UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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TABLE OF CONTENTS
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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Annual Report on Form 10-K of VNUE, Inc. (hereinafter the “Company,” “VNUE” “we,” “us” or “our”) discuss future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. In this Annual Report, forward-looking statements are generally identified by the words such as “anticipate,” “plan,” “believe,” “expect,” “estimate” and the like. Forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. A reader should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report. Important factors that may cause actual results to differ from projections include, for example:
| ● | our ability to successfully commercial the assets we acquired from Stage It |
| ● | the success or failure of management’s efforts to implement the Company’s business plan; |
| ● | the ability of the Company to fund its operating expenses; |
| ● | the ability of the Company to compete with other companies that have a similar business plan; |
| ● | the effect of changing economic conditions impacting our plan of operation; and |
| ● | the ability of the Company to meet the other risks as described elsewhere in this filing and as may be described in future filings with the SEC. |
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-K to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of our public disclosure practices. Additionally, the discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Form 10-K.
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PART I
ITEM 1. BUSINESS.
Business Overview
We are a music technology company that utilizes our platforms to record live concerts and commercializes the content by making the content immediately available for purchase through our website and the website at Set.fm, a technology platform that enables musical artists to capture, promote and sell high-fidelity recordings instantly. Our technology provides an income source to artists and record labels from the recorded content. Additionally, we offer high-end collectible products such as CDs, USB drives and laminates, which feature our fully mixed and mastered live concert content, through our exclusive partner DiscLive Network (the dba of RockHouse Live Media Productions, Inc). To date, we have created content from live concerts, including Rob Thomas, Patty Smyth and Scandal, The White Buffalo, King’s X, Paul Rodgers, Scott Stapp (of the band Creed), “The Music of Cream,” and many others.
Our products and services include:
| ● | With the addition of Stage It (Stage It.com), we have the ability to livestream concerts and other events, adding to the pool of other live music-focused technology services that include concerts or other live events that may be ticketed (just like an in-person event), and fans who pay for tickets may enjoy a performance or other engagement by watching digital video as it occurs on their web browser. For example, an artist can create an event through the platform, then, in advance, let their fans know they can purchase the ability to view the concerts on the Stage It platform. Fans then purchase the ability to access these concerts, and at the designated time, the fan may then observe the live performance on Stage It.com, |
| ● | 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, aside from Stage It, this is the only platform that generates any revenue for the Company.) |
| ● | Soundstr™ - a comprehensive music identification and rights management Cloud platform that we are developing, when fully deployed, can accurately track and audit public performances of music, creating a more transparent ecosystem for general music licensing and associated royalty payments, which will help ensure the correct stakeholders are compensated through the use of our “big data” collection. Soundstr is not yet generating revenue but is being commercially deployed to early adopters. |
| ● | 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 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 double CD sets, which are burned on-site where customers can purchase them. Our customers are fans of live music and the bands which we record. Furthermore the Company generates revenue via StageIt.com, through fans who purchase access to the site and redeems “notes” to “virtually attend” performances of artists of their choice.
Customers want to “take home” their experience of the concerts they attend. Our Company enters into agreements with certain bands and artists and record labels if a particular artist is 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, and in some cases, utilizes assets own by RockHouse Live Media Productions, Inc.
As we partner with both artists and labels, we market our services on their websites, social media platforms, and 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 three times rescheduled, most recently to Summer 2023 for the North American Leg and Spring 2024 for the Australian leg. The tour generated approximately $175,000 in income for the Company.
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Corporate History
On February 13, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company contracted to acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”). At the same time, Stage It and several of the shareholders of Stage It entered into a voting agreement concerning the Merger.
Pursuant to the Merger Agreement, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) were converted into the right to receive the applicable portion of the Merger Consideration. $1,085,450 of the Merger Consideration was paid in cash and satisfaction of certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion was paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, was held back for the purposes of satisfying certain contingent obligations of Stage It.
The Merger Agreement provides for the issuance of earn out shares provided that certain EBIDTA requirements are met until two years from the date of acquisition. The Company has determined, as of December 31, 2022, that the Earnout would not be achieved.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial 135,000,000 shares, paid certain amounts to Stage It vendors and will pay additional amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement.
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. We do this by selling recordings on set.fm, hard-copy products such as CDs utilizing our partner DiscLive, and through live ticketed performances on our livestreaming platform, StageIt.
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% or more of the net revenue generated from their specific music, and artists typically received a generous “net split” from sales of DiscLive physical products, creating a more robust opportunity for artists to monetize their live shows. 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. Additionally artists receive approximately 73% of ticket sales on StageIt.com, with some variety depending on the scope of the deal and additional services provided by StageIt.
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For an industry with constantly evolving trends, music’s live events have remained surprisingly static since the 1970s. 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 smartphone 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. Additionally, we have found that, even though the demise of CDs has been predicted for over a decade, there is still a strong demand for physical, collectible CD sets.
The rise of the mobile internet and smartphones have, 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.
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, live 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 to 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, as well as unique features built into Stageit, such as “live chat” and “tipping” the artist.
VNUE’s team members have been involved in the business of instant live content since 2003. The Company’s Chief Executive Officer 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 the 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
We have pending patents for our Soundstr™ technology and expect to file more related patents around the Soundstr™ platform, as well as Set.fm™.
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.
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Our Strategy for Growth
Key elements of our growth strategy include:
| ● | Continued rollout of the live recording business and further improvement to our software platforms. |
| ● | 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, which will be of value to a large group of businesses such as touring companies, marketing companies, performing rights organizations, and many more. |
| ● | The expansion of Stage It’s customer database is expected to bring us considerably more fans of music and specifically, live music. There are thousands of artists and a large number of end users on the Stage It database. We expect to tap that database for our existing services, as well as future services and integration, as our funding allows us to do. |
| ● | We intend to leverage technical development efforts to identify common threads across our Set.fm and Soundstr platforms and combine backend technologies to streamline and more efficiently utilize our platforms. |
| ● | Eventually, we will explore further branding and expansion of the platform services. |
| ● | Plans continue to be addressing Stage It debt to artists and to other vendors, as well as expansion into other markets. The Company has been successful in bringing a good number of new artists to the platform and continues to do so. |
Corporate Information
VNUE is a Nevada corporation. Our principal 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 annual report, and you should not consider information on our website to be part of this annual report. We also have a distribution center located in Memphis, TN.
Employees
We currently have 1 full-time and 4 part-time employees. We also currently engage independent contractors in the areas of accounting, legal, and corporate finance, as well as marketing and business development, as well as touring positions. The remuneration paid to our officers and directors will be more completely described elsewhere in this annual report. We expect to take on more employees or independent contractors as needed.
Legal Proceedings
In the matter of VNUE, Inc. v. Power Up Lending Group, Ltd. On October 6, 2021, the Company commenced an action against Power Up Lending Group, Ltd. “Power Up”) and Curt Kramer (“Kramer”) (Power Up and Kramer together, the “Power Up Parties”) in the United States District Court for the Eastern District of New York. The complaint alleges that: (1) Power Up is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”) and, pursuant to Section 29(b) of the Act, the Company is entitled to recessionary relief from certain convertible promissory notes (“Notes”) and securities purchase agreements (“SPAs”) entered into by the Company and Power Up; (2) Kramer is liable to the Company as the control person of Power Up pursuant to Section 20(a) of the Act; and (3) Power Up is liable to the Company for unjust enrichment arising from the Notes and SPAs.
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On December 10, 2021, the Power Up Parties filed their pre-motion conference request letter with the Court regarding their forthcoming motion to dismiss the Company’s complaint. On December 17, 2021, the Company filed its opposition thereto. On January 26, 2022, the Company filed its amended complaint, which asserted the same causes of action set forth in the initial complaint, and further alleged that Power Up made material misstatements in connection with the purchase and sale of the Company’s securities in violation of Section 10(b) of the Act and, thus, the Company is entitled to recessionary relief from the Notes and SPAs pursuant to Section 29(b) of the Act.
On February 9, 2022, the Court ordered an initial conference. The initial conference is currently scheduled for May 16, 2022, at 12:00 p.m. (EST). As of the date hereof, the Company intends to litigate its claims for relief against the Power Up Parties.
On June 7, 2022, the Company filed a voluntary dismissal of the action because the parties reached a confidential settlement.
On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (Golock and DBW together, the “Golock Plaintiffs”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Golock Plaintiffs alleged that the Company was in breach of certain convertible promissory notes, securities purchase agreements and common stock warrants.
Following a bench trial, on June 1, 2023, the District Court ruled in the Golock Plaintiffs’ favor on its breach of contract claims and against the Company. On the same day, the Company appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit (“Second Circuit”).
On June 16, 2023, the District Court entered a judgment in the Golock Plaintiffs’ favor and against the Company for: (1) $1,218,897.62 in favor of Golock, and (2) $268,211.18 in favor of DBW.
On July 5, 2023, the District Court entered an amended judgment in favor of the Golock Plaintiffs’ favor and against -the Company. In addition to the amounts awarded on June 16, the District Court awarded the Golock Plaintiffs $223,328.20 for the attorney’s fees incurred in connection with this action.
As of the date hereof, the Company’s appeal to the Second Circuit. The Second Circuit, however, has not yet rendered a decision on the appeal. The Company will continue to vigorously defend itself in this matter.
On June 15, 2022, the Company commenced an action against LG Capital, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman (collectively, “LG Defendants”) in the United States District Court for the Eastern District of New York. The Company’s complaint alleges that the LG Defendants (1) violated the Racketeer Influenced and Corrupt Organizations Act through the collection of an unlawful debt imposed under a certain convertible promissory note, and (2) were unjust enriched by their collections of a certain convertible promissory note.
On March 7, 2023, the Company filed an amended complaint against the LG Defendants. The amended complaint raises the same claims for relief as the initial complaint.
On January 12, 2024, the Magistrate Judge assigned to this matter recommended that the LG Defendants’ motion to dismiss be denied.
As of the date hereof, the District Court has not yet entered an order on the LG Defendants’ motion to dismiss.
The Company intends to vigorously pursue its claims for relief and the damages it maintains that it is entitled to thereunder.
Smaller Reporting Company
The Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company”, these exemptions will continue to be available to us.
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ITEM 1A. RISK FACTORS.
An investment in our securities involves a high degree of risk. In addition to the other information contained in this Annual Report on Form 10-K, prospective investors should carefully consider the following risks before investing in our securities. If any of the following risks actually occur, as well as other risks not currently known to us or that we currently consider immaterial, our business, operating results and financial condition could be materially adversely affected. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note On Forward-Looking Statements” in this Annual Report on Form 10-K. In assessing the risks below, you should also refer to the other information contained in this Annual Report on Form 10-K, including the financial statements and the related notes, before deciding to purchase any of our securities.
Risks Relating to Our Financial Condition
We cannot assure you that we will achieve or maintain profitability, and our auditor has expressed substantial doubt about our ability to continue as a going concern.
We will need to raise additional working capital to continue our normal and planned operations. We will need to generate and sustain significant revenue levels in future periods in order to become profitable, and even if we do, we may not be able to maintain or increase our level of profitability. Our efforts to build and grow our business may be costlier than we expect, and we may not be able to generate sufficient revenue to offset our operating expenses. We are operating at a loss and may incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties, complications and delays and other unknown events. Accordingly, substantial doubt exists about our ability to continue as a going concern, and we cannot assure you that we will achieve sustainable operating profits as we continue to expand our business and otherwise implement our growth initiatives.
The financial statements included with this Form 10-K have been prepared on a going concern basis. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and pay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. We plan to continue to provide for our capital needs through sales of our securities and/or related party advances. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
We have a very limited operating history of commercializing the IT assets and operations, and we have incurred losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. We may never generate any revenue or become profitable, or if we achieve profitability, we may not be able to sustain it.
Because we acquired Stage It in February 2022, we have a very limited operating history in commercializing its assets, upon which you can evaluate our business and prospects. We have not yet demonstrated an ability to overcome many of the risks and uncertainties frequently encountered by companies in the entertainment industry.
Investment in our common stock is highly speculative because we require substantial upfront capital expenditures, which we do not have available. We are not profitable and have incurred losses in the years ended December 31, 2023 and December 31, 2022. For the years ended December 31, 2023 and December 31, 2022, we reported a net loss of $1,136,776 and $22,762,622, respectively, and we had an accumulated deficit of $38,233,792 and $36,808,403, respectively.
We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we develop our operations and incorporate the business of Stage It into our business.
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Because we have a limited operating history, you may not be able to accurately evaluate our operations.
We have had limited operations to date and have generated limited revenues. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business and additional costs and expenses that may exceed current estimates. We expect to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will continue to generate operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
We are dependent on outside financing for continuation of our operations.
Because we have generated limited revenues and currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future.
We are dependent on outside financing for continuation of our operations.
Because we have generated limited revenues and currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business operations. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. As of December 31, 2023, we had cash on hand of $25,430.
We will need additional funds to complete further development of our business plan to achieve a sustainable level where ongoing operations can be funded out of revenues. We anticipate that we must raise $2,500,000 for our operations for the next 18 months, and $15,000,000 to $20,000,000 million to fully implement our business plan to its fullest potential and achieve our growth plans, including new initiatives. There is no assurance that any additional financing will be available or, if available, on terms that will be acceptable to us. Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern, and, as a result, our investors could lose their entire investment.
Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.
Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control, including but not limited to:
| ● | general economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; |
| ● | the budgetary constraints of our customers; seasonality; |
| ● | success of our strategic growth initiatives; |
| ● | costs associated with the launching or integration of new or acquired businesses; timing of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; |
| ● | the mix, by state and country, of our revenues, personnel and assets; movements in interest rates or tax rates; |
| ● | changes in, and application of, accounting rules; changes in the regulations applicable to us; and litigation matters; |
| ● | As a result of these factors, we may not succeed in our business and we could go out of business. |
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As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced any profit and may not in the near future, if at all. While we have generated limited revenue, all related party, we cannot be certain that we will be able to realize sufficient revenue to achieve profitability. Further, many of our competitors have a significantly larger industry presence and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
Risks Related to Intellectual Property
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 been, 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.
Our commercial success depends significantly on our ability to develop and commercialize our services and platform without infringing the intellectual property rights of third parties.
Our commercial success will depend, in part, on operating our business without infringing the trademarks or proprietary rights of third parties. Third parties that believe we are infringing on their rights could bring actions against us, claiming damages and seeking to enjoin the development, marketing and distribution of our services and platform. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If any of these actions are successful, we could be required to pay damages and/or obtain a license to continue to develop or market our products, in which case we may be required to pay substantial royalties. However, any such license may not be available on terms acceptable to us or at all.
Risks Related to Legal Uncertainty
Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our reputation may be harmed.
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If we fail to comply with the new rules under the Sarbanes-Oxley Act related to accounting controls and procedures, or if material weaknesses or other deficiencies are discovered in our internal accounting procedures, our stock price could decline significantly.
We are exposed to potential risks from legislation requiring companies to evaluate internal controls under Section 404(a) of the Sarbanes-Oxley Act of 2002. As a smaller reporting company, we are required to provide a report on the effectiveness of its internal controls over financial reporting, and we will be exempt from auditor attestation requirements concerning any such report so long as we are a smaller reporting company. There is a greater likelihood of material weaknesses in our internal controls, which could lead to misstatements or omissions in our reported financial statements as compared to issuers that have conducted such evaluations.
In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2023, the Company determined that there were deficiencies that constituted material weaknesses, as described below.
| ● | Lack of proper segregation of duties due to limited personnel. |
| ● | Lack of a formal review process that includes multiple levels of review. |
| ● | Lack of adequate policies and procedures for accounting for financial transactions. |
| ● | Lack of independent board member(s) |
| ● | Lack of independent audit committee |
Material weaknesses and deficiencies could cause investors to lose confidence in our company and result in a decline in our stock price and consequently affect our financial condition. In addition, if we fail to achieve and maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly. In addition, we cannot be certain that additional material weaknesses or significant deficiencies in our internal controls will not be discovered in the future.
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.
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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 acts 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.
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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 our 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 future pandemics, which could affect their ability to deliver their services to our customers in a satisfactory manner, or at all.
If we are unable to successfully manage growth, our operations could be adversely affected.
Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage personnel. There can be no absolute assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our services and platform. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact our business, our cash flow and results of operations, and our reputation with our current or potential customers.
We may fail to successfully integrate the acquisition of Stage It or otherwise be unable to benefit from pursuing acquisitions.
We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material:
| ● | difficulties integrating personnel from acquired entities and other corporate cultures into our business; difficulties integrating information systems; |
| ● | the potential loss of key employees of acquired companies; |
| ● | the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or the diversion of management attention from existing operations. |
| ● | We recently acquired our wholly-owned subsidiary, Stage It, and have been active in assimilating this business into VNUE. |
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Risks Related to Our Management and Control Persons
We are dependent on the continued services of Zach Bair, our Chairman, Chief Executive Officer and Chief Accounting Officer, and if we fail to keep him or fail to attract and retain qualified senior executive and key technical personnel, our business will not be able to expand.
We are dependent on the continued availability of Zach Bair, our Chairman, Chief Executive Officer and Chief Accounting Officer, and the availability of new employees to implement our business plans. The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain the services of all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.
Our personnel may voluntarily terminate their relationship with us at any time, and competition for qualified personnel is intense. The process of locating additional personnel with the combination of skills and attributes required to carry out our strategy could be lengthy, costly and disruptive.
If we lose the services of key personnel or fail to replace the services of key personnel who depart, we could experience a severe negative effect on our financial results and stock price. The loss of the services of any key personnel, marketing or other personnel, or our failure to attract, integrate, motivate and retain additional key employees could have a material adverse effect on our business, operating and financial results and stock price.
Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
Although the company plans (and has been planning) to obtain directors and officers liability (“D&O”) insurance, lack of funding has prevented the company from doing so. In the future, we may be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained D&O insurance. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
The elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contain provisions that eliminate the liability of our directors for monetary damages to our Company and shareholders, and furthermore, Nevada law further insulates our officers and directors. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resulting costs may also discourage our company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our Company and shareholders.
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Risks Related to Our Securities and the Over-the-Counter Market
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 quoted on the OTC Markets, and the closing price of our stock on April 7, 2023 was $0.0044. 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 OTC Pink Market 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 OTC Markets 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.
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Our existing stockholders will experience significant dilution from outstanding convertible notes, the acquisition of Stage It and conversion of existing preferred stock to common stock and the exercise of warrants.
The issuance of our common stock will continue to have a dilutive impact on our shareholders. As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we the Series B Preferred converts to common stock, the more shares of our common stock we will have to issue. If our stock price decreases, then our existing shareholders will experience greater dilution. 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 the price of our common stock.
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 4,000,000,000 shares of common stock. As of March 25, 2024 we had 2,841,865,526 shares 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 under the symbol “VNUE”, and currently, there is limited trading activity in our common stock and limited public 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-priced 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.
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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:
| ● | variations in our revenues, earnings and cash flow; |
| ● | announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; |
| ● | announcements of new offerings, solutions and expansions by us or our competitors; |
| ● | changes in financial estimates by securities analysts; |
| ● | detrimental adverse publicity about us, our brand, our services or our industry; |
| ● | additions or departures of key personnel; |
| ● | release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and |
| ● | potential litigation or regulatory investigations. |
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 the penny stock rules, which will make shares of our common stock more difficult to sell.
We are currently subject to, 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.
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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, 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 2,841,865,526 shares of common stock outstanding. We cannot predict what effect, if any, market sales of securities held by our 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.
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Our existing stockholders will experience significant dilution from the sale of our common stock pursuant to the GHS Financing Agreement.
The sale of our common stock to GHS Investments LLC (“GHS”) in accordance with the GHS Financing Agreement will have a dilutive impact on our shareholders. As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise our put options, the more shares of our common stock we will have to issue to GHS in order to exercise a put under the Financing Agreement. 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.
The issuance of shares pursuant to the Financing Agreement may have a significant dilutive effect.
Depending on the number of shares we issue pursuant to the GHS Financing Agreement, it could have a significant dilutive effect upon our existing shareholders. Although the number of shares that we may issue pursuant to the Financing Agreement will vary based on our stock price (the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to our shareholders, based on different potential future stock prices, if the full amount of the Financing Agreement is realized. Dilution is based upon common stock put to GHS and the stock price discounted to 80% of the lowest daily VWAP of our common stock during the ten (10) business days beginning on the date on which we deliver a put notice to GHS.
GHS will pay less than the then-prevailing market price of our common stock, which could cause the price of our common stock to decline.
Our common stock to be issued under the GHS Financing Agreement will be purchased at 80% of the lowest daily VWAP of our common stock during the ten (10) business days beginning on the date on which we deliver a put notice to GHS.
GHS has a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted price and the market price. If GHS sells our shares, the price of our common stock may decrease. If our stock price decreases, GHS may have further incentive to sell such shares. Accordingly, the discounted sales price in the Financing Agreement may cause the price of our common stock to decline.
If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline.
The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY.
We continue to augment the capabilities of our people, processes, and technologies in order to address our cybersecurity risks. Our cybersecurity risks, and the controls designed to mitigate those risks, are integrated into our overall risk management governance and are reviewed yearly by our Board of Directors.
Risk Management and Strategy
We have implemented a set of comprehensive cybersecurity and data protection policies and procedures. Risks from cybersecurity threats are regularly evaluated as a part of our broader risk management activities and as a fundamental component of our internal control system. Our employees receive annual cybersecurity awareness training, including specific topics related to social engineering and email frauds. We utilize an outsourced information technology firm and consultants with significant expertise in cybersecurity. We invest in advanced technologies for continuous cybersecurity monitoring across our information technology environment which are designed to prevent, detect, and minimize cybersecurity attacks, as well as alert management of such attacks.
Our Information Technology General Controls are firmly established based on the National Institute of Standards and Technology (“NIST”) cybersecurity framework and cover areas such as risk management, data backup, and disaster recovery. We have utilized an outsourced information technology consultant to reduce and monitor security threats and vulnerabilities. As part of our gap analysis, identified vulnerabilities have been, and will continue to be, promptly addressed with our senior business leadership and our Board of Directors.
Governance
Our Board of Directors is responsible for overseeing our cybersecurity risk management and strategy. Our President regularly meets with and provides periodic briefings to our Board of Directors regarding our cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties, and the like.
ITEM 2. PROPERTIES.
We own no real property. We rent space at 104 W. 29th Street, 11th Floor, New York, NY 10001. Currently, rent at this location is approximately $681 per month. We believe this property to be adequate to our needs for the time being. We also rent a small distribution center in Memphis, TN, which is approximately $1000 per month.
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ITEM 3. LEGAL PROCEEDINGS.
In the matter of VNUE, Inc. v. Power Up Lending Group, Ltd. On October 6, 2021, the Company commenced an action against Power Up Lending Group, Ltd. “Power Up”) and Curt Kramer (“Kramer”) (Power Up and Kramer together, the “Power Up Parties”) in the United States District Court for the Eastern District of New York. The complaint alleges that: (1) Power Up is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”) and, pursuant to Section 29(b) of the Act, the Company is entitled to recessionary relief from certain convertible promissory notes (“Notes”) and securities purchase agreements (“SPAs”) entered into by the Company and Power Up; (2) Kramer is liable to the Company as the control person of Power Up pursuant to Section 20(a) of the Act; and (3) Power Up is liable to the Company for unjust enrichment arising from the Notes and SPAs.
On December 10, 2021, the Power Up Parties filed their pre-motion conference request letter with the Court regarding their forthcoming motion to dismiss the Company’s complaint. On December 17, 2021, the Company filed its opposition thereto. On January 26, 2022, the Company filed its amended complaint, which asserted the same causes of action set forth in the initial complaint, and further alleged that Power Up made material misstatements in connection with the purchase and sale of the Company’s securities in violation of Section 10(b) of the Act and, thus, the Company is entitled to recessionary relief from the Notes and SPAs pursuant to Section 29(b) of the Act.
On February 9, 2022, the Court ordered an initial conference. The initial conference is currently scheduled for May 16, 2022, at 12:00 p.m. (EST). As of the date hereof, the Company intends to litigate its claims for relief against the Power Up Parties.
On June 7, 2022, the Company filed a voluntary dismissal of the action because the parties reached a confidential settlement.
On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (Golock and DBW together, the “Golock Plaintiffs”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Golock Plaintiffs alleged that the Company was in breach of certain convertible promissory notes, securities purchase agreements and common stock warrants.
Following a bench trial, on June 1, 2023, the District Court ruled in the Golock Plaintiffs’ favor on its breach of contract claims and against the Company. On the same day, the Company appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit (“Second Circuit”).
On June 16, 2023, the District Court entered a judgment in the Golock Plaintiffs’ favor and against the Company for: (1) $1,218,897.62 in favor of Golock, and (2) $268,211.18 in favor of DBW.
On July 5, 2023, the District Court entered an amended judgment in favor of the Golock Plaintiffs’ favor and against the Company. In addition to the amounts awarded on June 16, the District Court awarded the Golock Plaintiffs $223,328.20 for the attorney’s fees incurred in connection with this action.
As of the date hereof, the Company’s appeal to the Second Circuit. The Second Circuit, however, has not yet rendered a decision on the appeal. The Company will continue to vigorously defend itself in this matter.
On June 15, 2022, the Company commenced an action against LG Capital, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman (collectively, “LG Defendants”) in the United States District Court for the Eastern District of New York. The Company’s complaint alleges that the LG Defendants (1) violated the Racketeer Influenced and Corrupt Organizations Act through the collection of an unlawful debt imposed under a certain convertible promissory note, and (2) were unjust enriched by their collections of a certain convertible promissory note.
On March 7, 2023, the Company filed an amended complaint against the LG Defendants. The amended complaint raises the same claims for relief as the initial complaint.
On January 12, 2024, the Magistrate Judge assigned to this matter recommended that the LG Defendants’ motion to dismiss be denied.
As of the date hereof, the District Court has not yet entered an order on the LG Defendants’ motion to dismiss.
The Company intends to vigorously pursue its claims for relief and the damages it maintains that it is entitled to thereunder.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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 in December 2006. 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
As of December 31, 2023 there were 244 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.
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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.
Equity Compensation Plans
On October 4, 2022, the Company adopted an Equity Compensation Plan. The terms of the plan are as follows:
PART I – GENERAL COMPENSATION (“COMPENSATION LEVELS”)
Executives in VNUE are be paid in accordance with similar companies, at similar levels, and at similar stages of development. Compensation levels, which will become effective post-funding of $2,500,000 to $5,000,000, will be communicated and formalized via email. New salaries require “full time” participation, meaning substantially all of the employee’s or contractor’s time devoted to furthering VNUE’s business objectives. Until which time the Company receives funding in the levels noted, executives will contue to be paid considerably less than “market” rates.
PART II – BONUS COMPENSATION (“BONUS COMPENSATION”)
Bonus Compensation will be rewarded, at the option of the recipient, in restricted shares of the Company’s common securities, or cash, in a strategic transaction, subsidiary, joint venture, contract right, intellectual property, merger, acquisition, royalties or other asset, or in any combination of the above. This compensation will be rewarded based on identifying, negotiating, contracting or otherwise playing a team role with other key personnel in the closing of (a) revenue deals, (b) funding deals, or (c) strategic deals, mergers or acquisitions.
The Bonus Compensation will be 20% of what the value is to the Company, will be shared equally between the key personnel who took a direct role in securing the opportunity, and will be rewarded at the time the company either (a) closes a funding deal, (b) completes an acquisition, or (c) when the company realizes revenues, profits, EBITDA, free cash flow, cash distributions, dividends, sale proceeds, or other value of any kind. This includes goal-related acquisitions, whereby shares are awarded to acquisition targets based on performance.
The Bonus Compensation is based on the net consideration delivered to the company and will be paid quarterly in arrears. This means, if, for example, two employees secure a deal worth $100,000, the Bonus Compensation would be 20,000. In another example, if an employee brings a revenue deal to StageIt, and that deal generates $100,000 (in the current StageIt Model), the Company would net $20,000. Therefore, that employee would receive $5,000 in performance-based incentive compensation.
For revenue deals, this may be delivered in the Company’s restricted common stock, cash (at the time it is realized), or a combination of the two. Performance-based incentive compensation will be rewarded only when value is realized, or when transactions are complete, quarterly, in arrears (in some cases, when possible, the Company may, at its discretion, accelerate these rewards).. As with all other transactions, when there is a contingent nature to a transaction, performance-based compensation will only be paid on consideration actually paid, or value actually received over time as the contingent nature of the transactions are actually satisfied. Additionally, performance-based incentive compensation for funding deals shall only be paid in stock of the company, and the company will endeavor to issue the shares in as tax-advantaged a way as possible.
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Recent Sales of Unregistered Securities
The sales and issuances of the securities described below were made pursuant to the exemptions from registration contained in Section 4(a)(2) of the Securities Act and Regulation D under the Securities Act. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to the stock certificate issued to each purchaser and the transfer agent affixed the appropriate legends. None of the securities were sold through an underwriter, and accordingly, there were no underwriting, discounts or commissions involved.
During the 3-year period prior to the filing of this Form 10-K, the Company entered into the following transactions:
During the year ended December 31, 2023, the Company entered into the following transactions:
During the year ended December 31, 2022, the Company entered into the following transactions:
| ● | On May 25, 2022, we issued to each of Zach Bair, our Chairman, Chief Executive Officer and Chief Accounting Officer, Anthony Cardenas, our Chief Financial Officer and Director, and Lou Mann, our Executive Vice President and Director, 1,000 shares of our newly created Series C Preferred Stock for services rendered. |
| ● | On June 3, 2022, the Company entered into an Exchange Agreement with GHS Investments LLC (“GHS”), whereby GHS agreed to purchase 266 shares of the Company’s Series B Convertible Preferred Stock in exchange for retiring two convertible promissory notes held in our company with principal and accrued but unpaid interest of $267,194. |
| ● | On April 19, 2022, the Company entered into a Securities Purchase Agreement with GHS, whereby GHS agreed to purchase 250 shares of the Company’s Series B Convertible Preferred Stock in exchange for retiring two convertible promissory notes held in our Stock for $250,000. The company issued 260 shares of Series B Preferred Stock with 10 commitment shares included. | |
| ● | On June 29, 2022, the Company entered into a Securities Purchase Agreement with GHS, whereby GHS agreed to purchase 30 shares of the Company’s Series B Convertible Preferred Stock in exchange for retiring two convertible promissory notes held in our Stock for $30,000. The company issued 32 shares of Series B Preferred Stock with 2 commitment shares included. |
| ● | On January 3, 2022, and in February of 2022, we executed Securities Purchase Agreements with GHS whereby GHS agreed to purchase, in tranches, shares of our Series B Convertible Preferred Stock. We have been able to raise $1,750,000 (less financing fees of $130,000 from the sale of 1,795 shares of Series B Convertible Preferred Stock with 100% warrant coverage. |
| ● | On February 14, 2022, the Company completed the acquisition of Stage It. Under the terms of the acquisition, the Company agreed to an initial share issuance of 135,000,000 shares of common stock. |
During the year ended December 31, 2021, the Company entered into the following transactions:
| ● | Issued 75,195,174 shares upon the conversion of convertible notes resulting in a loss of $80,227 on the extinguishment of debt. |
During the year ended December 31, 2020, the Company entered into the following transactions:
| ● | Issued 500,000 shares to pay for services valued at $150.00. | |
| ● | Issued 17,539,543 shares valued at $11,084 to pay interest expense. | |
| ● | Issued 422,572,017 shares upon the conversion of convertible notes resulting in a paydown of $56,466 and a loss of $263,609 on the extinguishment of debt. | |
| ● | Issued $453,708 in convertible notes with a fixed conversion price of $0.001 if a qualified offering occurs. |
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These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view toward distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
The sales and issuances of the securities described below were made pursuant to the exemptions from registration contained in Section 4(a)(2) of the Securities Act and Regulation D under the Securities Act. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. We requested our stock transfer agent to affix appropriate legends to the stock certificate issued to each purchaser, and the transfer agent affixed the appropriate legends. Each purchaser was given adequate access to sufficient information about us to make an informed investment decision.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable to a smaller reporting company.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements in this quarterly report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also, look for discussions of strategies that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business. Some forward-looking statements that we may use include, without limitation, those statements that relate to:
| ● | Competition and market acceptance of our product, | |
| ● | Other risks and uncertainties related to the music industry and our business strategy and the impact of the Covid-19 pandemic on our operations, | |
| ● | Our ability to penetrate the market and continually innovate useful technologies, | |
| ● | Our ability to negotiate and enter into license agreements, | |
| ● | Our ability to raise capital, and | |
| ● | Our ability to protect our intellectual property rights. |
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety for all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.
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Presentation of Information
As used in this quarterly report, the terms “we”, “us”, “our” and the “Company” mean VNUE, Inc. and its subsidiaries, unless the context requires otherwise.
All dollar amounts in this annual report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a Nevada corporation on April 4, 2006.
Impact of the Current Coronavirus (COVID-19) Pandemic on the Company
Covid-19 has had a material adverse effect on our live recording business and the music industry in general. Substantially all of our future set.fm and DiscLive business is dependent on the success of public events and gatherings. We believe that the vaccination efforts throughout the world are having a positive impact on the population that may enable more live music events to be held in the future, which would be beneficial to our business; however, there can be no assurances on the timing of when this may occur or whether it will occur at all.
Overview
Our Business
We are a music technology company that utilizes our platforms to record live concerts and then sell the content to consumers. We make the content we record available to the set.fm platform, as well as our website, immediately after the show is finished. Our technology helps artists and record labels generate alternative income from the recorded content. We also offer high-end collectible products such as CDs, USB drives and laminates, which feature our fully mixed and mastered live concert content.
Until the acquisition of Stage It, described below, we had two products:
| ● | Set.fm™ / DiscLive Network™ - Our consumer app platform allows customers to download and purchase, via their individual mobile device, the concert they just attended. There are also physical collectible products which are recorded and sold at shows as well as online through the Company’s exclusive partner DiscLive Network™. The app itself is free to download and allows for in app purchases regarding the content. (Currently, this is the only platform that generates any revenue for the Company.) |
| ● | Soundstr™ - a comprehensive music identification and rights management Cloud platform that we are developing, when fully deployed, can accurately track and audit public performances of music, creating a more transparent ecosystem for general music licensing and associated royalty payments, which will help ensure the correct stakeholders are compensated through the use of our “big data” collection. Soudstr is not yet generating revenue but is being commercialy deployed to early adopters. |
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. The Company generates additional revenue via Stageit, which sells “notes to users allowing them to utilize our system (license) to view performances by artists registered on the site.
Customers want to “take home” their experience of the concerts they attend. Our Company enters into agreements with certain bands and artists and record labels, if a particular artist is 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.
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As we partner with both artists and labels, we market our services on their websites, social media platforms, and 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 February 13, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company agreed to acquire Stage It for $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate to the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back for the purposes of satisfying certain contingent obligations of Stage It. Though the period ended December 31, 2022, the Company has paid approximately $1,568,000 in purchase consideration and expenses related to the acquisition.
The Merger Agreement also allows for the issuance of earn out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months. To date, StageIt has not met the certain EBITDA requirements necessary to issue any earn out shares.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial 135,000,000 shares and has paid certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement.
With the addition of Stage It (Stage It.com), VNUE has the ability to livestream concerts and other events, adding to the pool of other live music-focused technology services. Stage It is an established platform where concerts or other live events may be ticketed (just like an in-person event), and fans who pay for tickets may enjoy a performance or other engagement by watching digital video as it occurs on their web browser. For example, an artist can create an event through the platform, then, in advance, let their fans know they can purchase the ability to view the concerts on the Stage It platform. Fans then buy the ability to access these concerts, and at the designated time, the fan may then observe the live performance on Stage It.com.
Recent Developments
In late July 2022, we announced that the Company is launching an aggressive campaign to deploy its Soundstr Music Recognition Technology in every bar, restaurant and hotel in Key West, FL, and has brought on local resources to have “boots on the ground” for the rollout. Although this effort has gone more slowly than anticipated, due to several factors unrelated to VNUE, the rollout continues.
Key West is one of the most sought-after vacation spots in the world, attracting around five million tourists per year by planes, boats (including cruise ships), and automobiles. It also boasts a large number of businesses that utilize music. In fact, the famed Duval Street is lined with no less than 143 bars – in less than two miles.
Interested businesses may receive the Soundstr Pulse devices for no cost whatsoever. In addition to Key West, the rollout has also commenced in several other geographic areas, including New York City, Memphis, TN, Jackson, TN, Southaven, MS, Clearwater Beach, FL, and others.
In June of 2023, VNUE signed an MOU with PEX to form a strategic partnership in order to pursue several initiatives surrounding VNUE's groundbreaking Soundstr music recognition technology and Pex's content identification technology, which identifies audio, melody, video, and lyrics in real time. To date the Companny and PEX remain engaged and testing various scenarios and products, and expect to formalize a commercial relationship.
VNUE also announced in September that it has brought on Victoria Vo and Haute Group International, as well as the Collective Sports Agency, in order to create a new Sports division, which will focus on leveraging VNUE’s assets in the sports world.
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Results of Operations for the years ended December 31, 2023, and 2022
The following discussion and analysis of our results of operations and financial condition for the years ended December 31, 2023, and 2022, should be read in conjunction with our consolidated financial statements and related notes included in this report.
Revenues
For the year ended December 31, 2023, we had revenue of $529,439 compared to $359,147 in revenue for the same period ended December 31, 2022, an increase of $170,293. The increase in revenue for the period is primarily attributable to approximately $175,000 in revenues from the Matchbox Twenty tour in 2023 compared to zero in the 2022 period .
We expect that our revenues will increase in future quarters as a result of the decreased impact of Covid-19 and the accompanying lockdowns on businesses, which has been an obstacle for live performances; however, there can be no assurances.
Direct Costs of Revenues
For the year ended December 31, 2023, we had direct costs of revenue of $346,802 compared to $325,878 for the same period ended December 31, 2022, representing an increase of $20,923. The increase in the cost of revenue is attributable to the inclusion of expenses related to the Matchbox Twenty tour offset by a reduction in the cost of revenue at Stage It
The increase in costs is attributable to Stage It. We expect to generate positive gross margins from higher sales volumes in the future, although there can be no assurances.
Operating Expenses
We incurred operating expenses in the amount of $1,593,757 for the year ended December 31, 2023, as compared with $21,849,979 for the same period ended December 31, 2022, a decrease of $20,256,221 primarily as a result of a non-cash charge of $15,300,000 representing the fair market value of the Series C Preferred Stock voting stock received as compensation by our management, amortization of intangible assets of $758,333 and due to the impairment of goodwill and intangible assets of $4,261,683. We did incur those expenses in 2023 and we do not expect to have this expense in future quarters.
The balance of our operating expenses for all periods consisted of the following for the years ended December 31, 2023 and 2022.
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| General and administrative expenses | $ | 350,325 | $ | 500,633 | ||||
| Payroll expenses | $ | 452,620 | $ | 302,277 | ||||
| Professional fees | $ | 409,312 | $ | 727,052 | ||||
| Amortization of intangible assets | $ | - | $ | 758,333 | ||||
| Impairment of goodwill and intangible assets | $ | - | $ | 4,261,683 | ||||
| Stock based compensation in 2023, and in from the issuance of Series C Preferred Stock | $ | 381,500 | $ | 15,300,000 | ||||
| $ | 1,593,757 | $ | 21,849,979 | |||||
Excluding stock based compensation in both periods and the impairment of goodwill and issuance of Series C voting stock, operating expenses were $1,212,257 for year ended December 31, 2023 compared to $1,529,962 for the year ended December 31, 2022. The decrease of $317,705 in operating expenses in the 2023 period is primarily attributable to a reduction in professional fees and general and administrative expense offset by an increase in payroll expenses.
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Other Income / Expenses, Net
We recorded other income of $274,344 in 2023 compared to other expense of $945,912 in 2022. The material improvement in other income in 2023 is due to the recording of other income of $517,524 at Stage It due to abandoned notes that had expired, and due to significant reduction in interest expense due to lowering of debt levels.
We expect to incur other expenses in future quarters as a result of financing transactions.
Net Income (Loss)
As a result of the foregoing, we recorded a net loss available to common shareholders of $1,425,389 for the year ended December 31, 2023, compared with a net loss available to common shareholders of $22,973,109 for the year ended December 31, 2022.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private offerings of our equity securities and loans.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2023, the Company used cash in operations of $1,084,903 and as of December 31, 2023, had a stockholders’ deficit of $38,233,792 and negative working capital of $6,582,006. 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 financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On December 31, 2023, the Company had cash on hand of $25,430, as compared with cash on hand of $82,807 as of December 31, 2022.
The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. Historically, the Company has been able to fund its operations from the proceeds of notes payable and convertible notes.
More recently, the Company has been relying on issuances of its preferred stock and its equity line of credit with GHS Investments, LLC (“GHS”), described below, to fund its operations. All other financial commitments have been terminated, and we are looking for new opportunities to fund the Company to supplement our preferred stock and credit line funding. 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.
During the year ended December 31, 2023, the Company utilized its equity line of credit and received $704,527 in gross proceeds from the issuance of 467,106,433 shares of common stock. The Company intends to continue to use its credit line to fund its operations, although there can be no assurance that there will be sufficient availability under the terms of the Equity Financing Agreement.
The Company is currently looking for other opportunities to fund the Company to supplement its credit line. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.
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Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this prospectus, we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because the information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include the assumptions used to determine the value of the derivative liabilities, the valuation allowance for the deferred tax asset, and the accruals for potential liabilities.
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 12 months of the balance sheet date.
28
Stock-Based Compensation
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by FASB where the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB where the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then-current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
Recent Accounting Pronouncements
See Note 2 of the Consolidated Financial Statement herein for management’s discussion of recent accounting pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
29
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
VNUE, Inc.
December 31, 2023
F-1
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 sheets of VNUE, Inc. as of December 31, 2023 and 2022, the related statements of operations, stockholders' equity (deficit), and cash flows for the years 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, 2023 and 2022, and the results of its operations and its cash flows for the years 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 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors 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 2. 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.
Critical Audit Matter
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
We determined that there are no critical audit matters.
/S/
We have served as the Company's auditor since 2020
April 15, 2024
| F-2 |
VNUE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Shares to be issued | ||||||||
| Accrued payroll-officers | ||||||||
| Dividends payable | ||||||||
| Notes payable | ||||||||
| Deferred revenue | ||||||||
| Convertible notes payable, net | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred A stock, par value $: shares authorized; and issued and outstanding as of December 31, 2023 and December 31, 2022 | ||||||||
| Preferred B stock, par value $: shares authorized; and issued and outstanding as of December 31, 2023 and December 31, 2022 | ||||||||
| Preferred C stock, par value $: shares authorized; and -- issued and outstanding as of December 31, 2023 and December 31, 2022 | ||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, as of December 31, 2023, and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the year ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues - related party | $ | $ | ||||||
| Revenue, net | ||||||||
| Total revenue | ||||||||
| Direct costs of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Stock-based compensation | ||||||||
| General and administrative expense | ||||||||
| Payroll expenses | ||||||||
| Professional fees | ||||||||
| Amortization of intangible assets | ||||||||
| Impairment of goodwill and intangible assets | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense), net | ||||||||
| Other income | ||||||||
| Loss on the extinguishment of debt | ( | ) | ||||||
| Financing costs | ( | ) | ( | ) | ||||
| Other income (expense), net | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Preferred B Stock dividends | ( | ) | ( | ) | ||||
| Net loss available to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)
| Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
| Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Issuance of Preferred B shares for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to Preferred B Shares | ||||||||||||||||||||||||||||||||||||||||||||
| Financing fee paid in Pref B shares | ||||||||||||||||||||||||||||||||||||||||||||
| Beneficial conversion feature of Pref B shares convertible notes | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon conversion of convertible notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Preferred C voting share to related parties | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition shares issued for Stage It purchase | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to the Company’s equity line of credit | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Par value $0.001 | Additional | |||||||||||||||||||||||||||||||||||||||||||
| Preferred A Shares | Preferred B Shares | Preferred C Shares | Common Shares | Paid- in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of Preferred B Shares for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Financing fee paid in Preferred B shares | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A Preferred stock to common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Series B dividends | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Shares issued from the Company’s equity line for cash | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
VNUE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Stock based compensation | ||||||||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Loss on the extinguishment of debt | ||||||||
| Beneficial conversion feature of Preferred B stock | ||||||||
| Impairment of goodwill and intangible assets | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable and accrued interest | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Accrued payroll officers | ( | ) | ||||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of fixed assets | ( | ) | ||||||
| Acquisition of a business net of cash received | ( | ) | ||||||
| Net cash (used in) investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from the Company’s equity line from the sale of common stock | ||||||||
| Repayment of officer advance | ( | ) | ||||||
| Payments on promissory notes | ( | ) | ||||||
| Shares issued for financing costs | ||||||||
| Proceeds from the sale of Series B Preferred Stock | ||||||||
| Proceeds from the issuance of promissory notes | ||||||||
| Proceeds from the issuance of convertible notes | ||||||||
| Net cash provided by investing activities | ||||||||
| Net Increase (Decrease) In Cash | ( | ) | ||||||
| Cash At The Beginning Of The Period | ||||||||
| Cash At The End Of The Period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash information: | ||||||||
| Common shares issued for the Stage It acquisition | $ | $ | ||||||
| Issuance of Preferred C voting shares | $ | $ | ||||||
| Preferred B shares issued upon the conversion of debt and accrued interest | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-6
VNUE, INC.
YEARS ENDED DECEMBER 31, 2023 AND 2022
NOTES TO CONDENSED 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 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.
On February 13, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”).
On February 13, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company contracted to acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”). At the same time, Stage It and several of the shareholders of Stage It entered into a voting agreement concerning the Merger.
Pursuant
to the Merger Agreement, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including
common and preferred shares) were converted into the right to receive the applicable portion of the Merger Consideration. $
The Merger Agreement provides for the issuance of earnout shares which the company estimates will not be achieved.
On February 14 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial shares, paid certain amounts to Stage It vendors and will potentially pay additional amounts as detailed under Merger Consideration in the Merger Agreement.
F-7
NOTE 2 – 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 as of December 31, 2023, the Company
had $
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.
NOTE 3 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Consolidation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company consolidates its results with its wholly-owned subsidiary, Stage It Corp.
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.
Stage It receives revenue through a percentage of ticket sales and tipping. This show-based revenue creates a pool that is shared with the performing artist. Once a show is completed the revenue that has been created through tickets and tips is allocated. Typically, Stage It retains 20% of the revenue as an agent and the artist receives 80% of the revenue as the performer, however, there are occasions when the profit split has different ratios. Revenue is recognized once a show is complete and the performance obligation to the consumer has been met. Since Stage It acts as an agent, revenue is recorded on a net basis only on the 20% portion, less direct expenses such as broadcast costs, merchant processing fees, bank services charges, license fees and the cost of production.
The Company also recognizes revenue on the sale of CDs and USB drives that contain the recording of live concerts and are made available to concert attendees immediately after the show and online. 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.
F-8
As of December 31, 2023 and December 31,
2022 deferred revenue amounted to $
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 the determination of goodwill and intangible assets, the valuation allowance for the deferred tax asset and the accruals for potential liabilities. Actual results could differ from these estimates.
Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.
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.
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. There were
F-9
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 is 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, 2023, because their impact would have been anti-dilutive.
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows:
| Computers, software, and office equipment | |||
| Furniture and fixtures |
As
of December 31, 2023 and 2022, the Company’s property, which consisted solely of computers at its Stage It subsidiary, amounted
to $-
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisition is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of customer relationships, trademarks, and product formulations. The useful life of these customer relationships is estimated to be three years.
Goodwill
is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company
performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or
changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing
compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by
considering both the income approach and market approaches. The fair values calculated under the income approach and market
approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines
fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount
factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing
model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the
Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other
significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures, and
changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are
comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is
no impairment. If the reporting unit’s carrying amount exceeds its fair value, then an impairment loss is recognized in an
amount equal to the excess. As of December 31, 2022 the Company determined that its goodwill and intangibles were fully impaired,
and as a result recorded an impairment of goodwill and intangible assets amounting to $
F-10
Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of Topic 326 is not expected to have a material effect on the Company’s financial statements and financial statement disclosures.
NOTE 4 – PREPAID EXPENSE
As
of December 31, 2023 and December 31, 2022, the balances in prepaid expenses was $-
| December 31, 2023 | December 31, 2022 | |||||||
| Matchbox Twenty agreement | $ | $ | ||||||
| Deposit with joint venture partner | ||||||||
| Total prepaid expenses | $ | $ | ||||||
NOTE 5 – 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 $
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,
2021, the Company’s Chief Executive Officer advanced $
F-11
NOTE 6 – BUSINESS ACQUISITION
On February 13, 2022, VNUE, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back to satisfy certain contingent obligations of Stage It.
The Merger Agreement also allows for the issuance of earn-out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On February 13, 2022, the Company, Stage It and the shareholders of Stage It entered into a voting agreement concerning the Merger.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial shares and pay certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement. To date, Stage It has not met EBITA targets to issue Earn Out shares.
The Merger Agreement has been included to provide investors with information regarding its terms. The representations, warranties, and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Merger Agreement, and may not have been intended to be statements of fact, but rather as a method of allocating risk and governing the contractual rights and relationships among the parties to the Merger Agreement. In addition, such representations, warranties, and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by the Company’s shareholders. None of the Company’s shareholders or any other third party should rely on the representations, warranties, and covenants, or any descriptions thereof, as characterizations of the actual state of facts or conditions of the Company, the Company, Merger Sub, or any of their respective subsidiaries or affiliates
For the acquisition of Stage It the following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired and liabilities assumed:
Consideration paid
| Common stock issued, 41,476,963 shares of the Company’s restricted common stock valued at $0.0101 per share | $ | |||
| Common stock issuable, 93,523,037 shares of the Company’s restricted common stock valued at $0.0101 per share | ||||
| Net liabilities assumed | ||||
| Cash paid | ||||
| Fair value of total consideration paid | $ |
F-12
Net assets acquired and liabilities assumed
| Cash and cash equivalents | $ | |||
| Computer equipment | ||||
| Total assets | ||||
| Accounts payable and accrued liabilities | ||||
| Notes payable | ||||
| Deferred revenue | ||||
| Total liabilities | $ | |||
| Net liabilities assumed | $ |
The
Company has allocated the fair value of the total consideration paid of $
On December 31, 2022 the Company, based on its internal analysis estimated that its Stage It subsidiary
would not achieve its Earnout and that all of the goodwill and intangible assets relating to the acquisition of Stage It was fully impaired.
As a result the Company recorded an impairment of goodwill and intangible assets charge net of the earnout reversal of $
The amount of $4,262,683 was calculated as follows:
| Goodwill impairment | $ | |||
| Intangible assets impairment | ||||
| Reversal of Earnout liability | ( | ) | ||
| Net impairment | $ |
NOTE 7 – DEFERRED REVENUE
As of December 31, 2023 and
December 31, 2022 deferred revenue amounted to $
NOTE 8 – 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, 2023, and December 31, 2022:
December 31, 2023 | December 31, 2022 | |||||||
| Accounts payable and accrued expense | $ | $ | ||||||
| Accrued interest | ||||||||
| Soundstr Obligation | ||||||||
| Total accounts payable and accrued liabilities | $ | $ | ||||||
F-13
NOTE 9 – PURCHASE LIABILITY
The
balance of the company’s Purchase Liability at December 31, 2022, and December 31, 2021 was $-
Under
the terms of the business acquisition of Stage It described in Note 6, during the year ended December 31, 2022 the Company had a
contingent Earnout Liability of $
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 $
The purchase liability was 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. The Company has had no correspondence regarding this liability with Pledge Music, who declared bankruptcy in 2019.
As of December 31, 2023 and December 31,
2022 the balances of shares to be issued were
| ● | As of December 31, 2023 the Company had not yet issued shares of common stock with a value of $ for past services provided and for an acquisition in previous years. |
| ● | During the year ended December 31, 2023, pursuant to the acquisition of Stage It described throughout this Report, an additional shares remain issuable to Stage It shareholders valued at $ |
NOTE 11 – NOTES PAYABLE
The balance of the Notes Payable outstanding as
of December 31, 2023, and December 31, 2022, was $
F-14
NOTE 12 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
| December 31, 2022 | December 31, 2021 | |||||||
| Various Convertible Notes | $ | |||||||
| Golock Capital, LLC Convertible Notes (a) | ||||||||
| Other Convertible Notes (b) | ||||||||
| Total Convertible Notes | $ | |||||||
| (a) |
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.
As
a result Golock has assessed the Company additional penalties and interest of $
| (b) |
F-15
NOTE 13 – STOCKHOLDERS’ DEFICIT
Common stock
The Company has authorized shares of $ par value common stock. As of December 31, 2023, and December 31, 2022, there were and and shares of common stock issued and outstanding respectively.
Preferred Stock Series A
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
As of December 31, 2023 and 2022 the Company had shares of $ par value preferred stock authorized and there were and 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
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.
As of December 31, 2023, and December 31, 2021, there were 3,200,579 shares of Series A Preferred issued and outstanding.
Preferred Stock Series B
On
January 3, 2022, the Company authorized and designated a class of
During the year ended December 31, 2023 the Company issued Preferred B shares to GHS. These share shares were valued as follows:
During the year ended December 31, 2022 the Company issued Preferred B shares to GHS. These share shares were valued as follows:
| ● |
shares were used to raise $ |
| ● | shares were used to retire $ in debt |
| ● |
F-16
Warrants
In
connection with the issuance of Series B Preferred Stock to the Company described in Note 14, the Company has issued
A summary of warrants is as follows:
| Number of Warrants | ||||
| Balance outstanding, December 31, 2020 | ||||
| Warrants expired or forfeited | ( | ) | ||
| Balance outstanding and exercisable, December 31, 2021 | ||||
| Warrants exercised or forfeited | ( | ) | ||
| Warrants granted during the year ended December 31, 2022 | ||||
| Balance outstanding and exercisable, December 31, 2022 | ||||
| Warrants exercised or forfeited | ||||
| Warrants granted during the year ended December 31, 2023 | ||||
| Balance outstanding and exercisable, December 31, 2023 | ||||
| (a) | The strike price on these warrants range between $0.00264 and $0.01122 and are subject to adjustment based on the market price of the Company’s stock price. |
Information relating to outstanding warrants on December 31, 2023, summarized by exercise price, is as follows:
The weighted-average remaining contractual life of all warrants outstanding and exercisable on December 31, 2023 is approximately years. As of December 31, 2023 these warrants has intrinsic value.
Preferred Stock Series C
On
May 25, 2022 the Company authorized and designated a class of shares of Series C Preferred Stock, par value $. The
holders of the Series C Preferred Stock shall have the right to cast one million (
F-17
NOTE 14 – COMMITMENT AND CONTINGENCIES
Litigation
Legal Matters
In the matter of VNUE, Inc. v. Power Up Lending Group, Ltd. On October 6, 2021, the Company commenced an action against Power Up Lending Group, Ltd. “Power Up”) and Curt Kramer (“Kramer”) (Power Up and Kramer together, the “Power Up Parties”) in the United States District Court for the Eastern District of New York. The complaint alleges that: (1) Power Up is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”) and, pursuant to Section 29(b) of the Act, the Company is entitled to recessionary relief from certain convertible promissory notes (“Notes”) and securities purchase agreements (“SPAs”) entered into by the Company and Power Up; (2) Kramer is liable to the Company as the control person of Power Up pursuant to Section 20(a) of the Act; and (3) Power Up is liable to the Company for unjust enrichment arising from the Notes and SPAs.
On December 10, 2021, the Power Up Parties filed their pre-motion conference request letter with the Court regarding their forthcoming motion to dismiss the Company’s complaint. On December 17, 2021, the Company filed its opposition thereto. On January 26, 2022, the Company filed its amended complaint, which asserted the same causes of action set forth in the initial complaint, and further alleged that Power Up made material misstatements in connection with the purchase and sale of the Company’s securities in violation of Section 10(b) of the Act and, thus, the Company is entitled to recessionary relief from the Notes and SPAs pursuant to Section 29(b) of the Act.
On February 9, 2022, the Court ordered an initial conference. The initial conference is currently scheduled for May 16, 2022, at 12:00 p.m. (EST). As of the date hereof, the Company intends to litigate its claims for relief against the Power Up Parties.
On June 7, 2022, the Company filed a voluntary dismissal of the action because the parties’ reached a confidential settlement.
On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (Golock and DBW together, the “Golock Plaintiffs”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Golock Plaintiffs alleged that the Company was in breach of certain convertible promissory notes, securities purchase agreements and common stock warrants.
Following a bench trial, on June 1, 2023, the District Court ruled in the Golock Plaintiffs’ favor on its breach of contract claims and against the Company. On the same day, the Company appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit (“Second Circuit”).
On June 16, 2023, the
On July 5, 2023, the
As of the date hereof, the Company’s appeal to the Second Circuit. The Second Circuit, however, has not yet rendered a decision on the appeal. The Company will continue to vigorously defend itself in this matter.
F-18
On June 15, 2022, the Company commenced an action against LG Capital, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman (collectively, “LG Defendants”) in the United States District Court for the Eastern District of New York. The Company’s complaint alleges that the LG Defendants (1) violated the Racketeer Influenced and Corrupt Organizations Act through the collection of an unlawful debt imposed under a certain convertible promissory note, and (2) were unjust enriched by their collections of a certain convertible promissory note.
On March 7, 2023, the Company filed an amended complaint against the LG Defendants. The amended complaint raises the same claims for relief as the initial complaint.
On January 12, 2024, the Magistrate Judge assigned to this matter recommended that the LG Defendants’ motion to dismiss be denied.
As of the date hereof, the District Court has not yet entered an order on the LG Defendants’ motion to dismiss.
The Company intends to vigorously pursue its claims for relief and the damages it maintains that it is entitled to thereunder.
NOTE 15 – SUBSEQUENT EVENTS
Subsequent to December 31, 2023 the Company issued shares
and received $
F-19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report, an evaluation was carried out by our management, with the participation of our principal executive officer and principal accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15c and 15d-15c under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.
Based on that evaluation, and the material weaknesses outlined below under Internal Control Over Financial Reporting, our principal executive officer and principal accounting officer concluded, as of December 31, 2023, due to weaknesses in our internal controls described below, our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our principal executive officer and principal accounting officer to allow timely decisions regarding required disclosures.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our principal executive officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 using the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2023, the Company determined that there were deficiencies that constituted material weaknesses, as described below.
| 1. | Lack of proper segregation of duties due to limited personnel. |
| 2. | Lack of a formal review process that includes multiple levels of review. |
| 3. | Lack of adequate policies and procedures for accounting for financial transactions. |
| 4. | Lack of independent board member(s). |
| 5. | Lack of independent audit committee. |
Management is currently evaluating remediation plans for the above material weaknesses.
30
In light of the existence of these material weaknesses, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. As a result, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2023 based on criteria established in Internal Control-Integrated Framework issued by COSO.
BF Borgers CPA PC, an independent registered public accounting firm, is not required to and has not issued a report concerning the effectiveness of our internal control over financial reporting as of December 31, 2023, pursuant to rules of the SEC.
Changes in Internal Control
During the year ended December 31, 2023, there were no other changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
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.
| Name | Age | Position | ||
| M. Zach Bair | 60 | Chairman, Chief Executive Officer and Chief Accounting Officer | ||
| Anthony Cardenas | 56 | Director, Chief Financial Officer and Vice President of Artist Development | ||
| Louis Mann | 71 | Executive Vice President and Director |
M. Zach Bair, 61, 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, 56, 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 of DiskFactory.com. Mr. Cardenas’ background makes him well qualified to serve as a director.
Significant Employees
Louis Mann, 71, the Company’s Executive Vice President and Director, 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.
Jeff Zakim, 49, 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.
32
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 between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including:
1. Any petition under the Federal bankruptcy laws or any state insolvency law 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 or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her 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. Being subject to 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 type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity;
5. Being found by a court of competent jurisdiction in a civil action or by the SEC 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. Being 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;
33
7. Being subject to, 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. Being subject to, 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.
34
ITEM 11. EXECUTIVE COMPENSATION.
The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2023 and 2022.
| Name
and Principal Position |
|
Year | |
|
Salary ($) |
|
|
Bonus ($) |
|
|
Stock Awards ($) |
|
|
Option Awards ($) |
|
|
Non-Equity Incentive Plan Compensation |
|
|
Nonqualified Deferred Compensation Earnings ($) |
|
|
All Other Compensation ($)(3) |
|
|
Total ($) |
|
||||||||
| Zach Bair, | 2023 | 170,000 | 170,000 | ||||||||||||||||||||||||||||||||
| CEO(2) | 2022 | 170,000 | 0 | 0 | 0 | 0 | 0 | 0 | 170,000 | ||||||||||||||||||||||||||
| Louis Mann, | 2023 | 60,000 | 100,000 | 160,000 | |||||||||||||||||||||||||||||||
| EVP(1)(4) | 2022 | 60,000 | 0 | 0 | 0 | 0 | 0 | 0 | 60,000 | ||||||||||||||||||||||||||
| Anthony Cardenas | 2023 | - | 64,000 | 64,000 | |||||||||||||||||||||||||||||||
| 2022 | - | - | |||||||||||||||||||||||||||||||||
Equity Incentive Plan
On October 4, 2022, the Company adopted an Equity Compensation Plan. The terms of the plan are as follows:
PART I – GENERAL COMPENSATION (“COMPENSATION LEVELS”)
Executives in VNUE will be paid in accordance with similar companies, at similar levels, and at similar stages of development. Compensation levels, which will become effective post-funding of $2,500,000 to $5,000,000, will be communicated and formalized via email. New salaries require “full time” participation, meaning substantially all of the employee’s or contractor’s time devoted to furthering VNUE’s business objectives.
PART II – BONUS COMPENSATION (“BONUS COMPENSATION”)
Bonus Compensation will be rewarded, at the option of the recipient, in restricted shares of the Company’s common securities, or cash, in a strategic transaction, subsidiary, joint venture, contract right, intellectual property, merger, acquisition, royalties or other asset, or in any combination of the above. This compensation will be rewarded based on identifying, negotiating, contracting or otherwise playing a team role with other key personnel in the closing of (a) revenue deals, (b) funding deals, or (c) strategic deals, mergers or acquisitions.
The Bonus Compensation will be 20% of what the value is to the Company, will be shared equally between the key personnel who took a direct role in securing the opportunity, and will be rewarded at the time the company either (a) closes a funding deal, (b) completes an acquisition, or (c) when the company realizes revenues, profits, EBITDA, free cash flow, cash distributions, dividends, sale proceeds, or other value of any kind. This includes goal-related acquisitions, whereby shares are awarded to acquisition targets based on performance.
The Bonus Compensation is based on the net consideration delivered to the company and will be paid quarterly in arrears.
For revenue deals, this may be delivered in the Company’s restricted common stock, cash (at the time it is realized), or a combination of the two. Performance-based incentive compensation will be rewarded only when value is realized, or when transactions are complete, quarterly, in arrears (in some cases, when possible, the Company may, at its discretion, accelerate these rewards). As with all other transactions, when there is a contingent nature to a transaction, such as StageIt, or like the equity finance line, performance-based compensation will only be paid on consideration actually paid, or value actually received over time as the contingent nature of the transactions are actually satisfied. Additionally, performance-based incentive compensation for funding deals shall only be paid in stock of the company, and the company will endeavor to issue the shares in as tax-advantaged a way as possible.
35
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, 2023 and 2022, no members of our board of directors received compensation in their capacity as directors.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets 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.
This table is based upon information derived from our stock records as of March 31, 2024. 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 2,949,938,301 shares of common stock, 3,200,579 shares of Series A Preferred Stock and 3,000 shares of Series C Preferred Stock outstanding as of March 31,2024. GHS Investments LLC holds 100% of the 2,504 shares of Series B convertible shares, which can be converted into approximately 859,000,000 shares of common stock.
| Common Stock | Series A Preferred Stock |
Series C Preferred Stock |
||||||||||||||||||||||
| Number of Shares Owned |
Percent of Class(1)(2) |
Number of Shares Owned |
Percent of Class(1)(2) |
Number of Shares Owner |
Percentage of Class |
|||||||||||||||||||
| Zach Bair | 105,000,980 | (1) | 3.4 | % | 1,498,347 | 46.8 | % | 1,000 | 33.3 | % | ||||||||||||||
| Anthony Cardenas | 95,001,000 | (2) | 3.1 | % | 260,000 | 8.1 | % | 1,000 | 33.3 | % | ||||||||||||||
| Louis Mann | 177,501,021 | (3) | 5.8 | % | 748,429 | 23.4 | % | 1,000 | 33.3 | % | ||||||||||||||
| All Directors and Executive Officers as a Group (3 persons) | 377,503,001 | (4) | 12.3 | % | 2,505,776 | 78.3 | % | 3,000 | 100 | % | ||||||||||||||
| 5% Holders | ||||||||||||||||||||||||
| Thomas Jackson Weaver III | 160,000,000 | 5.4 | % | |||||||||||||||||||||
| * | Less than 1% |
37
| (1) | Includes 30,082,630 shares of common stock owned by Mr. Bair, 1,498,347 Series A Preferred Stock owned by Mr. Bair, which converts into 74,917,350 shares of common stock, and 1,000 shares of Series C Preferred Stock owned by Mr. Bair, which converts into 1,000 shares of common stock. |
| (2) | Includes 81,000,000 shares of common stock owned by Mr. Cardenas, 260,000 Series A Preferred Stock owned by Mr. Cardenas, which converts into 13,000,000 shares of common stock, and 1,000 shares of Series C Preferred Stock owned by Mr. Cardenas, which converts into 1,000 shares of common stock. |
| (3) | Includes 140,078,571 shares of common stock owned by Mr. Mann, 748,429 shares of Series A Preferred Stock owned by Mr. Mann, which converts into 37,421,450 shares of common stock, and 1,000 shares of Series C Preferred Stock owned by Mr. Mann, which converts into 1,000 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. |
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.
38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Other than described below or the transactions described under the heading “Executive Compensation,” there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
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, Zach Bair.
Revenues of $359,147 and $100,476 for the periods ended December 31, 2023 and 2022, respectively, were recorded using the assets licensed under this agreement. For the periods ended December 31, 2023 and 2021, the fees would have amounted to $591 and $5,024, respectively. The Company’s Chief Executive Officer agreed to waive the right to receive these license fees for both years and has never taken any fees pursuant to this agreement.
Accrued Payroll to Officers and Advances from Officers
Accrued payroll due to two officers was $212,250 and $233,750 as of December 31, 2023, and December 31, 2022, respectively. Zach Bair’s compensation is $170,000 per year.
During the year ended December 31, 2023, the Company’s Chief Executive Officer, Zach Bair, advanced $10,000 to the Company. This loan was made on an interest-free basis and is payable on demand. As of December 31, 2023, the Company had a balance of $-0- due to its Chief Executive Officer.
39
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table sets forth the fees billed to our company for the years ended December 31, 2023 and 2022 for professional services rendered by our independent registered public accounting firm
| Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||
| Audit fees | $ | 95,000 | $ | 84,000 | ||||
| Total | $ | $ | 84,000 | |||||
Audit Fees
Audit fees were for professional services rendered for the audits of our annual financial statements and for review of our quarterly financial statements during the 2023 and 2022 fiscal years.
Audit-related Fees
This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees
As our independent registered public accountants did not provide any services to us for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 2023 and 2022, no tax fees were billed or paid during those fiscal years.
All Other Fees
Our independent registered public accountants did not provide any products and services not disclosed in the table above during the 2022 and 2021 fiscal years. As a result, there were no other fees billed or paid during those fiscal years.
Pre-Approval Policies and Procedures
Our board of directors, which acts as our audit committee, pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent registered public accounting firm and believes that the provision of services for activities unrelated to the audit is compatible with maintaining their respective independence.
40
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
None
Exhibits
| * | Filed herein |
| ** | Incorporated by reference to Registration Statement on Form S-1 filed June 23, 2021 |
| (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. |
| (5) | Included as an exhibit with our Form 8-K filed on June 26, 2019. |
| (6) | Included as an exhibit with our Form 8-K filed on January 6, 2022. |
| (7) | Included as an exhibit with our Form 8-K filed on February 14, 2022. |
41
ITEM 16. FORM 10-K SUMMARY.
None.
42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VNUE, INC | ||
| Date: April 15, 2024 | By: | /s/ Zach Bair |
| Zach Bair | ||
| Chief Executive Officer and Principal Accounting Officer | ||
Pursuant to the requirements of the Exchange Act this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| SIGNATURES | TITLE | DATE | ||
| /s/ Zach Bair | Chief Executive Officer, Principal | April 15, 2024 | ||
| Zach Bair | Accounting Officer and Chairman | |||
| /s/ Anthony Cardenas | Director | April 15, 2024 | ||
| Anthony Cardenas | ||||
| /s/ Louis Mann | Director | April 15, 2024 | ||
| Louis Mann |
43
Exhibit 31.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL ACCOUNTING OFFICER PURSUANT TO 18
U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14 UNDER THE SECURITIES ACT OF 1934
I, Zach Bair certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of VNUE, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations: and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Registrant | VNUE, Inc. | |
| Date: April 15, 2024 | By: | /s/ Zach Bair |
| Zach Bair | ||
| Principal Executive Officer and Principal Accounting Officer | ||
Exhibit 32.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL ACCOUNTING OFFICER PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of VNUE, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Zach Bair, Chief Executive Officer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Registrant | VNUE, Inc. | |
| Date: April 15, 2024 | By: | /s/ Zach Bair |
| Zach Bair | ||
| Principal Executive Officer and Principal Accounting Officer | ||
Pay vs Performance Disclosure - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Pay vs Performance Disclosure [Table] | ||
| Net Income (Loss) Attributable to Parent | $ (1,136,776) | $ (22,762,622) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Insider Trading Arrangements [Line Items] | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
ORGANIZATION AND BASIS OF PRESENTATION |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION AND BASIS OF PRESENTATION | 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 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.
On February 13, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”).
On February 13, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company contracted to acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly-owned subsidiary of the Company (the “Merger”). At the same time, Stage It and several of the shareholders of Stage It entered into a voting agreement concerning the Merger.
Pursuant to the Merger Agreement, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) were converted into the right to receive the applicable portion of the Merger Consideration. $1,085,450 of the Merger Consideration was paid in cash and satisfaction of certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion was paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, was held back for the purposes of satisfying certain contingent obligations of Stage It.
The Merger Agreement provides for the issuance of earnout shares which the company estimates will not be achieved.
On February 14 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial shares, paid certain amounts to Stage It vendors and will potentially pay additional amounts as detailed under Merger Consideration in the Merger Agreement.
|
GOING CONCERN |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GOING CONCERN | NOTE 2 – 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 as of December 31, 2023, the Company had $25,430 in cash on hand, had negative working capital of $6,582,006 and had an accumulated deficit of $38,233,792. Additionally for the year ended December 31, 2023, the Company used $1,084,903 in cash from operating activities. 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, 2023, consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.
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.
|
SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES |
12 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | ||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
| SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES | NOTE 3 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Consolidation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company consolidates its results with its wholly-owned subsidiary, Stage It Corp.
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.
Stage It receives revenue through a percentage of ticket sales and tipping. This show-based revenue creates a pool that is shared with the performing artist. Once a show is completed the revenue that has been created through tickets and tips is allocated. Typically, Stage It retains 20% of the revenue as an agent and the artist receives 80% of the revenue as the performer, however, there are occasions when the profit split has different ratios. Revenue is recognized once a show is complete and the performance obligation to the consumer has been met. Since Stage It acts as an agent, revenue is recorded on a net basis only on the 20% portion, less direct expenses such as broadcast costs, merchant processing fees, bank services charges, license fees and the cost of production.
The Company also recognizes revenue on the sale of CDs and USB drives that contain the recording of live concerts and are made available to concert attendees immediately after the show and online. 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.
As of December 31, 2023 and December 31, 2022 deferred revenue amounted to $656,290 and $862,597 respectively. As of December 31, 2023, deferred revenue was comprised of solely of $656,290 in unredeemed notes at Stage It that have been purchased by customers but not used toward any events. When these notes will be redeemed, on average the performing artists will receive 73%, and the Company will record 23% of the value of these notes as revenue.
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 the determination of goodwill and intangible assets, the valuation allowance for the deferred tax asset and the accruals for potential liabilities. Actual results could differ from these estimates.
Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.
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:
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.
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. There were no derivative liabilities outstanding as of December 31, 2023 and December 31, 2022.
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 is 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, 2023, because their impact would have been anti-dilutive.
Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows:
As of December 31, 2023 and 2022, the Company’s property, which consisted solely of computers at its Stage It subsidiary, amounted to $-0- and $9,134, respectively. Depreciation expense for the year ended December 31, 2023, and 2022, amounted to $9,134 and $28,688 respectively.
Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisition is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of customer relationships, trademarks, and product formulations. The useful life of these customer relationships is estimated to be three years.
Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures, and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess. As of December 31, 2022 the Company determined that its goodwill and intangibles were fully impaired, and as a result recorded an impairment of goodwill and intangible assets amounting to $4,261,683 in its Statements Operations for the year ended December 31, 2022.
Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of Topic 326 is not expected to have a material effect on the Company’s financial statements and financial statement disclosures.
|
PREPAID EXPENSE |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| PREPAID EXPENSE | NOTE 4 – PREPAID EXPENSE
As of December 31, 2023 and December 31, 2022, the balances in prepaid expenses was $-0- and $130,000.
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RELATED PARTY TRANSACTIONS |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 5 – 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 $182,773 and $11,818 for the periods ended December 31, 2023, and 2022, respectively, were recorded using the assets licensed under this agreement. For the periods ended December 31, 2023, and 2021 the fees would have amounted to $9,139 and $591 respectively. The Company’s Chief Executive Officer agreed to waive the right to receive these license fees for both years and has never taken any fees pursuant to this agreement.
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, 2021, the Company’s Chief Executive Officer advanced $10,000 to the Company on an interest-free basis. That amount was repaid in the fourth quarter of 2022.
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BUSINESS ACQUISITION |
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| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS ACQUISITION | NOTE 6 – BUSINESS ACQUISITION
On February 13, 2022, VNUE, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VNUE Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“MergerCo”), Stage It Corp., a Delaware corporation (“Stage It”), and the stockholders’ representative for Stage It, pursuant to which the Company will acquire Stage It for up to $10 million (the “Merger Consideration”), by merging MergerCo with and into Stage It, with Stage It continuing as the surviving entity and wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger (the “Closing”), each of Stage It’s outstanding shares (including common and preferred shares) will be converted into the right to receive the applicable portion of the Merger Consideration. A portion of the Merger Consideration will be paid in cash and take the form of satisfying certain outstanding debt obligations of Stage It, as outlined in a Closing Payment Certificate of the Merger Agreement, and the other portion will be paid in shares of the Company’s common stock or preferred stock, with the actual number of such shares to be issued reduced by the cash component outlaid in the transaction. A portion of the Merger Consideration, $1 million, will be held back to satisfy certain contingent obligations of Stage It.
The Merger Agreement also allows for the issuance of earn-out shares, not to exceed the overall Merger Consideration, provided that certain EBIDTA requirements are met over the course of 18 months.
On February 13, 2022, the Company, Stage It and the shareholders of Stage It entered into a voting agreement concerning the Merger.
On February 14, 2022, the Company completed the acquisition of Stage It. As a result of the Closing, Stage It became a wholly-owned subsidiary of the Company. For the acquisition, the Company issued the initial shares and pay certain amounts as detailed under Merger Consideration in the Merger Agreement. The price to be paid in cash and stock for the Earnout Shares and Holdback Shares are set forth in the Merger Agreement. To date, Stage It has not met EBITA targets to issue Earn Out shares.
The Merger Agreement has been included to provide investors with information regarding its terms. The representations, warranties, and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Merger Agreement, and may not have been intended to be statements of fact, but rather as a method of allocating risk and governing the contractual rights and relationships among the parties to the Merger Agreement. In addition, such representations, warranties, and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by the Company’s shareholders. None of the Company’s shareholders or any other third party should rely on the representations, warranties, and covenants, or any descriptions thereof, as characterizations of the actual state of facts or conditions of the Company, the Company, Merger Sub, or any of their respective subsidiaries or affiliates
For the acquisition of Stage It the following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired and liabilities assumed:
Consideration paid
Net assets acquired and liabilities assumed
The Company has allocated the fair value of the total consideration paid of $10,400,000 to goodwill and $2,600,000 to intangible assets with a life of three years. The value of goodwill represents Stage It’s ability to generate profitable operations going forward. Management estimated the provisional fair values of the intangible assets and goodwill on March 31, 2022 and did not completed a valuation study with an independent third party During the year ended December 31, 2022, the Company recorded $758,333 in amortization expense.
On December 31, 2022 the Company, based on its internal analysis estimated that its Stage It subsidiary would not achieve its Earnout and that all of the goodwill and intangible assets relating to the acquisition of Stage It was fully impaired. As a result the Company recorded an impairment of goodwill and intangible assets charge net of the earnout reversal of $4,262,683 on its Statements of Operations for the year ended December 31, 2022.
The amount of $4,262,683 was calculated as follows:
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DEFERRED REVENUE |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Revenue Recognition and Deferred Revenue [Abstract] | |
| DEFERRED REVENUE | NOTE 7 – DEFERRED REVENUE
As of December 31, 2023 and December 31, 2022 deferred revenue amounted to $656,290 and $862,597 respectively. As of December 31, 2023, deferred revenue was comprised of $656,290 in unredeemed notes at Stage It that have been purchased by customers but not used toward any events. When these notes will be redeemed, on average the performing artists will receive 73%, and the Company will record 27% of the value of these notes as revenue.
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 8 – 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, 2023, and December 31, 2022:
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PURCHASE LIABILITY |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Purchase Liability | |
| PURCHASE LIABILITY | NOTE 9 – PURCHASE LIABILITY
The balance of the company’s Purchase Liability at December 31, 2022, and December 31, 2021 was $-0- and $300,000, respectively.
Under the terms of the business acquisition of Stage It described in Note 6, during the year ended December 31, 2022 the Company had a contingent Earnout Liability of $7,679,984 due to the shareholders of Stage It if Stage It operations achieve certain EBITDA operating milestones. As of December 31, 2022 the Company estimated that the Earnout would not be achieved and wrote down the Earnout liability to zero as an offset against goodwill. See Note 6.
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.
The purchase liability was 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. The Company has had no correspondence regarding this liability with Pledge Music, who declared bankruptcy in 2019.
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SHARES TO BE ISSUED |
12 Months Ended | ||||||
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Dec. 31, 2023 | |||||||
| Shares To Be Issued | |||||||
| SHARES TO BE ISSUED |
As of December 31, 2023 and December 31, 2022 the balances of shares to be issued were 975,174 and $247,707. The balance as of December 31, 2023 is comprised of the following:
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NOTES PAYABLE |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Notes Payable | |
| NOTES PAYABLE | NOTE 11 – NOTES PAYABLE
The balance of the Notes Payable outstanding as of December 31, 2023, and December 31, 2022, was $1,359,865 and $1,134,262 respectively. The balances as of December 31, 2023, were comprised of numerous 8% notes for $1,082,761 due to Ylimit, payable on September 30, 2023, and $277,104 in notes due to former Stage It shareholders. During the three months ended September 30, 2023 the company entered into a loan modification agreement with Ylimit. Under the terms of the agreement Ylimit converted $102,603 in accrued interest into loan principal, and extended the maturity date of its outstanding promissory note to September 30, 2024. Also during the six months ended September 30, 2023 Ylimit advanced $80,000 to the company in the form of new notes. This amount is included in the outstanding balance of $1,082,761.
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CONVERTIBLE NOTES PAYABLE |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE NOTES PAYABLE | NOTE 12 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consist of the following:
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 requested 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 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, 2023 all of the Golock notes amounting to $339,011 were past due.
As a result Golock has assessed the Company additional penalties and interest of $1,172,782. The Company disagrees with the accrued interest and penalties due to Golock. Initially, the Company recorded this amount as a liability on its balance during the period ended 2021. Subsequent during the three month period ended September 30, 2021, the Company obtained a legal opinion supporting its position that these charges were egregious, and reversed the liability on its balance sheet The Company intends to litigate this amount as well as the validity of the principal and interest outstanding, if a settlement on a vastly reduced amount, cannot be reached.
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STOCKHOLDERS’ DEFICIT |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ DEFICIT | NOTE 13 – STOCKHOLDERS’ DEFICIT
Common stock
The Company has authorized shares of $ par value common stock. As of December 31, 2023, and December 31, 2022, there were and and shares of common stock issued and outstanding respectively.
Preferred Stock Series A
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 shares of Preferred Stock, of which 5,000,000 were designated as Series A Convertible Preferred Stock.
As of December 31, 2023 and 2022 the Company had shares of $ par value preferred stock authorized and there were and 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.
As of December 31, 2023, and December 31, 2021, there were 3,200,579 shares of Series A Preferred issued and outstanding.
Preferred Stock Series B
On January 3, 2022, the Company authorized and designated a class of 2,500 shares, par value $ of Series B Convertible Preferred Stock (“Series B Preferred Stock”), in accordance with a Certificate of Designation filed with the State of Nevada (the “Series 5 Designation”).
During the year ended December 31, 2023 the Company issued Preferred B shares to GHS. These share shares were valued as follows:
During the year ended December 31, 2022 the Company issued Preferred B shares to GHS. These share shares were valued as follows:
Warrants
In connection with the issuance of Series B Preferred Stock to the Company described in Note 14, the Company has issued 335,440,817 warrants, with a five-year life, at an average strike price of $0.00694.
A summary of warrants is as follows:
Information relating to outstanding warrants on December 31, 2023, summarized by exercise price, is as follows:
The weighted-average remaining contractual life of all warrants outstanding and exercisable on December 31, 2023 is approximately years. As of December 31, 2023 these warrants has intrinsic value.
Preferred Stock Series C
On May 25, 2022 the Company authorized and designated a class of shares of Series C Preferred Stock, par value $. The holders of the Series C Preferred Stock shall have the right to cast one million (1,000,000) votes for each share held of record on all matters submitted to a vote of holders of the Company’s common stock. On the same date, the Company issued to each of Zach Bair, CEO & Chairman, Anthony Cardenas, CCO and Director, and Lou Mann, EVP and Director, shares of this newly created Series C Preferred Stock for services rendered. These share which represented (billion) votes was valued at the trading price of the Company’s securities of $0.0051 on the date of Board of Director approval. As a result the Company recorded a non-cash charge of $15,300,000 on its Statement of Operation for the three months ended June 30, 2022. As of December 31, 2023 and December 31, 2022, the were 3,000 shares of Series C Preferred Stock outstanding.
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COMMITMENT AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENT AND CONTINGENCIES | NOTE 14 – COMMITMENT AND CONTINGENCIES
Litigation
Legal Matters
In the matter of VNUE, Inc. v. Power Up Lending Group, Ltd. On October 6, 2021, the Company commenced an action against Power Up Lending Group, Ltd. “Power Up”) and Curt Kramer (“Kramer”) (Power Up and Kramer together, the “Power Up Parties”) in the United States District Court for the Eastern District of New York. The complaint alleges that: (1) Power Up is an unregistered dealer acting in violation of Section 15(a) of the Securities Exchange Act of 1934 (the “Act”) and, pursuant to Section 29(b) of the Act, the Company is entitled to recessionary relief from certain convertible promissory notes (“Notes”) and securities purchase agreements (“SPAs”) entered into by the Company and Power Up; (2) Kramer is liable to the Company as the control person of Power Up pursuant to Section 20(a) of the Act; and (3) Power Up is liable to the Company for unjust enrichment arising from the Notes and SPAs.
On December 10, 2021, the Power Up Parties filed their pre-motion conference request letter with the Court regarding their forthcoming motion to dismiss the Company’s complaint. On December 17, 2021, the Company filed its opposition thereto. On January 26, 2022, the Company filed its amended complaint, which asserted the same causes of action set forth in the initial complaint, and further alleged that Power Up made material misstatements in connection with the purchase and sale of the Company’s securities in violation of Section 10(b) of the Act and, thus, the Company is entitled to recessionary relief from the Notes and SPAs pursuant to Section 29(b) of the Act.
On February 9, 2022, the Court ordered an initial conference. The initial conference is currently scheduled for May 16, 2022, at 12:00 p.m. (EST). As of the date hereof, the Company intends to litigate its claims for relief against the Power Up Parties.
On June 7, 2022, the Company filed a voluntary dismissal of the action because the parties’ reached a confidential settlement.
On September 29, 2021, Golock Capital, LLC (“Golock”) and DBW Investments, LLC (“DBW”) (Golock and DBW together, the “Golock Plaintiffs”) commenced an action against the Company in the United States District Court for the Southern District of New York. The Golock Plaintiffs alleged that the Company was in breach of certain convertible promissory notes, securities purchase agreements and common stock warrants.
Following a bench trial, on June 1, 2023, the District Court ruled in the Golock Plaintiffs’ favor on its breach of contract claims and against the Company. On the same day, the Company appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit (“Second Circuit”).
On June 16, 2023, the District Court entered a judgment in the Golock Plaintiffs’ favor and against the Company for: (1) $1,218,897.62 in favor of Golock, and (2) $268,211.18 in favor of DBW.
On July 5, 2023, the District Court entered an amended judgment in favor of the Golock Plaintiffs’ favor and against -the Company. In addition to the amounts awarded on June 16, the District Court awarded the Golock Plaintiffs $223,328.20 for the attorney’s fees incurred in connection with this action.
As of the date hereof, the Company’s appeal to the Second Circuit. The Second Circuit, however, has not yet rendered a decision on the appeal. The Company will continue to vigorously defend itself in this matter.
On June 15, 2022, the Company commenced an action against LG Capital, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman (collectively, “LG Defendants”) in the United States District Court for the Eastern District of New York. The Company’s complaint alleges that the LG Defendants (1) violated the Racketeer Influenced and Corrupt Organizations Act through the collection of an unlawful debt imposed under a certain convertible promissory note, and (2) were unjust enriched by their collections of a certain convertible promissory note.
On March 7, 2023, the Company filed an amended complaint against the LG Defendants. The amended complaint raises the same claims for relief as the initial complaint.
On January 12, 2024, the Magistrate Judge assigned to this matter recommended that the LG Defendants’ motion to dismiss be denied.
As of the date hereof, the District Court has not yet entered an order on the LG Defendants’ motion to dismiss.
The Company intends to vigorously pursue its claims for relief and the damages it maintains that it is entitled to thereunder.
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SUBSEQUENT EVENTS |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS
Subsequent to December 31, 2023 the Company issued shares and received $95,585 in gross proceeds pursuant to draws on its equity line of credit. |
SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES (Policies) |
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Dec. 31, 2023 | ||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||
| Basis of Consolidation | Basis of Consolidation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The Company consolidates its results with its wholly-owned subsidiary, Stage It Corp.
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| Revenue Recognition | 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.
Stage It receives revenue through a percentage of ticket sales and tipping. This show-based revenue creates a pool that is shared with the performing artist. Once a show is completed the revenue that has been created through tickets and tips is allocated. Typically, Stage It retains 20% of the revenue as an agent and the artist receives 80% of the revenue as the performer, however, there are occasions when the profit split has different ratios. Revenue is recognized once a show is complete and the performance obligation to the consumer has been met. Since Stage It acts as an agent, revenue is recorded on a net basis only on the 20% portion, less direct expenses such as broadcast costs, merchant processing fees, bank services charges, license fees and the cost of production.
The Company also recognizes revenue on the sale of CDs and USB drives that contain the recording of live concerts and are made available to concert attendees immediately after the show and online. 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.
As of December 31, 2023 and December 31, 2022 deferred revenue amounted to $656,290 and $862,597 respectively. As of December 31, 2023, deferred revenue was comprised of solely of $656,290 in unredeemed notes at Stage It that have been purchased by customers but not used toward any events. When these notes will be redeemed, on average the performing artists will receive 73%, and the Company will record 23% of the value of these notes as revenue.
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| Use of Estimates | 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 the determination of goodwill and intangible assets, the valuation allowance for the deferred tax asset and the accruals for potential liabilities. Actual results could differ from these estimates.
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| Stock Purchase Warrants | Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.
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| Fair Value of Financial Instruments | 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:
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.
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| Derivative Financial Instruments | 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. There were no derivative liabilities outstanding as of December 31, 2023 and December 31, 2022.
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| 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 is 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, 2023, because their impact would have been anti-dilutive.
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| Property and Equipment | Property and Equipment
Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in the results of operations. The estimated useful lives of property and equipment are as follows:
As of December 31, 2023 and 2022, the Company’s property, which consisted solely of computers at its Stage It subsidiary, amounted to $-0- and $9,134, respectively. Depreciation expense for the year ended December 31, 2023, and 2022, amounted to $9,134 and $28,688 respectively.
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| Goodwill and Intangible Assets | Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisition is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of customer relationships, trademarks, and product formulations. The useful life of these customer relationships is estimated to be three years.
Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures, and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess. As of December 31, 2022 the Company determined that its goodwill and intangibles were fully impaired, and as a result recorded an impairment of goodwill and intangible assets amounting to $4,261,683 in its Statements Operations for the year ended December 31, 2022.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of Topic 326 is not expected to have a material effect on the Company’s financial statements and financial statement disclosures.
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SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES (Tables) |
12 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Schedule of property plant equipment estimated useful lives |
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PREPAID EXPENSE (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepaid expense |
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BUSINESS ACQUISITION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value of consideration |
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| Schedule of net asset acquired and liabilities assumed |
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| Schedule of net impairment |
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued liabilities |
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CONVERTIBLE NOTES PAYABLE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible notes payable |
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 requested 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 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, 2023 all of the Golock notes amounting to $339,011 were past due.
As a result Golock has assessed the Company additional penalties and interest of $1,172,782. The Company disagrees with the accrued interest and penalties due to Golock. Initially, the Company recorded this amount as a liability on its balance during the period ended 2021. Subsequent during the three month period ended September 30, 2021, the Company obtained a legal opinion supporting its position that these charges were egregious, and reversed the liability on its balance sheet The Company intends to litigate this amount as well as the validity of the principal and interest outstanding, if a settlement on a vastly reduced amount, cannot be reached.
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STOCKHOLDERS’ DEFICIT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of warrants |
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ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Feb. 14, 2022 |
|
| Restructuring Cost and Reserve [Line Items] | ||
| Cash paid | $ 1,085,450 | |
| Initial shares issued | 5,204,352 | 135,000,000 |
| TGRI [Member] | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Number of shares outstanding | 50,762,987 |
GOING CONCERN (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Cash | $ 25,430 | $ 82,807 |
| Negative working capital | 6,582,006 | |
| Accumulated deficit | 38,233,792 | 36,808,403 |
| Net cash used in operating activities | $ 1,084,903 | $ 1,276,439 |
SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES (Details) |
Dec. 31, 2023 |
|---|---|
| Office Equipment [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Preoperty and equipment useful life | 3 years |
| Furniture and Fixtures [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Preoperty and equipment useful life | 7 years |
SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Deferred revenue | $ 656,290 | $ 862,597 |
| Derivative liabilities | 0 | 0 |
| Property and equipment | (0) | 9,134 |
| Depreciation | 9,134 | 28,688 |
| Impairment of goodwill and intangible assets | $ 4,261,683 | |
| Rob Thomas [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Unredeemed amount | $ 656,290 | |
PREPAID EXPENSE (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
| Matchbox Twenty agreement | $ 100,000 | |
| Deposit with joint venture partner | 30,000 | |
| Total prepaid expenses | $ (0) | $ 130,000 |
PREPAID EXPENSE (Details Narrative) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
| Prepaid expenses | $ (0) | $ 130,000 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Related Party Transaction [Line Items] | |||
| Revenues from related party | $ 182,773 | $ 11,818 | |
| License cost | $ 9,139 | $ 591 | |
| Chief Executive Officers [Member] | |||
| Related Party Transaction [Line Items] | |||
| Advances from company | $ 10,000 | ||
BUSINESS ACQUISITION (Details) - USD ($) |
Dec. 31, 2023 |
Feb. 13, 2022 |
|---|---|---|
| Business Acquisition [Line Items] | ||
| Cash paid | $ 1,085,450 | |
| VNUE Acquisition [Member] | ||
| Business Acquisition [Line Items] | ||
| Common stock issued, 41,476,963 shares of the Company's restricted common stock valued at $0.0101 per share | $ 418,917 | |
| Common stock issuable, 93,523,037 shares of the Company's restricted common stock valued at $0.0101 per share | 944,583 | |
| Net liabilities assumed | 2,871,066 | |
| Cash paid | 1,085,450 | |
| Fair value of total consideration paid | $ 5,320,016 |
BUSINESS ACQUISITION (Details 1) - VNUE Acquisition [Member] |
Feb. 13, 2022
USD ($)
|
|---|---|
| Business Acquisition [Line Items] | |
| Cash and cash equivalents | $ 107,689 |
| Computer equipment | 36,882 |
| Total assets | 144,571 |
| Accounts payable and accrued liabilities | 1,711,349 |
| Notes payable | 526,385 |
| Deferred revenue | 777,903 |
| Total liabilities | 3,015,637 |
| Net liabilities assumed | $ 2,871,066 |
BUSINESS ACQUISITION (Details 2) |
12 Months Ended |
|---|---|
|
Dec. 31, 2023
USD ($)
| |
| Business Combination and Asset Acquisition [Abstract] | |
| Goodwill impairment | $ 10,400,000 |
| Intangible assets impairment | 1,542,847 |
| Reversal of Earnout liability | (7,679,984) |
| Net impairment | $ 4,262,863 |
BUSINESS ACQUISITION (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Feb. 14, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Feb. 13, 2022 |
|
| Business Acquisition [Line Items] | ||||
| Amortization of intangible assets | $ 758,333 | |||
| Impairment of goodwill and intangible assets charge | $ 4,262,683 | |||
| VNUE Acquisition [Member] | ||||
| Business Acquisition [Line Items] | ||||
| Number of shares acquisition | 135,000,000 | |||
| Fair value consideration paid to goodwill | $ 10,400,000 | |||
| Fair value consideration paid to intangible assets | $ 2,600,000 | |||
DEFERRED REVENUE (Details Narrative) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Deferred revenue | $ 656,290 | $ 862,597 |
| Rob Thomas [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Unredeemed notes | $ 656,290 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accounts payable and accrued expense | $ 1,974,487 | $ 2,389,231 |
| Accrued interest | 304,427 | 282,612 |
| Soundstr Obligation | 145,529 | 145,259 |
| Total accounts payable and accrued liabilities | $ 2,424,443 | $ 2,817,102 |
PURCHASE LIABILITY (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | |
|---|---|---|---|
Oct. 16, 2017 |
Dec. 31, 2022 |
Dec. 31, 2023 |
|
| Dividends Payable [Line Items] | |||
| Earnout Liabilities | $ 7,679,984 | ||
| Dividend Declared [Member] | |||
| Dividends Payable [Line Items] | |||
| Purchase liability | $ 300,000 | $ 300,000 | $ 0 |
| Purchase price | $ 50,000 |
SHARES TO BE ISSUED (Details Narrative) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Feb. 14, 2022 |
|
| Shares To Be Issued | |||
| Common stock to be issued, value | $ 975,174 | $ 247,707 | |
| Common stock to be issued, shares | 5,204,352 | 135,000,000 | |
| Common stock to be issued, amount | $ 247,707 | ||
| Number of shares issuable | 72,026,422 | ||
| Number of shares issuable, value | $ 727,647 |
NOTES PAYABLE (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Notes Payable | $ 1,359,865 | $ 1,134,262 | |
| Accruing interest | 8.00% | ||
| Ylimit [Member] | |||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Notes Payable | $ 1,082,761 | ||
| Amount converted | $ 102,603 | ||
| Maturity date | Sep. 30, 2024 | ||
| Former Stage [Member] | |||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Notes Payable | $ 277,104 |
CONVERTIBLE NOTES PAYABLE (Details) - USD ($) |
1 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2018 |
Dec. 31, 2021 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2018 |
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| Short-Term Debt [Line Items] | |||||||||
| Convertible notes payable | $ 470,714 | $ 470,714 | |||||||
| Amendment [Member] | Lender [Member] | |||||||||
| Short-Term Debt [Line Items] | |||||||||
| Notes past due | 73,204 | ||||||||
| GHS Investments [Member] | |||||||||
| Short-Term Debt [Line Items] | |||||||||
| Interest rate | 8.00% | ||||||||
| Maturity date description | November 16, 2021 | ||||||||
| Convertible promissory note | $ 165,000 | ||||||||
| Various Convertible Notes [Member] | |||||||||
| Short-Term Debt [Line Items] | |||||||||
| Convertible notes payable | 43,500 | 43,500 | |||||||
| Golock Capital, LLC Convertible Notes [Member] | |||||||||
| Short-Term Debt [Line Items] | |||||||||
| Convertible notes payable | [1] | 339,011 | 339,011 | ||||||
| Principal amount | $ 40,000 | ||||||||
| Interest rate | 10.00% | ||||||||
| Maturity date description | November 2, 2018 | ||||||||
| Conversion price | $ 0.015 | ||||||||
| Warrant issued to common stock | 2,500,000 | ||||||||
| Exercise price | $ 0.015 | ||||||||
| Related debt discount | $ 40,000 | $ 0 | |||||||
| Debt instrument, description | 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. | ||||||||
| Increase/decrease in derivative liability | $ 553,000 | ||||||||
| Financing cost | $ 43,250 | ||||||||
| Convertible notes payable | $ 302,067 | ||||||||
| Other Convertible Notes [Member] | |||||||||
| Short-Term Debt [Line Items] | |||||||||
| Convertible notes payable | [2] | $ 88,203 | $ 88,203 | ||||||
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CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
Apr. 29, 2019 |
Feb. 02, 2018 |
Dec. 31, 2023 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
| Golock Capital, LLC Convertible Notes [Member] | |||||
| Short-Term Debt [Line Items] | |||||
| Debt instrument, description | 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. | ||||
| Convertible notes payable | $ 302,067 | ||||
| Debt instrument, principal amount | $ 339,011 | ||||
| Amount of additional penalties and interest | $ 1,172,782 | ||||
| Amendment [Member] | Golock [Member] | |||||
| Short-Term Debt [Line Items] | |||||
| Debt instrument, description | 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 requested conversion. | ||||
| Debt conversion, converted instrument, amount | $ 53,331 | ||||
| Debt conversion, converted instrument, accured interest | $ 23,102 | ||||
| Debt conversion, converted instrument, shares issued | 100,000,000 | ||||
| Convertible notes payable | $ 339,010 | ||||
| Notes past due | $ 285,679 | ||||
STOCKHOLDERS' DEFICIT (Details) - shares |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Equity [Abstract] | |||
| Number of warrants, Ending Balance | 279,655,690 | 15,800,319 | 23,805,027 |
| Number of warrants, Warrants expired or forfeited | (15,800,319) | (8,004,708) | |
| Warrants granted | 55,875,127 | 279,655,690 | |
| Number of warrants, Ending Balance | 335,440,817 | 279,655,690 | 15,800,319 |
COMMITMENT AND CONTINGENCIES (Details Narrative) |
1 Months Ended | |
|---|---|---|
Jul. 05, 2023 |
Jun. 16, 2023 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Judgement descriprion | District Court entered an amended judgment in favor of the Golock Plaintiffs’ favor and against -the Company. In addition to the amounts awarded on June 16, the District Court awarded the Golock Plaintiffs $223,328.20 for the attorney’s fees incurred in connection with this action. | District Court entered a judgment in the Golock Plaintiffs’ favor and against the Company for: (1) $1,218,897.62 in favor of Golock, and (2) $268,211.18 in favor of DBW. |
SUBSEQUENT EVENTS (Details Narrative) |
4 Months Ended |
|---|---|
|
Apr. 15, 2024
USD ($)
shares
| |
| Subsequent Events [Abstract] | |
| Number of shares issued | shares | 157,050,725 |
| Value of shares issued for line of credit | $ | $ 95,585 |