VNUE.Vnue, INC
10-Q: VNUE Inc. Reports Q3 2024 Results with Revenue Decline and Increased Net Loss
Sentiment:
Quarterly Report
VNUE Inc. experienced a decrease in revenue and an increase in net loss for the third quarter of 2024, primarily due to reduced activity at its Stage It subsidiary and a litigation judgment.
Capital raiseThe company's ability to continue as a going concern is dependent on raising additional funds.The company is actively seeking new sources of financing to fund its operations.The company is currently unable to use its equity line of credit and needs to re-audit its financial statements.
Worse than expectedThe company's revenue decreased significantly compared to the same period last year.The company's net loss increased substantially compared to the same period last year.The company's operating expenses increased significantly due to a litigation judgment.
Summary
- VNUE Inc. reported a net loss of $1.38 million for the three months ended September 30, 2024, compared to a net loss of $375,480 for the same period in 2023.
- The company's revenue decreased to $57,670 for the quarter, down from $196,522 in the prior year.
- Operating expenses increased significantly to $1.32 million, primarily due to a $1.3 million litigation judgment.
- For the nine months ended September 30, 2024, the net loss was $1.78 million, compared to a net loss of $1.12 million in 2023.
- Revenue for the nine-month period was $251,796, a decrease from $428,552 in the same period of 2023.
- The company's cash balance is very low at $3,416 as of September 30, 2024, down from $25,430 at the end of 2023.
- The company has a significant accumulated deficit of $40.2 million and negative working capital of $7.68 million.
- There is substantial doubt about the company's ability to continue as a going concern.
Sentiment
Score: 2
Explanation: The document paints a very negative picture of the company's financial health, with declining revenue, increasing losses, a critically low cash balance, and substantial doubt about its ability to continue as a going concern. The litigation and internal control issues further contribute to the negative sentiment.
Positives
- The company is exploring settlement terms with lenders regarding the litigation judgment.
- VNUE is pursuing legal action against LG Capital Funding, LLC, and others for alleged violations.
- The company has added a veteran record company executive to its team to provide record promotion services.
Negatives
- The company experienced a significant decrease in revenue in both the three and nine month periods ending September 30, 2024.
- Operating expenses increased substantially due to a large litigation judgment.
- The company's cash balance is extremely low, raising concerns about its ability to operate.
- There are material weaknesses in the company's internal controls over financial reporting.
- The company is facing substantial doubt about its ability to continue as a going concern.
- The company is currently unable to use its equity line of credit.
Risks
- The company's ability to continue as a going concern is highly dependent on securing additional financing.
- Failure to obtain new sources of financing will have a material adverse impact on the company.
- The company faces ongoing litigation that could result in further financial liabilities.
- Material weaknesses in internal controls could lead to misstatements in financial reporting.
- The company's revenue is dependent on live performances, which can be affected by external factors.
- The company's reliance on equity financing could lead to substantial dilution for stockholders.
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.
- The Company remains committed to vigorously pursuing its claims for monetary damages and/or equitable relief in the LG Capital Funding, LLC case.
- Management is negotiating and exploring terms of settlement with the Lenders in the Golock Capital, LLC and DBW Investments, LLC case.
Industry Context
The company operates in the music technology sector, providing platforms for live concert recording, streaming, and rights management. The industry is competitive, with various companies offering similar services. The company's performance is affected by the overall health of the live music industry and its ability to innovate and attract artists and customers.
Comparison to Industry Standards
- VNUE's financial performance is significantly below industry standards for companies in the music technology sector.
- Compared to companies like Live Nation Entertainment, which reported revenue of $7.4 billion in 2023, VNUE's revenue of $251,796 for the nine months ended September 30, 2024, is extremely low.
- Other companies in the live streaming space, such as Twitch, have significantly larger user bases and revenue streams.
- VNUE's negative working capital and accumulated deficit are also concerning when compared to industry benchmarks.
- The company's lack of profitability and reliance on external financing are not typical of established companies in the sector.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Weaknesses | The company identified material weaknesses in its internal control over financial reporting, including lack of proper segregation of duties, lack of a formal review process, lack of adequate policies and procedures, lack of independent board members, and lack of an independent audit committee. | 2024-09-30 | These weaknesses could lead to misstatements in financial reporting and a lack of reliability in the company's financial statements. |
Legal Proceedings
- The company is involved in ongoing litigation with Golock Capital, LLC and DBW Investments, LLC, which resulted in a judgment against the company.
- The company is also pursuing legal action against LG Capital Funding, LLC, and others for alleged violations.
- The company is currently negotiating and exploring terms of settlement with the Lenders in the Golock Capital, LLC and DBW Investments, LLC case.
Related Party Transactions
- The company has a licensing agreement with DiscLive Network, which is controlled by the company's CEO. The CEO has waived the right to receive license fees under this agreement.
Stakeholder Impact
- Shareholders are at risk of significant losses due to the company's poor financial performance and potential inability to continue as a going concern.
- Employees may face job insecurity due to the company's financial difficulties.
- Customers may be affected by the company's potential inability to provide services.
- Creditors are at risk of not being repaid due to the company's financial instability.
- Suppliers may be affected by the company's potential inability to pay for goods and services.
Next Steps
- The company needs to secure additional financing to continue operations.
- The company needs to address the material weaknesses in its internal controls.
- The company needs to negotiate a settlement with the lenders in the Golock and DBW case.
- The company needs to continue pursuing its claims in the LG Capital Funding, LLC case.
- The company needs to re-audit its financial statements for 2022 and 2023.
Key Dates
| Date | Description |
|---|---|
| 2006-04-04 | VNUE, Inc. was incorporated in Nevada. |
| 2015-05-29 | VNUE, Inc. entered into a merger agreement with VNUE Washington, Inc. |
| 2016-07-21 | VNUE entered into a strategic alliance with DiscLive. |
| 2017-07-10 | VNUE entered into a Licensing Agreement with DiscLive. |
| 2019-05-22 | The Company authorized and designated a class of Series A Convertible Preferred Stock. |
| 2019-07-02 | The Company filed a Certificate of Amendment to its Articles of Incorporation. |
| 2021-09-29 | Golock Capital, LLC and DBW Investments, LLC commenced an action against the Company. |
| 2022-01-03 | The Company authorized and designated a class of Series B Convertible Preferred Stock. |
| 2022-02-13 | VNUE entered into a Merger Agreement to acquire Stage It Corp. |
| 2022-02-14 | VNUE completed the acquisition of Stage It. |
| 2022-05-25 | The Company authorized and designated a class of Series C Preferred Stock. |
| 2022-06-15 | The Company commenced an action against LG Capital Funding, LLC, and others. |
| 2023-06-01 | The District Court ruled in favor of the Lenders in the Golock and DBW case. |
| 2023-06-16 | The District Court entered a judgment against the Company in the Golock and DBW case. |
| 2023-07-05 | The District Court entered an amended judgment against the Company in the Golock and DBW case. |
| 2024-03-30 | The District Court denied the LG Defendants motion to dismiss. |
| 2024-05-24 | The Second Circuit affirmed the District Court's judgment in the Golock and DBW case. |
| 2024-09-30 | End of the reporting period for the quarterly report. |
| 2024-11-19 | Date of the quarterly report filing. |
Keywords
VNUE, financial results, Q3 2024, net loss, revenue decline, litigation, going concern, Stage It, Soundstr, equity financing, internal controls
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