VNUE, INC. Forward-Looking Statements
The statements in this quarterly report that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words. Also, look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business. Some forward-looking statements that we may use include, without limitation, those statements that relate to:
? Competition and market acceptance of our product,
? Other risks and uncertainties related to the music industry and our business
strategy and the impact of the Covid-19 pandemic on our operations,
? Our ability to penetrate the market and continually innovate useful
technologies,
? Our ability to negotiate and enter into license agreements,
? Our ability to raise capital, and
? Our ability to protect our intellectual property rights.
You are cautioned that any such forward-looking statements are not guarantees
and may involve risks and uncertainties. Our actual results may differ
materially from those in the forward-looking statements due to risks facing us
or due to facts differing from the assumptions underlying our estimates. Some of
these risks and assumptions include those set forth in reports and other
documents we have filed with or furnished to the
Presentation of Information
As used in this quarterly report, the terms "we", "us", "our" and the "Company"
mean
All dollar amounts in this annual report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a
Impact of Current Coronavirus (COVID-19) Pandemic on the Company
Covid-19 has had a material adverse effect on our live recording business and the music industry in general. Substantially all of our future set.fm and DiscLive business is dependent on success of public events and gatherings. We believe that the vaccination efforts throughout the world are having a positive impact on the population that may enable more live music events to be held in the future which would be beneficial to our business, however, there can be no assurances on the timing of when this may occur or whether it will occur at all.
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Overview
Our Business
We are a music technology company that utilizes our platforms to record live concerts and then sell the content to consumers. We make content we record available to the set.fm platform, as well as our website, immediately after the show is finished. Our technology helps artists and record labels generate alternative income from the recorded content. We also offer high end collectible products such as CDs, USB drives and laminates, which feature our fully mixed and mastered live concert content.
Until the acquisition of Stage It, described below, we had two products:
? Set.fm™ / DiscLive Network™ - Our consumer app platform allows customers to
download and purchase, via their individual mobile device, the concert they
just attended. There are also physical collectible products which are recorded
and sold at shows as well as online through the Company's exclusive partner
DiscLive Network™. The app itself is free to download, and allows for in app
purchases regarding the content. (Currently, this is the only platform that
generates any revenue for the Company.)
? Soundstr™ - a comprehensive music identification and rights management Cloud
platform that we are developing, when fully deployed, can accurately track and
audit public performances of music, creating a more transparent ecosystem for
general music licensing and associated royalty payments, which will help
ensure the correct stakeholders are compensated through the use of our "big
data" collection.
While Set.fm™ and Soundstr™ are proprietary marks of the Company, DiscLive, and
its related marks and names are not owned by the Company and are owned and
utilized by
The Company currently only generates revenue from Set.fm and from DiscLive by (a) recording the audio of live concerts and then selling the content "instantly" through its set.fm website, as well as the IOS Set.fm mobile application, and (b) selling content on physical products such as CDs, which are burned on-site where customers can purchase them. Our customers are fans of live music and the bands which we record.
Customers want to "take home" their experience of the concerts they attend. Our Company enters into agreement with certain bands and artists, and record labels if a particular artist under contract with the label. Our teams then follow that artist or band while they are on tour and record every show on that tour. Our Company uses its own recording and sound equipment while recording concerts.
As we partner with both artists and labels, we market our services on their websites, their social media platforms, their mailing lists, as well as our own websites and social networks. Furthermore, partnerships, with companies similar to Ticketmaster, allow us to market to customers when they buy tickets to see certain artists in concert.
On
Pursuant to the Merger Agreement, each of Stage It's outstanding shares
(including common and preferred shares) will be converted into the right to
receive the applicable portion of the Merger Consideration. A portion of the
Merger Consideration will be paid in cash and take the form of satisfying
certain outstanding debt obligations of Stage It, as outlined in a Closing
Payment Certificate to the Merger Agreement, and the other portion will be paid
in shares of the Company's common stock or preferred stock, with the actual
number of such shares to be issued reduced by the cash component outlaid in the
transaction. A portion of the Merger Consideration,
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The Merger Agreement also allows for the issuance of earn out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On
With the addition of Stage It (Stage It.com), VNUE will have the ability to livestream concerts and other events, adding to the pool of other live music focused technology services. Stage It is an established platform where concerts or other live events may be ticketed (just like an in-person event), and fans who pay for tickets may enjoy a performance or other engagement by watching digital video as it occurs on their web browser. For example, an artist can create an event through the platform, and then, in advance, let their fans know they can purchase the ability to view the concerts on the Stage It platform. Fans then buy the ability to access these concerts, and at the designated time, the fan may then observe the live performance on Stage It.com.
Recent Developments
In late July, we announced that the Company is launching an aggressive campaign
to deploy its Soundstr Music Recognition Technology in every bar, restaurant and
hotel in
Interested businesses may receive the Soundstr Pulse devices for no cost whatsoever. Additionally, in the next several months, VNUE will be offering both playlist functionality - meaning clients will be able to play fully licensed music directly from Soundstr - as well as the ability to opt-in for advertising, which will help to offset licensing costs that businesses pay. One of the strongest points about Soundstr Pulse is that it does have high quality audio output capabilities (for use with advertising and for playlists), as well as Bluetooth beacon technology that will be leveraged for non-invasive advertising.
Also in late July, we announced the Company is partnering with
Live and Local at RockHouse Live Key West™ will air every Thursday night,
starting
In addition to being carried on terrestrial radio by Barefoot 104.9, the show
will also air on VNUE's online and app-based radio station, VNUE Radio, and it
will be professionally livestreamed on VNUE's StageIt.com platform, both of
which reach a global audience, and the latter with over a million subscribers.
And it will also air on select screens at each of the other RockHouse Live
locations, in
Two musical artists, which will range from solo artists to full bands, will be
featured every week, and will each be interviewed on-site in the
Results of Operations for the three and nine months ended
The following discussion and analysis of our results of operations and financial
condition for the three and nine months ended
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Revenues
For the three months ended
We expect that our revenues will increase in future quarters as a result of the decreased impact of Covid-19 and the accompanying lockdowns on businesses, which has been an obstacle for live performances, however, there can be no assurances.
Direct Costs of Revenues
In the nine months ended
The increase in costs is attributable to Stage It. We expect to generate positive gross margins from higher sales volumes in the future, although there can be no assurances.
Operating Expenses
We incurred operating expenses in the amount of
The balance of our operating expenses for all periods consisted of the following
for the nine months ended
Nine Months Ended
September 30,
2022 2021
General and administrative expenses
$ 419,204 $ 205,120 Professional Fees$ 581,867 $ 288,272
Amortization of intangible assets
The increase of
The increase of
We expect that our payroll will increase in future quarters as we take on more operations that require most human resources.
The increase of
We recorded amortization and intangible expense of
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Other Income / Expenses, Net
We recorded other expense of
We expect to incur other expenses in future quarters as a result of financing transactions.
Net Income (Loss)
As a result of the foregoing we recorded a net loss available to common
shareholders of
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. As reflected in
the accompanying consolidated financial statements, during the nine months ended
On
The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the Company has been able to fund its operations from the proceeds of notes payable and convertible notes.
More recently, the Company has been relying on issuances of its preferred stock
and its equity line of credit with
On
During the three months ended
Pursuant to the Series B Designation, each share of Series B Preferred Stock may
be converted into
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During the three months ended
During the three months ended
There can be no assurances that GHS will continue to purchase Series B Preferred Shares
On
We filed the amendment, after approval of our board and shareholders, to reserve sufficient shares of our common stock for issuance upon conversion or exercise of our outstanding debt and equity securities and to provide us with greater flexibility for future financings and potential acquisitions. As a result of the amendment, we are now able to supply shares of common stock to update our reserve commitments and we are now able to utilize the equity line that we recently entered into with GHS.
Also on
Following effectiveness of the registration statement, the Company shall have
the discretion to deliver puts to GHS and GHS will be obligated to purchase
shares of the Company's common stock based on the investment amount specified in
each put notice. The maximum amount that the Company shall be entitled to put to
GHS in each put notice shall not exceed two hundred percent (200%) of the
average daily trading dollar volume of the Company's Common Stock during the ten
(10) trading days preceding the put, in an amount equaling less than
Additionally, concurrently with the execution of definitive agreements, the Company has issued to GHS 29,069,768 commitment shares that were not issued prior by the Company, but have now been issued that the amendment to increase the Company's authorized common stock has been filed.
The Registration Agreement provides that the Company shall (i) use its best efforts to file with the Commission the Registration Statement within 30 days of the date of the registration rights Agreement; and (ii) have the registration statement declared effective by the Commission within 30 days after the date the registration statement is filed with the Commission, but in no event more than 90 days after the Registration Statement is filed.
The Company has filed the registration statement as required by the Registration Agreement.
During the three months ended
The Company is currently looking for other opportunities to fund the Company to supplement its credit line. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.
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Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which were prepared in
accordance with
While our significant accounting policies are more fully described in the notes
to our financial statements appearing elsewhere in this prospectus, we believe
that the accounting policies discussed below are critical to our financial
results and to the understanding of our past and future performance, as these
policies relate to the more significant areas involving management's estimates
and assumptions. We consider an accounting estimate to be critical if: (1) it
requires us to make assumptions because the information was not available at the
time or it included matters that were highly uncertain at the time we were
making our estimate; and (2) changes in the estimate could have a material
impact on our financial condition or results of operations. (See Note 1 -
Significant and Critical Accounting Policies and Practices in the Company's Form
10-K for the period ended
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles
generally accepted in
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
Stock-Based Compensation
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by FASB where the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB where the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then-current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
The fair value of the Company's stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
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Recent Accounting Pronouncements
See Note 2 of the Condensed Consolidated Financial Statement herein for management's discussion of recent accounting pronouncements.
Selected Financial Data
Not applicable.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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