Item
1. Financial Statements.
VIVA ENTERTAINMENT GROUP INC.
Condensed Balance Sheets
(Unaudited)
|
|
|
July 31,
2019
|
|
|
October 31, 2018
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
13,450
|
|
|
$
|
322
|
|
|
Other Receivable
|
|
|
15,000
|
|
|
|
—
|
|
|
Total Current Assets
|
|
|
28,450
|
|
|
|
322
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Software, net of amortization of $26,159 and $20,963
|
|
|
42,394
|
|
|
|
47,590
|
|
|
Total Other Assets
|
|
|
42,394
|
|
|
|
47,590
|
|
|
Total Assets
|
|
$
|
70,844
|
|
|
$
|
47,912
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Liabilities
|
|
$
|
589,347
|
|
|
$
|
589,347
|
|
|
Accrued Interest
|
|
|
199,526
|
|
|
|
160,392
|
|
|
Accrued Salary and Wages – Related Party
|
|
|
488,928
|
|
|
|
535,338
|
|
|
Related Party Payable
|
|
|
-
|
|
|
|
64,270
|
|
|
Convertible Notes Payable, net of discount – in default
|
|
|
731,899
|
|
|
|
931,056
|
|
|
Convertible Notes Payable, net of discount – current
|
|
|
390,661
|
|
|
|
—
|
|
|
Derivative Liability
|
|
|
3,050,601
|
|
|
|
2,878,931
|
|
|
Total Current Liabilities
|
|
|
5,450,962
|
|
|
|
5,159,334
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, 475,000,000 shares authorized, par value 0.00001, 74,344,597 and 15,279,850 shares issued and outstanding at July 31, 2019 and October 31, 2018
|
|
|
743
|
|
|
|
153
|
|
|
Stock Payable
|
|
|
1,808,250
|
|
|
|
1,808,250
|
|
|
Additional paid-in capital
|
|
|
24,251,686
|
|
|
|
21,046,900
|
|
|
Accumulated deficit
|
|
|
(31,440,797
|
)
|
|
|
(27,966,725
|
)
|
|
Total Stockholders’ Deficit
|
|
|
(5,380,118
|
)
|
|
|
(5,111,422
|
)
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
70,844
|
|
|
$
|
47,912
|
|
The Accompanying Notes are an Integral Part of These Financial Statements
VIVA
ENTERTAINMENT GROUP, INC.
Condensed
Statements of Operations
(Unaudited)
|
|
|
For the Three
|
|
|
For the Three
|
|
|
For the Nine
|
|
|
For the Nine
|
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
|
July 31,
2019
|
|
|
July 31,
2018
|
|
|
July 31,
2019
|
|
|
July 31,
2018
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
|
|
$
|
1,020
|
|
|
$
|
8,470
|
|
|
$
|
17,175
|
|
|
|
35,921
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting services
|
|
|
8,000
|
|
|
|
258,000
|
|
|
|
126,680
|
|
|
|
409,200
|
|
|
Professional fees
|
|
|
3,750
|
|
|
|
265,500
|
|
|
|
43,750
|
|
|
|
545,297
|
|
|
Content
|
|
|
4,096
|
|
|
|
5,479
|
|
|
|
151,138
|
|
|
|
59,903
|
|
|
General and administrative
|
|
|
423,389
|
|
|
|
821,204
|
|
|
|
792,068
|
|
|
|
2,878,253
|
|
|
Wages
|
|
|
69,945
|
|
|
|
72,055
|
|
|
|
191,195
|
|
|
|
245,905
|
|
|
Total Operating Expenses
|
|
|
509,180
|
|
|
|
1,422,508
|
|
|
|
1,304,831
|
|
|
|
4,137,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(508,160
|
)
|
|
|
(1,414,08
|
)
|
|
|
(1,287,656
|
)
|
|
|
(4,101,737
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on settlement of debt
|
|
|
(177,241
|
)
|
|
|
(73,336
|
)
|
|
|
(363,970
|
)
|
|
|
(107,098
|
)
|
|
Gain/(Loss) on change in derivative liability
|
|
|
2,530,627
|
|
|
|
(1,129,269
|
)
|
|
|
(398,056
|
)
|
|
|
(1,177,385
|
)
|
|
Interest and derivative expense
|
|
|
(558,778
|
)
|
|
|
231,060
|
|
|
|
(1,424,390
|
)
|
|
|
(134,809
|
)
|
|
Total other expense
|
|
|
1,794,608
|
|
|
|
(971.545
|
)
|
|
|
(2,186,416
|
)
|
|
|
(1,419,292
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
1,286,448
|
|
|
$
|
(2,385,583
|
)
|
|
$
|
(3,474,072
|
)
|
|
$
|
(5,521,029
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.02
|
|
|
$
|
(0.17
|
)
|
|
$
|
(0.08
|
)
|
|
|
(0.43
|
)
|
|
Diluted earnings per share
|
|
$
|
0.01
|
|
|
$
|
(0.17
|
)
|
|
$
|
(0.08
|
)
|
|
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computation of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
66,929,958
|
|
|
|
14,407,990
|
|
|
|
42,798,492
|
|
|
|
12,696,675
|
|
|
Diluted earnings per share
|
|
|
209,494,930
|
|
|
|
14,407,990
|
|
|
|
42,798,492
|
|
|
|
12,696,675
|
|
The
accompanying notes are an integral part of these financial statements.
VIVA
ENTERTAINMENT, INC.
Statements
of Stockholder’s Equity
(Unaudited)
|
|
|
Shares
|
|
Common
|
|
Additional Paid-in
|
|
|
Stock
|
|
|
Retained
|
|
|
Total
|
|
|
|
|
Outstanding
|
|
Stock
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Equity
|
|
|
Balance as of October 31, 2017
|
|
|
8,269,580
|
|
$
|
83
|
|
$
|
15,054,235
|
|
|
$
|
3,079,200
|
|
|
$
|
(21,034,249
|
)
|
|
$
|
(2,900,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on conversion of debt
|
|
|
3,698,939
|
|
|
37
|
|
|
654,036
|
|
|
|
—
|
|
|
|
—
|
|
|
|
654,073
|
|
|
Loss on debt conversion
|
|
|
—
|
|
|
—
|
|
|
143,197
|
|
|
|
—
|
|
|
|
—
|
|
|
|
143,197
|
|
|
Settlement of derivative
|
|
|
—
|
|
|
—
|
|
|
948,922
|
|
|
|
—
|
|
|
|
—
|
|
|
|
948,922
|
|
|
Shares issued for services
|
|
|
3,310,667
|
|
|
34
|
|
|
4,246,510
|
|
|
$
|
(1,270,950
|
)
|
|
|
—
|
|
|
|
2,975,593
|
|
|
Shares issued due to reverse split
|
|
|
664
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net loss for year ended October 31, 2018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,932,476
|
)
|
|
|
(6,932,476
|
)
|
|
Balance as of October 31, 2018
|
|
|
15,279,850
|
|
$
|
153
|
|
$
|
21,046,900
|
|
|
$
|
1,808,250
|
|
|
$
|
(27,966,725
|
)
|
|
$
|
(5,111,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on conversion of debt
|
|
|
9,157,516
|
|
|
92
|
|
|
162,130
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162,222
|
|
|
Loss on debt conversion
|
|
|
—
|
|
|
—
|
|
|
101,164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
101,164
|
|
|
Settlement of derivative
|
|
|
—
|
|
|
—
|
|
|
412,464
|
|
|
|
—
|
|
|
|
—
|
|
|
|
412,464
|
|
|
Shares issued for services
|
|
|
2,300,000
|
|
|
23
|
|
|
426,576
|
|
|
|
—
|
|
|
|
—
|
|
|
|
426,599
|
|
|
Net income for quarter ended January 31, 2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
62,090
|
|
|
|
62,090
|
|
|
Balance as of January 31, 2019
|
|
|
26,737,366
|
|
$
|
267
|
|
$
|
22,149,235
|
|
|
$
|
1,808,250
|
|
|
$
|
(27,904,635
|
)
|
|
$
|
(3,946,883
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on conversion of debt
|
|
|
18,136,668
|
|
|
181
|
|
|
135,466
|
|
|
|
—
|
|
|
|
—
|
|
|
|
135,647
|
|
|
Loss on debt conversion
|
|
|
—
|
|
|
—
|
|
|
85,565
|
|
|
|
—
|
|
|
|
—
|
|
|
|
85,565
|
|
|
Settlement of derivative
|
|
|
—
|
|
|
—
|
|
|
813,099
|
|
|
|
—
|
|
|
|
—
|
|
|
|
813,099
|
|
|
Net loss for quarter ended April 30, 2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,822,610
|
)
|
|
|
(4,822,610
|
)
|
|
Balance as of April 30, 2019
|
|
|
44,874,034
|
|
$
|
448
|
|
$
|
23,183,365
|
|
|
$
|
1,808,250
|
|
|
$
|
(32,727,245
|
)
|
|
$
|
(7,735,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on conversion of debt
|
|
|
29,470,563
|
|
|
295
|
|
|
246,346
|
|
|
|
—
|
|
|
|
—
|
|
|
|
246,641
|
|
|
Loss on debt conversion
|
|
|
—
|
|
|
—
|
|
|
177,241
|
|
|
|
—
|
|
|
|
—
|
|
|
|
177,241
|
|
|
Settlement of derivative
|
|
|
—
|
|
|
—
|
|
|
644,734
|
|
|
|
—
|
|
|
|
—
|
|
|
|
644,734
|
|
|
Net income for quarter ended July 31, 2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
1,286,448
|
|
|
|
1,286,448
|
|
|
Balance as of July 31, 2019
|
|
|
74,344,597
|
|
$
|
743
|
|
$
|
24,251,686
|
|
|
$
|
1,808,250
|
|
|
$
|
(31,440,797
|
)
|
|
$
|
(5,380,118
|
)
|
The accompanying notes are an integral part of these financial statements.
VIVA ENTERTAINMENT GROUP INC.
Condensed Statements of Cash Flows
(Unaudited)
|
|
|
For the Nine Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
|
July 31,
2019
|
|
|
July 31,
2018
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
$
|
(3,474,072
|
)
|
|
$
|
(5,521,029
|
)
|
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Amortization of other assets
|
|
|
5,196
|
|
|
|
5,196
|
|
|
Amortization of debt discount
|
|
|
641,365
|
|
|
|
632,886
|
|
|
Penalties incurred on debt
|
|
|
117,329
|
|
|
|
48,501
|
|
|
Loss on Debt Conversion
|
|
|
363,970
|
|
|
|
107,098
|
|
|
Derivative Expense
|
|
|
775,348
|
|
|
|
359,292
|
|
|
Change in fair value of derivative liability
|
|
|
398,056
|
|
|
|
818,014
|
|
|
Common stock issued and payable for services
|
|
|
426,599
|
|
|
|
2,969,412
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
122,087
|
|
|
|
—
|
|
|
Accrued salary and wages – related party
|
|
|
(46,410
|
)
|
|
|
84,740
|
|
|
Accounts payable and accrued liabilities
|
|
|
—
|
|
|
|
120,361
|
|
|
Net Cash Used in Operating Activities
|
|
|
(670,532
|
)
|
|
|
(375,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Cash paid for note receivable
|
|
|
(15,000
|
)
|
|
|
—
|
|
|
Net Cash Used in Investing Activities
|
|
|
(15,000
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Net (proceeds) on/from borrowing from related parties
|
|
|
(64,270
|
)
|
|
|
12,700
|
|
|
Payment on debt
|
|
|
—
|
|
|
|
(10,000
|
)
|
|
Proceeds from issuance of convertible notes
|
|
|
762,930
|
|
|
|
375,550
|
|
|
Net Cash Used in Financing Activities
|
|
|
698,660
|
|
|
|
378,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash
|
|
|
13,128
|
|
|
|
2,681
|
|
|
Cash - Beginning of Period
|
|
|
322
|
|
|
|
2,682
|
|
|
Cash - End of Period
|
|
$
|
13,450
|
|
|
$
|
5,363
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
Derivative issuances
|
|
$
|
1,643,911
|
|
|
$
|
408,560
|
|
|
Derivative conversions
|
|
$
|
1,870,297
|
|
|
$
|
892,725
|
|
|
Debt and interest converted into common stock
|
|
$
|
544,510
|
|
|
$
|
532,947
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
The Accompanying Notes are an Integral Part of These Financial Statements
VIVA
ENTERTAINMENT GROUP INC.
Notes
to Consolidated Financial Statements
As
of and For the Nine Months Ended July 31, 2019 and 2018
NOTE
1 – NATURE OF OPERATIONS
Description
of Business and History
The
Company was incorporated on October 26, 2009 in the State of Nevada. The Company originally engaged in the development of a website
and also the design and development of a catalogue to sell over the counter and prescription medications, and supplements. In
2012, the Company undertook a change in focus to the natural resources sector where it was engaged in the acquisition and exploration
of base metals and mineral mining properties.
On
April 5, 2016, the Company completed the purchase of Viva Entertainment Group, Inc. (“Viva Entertainment”), a Delaware
corporation, from EMS Find, Inc. (“EMS”) pursuant to a stock purchase agreement. Viva Entertainment’s Chief
Executive Officer, Johnny Falcones, was appointed as the Company’s sole director, President and Chief Executive Officer
to manage the development and marketing of Viva Entertainment’s over the top (IPTV/OTT) application for connected TV’s,
desktop computers, tablets, and smart phones.
Pursuant
to the stock purchase agreement, the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the
purchase of all outstanding shares of stock of Viva Entertainment by the Company in exchange for the issuance to EMS of a 10%
promissory note in the principal amount of $100,000, due six months from the Closing (the “EMS Note”), and the issuance
of 22,000,000 shares of common stock to Johnny Falcones. For accounting purposes, the transaction was treated as a reverse merger
since the acquired entity now forms the basis for operations and the transaction resulted in a change in control, with the acquired
company electing to become the successor issuer for reporting purposes. The accompanying financial statements have been prepared
to reflect the assets, liabilities and operations of Viva Entertainment Group, Inc. exclusive of Black River Petroleum since all
predecessor operations were discontinued. As part of the transaction, stock payable and amounts due to former officers were forgiven,
with the balances recorded as Contributed Capital. For equity purposes, additional paid-in capital and retained deficit shown
are those of Viva, exclusive of Black River Petroleum. Viva had no operations prior to the quarter ended April 30, 2016.
In
management’s opinion, all adjustments necessary for a fair statement of the results for the presented periods have been
made. All adjustments made were of a normal recurring nature.
Viva
Entertainment Group Inc. (F/K/A Black River Petroleum Corp.) (the “Company”) develops and markets Viva Entertainment’s
over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones. The Company is based
in Briarwood, New York.
Going
Concern
These
financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations
and continue its operations for the next fiscal year. Realization value may be substantially different from carrying
values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. As
of July 31, 2019, the Company has a working capital deficiency and has an accumulated deficit of $31,440,797. The continuation
of Viva Entertainment Group as a going concern is dependent upon the continued financial support from its shareholders, the ability
of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These
factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States for interim information Regulation S-K. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In
the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation
have been included. These financial statements should be read in conjunction with the audited financial statements for the
year ended October 31, 2018.
Use
of Estimates
The
preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and assumptions
related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation
allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results
experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between
our estimates and the actual results, our future results of operations will be affected.
Loss
Per Common Share
The
Company reports net loss per share in accordance with provisions of the FASB. The provisions require dual presentation
of basic and diluted loss per share. Basic net loss per share excludes the impact of common stock equivalents. Diluted net loss
per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents.
As of July 31, 2019 and 2018, there were no dilutive common stock equivalents outstanding.
Fair
Value of Financial Instruments
Pursuant
to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all
financial instruments included on its balance sheet as of July 31, 2019 and October 31, 2018. The Company’s financial instruments
consist of cash and derivative liabilities. The Company considers the carrying value of such amounts in the financial
statements to approximate their fair value due to the short-term nature of these financial instruments.
The
Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial
liabilities.ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally
accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this
standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively
with limited exceptions.
ASC
820-10 defines fair value as 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. This standard is now the single source in GAAP for the definition of fair
value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources
(observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based
on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad
levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are
described below:
|
●
|
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
|
|
|
●
|
Level
2
|
Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets
or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability
(e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
|
|
|
|
|
|
●
|
Level
3
|
Inputs
that are both significant to the fair value measurement and unobservable. These inputs rely on management’s own assumptions
about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed
based on the best information available in the circumstances and July include the Company’s own data.)
|
The
following presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring
basis as of July 31, 2019 and October 31, 2018:
July
31, 2019:
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Convertible Notes Payable, net of discount
|
|
$
|
1,122,560
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,122,560
|
|
|
Derivative Liability
|
|
|
3,050,601
|
|
|
|
|
|
|
|
|
|
|
|
3,050,601
|
|
|
Total
|
|
$
|
4,173,161
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,173,161
|
|
October
31, 2018:
|
|
|
Level 1
|
|
|
Level2
|
|
|
Level 3
|
|
|
Total
|
|
|
Convertible Notes Payable, net of discount
|
|
$
|
931,056
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
931,056
|
|
|
Derivative Liability
|
|
|
2,878,931
|
|
|
|
|
|
|
|
|
|
|
|
2,878,931
|
|
|
Total
|
|
$
|
3,809,987
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,809,987
|
|
’
Derivative
Financial Instruments
Fair
value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity
instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company
uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible
debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement.
If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments
as derivative financial instruments.
Once
determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease
in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair
value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.
Cash and Cash Equivalents
For
purposes of the Condensed Financial Statements, the Company considers liquid investments with an original maturity of three months
or less to be cash equivalents. As of July 31, 2019, and October 31, 2018, the Company had no cash equivalents.
Revenue
Recognition
Effective
November 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes
revenue from the sale of service contracts by applying the following steps: (1) identify the contract with a customer; (2) identify
the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance
obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods,
revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is
recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service
has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable;
and (4) the collectability of the fee is reasonably assured.
There
was no impact on the Company’s financial statements as a result of adopting Topic 606 for three and ninemonths ended July
31, 2019 or on prior periods.
Reverse
Split
On
October 12, 2018, the Company’s shareholders approved a reverse split of the issued and outstanding common stock on a 1:500
basis, which resulted in the cancellation of 7,255,764,887 shares of common stock. Immediately after effectuating the reverse
split, there were 14,511,538 shares issued and outstanding. As a result of the reverse split, 644 shares of common stock were
issued due to rounding. For comparative purposes, all share amounts reported in the accompanying financial statements have been
shown retroactive of the reverse split for all periods presented.
NOTE
3 – RELATED PARTY TRANSACTIONS
The
detail composition of the $488,928 in accrued wages with related parties as of July 31, 2019 includes the following due to officers
and directors: Johnny Falcones $22,303 and John Sepulveda $182,844. In addition, $183,781 is owed to Alberto Gomes, a former director,
for prior wages. This accrual covered services rendered by the employees for the period from April 2016 through July 31, 2019,
less payments made to such employees during the period.
Common
Stock Payable for all periods presented consists of $1,808,250 in stock payable with related parties due to unissued shares earned
on the employment agreements and for services performed during the years ended October 31, 2018, 2017 and 2016.
The
Company periodically receives cash advances from officers and directors or their family members for routine working capital purposes.
As of July 31, 2019 and October 31, 2018, a balance of $-0- and $64,270, respectively, was owed to the spouse of the Company’s
Chief Executive Officer. The advance is non-interest bearing and payable on demand.
NOTE
4 -- OTHER RECEIVABLE
Other
receivable consists of a short-term working capital advance to an unrelated third-party customer of the Company to assist with
their product development. The advance is not interest bearing and is due on demand.
NOTE
5 – CONVERTIBLE NOTES PAYABLE
During
prior years and through the nine months ended July 31, 2019, the Company issued multiple convertible notes payable to several
entities. The notes bear interest at rates between 8% and 15% and are convertible at rates between 40-60% of the lowest trading
price of company’s common stock over a period ranging from 5-20 days prior to the date of conversion. All of the outstanding
notes are either currently due or become due on or before July 31, 2020. The notes are summarized as follows:
|
Total convertible notes payable at July 31, 2019
|
|
$
|
1,526,291
|
|
|
Less: Current portion of notes payable
|
|
|
(1,526,291
|
)
|
|
Long term portion of notes payable
|
|
|
—
|
|
The
following table summarized the convertible note activity in the nine months ended July 31, 2019 and the year ended October 31,
2018:
|
|
|
Principal Balance
|
|
|
Loan Discount
|
|
|
Accrued interest
|
|
|
October 31, 2017
|
|
$
|
897,524
|
|
|
$
|
(383,122
|
)
|
|
$
|
61,520
|
|
|
Issued in the year
|
|
|
787,515
|
|
|
|
(754,153
|
)
|
|
|
—
|
|
|
Converted into stock or repaid
|
|
|
(580,448
|
)
|
|
|
—
|
|
|
|
(73,625
|
)
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
963,740
|
|
|
|
—
|
|
|
Interest accrued
|
|
|
—
|
|
|
|
—
|
|
|
|
172,497
|
|
|
October 31, 2018
|
|
$
|
1,104,591
|
|
|
$
|
(173,535
|
)
|
|
$
|
160,392
|
|
|
Issued in the period
|
|
|
883,257
|
|
|
|
(871,561
|
)
|
|
|
—
|
|
|
Converted into stock or repaid
|
|
|
(461,557
|
)
|
|
|
—
|
|
|
|
(82,953
|
)
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
641,365
|
|
|
|
—
|
|
|
Accrued interest
|
|
|
—
|
|
|
|
—
|
|
|
|
122,087
|
|
|
July 31, 2019
|
|
$
|
1,526,291
|
|
|
$
|
(403,731
|
)
|
|
$
|
199,526
|
|
The
Company evaluated the terms of the conversion features of its convertible debentures in accordance with ASC Topic No. 815 - 40,
Derivatives and Hedging - Contracts in Entity’s Own Stock and determined they are indexed to the Company’s common stock
and the conversion features meet the definition of a liability, and therefore bifurcated the conversion features and accounted
for them as a separate derivative liability.
Changes
in Derivative Liabilities were as follows:
|
October 31, 2017
|
|
$
|
1,463,047
|
|
|
Issuance of derivative
|
|
|
1,568,926
|
|
|
Conversion into stock or assignment
|
|
|
(948,922
|
)
|
|
Change in fair value
|
|
|
795,880
|
|
|
October 31, 2018
|
|
|
2,878,931
|
|
|
Issuance of derivative
|
|
|
1,643,911
|
|
|
Conversion into stock or assignment
|
|
|
(1,870,297
|
)
|
|
Change in fair value
|
|
|
398,056
|
|
|
July 31, 2019
|
|
$
|
3,050,601
|
|
Interest
expense for the nine months ended July 31, 2019 and 2018 was $239,415 and $134,809, respectively. Interest expense for the three
months ended July 31, 2019 and 2018 was $130,455 and $75,615, respectively. Accrued interest payable on convertible debt was $199,526
and $160,392 as of July 31, 2019 and October 31, 2018, respectively.
The
Company incurred a loss on the conversion of principal and interest during the nine months ended July 31, 2019 and 2018 of $363,970
and $107,098, respectively. During the nine months ended July 31, 2019, the Company recorded $1,184,975 in derivative expense.
NOTE 6
- COMMON STOCK
During
the year ended October 31, 2018, the Company had the following common stock transactions:
|
|
●
|
In October
2018, the Company effected a 1:500 reverse split of the common stock, which resulted in the cancellation of 7,255,764,887
shares of common stock and the issuance of 644 shares due to rounding differences.
|
|
|
|
|
|
|
●
|
The
Company issued a total of 3,698,939 shares of common stock (post split) on the conversion of $654,073 of debt and associated
interest. In addition, the company recorded $143,197 in loss on conversion of debt associated with these transactions, attributable
to the difference between the fair value of the shares issued and the amount of debt converted compared to recorded derivative
liability.
|
|
|
|
|
|
|
●
|
The
Company issued 3,310,667 shares of common stock (post split) having a value at issuance of $4,246,510 for services, which
included $1,270,950 recorded as stock issuable in the prior year, resulting in a net expense of $2,975,593 for the year ended
October 31, 2018. For valuation purposes, the Company used the closing bid price of the Company’s common
stock on the date of each service grant.
|
Each
of these issuances was made pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933.
During
the three months ended January 31, 2019, the Company had the following common stock transactions:
|
|
●
|
9,157,516
shares of common stock were issued on the conversion of $162,222 of notes payable and associated interest. In addition,
the company recorded $101,164 in loss on conversion of debt associated with these transactions, attributable to the difference
between the fair value of the shares issued and the amount of debt converted compared to recorded derivative liability.
|
|
|
●
|
2,300,000
shares of common stock were issued for services previously rendered by consultants with a value of $426,599.For valuation
purposes, the Company used the closing bid price of the Company’s common stock on the date of each service grant.
|
Each
of these issuances was made pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933 except for
800,000 shares issued for consulting services, which were issued pursuant to an S-8 registration.
During
the three months ended April 30, 2019, the Company had the following common stock transactions:
|
|
●
|
18,136,668
restricted shares were issued on the conversion of $135,647 in debt principal and associated interest. In addition, the company
recorded $85,565 in loss on conversion of debt associated with these transactions, attributable to the difference between
the fair value of the shares issued and the amount of debt converted compared to recorded derivative liability.
|
Each
of these issuances was made pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933.
During
the three months ended July 31, 2019, the Company had the following common stock transactions:
|
|
●
|
29,470,563
restricted shares were issued on the conversion of $246,641 in debt principal and associated interest. In addition, the company
recorded $177,241 in loss on conversion of debt associated with these transactions, attributable to the difference between
the fair value of the shares issued and the amount of debt converted compared to recorded derivative liability.
|
Each
of these issuances was made pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933.
NOTE 8
– SUBSEQUENT EVENTS
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary
Notice Regarding Forward Looking Statements
The
information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Actual results may materially differ from those projected in the forward-looking statements as a result of certain
risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected
in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to
be correct or that actual results will not be different from expectations expressed in this report.
This
filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect
to our business, strategies, products, future results and events, and financial performance. All statements made in this filing
other than statements of historical fact, including statements addressing operating performance, events, or developments which
management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume
growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about
future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “may,” variations of
such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements,
and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain
risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially
from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not
undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.
Readers
should not place undue reliance on these forward-looking statements, which are based on management’s current expectations
and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions
(including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause
or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K
and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested
parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.
Overview
Viva
Entertainment Group Inc. (the “Company”) develops and markets Viva Entertainment’s over the top (IPTV/OTT) application
for connected TV’s, desktop computers, tablets, and smart phones. The Company is based in Briarwood, New York.
Internet
Protocol Television (IPTV/OTT) is a system through which television services are delivered using the Internet protocol suite over
a network such as the Internet, instead of being delivered through traditional terrestrial, satellite signal, and cable television
formats.
IPTV
services may be classified into three main groups: 1) Live television, with or without interactivity related to the current TV
show; 2) Time-shifted television: catch-up TV (replays a TV show that was broadcast hours or days ago), start over TV (replays
the current TV show from its beginning); 3) Video On Demand (VOD): browse a catalog of videos, not related to TV programming.
A
Content Delivery Network (CDN) is an interconnected system of computers on the Internet that provides Web content rapidly to numerous
users by duplicating the content on multiple servers and directing the content to users based on proximity. CDNs are used by Internet
Service Providers (ISPs) to deliver static or dynamic Web pages but the technology is especially well suited to streaming audio,
video, and Internet Television (IPTV) programming Over-The-Top (OTT) content, describes broadband delivery of video and audio
without a multiple system operator being involved in the control or distribution of the content itself. Consumers can access OTT
content through internet-connected devices such as PCs, laptops, tablets, smart phones including iPhones and Droid phones, set-top
boxes, Smart TVs and gaming consoles.
During
the year ended October 31, 2018, the Company has completed the interface redesign as part of the revenue sharing and service agreement
with FlixFling, LLC, allowing subscribers access to the FlixFling catalogue through the VIVA portal starting at 11am today. The
Company signed a five-year agreement with FlixFling which provides for a share of 20% of sales by the Company of FlixFling subscriptions
and 30% from video-on-demand downloads sold through the Company. The agreement also provides for the Company and FlixFling to
work together to promote and market the product and also develop an integrated user experience between the two services.
Johnny
Falcones, Chief Executive Officer of the Company has spent six months since signing the revenue share agreement with FlixFling
in December 2017, working together to develop a seamless and integrated platform so that the Company’s customers can access
one of the best streaming services in the industry for the latest movies and music videos on demand.
From
the beginning, the Company’s goal has been to create an affordable solution giving our customers access to the broadest
possible range of meaningful content. FlixFling’s platform of movies-on-demand combined with music video channels makes
the Company one of the best OTT providers on the market. The redesigned app will allow customers to easily access both Company
and FlixFling content without having to switch between apps. It is just one more way in which the Company is setting itself apart
from the rest of the OTT community.
Philadelphia-based
FlixFling offers over 15,000 movies and television shows across all genres in an OTT format. Their unique service gives customers
a choice between video-on-demand and monthly subscription services. They are currently the only streaming service to offer both
movies and music to customers at one low price and the only service to offer streaming music video channels.
In
addition, the Company announces that it has entered into a partnership with Comcast, Communications Management LLC d/b/a Comcast
Technologies Solutions Inc. The partnership began January 2019.
The
Company and its Vivalivetv system will begin working on content, logistical and other technology services provided solely by Comcast
Communications Management. This partnership will help enhance our subscriber base in order to create more revenue. A joint press
release will be available by both parties in early 2019.
On
June 24, 2019, the Company signed an agreement with Kudu Creative Agency, SAS contracting them to redesign the vivalivetv.com
website. The site will consist of new features with new look and feel tailored to the evolving nature of OTT content delivery
and services. These changes represent an effort to give new and existing subscribers the ultimate television experience. The new
vivalivetv website will specifically facilitate the Company’s interface and coordination with new content and advertising
partners who are looking to help not only create revenues but integrate services and provide enhanced visibility to their millions
of customers already using their products.
The
contract commences immediately with work expected to be complete within six weeks.
Platform:
The
Company’s subscription offering provides the components and systems to build up a CDN and along with Viva Middleware (the
heart of the system), allows the provision of IPTV (Live and VOD) and other value added services, no matter the type of network
(managed or unmanaged) or the number of subscribers.
Middleware:
Interactive
TV Middleware is a multi service delivery platform (MSDP), providing converged and interactive IPTV services for the ISP, Telco,
Cable and Campus/Hospitality market. The platform enables end users to enjoy rich multimedia services any time - any place. Services
can be delivered over IP, DVB-C/T/S or 3G/4G access networks using several different devices in managed network or Over The Top,
via open Internet. In addition, this innovative approach enables third parties to develop attractive first or second screen applications
on different devices like PC, mobile phones, tablets, Smart TV sets or various STB devices.
Competitive
Edge:
The
platform represents the heart of the IPTV ecosystem, enabling service providers to accomplish attractive visual and functional
differentiation of their IPTV service. Agile development allows service providers quick response to competitive market conditions.
The Company’s main competitive advantages are field proven application platform, platform openness and flexibility, unique bouquet
of IPTV converged multimedia services and customizable, responsive and graphics-rich user interface. Pay as you grow approach
enables service providers to start slowly and extend the system according to the actual growth of the subscriber base. The platform
comes with comprehensive system management module, which enables total control over operational parameters and central customer,
device and service provisioning. The Company enables the service provider to manage its video, audio and information assets and
to offer these assets within reliable and compelling platform. It offers a rich information support for Live TV service with customizable
channel list and e-program guide in various shapes. TV channel recording functionality is available in various flavors to satisfy
user’s needs and lifestyle: program recording, Time-shifting, Pause Live TV and Instant TV recording. Middleware is offered as
a standalone solution, as the most important building block for the complete end to end IPTV solution, whether in the multicast,
DVB or Over the Top environment.
The
Company’s IPTV solution is based on the best of breed components and solutions from the leading vendors in the IPTV world that
have been proven in many wide and varied cases and environments in the past. End-2-End solutions designed by the Company are based
on the Open Standards Systems and Standards adopted in the DVB and IP world.
Distribution
The
Company operates three main specific segments of business. They are the following: (1) Broadcast and Digital Content
Syndication to media distribution affiliated companies; (2) Direct-To-Consumer content subscription and on demand content services;
(3) Consumer Electronic Subscription Sales that are company branded and sold to engaged customers on our owned and/or affiliated
media platforms to ensure an enhanced audience participation experience. Each are dependent on some common variables including
brand recognition and reinforcement, ability to adequately market our services, and the continued use of available technology
tools to enable efficient growth and management of the business. We operate and derive revenues for the aforementioned areas
of businesses mentioned herein as follows:
(1) Broadcast
and Digital Content Syndication:
a. This
business relies on the continued increase of content offerings into the marketplace offered to media companies in both the broadcast
and digital media space.
b. There’s
a heavy reliance factor on the levels of audience, customer engagements, and ratings that determine the levels of participation
that our content has.
c. The
successful sale of advertising associated with our syndicated content depends to the aforementioned levels of active consumer
engagements with our media affiliated partners.
d. Part
of the business model is to license the content to these media entities that become our content affiliates.
e. The
Company will derive revenue from the sale of advertising offerings that are directly associated with the content subscription
being syndicated to these media affiliated entities.
(2) Direct-To-Consumer
Content Subscription and On Demand Content Services:
a. This
business relies on the successful completion and launch of our Company’s own content software application.
b. The
application branded as, “Oi2” is being engineered to be a full cross-platform accessible software application that
will be made available on most mobile devices, media enabled set-top boxes and connected devices, as well as, other available
distribution outlets in an effort to accommodate various consumer behaviors as it relates to content consumption.
c. The
Company has secured affiliation agreements to provide a wide offering of content subscription available to consumers including
but not limited to live and linear broadcast and cable television networks, on demand prime time television shows, pay-per-view
and purchase options for an estimated 7,000+ Hollywood films/movies, and hundreds of audio channels in a wide variety of genres
and formats.
d. The
content subscription offerings for this business derives revenues from active consumer subscriptions of content, as well as, per
instance or pay-per-view and on demand offerings that require the consumer to pay using a bank credit or debit card per transaction.
(3) Consumer
Electronic Subscription Sales:
a. This
part of the business is based on a joint venture with third party partners under our JV with Oi2.
b. The
third party partner owns and controls a consumer electronics sourcing company that provides electronic consumer goods to certain
retail store chains and e-commerce sales outlets.
c. The
joint venture agreement allows for the Company to open e-commerce stores on its own consumer directed media software applications
and/or third party affiliated distribution partner platforms.
d. Once
launched revenues will be derived from the sales of consumer electronics subscription for a revenue share of the sales (after
manufacturing, sourcing, shipping, and other related expenses are accounted for).
Growth
Strategy
The
Company has a multifaceted approach to marketing its services and offerings. These are mainly based on the business
unit:
(1) Broadcast
and Digital Content Syndication:
a. The
Company engages in direct calls to prospective media affiliated partners using its in-house staff of affiliate sales and affiliate
relations personnel.
b. The
Company markets on a regular basis most of its content offerings via industry targeted bulk email offerings or participation in
industry related trade shows and sponsored events.
c. The
Company also brings market awareness of its content services and offerings using widely distributed press releases to known industry
related trade publishers.
(2) Direct-To-Consumer
Content Subscription and On Demand Content Services:
a. The
Company plans to utilize unsold media inventory from its broadcast and digital content syndication business to promote the Oi2
App brand awareness and content subscription offerings in an aim to drive audiences to download or seek the application in the
device of their choosing.
b. The
Company also plans to leverage its existing relationships with industry media affiliated partners that desire to bring awareness
of their own content offerings in our App thus driving their consumer base to actively be incentive to download or seek the application
in the device of their choosing.
c. The
Company is currently actively in deployment of a social media marketing initiative to bring awareness and drive incentives to
consumers to actively download or seek the application in the device of their choosing.
d. The
Companyis currently working with a certain increasing number of “social media influencers” or well-known talents that
have been incentivized by the Company to provide them with their own space to feature their branded content on our App.
As such their main task is to drive their social media followers to actively pursue their respective featured content on our App
thus aiding in the increase of consumer downloads of the app and active user engagements.
(3) Consumer
Electronic Subscription Sales:
a. The
Company plans to utilize unsold media inventory from its broadcast and digital content syndication business to promote our App
Consumer Electronic Subscriptions brand awareness and content subscription offerings in an aim to drive audiences to download
or seek the application in the device of their choosing.
b. The
Company also plans to leverage its existing relationships with industry media affiliated partners that desire to bring awareness
of their own content offerings in our App Consumer Electronic Subscription thus driving their consumer base to actively be incentive
to download or seek the application in the device of their choosing.
c. The
Company is currently actively in deployment of a social media marketing initiative to bring awareness and drive incentives to
consumers to actively download or seek the application in the device of their choosing.
Plan
of Operation
As
of July 31, 2019, the Company has a working capital deficiency of $5,422,512 and accumulated deficit of $31,440,797. We had revenues
from subscriptions in the amount of $1,020 and $17,175 for the three and nine months ended July 31, 2019, respectively, compared
to the revenues of $8,470 and $35,921 during the three and nine months ended July 31, 2018, respectively.
Our
auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have
not generated any material revenues or profits.
We
have only four officers and directors. They are responsible for our managerial and organizational structure which will include
preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, they
will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable
of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately
could cause you to lose your investment.
Limited
Operating History
There
is no historical financial information about us upon which to base an evaluation of our performance. The revenues generated to
date was small. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital resources.
Results
of Operations
Revenues
We
had revenues from subscription in amount of $1,020 and $17,175 for the three and nine months ended July 31, 2019, respectively,
compared to the revenues of $8,470 and $35,921 during the three and nine months ended July 31, 2018, respectively.
Effective
November 1, 2018, the Company adopted ASC 606- Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from
the sale of service contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the
performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance
obligation in the contract; and (5) recognize revenue when each performance obligations are satisfied. For the comparative periods,
revenue has not been adjusted and continues to be reported under ASC 605- Revenue Recognition. Under 605, revenue is recognized
when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of services has been
rendered to the customer or delivery occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4)
the collectability of the fee is reasonably assured.
There was no impact on the Company’s financial statements as a result of adopting Topic 606 for three
and nine months ended July 31, 2019 or on prior periods.
Operating
Expenses
For
the three and nine months ended July 31, 2019, we incurred operating expenses in the amounts of $509,180 and $1,304,831, respectively,
compared to the operating expenses in the amounts of $1,422,508 and $4,137,658 during the three and nine months ended July 31,
2018, respectively. Our operating expenses were comprised of: (i) consulting services expenses of $8,000 and $126,680 for the
three and nine months ended July 31, 2019, respectively (ii) content expenses of $4,096 and $151,138 for the three and nine months
ended July 31, 2019, respectively (iii) professional fees of $3,750 and $43,750 for the three and nine months ended July 31, 2019,
respectively (iv) general and administrative expenses of $423,389 and $792,068 for the three and nine months ended July 31, 2019,
respectively, and (v) wage expenses of $69,945 and $191,195 for the three and nine months ended July 31, 2019, respectively. Comparatively,
our operating expenses were comprised of: (i) consulting services expenses of $258,000 and $409,200 for the three and nine months
ended July 31, 2018, respectively (ii) content expenses of $5,479 and $59,903 for the three and nine months ended July 31, 2018,
respectively (iii) professional fees of $265,500 and $545,297 for the three and nine months ended July 31, 2018, respectively
(iv) general and administrative expenses of $821,204 and $2,878,253 for the three and nine months ended July 31, 2018, respectively,
and (v) wage expenses of $72,055 and $245,905 for the three and nine months ended July 31, 2018, respectively. The decrease in
the three and nine months ended July 31, 2019 was due primarily to the decrease in consulting services by $250,000 and $282,520,
respectively, a decrease in professional fees by $261,750 and $501,547, respectively, and general and administrative expenses
by $397,815 and $2,086,185, respectively. We had common stock issued for services in the amount of $2,969,412 during the nine
months ended July 31, 2018, and $426,599 during the nine months ended July 31, 2019.
Other
Income and Expense
Other
Income and Expense for the three and nine months ended July 31, 2019 included a change in derivative liabilities of $2,530,627
and $(398,056), respectively, compared to $(1,129,269) and $(1,177,385) during the three and nine months ended July 31, 2018,
respectively. The decrease resulted primarily from a difference in the value of the Company’s common stock between
October 31, 2018 and July 31, 2019. Also included is a loss on settlement of debt in amount of $(177,241) and $(363,970)
during the three and nine months ended July 31, 2019, respectively, compared to $(73,336) and $(107,098) for the three and nine
months ended July 31, 2018, respectively. The loss on settlement of debt arises from the recalculation of derivative expense when
a convertible debt is paid off, sold, or renegotiated. Interest and derivative expense for the three and nine months ended
July 31, 2019 was $(558,778) and $(1,424,390), respectively, compared to $231,060 and $(134,809) for the three and nine months
ended July 31, 2018, respectively. Derivative expense includes the difference between the derivative liability recorded at
issuance and the amount of recorded debt discount.
Net
Income/(Loss)
We
had net income of $1,286,448 and a net loss of $(3,474,072) during the three and nine months ended July 31, 2019, respectively,
compared to net loss of $(2,385,583) and $(5,521,029) during the same periods ended July 31, 2018, respectively. The decrease
in net loss in 2019 was due primarily to the gain on change in derivative liability as a result of an increase in the value of
the Company’s common stock between October 31, 2018 and July 31, 2019.
Inflation
We
do not believe that inflation has had a material effect on our results of operations.
Liquidity
and Capital Resources
As
of July 31, 2019, we had cash of $13,450 on hand. Current liabilities exceeded current assets by $5,422,512 at July 31, 2019,
which included derivative liabilities of $3,050,601, accrued salaries due to officers of $488,928, net convertible debt of $1,122,560,
accrued interest of $199,526, and accounts payable and accrued expenses of $589,347. Other long-term assets consisted of capitalized
software development costs of $68,553, net of accumulated amortization of $26,159.
Net
cash provided by operating activities was $670,532 during the nine months ended July 31, 2019, compared to net cash used in operating
activities of $375,250 during the same period ended July 31, 2018. The net gain in cash provided by operations during the nine
months ended July 31, 2019 was primarily attributable to the decrease in net loss of $2,700,863 offset by non-cash loss from derivative
expense of $766,398, change in derivative liabilities of $398,056, and other non-cash expenses including amortization of debt
discount of $641,365, loss on debt conversion of $363,970, common stock issued for services of $426,599. Comparatively, net cash
used in operations during the nine months ended July 31, 2018 was primarily attributable to net loss of $5,521,029, partially
offset by non-cash expense including amortization of debt discount of $632,886, loss on debt conversion of $107,098, changes in
derivative liabilities in amount of $818,014 and common stock issued for services of $2,969,412.
Cash
flow used in investing activities was $15,000 during the nine months ended July 31, 2019. There was no cash flows from investing
activities during the nine months ended July 31, 2018.
Cash
flows provided by financing activities were $698,660 and $378,250 for the nine months ended July 31, 2019 and 2018, respectively.
Positive cash flows from financing activities during the nine months ended July 31, 2019 were due primarily to proceeds of $762,930
from convertible notes, offset by the repayment of $64,270 to related parties’ loan. Comparatively, positive cash flows
from financing activities during the nine months ended July 31, 2018 was due to proceeds of $375,550 from convertible notes and
proceeds of $12,700 from related parties’ loan.
We
had revenues from subscriptions in amount of $1,020 and $17,175 for the three and nine months ended July 31, 2019, respectively,
compared to the revenues of $8,470 and $35,921 during the three and nine months ended July 31, 2018, respectively, and had four
salaried employees including Johnny Falcones, our officer and director. We currently require very limited resources but intend
to hire employees and consultants in the latter part of 2019 for the Viva Entertainment operations. In due course, should we require
capital for these operations, we will need to raise additional capital. There is no guarantee that we will be able to raise further
capital. At present, we have not made any arrangements to raise additional capital but are diligently working on this.
If
we need additional capital and cannot raise it, we will either have to suspend operations until we do raise the capital or cease
operations entirely. Other than as described in this paragraph, we have no other financing plans.
Future
Contractual Obligations and Commitment
We
incur contractual obligations and financial commitments in the normal course of our operations and financing activities. Contractual
obligations include future cash payments required under existing contracts, such as debt and lease agreements. These obligations
may result from both general financing activities and from commercial arrangements that are directly supported by related operating
activities.
As
of the date of this prospectus, we have no future contractual obligations or commitments.
Off-Balance
Sheet Arrangements
As
of the date of this prospectus, we have not entered into any transaction, agreement or other contractual arrangement with an entity
unconsolidated under which it has:
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retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;
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liquidity
or market risk support to such entity for such assets;
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an
obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or
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an
obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held
by, and material to us, where such entity provides financing, liquidity, market risk or credit risk support to or engages
in leasing, hedging, or research and development services with us.
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Recent
Accounting Pronouncements
In
March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting”. The standard is intended to simplify several areas of accounting for share-based compensation arrangements,
including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company
elected to early adopt the new guidance in the second quarter of fiscal year 2016 which requires us to reflect any adjustments
as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of
adoption was the recognition of additional stock compensation expense and paid-in capital for all periods in fiscal year 2016.
Additional amendments to the recognition of excess tax benefits, accounting for income taxes and minimum statutory withholding
tax requirements had no impact to retained earnings as of January 1, 2016, where the cumulative effect of these changes is required
to be recorded. We have elected to account for forfeitures as they occur to determine the amount of compensation cost to be recognized
in each period.
In
November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230).” ASU No. 2016-18 requires that
restricted cash be included with cash and cash equivalents when reconciling the change in cash flow. This guidance is reflected
in these financial statements.
In
January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the
two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount
of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total
amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill
impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount
of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim
goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual
goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not elected early adoption of this
standard and is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial
statement impact of adoption.
In
May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.”
The amendments in this update provide guidance about which changes to the terms or conditions of a share-based award require an
entity to apply modification accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018,
with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial
statements.
Accounting
standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the consolidated financial statements upon adoption.
Subsequent
Events
None
noted.