NightCulture (NGHT) 10-Q 15 May 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	15-May-15
Document And Entity Information
Entity Registrant Name	NightCulture, Inc.
Entity Central Index Key	1114208
Document Type	10-Q
Document Period End Date	31-Mar-15
Amendment Flag	FALSE
Current Fiscal Year End Date	-19
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		65,958,931
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$23,555	$64,293
Receivables		700
Inventory	23,154	37,332
Total current assets	46,709	102,325
Fixed assets, net of depreciation of $90,394 and $72,774	149,525	167,145
Intangible assets, net of accumulated amortization of $111,384 and $101,560	284,952	294,776
Total assets	481,186	564,246
Current liabilities:
Accounts payable and accrued expense	363,078	429,278
Accrued interest	94,329	89,063
Deferred income	26,021
Accrued salary - related parties	423,000	375,000
Advances from related parties	94,679	47,060
Derivative liability	482,410	1,437,676
Short term lease obligation	49,843	61,946
Convertible debentures, net of unamortized discounts of $67,704 and $101,697	353,556	319,563
Total current liabilities	1,886,916	2,759,586
Long term liabilities:
Long term lease obligation	67,790	74,634
Total liabilities	1,954,706	2,834,220
Shareholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 authorized, none issued and outstanding
Common stock, $0.001 par value, 500,000,000 authorized, 65,958,931 and 65,958,931 issued and outstanding, respectively	65,959	65,959
Additional paid-in capital	5,678,239	5,678,239
Accumulated deficit	-7,217,718	-8,014,172
Total shareholders' deficit	-1,473,520	-2,269,874
Total liabilities and shareholders' deficit	$481,186	$564,246

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets
Depreciation (in Dollars)	$90,394	$72,774
Amortization (in Dollars)	111,384	101,560
Current liabilities:
Convertible debet (in Dollars)	$67,704	$101,697
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	500,000,000	500,000,000
Common stock, shares issued	65,958,931	65,958,931
Common stock, shares outstanding	65,958,931	65,958,931

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Consolidated Statements Of Operations
Revenue	$1,170,084	$1,264,685
Direct costs	686,331	716,125
Gross profit	483,753	548,560
Operating expenses:
Depreciation and amortization expense	27,444	10,993
General and administrative expense	561,441	734,703
Total operating expenses	588,885	745,696
Loss from operations	-105,132	-197,136
Other income (expense):
Interest expense	-53,680	-88,183
(Loss) Gain on change in fair value of derivative liabilities	955,266	-612,026
Other expense		-591
Total other income (expense)	901,586	-700,800
Net (loss) income	$796,454	($897,936)
Net (loss) income per share: Basic	$0.01	($0.02)
Net (loss) income per share: Diluted	$0	($0.02)
Weighted average number of common shares outstanding: Basic	65,958,931	61,673,952
Weighted average number of common shares outstanding: Diluted	103,120,033	61,673,952

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net (loss) income	$796,454	($897,936)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization expense	27,444	10,993
Amortization of debt discount	33,993	79,573
Loss (Gain) on change in fair value of derivative liabilities	-955,266	612,026
Write-off of indemnification asset		76,921
Changes in operating assets and liabilities:
Accounts receivable	700	12,205
Inventory	14,178
Accrued salaries to related parties	48,000	48,000
Deferred revenue	26,021	525
Accounts payable and accrued expense	-60,934	99,228
Net cash provided by (used in) operating activities	-69,410	41,535
Cash flows used in investing activities
Purchase of intangible assets		-10,000
Cash paid for fixed assets		-234
Net cash used in investing activities	0	-10,234
Cash flows from financing activities
Bank indebtedness		-15,010
Advances from related parties	50,000	39,183
Repayment of related party advances	-2,381
Repayment of lease obligation	-18,947
Net cash flows provided by financing activities	28,672	24,173
Net increase (decrease) in cash	-40,738	55,474
Cash - beginning of period	64,293	52,691
Cash - end of period	23,555	108,165
SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	14,421	3,116
Income taxes paid
NONCASH INVESTING AND FINANCING ACTIVITIES:
Derivative write-off due to conversion of debt		142,242
Derivative write-off due to warrant exercises		432,798
Common stock issued for exercise of warrants		1,950
Common stock issued for conversion of convertible debt		78,740
Purchase of fixed assets through loans		$10,000

ORGANIZATION_AND_BASIS_OF_PRES

ORGANIZATION AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2015
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 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. In May 2012, the Company acquired Stereo Live, a related event venue operator, as a wholly-owned subsidiary. In September 2012, the Company acquired the assets of Full Access, an event promotion operator in Dallas, Texas.
	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, 2014. 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, 2014 as reported on Form 10-K, have been omitted.

GOING_CONCERN_CONSIDERATIONS

GOING CONCERN CONSIDERATIONS	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 2 - GOING CONCERN CONSIDERATIONS	As shown in the accompanying financial statements, the Company has a negative working capital of $1,840,207 and an accumulated deficit of $7,217,718, as of March 31, 2015. 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	3 Months Ended
	Mar. 31, 2015
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 March 31, 2015 and December 31, 2014:
	Recurring Fair Value Measures		Level 1			Level 2		Level 3		Total
	LIABILITIES:
	Derivative liabilities as of March 31, 2015			--			--	$	482,410	$	482,410
	Derivative liabilities as of December 31, 2014			--			--	$	1,437,676	$	1,437,676
	The below table represents the change in the fair value of the derivative liabilities during the three months ended March 31, 2015:
	Fair value of derivatives, December 31, 2014		$	1,437,676
	Change in fair value of derivative liability			(955,266	)
	Fair value of derivatives, March 31, 2015		$	482,410

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 4 - RELATED PARTY TRANSACTIONS	During the three months ended March 31, 2015 the Company received a loan from a director of the Company of $50,000. The loan is payable over 42 weekly payments of $1,547.62 per week. The company has made payment of $2,381 toward the principal balance during the three months ended March 31, 2015. As of March 31, 2015 and December 31, 2014, total advances owed to related parties were $94,679 and $47,060, respectively. The advances other than the $50,000 loan bear no interest and are payable on demand.
	As of March 31, 2015 and December 31, 2014, the Company had accrued salaries owed to related parties of $423,000 and $375,000, respectively.

DEBT

DEBT	3 Months Ended
	Mar. 31, 2015
Debt
NOTE 5 - DEBT	Convertible Debentures
	On September 12, 2012 the Company issued $500,000 of convertible debentures maturing on September 11, 2015. The 2012 Debentures accrue interest at 5% per annum with a default rate of 12% per annum. The 2012 Debentures are convertible into common stock of the Company at 50% of the average closing price of the 20 day trading price ending prior to the date of conversion into the Company common stock. As of March 31, 2015 and December 31, 2014, the outstanding principal balance under this convertible debt was $421,260 and $421,260, respectively. The embedded conversion option in these convertible debentures was accounted for as a derivative liability (see Note 3). As of March 31, 2015 and December 31, 2014, the unamortized discount on these convertible notes associated with the derivative liability was $67,704 and $101,697, respectively. During the three months ended March 31, 2015, amortization of the discount totaled $33,993.
	Lease Obligation
	On July 2, 2014 Stereo Live a subsidiary of the Company entered into credit line facility and three equipment leases. The terms of the credit facilities and leases are as follows:
		1	A $50,000 loan that is paid back to the lender at the rate of $273.81 per business day for 252 days for total payment of $69,000.12 including the $50,000 in principal and $19,000.12 in total interest. As of March 31, 2015 the balance of the note was $18,112;
		2	An equipment lease of $32,799.75 payable over 48 months at $1, 024.47 per month for total payment of $49,174.56 including the principal amount of $32,799.75 and interest of $16,374.81;
		3	An equipment lease of $58,942 payable over 48 months at $1,780.05 per month for total payment of $85,442.40 including the principal amount of $58,942 and interest of $26,500.40;
		4	An equipment lease of $32,250 payable over 44 months at $1,092.23 per month for total payments of $48,058.12 including the principal amount of $32,250 and interest of $15,808.12.
	The Company had accounted for the above transaction under ASC 640 - 30 “Capital Leases”. The Company has made payment of $18,947 toward the principal balance during the three months ended March 31, 2015. As of March 31, 2015 the balance due on the leases was $117,633, with $49,843 is recorded as short term debt and the remaining balance of $67,790 is recorded as long term debt.
	The note and the leases are personally guaranteed by principals of the Company.

WARRANTS

WARRANTS	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 6 - WARRANTS	As of March 31, 2015 the Company has 25,000,000 warrants outstanding entitling the holder to purchase up to 25,000,000 shares of the Company common stock at 50% of the average closing price of the 20 day period ending one day prior to exercising the warrants. The warrant holder may exercise these warrants on or before December 31, 2015.
	The following table summarizes the warrant activity during the nine months ended March 31, 2015:
						Weighted
				Weighted		Average
				Average		Remaining		Number of
				Exercise		Contract		Warrants		Intrinsic
		Warrants		Price		Life		Exercisable		Value
	Outstanding at December 31, 2014		25,000,000	$	0.01		1		25,000,000	$	490,688
	Granted		--		--		--		--		--
	Exercised		--		--		--		--		--
	Forfeited or Cancelled		--		--		--		--		--
	Outstanding at March 31, 2015		25,000,000		0.018		0.75		25,000,000	$	50,000

LITIGATION

LITIGATION	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 7 - LITIGATION	On October 21, 2014 a civil case # 2014-56915 was entered in the District Court in Harris County, Texas against Stereo Live. The complaint claims an individual served liquor by the staff of Stereo Live was involved in accident causing damages to the plaintiff who is seeking damages between $200,000 and $1,000,000. At the date of the incident, Stereo Live had enforce an insurance policy covering this incident with aggregate coverage of $2,000,000 and individual coverage up to $1,000,000 for such occurrence. The insurance company is defending the suit under the terms of the policy so the Company has not incurred or accrued any liability as it believes it is fully covered under the insurance policy.

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2015
Subsequent Events
NOTE 8 - SUBSEQUENT EVENTS	On April 27, 2015 the Company filed an information statement authorizing the Company through the approval of a majority of the shareholders to file amended articles of incorporation to increase the authorized shares of common stock from 100,000,000 to 500,000,000. As of this date the amended articles have not been filed.

DERIVATIVE_INSTRUMENTS_Tables

DERIVATIVE INSTRUMENTS (Tables)	3 Months Ended
	Mar. 31, 2015
Derivative Instruments Tables
Financial assets and liabilities	Recurring Fair Value Measures	Level 1			Level 2		Level 3		Total
	LIABILITIES:
	Derivative liabilities as of March 31, 2015		--			--	$	482,410	$	482,410
	Derivative liabilities as of December 31, 2014		--			--	$	1,437,676	$	1,437,676
Summarizes the changes in the derivative liabilities	Fair value of derivatives, December 31, 2014	$	1,437,676
	Change in fair value of derivative liability		(955,266	)
	Fair value of derivatives, March 31, 2015	$	482,410

GOING_CONCERN_CONSIDERATIONS_D

GOING CONCERN CONSIDERATIONS (Details Narrative) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Going Concern Considerations Details Narrative
Working capital	$1,840,207
Accumulated deficit	$7,217,718	$8,014,172

DERIVATIVE_INSTRUMENTS_Details

DERIVATIVE INSTRUMENTS (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Derivative liabilities	$482,410	$1,437,676
Level 1 [Member]
Derivative liabilities
Level 2 [Member]
Derivative liabilities
Level 3 [Member]
Derivative liabilities	$482,410	$1,437,676

DERIVATIVE_INSTRUMENTS_Details1

DERIVATIVE INSTRUMENTS (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2015
Derivative Instruments Details 1
Fair value of derivatives, December 31, 2014	$1,437,676
Change in fair value of derivative liability	-955,266
Fair value of derivatives, March 31, 2015	$482,410

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Payment to principal balance	$2,381
Advances owed to related parties	94,679	47,060
Accrued salary	423,000	375,000
Director [Member]
Received loan from related party	$50,000

DEBT_Details_Narrative

DEBT (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Debt Details Narrative
Convertible debt	$421,260		$421,260
Derivative liability	67,704		101,697
Amortization of debt discount	33,993	79,573
Repayment of debt	18,112
Repayment of lease obligation	-18,947
Balance due on leases	117,633		136,580
Short term lease obligation	49,843		61,946
Long term lease obligation	$67,790		$74,634

WARRANTS_Details

WARRANTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Warrant
Beginning Balance	25,000,000
Granted
Exercised
Forfeited or Cancelled
Ending Balance	25,000,000
Weighted Average Exercise Price
Beginning Balance	$0.01
Granted
Exercised
Forfeited or Cancelled
Ending Balance	$0.02
Weighted Average Remaining Contract Life
Beginning Balance	1 year
Ending Balance	9 months
Number of Options Exercisable
Beginning Balance	25,000,000
Granted
Exercised
Forfeited or Cancelled
Ending Balance	25,000,000
Intrinsic Value
Beginning Balance	$490,688
Granted
Exercised
Forfeited or Cancelled
Ending Balance	$50,000

WARRANTS_Details_Narrative

WARRANTS (Details Narrative) (USD $)	Mar. 31, 2015
Warrants Details Narrative
warrants outstanding	$25,000,000