10-Q: VNUE Inc. Reports Q2 2024 Results Amidst Going Concern Uncertainty

VNUE Inc.'s Q2 2024 results show a net loss and continued concerns about the company's ability to operate as a going concern.

Summary

• VNUE Inc. reported a net loss available to common shareholders of $353,127 for the three months ended June 30, 2024, compared to a loss of $528,206 for the same period in 2023.
• For the six months ended June 30, 2024, the net loss available to common shareholders was $604,272, compared to a loss of $967,207 for the same period in 2023.
• Revenue for the three months ended June 30, 2024, was $87,950, a decrease from $143,284 in the same period of 2023.
• Revenue for the six months ended June 30, 2024, was $194,127, a decrease from $232,030 in the same period of 2023.
• The company's cash on hand was $41,782 as of June 30, 2024, compared to $25,430 at the end of 2023.
• The company has an accumulated deficit of $38,838,064 and negative working capital of $6,328,745 as of June 30, 2024.
• The company's independent auditor has raised substantial doubt about the company's ability to continue as a going concern.
• The company is dependent on raising additional funds to continue operations.

Sentiment

Score: 3

Explanation: The document indicates significant financial challenges, including a net loss, decreased revenue, and a going concern warning, which suggests a negative outlook for investors. While there are some improvements in operating expenses, the overall sentiment is negative due to the company's financial instability and dependence on external funding.

Positives

• The net loss available to common shareholders decreased in both the three and six month periods compared to the previous year.
• Operating expenses decreased in both the three and six month periods compared to the previous year.
• The company's cash balance increased slightly from the end of 2023.

Negatives

• The company's revenue decreased in both the three and six month periods compared to the previous year.
• The company has a significant accumulated deficit and negative working capital.
• The company's independent auditor has raised substantial doubt about the company's ability to continue as a going concern.
• The company is dependent on raising additional funds to continue operations.

Risks

• The company's ability to continue as a going concern is dependent on securing additional financing.
• There is no assurance that the company will be able to obtain additional financing on satisfactory terms.
• Failure to obtain new sources of financing will have a material adverse impact on the company.
• The company has material weaknesses in its internal controls over financial reporting.
• The company is involved in ongoing litigation which could have a negative impact on its financial position.

Future Outlook

The company expects that its 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. 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 controls.
• Management believes that the issuance of the Series A Preferred Stock was exempt from the registration requirements under the Securities Act of 1933.
• Management is actively seeking additional funding through debt or equity financing.

Industry Context

The company operates in the music technology sector, providing platforms for live concert recording, streaming, and rights management. The company's performance is affected by the overall health of the live music industry and the adoption of its technologies by artists and venues. The company is also impacted by the ongoing shift towards digital content consumption and the need for effective rights management solutions.

Comparison to Industry Standards

• The company's revenue is significantly lower than established players in the music technology sector, such as Live Nation or Spotify, which have much larger user bases and diversified revenue streams.
• The company's net losses are also substantial compared to more mature companies in the industry, indicating a need for significant improvements in profitability.
• The company's reliance on external financing is a common trait among early-stage tech companies, but the uncertainty surrounding its ability to continue as a going concern is a major concern.
• The company's Soundstr technology is similar to other music recognition technologies, such as Shazam, but it is focused on the B2B market, which is a different approach.
• The company's Stage It platform competes with other live streaming platforms, such as Twitch and YouTube Live, but it is focused on ticketed events, which is a niche market.

Corporate Governance

Legal Proceedings

• The company is involved in ongoing litigation with Golock Capital, LLC and DBW Investments, LLC, where a judgment was entered against the company.
• The company is also involved in litigation with LG Capital, LLC, Joseph Lerman, Boruch Greenberg and Daniel Gellman.
• The company previously commenced an action against Power Up Lending Group, Ltd., which was settled confidentially.

Related Party Transactions

• The company has a licensing agreement with DiscLive Network, which is controlled by the company's CEO.
• The company recorded revenues of $2,200 and $129,304 for the six month periods ended June 30, 2024 and June 30, 2023, respectively, using the assets licensed under this agreement.
• 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.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and the going concern warning.
• Employees may be affected by potential cost-cutting measures or restructuring if the company fails to secure additional funding.
• Customers may be impacted by potential disruptions in service if the company's financial situation worsens.
• Creditors face the risk of non-payment if the company is unable to continue as a going concern.

Next Steps

• The company is evaluating remediation plans for the material weaknesses in internal controls.
• The company is seeking new sources of financing to fund its operations.
• The company is considering its options regarding the Golock litigation.
• The company is pursuing its claims for relief against the LG Defendants.

Key Dates

Keywords

financial results, going concern, net loss, revenue, operating expenses, liquidity, capital resources, internal controls, litigation, Stage It, Soundstr