SMC Entertainment 10Q 2024 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ________

Commission File No. 000-56558

SMC Entertainment, Inc.

(Exact name of the small business issuer as specified in its charter)

Nevada

(State of either jurisdiction of

Incorporation or Organization)

59170 Glades Road Suite 150

Boca Raton, FL 33434

(Address of principal executive offices)

(360) 820-5973

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the 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 Act). Yes ☐ No ☒

The number of shares of Common Stock, $0.001 par value of the registrant outstanding at May 11, 2024 was 1,473,960,743

FORM 10-Q

For the Quarterly Period Ended March 31, 2024

INDEX

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INDEX TO FINANCIAL STATEMENTS

Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023		4

Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited)		5

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)		6

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)		7

Notes to the Consolidated Financial Statements (unaudited)		8

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SMC ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2024			December 31, 2023

ASSETS	(Unaudited)			(Audited)

Current Assets:
Cash	$	4,222		$	7,269
Receivable		300,000			300,000
Total Current Assets		304,222			307,269

Goodwill		64,194			64,194

Total Assets	$	368,416		$	371,463

LIABILITIES & STOCKHOLDERS’ DEFICIT

Current Liabilities:
Accounts payable and accrued liabilities	$	88,719		$	87,887
Accrued compensation		489,125			1,486,335
Due to related parties		22,430			22,394
Notes payable – related party		1,111,460			—
Convertible notes		856,187			846,269
Accrued interest		480,815			465,064
Derivative liability		416,128			792,575
Total Current Liabilities		3,464,864			3,700,524

Total Liabilities		3,464,864			3,700,524

Shareholders’ Deficit:
Series A Preferred stock, $0.001 par value, 1,000,000 shares authorized; 990,346 shares issued and outstanding		990			990
Series B Preferred stock, $10.00 par value, 4,500,000 shares authorized; 2,500,000 and 0 shares issued and outstanding, respectively		25,000,000			25,000,000
Common stock $0.001 par value, 3,000,000,000 shares authorized; 1,379,960,743 and 1,379,960,743 shares issued and outstanding, respectively		1,473,961			1,379,961
Discount for series B Preferred stock		(24,967,500	)		(24,967,500	)
Common stock to be issued		—			22,000
Additional paid-in capital		12,800,975			12,796,175
Accumulated deficit		(17,404,874	)		(17,560,687	)
Total Stockholders’ Deficit		(3,096,448	)		(3,329,061	)
Total Liabilities and Stockholders’ Deficit	$	368,416		$	371,463

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SMC ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	March 31,
	2024			2023
Operating Expenses:
General and administrative	$	87,083		$	42,275
Compensation expense – related party		117,800			144,350
Total operating expenses		204,883			186,625

Loss from operations		(204,883	)		(186,625	)

Other income (expense):
Interest expense		(15,751	)		(7,956	)
Change in fair value of derivative		376,447			(236,326	)
Total Other Income (Expense)		360,696			(244,282	)

Net Income (Loss)	$	155,813		$	(430,907	)

Net income (loss) per share – basic and diluted	$	0.00		$	(0.00	)

Weighted average shares outstanding, basic and diluted		1,425,718,985			1,002,634,067

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SMC ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional Paid-in		Discount to Preferred			Common Stock to			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Stock			Be Issued			Deficit			Deficit
Balance, December 31, 2023		990,346	$	990		2,500,000	$	25,000,000		1,379,960,743	$	1,379,961	$	12,796,175	$	(24,967,500	)	$	22,000		$	(17,560,687	)	$	(3,329,061	)
Common stock issued for services – related party		—		—		—		—		19,000,000		19,000		4,800		—			(22,000	)		—			1,800
Common stock issued for services		—		—		—		—		75,000,000		75,000		—		—			—			—			75,000
Net income		—		—		—		—		—		—		—		—			—			155,813			155,813
Balance, March 31, 2024		990,346	$	990		2,500,000	$	25,000,000		1,473,960,743	$	1,473,961	$	12,800,975	$	(24,967,500	)	$	—		$	(17,404,874	)	$	(3,096,448	)

	Series A Preferred Stock				Common Stock				Additional Paid-in		Common Stock to			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Be Issued			Deficit			Deficit
Balance, December 31, 2022		990,346	$	990		962,535,830	$	962,536	$	12,657,620	$	23,500		$	(16,000,004	)	$	(2,355,358	)
Common stock issued for conversion of debt		—		—		63,000,000		63,000		95,639		—			—			158,639
Common stock issued for services – related party		—		—		—		—		—		4,350			—			4,350
Common stock issued for services		—		—		17,206,731		17,207		12,793		(15,000	)		—			15,000
Net loss		—		—		—		—		—		—			(430,907	)		(430,907	)
Balance, March 31, 2023		990,346	$	990		1,042,742,561	$	1,042,743	$	12,766,052	$	12,850		$	(16,430,911	)	$	(2,608,276	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SMC ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended March 31,
	2024			2023
Cash Flows from Operating Activities:
Net income (loss)	$	155,813		$	(430,907	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Common stock issued for services – related party		1,800			4,350
Common stock issued for services		75,000			15,000
Change in fair value of derivative		(376,447	)		236,326
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		832			13,962
Accrued interest		15,751			7,957
Accrued compensation – related party		114,250			140,000
Net cash used in operating activities		(13,001	)		(13,312	)

Cash Flows from Investing Activities:		—			—

Cash Flows from Financing Activities:
Proceeds from loan – related party		36			—
Proceeds from loans		9,918			13,312
Net cash provided by financing activities		9,954			13,312

Net change in cash		(3,047	)		—
Cash at beginning of period		7,269			2,350
Cash at end of period	$	4,222		$	2,350

Supplemental schedule of cash flow information:
Cash paid for interest	$	—		$	—
Cash paid for taxes	$	—		$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SMC ENTERTAINMENT, INC.

Notes to Unaudited Consolidated Financial Statements

March 31, 2024

NOTE 1 — DESCRIPTION OF BUSINESS AND HISTORY

SMC Entertainment, Inc. (the “Company” or “SMC”) was incorporated in the State of Nevada on January 23, 1998, under the name of Professional Recovery Systems, Ltd.

On April 21, 2023, the Company completed its acquisition of AI-enabled wealth management technology platform provider, Fyniti Global Equities EBT Inc. (“Fyniti”) for 2,500,000 shares of Series B $10.00 Preferred Stock.

Fyniti, (www.fyniti.com, www.fynitiiq.com) is a Fintech developer and provider of technology that combines Artificial Intelligence/Machine Learning (AI/ML) driven Quantitative investing (IQ Engine) with AI-enabled wealth management Electronic Block Trading (“EBT”) technology.

NOTE 2 — SUMMARY OF SIGNIFICANT POLICIES

Basis of Presentation

The Company’s unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2024. These unaudited financial statements should be read in conjunction with the financial statements and related notes for the year ended December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Significant estimates include the fair value for derivatives. Actual results could differ from those estimates.

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”).

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2024 and December 31, 2023.

Basic and Diluted Earnings Per Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. Diluted amounts are not presented when the effect of the computations are anti-dilutive due to the losses incurred. Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.

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Stock-Based Compensation

We account for equity-based transactions with employees and non-employees under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation” (Topic 718), which establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar equity or liability instruments in active markets are the best evidence of fair value and, if available, should be used as the basis for the measurement for equity and liability instruments awarded in these share-based payment transactions. However, if observable market prices of identical or similar equity or liability instruments are not available, the fair value shall be estimated by using a valuation technique or model that complies with the measurement objective, as described in FASB ASC Topic 718.

Revenue Recognition

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:

	●	Identification of a contract with a customer;
	●	Identification of the performance obligations in the contract;
	●	Determination of the transaction price;
	●	Allocation of the transaction price to the performance obligations in the contract; and
	●	Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Derivative Financial Instruments

The Company evaluates its convertible notes to determine if such instruments have 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 statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. 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.

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

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Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable amates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.

The following table classifies the Company’s asset measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2024:

Description	Level 1		Level 2		Level 3
Derivative	$	-	$	-	$	416,128
Total	$	-	$	-	$	416,128

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2023:

Description	Level 1		Level 2		Level 3
Derivative	$	-	$	-	$	792,575
Total	$	-	$	-	$	792,575

Recently issued accounting pronouncements

The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 — GOING CONCERN

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses since inception and has no assurance of future profitability. The Company will continue to require financing from external sources to finance its operating and investing activities until sufficient positive cash flows from operations can be generated. There is no assurance that financing or profitability will be achieved, accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.

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NOTE 4— CONVERTIBLE NOTES PAYABLE

A summary of all the Company’s convertible loans is as follows.

	Date Issued		Maturity Date		Rate			Balance 12/31/2023		Additions		Conversions/ Payments		Balance 3/31/2024		Conv Terms
FV Investments	5/27/2016		5/27/2017			12	%	$	16,596	$	-	$	-	$	16,596	$	0.001
FV Investments	3/14/2017		3/14/2018			12	%	$	15,000	$	-	$	-	$	15,000	$	0.001
Christopher Whitcomb	7/7/2016		7/7/2017			18	%	$	2,393	$	-	$	-	$	2,393		(1	)
Christopher Whitcomb	1/25/2017		1/25/2018			18	%	$	29,050	$	-	$	-	$	29,050		(1	)
Christopher Whitcomb	5/30/2017		5/30/2018			18	%	$	32,640	$	-	$	-	$	32,640		(1	)
Kanno Group Holdings ll Ltd	10/1/2019		10/1/2020			12	%	$	42,601	$	-	$	-	$	42,601	$	0.00466
Kanno Group Holdings ll Ltd	1/6/2020		1/6/2021			12	%	$	14,977	$	-	$	-	$	14,977	$	0.00615
Kanno Group Holdings ll Ltd	6/30/2020		6/30/2021			12	%	$	7,732	$	-	$	-	$	7,732	$	0.00615
Kanno Group Holdings ll Ltd	12/31/2020		12/31/2021			12	%	$	9,527	$	-	$	-	$	9,527	$	0.00185
Kanno Group Holdings ll Ltd	3/31/2021		3/31/2022			12	%	$	5,112	$	-	$	-	$	5,112	$	0.00628
Kanno Group Holdings ll Ltd	7/24/2021		7/24/2022			12	%	$	5,406	$	-	$	-	$	5,406	$	0.00603
Kanno Group Holdings ll Ltd	11/1/2021		11/1/2022			12	%	$	2,828	$	-	$	-	$	2,828	$	0.00544
Kanno Group Holdings ll Ltd	12/31/2021		12/31/2022			12	%	$	37,391	$	-	$	-	$	37,391	$	0.00509
Mammoth Corporation	1/12/2022		1/12/2023			12	%	$	231,652	$	-	$	-	$	231,652		(3	)
Mammoth Corporation	1/21/2022		1/21/2023			12	%	$	157,300	$	-	$	-	$	157,300		(4	)
Kanno Group Holdings ll Ltd	3/31/2022		3/31/2023			12	%	$	7,606	$	-	$	-	$	7,606	$	0.00222
Kanno Group Holdings ll Ltd	4/25/2022		4/25/2023			12	%	$	50,000	$	-	$	-	$	50,000	$	0.00206
Kanno Group Holdings ll Ltd	7/12/2022		7/12/2023			12	%	$	2,388	$	-	$	-	$	2,388	$	0.00163
Kanno Group Holdings ll Ltd	11/3/2022		11/3/2023			n/a		$	11,357	$	-	$	-	$	11,357	$	0.00167
Kanno Group Holdings ll Ltd	12/31/2022		12/31/2023			n/a		$	6,407	$	-	$	-	$	6,407	$	0.00096
Kanno Group Holdings ll Ltd	3/31/2023		3/31/2024			n/a		$	13,312	$	-	$	-	$	13,312	$	0.00054
Kanno Group Holdings ll Ltd	6/30/2023		6/30/2024			n/a		$	89,038	$	-	$	-	$	89,038	$	0.00084
Kanno Group Holdings ll Ltd	9/30/2023		9/30/2024			n/a		$	36,230	$	-	$	-	$	36,230	$	0.00042
Kanno Group Holdings ll Ltd	12/31/2023		9/30/2024			n/a		$	19,726	$	-	$	-	$	19,726	$	0.00035
Kanno Group Holdings ll Ltd	3/31/2024		3/31/2025			n/a		$	-	$	9,918	$	-	$	9,918	$	0.0003
								$	846,269	$	9,918	$	-	$	856,187

Kanno Group Holdings ll Ltd – accrued interest		n/a		n/a		n/a		$	339,077	$	7,376	$	-	$	346,453		(5	)
Other accrued interest		n/a		n/a		n/a		$	125,987		8,375	$	-	$	134,362
Total convertible debt and accrued interest								$	1,311,333		25,669	$	-	$	1,337,002

	(1)	75% discount to the lowest closing price within the 60 previous trading sessions.
	(2)	Note was assigned to Mammoth Corporation
	(3)	Conversion rate depends on what part of the loan and when the conversion occurs.
	(4)	50% of market price.
	(5)	During the year ended December 31, 2023, Kanno Group Holdings converted $37,695 of accrued interest into 127,000,000 shares of common stock.

A summary of the activity of the derivative liability for the notes above and for amounts due under the consulting agreements with Mr. Hughes and Mr. Blum (Note 8) is as follows:

Balance at December 31, 2022	$	536,399
Decrease to derivative due to conversion		(231,367	)
Derivative (gain) due to mark to market adjustment		487,543
Balance at December 31, 2023		792,575
Decrease to derivative due to conversion		-
Derivative gain due to mark to market adjustment		(376,447	)
Balance at March 31, 2024	$	416,128

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of March 31, 2024, is as follows:

Inputs	March 31, 2024			Initial Valuation
Stock price	$	0.0006		$	0.006 – 0.0115
Conversion price	$	0.0003 – 0.0004		$	0.0016 – 0.0098
Volatility (annual)		186.43	%	163.53%–214.94		%
Risk-free rate		5.5	%	.39%–1.55		%
Dividend rate		-			-
Years to maturity		.25			1

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management.

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NOTE 5 — COMMON STOCK

During Q1 2024, the Company granted 75,000,000 shares of common stock to a service provider. The shares were valued at 0.001, the closing stock price on the date of grant for total non-cash stock compensation expense of $75,000.

Refer to Note 8 for shares issued to related parties.

NOTE 6 — PREFERRED STOCK

Series A Preferred Stock

The Company has 1,000,000 shares of preferred stock designated as Series A. The Series A preferred stock, par value $0.001, are entitled to dividends, if declared, and are convertible into common stock by dividing the issue price of $1.00 by a 20% discount to the current market price.

Series B Preferred Stock

On December 16, 2021, the Company amended its Articles of Incorporation, creating a series of Preferred Stock designating 4,500,000 shares of Series B Convertible Preferred Stock, par value $10.00 per share. The Series B preferred stock are entitled to dividends, if declared, and are convertible into common stock at a rate of 10% to the preceding ten day weighted average price.

NOTE 7 — RELATED PARTY TRANSACTIONS

On December 26, 2023, Xuqiang (Adam) Yang, was appointed as Chief Financial Officer (“CFO”) of the Company to replace Mr. Blum, who was serving as the Interim CFO. Per the terms of the consulting agreement to serve as the Company’s CFO Mr. Yang will be compensated $7,000 per month, beginning November 1, 2023. As of March 31, 2024 and December 31, 2023, there is $34,000 and $14,000 due to Mr. Yang, respectively.

On March 25, 2024, the Company issued 9,500,000 shares of common stock to JW Price LLC. 2,000,000 shares are for shares earned in the current period. Those shares were valued at $0.0006, the closing price on the date of grant, for total non-cash compensation expense of $1,200. All other shares issued were earned in the prior period and had been disclosed as common stock to be issued.

On March 25, 2024, the Company issued 9,500,000 shares of common stock to Ronald Hughes for services. 1,000,000 shares are shares earned in the current period. Those shares were valued at $0.0006, the closing price on the date of grant, for total non-cash compensation expense of $600. All other shares issued were earned in the prior period and had been disclosed as common stock to be issued.

On March 31, 2024, the Company entered into a new consulting agreement with Ronald Hughes and North Arm Capital LLC. Per the terms of the agreement, effective January 1, 2024, Mr. Hughes is to be compensated $5,000 per month. In addition, the Company issued to Mr. Hughes a convertible promissory note for all accrued compensation as of December 31, 2023. The note for $517,000 is non-interest bearing and convertible into shares of common stock at $0.0006 per share. As of March 31, 2024 and December 31, 2023, there is $15,000 and $0 due to Mr. Hughes, respectively, for accrued consulting services.

On March 31, 2024, the Company entered into a new consulting agreement with Erik Blum and J W Price LLC. Per the terms of the agreement, effective January 1, 2024, Mr. Blum is to be compensated $26,666 per month. In addition, the Company issued to Mr. Blum a convertible promissory note for all accrued compensation as of December 31, 2023. The note for $594,460 is non-interest bearing and convertible into shares of common stock at $0.00055 per share. As of March 31, 2024 and December 31, 2023, there is $79,250 and $0 due to Mr. Blum, respectively, for accrued consulting services.

NOTE 8— SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, Subsequent Events, from the balance sheet date through the date the financial statements were issued and has determined that no material subsequent events exist.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management’s Discussion and Analysis should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included elsewhere in this quarterly report.

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward-looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, our actual results may differ significantly from management’s expectations. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or, in the case of documents referred to or incorporated by reference, the date of those documents.

The following discussion and analysis should be read in conjunction with our unaudited financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Company Overview and Description of Business

On August 14, 2023, the Company filed a Certificate of Change with the Nevada Secretary of State to increase the authorized shares of the Company’s common stock to 3,000,000,000.

Results of Operations

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) includes a discussion of the consolidated results from operations of SMC Entertainment, Inc. and its subsidiary for the three months ended March 31, 2024 and 2023.

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Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Revenue

We had no revenue for the three months ended March 31, 2024 and 2023.

General and Administrative Expenses

General and Administrative expenses for the three months ended March 31, 2024, were $87,083 as compared to $42,275 for the comparable prior period, an increase of $44,808 or 106%. During the current period we incurred $75,000 of non-cash consulting expense for the issuance of common stock. The was offset by a decrease to our audit and legal fees.

Compensation Expense – Related Party

Compensation Expense – Related Party for the three months ended March 31, 2024, was $117,800 as compared to $144,350 for the comparable prior period, a decrease of $26,550 or 18.4%. The decrease is the result of a new consulting agreement for Ronald Hughes, that decreased his monthly compensation.

Other Income (Expense)

Total other income for the three months ended March 31, 2024, was $360,696 as compared to total other expense of $244,282 for the comparable prior period. In the current period we had interest expense of $15,751 and a gain of $376,447 related to the change in fair value of derivatives. In the prior period we had interest expense of $7,956 and a loss of $236,326 related to the change in the fair value of derivatives.

Net Loss

For the three months ended March 31, 2024, we had net income of $155,813, due to the gain from the change in fair value of our derivatives. For the three months ended March 31, 2023, we had a net loss of $430,907. A large part of the loss was due to the loss of $236,326 related to the change in the fair value our derivatives.

Liquidity and Capital Resources

During the three months ended March 31, 2024, we used $13,001 of cash in operations compared to $13,312 used in the prior period.

As of March 31, 2024, we had convertible notes, including accrued interest, due of $1,337,002. We also have notes payable to related parties of $1,111,460.

Off-Balance Sheet Arrangements

As of March 31, 2024, the Company had no off-balance sheet arrangements.

Going Concern

Our auditors have expressed substantial doubt as to our ability to continue as a going concern. The accompanying unaudited financial statements have been prepared on a going concern basis. For the three months ended March 31, 2024, the Company had a net income of $155,813; however, this was only due to a gain on the fair value of our derivatives. We had net cash used in operating activities of $13,001 and an accumulated deficit of $17,404,874. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future. Management plans to provide for the Company’s capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Critical Accounting Policies

Refer to Note 2 for a condensed discussion of our critical accounting policies and to our Form K, which includes our audited financial statements for the year ended December 31, 2023, for a full discussion of our critical accounting policies.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures during the three months ended March 31, 2024 were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The term “disclosure controls and procedures,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Notwithstanding the identified material weaknesses, management believes the financial statements included in this quarterly report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. Legal Proceedings

There are no claims, actions, suits, proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None

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Item 6. Exhibits.

(a) Exhibits.

Exhibit No.		Description
31.1		Rule 13a14(a)/15d-14(a) Certification of Chief Executive Officer
32.1		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS*		Inline XBRL Instance Document(1)
101.SCH*		Inline XBRL Taxonomy Extension Schema Document(1)
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document(1)
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document(1)
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document(1)
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document(1)

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 14, 2024	SMC ENTERTAINMENT, INC.

	By:	/s/ Erik Blum
		Name:	Erik Blum
		Title:	Chief Executive Officer
			(Principal Executive Officer) and Director

	By:	/s/ Adam Yang
		Name:	Adam Yang
		Title:	Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)

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Readability	8th grade Avg

SMC Entertainment (SMCE) 10-Q2024 Q1 Quarterly report

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