NightCulture (NGHT) 10-Q 13 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 13, 2015
Document And Entity Information
Entity Registrant Name	NightCulture, Inc.
Entity Central Index Key	1,114,208
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
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		99,999,990
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 114,375	$ 64,293
Receivables	3,849	700
Inventory	19,986	37,332
Total current assets	138,210	102,325
Fixed assets, net of accumulated depreciation of $108,011 and $72,774	131,908	167,145
Intangible assets, net of accumulated amortization of $121,208 and $101,560	275,128	294,776
Total assets	545,246	564,246
Current liabilities:
Accounts payable and accrued expense	384,614	429,278
Accrued interest	99,595	89,063
Accrued salary - related parties	132,685	375,000
Advances from related parties	32,143	47,060
Derivative liability	851,438	1,437,676
Short term lease obligation	37,145	61,946
Convertible debentures, net of unamortized discounts of $33,712 and $101,697	387,548	319,563
Total current liabilities	1,925,168	2,759,586
Long term lease obligation	60,947	74,634
Total liabilities	$ 1,986,115	$ 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, 99,999,990 and 65,958,931 issued and outstanding, respectively	$ 100,000	$ 65,959
Additional paid-in capital	6,024,573	5,678,239
Accumulated deficit	(7,565,442)	(8,014,172)
Total shareholders' deficit	(1,440,869)	(2,269,874)
Total liabilities and shareholders' deficit	$ 545,246	$ 564,246

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets
Fixed assets, net of accumulated depreciation	$ 108,011	$ 72,774
Intangible assets, net of accumulated amortization	121,208	101,560
Current liabilities:
Convertible debentures, net of unamortized discounts	$ 33,712	$ 101,697
Shareholders' deficit
Preferred stock, par value	$ 0.001	$ 0.001
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	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	99,999,990	65,958,931
Common stock, shares outstanding	99,999,990	65,958,931

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements Of Operations
Revenue	$ 2,295,735	$ 1,655,817	$ 3,465,819	$ 2,920,502
Direct costs	1,740,448	881,779	2,426,779	1,597,904
Gross profit	555,287	774,038	1,039,040	1,322,598
Operating expenses:
Depreciation and amortization expense	27,441	12,576	54,885	23,569
General and administrative expense	446,853	586,978	1,008,294	1,321,681
Total operating expenses	474,294	599,544	1,063,179	1,345,250
Income (loss) from operations	$ 80,993	174,484	$ (24,139)	(22,652)
Other income (expense):
Gain on debt forgiveness and settlement		190,000		190,000
Interest expense	$ (59,689)	(42,437)	$ (113,369)	(130,620)
(Loss) Gain on change in fair value of derivative liabilities	$ (369,028)	464,236	$ 586,238	(147,790)
Other expense		(514)		(1,105)
Total other income (expense)	$ (428,717)	611,285	$ 472,869	(89,515)
Net (loss) income	$ (347,724)	$ 785,769	$ 448,730	$ (112,167)
Net (loss) income per share: Basic	$ 0	$ 0.01	$ 0.01	$ 0
Net (loss) income per share: Diluted	$ 0	$ 0.01	$ 0	$ 0
Weighted average number of common shares outstanding: Basic	78,677,568	64,046,843	72,353,384	62,866,952
Weighted average number of common shares outstanding: Diluted	78,677,568	95,121,543	205,557,793	62,866,952

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net (loss) income	$ 448,730	$ (112,167)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization expense	54,885	23,569
Amortization of debt discount	67,985	113,495
Loss (Gain) on change in fair value of derivative liabilities	$ (586,238)	147,790
Write-off of indemnification asset		76,921
Gain on settlement of debt		(150,000)
Gain on debt forgiveness		(40,000)
Changes in operating assets and liabilities:
Accounts receivable	$ (3,149)	(36,357)
Inventory	17,346	(7,723)
Accrued salaries to related parties	$ 91,000	96,000
Deferred revenue		(3,750)
Accounts payable and accrued expense	$ (34,132)	79,290
Net cash provided by operating activities	$ 56,427	187,068
Cash flows used in investing activities
Purchase of intangible assets		(17,500)
Cash paid for fixed assets		(11,571)
Net cash used in investing activities		(29,071)
Cash flows from financing activities
Bank indebtedness		(15,010)
Advances from related parties	$ 50,000	$ 24,560
Repayment of related party advances	(17,857)
Repayment of lease obligation	(38,488)
Net cash flows provided by (used in) financing activities	(6,345)	$ 9,559
Net increase (decrease) in cash	50,082	167,547
Cash - beginning of period	64,293	52,691
Cash - end of period	114,375	220,238
SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$ 34,853	$ 6,365
Income taxes paid
NONCASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for related parties advances and accrued salaries	$ 380,375
Derivative write-off due to conversion of debt		$ 142,242
Purchase of intangible assets through accounts payable		2,500
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
Common stock for settlement of debt		150,000
Purchase of fixed assets through accounts payable		$ 7,418

ORGANIZATION AND BASIS OF PRESE

ORGANIZATION AND BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 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. On June 19, 2015 the Company amended its articles of incorporation to increase the authorized shares of common stock from 100,000,000 to 500,000,000. 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

GOING CONCERN	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE 2 - GOING CONCERN CONSIDERATIONS	As shown in the accompanying financial statements, the Company has negative working capital of $1,786,958 and an accumulated deficit of $7,565,442 as of June 30, 2015. The Company’s ability to generate net income and positive cash flows is dependent on the ability to grow its operations 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	6 Months Ended
	Jun. 30, 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 June 30, 2015 and December 31, 2014: Recurring Fair Value Measures Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities as of June 30, 2015 - - $ 851,438 $ 851,438 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 six months ended June 30, 2015: Fair value of derivatives, December 31, 2014 $ 1,437,676 Change in fair value of derivative liability (586,238 ) Fair value of derivatives, June 30, 2015 $ 851,438

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE 4 - RELATED PARTY TRANSACTIONS	During the six months ended June 30, 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 $17,857 toward the principal balance during the six months ended June 30, 2015. On May 27, 2015, the Company issued 34,041,059 shares of common stock to two related parties in satisfaction of $47,060 of related party advances and $333,315 of accrued salaries. The shares were determined to have a fair value of $309,774 based on the stock price on issuance date. The $70,601 excess of debt amount satisfied over the fair value of the stock issued is recorded as additional paid in capital. As of June 30, 2015 and December 31, 2014, total advances owed to related parties were $32,143 and $47,060, respectively. The advances, other than the $50,000 loan noted above, bear no interest and are payable on demand. As of June 30, 2015 and December 31, 2014, the Company had accrued salaries owed to related parties of $132,685 and $375,000, respectively.

DEBT

DEBT	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
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 June 30, 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 June 30, 2015 and December 31, 2014, the unamortized discount on these convertible notes associated with the derivative liability was $33,712 and $101,697, respectively. During the six months ended June 30, 2015, amortization of the discount totaled $67,985. 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 June 30, 2015 the balance of the note was $5,414; 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. As of June 30, 2015, the balance of the note was $26,303; 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. As of June 30, 2015, the balance of the note was $45,565; and 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. As of June 30, 2015, the balance of the note was $20,810. The Company had accounted for the above transaction under ASC 640 - 30 “Capital Leases”. The Company has made payment of $38,488 toward the principal balance during the six months ended June 30, 2015. As of June 30, 2015 the balance due on the leases was $98,092, with $37,145 recorded as short term debt and the balance of $60,947 recorded as long term debt. The note and the leases are personally guaranteed by principals of the Company.

WARRANTS

WARRANTS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE 6 - WARRANTS	As of June 30, 2015, the Company had 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 six months ended June 30, 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 1.00 25,000,000 $ 490,688 Granted - - - - - Exercised - - - - - Forfeited or Cancelled - - - - - Outstanding at June 30, 2015 25,000,000 0.004 0.50 25,000,000 $ 130,188

LITIGATION

LITIGATION	6 Months Ended
	Jun. 30, 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.

DERIVATIVE INSTRUMENTS (Tables)

DERIVATIVE INSTRUMENTS (Tables)	6 Months Ended
	Jun. 30, 2015
Derivative Instruments Tables
Financial assets and liabilities	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 June 30, 2015 and December 31, 2014: Recurring Fair Value Measures Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities as of June 30, 2015 - - $ 851,438 $ 851,438 Derivative liabilities as of December 31, 2014 - - $ 1,437,676 $ 1,437,676
Summarizes the changes in the derivative liabilities	The below table represents the change in the fair value of the derivative liabilities during the six months ended June 30, 2015: Fair value of derivatives, December 31, 2014 $ 1,437,676 Change in fair value of derivative liability (586,238 ) Fair value of derivatives, June 30, 2015 $ 851,438

WARRANTS (Tables)

WARRANTS (Tables)	6 Months Ended
	Jun. 30, 2015
Warrants Tables
Summary of warrant activity	The following table summarizes the warrant activity during the six months ended June 30, 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 1.00 25,000,000 $ 490,688 Granted - - - - - Exercised - - - - - Forfeited or Cancelled - - - - - Outstanding at June 30, 2015 25,000,000 0.004 0.50 25,000,000 $ 130,188

GOING CONCERN (Details Narrativ

GOING CONCERN (Details Narrative) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Going Concern Details Narrative
Working capital	$ (1,786,958)
Accumulated deficit	$ (7,565,442)	$ (8,014,172)

DERIVATIVE INSTRUMENTS (Details

DERIVATIVE INSTRUMENTS (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Derivative liabilities	$ 851,438	$ 1,437,676
Level 1 [Member]
Derivative liabilities
Level 2 [Member]
Derivative liabilities
Level 3 [Member]
Derivative liabilities	$ 851,438	$ 1,437,676

DERIVATIVE INSTRUMENTS (Detai17

DERIVATIVE INSTRUMENTS (Details 1)	6 Months Ended
	Jun. 30, 2015USD ($)
Derivative Instruments Details 1
Fair value of derivatives, December 31, 2014	$ 1,437,676
Change in fair value of derivative liability	(586,238)
Fair value of derivatives, June 30, 2015	$ 851,438

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Payment to principal balance	$ 17,857
Advances owed to related parties	32,143	$ 47,060
Accrued salary	132,685	$ 375,000
Director [Member]
Received loan from related party	$ 50,000

DEBT (Details Narrative)

DEBT (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Convertible debt	$ 421,260		$ 421,260
Derivative liability	33,712		101,697
Amortization of debt discount	67,985	$ 113,495
Repayment of lease obligation	38,488
Balance due on leases	98,092
Short term lease obligation	37,145		61,946
Long term lease obligation	60,947		$ 74,634
Credit Line Facility [Member]
Lease Obligation balance note	5,414
Equipment Leases [Member]
Lease Obligation balance note	26,303
Equipment Leases One [Member]
Lease Obligation balance note	45,565
Equipment Leases Two [Member]
Lease Obligation balance note	$ 20,810

WARRANTS (Details)

WARRANTS (Details) - 6 months ended Jun. 30, 2015 - USD ($)	Total
Warrant
Beginning Balance	25,000,000
Granted
Exercised
Ending Balance	25,000,000
Weighted Average Exercise Price
Beginning Balance	$ 0.01
Granted
Exercised
Forfeited or Cancelled
Ending Balance	$ 0.004
Weighted Average Remaining Contract Life
Beginning Balance	1 year
Ending Balance	6 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	$ 130,188

WARRANTS (Details Narrative)

WARRANTS (Details Narrative)	Jun. 30, 2015USD ($)
Warrants Details Narrative
warrants outstanding	$ 25,000,000