Forward-Looking Statements
The statements in this quarterly report that are not reported financial results
or other historical information are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995, as amended.
These statements appear in a number of different places in this report and can
be identified by words such as “estimates”, “projects”, “expects”, “intends”,
“believes”, “plans”, or their negatives or other comparable words. Also, look
for discussions of strategy that involve risks and uncertainties.
Forward-looking statements include, among others, statements regarding our
business plans and availability of financing for our business.
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
Exchange Commission
expressly qualify in their entirety 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
Presentation of Information
As used in this annual report, the terms “we”, “us”, “our” and the “Company”
mean
All dollar amounts in this annual report refer to US dollars unless otherwise
indicated.
Overview
We were incorporated as a
Overview of our Current Business
The live music and entertainment space is constantly searching for new
monetization outlets. Music licensing and royalties are particular “hot button”
issues in the industry. We believe that we have developed solutions that create
new revenue streams, and simultaneously helps to protect the rights of the
creators and will help ensure they are properly compensated. This befits not
only artists, labels, publishers, and live venues but the fans as well.
Through
live entertainment music technology company that offers a suite of products and
services which monetize and monitor music for artists, labels, performing rights
organizations, publishers, writers, radio stations, venues, restaurants, bars,
and other stakeholders in music. Our two main product lines are:
· Set.fm™ / DiscLive Network™ - Our consumer app platform that allows fans
to purchase the concert they just experienced instantly on their mobile
device, and "instant" physical collectible products are recorded and sold
at shows and online through the company's exclusive partner DiscLive
Network™, the 15-year pioneer in "instant live" recording.
· Soundstr™ - Our technology which is a comprehensive music identification
and rights management Cloud platform that, 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, and will help to ensure the correct stakeholders are paid
through the use of our "big data" collection.
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While Set.fm™ and Soundstr™ are proprietary marks of the Company, DiscLive, and
its related marks and names are not owned by the Company and are owned or
utilized by
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.
On
performance artist, Matchbox Twenty “MT Agreement”), to record its 2020 tour and
sell limited edition double CD sets, download cards, and digital downloads. As
part of the deal, the Company agreed to pay an advance of
sales, to MT and its affiliated companies, which was paid in full in
installments, with the last installment of
Also as part of the transaction, Ticketmaster agreed to include the option for
their customers to pre-purchase a double CD set at checkout, for a price to the
customer of
after Ticketmaster’s fees and taxes. Additionally,
package sales company utilized by MT agreed to buy 5000 digital download cards
from VNUE for
wire
The following discussion and analysis of our results of operations and financial
condition for the three months ended
conjunction with our condensed consolidated financial statements and related
notes included in this report. We are in the process of completing the
development of our products and services and therefore had minimal revenues
during this quarter.
Three Months Ended
Revenues
Our revenues for the three months ended
and
entered into an agreement with Matchbox Twenty (“MT Agreement”) to record its
2020 tour and sell limited edition double CD sets, download cards, and digital
downloads. As part of the deal, the Company agreed to pay an advance of
against sales, to MT and its affiliated companies, which was paid in full in
installments, with the last installment of
Also as part of the transaction, Ticketmaster agreed to include the option for
their customers to pre-purchase a double CD set at checkout, for a price to the
customer of
after Ticketmaster’s fees and taxes. Additionally,
package sales company utilized by MT agreed to buy 5000 digital download cards
from VNUE for
to the onset of COVID-19 the tour has been postponed until the summer of 2021.
As a result,
recorded as deferred revenue and will be recorded as revenue after tour occurs.
Impact of Current Coronavirus (COVID-19) Pandemic on the Company
While the COVID-19 pandemic had an affect on our ability to complete our
financial statements in a timely manner we do not believe that it will have a
material adverse effect on our business at this time as we are currently
scheduled to roll out our products in third quarter of 2020. Nonetheless a
material portion of our future set.fm and DiscLive business is dependent on
success of public events and gatherings. In the event that quarantine and social
distancing rules or even social fears continue through such time then we will be
materially adversely affected, as these gatherings will see fewer attendees.
However, as Soundstr is rolled out, we do not expect to have a materially
adverse effect, as our devices will be rolled out to radio stations initially,
which do not depend upon attendees. We also do not anticipate expending material
costs on implementing social distancing or similar measures in our business.
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Direct Costs of Revenues
Our direct costs of revenues for the three months ended
2019, was
subtracting direct costs from revenue. The gross margin (loss) percentage is
calculated by dividing gross margins by revenue. Our gross margin percentage for
the period ended
148.1% for the same period in 2019. The current sales levels and associated
costs are indicative of the margins we expect to generate from higher sales
volumes.
General and Administrative Expenses
Our general and administrative expenses for the three months ended
2020
or approximately
primarily attributable to increased professional fees.
Other Income (Expenses), Net
We recorded other (expense) net, of
31, 2020
primarily attributable to an increase in the fair value of derivative
liabilities of
Net Income (Loss)
As a result of the foregoing revenues, direct costs of revenues, research and
development expenses, general and administrative expenses, and other income
(expenses), net, our net loss for the three months ended
of
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through private
offerings of our equity securities and loans.
As of
equivalents of
We had negative cash flows from operating activities of
months ended
activities of
in our negative cash flows from operations was primarily attributable to an
increase in our operating expenses.
We generated cash flows from financing activities of
months ended
due to a reduction in net proceeds from the sale of convertible notes.
Going Concern
The accompanying condensed 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 condensed consolidated financial statements,
during the three months ended
loss from operations of
stockholders’ deficit of
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
financial statements, has raised substantial doubt about the Company’s ability
to continue as a going concern.
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On
31, 2020
estimates that the current funds on hand will be sufficient to continue
operations through
concern is dependent upon its ability to obtain necessary debt or equity
financing to continue operations until it begins generating positive cash flow.
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. (See Note 2 –
Significant and Critical Accounting Policies and Practices herein).
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.
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.
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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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