the Company’s financial assetsinstruments such as cash, and liabilities, including cash, accounts payable and accrued expenses, and other current liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of our notes payable approximate their fair values because of the short maturity ofinterest rates on these instruments.obligations are based on prevailing market interest rates.
The fair value of the derivative liabilities of $779,903 and $508,107 at September 30, 2017 and December 31, 2016, respectively, were valued using Level 2 inputs.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. There were no derivative liabilities outstanding as of September 30, 2022 and December 31, 2021
LossIncome (Loss) per Common Share
Basic earnings (loss) per share are computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividingusing the net income (loss) applicable to Common Stockholders by the weighted averageweighted-average number of common shares outstanding plusduring the number of additional common shares that would have been outstanding ifperiod. Diluted net income (loss) per share is computed giving effect to all dilutive potential common shares had been issued,of Common Stock that were outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method. Potentialmethod, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that is then shared in the income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Dilutive potential shares areof Common Stock consist of incremental shares of Common Stock issuable upon exercise of stock options. No dilutive potential shares of Common Stock were included in the computation of diluted net loss per share on September 30, 2022, because their impact was anti-dilutive. As of September 30, 2022, the Company had outstanding warrants and shares related to convertible notes payables respectively, which were excluded from the computation as their effect is antidilutive.of net loss per share.
9
For
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the threestraight-line method and is charged to operations over the estimated useful lives of the assets. The threshold for depreciating office equipment is $200, and $1,000 for furniture and fixtures maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows:
Schedule of Property Plant Equipment Estimated Useful Lives | ||||
Computers, software, and office equipment | 3 years | |||
Furniture and fixtures | 7 years |
As of September 30, 2022, the Company’s property, which consisted solely of computers, amounted to $18,097 and -$-0- respectively. Depreciation expense for the nine months ended September 30, 20172022, and 2016,2021, amounted to $19,725 and $-0- respectively.
Goodwill and Intangible Assets
Goodwill represents the calculationsfuture economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisition is attributable to the value of basicthe potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of customer relationships, trademarks, and dilutedproduct formulations. The useful life of these customer relationships is estimated to be three years.
Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures, and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then an impairment loss per share areis recognized in an amount equal to the same because potential dilutive securities would have an anti-dilutive effect. As of September 30, 2017 and 2016, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from our calculation of earnings per share, as their effect would have been anti-dilutive.excess.
|
| September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Convertible Notes Payable |
|
| 110,015,835 |
|
|
| 15,951,363 |
|
Warrants |
|
| 1,000,000 |
|
|
| - |
|
Total |
|
| 111,015,835 |
|
|
| 15,951,363 |
|
Recently Issued Accounting Pronouncements
In May 2014,June 2016, the Financial Accounting Standards Board (FASB)(“FASB”) issued Accounting Standards Update (ASU)(“ASU”) No. 2014-09, Revenue from Contracts with Customers. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP2016-13”) and replace it with a principle based approach for determining revenue recognition. Underalso issued subsequent amendments to the initial guidance: ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued2018-19, ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12,2019-04, and ASU 2016-20 all2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effectiveexpected credit losses for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows.assets held. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018.
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lesseebe required to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.
In March 2016, the FASB issued the ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments inadopt this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. The ASU also allows for an employer to repurchase more of an employee's shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016,2022, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The Company plans to adopt ASU 2017-11 in the first quarter of 2018. The adoption of ASU 2017-11Topic 326 is not expected to have a material impacteffect on the Company’s financial statements and related disclosures because derivative liabilities from financial instruments (or embedded conversion features) that have down round features will be reclassified from liabilities to additional paid-in capital, effective asstatement disclosures.
10
NOTE 4 – PREPAID EXPENSE
As of September 30, 2022 and December 31, 2021, the balances in prepaid expenses was $100,000 and $464,336.
$100,000 of the beginningprepaid expense in both periods relates to a January 9, 2020 agreement entered into by the Company with recording and performance artist, Matchbox Twenty “MT Agreement”), to record its 2020 tour and sell limited edition double CD sets, download cards, and digital downloads. As part of the fiscal year.
Other recent accounting pronouncements issued bydeal, the FASB, includingCompany agreed to pay an advance of $100,000 against sales, to MT and its Emerging Issues Task Force,affiliated companies, which was paid in full in installments, with the American Institutelast installment of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management$40,000 paid on March 4, 2020. This tour which has been delayed due to have a material impact on the Company's present or future financial statements. Covid-19 is expected to commence in January 2023.
Note 3 - Related Party TransactionsNOTE 5 – RELATED PARTY TRANSACTIONS
DiscLive Network
On July 10, 2017, the Company entered into a Licensing Agreement with RockHouse Live Media Productions, Inc., DBA “DiscLive” or “DiscLive Network” (“DiscLive”) to formalize the terms of the Strategic Alliance entered into by the Company with DiscLive on July 21, 2016. VNUE has acquired an exclusive license from DiscLive, for a period of three years unless earlier terminated under the Agreement, for the use of all its assets, including but not limited to the DiscLive brand, website (including eCommerce platform), intellectual property, inventory, equipment, trade secrets and anything related to its business of “instant live” recording. Under the terms of the Agreement, DiscLive granted the Company a worldwide exclusive license.
In exchange for the license, DiscLive will receive a license fee equal to five percent (5%) of any sales derived from the sale and use of the products and services. DiscLive is controlled by our Chief Executive Officer. Revenues of $37,825$9,579 and cost of revenues of $35,151 during$9,295 for the nine monthsperiods ended September 30, 2017 resulted from the use of2022, and 2021, respectively, were recorded using the assets licensed under this agreement. For the periods ended September 30, 2022, and 2021 the fees would have amounted to $479 and $465, respectively. The Company’s Chief Executive Officer agreed to waive the right to receive these license fees for both years and has never taken any fees pursuant to this agreement.
Accrued Payroll to Officers
Accrued payroll to two officers was $259,250 and $233,750 respectively, as of September 30, 2022, and December 31, 2021, respectively. The Chief Executive Officer’s compensation is $ per year.
Advances from Officers/Stockholders / Employees
From time to time, employeesofficers/stockholders of the Company advance funds to the Company for working capital purposes. During the year ended December 31, 2021, the Company’s CEO advanced $10,000 to the Company on an interest-free basis. That amount remained outstanding as of September 30, 2022.
NOTE 6 – BUSINESS ACQUISITION
On February 13, 2022, VNUE, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back to satisfy certain contingent obligations of Stage It.
11
The advancesMerger Agreement also allows for the issuance of earn-out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are unsecured, non-interest bearingmet over the course of 18 months.
On February 13, 2022, the Company, Stage It and duethe shareholders of Stage It entered into a voting agreement concerning the Merger.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company will issue the initial shares and pay certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement.
The Merger Agreement has been included to provide investors with information regarding its terms. The representations, warranties, and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Merger Agreement, and may not have been intended to be statements of fact, but rather as a method of allocating risk and governing the contractual rights and relationships among the parties to the Merger Agreement. In addition, such representations, warranties, and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by the Company’s shareholders. None of the Company’s shareholders or any other third party should rely on demand. the representations, warranties, and covenants, or any descriptions thereof, as characterizations of the actual state of facts or conditions of the Company, the Company, Merger Sub, or any of their respective subsidiaries or affiliates
For the acquisition of Stage It the following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired and liabilities assumed:
Consideration paid
Schedule of fair value of consideration | ||||
Common stock issued, 41,476,963 shares of the Company’s restricted common stock valued at $0.0101 per share | $ | 418,917 | ||
Common stock issuable, 93,523,037 shares of the Company’s restricted common stock valued at $0.0101 per share | 944,583 | |||
Net liabilities assumed | 2,871,066 | |||
Earnout liability | 7,679,984 | |||
Cash paid | 1,085,450 | |||
Fair value of total consideration paid | $ | 13,000,000 |
Net assets acquired and liabilities assumed
Schedule of net asset acquired and liabilities assumed | ||||
Cash and cash equivalents | $ | 107,689 | ||
Property | 36,882 | |||
Total assets | 144,571 | |||
Accounts payable and accrued liabilities | 1,711,349 | |||
Notes payable | 526,385 | |||
Deferred revenue | 777,903 | |||
Total liabilities | $ | 3,015,637 | ||
Net liabilities assumed | $ | 2,871,066 |
The Company has allocated the fair value of the total consideration paid of $10,400,000 to goodwill and $2,600,000 to intangible assets with a life of three years. The value of goodwill represents Stage It’s ability to generate profitable operations going forward. Management estimated the provisional fair values of the intangible assets and goodwill on March 31, 2022. The Company’s accounting for the acquisition of Stage It is incomplete. Management is performing a valuation study to calculate the fair value of the acquired intangible assets, which it plans to complete within the one-year measurement period.
12
NOTE 7 – INTANGIBLE ASSETS
As of September 30, 20172022, the balance of intangible assets was $2,058,333. During the year the three-month period ended September 30, 2022, the Company recorded $541,577 in amortization expense. As discussed in Note 6, the intangible assets have been valued based on provisional estimates of fair value and are subject to change as the Company completes its valuation assessment by the completion of the one-year measurement period. Remaining amortization as of September 30, 2022 for the following fiscal years is: 2022 - $216,668; 2023 - $866,666; and 2024 - $866,666, 2025 -$108,333.
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payables are recognized initially at the transaction price and subsequently measured at the undiscounted amount of cash or other consideration expected to be paid. Accrued expenses are recognized based on the expected amount required to settle the obligation or liability.
The following table sets forth the components of the Company’s accrued liabilities on September 30, 2022, and December 31, 2016, the advances from the employees were $14,720 and $14,720, respectively.2021:
Schedule of accrued liabilities | ||||||||
September 30, 2022 | December 31, 2021 | |||||||
Accounts payable and accrued expense | $ | 2,417,266 | $ | 588,275 | ||||
Accrued interest | 292,790 | 189,527 | ||||||
Soundstr Obligation | 145,529 | 145,259 | ||||||
Total accounts payable and accrued liabilities | $ | 2,855,585 | $ | 923,061 |
Note payable to President and Significant StockholderNOTE 9 – PURCHASE LIABILITY
On December 31, 2014 the Company entered into a note payable agreement with its President, and significant stockholderThe balance of the Company. The note is unsecured, non-interest bearing and due on December 31, 2024. As ofcompany’s Purchase Liability at September 30, 20172022, and December 31, 2016,2021 was $7,979,984 and $300,000, respectively.
Under the note payableterms of the business acquisition of Stage It described in Note 6, during the three months ended September 30, 2022 the Company had a contingent Earnout Liability of $7,679,984 due to the officer was $74,131 and $74,131, respectively. shareholders of Stage It if Stage It operations achieve certain operating milestones. This liability will be subject to quarterly analysis.
Convertible Notes Payable to the Officers and Directors
In August 2014 the Company issued non-interest bearing convertible notes to certain Officers and Directors of the Company for working capital purposes. The notes are convertible at variable prices and payable on demand at any time after the earlier of (i) 36 months following the note issuance or (ii) the consummation of a corporate transaction if not previously converted. See further discussion in Note 5.
Transactions with Louis Mann
On August 26, 2015,October 16, 2017, the Company entered into an Advisory Agreementagreement with Louis Mann (“MANN”PledgeMusic, Inc. (the “Seller”), a former officer and director withwhereby the Company who resignedacquired the digital live music distribution platform “Set.fm” from his officerPledgeMusic. The purchase price for the acquisition was comprised of $50,000 paid in cash, and directora purchase liability of $300,000.
The purchase liability was payable on August 26, 2015. The Advisory Agreement provided for MANN’s continuedthe net revenues derived from VNUE’s live recording and ongoing advisory servicescontent business and must be paid in full to the Seller no later than the three (3) year anniversary of the date of the agreement, or October 16, 2020. If the Company until December 31, 2015fails to pay the Seller the purchase liability on time, the Seller may request at any time within one hundred eighty days (180) days following the (3) year anniversary of the asset purchase agreement, that the Company immediately forfeit, convey, assign, and MANN wastransfer to be paid $25,000the Seller all or any of the Purchased Assets so requested by the Seller for providing such advisory services, which was due and payable on or before December 31, 2015. Such amount is includedno additional consideration. The Company has had no correspondence regarding this liability with Pledge Music who declared bankruptcy in accrued expenses at2019.
As of September 30, 20172022 and December 31, 2016, respectively.
Note 4 – Notes Payable
Notes payable2021 the balances of shares to be issued were $1,020,571 and $247,707. The balance as of September 30, 2017 and December 31, 2016 consist2022 is comprised of the following
|
|
|
|
| As of |
| |||||
|
|
|
|
| September 30, |
|
| December 31, |
| ||
|
|
|
|
| 2017 |
|
| 2016 |
| ||
|
|
|
|
|
|
|
|
|
| ||
Individual |
| (a) |
|
| $ | 9,000 |
|
| $ | 9,000 |
|
Tarpon |
| (b) |
|
|
| - |
|
|
| 25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
| $ | 9,000 |
|
| $ | 34,000 |
|
______________
As of December | ||
● | During the nine months ended September 30, |
13
NOTE 11 – NOTES PAYABLE
The balance of the Notes Payable outstanding as of September 30, 2022, and December 31, 2021, was $1,143,262 and $869,157, respectively. The balances as of December 31, 2021 were comprised of two notes amounting to $12,000 and an 8% note for $857,157 due to Ylimit payable on September 30, 2022. On September 24, 2022 the maturity date of this Note was extended to September 30, 2023 on the same terms and conditions.
The two notes for $12,000 are past due an continue to accrue interest.
During the nine months ended September 30, 2022, the Company added $273,385 in note liabilities pursuant to the Stage It acquisition. These notes currently are not accruing interest.
Note 5NOTE 12 – Convertible Notes PayableCONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
|
|
|
| As of |
| ||||||
|
|
|
| September 30, |
|
| December 31, |
| |||
|
|
|
| 2017 |
|
| 2016 |
| |||
Various Convertible Notes |
| (a) |
| $ | 55,000 |
|
| $ | 55,000 |
| |
Tarpon Convertible Note |
| (b) |
|
|
| - |
|
|
| 33,500 |
|
Tarpon Convertible Note |
| (c) |
|
|
| - |
|
|
| - |
|
Ylimit, LLC Convertible Notes |
| (d) |
|
|
| 517,000 |
|
|
| 300,000 |
|
Crossover Capital Fund II, LLC Convertible Notes |
| (e) |
|
|
| 61,000 |
|
|
| - |
|
Golock Capital, LLC Convertible Notes |
| (f) |
|
|
| 105,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Convertible Notes |
|
|
|
|
| 738,000 |
|
|
| 388,500 |
|
Discount |
|
|
|
|
| (307,967 | ) |
|
| (244,534 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes, net |
|
|
|
| $ | 430,033 |
|
| $ | 143,966 |
|
Schedule of Convertible notes payable | ||||||||
September 30, 2022 | December 31, 2021 | |||||||
Various Convertible Notes | $ | 43,500 | 43,500 | |||||
Golock Capital, LLC Convertible Notes (a) | 339,011 | 339,011 | ||||||
Other Convertible Notes (b) | 88,203 | 253,203 | ||||||
Total Convertible Notes | $ | 470,714 |
| 635,714 |
______________
|
| ||
|
| ||
|
| ||
|
| ||
|
| ||
|
| ||
|
|
| |
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 requested conversion. During the year ending December 31, 2019, the Company issued new notes payable of $53,331 and $23,102 of notes and accrued interest were converted into shares of common stock. The balance of the notes outstanding on December 31, 2019, was $339,010. As of December 31, 2019, $285,679 of these notes were past due. As of September 30, 2022 all of the Golock notes amounting to $339,011 were past due.
As a result Golock has assessed the Company additional penalties and interest of $1,172,782. The Company disagrees with the accrued interest and penalties due to Golock. Initially, the Company recorded this amount as a liability on its balance during the period ended 2021. Subsequent during the three month period ended September 30, 2021, the Company obtained a legal opinion supporting its position that these charges were egregious, and reversed the liability on its balance sheet The Company intends to litigate this amount as well as the validity of the principal and interest outstanding, if a settlement on a vastly reduced amount, cannot be reached.
(b) | During the year ended December 31, 2021, GHS Investments funded an 8%, $165,000 convertible promissory note |
14
Summary
The Company considered the current FASB guidance of “Contracts in Entity’s Own Stock” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability of whether or not within the issuers’ control means the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined that the conversion prices of the Notes were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or the conversion price was variable. As a result, the Company determined that the conversion features of the Notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the Notes, the initial fair value of the embedded conversion feature was recorded as debt discount offsetting the fair value of the Notes and the remainder recorded as financing costs in the Condensed Consolidated Statement of Operations. The discount is being amortized using the effective interest rate method over the life of the debt instruments.
As of December 31, 2016, the unamortized debt discount was $244,534. During the nine months ended September 30, 2017, the Company issued $311,000 of convertible notes subject to a debt discount, and created a derivative liability upon issuance with a fair value of $668,557, of which $311,000 was recorded as a valuation discount, and the remaining $357,557 was recorded as a financing cost. In addition, the Company recorded an additional debt discount of $18,261 related to a warrant issued associated with the issuance of a convertible note during the period. During the nine months ended September 30, 2017, amortization of debt discount was $265,828. The unamortized balance of the debt discount was $307,967 as of September 30, 2017.
For the purposes of Balance Sheet presentation, convertible notes payable have been presented as follows:
|
| September 30, |
|
| December 31, |
| ||
Convertible notes payable, net |
| $ | 400,033 |
|
| $ | 121,865 |
|
Convertible notes payable, related party, net |
|
| 30,000 |
|
|
| 22,101 |
|
Total |
| $ | 430,033 |
|
| $ | 143,966 |
|
Note 6 – Derivative Liability
The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion prices of the Notes described in Note 5 were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or they were variable. Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
As of September 30, 2017 and December 31, 2016, the derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following assumptions:
|
| September 30, 2017 |
|
| Issued During 2017 |
|
| December 31, |
| |||
|
|
|
|
|
|
|
|
| ||||
Exercise Price |
| $ | 0.002 – 0.108 |
|
| $ | 0.005 – 0.026 |
|
| $ | 0.013 – 0.116 |
|
Stock Price |
| $ | 0.008 |
|
| $ | 0.006 - 0.035 |
|
| $ | 0.044 |
|
Risk-free interest rate |
| 0.84 – 1.24 | % |
| 0.94 – 1.23 | % |
| 0.59 – 0.85 | % | |||
Expected volatility |
|
| 358 | % |
| 273% - 344 | % |
|
| 243 | % | |
Expected life (in years) |
|
| 1.000 |
|
| 0.792 – 1.292 |
|
| 0.583 – 1.833 |
| ||
Expected dividend yield |
|
| 0 | % |
|
| 0 | % |
|
| 0 | % |
Fair Value: |
| $ | 779,903 |
|
| $ | 594,666 |
|
| $ | 508,107 |
|
The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future.
During the nine months ended September 30, 2017, the Company recognized $38,068 as other income, compared to $194,912 as other income during the nine months ended September 30, 2016, which represented the change in the fair value of the derivative from the respective prior period. In addition, the Company recognized derivative liabilities of $602,702 upon issuance of convertible notes during the period and a gain of $292,838 and $21,308 during the nine months ended September 30, 2017 and 2016, respectively, which represented the extinguishment of derivative liabilities related to both the extinguishment of convertible notes with cash and the conversion of a note to common stock.
Note 7NOTE 13 – Stockholders’ DeficitSTOCKHOLDERS’ DEFICIT
Common stock returned by officer
The Company has authorized shares of $ par value common stock. As of September 30, 2022, and December 31, 2021, there were and shares of common stock issued and outstanding respectively.
Preferred Stock Series A
On March 15, 2017,July 2, 2019, the Company filed a Company officer voluntarily returned 5,000,000Certificate 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 held by himand shares of Preferred Stock, of which, 5,000,000 were designated as Series A Convertible Preferred Stock.
As of September 30, 2022 and 2021 the Company had shares of $ par value preferred stock authorized and there were shares of Series A Preferred Stock issued and outstanding.
On May 22, 2019, the Company authorized and designated a class of Series A Convertible Preferred Stock (“Series A Preferred Stock”), in accordance with a Certificate of Designation filed with the State of Nevada (the “Series A Designation”). It subsequently issued 4,126,776 restricted shares of Series A Preferred Stock to various employees and service providers to compensate and reward them for services and to incentivize them to provide continued service to the Company. The Series A Preferred Stock receives relative rights and preferences under terms and conditions set forth in the Certificate of Designation of the Preferred Stock.
Pursuant to the Series A Designation, each share of Series A Preferred Stock may be converted into 50 shares of common stock of the Company. The Series A Preferred Stockholders shall be entitled to share among dividends with the common stock shareholders of the Company on an as-converted basis. The Series A Preferred Stockholders shall vote with the common stock as a single class, on a 100 to 1 basis, such that for every share of Series A Preferred Stock held, such shares shall entitle the holder to cast 100 votes. The holders of the Series A Preferred Stock have no consideration. liquidation or redemption preference rights but get treated as common stockholders on an as converted basis.
The Company believes that the issuance of the Series A Preferred Stock was exempt from the registration requirements under the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act in that said transaction did not involve a public solicitation and said restricted shares were subsequently cancelled. issued to only a small number of employees and consultants with an ongoing relationship with the Company.
As of September 30, 2022, and December 31, 2021, there were shares of Series A Preferred issued and outstanding.
Preferred Stock Series B
On January 3, 2022, the Company authorized and designated a class of 1,600 shares, par value $ of Series B Convertible Preferred Stock (“Series B Preferred Stock”), in accordance with a Certificate of Designation filed with the State of Nevada (the “Series 5 Designation”).
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Shares
During the three months ended March 31, 2022 the Company issued 1,535 restricted shares of Series B Preferred Stock to GHS Investments (“GHS”) in return for $1,500,000 (less $130,000 in fees) in financing provided to the Company.
Pursuant to the Series B Designation, each share of Series B Preferred Stock may be converted into $1,200 of common stock of the Company. In connection with the issuance of the Series B Preferred Stock, the Company recorded $42,000 in financing fees and a $300,000 expense for the beneficial conversion feature of Series B Preferred stock.
During the three months ended June 30, 2022 the Company issued an additional servicesgross cash proceeds of $280,000. of these shares were issued as a commitment fee, and of these shares were issued to retire debt. In connection with these issuances the Company recorded $12,000 in financing fees, a beneficial conversion feature of $87,000 and a loss of $154,200 on the retirement of debt. Series B Preferred Shares. of these shares were issued for
During the three months ended September 30, 2022 the Company issued an additional 151,600 shares. of these shares were issued as a commitment feet. In connection with these issuances the Company recorded $14,400 in financing fees and a beneficial conversion feature of $45,200. Though the nine months ended September 30, 2017,2022 the Company has accrued $145,103 in dividends on these Series B Preferred Issuances.
As of September 30, 2022, and December 31, 2021, there were and - - shares of Series B Preferred outstanding, respectively.
Preferred Stock Series C
On May 25, 2022 the Company authorized and designated a class of 10,000 shares of Series C Preferred Stock, par value $0.0001. The holders of the Series C Preferred Stock shall have the right to cast one million (1,000,000) votes for each share held of record on all matters submitted to a vote of holders of the Company’s common stock. On the same date, the Company issued an aggregateto each of 2,575,000Zach Bair, CEO & Chairman, Anthony Cardenas, CCO and Director, and Lou Mann, EVP and Director, 1,000 shares of its common stock to certain employees and contractorsthis newly created Series C Preferred Stock for services valuedrendered. These share which represented 3,000,000,000 (billion) votes was value at $95,125, based upon the closing markettrading price of the Company’s securities of $0.0051 on the date of Board of Director approval. As a result the Company recorded a non-cash charge of $15,300,000 on its Statement of Operation for the three months ended June 30, 2022.
As of September 30, 2022 and December 31, 2021, there were were authorizedof Series C Preferred Stock outstanding. and - - shares
Warrants
In connection with the issuance of Series B Preferred Stock to be issued.the Company described in Note 14, the Company issued 264,550,794 warrants, with a five year life, at an average strike price of $0.0788
Warrants
A summary of warrants for the nine months endedis as follows:
Schedule of warrants | ||||||||
Number of Warrants | Weighted Average Exercise | |||||||
Balance outstanding, December 31, 2020 | 23,805,027 | |||||||
Warrants expired or forfeited | (8,004,708 | ) | - | |||||
Balance outstanding and exercisable, December 31, 2021 | 15,800,319 | $ | 0.00475 | |||||
Warrants exercised or forfeited | (15,800,319 | ) | ||||||
Warrants granted during the nine months ended September 30, 2022 | $ | 0.00788 | (a) | |||||
Balance outstanding and exercisable, September 30, 2022 | 264,550,794 |
(a) | The strike price is subject to adjustment based on the market price of the company’s stock price |
Information relating to outstanding warrants on September 30, 20172022, summarized by exercise price, is as follows:
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| Number of |
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| Weighted - Average |
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| Shares |
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| Exercise Price |
| ||
Outstanding at December 31, 2016 |
|
| - |
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| - |
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Granted |
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| 1,000,000 |
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| $ | 0.01 |
|
Forfeited |
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| - |
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| - |
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Outstanding at September 30, 2017 |
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| 1,000,000 |
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| $ | 0.01 |
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Exercisable at September 30, 2017 |
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| 1,000,000 |
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| $ | 0.01 |
|
On September 1, 2017, the Company issued 1,000,000 warrants to purchase the Company’s common stock as an inducement to enter into a convertible note payable with Golock Capital LLC (See Note 5). The fair value of the warrants granted was determined to be $18,261 and was recorded as a debt discount and being amortized to financing costs over a term of the related convertible note of 12 months. The fair value of the warrant was calculated using the Black-Scholes option pricing model using the following assumptions – stock price of $0.01; exercise price of $0.01; expected life of 1 year; volatility of 358%; no dividend rate and a discount rate of 1.31%.
Additional information regarding warrants outstanding as of September 30, 2017 is as follows:
Warrants Outstanding at September 30, 2017 |
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| Warrants Exercisable at September 30, 2017 |
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| Weighted |
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| Number of |
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| Remaining |
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| Average |
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| Number of |
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| Average |
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Range of |
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| Shares |
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| Contractual Life |
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| Exercise |
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| Shares |
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| Exercise |
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Exercise |
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| Outstanding |
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| (Years) |
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| Price |
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| Exercisable |
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| Price |
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$ 0.01 |
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| 1,000,000 |
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| 2.92 |
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| $ | 0.01 |
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| 1,000,000 |
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| $ | 0.01 |
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| 1,000,000 |
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| 1,000,000 |
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The weighted-average remaining contractual life of all warrants outstanding and exercisable aton September 30, 20172022 is 2.92approximately years. The outstanding and exercisable warrants outstanding on September 30, 2022, had no intrinsic value.
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Note 8 - CommitmentNOTE 14 – COMMITMENT AND CONTINGENCIES
Litigation
Legal Matters
DBW Investments, LLC et al
As disclosed in greater detail in the Company’s Form 10-Q, filed May 23, 2022, the Company remains in active litigation with DBW Investments, LLC (“DBW”) and ContingenciesGolock Capital, LLC (“Golock”). The remainder of this disclosure will address all material updates since the aforementioned Form 10-Q.
Litigation – Hughes Media Law Group, Inc.
On December 11, 2015, Hughes Media Law Group, Inc. (“HLMG”)May 6, 2022, the Company filed a lawsuit against VNUE, Inc. in the Superior Court of King County, Washington, under case number 15-2-30108-0. HMLG claims damages of $130,553motion for unpaid legal fees HMLG alleges are owed pursuantleave to an April 4, 2014 agreement with VNUE Washington, for legal work performed by HMLG for VNUE Washington prior to the Merger. The Complaint sets forth no legal basis for a lawsuit against VNUE, Inc. (Nevada) and does not, in fact, sue VNUE Washington, HMLG’s former client. The Company believes that VNUE, Inc. (Nevada) is not the proper party for this lawsuit, and reserves all availableamend its answer, affirmative defenses, and counterclaims. Under Washington Superior Court rules, VNUE, Inc. (Nevada) if serviceAs of process takes place outside of Washington, a defendant has Sixty (60) days from the date on which ithereof, the Company’s motion is fully submitted to the Court, but no decision has been made.
On August 17, 2022, the Company was servedinformed that the Complaint,case was reassigned from Judge Vernon S. Broderick to file a response setting forth its defenses. Judge Denise L. Cote.
The Company remains committed to vigorously defending itself against DBW and Golock
LG Capital, LLC et al
On July 25, 2016,June 15, 2022, the court issued judgment awarding HLMG $133,482 with interest at a rateCompany commenced an action against LG Capital, LLC (“LG Capital”), Joseph Lerman (“Lerman”), Boruch Greenberg (“Greenberg”), and Daniel Gellman (“Gellman”) (LG, Lerman, Greenberg, and Gellman, together, the “LG Defendants”) in the U.S. District Court for the Eastern District of 12% per annum. New York.
The judgment stipulated that $12,000 be paid within five daysCompany’s complaint alleges that: (i) LG is an unregistered dealer acting in contravention of federal securities laws and, thus, the Company is entitled to rescission—pursuant to Section 29(b) of the judgmentSecurities Exchange Act of 1934—of all unlawful securities transactions by and paymentsbetween the Company and LG, including the Convertible Promissory Note, dated October 23, 2018 (the “Note”), the Securities Purchase Agreement, dated October 23, 2018 (“SPA”), and all conversions made pursuant to the Note (“Conversions”); (ii) Lerman, Greenberg, and Gellman are liable to the Company as control persons of $4,000 per monthLG Capital for its violations of federal securities laws; (iii) LG Capital is a RICO enterprise, that Lerman, Greenberg, and Gellman are RICO culpable persons who controlled LG Capital, and the LG Defendants violated RICO by engaging in unlawful debt collection through the Note and Conversions; (iv) Lerman, Greenberg, and Gellman conspired to start in October, 2016. The amountviolate RICO through unlawful debt collection; (v) the LG Defendants have been unjustly enriched at the expense of the settlement has been recorded in accounts payable inCompany through the accompanying consolidated balance sheets as of SeptemberNote, SPA, and Conversions; and (vi) a constructive trust be imposed against the LG Defendants.
The LG Defendants are obligated to answer or otherwise respond to the Company’s complaint on or before August 30, 2017 and December 31, 2016.2022.
The Company remains committed to vigorously asserting its legal claims against the LG Defendants.
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Note 9NOTE 15 – SUBSEQUENT EVENTS
Subsequent Eventsto September 30. 2022 the Company raise $166,341 in gross proceed proceeds from the sale of Preferred B shares and from the private placement of 75,193,682 common shares pursuant to the terms of its equity line. Additionally in connection with the issuance of the 36 Preferred B shares the Company also issued warrants at a strike price of $ per share.
Asset Acquisition
On October 16, 2017,12, 2022 the Company entered into ana joint venture agreement with PledgeMusic, Inc.Kokku Games Ltda., whereby the Company will acquire the assets of the digital live music distribution platform Set.fm from PledgeMusic. Additionally, the Company will offer PledgeMusic NorthSouth America’s full suite of music business tools allowing artistslargest gaming and entertainment co-development firm to sell music, merchandise and live experiences directly to fans, enhancing the Company’s clients’ revenue opportunities on a shared revenue basis.
Set.fm is a DIY platform that makes it easy for artists to record and sell their live shows directly to fans’ mobile devices, uploading simultaneously with their performance. The platform, which also features an innovative and easy-to-use studio app, already boasts thousands of artists and tens of thousands of fans using it. VNUE plans to update and improve the existing platform for indie artistsprovide entertainers and their fans,team tools and services needed to implement pro features for artists that VNUEstreamline, production, management and its affiliate DiscLive produce.promotion.
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PledgeMusic has a growing base of 3 million music fans directly engaging with the artists they love. The platform has launched more than 50,000 campaigns across a wide range of artists with inventive ways to connect with those fans, creating newfound revenue and strategic marketing and engagement opportunities.
Convertible Note Payable
Subsequent to September 30, 2017, the Company received additional borrowings of $50,000 and issued the Lender a warrant to purchase 3,454,708 shares of the Company’s common stock at an exercise price of $0.015 per share.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements in this quarterly report that are not reported financial results or other historical information are "forward-looking statements"“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"“estimates”, "projects"“projects”, "expects"“expects”, "intends"“intends”, "believes"“believes”, "plans"“plans”, or their negatives or other comparable words. Also, look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business. Some forward-looking statements that we may use include, without limitation, those statements that relate to:
● | Competition and market acceptance of our product, | |
● | Other risks and uncertainties related to the music industry and our business strategy and the impact of the Covid-19 pandemic on our operations, | |
● | Our ability to penetrate the market and continually innovate useful technologies, | |
● | Our ability to negotiate and enter into license agreements, | |
● | Our ability to raise capital, and | |
● | Our ability to protect our intellectual property rights. |
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission ("SEC"(“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 annualquarterly report, the terms "we"“we”, "us"“us”, "our"“our” and the "Company"“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.
OverviewImpact of Current Coronavirus (COVID-19) Pandemic on the Company
Covid-19 has had a material adverse effect on our live recording business and the music industry in general. Substantially all of our Current Businessfuture set.fm and DiscLive business is dependent on success of public events and gatherings. We believe that the vaccination efforts throughout the world are having a positive impact on the population that may enable more live music events to be held in the future which would be beneficial to our business, however, there can be no assurances on the timing of when this may occur or whether it will occur at all.
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Through VNUE, Inc., our wholly owned subsidiary, we now carry on business as
Overview
Our Business
We are a live entertainment music technology company that utilizes our platforms to record live concerts and then sell the content to consumers. We make content we record available to the set.fm platform, as well as our website, immediately after the show is finished. Our technology helps artists and record labels generate alternative income from the recorded content. We also offer high end collectible products such as CDs, USB drives and laminates, which brings bandsfeature our fully mixed and fans together by capturing professional quality audiomastered live concert content.
Until the acquisition of Stage It, described below, we had two products:
● | Set.fm™ / DiscLive Network™ - Our consumer app platform allows customers to download and purchase, via their individual mobile device, the concert they just attended. There are also physical collectible products which are recorded and sold at shows as well as online through the Company’s exclusive partner DiscLive Network™. The app itself is free to download, and allows for in app purchases regarding the content. (Currently, this is the only platform that generates any revenue for the Company.) |
● | Soundstr™ - a comprehensive music identification and rights management Cloud platform that we are developing, when fully deployed, can accurately track and audit public performances of music, creating a more transparent ecosystem for general music licensing and associated royalty payments, which will help ensure the correct stakeholders are compensated through the use of our “big data” collection. |
While Set.fm™ and video recordings of live performances and delivers the experience of a venue to your home and hand.
By streamlining the processes of curation, clearing, capturing, distribution and monetization of music performances, VNUE manages and simplifies the complexitiesSoundstr™ are proprietary marks of the music ecosystem. Company, DiscLive, and its related marks and names are not owned by the Company and are owned and utilized by RockHouse Live Media Productions, Inc. The Company has not filed any formal trademark applications relating to Set.fm™ with the United States US Patent and Trademark Office but has been using these marks openly since 2017 and claims common law rights to them.
VNUE producesThe Company currently only generates revenue from Set.fm and captures rich content through its Front of House mobile application and provides world-wide distribution and monetizationfrom DiscLive by (a) recording the audio of live concerts and other eventsthen selling the content “instantly” through a suite ofits set.fm website, as well as the IOS Set.fm mobile web administration applications, allowing an artist to seamlessly deliverapplication, and sell their live performances directly to the fans who attend their shows. Additionally, VNUE will now offer(b) selling content on physical products such as limited edition “instant” CD sets, USB drives,CDs, which are burned on-site where customers can purchase them. Our customers are fans of live music and other products, through its strategic partnership and exclusive licensingthe bands which we record.
Customers want to “take home” their experience of the concerts they attend. Our Company enters into agreement with RockHouse Live Media Productions, Inc., dba DiscLive, widely known to becertain bands and artists, and record labels if a particular artist under contract with the leaderlabel. Our teams then follow that artist or band while they are on tour and pioneer in the “instant live” space.record every show on that tour. Our Company uses its own recording and sound equipment while recording concerts.
While VNUE will primarily be used in live music venues,As we are also planning to branch into many other entertainment experiences such as comedy, plays, musicals, university lectures, professional demonstrationspartner with both artists and panel discussions,labels, we market our services on their websites, their social media platforms, their mailing lists, as well as action sportsour own websites and religious events.social networks. Furthermore, partnerships, with companies similar to Ticketmaster, allow us to market to customers when they buy tickets to see certain artists in concert.
On February 13, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company agreed to acquire Stage It for $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate to the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back for the purposes of satisfying certain contingent obligations of Stage It. Though the period ended March 31,, 2022 the Company has paid approximately $1,568,000 in purchase consideration and expenses related to the acquisition.
20
VNUE's business model
The Merger Agreement also allows for the issuance of earn out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company will issue the initial 135,000,000 shares and pay certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement.
With the addition of Stage It (Stage It.com), VNUE will have the ability to livestream concerts and other events, adding to the pool of other live music focused technology services. Stage It is basedan established platform where concerts or other live events may be ticketed (just like an in-person event), and fans who pay for tickets may enjoy a performance or other engagement by watching digital video as it occurs on their web browser. For example, an artist can create an event through the platform, and then, in advance, let their fans know they can purchase the ability to view the concerts on the productionStage It platform. Fans then buy the ability to access these concerts, and at the designated time, the fan may then observe the live performance on Stage It.com.
Recent Developments
In late July, we announced that the Company is launching an aggressive campaign to deploy its Soundstr Music Recognition Technology in every bar, restaurant and hotel in Key West, FL, and has brought on local resources to have “boots on the ground” for the rollout.
Key West is one of instant contentthe most sought-after vacation spots in the world, attracting around five million tourists per year by planes, boats (including cruise ships), and automobiles. It also boasts a large number of businesses that utilize music. In fact, the famed Duval Street is lined with no less than 143 bars – availablein less than two miles.
Interested businesses may receive the Soundstr Pulse devices for no cost whatsoever. Additionally, in the next several months, VNUE will be offering both playlist functionality – meaning clients will be able to fans as they leave events,play fully licensed music directly from Soundstr – as well as business to business monetization of our back end rights clearing system software, which is currently in development.
We are a relatively new company and to date we have received a minimal amount of revenues from our operations. VNUE, Inc., our wholly owned subsidiary, only recently commenced operations and we have undertaken only organizational activities and software application development. Our independent auditors have raised substantial doubts as to ourthe ability to continueopt-in for advertising, which will help to offset licensing costs that businesses pay. One of the strongest points about Soundstr Pulse is that it does have high quality audio output capabilities (for use with advertising and for playlists), as well as Bluetooth beacon technology that will be leveraged for non-invasive advertising.
Also in late July, we announced the Company is partnering with Key West’s Barefoot Radio 104.9 and RockHouse Live Key West, in collaboration on a going concern without significant additional financing. Accordingly,new music show centered around local artists and those artists who pass through the exotic and beautiful island on tour.
Live and Local at RockHouse Live Key West™ will air every Thursday night, starting September 1, 2022, from 8PM to 10PM, 100% live from RockHouse Live Key West’s exclusive Rock Room.
In addition to being carried on terrestrial radio by Barefoot 104.9, the show will also air on VNUE’s online and app-based radio station, VNUE Radio, and it will be professionally livestreamed on VNUE’s StageIt.com platform, both of which reach a global audience, and the latter with over a million subscribers. And it will also air on select screens at each of the other RockHouse Live locations, in Clearwater Beach, Oxford, MS, and Memphis, TN.
Two musical artists, which will range from solo artists to full bands, will be featured every week, and will each be interviewed on-site in the RockHouse Live Rock Room, in front of a live audience. Each artist will also take the stage, and during their performance, the radio station will play recordings by each of the featured artists, as well as other local artists who have submitted material for consideration.
Results of Operations for the foreseeable future, we will continue to be dependent on additional debtthree and equity financing in order to maintain our operationsnine months ended September 30, 2022, and continue with our development activities.2021
Acquisitions will be pursued where the Directors consider that there is clear value through the addition of expertise, customers, monetization potential or geographic footprint.
Our principal offices are located at 104 W. 29th Street, 11th Floor, New York, NY 10001. Our telephone number is 857-777-6190. The live music and entertainment space is constantly searching for new monetization outlets; VNUE has a solution that melds content and technology in almost any venue in the world. This befits not only artist, labels, publishers and live venues but the fan.
Results of Operations
The following discussion and analysis of our results of operations and financial condition for the three and nine months ended September 30, 20172022, and 2021, should be read in conjunction with our condensed consolidated financial statements and related notes included in this report. We are in the process of completing development of our products and services and therefore had minimal but material revenues during this quarter.
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Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016
Revenues
Software Development
Our software development expenses forFor the three months ended September 30, 2017 amounted to $24,7782022 we had revenue of $99,181 compared to $126,838$2,714 in revenue for the threesame period ended September 30, 2021, an increase of $96,467. In the nine months ended September 30, 2016. The decrease in software development expenses relative to last year reflected the decrease in salaries for full time personnel and contract labor.
General and Administrative Expenses
Our general and administrative expenses for the three months ended September 30, 2017 amounted to $172,3192022, we had revenue of $233,871 compared to $154,908 for the three months ended September 30, 2016. The increase in general and administrative expenses relative to last year was due primarily to an increase in professional fees.
Other Income (Expenses), Net
We recorded other expense, net for the three months ended September 30, 2017 of $110,712 compared to other expense, net of $207,412 for the three months ended September 30, 2016. The change in other income (expenses), net, was primarily due to the change in the fair value of derivative liabilities of $80,812, increased financing costs of $128,641, offset by the increase in the gain in fair value of derivative liability of $174,529 as compared to last year.
Net Lossfrom Operations
As a result of the foregoing revenues, direct costs of revenues, software development expenses, general and administrative expenses, and other income (expenses), net, our net loss for the three months ended September 30, 2017 was $307,809, compared to our net loss for the three months ended September 30, 2016 of $489,158.
Nine months Ended September 30, 2017 Compared to Nine months Ended September 30, 2016
Revenues
Our revenues$9,295 for the nine months ended September 30, 2017 amount2021, representing an increase of $224,576. The increase in revenue in both the three and nine month period is attributable to $37,825. The Companythe inclusion of Stage It revenues in the three and nine months ended September 30, 2022 compared to zero during the same periods ended September 30, 2021.
We expect that our revenues will increase in future quarters as a result of the decreased impact of Covid-19 and the accompanying lockdowns on businesses, which has been an obstacle for live performances, however, there can be no assurances.
Direct Costs of Revenues
In the nine months ended September 30, 2022, we had no revenuesdirect costs of revenue of $224,786 compared to $5,446 for the nine months ended September 30, 2016. 2021, representing an increase of $219,340. For the three months compared for each year, it represented an increase of $66,679.
The revenues resultedincrease in costs is attributable to Stage It. We expect to generate positive gross margins from higher sales volumes in the usefuture, although there can be no assurances.
Operating Expenses
We incurred operating expenses in the amount of the assets licensed from DiscLive.
Direct Costs of Revenues
Our direct costs of revenues$17,014,634 for the nine months ended September 30, 2017 amounted2022, as compared with $614,976 for the same period ended September 30, 2021, primarily as a result of a non-cash charge of $15,300,000 representing the fair market value of the Series C Preferred Stock voting stock received as compensation by our management. We do not expect to $35,121. have this expense in future quarters.
The Company had no direct costsbalance of revenuesour operating expenses for all periods consisted of the following for the nine months ended September 30, 2016. 2022 and 2021.
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
General and administrative expenses | $ | 171,896 | $ | 121,404 | ||||
Payroll expenses | $ | 419,204 | $ | 205,120 | ||||
Professional Fees | $ | 581,867 | $ | 288,272 | ||||
Amortization of intangible assets | $ | 541,667 | $ | - |
The costs resulted from the useincrease of the assets licensed from DiscLive.
Software Development
Our software development expenses for the nine months ended September 30, 2017 amounted to $92,905 compared to $1,033,207 for the nine months ended September 30, 2016. The decrease$50,492 in software development expenses relative to last year was due to $730,513 in stock based compensation expense recorded last year relating to shares issued to certain employees and contractors for services received as compared to $18,500 recorded for the nine months ended September 30, 2017. Excluding stock based compensation expense, our software development expenses decreased reflecting the decrease in salaries for full time personnel and contract labor caused by our lack of sufficient working capital.
General and Administrative Expenses
Our general and administrative expenses for the nine months ended September 30, 2017 amounted to $631,0572022 versus the same period ended 2021 is largely the result of the inclusion of Stage It expenses in 2022 compared to $992,470$-0- in the prior year. We expect our general and administrative expenses to increase in future quarters with our reporting obligations with the SEC and the increased expenses associated with increased activity with Stage It operations, which is expected for the balance of the year.
The increase of $214,84 in our payroll expenses for the nine months ended September 30, 2016. The decrease in general2022 versus the same period ended 2021 is largely the result salaries, wages, benefits and administrative expenses relative to last year wasother human resource related costs due primarily to the decrease in stock based compensation expenseacquisition of $491,123 relatingStageIt and the team to shares issued to certain employees and contractors for services received. Excluding the difference in stock based compensation expense,support additional growth.
We expect that our general and administrative expenses increased reflecting anpayroll will increase in future quarters as we take on more operations that require most human resources.
The increase of $293,595 in our professional fees.
Other Income (Expenses), Net
We recorded other expense, netfees for the nine months ended September 30, 20172022 versus the same period ended 2021 is largely the result of $360,238 compared to otherthe added cost of legal and accounting compliance in connection with the merger with StageIt and the increased costs associated with our newly acquired subsidiary.
We recorded amortization and intangible expense net of $85,861$541,667 for the nine months ended September 30, 2016. The change in other income (expenses), net, was primarily due to the change2022 with none in the fair value of derivative liabilities of $156,844, increased financing costs of $359,063, offset by the increase in the gain in fair value of derivative liability of $271,530same period ended September 30, 2021 as compared to last year.
Net Lossfrom Operations
As a result of the foregoing revenues, direct costsacquisition of revenues, software development expenses, general and administrative expenses, andStage It.
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Other Income / Expenses, Net
We recorded other income (expenses), net, our net lossexpense of $931,498 for the nine months ended September 30, 2017 was $1,081,526,2022, compared to our net lossother income of $3,960,990 for the nine months ended September 30, 20162021. Our other expenses in the 2022 period was mainly attributable to financing costs and a loss on the extinguishment of $2,111,538.debt. Our other income in the 2021 period was mainly attributable to a change in the fair market value of a derivative liability of $3,156, 582 and from other income of $1,172,782 due to the reversal of an accrued liability..
We expect to incur other expenses in future quarters as a result of financing transactions.
Net Income (Loss)
As a result of the foregoing we recorded a net loss available to common shareholders of $18,082,151 for the nine months ended September 30, 2022, compared with net income available to common shareholders of $3,350,043 for the nine months ended September 30, 2021.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
As of September 30, 2017, we had cash and cash equivalents of $73,195.
We had negative cash flows from operating activities of $318,757 for the nine months ended September 30, 2017, compared with negative cash flows from operating activities of $230,587 for the nine months ended September 30, 2016. The increase in our negative cash flows from operating activities for the period is primarily due to changes in our working capital accounts.
We had positive cash flows from financing activities of $374,000 for the nine months ended September 30, 2017 as compared to $272,510 for the nine months ended September 30, 2016. The cash flows from financing activities for the nine months ended September 30, 2017 was due to $407,000 in proceeds from convertible notes less repayments of $33,000. The cash flows from financing activities for the nine months ended September 30, 2016 were primarily due to $250,000 in proceeds from a convertible note, $17,510 in advances from a stockholder and $5,000 from the sale of common shares.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Going Concern
The Company’s condensedaccompanying consolidated financial statements have been prepared assuming that it will continue ason a going concern basis, which contemplates continuity of operations,the realization of assets and liquidationthe settlement of liabilities and commitments in the normal course of business. As reflected in the condensedaccompanying consolidated financial statements, during the nine months ended September 30, 2022, the Company used cash in operations of $557,538, and as of September 30, 2022, had a stockholders’ deficit of $2,690,827 at September 30, 2017,$31,243,437 and incurred a net lossnegative working capital of $1,081,526, and used net cash in operating activities of $318,757 for the reporting period then ended. Certain of the Company’s notes payable are also past due and in default.$ 14,433,505. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date thatof the financial statements werebeing issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ended December 31, 2016, has expressed substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through June 2018. The ability of the Company to continue as a going concern is dependent onupon the Company’s ability to executeraise additional funds and implement its strategy and inbusiness plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On September 30, 2022, the Company had cash on hand of $112,193, as compared with cash on hand of $36,958 as of December 31, 2021.
The continuation of the Company as a going concern is dependent upon its ability to raise additional funds. Management is currently seeking additional funds, primarily throughobtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the issuanceCompany has been able to fund its operations from the proceeds of notes payable and convertible notes.
More recently, the Company has been relying on issuances of its preferred stock and its equity securitiesline of credit with GHS Investments, LLC (“GHS”), described below, to fund its operations. All other financial commitments have been terminated and we are looking for cashnew opportunities to operatefund the Company to supplement our business.preferred stock and credit line funding. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able tocan obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders,stockholders, in the case orof equity financing.
On January 3, 2022, the Company authorized and designated a class of 1,600 shares, par value $0.0001 of Series B Convertible Preferred Stock (“Series B Preferred Stock”), in accordance with a Certificate of Designation filed with the State of Nevada (the “Series 5 Designation”).
During the three months ended March 31, 2022 the Company issued 1,535 restricted shares of Series B Preferred Stock to GHS Investments (“GHS”) in return for $1,500,000 (less $130,000 in fees) in financing provided to the Company.
Pursuant to the Series B Designation, each share of Series B Preferred Stock may be converted into $1,200 of common stock of the Company. In connection with the issuance of the Series B Preferred Stock, the Company recorded $42,000 in financing fees and a $300,000 expense for the beneficial conversion feature of Series B Preferred stock.
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During the three months ended June 30, 2022 the Company issued an additional 556 Series B Preferred Shares. 280 of these shares were issued for gross cash proceeds of $280,000. 10 of these shares were issued as a commitment fee, and 266 of these shares were issued to retire debt. In connection with these issuances the Company recorded $12,000 in financing fees, a beneficial conversion feature of $87,000 and a loss of $154,200 on the retirement of debt.
During the three months ended September 30, 2022 the Company issued an additional 176 Series B Preferred Shares. 164 of these shares were issued for gross cash proceeds of $151,600 shares. 12 of these shares were issued as a commitment feet. In connection with these issuances the Company recorded $14,400 in financing fees and a beneficial conversion feature of $45,200. Though the nine months ended September 30, 2022 the Company has accrued $145,103 in dividends on these Series B Preferred Issuances.
There can be no assurances that GHS will continue to purchase Series B Preferred Shares
On August 8, 2022, we filed an amendment to our Articles of Incorporation to increase our authorized shares of common stock from 2,000,000,000 to 4,000,000,000 shares with par value remaining at $0.0001 per share. There was no change to the number of our authorized preferred stock.
We have not generated revenues, have incurred losses sincefiled the amendment, after approval of our inception,board and rely upon the saleshareholders, to reserve sufficient shares of our common stock for issuance upon conversion or exercise of our outstanding debt and loansequity securities and to provide us with greater flexibility for future financings and potential acquisitions. As a result of the amendment, we are now able to supply shares of common stock to update our reserve commitments and we are now able to utilize the equity line that we recently entered into with GHS.
Also on June 6, 2022, the Company entered into an Equity Financing Agreement (“Financing Agreement”) and Registration Rights Agreement (“Registration Agreement”) with GHS. Under the terms of the Financing Agreement, GHS agreed to provide the Company with up to $10,000,000 upon effectiveness of a registration statement filed with the U.S. Securities and Exchange Commission.
Following effectiveness of the registration statement, the Company shall have the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, in an amount equaling less than ten thousand dollars ($10,000) or greater than five hundred thousand dollars ($500,000). Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s common stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Financing Agreement). Following an up-list to the NASDAQ or an equivalent national exchange by the Company, the Purchase price shall mean ninety percent (90%) of the Market Price, subject to a floor of $.0001 per share. Puts may be delivered by the Company to GHS until the earlier of twenty-four (24) months after the effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $10,000,000 worth of common stock under the terms of the Equity Financing Agreement.
Additionally, concurrently with the execution of definitive agreements, the Company has issued to GHS 29,069,768 commitment shares that were not issued prior by the Company, but have now been issued that the amendment to increase the Company’s authorized common stock has been filed.
The Registration Agreement provides that the Company shall (i) use its best efforts to file with the Commission the Registration Statement within 30 days of the date of the registration rights Agreement; and (ii) have the registration statement declared effective by the Commission within 30 days after the date the registration statement is filed with the Commission, but in no event more than 90 days after the Registration Statement is filed.
The Company has filed the registration statement as required by the Registration Agreement.
During the three months ended September 30, 2022, the Company utilized its equity line of credit and received $124,259 in proceeds from related and other partiesthe issuance of 49,451,287 shares of common stock. The Company intends to continue to use its credit line to fund its operations although there can be no assurance that there will be sufficient availability under the terms of the Equity Financing Agreement
The Company is currently looking for other opportunities to fund the Company to supplement its credit line. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations. We do not anticipate generating any revenuesoperations, in the foreseeable future, and if we are unable to raisecase of debt financing or cause substantial dilution for our stockholders, in the case of equity or secure alternative financing, we may not be able to pursue our plans and our business may fail.financing.
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Application of Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this prospectus, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because 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(See Note 21 - Significant and Critical Accounting Policies and Practices herein.in the Company’s Form 10-K for the period ended December 31, 2021 filed with the SEC on April 15, 2022.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include the assumptions used to determine the value of the derivative liabilities, the valuation allowance for the deferred tax asset, and the accruals for potential liabilities.
Internal Software Development Costs
Development costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. The Company considers technological feasibility to be established when all planning, designing, coding and testing has been completed according to design specifications. After technological feasibility is established, any additional costs are capitalized. Through September 30, 2017, technological feasibility of the Company’s software had not been established; and, accordingly, no costs have been capitalized to date.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
Stock-Based Compensation
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by FASB where the value of the award is measured on the date of grant and recognized as compensation expense on 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 currentthen-current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
The fair value of the Company'sCompany’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
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Recent Accounting Pronouncements
See Note 2 of the condensed consolidated financial statementCondensed Consolidated Financial Statement herein for management’s discussion of recent accounting pronouncements.
Selected Financial Data
Not applicable.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Item 3. Quantitative and Qualitative Disclosures of Market Risk
Not applicable.
Item 4. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this quarterly report, an evaluation was carried out by our management, with the participation of our principal executive officer and principal accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"“Exchange Act”)) as of September 30, 2017.2022. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.
Based on that evaluation, and the material weaknesses outlined below under Internal Control Over Financial Reporting, our principal executive officer and principal accounting officer concluded, as of the end of the period covered by this annual report, that, due to weaknesses in our internal controls described below, our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our principal executive officer and principal accounting officer to allow timely decisions regarding required disclosures.
b) Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our principal executive officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2016 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2016,September 30, 2022, the Company determined that there were deficiencies that constituted material weaknesses, as described below.
1. | Lack of proper segregation of duties due to limited personnel. |
2. | Lack of a formal review process that includes multiple levels of review. |
3. | Lack of adequate policies and procedures for accounting for financial transactions. |
4. | Lack of independent board member(s) |
5. | Lack of independent audit committee |
Management is currently evaluating remediation plans for the above control deficiencies.
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In light of the existence of these material weaknesses, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. As a result, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2016 based on criteria established in Internal Control—Integrated Framework issued by COSO.
Weinberg & Company, an independent registered public accounting firm, is not required to and has not issued a report concerning the effectiveness of our internal control over financial reporting as of December 31, 2016 pursuant to rules of the SEC.
c) Changes in Internal ControlControls over Financial Reporting
During the nine monthsfiscal quarter ended September 30, 2017,2022, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
d) Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
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- OTHER INFORMATION
From time to time, we may bebecome involved in litigation relating to claims arising out of our operationsvarious lawsuits and legal proceedings, which arise, in the normalordinary course of business. Other than described herein, neither the Company, nor its officersHowever, litigation is subject to inherent uncertainties, and an adverse result in these or directorsother matters may arise from time to time that may harm our business. We are involved in, or the subjectcurrently not aware of any pendingsuch legal proceedings or governmental actions the outcome of which, in management’s opinion, would beclaims that we believe will have a material toadverse effect on our business, financial condition, or results of operations. operating results.
On December 11, 2015, Hughes Media Law Group, Inc. filed a lawsuit against VNUE, Inc. in the Superior Court of King County, Washington, under case number 15-2-30108-0. HMLG claims damages of $130,553 for unpaid legal fees HMLG alleges are owed pursuant to an April 4, 2014 agreement with VNUE Washington, for legal work performed by HMLG for VNUE Washington prior to the Merger. The Complaint sets forth no legal basis for a lawsuit against VNUE, Inc. (Nevada) and does not, in fact, sue VNUE Washington, HMLG’s former client. The Company believes that VNUE, Inc. (Nevada) is not the proper party for this lawsuit, and reserves all available defenses and counterclaims. Under Washington Superior Court rules, VNUE, Inc. (Nevada) if service of process takes place outside of Washington, a defendant has Sixty (60) days from the date on which it was served the Complaint, to file a response setting forth its defenses. The lawsuit was amended by HMLG, and now includes VNUE Media, Inc. and VNUE Technology, Inc. as additional parties. On July 25, 2016, the court issued judgment awarding HLMG $133,482 with interest at a rate of 12% per annum. The judgment stipulated that $12,000 be paid within five days of the judgment and payments of $4,000 per month to start in October, 2016. The amount of the settlement has been recorded in accounts payable in the accompanying condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
None.Please see section titled “Liquidity and Capital Resources” above for unregistered sales of equity issuances.
In August 2022, the Company issued 29,069,768 shares of common stock to GHS under the Financing Agreement as commitment shares.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the period ended September 30, 2017.2022.
ITEM 4. MININGMINE SAFETY DISCLOSURES
N/ANot applicable
The Board of Directors of Vnue, Inc., a Nevada corporation (the “Company”), has approved a reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1 for 10 of each share issued and outstanding on the effective date of April 15, 2017 with the State of Nevada. The reverse became effective with the market on August 7, 2017 after receipt of FINRA's acknowledgement of our corporate action authorizing the reverse split. (the “Reverse Stock Split”).
Reason for the Reverse Stock Split
The Board of Directors of the Company has determined that itThere is in the best interests of the Company to reverse split the common stock of the Company on a one (1) for ten (10) basis because the Company’s stock is currently quoted with no Bid and a very low ask affording little or no liquidity for the shareholders. It is the belief of the Board that the reverse split will cause the Bid and Ask prices to increase, creating the possibility for the stock to trade at more reasonable prices and a more reasonable spread between the Bid and Ask prices. The Company would also have sufficient authorized sharesother information required to be able to acquire additional capital.disclosed under this item which was not previously disclosed.
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The Board of Directors of the Company have the right to reverse split the stock of the Company in accordance with the Nevada Revised Statutes (NRS Section 78.207 and NRS Section 78.209) to effect a reverse stock split of the Common Stock and the By Laws of the Company do not preclude the Board of Directors from taking such action.
Effects of the Reverse Stock Split
The Company is currently authorized to issue 750,000,000 shares of Common Stock. As a result of the Reverse Stock Split, the authorized shares will not be changed.
As of April 14, 2017 prior to the reverse there were approximately 694,825,747 outstanding. After the 1 for 10 reverse split the number of shares outstanding is 69,482,575.
The Reverse Stock Split became effective with FINRA (the Financial Industry Regulatory Authority) and in the marketplace on August 7, 2017 upon FINRA’s acknowledgement of our corporate action.. As of the market effective date the shares of common stock began trading on a split-adjusted basis and the Company’s trading symbol changed to “VNUED” for a period of 20 business days, after which the “D” will be removed from the Company’s trading symbol, which will revert to the original symbol of “VNUE”. A new CUSIP number has been issued and will be placed on all stock certificates going forward.
Split Adjustment; No Fractional Shares
On the Effective Date with the Nevada Secretary of State, the total number of shares of the Company’s Common Stock held by each stockholder were converted automatically into the number of whole shares of Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by such stockholder immediately prior to the reverse stock split, divided by 10 and (ii) no fractional shares will be issued, and no cash or other consideration will be paid. Instead, the Company will issue one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.
State Filing
The Reverse Stock Split was effected by the Company filing a Certificate of Change (the “Certificate”) pursuant to Nevada Revised Statutes (“NRS”) Section 78.207 and Section 78.209 with the Secretary of State of the State of Nevada on April 4, 2017. The Certificate became effective with the Nevada Secretary of State on April 15, 2017. Under Nevada law, no amendment to the Company’s Articles of Incorporation is required in connection with the Reverse Stock Split.
No Stockholder Approval Required
Under Nevada law, because the Reverse Stock Split was approved by the Board of Directors of the Company in accordance with NRS Section 78.207. No stockholder approval is required. NRS Section 78.207 provides that the Company may affect the reverse stock split without stockholder approval. Company does not pay money or issue scrip to stockholders who would otherwise be entitled to receive a fractional share as a result of the Reverse Stock Split. As described herein, the Company has complied with these requirements.
Capitalization
The Reverse Stock Split does not affect the Company’s authorized preferred stock. There are no outstanding shares of the Company’s preferred stock. After the Reverse Stock Split, the Company’s authorized preferred Stock of 20,000,000 shares will remain unchanged.
Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power will remain virtually unchanged except for minor changes and adjustments that will result from rounding fractional shares into whole shares. The rights and privileges of the holders of shares of Common Stock will be substantially unaffected by the reverse stock split.
All options, warrants and convertible securities of the Company outstanding immediately prior to the Reverse Stock Split that have a fixed conversion price will be appropriately adjusted by dividing the number of shares of Common Stock into which the options, warrants and convertible securities are exercisable or convertible by 10 and multiplying the exercise or conversion price thereof by 10, as a result of the Reverse Stock Split.
Exhibits
Exhibit Number | Description of Exhibits | |
31.1* | ||
| Agreement between Kokku Games, Ltda and VNUE Inc. dated October 12, 2022 | |
101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
| Inline XBRL Taxonomy Extension Schema Document. | |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| Inline XBRL Taxonomy | |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
___________
*Filed herein
|
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|
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant | VNUE, Inc. | |||
Date: November | By: | /s/ Zach Bair | ||
Zach Bair | ||||
Chief Executive Officer |
| Officer) |
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