NightCulture (NGHT) 10-Q 19 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 14, 2013
Document And Entity Information	'	'
Entity Registrant Name	'NightCulture, Inc.	'
Entity Central Index Key	'0001114208	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	57,768,965
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2013	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current assets:	'	'
Cash and cash equivalents	$52,318	$31,030
Inventory	9,882	22,099
Prepaid expenses	109,000	'
Total current assets	171,200	53,129
Fixed assets, net of depreciation of $32,444 and $27,640 respectively	4,829	9,634
Intangible asset net of amortization of $52,440 and $22,968, respectively	343,896	373,368
Goodwill	238,674	238,674
Total assets	758,599	674,805
Current liabilities:	'	'
Accounts payable and accrued expense	438,164	379,914
Accrued interest	71,121	487,135
Deferred income	'	50,000
Advances- related party	22,500	22,500
Derivative liability	2,522,873	5,006,837
Notes payable	420,000	734,349
Total current liabilities	3,474,658	6,680,735
Convertible debentures- net of discount of $324,772 and $449,772, respectively	175,228	50,228
Total liabilities	3,649,886	6,730,963
Stockholders' deficit:	'	'
Preferred stock, $0.001 par value, 10,000,000 authorized, none outstanding	'	'
Common stock, $0.001 par value, 100,000,000 authorized, 57,923,615 and 53,072,325 issued and outstanding, respectively	57,923	53,072
Additional paid-in capital	4,769,741	4,224,412
Accumulated deficit	-7,718,951	-10,333,642
Total stockholders' deficit	-2,891,287	-6,056,158
Total liabilities and stockholders' deficit	$758,599	$674,805

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current assets	'	'
Depreciation (in Dollars)	$32,444	$27,640
Amortization (in Dollars)	52,440	22,968
Long term liabilities:	'	'
Convertible debentures (in Dollars)	$324,772	$449,772
Shareholders' deficit	'	'
Preferred stock, par value	$0.00	$0.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$0.00	$0.00
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	57,923,615	53,072,325
Common stock, shares outstanding	57,923,615	53,072,325

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements Of Operations	'	'	'	'
Revenue	$1,144,918	$1,046,948	$3,441,842	$2,661,949
Direct costs	609,775	798,583	1,828,692	1,637,549
Gross profit	535,143	248,365	1,613,150	1,024,400
Operating expenses:	'	'	'	'
Depreciation and amortization expense	10,992	4,604	34,276	13,517
General and administrative expense	601,642	370,645	1,584,144	1,210,994
Total operating expenses	612,634	375,249	1,618,420	1,224,511
Loss from operations	-77,491	-126,884	-5,270	-200,111
Other income (expense)	'	'	'	'
Other income	1	'	2,023	'
Loss on equipment	'	'	'	-900
Interest expense	-65,803	-19,268	-197,330	-56,541
Gain on settlement of debt	875,934	'	875,934	'
Gain (loss) on derivative liabilities	-296,193	-6,998,656	1,939,334	-6,633,030
Total other income (expense)	513,939	-7,017,924	2,619,961	-6,690,471
Net income (loss)	$436,448	($7,144,808)	$2,614,691	($6,890,582)
Net income (loss) per share : Basic	$0.01	($0.14)	$0.05	($0.14)
Net income (loss) per share : Diluted	$0.01	($0.14)	$0.03	($0.14)
Weighted average number of shares outstanding: Basic	57,798,340	49,509,134	55,584,746	48,589,053
Weighted average number of shares outstanding: Diluted	109,370,775	49,509,134	107,157,181	48,589,053

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:	'	'
Net income (loss)	$2,614,691	($6,890,582)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	'	'
Depreciation and amortization expense	34,276	13,517
Gain on settlement of debt and accrued interest	-875,934	'
Amortization of debt discount	125,000	'
Loss (gain) on change in fair value of derivative liabilities	-1,939,334	6,633,030
Loss on equipment	'	900
Changes in operating assets and liabilities:	'	'
Inventory	12,217	-3,164
Accounts payable and accrued expense	129,372	38,903
Prepaid expenses and other assets	-109,000	92
Deferred income	-50,000	'
Net cash provided by (used in) operating activities	-58,712	-207,304
Cash flows from investing activities:	'	'
Cash paid for purchase of Full Access	'	-300,000
Cash flows from financing activities:	'	'
Proceeds from borrowings on debt	80,000	500,000
Net increase (decrease) in cash	21,288	-7,304
Cash- beginning of period	31,030	13,105
Cash- end of period	52,318	5,801
SUPPLEMENT DISCLOSURES	'	'
Interest paid	'	'
Income taxes paid	'	'
NONCASH INVESTING AND FINANCING ACTIVITIES:	'	'
Derivative write off due to conversion	'	732,723
Recognition of new derivative liabilities	'	5,149,437
Stock issued for acquisition of Full Access	'	290,000
Derivative write off due to warrant exercise	544,630	'
Stock issued for conversion of warrants	4,701	'
Stock issued for debt and accrued interest	$5,550	$528,836

ORGANIZATION_AND_BASIS_OF_PRES

ORGANIZATION AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION	'
	Organization
	NightCulture, Inc. (the “Company”) is incorporated under the laws of the State of Nevada. The Company operates in the event promotion business.
	The Company was originally incorporated as Texxon, Inc. on October 6, 1998, under the laws of the State of Oklahoma. From inception until 2011, the Company pursued various business plans under multiple names, made an acquisition pursuant to a share exchange and carried out multiple reverse stock splits. From March 2009 until July 31, 2011, the Company operated under the name XXX Acquisition Corp and conducted no operations other than seeking a business to acquire. Since completion of an Exchange (defined below) in July 2011, the Company has been engaged in the event promotion business. In August 2011, the Company changed its name to NightCulture, Inc. and carried out an 8-for-1 forward stock split.
	Financial Statements Presented
	The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end December 31, 2012 as reported on Form 10-K, have been omitted.

GOING_CONCERN_CONSIDERATIONS

GOING CONCERN CONSIDERATIONS	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 2 - GOING CONCERN CONSIDERATIONS	'
	As shown in the accompanying financial statements, the Company has a negative working capital of $3,303,458 for the period ending September 30, 2013. As of September 30, 2013, the Company reported an accumulated deficit of $7,718,951. The Company’s ability to generate net income and positive cash flows is dependent on the ability to grow its operating entity as well as the ability to raise additional capital. Management is following strategic plans to accomplish these objectives, but success is not guaranteed. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

DERIVATIVE_INSTRUMENTS

DERIVATIVE INSTRUMENTS	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 3 - DERIVATIVE INSTRUMENTS	'
	During 2012 the Company issued instruments that require liability classification under ASC 815. These instruments are measured at fair value at the end of each reporting period.
	As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
	The three levels of the fair value hierarchy are as follows:
	Level 1  –	Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
	Level 2  –	Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
	Level 3  –	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
	The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as September 30, 2013.
	Recurring Fair Value Measures		Level 1		Level 2		Level 3			Total
	LIABILITIES:
	Derivative liabilities as of December 31, 2012						$	5,006,837		$	5,006,837
	Derivative write off due to warrant exercise							(544,630	)		(544,630	)
	Change in fair value of derivative liability			--		--		(1,939,334	)		(1,939,334	)
	Derivative liability as of September 30, 2013			--		--		2,522,873			2,522,873

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 4 - RELATED PARTY TRANSACTIONS	'
	For the period ended September 30, 2013, there are net advances owed to a related party of $22,500.

NOTES_PAYABLE

NOTES PAYABLE	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Note 5 - NOTES PAYABLE	'
	On August 25, 2013, the Company borrowed $80,000 from a third party. The note is due on November 15, 2013, carries an interest rate of 8%, and the principal to be paid back is $89,600.

EQUITY

EQUITY	9 Months Ended
	Sep. 30, 2013
Equity	'
NOTE 6 - EQUITY	'
	On April 1, 2013 the Company issued 1,852,004 shares of common stock in exchange for 3,647,996 warrants, which were issued in 2011. The conversion of the warrants was a cashless conversion.
	On May 6, 2013 the Company issued 841,820 shares of common stock in exchange for 2,500,000 warrants, which were issued in 2011. The conversion of the warrants was a cashless conversion.
	On June 11, 2013 the Company issued 2,007,466 shares of common stock in exchange for 5,991,784 warrants, which were issued in 2011. The conversion of the warrants was a cashless conversion.
	On September 15, 2013, the Company issued 150,000 shares of common stock in exchange for $487,135 of accrued interest and $394,349 of notes payable. The fair value of the common stock was valued at $5,550. This transaction resulted in a gain on settlement of debt and accrued interest of $875,934.

RESTATEMENT

RESTATEMENT	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 7 - RESTATEMENT	'
	During 2011, the Company issued debt instruments that were convertible into common stock at price equal to 70% of the average closing price of the Company’s common stock. The conversion options embedded in these instruments contain no explicit limit to the number of shares to be issued upon settlement and as a result are classified as liabilities under ASC 815. Additionally, because the number of shares to be issued upon settlement is indeterminate, all other share settle-able instruments must also be classified as liabilities. Originally, the Company accounted for other share settle-able instruments in equity. During 2013, management discovered the error and is restating its financial statements for the nine months ended September 30, 2012 to correct this error.
	During the nine month period ended September 30, 2012, the Company recognized an additional loss on derivatives of $6,514,819 as a result of the error noted above.
	During 2011, the Company recognized revenues and cost of sales on a cash basis, but worked regularly with other promoters and shared the costs and revenues earned for each event. This often resulted in netting of revenues and direct costs as of September 30, 2013. During 2013, management discovered the error and is restating its financial statements for the nine months ended September 30, 2012 to correct this error.
	During the nine month period ended September 30, 2012, the Company recognized additional revenues and direct costs of $930,072 as a result of the error noted above.

FULL_ACCESS_ACQUISITION

FULL ACCESS ACQUISITION	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Note 8 - FULL ACCESS ACQUISITION	'
	On September 13, 2012, the Company purchased Full Access, a promotions and production business in the Dallas, Texas market. Under the purchase agreement, it was represented that there were no outstanding liabilities that the Company would assume. On July 2013, a vendor has contacted the Company claiming amounts owed of $142,000, which were accrued prior to the Company’s purchase of Full Access. The Company has an ongoing relationship with this vendor and has gross receivables outstanding of $114,981 as of September 30, 2013. The vendor will withhold payment of the receivables until the $142,000 claim has been paid. These receivable amounts have been netted against the $142,000 claim, resulting in a payable of $27,019 to the vendor as of September 30, 2013. The Company has filed a petition against the sellers of Full Access to pay the $142,000 in full.

ORGANIZATION_AND_BASIS_OF_PRES1

ORGANIZATION AND BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2013
Organization And Basis Of Presentation Policies	'
Organization	'
	NightCulture, Inc. (the “Company”) is incorporated under the laws of the State of Nevada. The Company operates in the event promotion business.
	The Company was originally incorporated as Texxon, Inc. on October 6, 1998, under the laws of the State of Oklahoma. From inception until 2011, the Company pursued various business plans under multiple names, made an acquisition pursuant to a share exchange and carried out multiple reverse stock splits. From March 2009 until July 31, 2011, the Company operated under the name XXX Acquisition Corp and conducted no operations other than seeking a business to acquire. Since completion of an Exchange (defined below) in July 2011, the Company has been engaged in the event promotion business. In August 2011, the Company changed its name to NightCulture, Inc. and carried out an 8-for-1 forward stock split.
Financial Statements Presented	'
	The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end December 31, 2012 as reported on Form 10-K, have been omitted.

DERIVATIVE_INSTRUMENTS_Tables

DERIVATIVE INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2013
Derivative Instruments Tables	'
Company's financial assets and liabilities that were accounted for at fair value	'
	The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as September 30, 2013.
	Recurring Fair Value Measures	Level 1		Level 2		Level 3			Total
	LIABILITIES:
	Derivative liabilities as of December 31, 2012					$	5,006,837		$	5,006,837
	Derivative write off due to warrant exercise						(544,630	)		(544,630	)
	Change in fair value of derivative liability		--		--		(1,939,334	)		(1,939,334	)
	Derivative liability as of September 30, 2013		--		--		2,522,873			2,522,873

GOING_CONCERN_Details_Narrativ

GOING CONCERN (Details Narrative) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Going Concern Details Narrative	'	'
Accumulated deficit	$7,718,951	$10,333,642
Negative working capital	$3,303,458	'

DERIVATIVE_INSTRUMENTS_Details

DERIVATIVE INSTRUMENTS (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
Beginning Balance	$5,006,837
Derivative write off due to warrant exercise	-544,630
Change in fair value of derivative liability	-1,939,334
Ending balance	2,522,873
Level 1 [Member]	'
Beginning Balance	'
Derivative write off due to warrant exercise	'
Change in fair value of derivative liability	'
Ending balance	'
Level 2 [Member]	'
Beginning Balance	'
Derivative write off due to warrant exercise	'
Change in fair value of derivative liability	'
Ending balance	'
Level 3 [Member]	'
Beginning Balance	5,006,837
Derivative write off due to warrant exercise	-544,630
Change in fair value of derivative liability	-1,939,334
Ending balance	$2,522,873

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	Sep. 30, 2013
Related Party Transactions Details Narrative	'
Advances owed to related parties	$22,500

RESTATEMENT_Details_Narrative

RESTATEMENT (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2013
Restatement Details Narrative	'
Recognized an additional loss on derivatives	$6,514,819
Recognized additional revenues and direct costs	$930,072

FULL_ACCESS_ACQUISITION_Detail

FULL ACCESS ACQUISITION (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2013
Full Access Acquisition Details Narrative	'
Outstanding gross receivables	$114,981
Vendor Payable	$27,019