The following discussion and analysis of our results of operations and financial
condition should be read in conjunction with our financial statements and the
notes to those financial statements that are included elsewhere in this Annual
Report on Form 10-K. Our discussion includes forward-looking statements based
upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. Actual results and the timing of
events could differ materially from those anticipated in these forward-looking
statements as a result of a number of factors. See “Cautionary Note Regarding
Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.
Results of Operations for the Years Ended
The following discussion and analysis of our results of operations and financial
condition for the years ended
conjunction with our condensed consolidated financial statements and related
notes included in this annual report.
Revenues
In the year ended
the impact of COVID-19, thus allowing us to sponsor one live concert.
Direct Costs of Revenues
In the year ended
compared to
increase of
related to one large concert event that we sponsored in the fourth quarter of
2021. We expect to generate positive gross margins from higher sales volumes in
the future, although there can be no assurances.
General and Administrative Expenses
In the year ended
of
representing an increase of
attributable to an increase in professional fees of approximately
increase in officer compensation of approximately
research and development expenses of
Other Income (Expenses), Net
We recorded other income of
compared to other expense of
The significant increase in other income for the year ended
period was primarily attributable to a reduction of
the fair value of the Company’s derivative liability related to convertible
notes, and
2020 accrued liability.
Net Income (Loss)
As result of the foregoing, we recorded net income of
ended
ended
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
working capital of
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.
18
On
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.
On
“SPA”) with
company, pursuant to which the Company will have the right in its sole
discretion for a period of one year from the date of the SPA, to sell up to
million
(subject to certain limitations) to
considered an Equity Line of Credit (“ELOC”).
As of the date of this annual report, the Company is relying on its ELOC with
liquidity for the immediate future, however, the ELOC credit is subject to
certain limitations based on the trading price of the Company’s common stock,
which may not enable the Company to continue to advance funds. We are currently
looking for new opportunities to fund the Company to supplement our 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.
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
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
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.
19
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments
are derivatives or contain features that qualify as embedded derivatives. For
derivative financial instruments that are accounted for as liabilities, the
derivative instrument is initially recorded at its fair value and is then
re-valued at each reporting date, with changes in the fair value reported in the
condensed consolidated statements of operations. The classification of
derivative instruments, including whether such instruments should be recorded as
liabilities or as equity, is evaluated at the end of each reporting period.
Derivative instrument liabilities are classified in the balance sheet as current
or non-current based on whether or not the net-cash settlement of the derivative
instrument could be required within 12 months of the balance sheet date.
Stock-Based Compensation
The Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and financing
costs. The Company accounts for stock option and warrant grants issued and
vesting to employees based on the authoritative guidance provided by FASB where
the value of the award is measured on the date of grant and recognized as
compensation expense on the straight-line basis over the vesting period. The
Company accounts for stock option and warrant grants issued and vesting to
non-employees in accordance with the authoritative guidance of the FASB where
the value of the stock compensation is based upon the measurement date as
determined at either a) the date at which a performance commitment is reached,
or b) at the date at which the necessary performance to earn the equity
instruments is complete. Options granted to non-employees are revalued each
reporting period to determine the amount to be recorded as an expense in the
respective period. As the options vest, they are valued on each vesting date and
an adjustment is recorded for the difference between the value already recorded
and the then-current value on the date of vesting. In certain circumstances
where there are no future performance requirements by the non-employee, option
grants are immediately vested and the total stock-based compensation charge is
recorded in the period of the measurement date.
The fair value of the Company’s stock option and warrant grants are estimated
using the Black-Scholes-Merton Option Pricing model, which uses certain
assumptions related to risk-free interest rates, expected volatility, expected
life of the stock options or warrants, and future dividends. Compensation
expense is recorded based upon the value derived from the Black-Scholes-Merton
Option Pricing model, and based on actual experience. The assumptions used in
the Black-Scholes-Merton Option Pricing model could materially affect
compensation expense recorded in future periods.
Recent Accounting Pronouncements
See Note 2 of the Condensed Consolidated Financial Statement herein for
management’s discussion of recent accounting pronouncements.
Selected Financial Data
Not applicable.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to stockholders.
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