As filed with the Securities and Exchange Commission on
June 23, 2021
Registration No. _________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VNUE, INC.
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(Exact Name of
Registrant as Specified in Its Charter)
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Nevada
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7829
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98-0543851
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(State or
jurisdiction of
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(Primary
Standard Industrial
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(I.R.S.
Employer
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incorporation or
organization)
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Classification
Code Number)
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Identification
No.)
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104 West 29th St, 11th floor, New
York, NY 10001
Telephone: (833) 937-5493
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive
Offices)
Corporate Services Center, Inc.
5605 Riggins Court, Suite 200
Reno, Nevada 89502
Name, address, including zip code, and telephone
number,
including area code, of agent for
service)
Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration
Statement is declared effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
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. (Check one):
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Large accelerated
filer:
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☐
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Accelerated filer:
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☐
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Non-accelerated
filer:
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☐
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Smaller reporting
company:
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☒
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Emerging Growth
Company:
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☐
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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 7(a)(2)(B) of the Securities
Act ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to
be Registered
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Proposed Maximum
Aggregate Offering
Price(1)(2)
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Amount
of
Registration
Fee
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Shares of common stock
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$ |
2,500,000 |
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$ |
272.75 |
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_________
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(1)
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Pursuant to Rule 416(a)
under the Securities Act of 1933, as amended (the “Securities Act”)
the registrant is also registering an indeterminate number of
additional shares of common stock that may be issued as a result of
stock splits, stock dividends or similar transactions.
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(2)
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Consists of up to
250,000,000 shares of common stock to be offered by the Company in
the Offering. As of June 23, 2021, the Company had 1,108,423,770
shares of common stock in the public float and 1,269,633,963 shares
of common stock outstanding. The 250,000,000 shares being
registered represent approximately 22% of the shares in the public
float as of June 23, 2021. Assuming all of these shares are sold,
the Company’s total number of issued and outstanding shares of
common stock will be 1,019,633,963 calculated on the total number
of shares issued and outstanding on June 23, 2021, of
1,269,633,963. The total number of registered shares will then
represent 24% of the issued and outstanding shares.
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The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until this Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to Section 8(a), may
determine.
The information in this prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell, nor does it
seek an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
Subject to completion dated June 23, 2021
PRELIMINARY PROSPECTUS
VNUE, INC.
250,000,000 shares of common stock
This Prospectus relates to the sale of 250,000,000 shares of common
stock, par value $0.0001, of VNUE, Inc., a Nevada corporation
(referred to herein as the “Company”), by the
Company on a “best efforts” basis through its management to be sold
at a fixed price to be determined upon effectiveness (the
“Offering”). The total proceeds from the Offering
will not be escrowed or segregated but will be available to the
Company immediately. There is no minimum amount of shares of Common
Stock required to be purchased, and, therefore, the total proceeds
received by the Company might not be enough to sustain continued
operations. No commission or other compensation related to the sale
of the shares will be paid. For more information, see the sections
titled “Plan of Distribution” and “Use of Proceeds” herein.
As of June 23, 2021, the Company had 1,108,423,770 shares of common
stock in the public float and 1,269,633,963 shares of common stock
outstanding. The 250,000,000 shares being registered represent
approximately 22% of the shares in the public float as of June 23,
2021. Assuming all of these shares are sold, the Company’s total
number of issued and outstanding shares of common stock will be
1,019,633,963, calculated on the total number of shares issued and
outstanding on June 23, 2021, of 1,269,633,963. The total number of
registered shares will then represent 24% of the issued and
outstanding shares.
Our Common Stock is quoted on the OTC Pink under the symbol “VNUE”.
On June 18, 2021, the closing price per share of our Common Stock
as quoted on the OTC Pink was $0.014 per share.
Investment in our common stock involves risk. See “Risk
Factors” contained in this prospectus. You should carefully read
this prospectus, together with the documents we incorporate by
reference, before you invest in our common stock.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or passed upon the adequacy or the accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
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Per Share
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Total
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Initial public offering price
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$ |
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$ |
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Underwriting discounts and commissions
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$
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$ |
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Proceeds to us, before expenses
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$
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$ |
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The date of this prospectus is June 23, 2021.
TABLE OF
CONTENTS
COMMONLY USED DEFINED TERMS
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●
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Unless the context
provides otherwise, “we,” “us,” “our company,” “our,” “the Company”
and “VNUE” is to VNUE, Inc., a Nevada company.
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All references to “U.S.
dollars,” “dollars,” “USD” or “$” are to the legal currency of the
United States; and;
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“shares”, “Shares” are
to the shares of the common stock of VNUE Group, Inc, par value
$0.0001 per share;
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“Websites” are to our
websites at VNUE.com.
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ABOUT
THIS PROSPECTUS
You should rely only on the information contained in this
prospectus or contained in any prospectus supplement or free
writing prospectus filed with the Securities and Exchange
Commission (the “SEC”). We have never authorized anyone to provide
you with additional information or information different from that
contained in this prospectus filed with the SEC. We are offering to
sell, and seeking offers to buy, shares of our Common Stock only in
jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this
prospectus or of any sale of shares of our Common Stock. Our
business, financial condition, results of operations and prospects
may have changed since that date.
For investors outside the United States: We have never done
anything that would permit this offering or possession or
distribution of this prospectus in any jurisdiction where action
for that purpose is required, other than in the United States.
Persons outside the United States who come into possession of this
prospectus must inform themselves about, and observe any
restrictions relating to, the offering of the shares of Common
Stock and the distribution of this prospectus outside the United
States.
As used in this prospectus, unless otherwise designated, the terms
“we,” “us,” “our,” the “Company,” “VNUE” and “our company” refer to
VNUE, Inc. a Nevada corporation, and its wholly-owned subsidiary
described below.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. Before making an investment decision, you should read
the entire prospectus carefully, including the sections entitled
“Risk Factors,” beginning on page 5 and “Cautionary
Statement Regarding Forward-Looking Statements,” beginning on page
12.
About VNUE
VNUE, Inc. was originally incorporated as Tierra Grande Resources
Inc., (“Tierra Grande”) in Nevada on April 4, 2006. On May 29,
2015, Tierra Grande entered into an Agreement and Plan of Merger
(“Merger Agreement”) with VNUE, Inc., resulting in VNUE, Inc.
becoming Tierra Grande’s wholly-owned operating subsidiary.
Pursuant to the Merger Agreement Tierra Grande changed its name to
VNUE, Inc. (the “Company”).
Overview of Our Current Business
We are a music technology company that utilizes our platforms to
record live concerts, and then sell that content to consumers. We
make the content we record available to the set.fm platform, as
well as our website, immediately after a live 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, that
feature our fully mixed and mastered live concert content.
We currently have two products:
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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.)
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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.
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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 RockHouse Live Media
Productions, Inc. The Company has not filed any formal trademark
applications relating to Set.fm™ with the United States US Patent
and Trademark Office but has been using these marks openly since
2017 and claims common law rights to them.
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 January 9, 2020, the Company entered into an artist agreement
(the “Artist Agreement”) with recording and performance artist,
Matchbox Twenty (“MT”) to record its 2020 tour and sell limited
edition double CD sets, download cards, and digital downloads. Due
to COVID-19, the tour has been rescheduled to May 2022.
We are a relatively new company and our independent auditors have
raised substantial doubts as to our ability to continue without
significant additional financing.
Our future operations may be dependent on our ability to secure
additional financing. Even if we are able to raise the funds
required, it is possible that we could incur unexpected costs and
expenses, fail to collect amounts owed to us, or experience
unexpected cash requirements that would force us to seek
alternative financing. Furthermore, if we issue additional equity
or debt securities, stockholders may experience additional dilution
or the new equity securities may have rights, preferences or
privileges senior to those of existing holders of our common stock.
The inability to obtain additional capital will restrict our
ability to grow and may reduce our ability to continue to conduct
business operations. If we are unable to obtain additional
financing, we will likely be required to curtail our marketing and
development plans and possibly cease our operations.
We
anticipate that depending on market conditions and our plan of
operations, we may incur operating losses in the foreseeable
future. Therefore, our auditors have raised substantial doubt about
our ability to continue as a going concern.
Our liquidity may be negatively impacted by the significant costs
associated with our public company reporting requirements, costs
associated with newly applicable corporate governance requirements,
including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the Securities and Exchange Commission.
We expect all of these applicable rules and regulations to
significantly increase our legal and financial compliance.
Our Revenue Model
The live music and entertainment space are constantly searching for
ways to generate revenue. Music licensing and royalties are
particular “hot button” issues in the industry. We have developed
solutions that create new revenue streams that simultaneously help
to protect the rights of the artists. Our business model helps to
ensure that creators and artists are properly compensated for their
work.
Employees
We currently have 1 full-time and 5 part-time employees. We also
currently engage independent contractors in the areas of
accounting, legal and auditing services, corporate finance, as well
as marketing and business development. The remuneration paid to our
officers and directors will be more completely described elsewhere
in our audited financial statements. We expect to double the number
of employees over the next 12-month period with the capitalization
needed and obtained through this S1. We do and will continue to
outsource contract employment as needed.
Our Industry
The live music and entertainment space is constantly searching for
new monetization outlets. We believe that we have developed
solutions that create new revenue streams.
Since 2003, half of the nation’s CD and record stores have closed.
Annual data regarding downloads was not even collected until 2004,
yet in 2014 it accounted for 46% of total music industry sales. For
most artists, digital sales and streaming revenues have not
replaced the income they earn from recording and publishing.
However, streaming revenues create an additional income stream.
A recent study on musicians’ online revenue streams, featured on
www.lifeisbeautiful.com, suggests that the average payment to an
artist is $0.0011 net per stream. Artists that have their content
on our Set.fm mobile app receive 30% of the net revenue generated
from their specific music. Live music shows are seeing significant
new commercial and experiential trends driven by technology. More
musicians engage directly with their fans via their web presence
—selling songs and even allowing them to vote on touring venues –
bypassing the traditional record labels and ticket services.
For an industry with constantly evolving trends, music's live
events have remained surprisingly static since the 1970’s. VNUE
employs a unique platform that provides music lovers with an
exciting new way to experience the live music events they attend.
With Set.fm and DiscLive, the customer can purchase the songs they
just heard at the concert, in excellent quality, mixed and
mastered, and take that unique magical moment home, to be enjoyed
for a lifetime.
Almost everyone has a smart phone present with them when they
attend live events. The widespread use of these mobile devices is
changing the ways customers behave before, during and after a live
music event. Customers use their devices to search for live music
events, buy tickets, and share their experiences.
The rise of the mobile internet and smart phones has, in recent
years, begun shaping and changing the live music concert experience
for many audience members. The ability to preserve and share
moments of the show as they happen—to take photos and upload them
instantly, to capture videos is a growing trend. Everyone has a
cell phone.
According to a Nielsen report, as of August 2019, the annual
average consumer music spending in the U.S. is over $150 million,
of which 54% of that spending is on live music events.
Our Company reimagines the live event experience. We connect
consumers, artists and venues with the VNUE Set.fm app as well as
our physical, collectible products. We create promotional and
social opportunities that enhance the live concert experience. We
offer certain venues a partnership to help with their sales, and
artists can get added revenue with their concerts. Our app allows
artists to connect with their fans at a different level.
Our technology enhances our customer’s sensory experience at live
events. It creates a natural extension of earlier concert culture
allowing our customers to now have a piece of the live experience
and own it forever.
Competition
Any entity that offers, or has the ability to offer, lice music
recordings that can be uploaded to an app-based platform is
considered a direct competitor of our Company, regardless of
whether the end-user is required to pay for those services or not.
This also includes applications that allow users engage in
streaming activities and download musical content, such as Amazon,
Apple, SoundCloud, iTunes, etc.
Competitive Strengths
We believe our expertise and experience in “Instant Live” content
production and distribution is a competitive strength that
differentiates us from our competitors.
VNUE’s team members have been involved in the business of instant
live content since 2003. The Company’s CEO has vast experience with
this concept and how to commercialize it. Over the years, the
Company has continued to develop the processes and methodologies it
uses to gain partnerships with certain artists and labels which
gives us a competitive advantage in live content industry. We plan
to continue to develop our current business model as well as
introduce new innovative and immersive software features to
consumers.
Intellectual Property
VNUE has pending patents for our Soundstr™ technology and expects
to file more related patents around the Soundstr™ platform, as well
as Set.fm™. This will further strengthen the company as a leader in
music technology and will allow us to have a competitive edge
against those that may emerge as the company continues to
execute.
We have patent-pending technology, USPTO Application US
2017/0316089, “System and Method for Capturing, Archiving and
Controlling Content in a Performance Venue” which relates to our
Soundstr™ technology.
Our Strategy for Growth
Key elements of our growth strategy include:
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Continued rollout of the live
recording business and further improvement to our software
platforms. |
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Rollout of the Soundstr
technology, which is a key part of our Company’s strategy going
forward. Soundstr is in a space called “Music Recognition
Technology,” (MRT), that is a relatively new area of live music and
addresses a large market with no known, established solution for
recognizing music and then tracking this information in an
automated fashion. By leveraging technology and automation,
Soundstr will be in a position to help the company build a large
database of music performed in public spaces, such as bars,
restaurants, gyms, radio, and other businesses.
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Summary of Significant Risk Factors
Investing in our shares involves significant risks. You should
carefully consider all of the information in this prospectus before
making an investment in our shares. Below please find a summary of
the significant risks we face, organized under relevant headings.
These risks are discussed more fully in the section titled “Risk
factors.”
Corporate Information
Our common stock offered in this prospectus is quoted on the OTC
Pink under the symbol “VNUE”.
Our principal executive offices are located at 104 W.
29th Street, 11th Floor, New York, NY 10001,
and our telephone number is 833-937-5493. Our website is VNUE.com.
Information contained in, or that can be accessed through, our
website is not incorporated by reference into this prospectus, and
you should not consider information on our website to be part of
this prospectus.
THE OFFERING
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Issuer
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VNUE, INC.
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Securities Being Offered
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250,000,000 shares of
common stock.
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Offering Price
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$
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Common Stock Outstanding Before this
Offering
Newly Issued Common Stock
Being
Registered Pursuant to the
Offering.
250,000,000
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1,269,633,963
1,069,633,963
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Common Stock Outstanding After this
Offering
Common Stock In Public Float Before
The Offering
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1,019,633,963
1,108,423,770
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Use of Proceeds
Offering Period
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We estimate that we
will receive net proceeds of approximately $[ ] from our sale
of Shares in this offering, after deducting underwriting discounts
and estimated offering expenses payable by us. We intend to use the
net proceeds of this offering to provide funding for service,
sales, marketing efforts, strategic acquisitions and related
expenses, and general working capital. See “Use of Proceeds.”
The Offering will
conclude upon such time as all the common stock has been sold
pursuant to the registration statement, or 24 months after the
effective date.
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Risk Factors
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Please read “Risk
Factors” and other information included in this prospectus for
a discussion of factors you should carefully consider before
deciding to invest in the securities offered in this
prospectus.
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Transfer Agent
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ClearTrust, LLC
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Unless we indicate otherwise, all information in this prospectus is
based on 1,269,633,963 shares of common stock issued and
outstanding as of June 23, 2021, and excludes shares issuable upon
conversion of convertible notes and shares issuable upon the
conversion of outstanding warrants and options.
RISK
FACTORS
Risks Related to our Business
If we fail to keep up with industry trends or
technological developments, our business, results of operations and
financial condition may be materially and adversely
affected.
The live music content industry is rapidly evolving and subject to
continuous technological changes. Our success will depend on our
ability to keep up with the changes in technology and user behavior
resulting from new developments and innovations. For example, as we
provide our product and service offerings across a variety of
mobile systems and devices, we are dependent on the
interoperability of our services with popular mobile devices and
mobile operating systems that we do not control, such as Android
and iOS. If any changes in such mobile operating systems or devices
degrade the functionality of our services or give preferential
treatment to competitive services, the usage of our services could
be adversely affected.
Technological innovations may also require substantial capital
expenditures in product development as well as in modification of
products, services or infrastructure. We cannot assure you that we
can obtain financing to cover such expenditure. If we fail to adapt
our products and services to such changes in an effective and
timely manner, we may suffer from decreased user base, which, in
turn, could materially and adversely affect our business, financial
condition and results of operations.
Rapidly evolving technologies could cause demand for
our products to decline or could cause our products to become
obsolete.
Current or future competitors may develop technological or product
innovations that address live music content in a manner that is, or
is perceived to be, equivalent or superior to our products. In the
technology market in particular, innovative products have been
introduced which have the effect of revolutionizing a product
category and rendering many existing products obsolete. If
competitors introduce new products or services that compete with or
surpass the quality or the price/performance of our products, we
may be unable to attract and retain users or to maintain or
increase revenues from our users. We may not anticipate such
developments and may be unable to adequately compete with these
potential solutions. As a result of these or similar potential
developments, in the future it is possible that competitive
dynamics in our market may require us to reduce prices for our paid
for products, which could harm our net revenues, gross margin and
operating results or cause us to incur losses.
Our business depends on our users having continued and
unimpeded access to the Internet. Companies providing access to the
Internet may be able to block or degrade our calls, or block access
to our website or charge us or our users additional fees for our
products.
All of our users rely on open, unrestricted access to the Internet
to use our products. If they have limited, restricted or no access
at all to the Internet, or their connection to the Internet is
interrupted or disturbed, they may be less likely to use our
products as a result.
Some of these internet providers have stated that they may take
measures that could increase the cost of customers’ use of our
products by restricting or prohibiting the use of their lines or
access points to the Internet for our products, by filtering,
blocking, delaying, or degrading the packets of data used to
transmit our communications, and by charging increased fees to our
users for access to our products.
Some Internet access providers have additionally, or alternatively,
contractually restricted their customers’ access to Internet
communications products through their terms of service. Customers
of these and other Internet access providers may not be aware that
technical disruptions or additional tariffs are the act of other
parties, which could harm our brand. Even if customers understand
that we are not the source of such disruptions, they may be less
likely to use our products as a result.
In
the United States, the European Union and other jurisdictions,
regulatory authorities are in the process of examining the adoption
of “network neutrality” policies, which aim to treat all Internet
traffic equally, and developing or considering laws and regulations
to codify acceptable behaviors on the part of network operators and
access providers when providing consumers and businesses with
access to the Internet. Different regulatory authorities have
different approaches to this policy area both from a substantive
and procedural perspective. Any failure on the part of regulatory
authorities to protect the accessibility of the Internet to all, or
any particular category of, Internet subscribers, or their failure
to protect the delivery on a non-discriminatory basis of user
communications over the Internet, regardless of type or service,
could harm our results of operations and prospects.
Our business depends on the continued reliability of
the Internet infrastructure.
If
Internet service providers and other third parties providing
Internet services have outages or deteriorations in their quality
of service, our customers will not have access to our products or
may experience a decrease in the quality of our products.
Furthermore, as the rate of adoption of new technology increases,
the networks on which our products rely in certain countries may
not be able to sufficiently adapt to the increased demand for their
products and services. Frequent or persistent interruptions could
cause current or potential users to believe that our systems are
unreliable, leading them to switch to our competitors or to avoid
our products, and could permanently harm our reputation and
brands.
We cannot control internet-based delays and
interruptions, which may negatively affect our customers and thus
our revenues.
Any delay or interruption in the services by these third parties
service providers could result in delayed or interrupted service to
our customers and could harm tour business. Accordingly, we could
be adversely affected if such third party service providers fail to
maintain consistent and reliable services, or fail to continue to
make these services available to us on economically acceptable
terms, or at all. These suppliers could also be adversely impacted
by the COVID-19 pandemic, which could affect their ability to
deliver their services to our customers in a satisfactory manner,
or at all.
Our failure to adopt certain corporate governance
procedures may prevent us from obtaining a listing on a national
securities exchange.
We do not have an audit, compensation or nominating and corporate
governance committee. The functions such committees would perform
are performed by the board as a whole. Consequently, there is a
potential conflict of interest in board decisions that may
adversely affect our ability to become a listed security on a
national securities exchange and as a result adversely affect the
liquidity of our Common Stock.
We may be subject to intellectual property infringement
claims, which may be expensive to defend and may disrupt our
business and operations.
We cannot be certain that our operations or any aspects of our
business do not or will not infringe upon or otherwise violate
intellectual property rights held by third parties. We have not but
in the future may be, subject to legal proceedings and claims
relating to the intellectual property rights of others. There could
also be existing intellectual property of which we are not aware
that our products may inadvertently infringe. We cannot assure you
that holders of intellectual property purportedly relating to some
aspect of our technology or business, if any such holders exist,
would not seek to enforce such intellectual property against us in
the United States, or any other jurisdictions. If we are found to
have violated the intellectual property rights of others, we may be
subject to liability for our infringement activities or may be
prohibited from using such intellectual property, and we may incur
licensing fees or be forced to develop alternatives of our own. In
addition, we may incur significant expenses, and may be forced to
divert management’s time and other resources from our business and
operations to defend against these infringement claims, regardless
of their merits. Successful infringement or licensing claims made
against us may result in significant monetary liabilities and may
materially disrupt our business and operations by restricting or
prohibiting our use of the intellectual property in question, and
our business, financial position and results of operations could be
materially and adversely affected.
Digital piracy continues to adversely impact our
business.
A substantial portion of our revenue comes from the distribution of
music which is potentially subject to unauthorized consumer copying
and widespread digital dissemination without an economic return to
us, including as a result of “stream-ripping.” In its Music
Listening 2019 report, IFPI surveyed 34,000 Internet users to
examine the ways in which music consumers aged 16 to 64 engage with
recorded music across 21 countries. Of those surveyed, 23% used
illegal stream-ripping services, the leading form of music piracy.
Organized industrial piracy may also lead to decreased revenues.
The impact of digital piracy on legitimate music revenues and
subscriptions is hard to quantify, but we believe that illegal file
sharing and other forms of unauthorized activity, including stream
manipulation, have a substantial negative impact on music revenues.
If we fail to obtain appropriate relief through the judicial
process or the complete enforcement of judicial decisions issued in
our favor (or if judicial decisions are not in our favor), if we
are unsuccessful in our efforts to lobby governments to enact and
enforce stronger legal penalties for copyright infringement or if
we fail to develop effective means of protecting and enforcing our
intellectual property (whether copyrights or other intellectual
property rights such as patents, trademarks and trade secrets) or
our music entertainment-related products or services, our results
of operations, financial position and prospects may suffer.
Risks Related to our Common Stock
Since we are traded on the OTC Pink Market, an active,
liquid trading market for our common stock may not develop or be
sustained. If and when an active market develops the price of our
common stock may be volatile.
Presently, our common stock is traded on the OTC pink sheets and
the closing price of our stock on June 21, 2021 is $0.014.
Presently there is limited trading in our stock and in the absence
of an active trading market investors may have difficulty buying
and selling or obtaining market quotations, market visibility for
shares of our common stock may be limited, and a lack of visibility
for shares of our common stock may have a depressive effect on the
market price for shares of our common stock.
The lack of an active market impairs your ability to sell your
shares at the time you wish to sell them or at a price that you
consider reasonable. The lack of an active market may also reduce
the fair market value of your shares. An inactive market may also
impair our ability to raise capital to continue to fund operations
by selling shares.
Trading in stocks quoted on the Pink Markets is often thin and
characterized by wide fluctuations in trading prices, due to many
factors that may have little to do with our operations or business
prospects. The securities market has from time to time experienced
significant price and volume fluctuations that are not related to
the operating performance of particular companies. These market
fluctuations may also materially and adversely affect the market
price of shares of our common stock. Moreover, the pink sheets is
not a stock exchange, and trading of securities is often more
sporadic than the trading of securities listed on a quotation
system like Nasdaq or a national stock exchange like the NYSE.
Accordingly, stockholders may have difficulty reselling any shares
of common stock.
There is no assurance that we will be able to pay
dividends to our shareholders, which means that you could receive
little or no return on your investment.
Payment of dividends from our earnings and profits may be made at
the sole discretion of our board of directors. There is no
assurance that we will generate any distributable cash from
operations. Our board may elect to retain cash for operating
purposes, debt retirement, or some other purpose. Consequently, you
may receive little or no return on your investment.
Our shares will be subordinate to all of our debts and
liabilities, which increases the risk that you could lose your
entire investment.
Our shares are equity interests that will be subordinate to all of
our current and future indebtedness with respect to claims on our
assets. In any liquidation, all of our debts and liabilities must
be paid before any payment is made to our shareholders. The amount
of any debt financing we incur creates a substantial risk that in
the event of our bankruptcy, liquidation or reorganization, we may
have no assets remaining for distribution to our shareholders after
payment of our debts.
Our Board of Directors may authorize and issue shares
of new classes of stock that could be superior to or adversely
affect you as a holder of our common stock.
Our board of directors has the power to authorize and issue shares
of classes of stock, including preferred stock that have voting
powers, designations, preferences, limitations and special rights,
including preferred distribution rights, conversion rights,
redemption rights and liquidation rights without further
shareholder approval which could adversely affect the rights of the
holders of our common stock. In addition, our board could authorize
the issuance of a series of preferred stock that has greater voting
power than our common stock or that is convertible into our common
stock, which could decrease the relative voting power of our common
stock or result in dilution to our existing common
stockholders.
Any of these actions could significantly adversely affect the
investment made by holders of our common stock. Holders of common
stock could potentially not receive dividends that they might
otherwise have received. In addition, holders of our common stock
could receive less proceeds in connection with any future sale of
the Company, whether in liquidation or on any other basis.
Shares eligible for future sale may adversely affect
the market price of our common stock, as the future sale of a
substantial amount of outstanding common stock in the public
marketplace could reduce the price of our common
stock.
The market price of our shares could decline as a result of sales
of substantial amounts of our shares in the public market, or the
perception that these sales could occur. In addition, these factors
could make it more difficult for us to raise funds through future
offerings of our common stock.
If we fail to maintain an effective system of internal
controls, we may not be able to accurately report our financial
results or prevent fraud.
The SEC, as required by Section 404 of the Sarbanes-Oxley Act of
2002, adopted rules requiring every public company to include a
management report on such company’s internal controls over
financial reporting in its annual report, which contains
management’s assessment of the effectiveness of internal controls
over financial reporting.
Our reporting obligations as a public company place a significant
strain on our management and operational and financial resources
and systems. Effective internal controls, particularly those
related to revenue recognition, are necessary for us to produce
reliable financial reports and are important to prevent fraud. As a
result, our failure to achieve and maintain effective internal
controls over financial reporting may result in the loss of
investor confidence in the reliability of our financial statements,
which in turn may harm our business and negatively impact the
trading price of our stock. Furthermore, we anticipate that we will
continue to incur considerable costs and use significant management
time and other resources in an effort to comply with Section 404
and other requirements of the Sarbanes-Oxley Act.
We may, in the future, issue additional common shares,
which would reduce investors’ percent of ownership and may dilute
our share value.
Our Articles of Incorporation authorizes the issuance of
2,000,000,000 shares of common stock. We currently have
1,211,495,162 shares of common stock issued and outstanding. The
future issuance of common stock will result in substantial dilution
in the percentage of our common stock held by our then existing
shareholders. We may value any common stock issued in the future on
an arbitrary basis. The issuance of common stock for future
services or acquisitions or other corporate actions may have the
effect of diluting the value of the shares held by our investors
and might have an adverse effect on any trading market for our
common stock.
There is a limited market for our common stock, which
may make it difficult for holders of our common stock to sell their
stock.
Our common stock currently trades on the OTC Pink Markets under the
symbol “VNUE” and currently there is no trading in our common stock
or current information regarding our company. Accordingly, there
can be no assurance as to the liquidity of any markets that may
develop for our common stock, the ability of holders of our common
stock to sell our common stock, or the prices at which holders may
be able to sell our common stock. Further, many brokerage firms
will not process transactions involving low price stocks,
especially those that come within the definition of a “penny
stock.” If we cease to be quoted, holders of our common stock may
find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of our common stock, and the
market value of our common stock would likely decline.
The trading price of our Common Stock is likely to be
volatile, which could result in substantial losses to
investors.
The trading price of our common stock is likely to be volatile and
could fluctuate widely due to factors beyond our control. This may
happen because of broad market and industry factors, including the
performance and fluctuation of the market prices of other companies
with business operations located outside of the United States. In
addition to market and industry factors, the price and trading
volume for our common stock may be highly volatile for factors
specific to our own operations, including the following:
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Any of these factors may result in large and sudden changes in the
volume and price at which our common stock will trade.
In the past, shareholders of public companies have often brought
securities class action suits against those companies following
periods of instability in the market price of their securities. If
we were involved in a class action suit, it could divert a
significant amount of our management's attention and other
resources from our business and operations and require us to incur
significant expenses to defend the suit, which could harm our
results of operations. Any such class action suit, whether or not
successful, could harm our reputation and restrict our ability to
raise capital in the future. In addition, if a claim is
successfully made against us, we may be required to pay significant
damages, which could have a material adverse effect on our
financial condition and results of operations.
We are subject to be the penny stock rules which will
make shares of our common stock more difficult to
sell.
We are subject now and, in the future, may continue to be subject
to the SEC’s “penny stock” rules if our shares of common stock sell
below $5.00 per share. Penny stocks generally are equity securities
with a price of less than $5.00. The penny stock rules require
broker-dealers to deliver a standardized risk disclosure document
prepared by the SEC which provides information about penny stocks
and the nature and level of risks in the penny stock market. The
broker-dealer must also provide the customer with current bid and
offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson, and monthly account statements
showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information must be given to the customer
orally or in writing prior to completing the transaction and must
be given to the customer in writing before or with the customer’s
confirmation.
In addition, the penny stock rules require that prior to a
transaction, the broker dealer must make a special written
determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser’s written agreement to the
transaction. The penny stock rules are burdensome and may reduce
purchases of any offerings and reduce the trading activity for
shares of our common stock. As long as our shares of common stock
are subject to the penny stock rules, the holders of such shares of
common stock may find it more difficult to sell their
securities.
The sale or availability for sale of substantial
amounts of our common stock could adversely affect their market
price.
Sales of substantial amounts of our common stock in the public
market after the filing of this Form S-1, or the perception that
these sales could occur, could adversely affect the market price of
our common stock and could materially impair our ability to raise
capital through equity offerings in the future. Shares held by our
existing shareholders may be sold in the public market in the
future subject to the restrictions in Rule 144 and Rule 701 under
the Securities. We currently have 1,211,495,162 shares of common
stock outstanding, with approximately 24.6% of the shares being
held by affiliates. We cannot predict what effect, if any, market
sales of securities held by our significant shareholders or any
other shareholder or the availability of these securities for
future sale will have on the market price of our common stock.
Because we do not expect to pay dividends in the
foreseeable future, you must rely on a price appreciation of our
common stock for return on your investment.
We currently intend to retain most, if not all, of our available
funds and any future earnings to fund the development and growth of
our business. As a result, we do not expect to pay any cash
dividends in the foreseeable future. Therefore, you should not rely
on an investment in our common stock as a source for any future
dividend income.
Our board of directors has complete discretion as to whether to
distribute dividends, Even if our board of directors decides to
declare and pay dividends, the timing, amount and form of future
dividends, if any, will depend on our future results of operations
and cash flow, our capital requirements and surplus, the amount of
distributions, if any, received by us from our subsidiaries, our
financial condition, contractual restrictions and other factors
deemed relevant by our board of directors. Accordingly, the return
on your investment in our common stock will likely depend entirely
upon any future price appreciation of our common stock. There is no
guarantee that our common stock will appreciate in value, or even
maintain the price at which you purchased the common stock. You may
not realize a return on your investment in our common stock and you
may even lose your entire investment in our common stock.
Short sellers of our stock may be manipulative and may
drive down the market price of our common stock.
Short selling is the practice of selling securities that the seller
does not own but rather has borrowed or intends to borrow from a
third party with the intention of buying identical securities at a
later date to return to the lender. A short seller hopes to profit
from a decline in the value of the securities between the sale of
the borrowed securities and the purchase of the replacement shares,
as the short seller expects to pay less in that purchase than it
received in the sale. As it is therefore in the short seller’s
interest for the price of the stock to decline, some short sellers
publish, or arrange for the publication of, opinions or
characterizations regarding the relevant issuer, its business
prospects and similar matters calculated to or which may create
negative market momentum, which may permit them to obtain profits
for themselves as a result of selling the stock short. Issuers
whose securities have historically had limited trading volumes
and/or have been susceptible to relatively high volatility levels
can be particularly vulnerable to such short seller attacks.
The publication of any such commentary regarding us by a short
seller may bring about a temporary, or possibly long term, decline
in the market price of our common stock. No assurances can be made
that we will not become a target of such commentary and declines in
the market price of our common stock will not occur in the future,
in connection with such commentary by short sellers or
otherwise.
Risks Related to the Offering
Our existing stockholders may experience significant
dilution from the sale of our common stock.
The sale of our common stock in this Offering may have a dilutive
impact on our shareholders. As a result, the market price of our
common stock could decline. If our stock price decreases, then our
existing shareholders would experience greater dilution for any
given dollar amount raised through the Offering.
The perceived risk of dilution may cause our stockholders to sell
their shares, which may cause a decline in the price of our common
stock. Moreover, the perceived risk of dilution and the resulting
downward pressure on our stock price could encourage investors to
engage in short sales of our common stock. By increasing the number
of shares offered for sale, material amounts of short selling could
further contribute to progressive price declines in our common
stock.
There could be unidentified risks involved with an
investment in our securities.
The foregoing risk factors are not a complete list or explanation
of the risks involved with an investment in the securities.
Additional risks will likely be experienced that are not presently
foreseen by us. Prospective investors must not construe this the
information provided herein as constituting investment, legal, tax
or other professional advice. Before making any decision to invest
in our securities, you should read this entire Prospectus and
consult with your own investment, legal, tax and other professional
advisors. An investment in our securities is suitable only for
investors who can assume the financial risks of an investment in us
for an indefinite period of time and who can afford to lose their
entire investment. We make no representations or warranties of any
kind with respect to the likelihood of the success or the business
of our Company, the value of our securities, any financial returns
that may be generated or any tax benefits or consequences that may
result from an investment in us.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based upon our current assumptions,
expectations and beliefs concerning future developments and their
potential effect on our business. In some cases, you can identify
forward-looking statements by the following words: “may,” “will,”
“could,” “would,” “should,” “expect,” “intend,” “plan,”
“anticipate,” “believe,” “approximately,” “estimate,” “predict,”
“project,” “potential,” “continue,” “ongoing,” or the negative of
these terms or other comparable terminology, although the absence
of these words does not necessarily mean that a statement is not
forward-looking. This information may involve known and unknown
risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different
from the future results, performance or achievements expressed or
implied by any forward-looking statements.
We cannot predict all of the risks and uncertainties. Accordingly,
such information should not be regarded as representations that the
results or conditions described in such statements or that our
objectives and plans will be achieved and we do not assume any
responsibility for the accuracy or completeness of any of these
forward-looking statements. These forward-looking statements are
found at various places throughout this prospectus and include
information concerning possible or assumed future results of our
operations, including statements about potential acquisition or
merger targets; business strategies; future cash flows; financing
plans; plans and objectives of management; any other statements
regarding future acquisitions, future cash needs, future
operations, business plans and future financial results, and any
other statements that are not historical facts.
All forward-looking statements speak only as of the date of this
prospectus. We undertake no obligation to update any
forward-looking statements or other information contained herein.
Shareholders and potential investors should not place undue
reliance on these forward-looking statements. Although we believe
that our plans, intentions and expectations reflected in or
suggested by the forward-looking statements in this report are
reasonable, we cannot assure stockholders and potential investors
that these plans, intentions or expectations will be achieved.
These forward-looking statements represent our intentions, plans,
expectations, assumptions `and beliefs about future events and are
subject to risks, uncertainties and other factors. Many of those
factors are outside of our control and could cause actual results
to differ materially from the results expressed or implied by those
forward-looking statements. Considering these risks, uncertainties
and assumptions, the events described in the forward-looking
statements might not occur or might occur to a different extent or
at a different time than we have described. You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this prospectus. All subsequent
written and oral forward-looking statements concerning other
matters addressed in this prospectus and attributable to us or any
person acting on our behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to
herein.
Except to the extent required by law, we undertake no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events, a change in events,
conditions, circumstances or assumptions underlying such
statements, or otherwise.
THE OFFERING
This Prospectus relates to the sale of 200,000,000 shares of common
stock, par value $0.0001, of the Company at a fixed price of $[ ].
This Offering will terminate 24 months after commencement. We are
offering the shares on a self-underwritten “best efforts” basis
directly through our management. There is no minimum amount of
shares required to be purchased, and the total proceeds received by
us might not be enough to continue. No commissions or other
compensation related to the sale of the shares will be paid. For
more information, see the section titled “Plan of Distribution” and
“Use of Proceeds” herein.
USE OF
PROCEEDS
We estimate the net proceeds to us from this Offering will be
approximately $[ ], based on an assumed initial offering price of
$[ ], per share, after deducting estimated offering expenses
payable by us.
We anticipate that the net proceeds of the Offering will be used
primarily to execute our business plan as follows: $
for general working capital, and $__ remaining
in cash reserves. Additionally, proceeds will be used for paying
other general and administrative expenses associated with this
offering, and paying general and administrative expenses associated
with being a public company, such as accounting, auditing, transfer
agent, EDGAR filing, and legal expenses. In the event that we sell
less than the maximum shares offered in the Offering, our first
priority is to pay fees associated with registration of our stock
and general working capital. The following table summarizes how we
anticipate using the gross proceeds of the Offering, depending upon
whether we sell 100%, 75%, 50%, or 25% of the shares being offered
in the Offering:
The Company anticipates that the estimated $[ ] gross proceeds
from the offering would enable it to expand operations, enable
further research and development of our technology, and fund its
other capital needs for the next fiscal year. In the event that the
offering is not completed, the Company will likely be required to
seek additional financing as the Company needs a minimum of
approximately $[ ] in gross proceeds to implement its business
plan and support its operations over the next twelve months. There
can be no assurance that additional financing will be available
when needed, and, if available, that it will be on terms acceptable
to the Company.
DETERMINATION OF OFFERING PRICE
The shares for sale by the Company in the Offering of 250,000,000
shares will be sold at a fixed price of [ ].
MARKET PRICE AND
DIVIDENDS
Market Price for our Common Stock
There is a limited public market for our common shares. Our common
shares are quoted on the OTC Pink under the symbol “VNUE”. Trading
in stocks quoted on the OTC Pink is often thin and is characterized
by wide fluctuations in trading prices due to many factors that may
be unrelated to a company’s operations or business prospects. We
cannot assure you that there will be a market in the future for our
common stock.
OTC Pink securities are not listed or traded on the floor of an
organized national or regional stock exchange. Instead, OTC Pink
securities transactions are conducted through a telephone and
computer network connecting dealers in stocks. OTC Pink issuers are
traditionally smaller companies that do not meet the financial and
other listing requirements of a regional or national stock
exchange.
Our common stock became eligible for quotation on the OTC Pink on
____. Over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5.00,
other than securities registered on certain national securities
exchanges or quoted on the Nasdaq system, provided that current
price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared
by the SEC, that: (a) contains a description of the nature and
level of risk in the market for penny stocks in both public
offerings and secondary trading; (b) contains a description of the
broker's or dealer's duties to the customer and of the rights and
remedies available to the customer with respect to a violation of
such duties or other requirements of the securities laws; (c)
contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance
of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions;
(e) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (f) contains such other
information and is in such form, including language, type size and
format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with (a) bid and offer
quotations for the penny stock; (b) the compensation of the
broker-dealer and its salesperson in the transaction; (c) the
number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and (d) a monthly account statement showing
the market value of each penny stock held in the customer's
account.
In
addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive
the purchaser's written acknowledgment of the receipt of a risk
disclosure statement, a written agreement as to transactions
involving penny stocks, and a signed and dated copy of a written
suitability statement.
These disclosure requirements may have the effect of reducing the
trading activity for our common stock. Therefore, stockholders may
have difficulty selling our securities.
Holders
On June 23, 2021, there were 216 holders of record of our Common
Stock. The number of record holders does not include an
indeterminate number of stockholders whose shares are held by
brokers in street name.
Dividend Policy
We have never declared or paid any cash dividends on our common
stock. We intend to retain future earnings, if any, to finance the
expansion of our business. As a result, the Company does not
anticipate paying any cash dividends in the foreseeable future.
There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised
Statutes, however, do prohibit us from declaring dividends where
after giving effect to the distribution of the dividend:
1. We would not be able to pay our debts and they become due in the
usual course of business; or
2. Our total assets would be less than the sum of our total
liabilities plus the amount that would be needed to satisfy the
rights of shareholders who have preferential rights superior to
those receiving the distribution.
Rule 10B-18 Transactions
None.
DILUTION
Just prior to the Offering there are 1,269,633,963 common shares
outstanding. The 250,000,000 shares of common stock of the Company
being offered in the Offering represent a dilution event to
common stockholders that will result in a new total for outstanding
and issued common shares of 1,019,633,963.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
VNUE, Inc. was originally incorporated as Tierra Grande Resources
Inc. in Nevada on April 4, 2006. On May 29, 2015, Tierra Grande
entered into a Merger Agreement with VNUE, Inc., resulting in VNUE,
Inc. becoming Tierra Grande’s wholly-owned operating subsidiary.
Pursuant to the Merger Agreement Tierra Grande changed its name to
VNUE, Inc.
VNUE was founded with the vision of creating a collective network
of connected venues that empower and assist bands, artists, and
entertainers. Our technology allows our consumers to monetize their
performances in the venues where they perform using mobile
technologies, leveraging teams that record concerts, and making
that content available through our technology and technology
partners.
In 2014, VNUE acquired Lively LLC, a Seattle based music technology
company and direct-to-fan mobile platform. This platform connected
artists, fans, and brands together by capturing live performances.
In May 2016, Zach Bair, our Company’s CEO, joined VNUE. He and his
team determined that the Lively intellectual property (“IP”),
although valuable, had not been fully developed to the extent that
it could be deployed with major recording artist clients. The
Company set out to build and acquire other technologies which would
help the Company realize its goals more fully.
DiscLive™ Exclusive License
On July 10, 2017, VNUE entered into a licensing agreement
(“Licensing Agreement”) with RockHouse Live Media Productions,
Inc., DBA “DiscLive” or “DiscLive Network” (“DiscLive”) (DiscLive
and related marks indicated herein are marks utilized by DiscLive
and the Company disclaims rights to those names or marks). This
Agreement provided VNUE with an exclusive license from DiscLive,
for three years unless earlier terminated under the Agreement, for
the use of all DiscLive’s assets, including but not limited to the
DiscLive brand, website (including eCommerce platform),
intellectual property, inventory, equipment and trade secrets.
DiscLive received a license fee equal to five percent (5%) of any
sales derived from the sale and use of the products and services by
the Company. DiscLive is controlled by our Chief Executive Officer,
Mr. Bair. On March 19, 2021, the Licensing Agreement was extended
until March 2022, and will automatically extend unless either party
notifies the other of cancellation.
Set.fm™ Acquisition
On October 16, 2017, the Company entered into an asset purchase
agreement (the “Purchase Agreement”) with PledgeMusic, Inc.,
whereby the Company acquired the assets of the digital live music
distribution platform Set.fm™ from PledgeMusic (See Note 3 of the
Consolidated Financial Statements herein). Set.fm™ allows us to
record and sell live shows directly to consumer’s mobile devices,
uploading simultaneously with the artist’s performance, similar to
the “instant live” physical distribution of DiscLive. The platform
features an innovative and an easy-to-use DIY studio app. VNUE has
conducted software updates and intends to continue to update the
Set.fm™ platform which will lead to overall improvement of the
platform. This will allow the Company to leverage the platform for
major label music clients. Set.fm has been used to record and
release content for numerous major artists such as Rob Thomas,
Patty Smyth and Scandal, and King’s X.
Soundstr™ Acquisition
On April 23, 2018, the Company entered into an asset purchase
agreement with MusicPlay Analytics, LLC (d/b/a Soundstr)
(“Soundstr”) (the “Soundstr Purchase Agreement”) whereby the
Company acquired the assets of Soundstr, a technology that aims to
help businesses pay fairer music license fees based on actual music
usage (see Note 3 of the Consolidated Financial Statements
herein).
The Company intends to continually update and improve the above
technologies as funds and resources permit. Currently the
technology has progressed such that we deployed some units to the
field for further testing, and commercialization.
Recent Developments
On March 11, 2020, the World Health Organization (“WHO”) declared
the COVID-19 outbreak to be a global pandemic. In addition to the
devastating effects on human life, the pandemic is having a
negative ripple effect on the global economy, leading to
disruptions and volatility in the global financial markets. Most
U.S. states and many countries have issued policies intended to
stop or slow the further spread of the disease.
There are no comparable events that provide guidance as to the
effect the COVID-19 pandemic may have. The onset of Covid-19 in
March 2020 has had a material adverse impact on our business
Impact of Current Coronavirus (COVID-19) Pandemic on
the Company
While the COVID-19 pandemic had an effect on our ability to
complete our financial statements in a timely manner, and had a
material effect on our revenues from live concert events, we do not
believe that it will have a material adverse effect on other
aspects of our business at this time as we are currently scheduled
to roll out our products in the third quarter of 2020 that are not
dependent on large live venues. Nonetheless a material portion of
our future set.fm and DiscLive business is dependent on the success
of public events and gatherings. If quarantine and social
distancing rules or even social fears continue through such time
then we will be materially adversely affected, as these gatherings
will see fewer attendees. However, as Soundstr™ is rolled out, we
do not expect to have a materially adverse effect, as our devices
will be rolled out to radio stations initially, which do not depend
upon attendees. We also do not anticipate expending material costs
on implementing social distancing or similar measures in our
business.
Corporate Developments
None.
Our Products
We have two main product lines:
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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.)
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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.
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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 RockHouse Live Media
Productions, Inc. The Company has not filed any formal trademark
applications relating to Set.fm™ with the United States US Patent
and Trademark Office but has been using these marks openly since
2017 and claims common law rights to them.
The Company currently only generates revenue from Set.fm and from
DiscLive by (a) recording the audio of live concerts, and 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.
The Market
Our business has two main “end users” or revenue sources:
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the “consumer”, where
we record live concerts and release experiential content to fans
immediately afterward (the “instant live” model), which consists of
DiscLive, and Set.fm™, and
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The emerging market of
Music Recognition Technology (MRT), which is a B2B model whereby we
can identify music being played in bars, restaurants, other
businesses, and radio stations, and trace that music back to the
original songwriters so that we can ensure the correct creators are
being compensated. This is the Soundstr cloud and hardware
technology. Eventually, we envision this functionality being merged
together.
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Set.fm™ & DiscLive™: “Instant Live Recording and
Experiential Products”
DiscLive and set.fm™ provide customers with instant experiential
content, so that they can take their experience home with them. The
concert never ends with DiscLive and Set.fm™. With the increase in
digital media (and related piracy issues), music concerts and
related media and merchandising and events (e.g. post-concert shows
etc.) are becoming the primary driver in music revenues today.
How Instant Live Recording Works
Teams follow certain bands and musical artists on tour, record the
live performances and then release high-quality audio products
instantly via the set.fm™ mobile app and DiscLive physical products
(online and onsite). Set.fm™ also offers “indie” artists a free
“Set.fm Studio” app which allows them to record themselves and then
sell their music on our platform. Thousands of shows have been
recorded all over the world and tens of thousands of products sold.
Major artist clients (past and current) include Rob Thomas, Peter
Frampton, King’s X, Bad Company, Slash, Seether, Devo, Blondie, and
others.
Sales and Marketing
We sell CDs and digital downloads of recorded live concerts, which
are made available to customers immediately after shows. We partner
with the artists and labels and engage with our customer base to
make them aware of the availability of these products. We market
through artist and label websites, as well as their social media,
and our own platforms. We have a strong grassroots marketing
strategy that leverages our relationships. Customers are made aware
of our products before a concert, during a concert (including and
on-site sales and production team) and after a concert is over. Our
executive team has a large high level network with multiple music
companies, labels and management companies. As such, we do not
require a large marketing team to court potential artists to come
and be a part of our platform.
Seasonality
We do not have a seasonal business cycle.
Environmental Matters
Our business currently does not implicate any environmental
regulation.
Intellectual Property
VNUE has pending patents for our Soundstr technology, and expects
to file more related patents around the Soundstr™ platform, as well
as Set.fm.
The Company has not filed any formal trademark applications
relating to Set.fm or Soundstr with the United States US Patent and
Trademark Office but has been using these marks openly since
approximately fall 2017 and spring 2018 respectively, although both
marks had been in use well before our acquisition of the
assets.
We have patent-pending technology, USPTO Application US
2017/0316089, “System and Method for Capturing, Archiving and
Controlling Content in a Performance Venue” which relates to our
Soundstr™ technology.
We have patents pending for our Soundstr technology, and expect to
file more patents and trademarks around technology we are
developing or have already developed, or plan to develop, funds
permitting. We will continue to assess the need for any copyright,
trademark, or patent applications on an ongoing basis.
DESCRIPTION OF PROPERTY
CONFIRMED
Our corporate office is located at 104 W. 29th Street, 11th Floor,
New York, NY 10001. We pay $640 a month to utilize this space. Our
telephone number is 833.WE.R.LIVE. The office space is shared with
other companies and entrepreneurs. Additionally, we pay $1,000 per
month for the use of the space at 5711 Raleigh LaGrange, Memphis,
TN 38134, which is a warehouse and fulfillment center for physical
products, and storage for equipment. We began the use of the New
York office space in April 2015.
LEGAL
PROCEEDINGS
From time to time, we may become involved in various lawsuits and
legal proceedings relating to claims arising out of our operations
in the normal course of business. However, we are currently not
involved with any legal proceedings or claims.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with our
financial statements and the related notes included elsewhere in
this prospectus. This discussion contains forward-looking
statements that are based on our current expectations, estimates
and projections about our business and operations. Our actual
results may differ materially from those currently anticipated and
expressed in such forward-looking statements.
Impact of Current Coronavirus (COVID-19) Pandemic on
the Company
Overview
The live music and entertainment space are constantly searching for
new monetization outlets. Music licensing and royalties are
particular “hot button” issues in the industry. We believe that we
have developed solutions for these issues that create new revenue
streams and simultaneously help protect the rights of the creators
and help ensure they are properly compensated. This benefits not
only artists, labels, publishers, and live venues, but also our
customers.
On May 29, 2015, Tierra Grande entered into a Merger Agreement with
VNUE, Inc. Pursuant to which, all of the outstanding shares of any
class or series of VNUE, Inc. were exchanged for an aggregate of
50,762,987 shares of Tierra Grande common stock. As a result of the
Merger Agreement, VNUE, Inc. became a wholly-owned subsidiary of
the Company, and the transaction was accounted for as a reverse
merger whereby VNUE, Inc. was the acquired company for accounting
purposes, and the Company deemed the legal acquirer.
Through VNUE, Inc. we carry on business as a live entertainment
music technology company that offers a suite of products and
services which monetize and monitor music for artists, labels,
performing rights organizations, publishers, writers, radio
stations, venues, restaurants, bars, and other stakeholders in
music.
Critical Accounting Policies and Estimates
Use of Estimates
The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions. These estimates and assumptions
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant
estimates made by management include, among others, revenue
recognition, recoverability of accounts receivable, digital assets,
and investments. Actual results could differ from those estimates.
It is possible that accounting estimates and assumptions may be
material to the Company due to the levels of subjectivity and
judgment involved.
Revenue Recognition
On January 1, 2019, the Company adopted the new accounting standard
ASC 606. Revenue from Contracts with Customers, for all open
contracts and related amendments as of December 31, 2019 using the
modified retrospective method. The adoption had no impact on the
reported results. Results for 2018 are presented under ASC 606,
while the comparative information will not be restated and will
continue to be reported under the accounting standards in effect
for that period.
The Company recognizes revenue in accordance with ASC 606, the core
principle of which is that an entity should recognize revenue to
depict the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled to receive in exchange for those goods or
services. To achieve this core principle, five basic criteria must
be met before revenue can be recognized: (1) identify the contract
with a customer; (2) identify the performance obligation(s) in the
contract; (3) determine the transaction price; (4) allocate the
transaction price to performance obligation(s) in the contract; and
(5) recognize revenue when or as the Company satisfies a
performance obligation.
The Company recognizes revenues derived from sub-leasing
telecommunications infrastructure and the provision of
telecommunications and colocation services. These revenues are
accounted for as a single performance obligation satisfied over
time because the customer simultaneously receives and consumes the
benefits of the Company’s performance on a monthly basis. These
arrangements stipulate monthly billing and the Company has elected
the “as invoiced” practical expedient to recognize revenue as the
services are consumed as the Company has the right to payment in an
amount that corresponds directly with the value of performance
completed to date.
Taxes collected from customers and remitted to a governmental
authority are reported on a net basis and are excluded from
revenue. Most revenue is billed in advance on a fixed-rate basis.
The remainder of revenue is billed in arrears on a transactional
basis determined by customer usage.
The Company often bills customers for upfront charges. These
charges relate to down payments or prepayments for future services
or equipment and are influenced by various business factors
including how the Company and customer agree to structure the
payment terms. These payments are recognized as deferred revenue
until the service is provided or equipment is delivered and
installed. All ongoing fees are billed and recognized as revenue on
a monthly basis as service is provided.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC
Topic 740, Income Taxes. ASC 740 requires a company to use the
asset and liability method of accounting for income taxes, whereby
deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely
than not that some portion, or all of, the deferred tax assets will
not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of
enactment.
Under ASC 740, a tax position is recognized as a benefit only if it
is “more likely than not” that the tax position would be sustained
in a tax examination, with a tax examination being presumed to
occur. The amount recognized is the largest amount of tax benefit
that is greater than 50% likely of being realized on examination.
For tax positions not meeting the “more likely than not” test, no
tax benefit is recorded.
For the twelve months ended December 31, 2020 and 2019, there were
no significant deferred tax assets, except for a net operating loss
carryforward for which a 100% valuation allowance has been
provided.
The Company annually conducts an analysis of its tax positions and
has concluded that it has no uncertain tax positions as of December
31, 2020 and 2019. The 2016 to 2019 tax years are still subject to
Federal audit. The 2016 to 2020 tax years are still subject to
state audit.
Recent Authoritative Guidance
In February 2017, the FASB issued ASU No. 2017-02, Leases (Topic
842). Under the new guidance, lessees will be required to recognize
the following for all leases (with the exception of short-term
leases) at the commencement date:
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A lease liability, which is the
lessee’s obligation to make lease payments arising from a lease,
measured on a discounted basis; and |
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A right-of-use asset, which is an
asset that represents the lessee’s right to use, or control the use
of, a specified asset for the lease term. |
Under the new guidance, lessor accounting is largely unchanged.
Certain targeted improvements were made to align, where necessary,
the lessor’s accounting with the lessee’s accounting model and
Topic 606, Revenue from Contracts with Customers.
In August 2018, the FASB issued new guidance on disclosures related
to fair value measurements. The guidance is intended to improve the
effectiveness of the notes to financial statements by facilitating
clearer communication, and it includes multiple new, eliminated and
modified disclosure requirements. The guidance was effective for
the Company as of January 1, 2020. The adoption of this guidance is
not expected to have a material impact on the Company’s
consolidated financial statements.
In December 2019, the FASB issued new guidance on income taxes. The
guidance removes certain exceptions to the general income tax
accounting principles and clarifies and amends existing guidance to
facilitate consistent application of the accounting principles. The
new guidance is effective for us as of January 1, 2021. The Company
is assessing the impact of the adoption of this guidance on its
consolidated financial statements.
Management does not believe any other recently issued but not yet
effective accounting pronouncement, if adopted, would have a
material impact effect on the Company’s present or future financial
statements.
Results of Operations
The following discussion and analysis of our results of operations
and financial condition for the three months ended March 31, 2021
and the twelve months ended December 31, 2020 should be read in
conjunction with our condensed consolidated financial statements,
our audited consolidated financial statements and related notes
included in this report. We are in the process of completing the
development of our products and services and therefore have only
nominal revenues or income. Accordingly, we are completely
dependent on our capital raising efforts in order to complete
development and roll out our products.
Three Months Ended March 31, 2021, Compared to Three
Months Ended March 31, 2020
Revenues
Our revenues for the three months ended March 31, 2021 and 2020,
was $2,261 and $12,059, respectively. The reason for the
increase/decrease was due to the lingering impact of Covid-19 which
has prevented live concerts from taking place.
Direct Costs of Revenues
Our direct costs of revenues for the three months ended March 31,
2021, and 2020 was $-0- and $8,509, respectively. Gross margin is
calculated by subtracting direct costs from revenue. Due to the low
level Due to the low current sales levels, the associated costs are
not indicative of the costs and margins we expect to generate from
higher sales volumes.
General and Administrative Expenses
Our general and administrative expenses for the three months ended
March 31, 2021, and 2020, was $174,028 and $176,188. These general
and administrative expenses were consistent during the comparable
periods. These expenses as of March 31, 2021 were primarily
comprised of approximately $91,000 of legal and professional fees,
and $57,500 of officers compensation.
Other Income (Expenses), Net
We
recorded other income, net of $2,162,868 for the three months ended
March 31, 2021, compared to other expense, net of $(466,919) for
the three months ended March 31, 2020. The significant increase in
other income net, in the 2021 period was primarily attributable to
a reduction of $2,344,234 in the Company derivative liability
related to convertible notes.
Net Income (Loss)
As
a result of the foregoing revenues, direct costs of revenues,
research and development expenses, general and administrative
expenses, and other income (expenses), net, our net profit was
$1,991,101 for the three months ended March 31, 2021, compared to a
net loss for the three months ended March 31, 2020, of
$(639,557).
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily
through private offerings of our equity securities and loans.
As
of March 31, 2021, we had current assets consisting of cash and
cash equivalents of $57,439.
We
had negative cash flows from operating activities of $174,019 for
the three months ended March 31, 2021, compared with negative cash
flows from operating activities of $181,277 for the three months
ended March 31, 2020. The slight decrease in our negative cash
flows from operations was primarily attributable to the net change
in our operating assets and liabilities in the 2021 period.
We
generated cash flows from financing activities of $227,000, for the
three months ended March 31, 2021, as compared to $145,600 for the
three months ended March 31, 2020. The increase/decrease in net
cash provided by financing operations was due to an increase in the
proceeds from convertible notes.
Twelve Months Ended December 31, 2020 Compared to
Twelve Months Ended December 31, 2019
Revenues
Our revenues for the twelve months ended December 31, 2020 and
2019, amount to $22,474 and $206,161, respectively, a decrease of
$183,687. The decrease in revenues in 2020 compared to 2019 is
primarily attributable to the onset of Covid-19 which eliminated
the possibility of holding live music events which is the essential
element of the Company’s business and is necessary to generate
revenues. If the Covid-19 pandemic is mitigated the Company expects
to resume its tour that was cancelled in 202 with Matchbox Twenty
and generate revenue, however, there can be no assurances this will
occur.
Direct Costs of Revenues
Our direct costs of revenues for the twelve months ended December
31, 2020 and 2019, amounted to $8,509 and $211,031, respectively, a
decrease of $202,522. The decrease in costs resulted from decreased
sales volumes.
Research and Development
Our research and development expenses for the twelve months ended
December 31, 2020 amounted to $-0- compared to $12,404 for the
twelve months ended December 31, 2019. We believe that R&D is a
material portion of our business plan and if we are unable to raise
sufficient capital or to implement a proper R&D program we will
be adversely affected. As we continue to move forward, we expect to
spend more on R&D due to our product roadmap and in further
developing solutions that will invoke both consumer interest as
well as further automation and usability of our products.
General and Administrative
Expenses
Our general and administrative expenses for the twelve months ended
December 31, 2020 and 2019, amounted to $601,022 and $1,177,756
respectively. The increase in general and administrative expenses
in 2020 compared to the same period in 2019 was due primarily to a
one-time non-cash stock based compensation charge of $590,129 in
2019 related to the issuance of preferred stock, compared to $-0-
in stock based compensation in 2020. Excluding stock-based
compensation, general and administrative expense in 2020 was
$587,627, or at level substantially equivalent to 2019 levels.
Intangible Asset Impairment
On December 31, 2019, we conducted an impairment analysis and
although we believe that we will be able to generate revenues in
the future from our Soundstr asset, based on the lack of any
historical sales to date or lack of any pending contracts, we
determined that we could not substantiate any anticipated future
revenues, and determined that the remaining book value of the
intangible of $132,397 should be impaired as of December 31,
2019.
Other Income (Expenses), Net
We recorded other expense, net, for the twelve months ended
December 31, 2020 of $3,996,719 compared to other expense, net, of
$72,671 for the year ended December 31, 2019. The significant
increase in other expense, net, in 2020 compared to 2019 levels was
primarily due to an increase in expense based on the increase in
the fair value of the derivative liability of $3,413,629, an
increase in financing costs in 2020 of $713,805; offset by a
decrease in the loss on the extinguishment of debt of $268,920 in
2020.
Net Loss from
Operations
As a result of the foregoing revenues, direct costs of revenues,
research and development expenses, general and administrative
expenses, and other income (expenses), net, our net loss for the
twelve months ended December 31, 2020 and 2019, was $4,553,777 and
$1,400,098, respectively.
Liquidity and Capital
Resources
Since our inception, we have funded our operations primarily
through private offerings of our equity securities and loans,
including convertible debt. Our ability to raise capital in the
form of equity or convertible debt will be hindered if and as our
stock price decreases or we are required to increase our
capitalization.
As of December 31, 2020, we had cash and cash equivalents of
$4,458.
We had negative cash flow from operating activities of $518,493 for
the twelve months ended December 31, 2020, compared with negative
cash flow from operating activities of $501,905 for the twelve
months ended December 31, 2019.
We had no cash used for investing activity in either 2020 or
2019.
Cash flow provided by financing activities was $470,855 for the
year ended December 31, 2020 as compared to $535,810 for the twelve
months ended December 31, 2019. The decrease in cash flow provided
from financing activities is primarily attributable to a reduction
in proceeds from the issuance of convertible notes and promissory
notes of approximately $65,000 in 2020 compared to 2019 levels.
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.
Going Concern
The Company’s auditors have expressed doubt as to the ability of
the Company to continue as a going concern. As of March 31, 2021,
the Company had cash on hand of $57,43. The Company had negative
working capital of $6,144,655 and an accumulated deficit of
$14,764,575. As of December 31, 2020, the Company had a
stockholders’ deficit of $16,755,676 and negative working of
$8,247,522. Certain of the Company’s notes payable are also past
due, however, we have negotiated extensions for them and continue
to honor them. One of our vendors claims that we owe them
$1,172,781 in unpaid interest and penalties above the principal
amount due. We intend to dispute this claim. These factors raise
substantial doubt about the Company’s ability to continue as a
going concern within one year after the date that the financial
statements were issued. The consolidated financial statements do
not include any adjustments related to the recoverability and
classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
Management estimates that the current funds on hand will only be
sufficient to continue operations through July, 2021. Historically,
the Company has used the proceeds of convertible notes to fund its
operations. The Company believes that it can continue to raise
proceeds during 2021, however, there can be no assurances. The
ability of the Company to continue as a going concern is dependent
on the Company’s ability to execute its strategy and in its ability
to raise additional funds. Management is currently seeking
additional funds, primarily through the issuance of equity or
convertible debt securities for cash to operate our business.
However, among other risks and uncertainties, given our low stock
price, and limited number of authorized common shares available for
issuance, we will likely be required to increase our authorized
capital in order to accommodate these financings, which action will
require shareholder approval. 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 is able to 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 case or
equity financing.
We have generated minimal revenues, have incurred losses since our
inception, and rely upon the issuance of convertible notes to fund
our operations. If we are unable to continue issuing convertible
debt or raise equity or secure alternative financing, we may not be
able to pursue our plans and our business may fail.
Contractual Obligations
None
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
Smaller reporting companies are not required to provide the
information required by this item.
MANAGEMENT AND BOARD OF
DIRECTORS
Board of Directors, Executive Officers and Significant
Employees
The following table sets forth the names and ages of our officers
and directors. Our executive officers are elected annually by our
Board of Directors. Our executive officers hold their offices until
they resign, are removed by the Board, or a successor is elected
and qualified.
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Age
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Position
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M. Zach Bair
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59
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Chairman, Chief
Executive Officer and Chief Accounting Officer
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Anthony Cardenas
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55
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Director, Chief
Financial Officer and Vice President of Artist Development
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Louis Mann
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70
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Executive Vice
President
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M. Zach Bair, 59, Chairman of the Board of
Directors, Chief Executive Officer and Chief Accounting Officer
joined VNUE, Inc. in May 2016. Prior to his employment with VNUE,
Mr. Bair was Founder, President and Chief Executive Officer for
DiscLive Network/RockHouse Live Media Productions, Inc. from
January 2007 to May 2016. From March 2001 to December 2006 Mr. Bair
was Founder, Chairman and Chief Executive Officer of Immediatek,
Inc., a music technology company Mr. Bair took public in 2002. Mr.
Bair is an accomplished audio and video producer, and has been a
voting member of the Recording Academy (the Grammys™) since 2012.
Mr. Bair has significant experience in implementing and
commercializing an “instant media” business model. After
selling the original DiscLive in 2006 as part of Immediatek, Mr.
Bair started a similar instant media company in 2007 under the
RockHouse brand. Mr. Bair’s extensive experience in the
instant media space led to the conclusion that he should serve as a
director of VNUE.
Anthony Cardenas, 55, Director, Chief Creative
Officer and Vice President of Artist Relations joined VNUE, Inc. in
May, 2016. Prior to Mr. Cardenas’ role with our Company, he was
employed by DiscLive Network/RockHouse Live Media Productions, Inc.
from January 2012 to May 2016 in product development and marketing.
From January 2002 to January 2012, Mr. Cardenas was employed as the
President and Co-Founder the by DiskFactory.com. Mr. Cardenas’
background makes him well qualified to serve as a director.
Significant Employees
Louis Mann, 70, the Company’s Executive Vice
President, joined VNUE in September 2017. Prior to joining VNUE,
Mr. Mann was the President of the Media Properties division of
House of Blues International since June 1999. During his musical
career, Mr. Mann was involved with the development of new artists
such as Whitney Houston, The Alan Parsons Project, and Barry
Manilow. He served as Senior Vice President and General Manager of
Capital Records, Inc. from October 1988 to December 2002 where he
was in charge of developing the strategic vision for the company.
Mr. Mann also founded the Third Day Partnership, LLC.
James A. King (Jim), 59, Chief Technology Officer
(CTO), joined VNUE in March, 2019. Prior to joining the VNUE team,
Mr. King held numerous business leadership roles, technology and
operations roles, and was involved in a number of start-up efforts.
Over his 33 year career, he has worked for companies such as The
McGraw-Hill Companies, Reed Elsevier, LexisNexis, United Business
Media’s PRNewswire, Broadcast Music Incorporated, Brightpoint
Mobile, Microsoft Corporation, and AT&T/NCR Corporation. Mr.
King is also the CEO for Spoken Giants, LLC and Core Rights, LLC,
and provides consulting services for companies such as Outsell,
Inc, Capital Investment Partners, Inc., and others.
Jock Weaver, 63, is a Special Advisor to the
Company and joined VNUE in December 2018. Mr. Weaver founded and
serves as Chairman of Heritage Trust Company, a private equity firm
that provides advisory services to growing businesses, and can
efficiently access debt and equity capital. Mr. Weaver is the
youngest person in history to list a company on the London Stock
Exchange and the American Stock Exchange. He has over 35 years of
business experience in mergers, acquisitions, and the development
of growth companies at an international level. Mr. Weaver founded
TBA Entertainment Company in February 1994, one of the nation’s
larger live event companies. Mr. Weaver served as the President of
Hard Rock Café International, an English public company from
January 1986 to January 1989.
Jeff Zakim, 48, our Vice President of Business
Development and Content Curation, joined VNUE, Inc. in October
2017. Prior to his employment with the Company, Mr. Zakim acted as
a consultant from July 2015 to October 2017 for his own
consultancy firm, Zakim Digital LLC. Prior to this, Mr. Zakim
was employed with NAPC from September 2014 to July 2015. Mr. Zakim
was employed by Eleven Seven Music Group, Inc. from January 2014 to
August 2015 and Razor and Tie Enterprises, LLC from October 2012 to
December 2013. From January 2011 to November 2011 Mr. Zakim was
employed by Ruckus Media Group, LLC and from 2001 to November 2011
he was employed by EMI Music, Inc. Mr. Zakim has a Bachelor of
Science degree in communications from Towson State University.
Term of Office
Our directors are appointed and shall hold office until his
successor is elected and qualified, in accordance with our
bylaws.
Family Relationships
There are no family relationships among our directors and
officers.
Certain Legal Proceedings
During the past ten years no current director, executive officer,
promoter or control person of the Company has been involved in the
following:
(1) A petition under the Federal bankruptcy laws or any state
insolvency law which was filed by or against, or a receiver, fiscal
agent or similar officer was appointed by a court for the business
or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such
filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such
filing;
(2) Such person was convicted in a criminal proceeding or is a
named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree,
not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him
from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any
violation of Federal or State securities laws or Federal
commodities laws;
(4) Such person was the subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any Federal or
State authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any activity
described in paragraph (f)(3)(i) of this section, or to be
associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a
civil action or by the Commission to have violated any Federal or
State securities law, and the judgment in such civil action or
finding by the Commission has not been subsequently reversed,
suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any Federal or
State judicial or administrative order, judgment, decree, or
finding, not subsequently reversed, suspended or vacated, relating
to an alleged violation of:
i. Any Federal or State securities or commodities law or
regulation; or
ii. Any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud
in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or
order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or
persons associated with a member.
EXECUTIVE AND DIRECTOR COMPENSATION
The following table sets forth information concerning all cash and
non-cash compensation awarded to, earned by or paid to our Chief
Executive Officer and the other executive officer with compensation
exceeding $100,000 during 2020 and 2019 (each a “Named Executive
Officer”).
|
Summary
Compensation Table
|
|
Name and
Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)
|
|
|
Zach Bair,
CEO(2)
|
|
2020
|
|
|
|
170,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
170,000
|
|
|
|
|
2019
|
|
|
|
170,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
214,264
|
|
|
|
384,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis Mann,
EVP (1)(4)
|
|
2020
|
|
|
$
|
60,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
60,000
|
|
|
|
|
2019
|
|
|
$
|
60,000
|
|
|
|
0
|
|
|
|
3,050
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
109,964
|
|
|
|
170,014
|
|
_________
|
(1)
|
Mr. Louis Mann, 68, Executive Vice President,
joined VNUE, Inc. in September 2017.
|
|
(2)
|
$108,500 of Mr. Bair’s compensation was
deferred as of December 31, 2020.
|
|
(3)
|
Represents the fair value of preferred stock
awards granted in 2019.
|
|
(4)
|
$101,250 of Mr. Mann’s compensation was
deferred as of December 31, 2020.
|
Equity Incentive Plan
The Company has a formal Stock Incentive Plan (the “Plan”), which
was adopted on March 1, 2013, which was included as an exhibit with
our Form 8-K filed April 11, 2013, and incorporated herein by
reference. 15,000,000 shares of the Company’s common stock were
reserved for awards in the Plan. No awards have been granted since
the Plan’s adoption in March 2013.
Employment Agreements
None
Director Compensation
There is currently no agreement or arrangement to pay any of our
directors for their services as our directors. The Board of
Directors may award special remuneration to any director
undertaking any special services on behalf of our company other
than services ordinarily required of a director. No director has
received and/or accrued any compensation for his services as a
director, including committee participation and/or special
assignments.
Outstanding Equity Awards at Fiscal
Year-End
None
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive
officers.
Compensation Committee
We currently do not have a compensation committee of the Board of
Directors. The Board of Directors as a whole determines executive
compensation.
Audit Committee
We
do not have an audit committee. The entire Board of Directors
performs the functions of an audit committee, but no written
charter governs the actions of the Board of Directors when
performing the functions of what would generally be performed by an
audit committee. The Board of Directors approves the selection of
our independent accountants and meets and interacts with the
independent accountants to discuss issues related to financial
reporting. In addition, the Board of Directors reviews the scope
and results of the audit with the independent accountants, reviews
with management and the independent accountants our annual
operating results, considers the adequacy of our internal
accounting procedures and considers other auditing and accounting
matters including fees to be paid to the independent auditor and
the performance of the independent auditor.
Compensation of Directors
For the years ended December 31, 2020 and 2019, no members of our
board of directors received compensation in their capacity as
directors.
PRINCIPAL SHAREHOLDERS
The following table set forth the ownership, as of the date of this
Annual Report, of our common stock by each person known by us to be
the beneficial owner of more than 5% of our outstanding common
stock, our directors, and our executive officers and directors as a
group. To the best of our knowledge, the persons named have sole
voting and investment power with respect to such shares, except as
otherwise noted. There are not any pending or anticipated
arrangements that may cause a change in control.
The information presented below regarding beneficial ownership of
our voting securities has been presented in accordance with the
rules of the Securities and Exchange Commission and is not
necessarily indicative of ownership for any other purpose. Under
these rules, a person is deemed to be a “beneficial owner” of a
security if that person has or shares the power to vote or direct
the voting of the security or the power to dispose or direct the
disposition of the security even though they may not rightfully
“own” those shares. A person is deemed to own beneficially any
security as to which such person has the right to acquire sole or
shared voting or investment power within 60 days through the
conversion or exercise of any convertible security, warrant,
option, or other right. More than one person may be deemed to be a
beneficial owner of the same securities. The percentage of
beneficial ownership by any person as of a particular date is
calculated by dividing the number of shares beneficially owned by
such person, which includes the number of shares as to which such
person has the right to acquire voting or investment power within
60 days, by the sum of the number of shares outstanding as of such
date plus the number of shares as to which such person has the
right to acquire voting or investment power within 60 days.
Consequently, the denominator used for calculating such percentage
may be different for each beneficial owner. Except as otherwise
indicated below, we believe that the beneficial owners of our
common stock listed below have sole voting and investment power
with respect to the shares shown. The mailing address for all
persons is at 104 W. 29th Street, 11th Floor,
New York, NY 10001.
|
Shareholders
|
|
# of
Shares
|
|
|
Percentage
|
|
|
Zach Bair, Chief Executive Officer
|
|
|
181,187,272
|
(1)
|
|
|
15.0
|
%
|
|
Anthony Cardenas, Chief Creative Officer
|
|
|
27,000,000
|
(2)
|
|
|
2.2
|
%
|
|
Louis Mann, Executive Vice President
|
|
|
89,921,491
|
(3)
|
|
|
7.4
|
%
|
|
All directors and executive officers
as a group
|
|
|
298,118,763
|
(4)
|
|
|
24.6
|
%
|
|
Christopher Mann
|
|
|
8,185,886
|
|
|
|
.7
|
%
|
|
Thomas Jackson Weaver III
|
|
|
105,000,000
|
(5)
|
|
|
8.7
|
%
|
This table is based upon information derived from our stock
records. The shareholder named in this table has sole or shared
voting and investment power with respect to the shares indicated as
beneficially owned. Applicable percentages are based upon
1,269,633,963 shares of common stock outstanding as of June 23,
2021. The common shares outstanding include voting power of shares
of Series A Preferred Stock owned by such officer or director. The
Series A Preferred Stock vote on a 100:1 basis with common
stockholders and convert on a 50:1 basis into common stock.
_________
|
(1)
|
Includes 31,352,572
shares of common stock and the voting power of 1,498,347 Series A
Preferred Stock which cast votes as 149,834,700 shares of common
stock. The Series A Preferred Stock owned by Mr. Bair converts into
74,917,350 shares of common stock.
|
|
(2)
|
Includes 1,000,000
shares of common stock and voting power of 260,000 shares of Series
A Preferred Stock which vote as 26,000,000 shares of common stock.
The Series A Preferred Stock owned by Mr. Cardenas converts into
13,000,000 shares of common stock.
|
|
(3)
|
Includes 15,078,591
shares of common stock and the voting power of 748,000 shares of
Series A Preferred Stock which vote as 74,842,900 shares of common
stock. The Series A Preferred Stock owned by Mr. Louis Mann convert
into 37,421,450 shares of common stock.
|
|
(4)
|
Includes all common
stock held by such directors or officers as a group, as well as the
voting power of all Series A Preferred Stock owned by such
persons.
|
|
(5)
|
Includes the voting
power of 1,050,000 shares of Series A Preferred Stock which vote as
105,000,000 shares of common stock. Mr. Weaver’s Series A Preferred
Stock convert into 52,500,000 shares of common stock.
|
Director Independence
We are not subject to listing requirements of any national
securities exchange or national securities association and, as a
result, we are not at this time required to have our Board
comprised of a majority of “Independent Directors.” We do not
believe that our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of
NASDAQ.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
On July 10, 2017, the Company entered into a Licensing Agreement
with RockHouse Live Media Productions, Inc., DBA “DiscLive” or
“DiscLive Network” (“DiscLive”) to formalize the terms of the
Strategic Alliance entered into by the Company with DiscLive on
July 21, 2016. VNUE has acquired an exclusive license from
DiscLive, for a period of three years unless earlier terminated
under the Agreement, for the use of all its assets, including but
not limited to the DiscLive brand, website (including eCommerce
platform), intellectual property, inventory, equipment, trade
secrets and anything related to its business of “instant live”
recording. Under the terms of the Agreement, DiscLive granted the
Company a worldwide exclusive license. In exchange for the license,
DiscLive will receive a license fee equal to five percent (5%) of
any sales derived from the sale and use of the products and
services. DiscLive is controlled by our Chief Executive Officer.
Revenues of $2,261 and $12,059 during the three months ended March
31, 2021, and 2020, respectively, were recorded using the assets
licensed under this agreement. For the three months ended March 31,
2021 and 2020, the fees would have amounted to $113 and $603
respectively. Our Chief Executive Officer agreed to waive the right
to receive these license fees for both years.
DESCRIPTION OF
SECURITIES
The rights of our stockholders are be governed by Nevada law,
and our Articles of Incorporation, as amended, and our Bylaws. The
following briefly summarizes the material terms of our Common
Stock.
Common Stock
The Company is authorized to issue 2,000,000,000 shares of common
stock at a par value of $0.0001 and as of June 23, 2021 had
1,269,633,963 shares of common stock issued and outstanding.
Dividend Rights
The holders of outstanding shares of our common stock are entitled
to receive dividends out of funds legally available at the times
and in the amounts that our board of directors may determine.
Voting Rights
Each holder of our common stock is entitled to one vote for each
share of common stock held on all matters submitted to a vote of
stockholders. Cumulative voting for the election of directors is
not provided for in our articles of incorporation, which means that
the holders of a majority of our shares of common stock voted can
elect all of the directors then standing for election.
Preemptive or Similar Rights
Our Common Stock is not entitled to preemptive rights and is not
subject to conversion or redemption.
Liquidation Rights
Upon our liquidation, dissolution, or winding-up, the assets
legally available for distribution to our stockholders would be
distributable ratably among the holders of our Common Stock
outstanding at that time after payment of other claims of
creditors.
Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred
stock at a par value of $0.0001 and as of June 23, 2021 had
4,126,776 shares of Preferred Stock issued and outstanding.
We have authority to issue 20,000,000 shares of Preferred Stock.
Our Board of Directors may issue the authorized Preferred Stock in
one or more series and may fix the number of shares of each series
of preferred stock. Our Board of Directors also has the authority
to set the voting powers, designations, preferences and relative,
participating, optional or other special rights of each series of
Preferred Stock, including the dividend rights, dividend rate,
terms of redemption, redemption price or prices, conversion and
voting rights and liquidation preferences. Preferred Stock can be
issued and its terms set by our Board of Directors without any
further vote or action by our stockholders.
Series A Preferred Stock
We have 20,000,000 shares of Preferred Stock authorized with
4,126,776 issued and outstanding. Of the 20,000,000 shares of
Preferred Stock, 5,000,000 shares are designated as Series A
Convertible Preferred Stock. There are no other rights, including
conversion liquidation preferences, with the Series A Preferred
Stock.
Pursuant to the Series A Designation, each share of Series A
Preferred Stock may be converted into 50 shares of common stock of
the Company. The Series A Preferred Stockholders are also entitled
to share among dividends with the common stock shareholders of the
Company on an as-converted basis. Each share of Series A Preferred
Stock shall vote with the Common Stock as a single class on all
matters brought before the shareholders, on a 100 to 1 basis with
the Common Stock, such that for every share of Series A Preferred
Stock held, such share of Series A Preferred Stock shall entitle
the holder thereof to cast 100 votes on any matter brought before
the holders of Common Stock as a class.
We refer you to our Articles of Incorporation, any amendments
thereto, Bylaws, and the applicable provisions of the Nevada
Revised Statutes for a more complete description of the rights and
liabilities of holders of our securities.
Transfer Agent
The transfer agent for our capital stock is ClearTrust, LLC with an
address of 16540 Pointe Village Drive, Suite 205, Lutz, Florida
33558. The telephone number is (813) 235-4490.
Indemnification of Directors and
Officers
Neither our articles of incorporation, nor our bylaws, prevent us
from indemnifying our officers, directors and agents to the extent
permitted under the Nevada Revised Statutes (“NRS”). NRS Section
78.7502, provides that a corporation may indemnify any director,
officer, employee or agent of a corporation against expenses,
including fees, actually and reasonably incurred by him in
connection with any defense to the extent that a director, officer,
employee or agent of a corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to Section 78.7502(1) or 78.7502(2), or in defense of any
claim, issue or matter therein.
NRS 78.7502(1) provides that a corporation may indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses, including fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he: (a) is not liable
pursuant to NRS 78.138; or (b) acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
NRS Section 78.7502(2) provides that a corporation may indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including amounts paid in
settlement and fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if
he: (a) is not liable pursuant to NRS 78.138; or (b) acted in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation. Indemnification
may not be made for any claim, issue or matter as to which such a
person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals there from, to be liable to the
corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances
of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
NRS Section 78.747 provides that except as otherwise provided by
specific statute, no director or officer of a corporation is
individually liable for a debt or liability of the corporation,
unless the director or officer acts as the alter ego of the
corporation. The court as a matter of law must determine the
question of whether a director or officer acts as the alter ego of
a corporation.
Our charter provides that we will indemnify our directors,
officers, employees and agents to the extent and in the manner
permitted by the provisions of the NRS, as amended from time to
time, subject to any permissible expansion or limitation of such
indemnification, as may be set forth in any stockholders’ or
directors’ resolution or by contract. Any repeal or modification of
these provisions approved by our stockholders will be prospective
only and will not adversely affect any limitation on the liability
of any of our directors or officers existing as of the time of such
repeal or modification. We are also permitted to apply for
insurance on behalf of any director, officer, employee or other
agent for liability arising out of his actions, whether or not the
NRS would permit indemnification.
Anti-Takeover Effects of Certain Provisions of Nevada
Law
Effect of Nevada Anti-takeover Statute. We are subject to Section
78.438 of the Nevada Revised Statutes, an anti-takeover law. In
general, Section 78.438 prohibits a Nevada corporation from
engaging in any business combination with any interested
stockholder for a period of three years following the date that the
stockholder became an interested stockholder, unless prior to that
date, the board of directors of the corporation approved either the
business combination or the transaction that resulted in the
stockholder becoming an interested stockholder. Section 78.439
provides that business combinations after the three-year period
following the date that the stockholder becomes an interested
stockholder may also be prohibited unless approved by the
corporation’s directors or other stockholders or unless the price
and terms of the transaction meet the criteria set forth in the
statute.
Section 78.416 defines “business combination” to include the
following:
|
|
·
|
any merger or
consolidation involving the corporation and the interested
stockholder or any other corporation which is an affiliate or
associate of the interested stockholder;
|
|
|
|
|
|
|
·
|
any sale, transfer,
pledge or other disposition of the assets of the corporation
involving the interested stockholder or any affiliate or associate
of the interested stockholder if the assets transferred have a
market value equal to 5% or more of all of the assets of the
corporation or 5% or more of the value of the outstanding shares of
the corporation or represent 10% or more of the earning power of
the corporation;
|
|
|
|
|
|
|
·
|
subject to certain
exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation with a
market value of 5% or more of the value of the outstanding shares
of the corporation;
|
|
|
|
|
|
|
·
|
the adoption of a plan
of liquidation proposed by or under any arrangement with the
interested stockholder or any affiliate or associate of the
interested stockholder;
|
|
|
|
|
|
|
·
|
any transaction
involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder or any
affiliate or associate of the interested stockholder; or
|
|
|
|
|
|
|
·
|
the receipt by the
interested stockholder or any affiliate or associate of the
interested stockholder of the benefit of any loans, advances,
guarantees, pledges or other financial benefits provided by or
through the corporation.
|
In general, Section 78.423 defines an interested stockholder as any
entity or person beneficially owning, directly or indirectly, 10%
or more of the outstanding voting stock of the corporation and any
entity or person affiliated with or controlling or controlled by
any of these entities or persons.
Control Share Acquisitions. Sections 78.378 through 78.3793 of the
Nevada Revised Statutes limit the voting rights of certain acquired
shares in a corporation. The provisions apply to any acquisition of
outstanding voting securities of a Nevada corporation that has 200
or more stockholders, at least 100 of which are Nevada residents,
and conducts business in Nevada (an “issuing corporation”)
resulting in ownership of one of the following categories of an
issuing corporation’s then outstanding voting securities: (i)
twenty percent or more but less than thirty-three percent; (ii)
thirty-three percent or more but less than fifty percent; or (iii)
fifty percent or more. The securities acquired in such acquisition
are denied voting rights unless a majority of the security holders
approve the granting of such voting rights. Unless an issuing
corporation’s articles of incorporation or bylaws then in effect
provide otherwise: (i) voting securities acquired are also
redeemable in part or in whole by an issuing corporation at the
average price paid for the securities within 30 days if the
acquiring person has not given a timely information statement to an
issuing corporation or if the stockholders vote not to grant voting
rights to the acquiring person’s securities, and (ii) if
outstanding securities and the security holders grant voting rights
to such acquiring person, then any security holder who voted
against granting voting rights to the acquiring person may demand
the purchase from an issuing corporation, for fair value, all or
any portion of his securities. These provisions do not apply to
acquisitions made pursuant to the laws of descent and distribution,
the enforcement of a judgment, or the satisfaction of a security
interest, or made in connection with certain mergers or
reorganizations.
Undesignated Preferred Stock
We are authorized to issue 20,000,000 shares of preferred stock, of
which 5,000,000 shares are designated as Series A Preferred Stock.
The ability to authorize undesignated preferred stock makes it
possible for our board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success
of any attempt to change control of the company. These and other
provisions may have the effect of deterring hostile takeovers or
delaying changes in control or management of the company.
The provisions of the Nevada Revised Statutes, our articles of
incorporation and our bylaws could have the effect of discouraging
others from attempting hostile takeovers and, as a consequence,
they may also inhibit temporary fluctuations in the price of our
common stock that often result from actual or rumored hostile
takeover attempts. These provisions may also have the effect of
preventing changes in our management. It is possible that these
provisions could make it more difficult to accomplish transactions
that shareholders may otherwise deem to be in their best
interests.
PLAN OF
DISTRIBUTION
Our Shares of common stock subject to the Offering are referred to
herein collectively as the “Shares.” The Shares will be sold
through our management, who may be considered an underwriter as
that term is defined in Section 2(a)(11) of the Securities Act. Our
management will not receive any commission in connection with the
sale of Shares, although we may reimburse them for direct expenses
incurred by them in connection with the offer and sale of the
Shares. We estimate our total offering registration costs to be
approximately $[ ] and our legal, auditor, miscellaneous and
related fees will be $[ ] equaling at total expense to the
Company of $[ ] relating to the registration. There is no
minimum number of Shares that must be sold by us for the offering
to proceed. We will retain any proceeds from the Offering.
Our management will be relying on, and complying with, Rule
3a4-1(a)(4)(ii) of the Exchange Act as a “safe harbor” from
registration as a broker-dealer in connection with the offer and
sale of the Shares. In order to rely on such “safe harbor”
provisions provided by Rule 3a4-1(a) (4) (ii), each must be in
compliance with all of the following:
|
|
·
|
an individual must not
be subject to a statutory disqualification;
|
|
|
|
|
|
|
·
|
an individual must not
be compensated in connection with such selling participation by
payment of commissions or other payments based either directly or
indirectly on such transactions;
|
|
|
|
|
|
|
·
|
an individual must not
be an associated person of a broker-dealer;
|
|
|
|
|
|
|
·
|
an individual must
primarily perform, or is intended primarily to perform at the end
of the Offering, substantial duties for or on behalf of the Company
otherwise than in connection with transactions in securities;
and
|
|
|
|
|
|
|
·
|
an individual must
perform substantial duties for the Company after the close of the
Offering not connected with transactions in securities, and not
have been an associated person of a broker or dealer for the
preceding 12 months, and not participate in selling an offering of
securities for any issuer more than once every 12 months.
|
Each member of our management will comply with the guidelines
enumerated in Rule 3a4-1(a) (4) (ii). Neither our management nor
any of their affiliates will be purchasing Shares in the
Offering.
You may purchase Shares by completing and manually executing a
simple subscription agreement and delivering it with your payment
in full for all Shares you wish to purchase to our offices. A copy
of the form of that subscription agreement is attached as an
exhibit to our registration statement of which this Prospectus is a
part. Your subscription shall not become effective until accepted
by us and approved by our counsel. Our subscription process is as
follows:
|
|
·
|
this Prospectus, with
subscription agreement, is delivered by the Company to each
offeree;
|
|
|
·
|
the subscription is
completed by the offeree, and submitted with check back to the
Company where the subscription and a copy of the check is emailed
to counsel for review;
|
|
|
·
|
each subscription is
reviewed by counsel for the Company to confirm the subscribing
party completed the form, and to confirm the state of
acceptance;
|
|
|
·
|
once approved by
counsel, the subscription is accepted by management and the funds
shall be deposited within four days of acceptance;
|
|
|
·
|
subscriptions not
accepted are returned with all funds sent with the subscription
within three business days of the Company’s receipt of the
subscription, without interest or deduction of any kind.
|
LEGAL MATTERS
The validity of the shares of common stock being offered by this
prospectus has been passed upon for us by The Crone Law Group,
P.C.
EXPERTS
The consolidated financial statements included in this prospectus
and in the registration statement for the quarter ended March 31,
2021 and the years ended December 31, 2020 and December 31, 2019
have been audited by BFBorgers CPA PC, an independent registered
public accounting firm, and are included in reliance upon such
report given upon the authority of said firm as experts in auditing
and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
This prospectus is part of a Registration Statement on Form S-1 we
have filed with the SEC. We have not included in this prospectus
all of the information contained in the Registration Statement and
you should refer to our Registration Statement and its exhibits for
further information. You can obtain a copy of the Registration
Statement, including the exhibits filed with it, from the SEC as
indicated below.
We will file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any materials we file with the SEC at their Public Reference
Room at 100 F Street, NE, Washington, DC 20549, on official
business days during the hours of 10 a.m. to 3 p.m. You may obtain
information about the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Our filings are also available
to the public from commercial document retrieval services and at
the website maintained by the SEC at www.sec.gov.
You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with
different information. Therefore, if anyone gives you different or
additional information, you should not rely on it. The information
contained in this prospectus is correct as of its date. It may not
continue to be correct after this date.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
Table of
Contents
|
VNUE, INC.
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
2021
|
|
|
December
31,
2020
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
$ |
57,439 |
|
|
$ |
4,458 |
|
|
Prepaid expenses
|
|
|
100,000 |
|
|
|
100,000 |
|
|
Total current
assets
|
|
|
157,439 |
|
|
|
104,458 |
|
|
Total
assets
|
|
$ |
157,439 |
|
|
$ |
104,458 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
$ |
2,432,421 |
|
|
$ |
2,372,072 |
|
|
Shares to be issued
|
|
|
247,707 |
|
|
|
247,707 |
|
|
Accrued payroll-officers
|
|
|
216,750 |
|
|
|
209,750 |
|
|
Advances from former
officer
|
|
|
720 |
|
|
|
720 |
|
|
Notes payable
|
|
|
34,000 |
|
|
|
34,000 |
|
|
Deferred revenue
|
|
|
74,225 |
|
|
|
74,225 |
|
|
Convertible notes payable,
net
|
|
|
2,183,922 |
|
|
|
1,956,922 |
|
|
Purchase liability
|
|
|
300,000 |
|
|
|
300,000 |
|
|
Derivative liability
|
|
|
812,349 |
|
|
|
3,156,582 |
|
|
Total current
liabilities
|
|
|
6,302,094 |
|
|
|
8,351,979 |
|
|
Total
liabilities
|
|
|
6,302,094 |
|
|
|
8,351,979 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value
$0.0001: 20,000,000 shares authorized 4,126,776 issued and
outstanding
|
|
|
413 |
|
|
|
413 |
|
|
Common stock, par value $0.0001,
2,000,000,000 shares authorized; 1,211,495,162 and 1,211,495,162
shares issued and outstanding, respectively
|
|
|
121,149 |
|
|
|
121,149 |
|
|
Additional paid-in capital
|
|
|
8,498,358 |
|
|
|
8,386,593 |
|
|
Accumulated deficit
|
|
|
(14,764,575 |
) |
|
|
(16,755,676 |
) |
|
Total stockholders'
deficit
|
|
|
(6,144,655 |
) |
|
|
(8,247,522 |
) |
|
Total Liabilities and
Stockholders' Deficit
|
|
$ |
157,439 |
|
|
$ |
104,458 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
|
VNUE, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the
Three
|
|
|
For the
Three
|
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
|
|
March 31,
2021
|
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
|
|
Revenues - related party
|
|
$ |
2,261 |
|
|
$ |
12,059 |
|
|
Direct costs of revenue
|
|
|
- |
|
|
|
8,509 |
|
|
Gross margin (loss)
|
|
|
2,261 |
|
|
|
3,550 |
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
174,028 |
|
|
|
176,188 |
|
|
Total costs and expenses
|
|
|
174,028 |
|
|
|
176,188 |
|
|
Operating loss
|
|
|
(171,767 |
) |
|
|
(172,638 |
) |
|
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
Change in fair value of
derivative liability
|
|
|
2,344,234 |
|
|
|
(290,862 |
) |
|
Loss on the extinguishment of
debt
|
|
|
- |
|
|
|
(72,709 |
) |
|
Financing costs
|
|
|
(181,366 |
) |
|
|
(103,348 |
) |
|
Other income (expense), net
|
|
|
2,162,868 |
|
|
|
(466,919 |
) |
|
Net income (loss)
|
|
$ |
1,991,101 |
|
|
$ |
(639,557 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and
diluted
|
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
1,211,495,162 |
|
|
|
1,029,274,036 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
|
VNUE, INC.
|
|
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT
|
|
FOR THE THREE
AND SIX MONTHS ENDED MARCH 31, 2021 AND 2020
|
|
|
|
|
|
|
|
|
|
Par value
$0.001
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Paid-
in
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Amount
|
|
|
Number
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance - December 31, 2019
|
|
|
4,126,776 |
|
|
$ |
413 |
|
|
|
770,883,602 |
|
|
$ |
77,088 |
|
|
$ |
8,099,346 |
|
|
|
(12,201,899 |
) |
|
|
(4,025,052 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on conversion of notes
payable
|
|
|
|
|
|
|
|
|
|
|
378,872,550 |
|
|
|
37,887 |
|
|
|
83,421 |
|
|
|
|
|
|
|
121,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(639,557 |
) |
|
|
(639,557 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020
|
|
|
4,126,776 |
|
|
$ |
413 |
|
|
|
1,149,756,152 |
|
|
$ |
114,975 |
|
|
$ |
8,182,767 |
|
|
$ |
(12,841,456 |
) |
|
$ |
(4,543,301 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Par value
$0.001
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
|
Paid-
in
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Amount
|
|
|
Number
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance - December 31, 2020
|
|
|
4,126,776 |
|
|
$ |
413 |
|
|
|
1,211,495,162 |
|
|
$ |
121,149 |
|
|
$ |
8,386,593 |
|
|
$ |
(16,755,676 |
) |
|
$ |
(8,247,521 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,991,101 |
|
|
|
1,991,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature of convertible
notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,765 |
|
|
|
|
|
|
|
111,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021
|
|
|
4,126,776 |
|
|
$ |
413 |
|
|
|
1,211,495,162 |
|
|
$ |
121,149 |
|
|
$ |
8,498,358 |
|
|
$ |
(14,764,575 |
) |
|
$ |
(6,144,655 |
) |
The accompanying notes are an integral part of these financial
statements
|
VNUE, INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
For
the
Three
|
|
|
For
the
Three
|
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
|
|
|
March
31,
2021
|
|
|
March
31,
2020
|
|
|
Cash Flows From Operating
Activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
1,991,101 |
|
|
$ |
(639,557 |
) |
|
Adjustments to reconcile net
income to net cash provided by (used for) operating activities
|
|
|
|
|
|
|
|
|
|
Change in the fair value of
derivatives
|
|
|
(2,344,233 |
) |
|
|
290,862 |
|
|
Loss on the extinguishment of
debt
|
|
|
- |
|
|
|
72,709 |
|
|
Amortization of debt
discount
|
|
|
111,765 |
|
|
|
48,193 |
|
|
Changes in operating assets and
liabilities
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
- |
|
|
|
(100,000 |
) |
|
Accounts payable and accrued
interest
|
|
|
60,348 |
|
|
|
8,541 |
|
|
Deferred revenue
|
|
|
- |
|
|
|
74,225 |
|
|
Accrued payroll officers
|
|
|
7,000 |
|
|
|
63,750 |
|
|
Net cash (used in) operating
activities
|
|
|
(174,019 |
) |
|
|
(181,277 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing
Activities:
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Payoff of convertible note
|
|
|
- |
|
|
|
(4,400 |
) |
|
Proceeds from the issuance of
convertible notes
|
|
|
227,000 |
|
|
|
150,000 |
|
|
Net cash provided by investing
activities
|
|
|
227,000 |
|
|
|
145,600 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash
|
|
|
52,981 |
|
|
|
(35,677 |
) |
|
Cash At The Beginning Of The Period
|
|
|
4,458 |
|
|
|
52,096 |
|
|
Cash At The End Of The Period
|
|
$ |
57,439 |
|
|
$ |
16,419 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Financing Activities
|
|
|
|
|
|
|
|
|
|
Common shares issued upon conversion of notes
payable and accrued interest
|
|
$ |
- |
|
|
$ |
121,308 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
VNUE,
INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF
PRESENTATION
History and Organization
VNUE, Inc. (formerly Tierra Grande Resources, Inc.) (“VNUE”,
“TGRI”, or the “Company”) was incorporated under the laws of the
State of Nevada on April 4, 2006.
On May 29, 2015, VNUE, Inc. entered into a merger agreement with
VNUE Washington, Inc. Pursuant to the terms of the Merger
Agreement, all of the outstanding shares of any class or series of
VNUE Washington were exchanged for an aggregate of 50,762,987
shares of TGRI common stock. As a result of the Merger, VNUE
Washington became a wholly-owned subsidiary of the Company, and the
transaction was accounted for as a reverse merger with VNUE
Washington deemed the acquiring company for accounting purposes,
and the Company deemed the legal acquirer.
The Company is developing technology driven solutions for artists,
venues and festivals to automate the capturing, publishing, and
monetization of their content, as well as protection of their
rights.
Going Concern
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 three
months ended March 31, 2021 the Company used cash in operations of
$174,019, and as of March 31, 2021 had a stockholders’ deficit of
$14,764,575. In addition, the Company had negative working capital
of $6,144,656. These factors raise substantial doubt about the
Company’s ability to continue as a going concern within one year
after the date of the financial statements being issued. The
ability of the Company to continue as a going concern is dependent
upon the Company’s ability to raise additional funds and implement
its business plan. The Company does not have any commitments for
additional capital. The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern. In addition, the Company’s independent
registered public accounting firm, in its report on the Company’s
December 31, 2020, consolidated financial statements, has raised
substantial doubt about the Company’s ability to continue as a
going concern.
On March 31, 2021, the Company had cash on hand of $57,439.
Management estimates that the current funds on hand will be
sufficient to continue operations through July, 2021. 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. 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.
Management’s Representation of Interim Financial
Statements
The accompanying unaudited condensed consolidated financial
statements have been prepared by the Company without audit pursuant
to the rules and regulations of the Securities and Exchange
Commission (“SEC”). The Company uses the same accounting policies
in preparing quarterly and annual financial statements. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”) have been
condensed or omitted as allowed by such rules and regulations, and
management believes that the disclosures are adequate to make the
information presented not misleading. These condensed consolidated
financial statements include all of the adjustments, which in the
opinion of management are necessary to a fair presentation of
financial position and results of operations. All such adjustments
are of a normal and recurring nature. Interim results are not
necessarily indicative of results for a full year. These condensed
consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes
thereto at December 31, 2020, as presented in the Company’s Annual
Report on Form 10-K filed on April 8, 2021 with the SEC.
NOTE 2 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND
PRACTICES
Basis of Consolidation
The Company consolidates all wholly-owned and majority-owned
subsidiaries in which the Company’s power to control exists. The
Company consolidates the following subsidiaries and/or
entities:
|
Name of
consolidated subsidiary or Entity
|
|
State or
other jurisdiction of
incorporation
or organization
|
|
Date of
incorporation or formation
(date of
acquisition/disposition, if
applicable)
|
|
Attributable
interest
|
|
|
|
|
|
|
|
|
|
|
|
VNUE Inc. (formerly
TGRI)
|
|
The State of Nevada
|
|
April 4, 2006 (May 29,
2015)
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
VNUE Inc. (VNUE
Washington)
|
|
The State of Washington
|
|
October 16, 2014
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
VNUE LLC
|
|
The State of Washington
|
|
August 1, 2013 (December 3, 2014)
|
|
|
100 |
% |
Revenue Recognition
The Company recognizes revenue in accordance with Accounting
Standards Codification (“ASC”) 606, Revenue from
Contracts. ASC 606 creates a five-step model that requires
entities to exercise judgment when considering the terms of
contracts, which includes (1) identifying the contracts or
agreements with a customer, (2) identifying our performance
obligations in the contract or agreement, (3) determining the
transaction price, (4) allocating the transaction price to the
separate performance obligations, and (5) recognizing revenue as
each performance obligation is satisfied. The Company only applies
the five-step model to contracts when it is probable that the
Company will collect the consideration it is entitled to in
exchange for the services it transfers to its clients.
The Company recognizes revenue on the sale CDs and USB drives that
contain the recording of live concerts and made available to
concert attendees immediately after the show and on-line. Revenue
is recognized on the sale of a product when our performance
obligation is completed which is when the risk of loss transfers to
our customers and the collection of the receivable is reasonably
assured, which generally occurs when the product is purchased.
Use of Estimates
The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the U.S
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the financial statement date
and reported amounts of revenue and expenses during the reporting
period. Significant estimates include the assumptions used for
impairment testing of intangible assets, assumptions used to value
the derivative liabilities, the valuation allowance for the
deferred tax asset and the accruals for potential liabilities.
Actual results could differ from these estimates.
Fair Value of Financial Instruments
The Company determines the fair value of its assets and liabilities
based on the exchange price in U.S. dollars that would be received
for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value
maximize the use of observable inputs and minimize the use of
unobservable inputs. The Company uses a fair value hierarchy with
three levels of inputs, of which the first two are considered
observable and the last unobservable, to measure fair value:
|
|
·
|
Level 1 — Quoted prices
in active markets for identical assets or liabilities.
|
|
|
|
|
|
|
·
|
Level 2 — Inputs, other
than Level 1, that are observable, either directly or indirectly,
such as quoted prices for similar assets or liabilities; quoted
prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
|
|
|
|
|
|
|
·
|
Level 3 — Unobservable
inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities.
|
The carrying amounts of financial instruments such as cash, and
accounts payable and accrued liabilities, approximate the related
fair values due to the short-term maturities of these instruments.
The carrying values of our notes payable approximate their fair
values because interest rates on these obligations are based on
prevailing market interest rates.
The fair value of the derivative liabilities of $812,349 and
$3,156,582 on March 31, 2021, and December 31, 2020, respectively,
were valued using Level 3 inputs.
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
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 twelve months of the balance sheet
date.
Income (Loss) per Common Share
Basic net income (loss) per share is computed by using the
weighted-average number of common shares outstanding during the
period. Diluted net income (loss) per share is computed giving
effect to all dilutive potential shares of Common Stock that were
outstanding during the period. Diluted income (loss) per share
reflects the potential dilution, using the treasury stock method,
that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the income (loss)
of the Company as if they had been converted at the beginning of
the periods presented, or issuance date, if later. In computing
diluted income (loss) per share, the treasury stock method assumes
that outstanding options and warrants are exercised and the
proceeds are used to purchase common stock at the average market
price during the period. Options and warrants may have a dilutive
effect under the treasury stock method only when the average market
price of the common stock during the period exceeds the exercise
price of the options and warrants. Dilutive potential shares of
Common Stock consist of incremental shares of Common Stock issuable
upon exercise of stock options. No dilutive potential shares of
Common Stock were included in the computation of diluted net loss
per share on March 31, 2021, because their impact was
anti-dilutive. As of March 31, 2021, the Company had 15,800,319
outstanding warrants and 1,747,064,356 shares related to
convertible notes payables respectively, which were excluded from
the computation of net loss per share.
Recently Issued Accounting Pronouncements
On Dec. 18, 2019, the Financial Accounting Standards Board (FASB)
released Accounting Standards Update (ASU) 2019-12, which affects
general principles within Topic 740, Income Taxes. The amendments
of ASU 2019-12 are meant to simplify and reduce the cost of
accounting for income taxes. The FASB has stated that the ASU is
being issued as part of its Simplification Initiative, which is
meant to reduce complexity in accounting standards by improving
certain areas of generally accepted accounting principles (GAAP)
without compromising information provided to users of financial
statements. The Company adopted this guidance on January 1, 2021
which had no impact on the Company’s financial statements.
The Company has implemented all new accounting pronouncements that
are in effect and that may impact its financial statements and does
not believe that there are any other new pronouncements that have
been issued that might have a material impact on its financial
position or results of operations. The Company adopted ASC 842 on
January 1, 2019. However, the adoption of the standard had no
impact on the Company’s financial statements since all Company
leases are month to month, or short-term rentals.
NOTE 3 – PREPAID EXPENSE
On Jan 9th, 2020, the Company entered into an agreement with
recording and performance artist, Matchbox Twenty “MT Agreement”),
to record its 2020 tour and sell limited edition double CD sets,
download cards, and digital downloads. As part of the deal, the
Company agreed to pay an advance of $100,000 against sales, to MT
and its affiliated companies, which was paid in full in
installments, with the last installment of $40,000 paid on March
4th. We have recorded this amount as a prepaid expense on our
consolidated balance sheet as of March 31, 2021 and December 31,
2020.
NOTE 4 – RELATED PARTY TRANSACTIONS
DiscLive Network
On July 10, 2017, the Company entered into a Licensing Agreement
with RockHouse Live Media Productions, Inc., DBA “DiscLive” or
“DiscLive Network” (“DiscLive”) to formalize the terms of the
Strategic Alliance entered into by the Company with DiscLive on
July 21, 2016. VNUE has acquired an exclusive license from
DiscLive, for a period of three years unless earlier terminated
under the Agreement, for the use of all its assets, including but
not limited to the DiscLive brand, website (including eCommerce
platform), intellectual property, inventory, equipment, trade
secrets and anything related to its business of “instant live”
recording. Under the terms of the Agreement, DiscLive granted the
Company a worldwide exclusive license. In exchange for the license,
DiscLive will receive a license fee equal to five percent (5%) of
any sales derived from the sale and use of the products and
services. DiscLive is controlled by our Chief Executive Officer.
Revenues of $2,261 and $12,059 during the three months ended March
31, 2021, and 2020, respectively, were recorded using the assets
licensed under this agreement. For the three months ended March 31,
2021 and 2020, the fees would have amounted to $113 and $603
respectively. Our Chief Executive Officer agreed to waive the right
to receive these license fees for both years.
Accrued Payroll to Officers
Accrued payroll to officers was $216,750 and $209,750 respectively,
as of March 31, 2021, and December 31, 2020, respectively. The
Chief Executive Officers’ compensation is $170,000 per year.
Advances from Officers/Stockholders
From time to time, officers/stockholders of the Company advance
funds to the Company for working capital purposes. During the year
ended December 31, 2019, a former employee and stockholder agreed
to forgive $14,000 owed by the Company. The Company recorded the
$14,000 as a gain on the settlement of debt, leaving a remaining
balance of $720 on March 31, 2021.
NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts payables are recognized initially at the transaction price
and subsequently measured at the undiscounted amount of cash or
other consideration expected to be paid. Accrued expenses are
recognized based on the expected amount required to settle the
obligation or liability.
The following table sets forth the components of the Company’s
accrued liabilities on March 31, 2021, and December 31, 2020.
|
|
|
March
31,
2021
|
|
|
December
31,
2020
|
|
|
Accounts payable and accrued expense
|
|
$ |
592,980 |
|
|
|
587,230 |
|
|
Accrued interest
|
|
|
521,402 |
|
|
|
466,801 |
|
|
Accrued interest and penalties Golock (a)
|
|
|
1,172,782 |
|
|
|
1,172,782 |
|
|
Soundstr Obligation
|
|
|
145,258 |
|
|
|
145,259 |
|
|
Total accounts payable and accrued
liabilities
|
|
$ |
2,432,422 |
|
|
|
2,372,072 |
|
_________
|
(a)
|
The Company strongly
disagrees with the accrued interest and penalties claimed by Golock
in regard to their notes, and intends to arbitrate or litigate this
amount if a settlement on a vastly reduced amount cannot be
reached.
|
NOTE 6 – PURCHASE LIABILITY
On October 16, 2017, the Company entered into an agreement with
PledgeMusic, Inc. (the “Seller”), whereby the Company acquired the
digital live music distribution platform “Set.fm” from PledgeMusic.
The purchase price for the acquisition was comprised of $50,000
paid in cash, and a purchase liability of $300,000, for an
aggregate purchase price of $350,000. The Company assigned $350,000
of the purchase price to intellectual property, of which $116,668
was amortized in 2018. As of December 31, 2018, the Company
recorded an impairment charge of the remaining balance of $204,165.
The purchase liability is payable on the net revenues derived from
VNUE’s live recording and content business and must be paid in full
to the Seller no later than the three (3) year anniversary of the
date of the agreement, or October 16, 2020. If the Company fails to
pay the Seller the purchase liability on time, the Seller may
request at any time within one hundred eighty days (180) days
following the (3) year anniversary of the asset purchase agreement,
that the Company immediately forfeit, convey, assign, and transfer
to the Seller all or any of the Purchased Assets so requested by
the Seller for no additional consideration. For the years ended
December 31, 2019 and 2018, there was no net revenue derived from
the acquired assets and accordingly, no payments were made on the
earnout. The balance due on March 31, 2021 and December 31, 2020
was $300,000.
NOTE 7 – SHARES TO BE ISSUED
As of December 31, 2018, the Company had not yet issued 3,964,352
shares of common stock with a value of $243,839 for past services
provided and for an acquisition. During the year ended December 31,
2019 the Company became obligated to issue an additional 240,000
shares of common, valued at $184, per the terms of a consulting
agreement , and 1,000,000 shares of common stock valued at $3,500,
as consideration for amending an existing convertible note. As of
March 31, 2021 and December 31, 2020 the Company had not yet issued
5,204,352 shares of common stock with a value of $247,707.
NOTE 8 – NOTES PAYABLE -PAST DUE
On December 17, 2015, the Company issued a Promissory Note in the
principal amount of $9,000. The note was due within 10 business
days of the Company receiving notice of the effectiveness of its
Form S-1 filed on February 22, 2016. Failure to make payment during
that 10 business day period shall constitute an Event of Default,
as a result of which the note will become immediately due and
payable and the balance will bear interest at 7%. The Company’s
Form S-1 was declared effective on March 8, 2016, and payment was
due before March 22, 2016. The Company did not repay the note
before March 22, 2016; therefore, the note is in default with an
interest rate of 7%.
On April 30, 2019, the Company issued an unsecured Promissory Note
in the principal amount of $25,000. The Note is due and payable on
August 30, 2019, along with $5,000 worth of interest. The
Promissory Note is past due, however, the maker of the Note has
verbally agreed not to call a default.
As of March 31, 2021, the accrued interest expense on these two
Notes amounted to $26,430.
The balance of the Notes Payable outstanding was $34,000 and $9,000
as of March 31, 2021, and December 31, 2020, respectively and are
past due.
NOTE 9 – CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE,
RELATED PARTIES
Convertible notes payable consists of the following:
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Various Convertible Notes (a)
|
|
$ |
43,500 |
|
|
$ |
43,500 |
|
|
Ylimit, LLC Convertible Notes (b)
|
|
|
1,348,208 |
|
|
|
1,336,208 |
|
|
Golock Capital, LLC Convertible Notes (c)
|
|
|
339,011 |
|
|
|
339,011 |
|
|
GSH Note (e)
|
|
|
165,000 |
|
|
|
- |
|
|
Baggett Note (f)
|
|
|
50,000 |
|
|
|
- |
|
|
Other Convertible Notes (d)
|
|
|
238,203 |
|
|
|
238,203 |
|
|
Convertible notes, net
|
|
$ |
2,183,922 |
|
|
$ |
1,956,922 |
|
(a) In August 2014, the Company issued a series of convertible
notes with various interest rates ranging up to 10% per annum. The
Note Conversion Price is determined as follows: (a) if the Note is
converted upon the Next Equity Financing, an amount equal to 80% of
the price paid per share paid by the investors in the Next Equity
Financing; (b) if the Note is converted in the event of a Corporate
Transaction, a price per share derived by dividing a “pre-money”
valuation of $8,000,000 by the number of shares outstanding
immediately prior to the time of such conversion, on a fully
diluted basis; or (c) if the Note is converted as part of a
Maturity Conversion, a price per unit derived by dividing a
“pre-money” valuation of $8,000,000 by the total number of units
(restricted and non-restricted) outstanding immediately prior to
the time of such conversion, on a fully diluted basis. The notes
are due and payable on demand at any time after the earlier of (i)
36 months following the note issuance or (ii) the consummation of a
corporate transaction if not previously converted. The balance of
the notes outstanding was $45,000 as of December 31, 2018. On March
4, 2019, a note holder elected to forgive and cancel their
outstanding convertible note balance of $1,500, which the Company
recorded as a gain on extinguishment of debt in the accompanying
consolidated statement of operations. The balance of the notes
outstanding was $43,500 as of December 31, 2019 of which $28,500
was due to related parties.
(b) On May 9, 2016, the Company issued a convertible note to
YLimit, LLC in the principal amount of $100,000 with interest at
10% per annum and due on May 9, 2018. The note is secured by the
Company’s rights, titles and interests in all the Company’s
tangible and intangible assets, including intellectual property and
proprietary software whether existing now or created in the future.
On August 25, 2017, the Note was amended to authorize total
borrowings on this Note to $517,000, The balance of the notes
outstanding was $517,000 as of December 31, 2017 and the balance of
the debt discount was $137,358.
On April 12, 2018, and again on August 15, 2018, the Company and
Ylimit, LLC entered into an amendment to the original secured
convertible promissory note. The amendments increased the borrowing
limits by $190,500 to a total of $707,500, and extended the
maturity date to May 9, 2019. In addition, the amendment on April
12, 2018 modified the conversion feature to state that all
borrowings under the note will be converted at 75% of the per share
stock price in the equity funding, but in no event shall the
conversion price be less than $0.035 per share. This feature gave
rise to a derivative liability of $135,900 during the period ended
December 31, 2018 that is discussed below. During the year ended
December 31, 2018, the Company borrowed an additional $190,500. The
balance of notes outstanding was $707,500 as of December 31, 2018
and the balance of the debt discount was $70,078.
On November 9, 2019 the Company and Ylimit, LLC entered into an
amendment (“Ylimit Amendment One”) to the original secured
convertible promissory note dated May 9, 2016 along with subsequent
amendment and fundings that followed. Under the terms of Ylimit
Amendment One, Ylimit extended maturity date of all outstanding
convertible debt due to them by the company, to a new maturity date
of February 09, 2020. Ylimit received no consideration for this
amendment.
By verbal agreement Ylimit increased the Company’s borrowing limits
by $175,000 and extended this amount of additional funding to the
Company during the last three months of 2019 bring the total
convertible note balance due to YLimit to a total of $882,500 as
December 31, 2019. All note discount related to Ylimit was fully
amortized as of December 31, 2019.
On February 9, 2020, the Company entered into another amendment
with Ylimit (“Ylimit Amendment Two”) to further extend the maturity
date of all of the Company’s outstanding debt to August 9, 2020
including the $175,000 that Ylimit funded in the fourth quarter of
2019. Ylimit received no consideration for the Ylimit Amendment
Two.
During the year ended December 31, 2020, Ylimit provided another
$453,708 in funding to the Company bringing their balance to
$1,366,208 as of December 31, 2020. On January 5, 2021 the Company
entered into Amendment Three to extend the maturity of all notes
until February 9, 2022. Ylimit received no consideration for
Amendment Three.
During the three months ended March 31, 2021, Ylimit invested
another $12,000 on terms comparable to recent fundings.
(c) From September 1, 2017 to December 31, 2017, the Company issued
convertible notes to Golock Capital, LLC (“Lender”) in the
aggregate principal amount of $191,750 with an interest rate at 10%
per annum and maturity dates between June 1, 2018 and August 31,
2018. The notes are convertible into shares of the Company’s common
stock at prices between $0.015 and $0.02 per share. As additional
consideration for the Lender to enter into these agreements with
the Company, the Company issued warrants to the Lender to acquire
in the aggregate 4,804,708 shares of the Company’s common stock at
a weighted average exercise price of $0.014 per share. In addition,
the Lender shall have the first right of refusal as to any future
funding of Borrower in that Lender shall have the right to provide
all or a portion of the funding upon the same terms as those
offered in writing by any third party or contained in any private
placement of borrower. The Lender, upon conversion, shall have
piggyback registration rights for all of its common stock shares in
any registration or post-effective amendment to any registration
initiated by Borrower with the Securities and Exchange Commission.
The balance of the notes outstanding and the related debt discount
was $191,750 and $19,652, respectively, as of December 31,
2017.
On February 2, 2018, the Company issued a convertible note to
Golock Capital, LLC (“Lender”) in the principal amount of $40,000
with an interest rate at 10% per annum and a maturity date of
November 2, 2018. The note included an original issue discount of
$5,000. The note is convertible into shares of the Company’s common
stock at $0.015 per share. As additional consideration for the
Lender to enter into this agreement with the Company, the Company
issued warrants to the Lender to acquire in the aggregate 2,500,000
shares of the Company’s common stock at an exercise price of $0.015
per share that expire three years from the date of grant. The
relative fair value of the warrants, the original issue discount,
and the beneficial conversion feature totaling $40,000 was recorded
as a debt discount and will be amortized to interest expense over
the term of the note. On November 5, 2018, the Company amended the
notes above by changing the conversion feature for the aggregate
notes to be convertible into shares of common stock of the Company
at the lower of (i) $0.015 per share or, (ii) 58% of the lowest
closing bid price in the 20 trading days prior to the day that the
Lender requests conversion. This feature gave rise to a derivative
liability of $553,000 at date of issuance as discussed below. The
amendment also increased the principal face amount of notes to
include accrued interest, and an additional $43,250 was added to
principal, which was recorded to financing costs. The aggregate
balance of the notes outstanding, and the related debt discount was
$302,067 and $0, respectively, as of December 31, 2018.
On April 29, 2019, Golock entered into an amendment with the
Company to extend the maturity of the Notes until July 31, 2019. In
return, Golock received several concessions. They received (a) a
warrant to purchase 12,833,333 shares of the Company’s common stock
for 48 months exercisable at a strike price of $.00475. The Company
recorded a financing charge of $28,227 related to these warrants
and (b) the conversion noted above was changed from 58% to 50% of
the lowest closing bid price in the 20 trading days prior to that
day that the Lender request conversion. During the year ending
December 31, 2019 the Company issued new notes payable of $53,331
and $23,102 of notes and accrued interest were converted into
100,000,000 shares of common stock. The balance of the notes
outstanding on December 31, 2019, was $339,010. As of December 31,
2019, $285,679 of these notes were past due. As of December 31,
2020 all of the Golock notes amounting to $339,011 were past due.
As a result, Golock has assessed the Company additional penalties
and interest pf $1,172,782. The Company has recorded this amount as
an accrued liability as of March 31, 2021 and December 1, 2020. The
Company disagrees with the accrued interest and penalties due to
Golock and intends to litigate this amount if a settlement on a
vastly reduced amount, cannot be reached.
(d) As of December 31, 2017 the Company had an outstanding
convertible note payable of $61,000. During the year ended December
31, 2018, the Company entered into additional notes of $369,250.
The convertible notes have interest rates ranging from 8% to 12%
per annum, maturity dates ranging from August 21, 2018, to June 19,
2020, and are convertible into shares of common stock of the
Company at discount rates between 38% and 50% of the lowest trading
price for the Company s common stock during the prior twenty (20)
trading day period, and for one lender, no lower than $0.035 per
share. The issuance of notes with conversion features gave rise to
derivative liabilities of $559,397 (see discussion below). As of
December 31, 2018, the aggregate convertible notes balance to the
five lenders was $426,964 and the related debt discount was
$179,162. As of December 31, 2020 all $238,303 were past due.
During the year ended December 31, 2019, the Company entered into
additional notes of $256,000, with interest rates from 10% to 12%,
and maturity dates ranging from January 22, 2020, to August 2,
2020, at conversion terms comparable to the terms above. The
issuance of notes with conversion features gave rise to derivative
liabilities of $357,465 (see discussion below). In addition, On
April 29, 2019, one of the lenders entered into an amendment with
the Company to extend the maturity of the Notes until July 31,
2019. In return, the Company issued (a) a warrant to purchase
2,966,986 shares of the Company’s common stock for a period of 48
months exercisable at a strike price of $.00475 with a fair value
of $5,934, and (b) the conversion price of outstanding notes was
changed from $.015 to 50% of the lowest closing bid price in the 20
trading days prior to that day that the Lender request conversion.
During the year ended December 31, 2019, convertible notes of
$388,207 and accrued interest were converted into 540,276,078
shares of common stock. As of December 31, 2019, the aggregate
convertible notes balance to the five lenders was $299,069 and the
related debt discount was $ 33,667. As of December 31, 2019,
$96,069 of these notes were past due.
In total, during 2019 convertible notes and accrued interest
aggregating $411,309 were converted into 640,276,078 common shares
with a fair value of $959,290 and recognized loss on settlement of
debt of $548,029 during the year ended December 31, 2019. On
December 31, 2019, the aggregate balance of the fair value of the
notes outstanding was $1,564,080 and the related debt discount was
$78,013. As of December 31, 2019, the above notes are convertible
into 3,334,494,813 shares of common stock.
During the year ended December 31, 2020, $56,466 of the principal
balance and $8,600 of interest was converted to 440,111,560 shares
of common stock. The Company recorded a loss on the extinguishment
of debt on these two conversions of $263,609. Additionally, the
Company paid $4,400 to reduce the principal balance. These were the
only note conversions during the year ended December 31, 2020.
(e) During the three months ended March 31, 2021, GHS Investments
funded an 8%, $165,000 convertible promissory note maturing on
November 16, 2021. The conversion price on the Note is fixed at
.0171. The Company recorded a beneficial conversion feature of
$106,765 upon the issuance of the Note and was immediately expensed
in full.
(f) The Company issued a 10% convertible note to Baggett that
contained various conversion features related to future Offerings
of the Company. The Company recorded a note discount of $5,000 on
the Note which was immediately expensed. Additionally, as well as a
derivative liability of $45,262
Summary
The Company considered the current FASB guidance of “Contracts in
Entity’s Own Stock” which indicates that any adjustment to the
fixed amount (either conversion price or number of shares) of the
instrument regardless of the probability of whether or not within
the issuers’ control means the instrument is not indexed to the
issuer’s own stock. Accordingly, the Company determined that the
conversion prices of the Notes were not a fixed amount because they
were either subject to an adjustment based on the occurrence of
future offerings or events or the conversion price was variable. As
a result, the Company determined that the conversion features of
the Notes were not considered indexed to the Company’s own stock
and characterized the fair value of the conversion features as
derivative liabilities upon issuance. The Company determined that
upon issuance of the Notes, the initial fair value of the embedded
conversion feature was recorded as debt discount offsetting the
fair value of the Notes and the remainder recorded as financing
costs in the Consolidated Statement of Operations.
On March 31, 2021, the aggregate balance of the fair value of all
convertible notes outstanding was $2,183,922 and the related debt
discount was $-0-, or a net balance of $2,183,922. Of this amount,
$620,714 in principal was past due. As of March 31, 2021, the above
notes are convertible into 1,747,064,356 shares of common stock.
Accrued interest on the convertible notes amounted to $494,972 as
of March 31, 2021.
On December 31, 2020, the aggregate balance of the fair value of
all convertible notes outstanding was $1,956,922 and the related
debt discount was $-0-, or a net balance of $1,956,922. Of this
amount, $620,714 in principal was past due. As of December 31,
2020, the above notes are convertible into 1,948,265,842 shares of
common stock.
During the year ended December 31, 2019, the Company issued
$484,331 of convertible notes whose conversion features created a
derivative liability upon issuance with a fair value of $357,465 of
which $218,637 was recorded as a debt discount, and the remaining
$138,828 was recorded as a financing cost. During the year ended
December 31, 2019, the amortization of debt discount was $389,793
which is included in financing costs on the Company’s statement of
operations. The balance of the unamortized note discount on
December 31, 2019 was $78,013.
NOTE 10 – DERIVATIVE LIABILITY
The FASB has issued authoritative guidance whereby instruments
which do not have fixed settlement provisions are deemed to be
derivative instruments. The conversion prices of the Notes
described in Note 6 were not a fixed amount because they were
either subject to an adjustment based on the occurrence of future
offerings or events or they were variable. Since the number of
shares is not explicitly limited, the Company is unable to conclude
that enough authorized and unissued shares are available to settle
the conversion option. In accordance with the FASB authoritative
guidance, the conversion features have been characterized as
derivative liabilities to be re-measured at the end of every
reporting period with the change in value reported in the statement
of operations. As of March 31, 2021 and December 31, 2020, the
derivative liabilities were valued using probability weighted
option pricing models with the following assumptions:
|
|
|
March
31,
2021
|
|
|
December
31,
2020
|
|
|
|
|
|
|
|
|
|
|
Exercise Price
|
|
$ |
0.1175-0.02115
|
|
|
$ |
0.00015–0.00018
|
|
|
Stock Price
|
|
|
.0235 |
|
|
$ |
0.0003 |
|
|
Risk-free interest
rate
|
|
|
.06 |
% |
|
|
.06 |
% |
|
Expected volatility
|
|
|
204.20 |
|
|
|
236 |
% |
|
Expected life (in
years)
|
|
|
1.00 |
|
|
|
1.00 |
|
|
Expected dividend
yield
|
|
|
0 |
% |
|
|
0 |
% |
|
Fair Value:
|
|
$ |
812,349 |
|
|
$ |
3,156,582 |
|
The risk-free interest rate was based on rates established by the
Federal Reserve Bank. The Company uses the historical volatility of
its common stock to estimate the future volatility for its common
stock. The expected life of the conversion feature of the notes was
based on the remaining term of the notes. The expected dividend
yield was based on the fact that the Company has not customarily
paid dividends in the past and does not expect to pay dividends in
the future.
NOTE 11 – STOCKHOLDERS’ DEFICIT
On July 2, 2019, the Company filed a Certificate of Amendment (the
“Charter Amendment”) to the Company’s Articles of Incorporation (as
amended to date, the “Articles of Incorporation”) with the
Secretary of State of the State of Nevada. The Charter Amendment
increased the Company’s capitalization to 2,000,000,000 shares of
Common Stock and 20,000,000 shares of Preferred Stock, of which,
5,000,000 were designated as Series A Convertible Preferred
Stock.
Common stock
The Company has authorized 2,000,000,000 shares of $0.0001 par
value common stock. As of March 31, 2021 and December 31, 2020
there were 1,211,495,162 and 1,211,495,162 shares of common stock
issued and outstanding respectively.
Preferred Stock Series A
As of March 31, 2021 and December 31, 2020, the Company had
20,000,000 shares of $0.0001 par value preferred stock authorized
and there were 4,126,776 shares of Series A Preferred Stock issued
and outstanding.
On May 22, 2019, the Company authorized and designated a class of
Series A Convertible Preferred Stock (“Series A Preferred Stock”),
in accordance with a Certificate of Designation filed with the
State of Nevada (the “Series A Designation”). It subsequently
issued 4,126,776 restricted shares of Series A Preferred Stock to
various employees and service providers to compensate and reward
them for services and to incentivize them to provide continued
service to the Company. The Series A Preferred Stock receives
relative rights and preferences under terms and conditions set
forth in the Certificate of Designation of the Preferred Stock.
Pursuant to the Series A Designation, each share of Series A
Preferred Stock may be converted into 50 shares of common stock of
the Company. The Series A Preferred Stockholders shall be entitled
to share among dividends with the common stock shareholders of the
Company on an as-converted basis. The Series A Preferred
Stockholders shall vote with the common stock as a single class, on
a 100 to 1 basis, such that for every share of Series A Preferred
Stock held, such shares shall entitle the holder to cast 100 votes.
The holders of the Series A Preferred Stock have no liquidation or
redemption preference rights but get treated as common stockholders
on an as converted basis.
The Company believes that the issuance of the Series A Preferred
Stock was exempt from the registration requirements under the
Securities Act of 1933, as amended pursuant to Section 4(a)(2) of
the Act in that said transaction did not involve a public
solicitation and said restricted shares were issued to only a small
number of employees and consultants with an ongoing relationship
with the Company.
The Company determined the fair value of the preferred shares to be
$590,129 which is included as stock-based compensation in general
and administrative expense on the Company’s statements of
operations for the year ended December 31, 2019.
Warrants
No warrants were issued during the three ended March 31, 2021.
A summary of warrants is as follows:
|
|
|
Number
|
|
|
Weighted
|
|
|
|
|
of
|
|
|
Average
|
|
|
|
|
Warrants
|
|
|
Exercise
|
|
|
Balance outstanding,
December 31, 2018
|
|
|
8,004,708 |
|
|
|
0.014 |
|
|
Warrants granted
|
|
|
15,800,319 |
|
|
|
.00475 |
|
|
Warrants exercised
|
|
|
- |
|
|
|
- |
|
|
Warrants expired or
forfeited
|
|
|
- |
|
|
|
- |
|
|
Balance outstanding,
December 31, 2019
|
|
|
23,805,027 |
|
|
|
0.079 |
|
|
Warrants granted
|
|
|
- |
|
|
|
- |
|
|
Warrants exercised
|
|
|
- |
|
|
|
- |
|
|
Balance outstanding,
December 31, 2020
|
|
|
23,805,027 |
|
|
|
0.079 |
|
|
Warrants expired or
forfeited
|
|
|
(8,004,708 |
) |
|
|
- |
|
|
Balance outstanding and
exercisable, March 31, 2021
|
|
|
15,800,319 |
|
|
$ |
0.0079 |
|
Information relating to outstanding warrants on March 31, 2020,
summarized by exercise price, is as follows:
|
|
|
|
Outstanding and
Exercisable
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Exercise Price
Per Share
|
|
|
Shares
|
|
|
Life
(Years)
|
|
|
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.004750 |
|
|
|
15,800,319 |
|
|
|
2.33 |
|
|
$ |
0.00475 |
|
The weighted-average remaining contractual life of all warrants
outstanding and exercisable on March 31, 2021 is 2.33 years. The
outstanding and exercisable warrants outstanding on March 31, 2021,
had no intrinsic value.
NOTE 12 – COMMITMENT AND CONTINGENCIES
Joint Venture Agreement – Music Reports, Inc.
On September 1, 2018, the Company entered into an initial joint
venture (“JV”) agreement with Music Reports, Inc., (“MRI”). Music
Reports (musicreports.com) will initially partner with VNUE to
provide Performing Rights Organization (PRO) data to VNUE’s
Soundstr MRT (music recognition technology) platform through its
extensive Songdex database, and will eventually work with VNUE to
integrate automated direct licensing capability and royalty payment
and distribution into the Soundstr platform. The initial term of
the JV is for nine (6) months and requires the Company to Pay MRI
fifty percent (50%) of net revenue every quarter. As of March 31,
2021, no net revenue was generated from the JV.
Litigation
None
Artist Agreement
On October 27, 2015, the Company entered into an Artist Agreement
with I Break Horses, a Swedish duo based in Stockholm. The Artist
Agreement is effective October 27, 2015, and has a term lasting as
long as I Break Horses artist recordings are available via the VNUE
Service. Under the terms of the Artist Agreement, the Company shall
handle rights clearing and distribution for I Break Horses
recordings and receive 30% of the Net Income generated thereby. As
of March 31, 2021, the Company had not earned any revenue under
this agreement.
NOTE 13 – SUBSEQUENT EVENTS
On May 17, 2021, Ylimit LLC (“Ylimit”) converted $962,680 of their
convertible debt into 58,151,174 shares of common stock at a
conversion price of $0.014 and into 123,083 of Series A Preferred
Stock at a price of $1.20 per shares. After the transaction, Ylimit
had $743,269 in outstanding convertible notes and accrued interest
due from the Company.
Table of
Contents
Report of
Independent Registered Public Accounting Firm
To the shareholders and the board of directors of VNUE, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of VNUE, Inc. (the
"Company") as of December 31, 2020, the related statement of
operations, stockholders' equity (deficit), and cash flows for the
year then ended, and the related notes (collectively referred to as
the "financial statements"). In our opinion, the financial
statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2020, and the results of
its operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the
United States.
Substantial Doubt about the Company’s Ability to Continue
as a Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company’s significant
operating losses raise substantial doubt about its ability to
continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audit. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis
for our opinion.
/s BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company's auditor since 2020
Lakewood, CO
April 8, 2021
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders of
VNUE, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of
VNUE, Inc. (the "Company") as of December 31, 2019 and the related
consolidated statements of operations, stockholders' deficit, and
cash flows for the year then ended, and the related notes
(collectively referred to as the "consolidated financial
statements"). In our opinion, the consolidated financial statements
present fairly, in all material respects, the consolidated
financial position of the Company as of December 31, 2019, and the
consolidated results of their operations and their cash flows for
the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1, the Company experienced a net loss
and utilized cash from operations during the year ended December
31, 2019 and has a stockholders’ deficit as of that date. These
matters raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these
matters are also described in Note 1 to the consolidated financial
statements. These consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on the Company's consolidated financial statements based on
our audit. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due
to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of
material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our audit
provides a reasonable basis for our opinion.
We have served as the Company's auditor since 2016.
Weinberg & Company P.A
Los Angeles, California
May 19, 2020
|
|
|
December
31,
2020
|
|
|
December
31,
2019
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
$ |
4,458 |
|
|
$ |
52,096 |
|
|
Prepaid expenses
|
|
|
100,000 |
|
|
|
- |
|
|
Total current
assets
|
|
|
104,458 |
|
|
|
52,096 |
|
|
Total
assets
|
|
$ |
104,458 |
|
|
$ |
52,096 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
$ |
2,372,072 |
|
|
$ |
1,018,145 |
|
|
Shares to be issued
|
|
|
247,707 |
|
|
|
- |
|
|
Accrued payroll-officers
|
|
|
209,750 |
|
|
|
68,000 |
|
|
Advances from former officer
|
|
|
720 |
|
|
|
720 |
|
|
Notes payable
|
|
|
34,000 |
|
|
|
34,000 |
|
|
Deferred revenue
|
|
|
74,225 |
|
|
|
- |
|
|
Convertible notes payable,
net
|
|
|
1,956,922 |
|
|
|
1,486,067 |
|
|
Purchase liability
|
|
|
300,000 |
|
|
|
300,000 |
|
|
Derivative liability
|
|
|
3,156,582 |
|
|
|
922,509 |
|
|
Total current
liabilities
|
|
|
8,351,979 |
|
|
|
3,829,441 |
|
|
Total
liabilities
|
|
|
8,351,979 |
|
|
|
3,829,441 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value
$0.0001: 20,000,000 shares authorized 4,126,776 issued and
outstanding
|
|
|
413 |
|
|
|
413 |
|
|
Common stock, par value $0.0001,
2,000,000,000 shares authorized; 1,211,495,162 and 770,883,602
shares issued and outstanding, respectively
|
|
|
121,149 |
|
|
|
77,088 |
|
|
Additional paid-in capital
|
|
|
8,386,593 |
|
|
|
8,099,346 |
|
|
Common stock to be issued,
5,204,352 and 5,204,352 shares, respectively
|
|
|
- |
|
|
|
247,707 |
|
|
Accumulated deficit
|
|
|
(16,755,676 |
) |
|
|
(12,201,899 |
) |
|
Total stockholders'
deficit
|
|
|
(8,247,521 |
) |
|
|
(3,777,345 |
) |
|
Total Liabilities and
Stockholders' Deficit
|
|
$ |
104,458 |
|
|
$ |
52,096 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
|
VNUE, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
For the
year
|
|
|
For the
year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
December
31,
2020
|
|
|
December
31,
2019
|
|
|
|
|
|
|
|
|
|
|
Revenues - related party
|
|
$ |
22,474 |
|
|
$ |
206,161 |
|
|
Direct costs of revenue
|
|
|
8,509 |
|
|
|
211,031 |
|
|
Gross margin (loss)
|
|
|
13,965 |
|
|
|
(4,870 |
) |
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
- |
|
|
|
12,404 |
|
|
General and administrative
|
|
|
601,022 |
|
|
|
1,177,756 |
|
|
Intangible asset impairment
|
|
|
- |
|
|
|
132,397 |
|
|
Total costs and expenses
|
|
|
601,022 |
|
|
|
1,322,557 |
|
|
Operating loss
|
|
|
(587,058 |
) |
|
|
(1,327,427 |
) |
|
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
Change in fair value of
derivative liability
|
|
|
(2,234,073 |
) |
|
|
1,179,556 |
|
|
Loss on the extinguishment of
debt
|
|
|
(263,609 |
) |
|
|
(532,529 |
) |
|
Gain on settlement of
obligations
|
|
|
- |
|
|
|
35,534 |
|
|
Financing costs
|
|
|
(1,469,037 |
) |
|
|
(755,232 |
) |
|
Other income (expense), net
|
|
|
(3,966,719 |
) |
|
|
(72,671 |
) |
|
Net income (loss)
|
|
$ |
(4,553,777 |
) |
|
$ |
(1,400,098 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and
diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
1,135,193,463 |
|
|
|
447,194,161 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
VNUE,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Par value
$0.001
|
|
|
Additional
|
|
|
Shares
to
be
|
|
|
|
|
|
|
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Paid-
in
|
|
|
Issued
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Amount
|
|
|
Number
|
|
|
Amount
|
|
|
Capital
|
|
|
Amount
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance - December 31, 2018
|
|
|
- |
|
|
|
- |
|
|
|
105,635,816 |
|
|
$ |
10,563 |
|
|
$ |
6,493,070 |
|
|
$ |
243,839 |
|
|
|
(10,801,801 |
) |
|
|
(4,054,329 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued upon conversion of notes
payable
|
|
|
|
|
|
|
|
|
|
|
640,276,078 |
|
|
|
64,028 |
|
|
|
895,262 |
|
|
|
|
|
|
|
|
|
|
|
959,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Series A Preferred Stock
|
|
|
4,127,776 |
|
|
|
413 |
|
|
|
|
|
|
|
|
|
|
|
589,716 |
|
|
|
|
|
|
|
|
|
|
|
590,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for settlement of accounts
payable to former officer
|
|
|
|
|
|
|
|
|
|
|
11,428,571 |
|
|
|
1,143 |
|
|
|
29,714 |
|
|
|
|
|
|
|
|
|
|
|
30,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for settlement of accounts
payable
|
|
|
|
|
|
|
|
|
|
|
541,912 |
|
|
|
54 |
|
|
|
650 |
|
|
|
|
|
|
|
|
|
|
|
704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on conversion of accrued
payroll to officers
|
|
|
|
|
|
|
|
|
|
|
15,057,143 |
|
|
|
1,506 |
|
|
|
39,149 |
|
|
|
|
|
|
|
|
|
|
|
40,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on extinguishment of accrued payroll to
officers recorded as contributed capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,046 |
|
|
|
|
|
|
|
|
|
|
|
12,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued for financing cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500 |
|
|
|
|
|
|
|
3,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued for services
|
|
|
|
|
|
|
|
|
|
|
2,500,000 |
|
|
|
250 |
|
|
|
2,750 |
|
|
|
368 |
|
|
|
|
|
|
|
3,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares returned by former officer
|
|
|
|
|
|
|
|
|
|
|
(4,555,918 |
) |
|
|
(456 |
) |
|
|
456 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for notes amendment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,533 |
|
|
|
|
|
|
|
|
|
|
|
36,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,400,098 |
) |
|
|
(1,400,098 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
|
|
4,127,776 |
|
|
$ |
413 |
|
|
|
770,883,602 |
|
|
$ |
77,088 |
|
|
$ |
8,099,346 |
|
|
$ |
247,707 |
|
|
$ |
(12,201,899 |
) |
|
$ |
(3,777,345 |
) |
|
|
|
|
|
|
|
|
|
Par value
$0.001
|
|
|
Additional
|
|
|
Shares
to
be
|
|
|
|
|
|
|
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Paid-
in
|
|
|
Issued
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Amount
|
|
|
Number
|
|
|
Amount
|
|
|
Capital
|
|
|
Amount
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2019
|
|
|
4,126,776 |
|
|
$ |
413 |
|
|
|
770,883,602 |
|
|
$ |
77,088 |
|
|
$ |
8,099,346 |
|
|
$ |
247,707 |
|
|
$ |
(12,201,899 |
) |
|
$ |
(3,777,345 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To reclassify shares to be issued to a
liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(247,707 |
) |
|
|
|
|
|
|
(247,707 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable to common
shares
|
|
|
|
|
|
|
|
|
|
|
422,572,017 |
|
|
|
42,257 |
|
|
|
277,817 |
|
|
|
|
|
|
|
|
|
|
|
320,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to pay interest expense
|
|
|
|
|
|
|
|
|
|
|
17,539,543 |
|
|
|
1,754 |
|
|
|
9,330 |
|
|
|
|
|
|
|
|
|
|
|
11,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
|
50 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,553,777 |
) |
|
|
(4,553,777 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
4,126,776 |
|
|
$ |
413 |
|
|
|
1,211,495,162 |
|
|
$ |
121,149 |
|
|
$ |
8,386,593 |
|
|
$ |
- |
|
|
$ |
(16,755,676 |
) |
|
$ |
(8,247,521 |
) |
The accompanying notes are an integral part of these financial
statements
VNUE,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
For the
Year
|
|
|
For the
Year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
December
31,
2020
|
|
|
December
31,
2019
|
|
|
Cash Flows From Operating
Activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(4,553,777 |
) |
|
$ |
(1,400,098 |
) |
|
Adjustments to reconcile net
income to net cash provided by (used for) operating activities
|
|
|
|
|
|
|
|
|
|
Change in the fair value of
derivatives
|
|
|
2,234,073 |
|
|
|
(1,179,556 |
) |
|
Derivative value considered
financing costs
|
|
|
|
|
|
|
138,828 |
|
|
Gain on the settlement of vendor
obligations
|
|
|
|
|
|
|
(35,534 |
) |
|
Loss on the extinguishment of
debt
|
|
|
|
|
|
|
532,529 |
|
|
Amortization of debt
discount
|
|
|
78,013 |
|
|
|
389,793 |
|
|
Amortization of intangible
assets
|
|
|
|
|
|
|
101,032 |
|
|
Impairment of intangible
assets
|
|
|
|
|
|
|
132,397 |
|
|
Warrants issued for financing
costs
|
|
|
|
|
|
|
36,533 |
|
|
Issuance of preferred stock for
services
|
|
|
|
|
|
|
590,129 |
|
|
Shares issued for financing
costs
|
|
|
253,194 |
|
|
|
3,500 |
|
|
Shares issued for services
|
|
|
100 |
|
|
|
3,368 |
|
|
Changes in operating assets and
liabilities
|
|
|
|
|
|
|
|
|
|
Gain on debt forgiveness
|
|
|
|
|
|
|
(15,500 |
) |
|
Prepaid expenses
|
|
|
(100,000 |
) |
|
|
666 |
|
|
Accounts payable and accrued
interest
|
|
|
1,395,177 |
|
|
|
132,008 |
|
|
Shares to be issued
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
74,225 |
|
|
|
- |
|
|
Accrued payroll officers
|
|
|
100,500 |
|
|
|
68,000 |
|
|
Net cash (used in) operating
activities
|
|
|
(518,493 |
) |
|
|
(501,905 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing
Activities:
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
|
|
|
|
|
25,000 |
|
|
Payoff of convertible note
|
|
|
(45,134 |
) |
|
|
(30,000 |
) |
|
Proceeds from the issuance of
convertible notes
|
|
|
515,989 |
|
|
|
540,810 |
|
|
Net cash provided by investing
activities
|
|
|
470,855 |
|
|
|
535,810 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash
|
|
|
(47,638 |
) |
|
|
33,905 |
|
|
Cash At The Beginning Of The Period
|
|
|
52,096 |
|
|
|
18,191 |
|
|
Cash At The End Of The Period
|
|
$ |
4,458 |
|
|
$ |
52,096 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Financing Activities
|
|
|
|
|
|
|
|
|
|
Common shares issued upon conversion of notes
payable and accrued interest
|
|
|
|
|
|
$ |
959,290 |
|
|
Common shares issued in settlement of
accounts payable and accrued expenses
|
|
$ |
- |
|
|
$ |
31,561 |
|
|
Common shares issued upon conversion of
accrued payroll
|
|
$ |
- |
|
|
$ |
40,654 |
|
|
Fair value of derivative created upon
issuance of convertible debt recorded as debt discount
|
|
$ |
- |
|
|
$ |
218,637 |
|
|
Capital contribution upon conversion of
accrued payroll for officer/shareholder
|
|
$ |
- |
|
|
$ |
12,046 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
VNUE,
INC.
YEARS ENDED DECEMBER 31, 2020 AND 2019
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF
PRESENTATION
History and Organization
VNUE, Inc. (formerly Tierra Grande Resources, Inc.) (“VNUE”,
“TGRI”, or the “Company”) was incorporated under the laws of the
State of Nevada on April 4, 2006.
On May 29, 2015, VNUE, Inc. entered into a merger agreement with
VNUE Washington, Inc. Pursuant to the terms of the Merger
Agreement, all of the outstanding shares of any class or series of
VNUE Washington were exchanged for an aggregate of 50,762,987
shares of TGRI common stock. As a result of the Merger, VNUE
Washington became a wholly-owned subsidiary of the Company, and the
transaction was accounted for as a reverse merger with VNUE
Washington deemed the acquiring company for accounting purposes,
and the Company deemed the legal acquirer.
The Company is developing technology driven solutions for Artists,
Venues and Festivals to automate the capturing, publishing, and
monetization of their content, as well as protection of their
rights.
Going Concern
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 year
ended December 31, 2020 the Company incurred a net operating loss
of $4,553,777 used cash in operations of $518,493 and had a
stockholders’ deficit of $16,755,676 as of December 31, 2020. In
addition we had negative working capital of $8,247,522. These
factors raise substantial doubt about the Company’s ability to
continue as a going concern within one year after the date of the
financial statements being issued. The ability of the Company to
continue as a going concern is dependent upon the Company’s ability
to raise additional funds and implement its business plan. The
Company does not have any commitments for additional capital. The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
In addition, the Company’s independent registered public accounting
firm, in its report on the Company’s December 31, 2020,
consolidated financial statements, has raised substantial doubt
about the Company’s ability to continue as a going concern.
On December 31, 2020, the Company had cash on hand of $4,458. In
February 2021, the Company raised an additional $150,000 from the
issuance of notes payable that was used for corporate operating
purposes. Management estimates that the current funds on hand will
be sufficient to continue operations through July, 2021. 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. 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.
Basis of Consolidation
The Company consolidates all wholly-owned and majority-owned
subsidiaries in which the Company’s power to control exists. The
Company consolidates the following subsidiaries and/or
entities:
|
Name of
consolidated subsidiary or Entity
|
|
State or
other jurisdiction of
incorporation
or organization
|
|
Date of
incorporation or formation
(date of
acquisition/disposition, if
applicable)
|
|
Attributable
interest
|
|
|
|
|
|
|
|
|
|
|
|
VNUE Inc. (formerly
TGRI)
|
|
The State of Nevada
|
|
April 4, 2006 (May 29,
2015)
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
VNUE Inc. (VNUE
Washington)
|
|
The State of Washington
|
|
October 16, 2014
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
VNUE LLC
|
|
The State of Washington
|
|
August 1, 2013 (December 3, 2014)
|
|
|
100
|
%
|
Revenue Recognition
The Company recognizes revenue in accordance with Accounting
Standards Codification (“ASC”) 606, Revenue from
Contracts. ASC 606 creates a five-step model that requires
entities to exercise judgment when considering the terms of
contracts, which includes (1) identifying the contracts or
agreements with a customer, (2) identifying our performance
obligations in the contract or agreement, (3) determining the
transaction price, (4) allocating the transaction price to the
separate performance obligations, and (5) recognizing revenue as
each performance obligation is satisfied. The Company only applies
the five-step model to contracts when it is probable that the
Company will collect the consideration it is entitled to in
exchange for the services it transfers to its clients.
The Company recognizes revenue on the sale CDs and USB drives that
contain the recording of live concerts and made available to
concert attendees immediately after the show and on-line. Revenue
is recognized on the sale of a product when our performance
obligation is completed which is when the risk of loss transfers to
our customers and the collection of the receivable is reasonably
assured, which generally occurs when the product is purchased.
Use of Estimates
The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the U.S
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the financial statement date
and reported amounts of revenue and expenses during the reporting
period. Significant estimates include the assumptions used for
impairment testing of intangible assets, assumptions used to value
the derivative liabilities, the valuation allowance for the
deferred tax asset and the accruals for potential liabilities.
Actual results could differ from these estimates.
Fair Value of Financial Instruments
The Company determines the fair value of its assets and liabilities
based on the exchange price in U.S. dollars that would be received
for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value
maximize the use of observable inputs and minimize the use of
unobservable inputs. The Company uses a fair value hierarchy with
three levels of inputs, of which the first two are considered
observable and the last unobservable, to measure fair value:
|
|
·
|
Level 1 — Quoted prices
in active markets for identical assets or liabilities.
|
|
|
|
|
|
|
·
|
Level 2 — Inputs, other
than Level 1, that are observable, either directly or indirectly,
such as quoted prices for similar assets or liabilities; quoted
prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
|
|
|
|
|
|
|
·
|
Level 3 — Unobservable
inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities.
|
The carrying amounts of financial instruments such as cash, and
accounts payable and accrued liabilities, approximate the related
fair values due to the short-term maturities of these instruments.
The carrying values of our notes payable approximate their fair
values because interest rates on these obligations are based on
prevailing market interest rates.
The fair value of the derivative liabilities of $3,156,582 and
$922,509 on December 31, 2020, and December 31, 2019, respectively,
were valued using Level 3 inputs.
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
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 twelve months of the balance sheet
date.
Income (Loss) per Common Share
Basic net income (loss) per share is computed by using the
weighted-average number of common shares outstanding during the
period. Diluted net income (loss) per share is computed giving
effect to all dilutive potential shares of Common Stock that were
outstanding during the period. Diluted income (loss) per share
reflects the potential dilution, using the treasury stock method,
that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the income (loss)
of the Company as if they had been converted at the beginning of
the periods presented, or issuance date, if later. In computing
diluted income (loss) per share, the treasury stock method assumes
that outstanding options and warrants are exercised and the
proceeds are used to purchase common stock at the average market
price during the period. Options and warrants may have a dilutive
effect under the treasury stock method only when the average market
price of the common stock during the period exceeds the exercise
price of the options and warrants. Dilutive potential shares of
Common Stock consist of incremental shares of Common Stock issuable
upon exercise of stock options. No dilutive potential shares of
Common Stock were included in the computation of diluted net loss
per share on December 31, 2020, because their impact was
anti-dilutive. As of December 31, 2020, the Company had 23,805,027
outstanding warrants and 1,948,265,842 shares related to
convertible notes payables respectively, which were excluded from
the computation of net loss per share.
Intangible Assets
The Company accounts for intangible assets in accordance with the
authoritative guidance issued by the FASB. Intangibles are valued
at their fair market value and are amortized taking into account
the character of the acquired intangible asset and the expected
period of benefit. The Company evaluates intangible assets for
impairment, at a minimum, on an annual basis and whenever events or
changes in circumstances indicate that the carrying value may not
be recoverable from its estimated undiscounted future cash flows.
Recoverability of intangible assets is measured by comparing their
net book value to the related projected undiscounted cash flows
from these assets, considering a number of factors, including past
operating results, budgets, economic projections, market trends,
and product development cycles. If the net book value of the asset
exceeds the related undiscounted cash flows, the asset is
considered impaired, and a second test is performed to measure the
amount of impairment loss. As of December 31, 2020 based on the
assessment of Management, the Company determined that its
intangible asset had been impaired.
Segments
The Company operates in one segment for the manufacture and
distribution of our products. In accordance with the “Segment
Reporting” Topic of the ASC, the Company’s chief operating decision
maker has been identified as the Chief Executive Officer and
President, who reviews operating results to make decisions about
allocating resources and assessing performance for the entire
Company. Existing guidance, which is based on a management approach
to segment reporting, establishes requirements to report selected
segment information quarterly and to report annually entity-wide
disclosures about products and services, major customers, and the
countries in which the entity holds material assets and reports
revenue. All material operating units qualify for aggregation under
“Segment Reporting” due to their similar customer base and
similarities in economic characteristics; nature of products and
services; and procurement, manufacturing, and distribution
processes. Since the Company operates in one segment, all financial
information required by “Segment Reporting” can be found in the
accompanying financial statements.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that
are in effect and that may impact its financial statements and does
not believe that there are any other new pronouncements that have
been issued that might have a material impact on its financial
position or results of operations. The Company adopted ASC 842 on
January 1, 2019. However, the adoption of the standard had no
impact on the Company’s financial statements since all Company
leases are month to month, or short-term rentals.
NOTE 3 – PREPAID EXPENSE
On Jan 9th, 2020, the Company entered into an agreement with
recording and performance artist, Matchbox Twenty “MT Agreement”),
to record its 2020 tour and sell limited edition double CD sets,
download cards, and digital downloads. As part of the deal, the
Company agreed to pay an advance of $100,000 against sales, to MT
and its affiliated companies, which was paid in full in
installments, with the last installment of $40,000 paid on March
4th. We have recorded this amount as a prepaid expense on our
consolidated balance sheet as of December 31, 2020.
NOTE 4 – RELATED PARTY TRANSACTIONS
DiscLive Network
On July 10, 2017, the Company entered into a Licensing Agreement
with RockHouse Live Media Productions, Inc., DBA “DiscLive” or
“DiscLive Network” (“DiscLive”) to formalize the terms of the
Strategic Alliance entered into by the Company with DiscLive on
July 21, 2016. VNUE has acquired an exclusive license from
DiscLive, for a period of three years unless earlier terminated
under the Agreement, for the use of all its assets, including but
not limited to the DiscLive brand, website (including eCommerce
platform), intellectual property, inventory, equipment, trade
secrets and anything related to its business of “instant live”
recording. Under the terms of the Agreement, DiscLive granted the
Company a worldwide exclusive license. In exchange for the license,
DiscLive will receive a license fee equal to five percent (5%) of
any sales derived from the sale and use of the products and
services. DiscLive is controlled by our Chief Executive Officer.
Revenues of $22,474 and $206,161 and direct cost of revenues
of$8,509 and $211,031 during the years ended December 31, 2020, and
2019, respectively, were recorded using the assets licensed under
this agreement. For the periods ended December 31, 2020 and 2019.
The fees would have amounted to $1,124 and $10,308 respectively.
Our Chief Executive Officer agreed to waive the right to receive
these license fees for both years.
Accrued Payroll to Officers
Accrued payroll to officers was $209,750 and $68,000 respectively,
as of December 31, 2020, and December 31, 2019, respectively.
During the year ended December 31, 2019, the Company entered into a
conversion and cancellation of a debt agreement with its Chief
Executive Officer. The Company agreed to convert accrued payroll of
$52,700 into 15,057,143 shares of the Company’s stock, valued at
$40,654 using the closing market price of the Company’s stock on
the date of the conversion and cancellation of debt agreements. The
difference between the total accrued payroll converted of $52,700,
and the market value of the shares issued of $40,654, was recorded
as contributed capital of $12,046 in the consolidated statements of
stockholders’ deficit for the year ended December 31, 2019.
The Chief Executive Officers’ compensation is $170,000 per year all
of which was expensed during the years ended December 31, 2020 and
2019; of which $129,500 and $102,000 has been paid and $108,500 and
$68,000 was outstanding as of December 31, 2020 and 2019,
respectively.
Advances from Officers/Stockholders
From time to time, officers/stockholders of the Company advance
funds to the Company for working capital purposes. During the year
ended December 31, 2019, a former employee and stockholder agreed
to forgive $14,000 owed by the Company. The Company recorded the
$14,000 as a gain on the settlement of debt, leaving a remaining
balance of $720 on December 31, 2019.
Transactions with Former Director and Officer
On September 15, 2017, the Company entered into an Advisory
Agreement with Louis Mann (“MANN”), a former officer and director
with the Company who previously resigned as an officer and director
on August 26, 2015 after a short stint. He was re-appointed to the
board on June 23, 2018, while continuing to serve in under the
Advisory agreement. The Advisory Agreement provides for MANN’s
continued and ongoing advisory services to the Company for nine (9)
months and with automatic nine (9) months renewals unless
terminated per the agreement. MANN is to receive $5,000 per month
and 20,000 shares of common stock per month. Mann is still
currently still engaged with the company, and serves as Executive
Vice President as well as Director, as noted above.
As of December 31, 2018, $40,000 of cash compensation was owed to
MANN under the Advisory Agreements and included in accounts payable
and accrued expenses. On March 4, 2019, the Company and MANN
entered into a conversion and cancellation of debt agreement
relating to the $40,000 cash compensation balance outstanding on
December 31, 2018. The Company issued 11,428,571 shares of common
stock, at $0.0035 per share, as payment in full for the $40,000
balance outstanding on December 31, 2018. The difference between
the total obligations of $40,000 that MANN converted, and the
market value of the shares issued of $30,857, was recorded as a
gain on settlement of obligations of $9,143 in other income in the
consolidated statements of operations for the year ended December
31, 2019.
During the year ended December 31, 2019, the Company recorded
$45,000 of compensation relating to the agreement and made payments
of $3,750 leaving a balance owed to MANN of $41,250 on December 31,
2019, which is included in accounts payable and accrued expenses.
In May 2019, the Company awarded MANN, 748,429 shares of Series A
Preferred Stock.
During the year ended December 31, 2020, $60,000 in compensation
was accrued for MANN and no payments were made to him.
NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
Accounts payables are recognized initially at the transaction price
and subsequently measured at the undiscounted amount of cash or
other consideration expected to be paid. Accrued expenses are
recognized based on the expected amount required to settle the
obligation or liability.
The following table sets forth the components of the Company’s
accrued liabilities on December 31, 2020, and December 31,
2019.
|
|
|
December
31,
2020
|
|
|
December
31,
2019
|
|
|
Accounts payable and accrued expense
(includes $41,250 to a former officer and director at December 31,
2019, Note 4)
|
|
$ |
587,230 |
|
|
|
577,115 |
|
|
Accrued interest
|
|
|
466,801 |
|
|
|
271,621 |
|
|
Accrued interest and penalties Golock(a)
|
|
|
1,172,782 |
|
|
|
- |
|
|
Soundstr Obligation
|
|
|
145,259 |
|
|
|
169,409 |
|
|
Total accounts payable and accrued
liabilities
|
|
$ |
2,372,072 |
|
|
|
1,018,145 |
|
_________
|
(a)
|
The Company strongly
disagrees with the accrued interest and penalties claimed by Golock
in regard to their notes, and intends to arbitrate or litigate this
amount if a settlement on a vastly reduced amount cannot be
reached.
|
NOTE 6 – PURCHASE LIABILITY
On October 16, 2017, the Company entered into an agreement with
PledgeMusic, Inc. (the “Seller”), whereby the Company acquired the
digital live music distribution platform “Set.fm” from PledgeMusic.
The purchase price for the acquisition was comprised of $50,000
paid in cash, and a purchase liability of $300,000, for an
aggregate purchase price of $350,000. The Company assigned $350,000
of the purchase price to intellectual property, of which $116,668
was amortized in 2018. As of December 31, 2018, the Company
recorded an impairment charge of the remaining balance of $204,165.
The purchase liability is payable on the net revenues derived from
VNUE’s live recording and content business and must be paid in full
to the Seller no later than the three (3) year anniversary of the
date of the agreement, or October 16, 2020. If the Company fails to
pay the Seller the purchase liability on time, the Seller may
request at any time within one hundred eighty days (180) days
following the (3) year anniversary of the asset purchase agreement,
that the Company immediately forfeit, convey, assign, and transfer
to the Seller all or any of the Purchased Assets so requested by
the Seller for no additional consideration. For the years ended
December 31, 2019 and 2018, there was no net revenue derived from
the acquired assets and accordingly, no payments were made on the
earnout. The balance due on December 31, 2020 and 2019 was
$300,000.
NOTE 7 – SHARES TO BE ISSUED
As of December 31, 2018, the Company had not yet issued 3,964,352
shares of common stock with a value of $243,839 for past services
provided and for an acquisition. During the year ended December 31,
2019 the Company became obligated to issue an additional 240,000
shares of common, valued at $184, per the terms of a consulting
agreement , and 1,000,000 shares of common stock valued at $3,500,
as consideration for amending an existing convertible note. As of
December 31, 2020 and 2019, the Company had not yet issued
5,204,352 shares of common stock with a value of $247,707.
NOTE 8 – NOTES PAYABLE -PAST DUE
On December 17, 2015, the Company issued a Promissory Note in the
principal amount of $9,000. The note was due within 10 business
days of the Company receiving notice of the effectiveness of its
Form S-1 filed on February 22, 2016. Failure to make payment during
that 10 business day period shall constitute an Event of Default,
as a result of which the note will become immediately due and
payable and the balance will bear interest at 7%. The Company’s
Form S-1 was declared effective on March 8, 2016, and payment was
due before March 22, 2016. The Company did not repay the note
before March 22, 2016; therefore, the note is in default with an
interest rate of 7%.
On April 30, 2019, the Company issued an unsecured Promissory Note
in the principal amount of $25,000. The Note is due and payable on
August 30, 2019, along with $5,000 worth of interest. The
Promissory Note is past due, however, the maker of the Note has
verbally agreed not to call a default.
During the years ended December 31, 2020 and 2019; the Company
recorded $15,630 and $5,630, respectively, of accrued interest
expense on these two Notes.
The balance of the Notes Payable outstanding was $34,000 and $9,000
as of December 31, 2020, and December 31, 2019, respectively and
are past due.
NOTE 9 – CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE,
RELATED PARTIES
Convertible notes payable consist of the following:
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Various Convertible Notes(a)
|
|
$ |
43,500 |
|
|
$ |
43,500 |
|
|
Ylimit, LLC Convertible Notes (b)
|
|
|
1,336,208 |
|
|
|
882,500 |
|
|
Golock Capital, LLC Convertible Notes(c)
|
|
|
339,011 |
|
|
|
339,011 |
|
|
Other Convertible Notes(d)
|
|
|
238,203 |
|
|
|
299,069 |
|
|
Total Convertible Notes
|
|
|
1,956,922 |
|
|
|
1,564,080 |
|
|
Debt discount
|
|
|
- |
|
|
|
(78,013 |
) |
|
Convertible notes, net
|
|
$ |
1,956,922 |
|
|
$ |
1,486,067 |
|
(a) In August 2014, the Company issued a series of convertible
notes with various interest rates ranging up to 10% per annum. The
Note Conversion Price is determined as follows: (a) if the Note is
converted upon the Next Equity Financing, an amount equal to 80% of
the price paid per share paid by the investors in the Next Equity
Financing; (b) if the Note is converted in the event of a Corporate
Transaction, a price per share derived by dividing a “pre-money”
valuation of $8,000,000 by the number of shares outstanding
immediately prior to the time of such conversion, on a fully
diluted basis; or (c) if the Note is converted as part of a
Maturity Conversion, a price per unit derived by dividing a
“pre-money” valuation of $8,000,000 by the total number of units
(restricted and non-restricted) outstanding immediately prior to
the time of such conversion, on a fully diluted basis. The notes
are due and payable on demand at any time after the earlier of (i)
36 months following the note issuance or (ii) the consummation of a
corporate transaction if not previously converted. The balance of
the notes outstanding was $45,000 as of December 31, 2018. On March
4, 2019, a note holder elected to forgive and cancel their
outstanding convertible note balance of $1,500, which the Company
recorded as a gain on extinguishment of debt in the accompanying
consolidated statement of operations. The balance of the notes
outstanding was $43,500 as of December 31, 2019 of which $28,500
was due to related parties.
(b) On May 9, 2016, the Company issued a convertible note to
YLimit, LLC in the principal amount of $100,000 with interest at
10% per annum and due on May 9, 2018. The note is secured by the
Company’s rights, titles and interests in all the Company’s
tangible and intangible assets, including intellectual property and
proprietary software whether existing now or created in the future.
On August 25, 2017, the Note was amended to authorize total
borrowings on this Note to $517,000, The balance of the notes
outstanding was $517,000 as of December 31, 2017 and the balance of
the debt discount was $137,358.
On April 12, 2018, and again on August 15, 2018, the Company and
Ylimit, LLC entered into an amendment to the original secured
convertible promissory note. The amendments increased the borrowing
limits by $190,500 to a total of $707,500, and extended the
maturity date to May 9, 2019. In addition, the amendment on April
12, 2018 modified the conversion feature to state that all
borrowings under the note will be converted at 75% of the per share
stock price in the equity funding, but in no event shall the
conversion price be less than $0.035 per share. This feature gave
rise to a derivative liability of $135,900 during the period ended
December 31, 2018 that is discussed below. During the year ended
December 31, 2018, the Company borrowed an additional $190,500. The
balance of notes outstanding was $707,500 as of December 31, 2018
and the balance of the debt discount was $70,078.
On November 9, 2019 the Company and Ylimit, LLC entered into an
amendment (“Ylimit Amendment One”) to the original secured
convertible promissory note dated May 9, 2016 along with subsequent
amendment and fundings that followed. Under the terms of Ylimit
Amendment One, Ylimit extended maturity date of all outstanding
convertible debt due to them by the company, to a new maturity date
of February 09, 2020. Ylimit received no consideration for this
amendment.
By verbal agreement Ylimit increased the Company’s borrowing limits
by $175,000 and extended this amount of additional funding to the
Company during the last three months of 2019 bring the total
convertible note balance due to YLimit to a total of $882,500 as
December 31, 2019. All note discount related to Ylimit was fully
amortized as of December 31, 2019.
On February 9, 2020, the Company entered into another amendment
with Ylimit (“Ylimit Amendment Two”) to further extend the maturity
date of all of the Company’s outstanding debt to August 9, 2020
including the $175,000 that Ylimit funded in the fourth quarter of
2019. Ylimit received no consideration for the Ylimit Amendment
Two.
During the year ended December 31, 2020, Ylimit provided another
$453,708 in funding to the Company bringing their balance to
$1,366,208 as of December 31, 2020. On January 5, 2021 the Company
entered into Amendment Three to extend the maturity of all notes
until February 9, 2022. Ylimit received no consideration for
Amendment Three.
(c) From September 1, 2017 to December 31, 2017, the Company issued
convertible notes to Golock Capital, LLC (“Lender”) in the
aggregate principal amount of $191,750 with an interest rate at 10%
per annum and maturity dates between June 1, 2018 and August 31,
2018. The notes are convertible into shares of the Company’s common
stock at prices between $0.015 and $0.02 per share. As additional
consideration for the Lender to enter into these agreements with
the Company, the Company issued warrants to the Lender to acquire
in the aggregate 4,804,708 shares of the Company’s common stock at
a weighted average exercise price of $0.014 per share. In addition,
the Lender shall have the first right of refusal as to any future
funding of Borrower in that Lender shall have the right to provide
all or a portion of the funding upon the same terms as those
offered in writing by any third party or contained in any private
placement of borrower. The Lender, upon conversion, shall have
piggyback registration rights for all of its common stock shares in
any registration or post-effective amendment to any registration
initiated by Borrower with the Securities and Exchange Commission.
The balance of the notes outstanding and the related debt discount
was $191,750 and $19,652, respectively, as of December 31,
2017.
On February 2, 2018, the Company issued a convertible note to
Golock Capital, LLC (“Lender”) in the principal amount of $40,000
with an interest rate at 10% per annum and a maturity date of
November 2, 2018. The note included an original issue discount of
$5,000. The note is convertible into shares of the Company’s common
stock at $0.015 per share. As additional consideration for the
Lender to enter into this agreement with the Company, the Company
issued warrants to the Lender to acquire in the aggregate 2,500,000
shares of the Company’s common stock at an exercise price of $0.015
per share that expire three years from the date of grant. The
relative fair value of the warrants, the original issue discount,
and the beneficial conversion feature totaling $40,000 was recorded
as a debt discount and will be amortized to interest expense over
the term of the note. On November 5, 2018, the Company amended the
notes above by changing the conversion feature for the aggregate
notes to be convertible into shares of common stock of the Company
at the lower of (i) $0.015 per share or, (ii) 58% of the lowest
closing bid price in the 20 trading days prior to the day that the
Lender requests conversion. This feature gave rise to a derivative
liability of $553,000 at date of issuance as discussed below. The
amendment also increased the principal face amount of notes to
include accrued interest, and an additional $43,250 was added to
principal, which was recorded to financing costs. The aggregate
balance of the notes outstanding, and the related debt discount was
$302,067 and $0, respectively, as of December 31, 2018.
On April 29, 2019, Golock entered into an amendment with the
Company to extend the maturity of the Notes until July 31, 2019. In
return, Golock received several concessions. They received (a) a
warrant to purchase 12,833,333 shares of the Company’s common stock
for 48 months exercisable at a strike price of $.00475. The Company
recorded a financing charge of $28,227 related to these warrants
and (b) the conversion noted above was changed from 58% to 50% of
the lowest closing bid price in the 20 trading days prior to that
day that the Lender request conversion. During the year ending
December 31, 2019 the Company issued new notes payable of $53,331
and $23,102 of notes and accrued interest were converted into
100,000,000 shares of common stock. The balance of the notes
outstanding on December 31, 2019, was $339,010. As of December 31,
2019, $285,679 of these notes were past due. As of December 31,
2020 all of the Golock notes amounting to $339,011 were past due.
As a result Golock has assessed the Company additional penalties
and interest pf $1,172,782. The Company has recorded this amount as
an accrued liability as of December 1, 2020. The Company disagrees
with the accrued interest and penalties due to Golock and intends
to litigate this amount if a settlement on a vastly reduced amount,
cannot be reached.
(d) As of December 31, 2017 the Company had an outstanding
convertible note payable of $61,000. During the year ended December
31, 2018, the Company entered into additional notes of $369,250.
The convertible notes have interest rates ranging from 8% to 12%
per annum, maturity dates ranging from August 21, 2018, to June 19,
2020, and are convertible into shares of common stock of the
Company at discount rates between 38% and 50% of the lowest trading
price for the Company s common stock during the prior twenty (20)
trading day period, and for one lender, no lower than $0.035 per
share. The issuance of notes with conversion features gave rise to
derivative liabilities of $559,397 (see discussion below). As of
December 31, 2018, the aggregate convertible notes balance to the
five lenders was $426,964 and the related debt discount was
$179,162. As of December 31, 2020 all $238,303 were past due.
During the year ended December 31, 2019, the Company entered into
additional notes of $256,000, with interest rates from 10% to 12%,
and maturity dates ranging from January 22, 2020, to August 2,
2020, at conversion terms comparable to the terms above. The
issuance of notes with conversion features gave rise to derivative
liabilities of $357,465 (see discussion below). In addition, On
April 29, 2019, one of the lenders entered into an amendment with
the Company to extend the maturity of the Notes until July 31,
2019. In return, the Company issued (a) a warrant to purchase
2,966,986 shares of the Company’s common stock for a period of 48
months exercisable at a strike price of $.00475 with a fair value
of $5,934, and (b) the conversion price of outstanding notes was
changed from $.015 to 50% of the lowest closing bid price in the 20
trading days prior to that day that the Lender request conversion.
During the year ended December 31, 2019, convertible notes of
$388,207 and accrued interest were converted into 540,276,078
shares of common stock. As of December 31, 2019, the aggregate
convertible notes balance to the five lenders was $299,069 and the
related debt discount was $ 33,667. As of December 31, 2019,
$96,069 of these notes were past due.
In total, during 2019 convertible notes and accrued interest
aggregating $411,309 were converted into 640,276,078 common shares
with a fair value of $959,290 and recognized loss on settlement of
debt of $548,029 during the year ended December 31, 2019. On
December 31, 2019, the aggregate balance of the fair value of the
notes outstanding was $1,564,080 and the related debt discount was
$78,013. As of December 31, 2019, the above notes are convertible
into 3,334,494,813 shares of common stock.
During the year ended December 31, 2020, $56,466 of the principal
balance and $8,600 of interest was converted to 440,111,560 shares
of common stock. The Company recorded a loss on the extinguishment
of debt on these two conversions of $263,609. Additionally, the
Company paid $4,400 to reduce the principal balance. These were the
only note conversions during the year ended December 31, 2020.
Summary
On December 31, 2020, the aggregate balance of the fair value of
all convertible notes outstanding was 1,956,922 and the related
debt discount was $-0-, or a net balance of $1,956,922. Of this
amount, $620,714 in principal was past due. As of December 31,
2020, the above notes are convertible into 1,948,265,842 shares of
common stock.
The Company considered the current FASB guidance of “Contracts in
Entity’s Own Stock” which indicates that any adjustment to the
fixed amount (either conversion price or number of shares) of the
instrument regardless of the probability of whether or not within
the issuers’ control means the instrument is not indexed to the
issuer’s own stock. Accordingly, the Company determined that the
conversion prices of the Notes were not a fixed amount because they
were either subject to an adjustment based on the occurrence of
future offerings or events or the conversion price was variable. As
a result, the Company determined that the conversion features of
the Notes were not considered indexed to the Company’s own stock
and characterized the fair value of the conversion features as
derivative liabilities upon issuance. The Company determined that
upon issuance of the Notes, the initial fair value of the embedded
conversion feature was recorded as debt discount offsetting the
fair value of the Notes and the remainder recorded as financing
costs in the Consolidated Statement of Operations. The discount is
being amortized using the effective interest rate method over the
life of the debt instruments.
The balance of the unamortized note discount on December 31, 2017
was $198,025. During the year ended December 31, 2018, the Company
issued $583,750 of convertible notes whose conversion features
created a derivative liability upon issuance with a fair value of
$1,329,389 of which $483,635 was recorded as a debt discount, and
the remaining $845,754 was recorded as a financing cost. During the
year ended December 31, 2018, the amortization of debt discount was
$432,419 which is included in financing costs on the Company’s
statement of operations. The balance of the unamortized note
discount on December 31, 2018 was $249,241.
During the year ended December 31, 2019, the Company issued
$484,331 of convertible notes whose conversion features created a
derivative liability upon issuance with a fair value of $357,465 of
which $218,637 was recorded as a debt discount, and the remaining
$138,828 was recorded as a financing cost. During the year ended
December 31, 2019, the amortization of debt discount was $389,793
which is included in financing costs on the Company’s statement of
operations. The balance of the unamortized note discount on
December 31, 2019 was $78,013.
NOTE 10 – DERIVATIVE LIABILITY
The FASB has issued authoritative guidance whereby instruments
which do not have fixed settlement provisions are deemed to be
derivative instruments. The conversion prices of the Notes
described in Note 6 were not a fixed amount because they were
either subject to an adjustment based on the occurrence of future
offerings or events or they were variable. Since the number of
shares is not explicitly limited, the Company is unable to conclude
that enough authorized and unissued shares are available to settle
the conversion option. In accordance with the FASB authoritative
guidance, the conversion features have been characterized as
derivative liabilities to be re-measured at the end of every
reporting period with the change in value reported in the statement
of operations. As of December 31, 2020 and 2019, the derivative
liabilities were valued using probability weighted option pricing
models with the following assumptions:
|
|
|
December
31,
2020
|
|
|
December
31,
2019
|
|
|
|
|
|
|
|
|
|
|
Exercise Price
|
|
$
|
0.0015-0.0018
|
|
|
$
|
0.00015–0.00018
|
|
|
Stock Price
|
|
|
.0114
|
|
|
$
|
0.0003
|
|
|
Risk-free interest
rate
|
|
|
.17
|
%
|
|
|
1.59
|
%
|
|
Expected volatility
|
|
|
737.80
|
|
|
|
236
|
%
|
|
Expected life (in
years)
|
|
|
1.00
|
|
|
|
1.00
|
|
|
Expected dividend
yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Fair Value:
|
|
$
|
3,156,582
|
|
|
$
|
922,509
|
|
The risk-free interest rate was based on rates established by the
Federal Reserve Bank. The Company uses the historical volatility of
its common stock to estimate the future volatility for its common
stock. The expected life of the conversion feature of the notes was
based on the remaining term of the notes. The expected dividend
yield was based on the fact that the Company has not customarily
paid dividends in the past and does not expect to pay dividends in
the future.
During the year ended December 31, 2019, the Company recorded
derivative liabilities of $357,465 related to the issuance of
certain new convertible notes, a modification of $189,186 relating
to an additional derivative, and recognized $1,179,556 as other
income, which represented the net change in the value of the
derivative liability at December 31, 2019.
NOTE 11 – STOCKHOLDERS’ DEFICIT
On July 2, 2019, the Company filed a Certificate of Amendment (the
“Charter Amendment”) to the Company’s Articles of Incorporation (as
amended to date, the “Articles of Incorporation”) with the
Secretary of State of the State of Nevada. The Charter Amendment
increased the Company’s capitalization to 2,000,000,000 shares of
Common Stock and 20,000,000 shares of Preferred Stock, of which,
5,000,000 were designated as Series A Convertible Preferred
Stock.
Common stock
The Company has authorized 2,000,000,000 shares of $0.0001 par
value common stock. As of December 31, 2020 and December 31, 2019
there were 1,211,495,162 and 770,883,062 shares of common stock
issued and outstanding respectively.
Common stock returned by a director or officer
During the year ended December 31, 2019, a former Company director
voluntarily returned 4,555,918 shares of Company common stock to
Treasury. These shares were valued at par value of $456 and
decreased common stock and increased paid-in capital by the same
amount, so the transaction had no impact on the Company’s
equity.
Shares issued for services
During the year ended December 31, 2020, the Company issued 500,000
shares to the vendor who supplied consulting services to the
Company. The Company recorded consulting expense of $150 related to
this issuance.
During the year ended December 31, 2019, the Company issued
2,500,000 shares to the vendor who supplied consulting services to
the Company. The Company recorded consulting expense of $3,368
related to this issuance.
Shares issued to retire trade debt
During the year ended December 31, 2019, the Company reached
agreement with a vendor to retire approximately $27,096 in debt at
a price of $0.05 per share and issued the vendor 541,912 shares
pursuant to the agreement. At the time of the settlement of the
debt the Company’s common stock was trading at a price of $.0013,
so the Company recognized a profit of $26,391 upon the
extinguishment of the debt
Preferred Stock Series A
As of December 31, 2020 and 2019, the Company had 20,000,000 shares
of $0.0001 par value preferred stock authorized and there were
4,126,776 shares of Series A Preferred Stock issued and
outstanding.
On May 22, 2019, the Company authorized and designated a class of
Series A Convertible Preferred Stock (“Series A Preferred Stock”),
in accordance with a Certificate of Designation filed with the
State of Nevada (the “Series A Designation”). It subsequently
issued 4,126,776 restricted shares of Series A Preferred Stock to
various employees and service providers to compensate and reward
them for services and to incentivize them to provide continued
service to the Company. The Series A Preferred Stock receives
relative rights and preferences under terms and conditions set
forth in the Certificate of Designation of the Preferred Stock.
Pursuant to the Series A Designation, each share of Series A
Preferred Stock may be converted into 50 shares of common stock of
the Company. The Series A Preferred Stockholders shall be entitled
to share among dividends with the common stock shareholders of the
Company on an as-converted basis. The Series A Preferred
Stockholders shall vote with the common stock as a single class, on
a 100 to 1 basis, such that for every share of Series A Preferred
Stock held, such shares shall entitle the holder to cast 100 votes.
The holders of the Series A Preferred Stock have no liquidation or
redemption preference rights but get treated as common stockholders
on an as converted basis.
The Company believes that the issuance of the Series A Preferred
Stock was exempt from the registration requirements under the
Securities Act of 1933, as amended pursuant to Section 4(a)(2) of
the Act in that said transaction did not involve a public
solicitation and said restricted shares were issued to only a small
number of employees and consultants with an ongoing relationship
with the Company.
The Company determined the fair value of the preferred shares to be
$590,129 which is included as stock-based compensation in general
and administrative expense on the Company’s statements of
operations for the year ended December 31, 2019.
Warrants
No warrants were issued during the year ended December 31,
2020.
During the year ended December 31, 2019, the Company issued
15,800,319 warrants to two convertible noteholders as consideration
for extending the term of their convertible notes. The warrants are
exercisable for a period of four years at a strike price of
$0.00475. As a result of the issuance of these warrants, the
company recorded a financing expense of $36,533.
A summary of warrants for the years ended December 31, 2020 and
December 31, 2019, is as follows:
|
|
|
Number
|
|
|
Weighted
|
|
|
|
|
of
|
|
|
Average
|
|
|
|
|
Warrants
|
|
|
Exercise
|
|
|
Balance outstanding,
December 31, 2018
|
|
|
8,004,708 |
|
|
|
0.014 |
|
|
Warrants granted
|
|
|
15,800,319 |
|
|
|
.00475 |
|
|
Warrants exercised
|
|
|
- |
|
|
|
- |
|
|
Warrants expired or
forfeited
|
|
|
- |
|
|
|
- |
|
|
Balance outstanding,
December 31, 2019
|
|
|
23,805,027 |
|
|
|
0.079 |
|
|
Warrants granted
|
|
|
- |
|
|
|
- |
|
|
Warrants exercised
|
|
|
- |
|
|
|
- |
|
|
Warrants expired or
forfeited
|
|
|
- |
|
|
|
- |
|
|
Balance outstanding and
exercisable, December 31, 2020
|
|
|
23,805,027 |
|
|
$ |
0.0079 |
|
Information relating to outstanding warrants on December 31, 2020,
summarized by exercise price, is as follows:
|
|
|
|
Outstanding and
Exercisable
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Exercise Price
Per Share
|
|
|
Shares
|
|
|
Life
(Years)
|
|
|
Exercise
Price
|
|
|
$
|
0.010-0.015
|
|
|
|
8,004,708
|
|
|
|
0.14
|
|
|
$
|
0.014
|
|
|
$
|
0.004750
|
|
|
|
15,800,319
|
|
|
|
2.58
|
|
|
$
|
0.00475
|
|
The weighted-average remaining contractual life of all warrants
outstanding and exercisable on December 31, 2020, is .96 years. The
outstanding and exercisable warrants outstanding on December 31,
2020, had no intrinsic value.
NOTE 12 – COMMITMENT AND CONTINGENCIES
Joint Venture Agreement – Music Reports, Inc.
On September 1, 2018, the Company entered into an initial joint
venture (“JV”) agreement with Music Reports, Inc., (“MRI”). Music
Reports (musicreports.com) will initially partner with VNUE to
provide Performing Rights Organization (PRO) data to VNUE’s
Soundstr MRT (music recognition technology) platform through its
extensive Songdex database, and will eventually work with VNUE to
integrate automated direct licensing capability and royalty payment
and distribution into the Soundstr platform. The initial term of
the JV is for nine (6) months and requires the Company to Pay MRI
fifty percent (50%) of net revenue every quarter. As of December
31, 2020, no net revenue was generated from the JV.
Litigation
None
Artist Agreement
On October 27, 2015, the Company entered into an Artist Agreement
with I Break Horses, a Swedish duo based in Stockholm. The Artist
Agreement is effective October 27, 2015, and has a term lasting as
long as I Break Horses artist recordings are available via the VNUE
Service. Under the terms of the Artist Agreement, the Company shall
handle rights clearing and distribution for I Break Horses
recordings and receive 30% of the Net Income generated thereby. As
of December 31, 2020, the Company had not earned any revenue under
this agreement.
NOTE 13 – INCOME TAXES
Reconciliation between the expected federal income tax rate and the
actual tax rate is as follows:
|
|
|
Year Ended
December 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Federal statutory tax
rate
|
|
|
21 |
% |
|
|
21 |
% |
|
State tax, net of
federal benefit
|
|
|
6 |
% |
|
|
6 |
% |
|
Total tax rate
|
|
|
27 |
% |
|
|
27 |
% |
|
Allowance
|
|
|
(27 |
)% |
|
|
(27 |
)% |
|
Effective tax rate
|
|
-
|
%
|
|
-
|
%
|
The following is a summary of the deferred tax assets:
|
|
|
Year Ended
December 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Net operating loss
carryforwards
|
|
$ |
3,060,000 |
|
|
|
2,434,000 |
|
|
Accrued
compensation
|
|
|
- |
|
|
|
- |
|
|
Deferred tax asset
|
|
|
3,060,000 |
|
|
|
2,434,000 |
|
|
Valuation allowance
|
|
|
(3,060,000 |
) |
|
|
(2,434,000 |
) |
|
Net deferred tax
asset
|
|
$ |
- |
|
|
$ |
- |
|
The Company has no tax provision for any period presented due to
our history of operating losses. As of December 31, 2020, the
Company had estimated net operating loss carry forwards of
approximately $11,333,000 that may be available to reduce future
years’ taxable income through 2032 subject to Section 382
limitations. Future tax benefits which may arise as a result of
these losses have not been recognized in these financial
statements, as management has determined that their realization is
not likely to occur and accordingly, the Company has recorded a
valuation allowance for the full value of the deferred tax asset
relating to these tax loss carry-forwards. Additionally, the
Company has not filed tax returns, therefore the potential
realizability of this loss in future periods is indeterminable.
The Company adopted accounting rules which address the
determination of whether tax benefits claimed or expected to be
claimed on a tax return should be recorded in the financial
statements. Under these rules, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely
than not that the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements
from such a position are measured based on the largest benefit that
has a greater than fifty percent likelihood of being realized upon
ultimate settlement. These accounting rules also provide guidance
on de-recognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased
disclosures. As of December 31, 2017 no liability for unrecognized
tax benefits was required to be recorded.
NOTE 14 – SUBSEQUENT EVENTS
In February 2021, the Company entered into a $165,000 8%
Convertible Note Agreement with an accredited investor that matures
on November 16, 2021. The Note carried an original issue discount
(OID) of 10% so the amount funded to the Company was $150,000.The
note contains a conversion Price shall equal $.0171 (fixed price
equaling 90% of the lowest variable weighted average price (“VWAP”)
for 10 days preceding the Issue Date) (the “Fixed Conversion
Price”), subject to equitable adjustments for stock splits, stock
dividends or rights offerings by the Borrower relating to the
Borrower’s securities or the securities of any subsidiary of the
Borrower.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
|
ITEM 13.
|
OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION.
|
The following table sets forth the expenses payable by the
registrant, in connection with the sale of Common Stock being
registered under this registration statement. All amounts shown are
estimates except for the SEC registration fee.
|
SEC Registration fee
|
|
$ |
272.75
|
|
|
Legal fees and expenses
|
|
$ |
|
|
|
Accountant’s fees and expenses
|
|
$ |
|
|
|
Transfer Agent fees and expenses
|
|
$ |
|
|
|
Miscellaneous
|
|
$ |
|
|
|
Total
|
|
$ |
|
|
|
ITEM 14.
|
INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
|
Neither our articles of incorporation, nor our bylaws, prevent us
from indemnifying our officers, directors and agents to the extent
permitted under the Nevada Revised Statutes (“NRS”). NRS Section
78.7502, provides that a corporation may indemnify any director,
officer, employee or agent of a corporation against expenses,
including fees, actually and reasonably incurred by him in
connection with any defense to the extent that a director, officer,
employee or agent of a corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to Section 78.7502(1) or 78.7502(2), or in defense of any
claim, issue or matter therein.
NRS 78.7502(1) provides that a corporation may indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses, including fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he: (a) is not liable
pursuant to NRS 78.138; or (b) acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
NRS Section 78.7502(2) provides that a corporation may indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including amounts paid in
settlement and fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if
he: (a) is not liable pursuant to NRS 78.138; or (b) acted in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation. Indemnification
may not be made for any claim, issue or matter as to which such a
person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals there from, to be liable to the
corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances
of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
NRS Section 78.747 provides that except as otherwise provided by
specific statute, no director or officer of a corporation is
individually liable for a debt or liability of the corporation,
unless the director or officer acts as the alter ego of the
corporation. The court as a matter of law must determine the
question of whether a director or officer acts as the alter ego of
a corporation.
Our charter provides that we will indemnify our directors,
officers, employees and agents to the extent and in the manner
permitted by the provisions of the NRS, as amended from time to
time, subject to any permissible expansion or limitation of such
indemnification, as may be set forth in any stockholders’ or
directors’ resolution or by contract. Any repeal or modification of
these provisions approved by our stockholders will be prospective
only and will not adversely affect any limitation on the liability
of any of our directors or officers existing as of the time of such
repeal or modification. We are also permitted to apply for
insurance on behalf of any director, officer, employee or other
agent for liability arising out of his actions, whether or not the
NRS would permit indemnification.
|
ITEM
15.
|
RECENT
SALES OF UNREGISTERED SECURITIES.
|
Over the past three years, we have issued and sold the following
securities without registration under the Securities Act:
The offers, sales, and issuances of the securities described above
were exempt from the registration requirements under the Securities
Act, in reliance on the exemption from registration provided by
Section 4(a)(2) of the Securities Act of 1933, including Regulation
D promulgated thereunder, regarding transactions by an issuer not
involving a public offering. All purchasers of securities in the
above transactions represented that they were accredited investors
and were acquiring the securities for investment purposes only and
not with a view to, or for sale in connection with, any
distribution thereof and that they could bear the risks of the
investment and could hold the securities for an indefinite period
of time. The purchasers received written disclosures that the
securities had not been registered under the Securities Act and
that any resale must be made pursuant to a registration statement
or an available exemption from the registration under the
Securities Act. All certificates representing the securities in the
transactions described in this Item 15 included appropriate legends
setting forth that the securities had not been offered or sold
pursuant to a registration statement and describing the applicable
restrictions on transfer of the securities.
|
ITEM 16.
|
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES.
|
(a) Exhibits.
See the Exhibit Index attached to this registration statement,
which is incorporated by reference herein.
(b) Financial Statement Schedules.
All other schedules for which provision is made in the applicable
accounting regulations of the SEC are not required under the
related instructions, or are inapplicable, and therefore have been
omitted.
|
Exhibit Number
|
|
Description of Document
|
|
|
|
|
|
3.1
|
|
Articles of Incorporation (1)
|
|
3.2
|
|
Amendment to Articles of Incorporation (2)
|
|
3.3
|
|
Bylaws (2)
|
|
4.1
|
|
2012 Stock Incentive Plan (3)
|
|
5.1
|
|
To be filed
|
|
10.1
|
|
License Agreement by and between VNUE, Inc. and RockHouse Media
Productions, Inc., dated July 10, 2017 (4)
|
|
10.2*
|
|
Experimental Joint
Venture and Development Agreement by and between VNUE, Inc. and
Music Reports, Inc., dated September 1, 2018
|
|
10.3*
|
|
Bill of Sale and
Assignment and Assumption Agreement by and between VNUE, Inc. and
MusicPlay Analytics, LLC (d/b/a Soundstr, LLC) dated April 23,
2018
|
|
10.4*
|
|
Promissory Note
dated as of November 13, 2017 in the original principal Amount of
$36,750 issued to GoLock Capital, LLC
|
|
10.5*
|
|
Promissory Note
dated as of February 2, 2018 in the original principal Amount of
$40,000 issued to GoLock Capital, LLC
|
|
10.6*
|
|
Promissory Note
dated as of September 1, 2018 in the original principal Amount of
$105,000 issued to GoLock Capital, LLC
|
|
10.7*
|
|
Promissory Note
dated January 11, 2021 in the original principal amount of $50,000
issued to Jeffery Baggett
|
|
10.8*
|
|
Promissory Note
dated February 16, 2021 in the original principal amount of
$165,000 issued to GHS Investments, LLC
|
|
10.9*
|
|
Conversion and
Cancellation of Debt Agreement by and between VNUE, Inc. and
Jeffery Baggett, dated June 11, 2021
|
|
10.10*
|
|
Amendment to
Original Secured Convertible Promissory Note issued to YLimit, LLC
dated January 15, 2021
|
|
10.11*
|
|
Conversion and
Cancellation of Debt Agreement by and between VNUE, Inc. and
YLimit, LLC, dated May 17, 2021
|
|
10.12*
|
|
Form of Artist
Agreement by and between VNUE, Inc. and Artist dated January 9,
2020
|
|
10.13*
|
|
Securities
Purchase Agreement by and between VNUE, Inc. and GHS Investments,
LLC, dated June 21, 2021
|
|
21.1*
|
|
List of
subsidiaries of VNUE, Inc.
|
|
23.1*
|
|
Consent of BF
Borgers CPA PC
|
___________
* Filed herein
|
(1)
|
Included as an exhibit
with our Form SB-2 filed October 13, 2006.
|
|
|
|
|
(2)
|
Included as an exhibit
with our Form 8-K filed February 1, 2011.
|
|
|
|
|
(3)
|
Included as an exhibit
with our Form 8-K filed April 11, 2013.
|
|
|
|
|
(4)
|
Included as an exhibit with our Form 8-K
filed on July 14, 2017.
|
The undersigned Registrant hereby undertakes:
(A) (1) To file, during any period in which offers, or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the
Securities Act to any purchaser, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as
of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(B) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized,
thereunto duly authorized in the City of New York, State of New
York on June 23, 2021.
|
|
VNUE,
INC.
|
|
|
|
|
|
|
|
Date: June 23, 2021
|
By:
|
/s/ Zach
Bair
|
|
|
|
|
Zach Bair
|
|
|
|
|
Chief Executive
Officer
|
|
|
|
|
(Principal Executive
Officer)
|
|
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities and on the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Zach Bair
|
|
Chairman, Chief Executive Officer and
Principal
|
|
June 23, 2021
|
|
Zach Bair
|
|
Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Anthony Cardenas
|
|
Director, Chief Financial Officer and Vice
President of Artist Development
|
|
June 23, 2021
|
|
Anthony Cardenas
|
|
|
|
|
|
/s/ Louis Mann
|
|
Director, Executive Vice President
|
|
June 23, 2021
|
|
Louis Mann
|
|
|
|
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