10-Q: VNUE Inc. Reports Q1 2024 Results Amidst Going Concern Challenges

VNUE Inc. reported a net loss of $251,145 for the first quarter of 2024, while facing significant financial challenges and concerns about its ability to continue as a going concern.

Summary

• VNUE Inc. reported a net loss available to common shareholders of $251,145 for the three months ended March 31, 2024, compared to a net loss of $439,000 for the same period in 2023.
• The company's revenue increased to $106,177 from $88,745 in the same period last year, primarily due to increased revenues at its Stage It subsidiary.
• Operating expenses decreased significantly to $192,087 from $352,693 year-over-year, due to reductions in professional fees, payroll, and general administrative costs.
• The company's cash on hand increased to $42,660 as of March 31, 2024, from $25,430 at the end of 2023.
• VNUE has a negative working capital of $6,010,099 and an accumulated deficit of $38,484,937, raising substantial doubt about its ability to continue as a going concern.
• The company's ability to continue operations is dependent on securing additional debt or equity financing.
• The company issued 157,050,725 shares of common stock for $95,585 in gross proceeds through its equity line of credit during the quarter.
• The company's previous auditor, BF Borgers CPA PC, was banned by the SEC, requiring the company to engage a new auditor and re-audit its financial statements for 2022 and 2023.

Sentiment

Score: 3

Explanation: The document presents a concerning financial situation with significant losses, negative working capital, and going concern issues. While there are some positive aspects like revenue growth and reduced operating expenses, the overall sentiment is negative due to the company's financial instability and operational challenges.

Positives

• Revenue increased by $17,432 compared to the same period last year, primarily due to the Stage It subsidiary.
• Operating expenses decreased by $160,606 compared to the same period last year, due to reductions in professional fees, payroll, and general administrative costs.
• The net loss available to common shareholders improved by $187,855 compared to the same period last year.
• Cash on hand increased by $17,230 compared to the end of 2023.

Negatives

• The company has a negative working capital of $6,010,099.
• The company has an accumulated deficit of $38,484,937.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company's previous auditor was banned by the SEC, requiring a re-audit of financial statements.
• The company does not have the funding to engage its new auditors to undertake the re-audits.

Risks

• The company's ability to continue as a going concern is dependent on securing additional debt or equity financing.
• Failure to obtain new sources of financing will have a material adverse impact on the company.
• The company may face undue restrictions on operations or substantial dilution for stockholders if it obtains additional financing.
• The company's internal controls over financial reporting are not effective.
• The company is involved in ongoing legal proceedings.

Future Outlook

The company expects revenues to increase in future quarters as the impact of COVID-19 decreases, but there are no assurances. The company is also looking for new opportunities to fund the Company to supplement its preferred stock and credit line funding.

Management Comments

• Management is currently evaluating remediation plans for the material weaknesses in internal control.
• Management believes that the issuance of the Series A Preferred Stock was exempt from the registration requirements under the Securities Act of 1933.
• Management estimated the provisional fair values of the intangible assets and goodwill on March 31, 2022 and did not complete a valuation study with an independent third party.

Industry Context

The company operates in the music technology sector, focusing on live concert recording, streaming, and rights management. The company's acquisition of Stage It allows it to expand into live streaming events. The company is also deploying its Soundstr technology in Key West, FL, to track music usage in commercial establishments.

Comparison to Industry Standards

• The company's financial performance is weak compared to industry standards, with a significant accumulated deficit and negative working capital.
• The company's reliance on equity financing and convertible notes is not uncommon for early-stage technology companies, but the going concern issues raise concerns.
• The company's revenue growth is positive, but it needs to significantly improve its profitability and cash flow to become sustainable.
• The company's internal control weaknesses are a significant concern and need to be addressed to ensure accurate financial reporting.

Corporate Governance

Legal Proceedings

• The company is involved in ongoing legal proceedings with Golock Capital, LLC and DBW Investments, LLC.
• The company is also involved in legal proceedings with LG Capital, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman.

Related Party Transactions

• The company has a licensing agreement with DiscLive Network, which is controlled by the company's CEO.
• Revenues of $0 and $ 3,875 for the periods ended March 31, 2024 and March 31, 2023, respectively, were recorded using the assets licensed under this agreement.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern issues.
• Employees may be impacted by potential cost-cutting measures or restructuring.
• Customers may be affected by potential disruptions in service or product offerings.
• Creditors face increased risk of non-payment due to the company's financial difficulties.
• Suppliers may be impacted by potential delays or non-payment of invoices.

Next Steps

• The company needs to secure additional debt or equity financing to continue operations.
• The company needs to remediate the material weaknesses in its internal controls.
• The company needs to engage its new auditors to undertake the re-audits of its financial statements for 2022 and 2023.
• The company needs to continue to develop and deploy its Soundstr technology.

Key Dates

Keywords

VNUE, Stage It, financial results, going concern, revenue, operating expenses, net loss, equity financing, debt financing, auditor, internal controls