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. Some forward-looking statements that we may use include, without limitation, those statements that relate to:





    ·   Competition and market acceptance of our product,
    ·   Other risks and uncertainties related to the music industry and our
        business strategy and the
        impact of the Covid-19 pandemic on our operations
    ·   Our ability to penetrate the market and continually innovate useful
        technologies,
    ·   Our ability to negotiate and enter into license agreements,
    ·   Our ability to raise capital,
    ·   Our ability to protect our intellectual property rights,

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 United States Securities and Exchange Commission ("SEC"). We advise you that these cautionary remarks 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 SEC.





Presentation of Information

As used in this quarterly report, the terms "we", "us", "our" and the "Company" mean VNUE, Inc. and its subsidiaries, unless the context requires otherwise.

All dollar amounts in this annual report refer to US dollars unless otherwise indicated.





Overview

We were incorporated as a Nevada corporation on April 4, 2006.

Impact of Current Coronavirus (COVID-19) Pandemic on the Company

Covid-19 has had a material adverse effect on our live recording business and the music industry in general. Substantially all of our future set.fm and DiscLive business is dependent on success of public events and gatherings. We believe that the vaccination efforts throughout the world are having a positive impact on the population that may enable more live music events to be held in the future which would be beneficial to our business, however, there can be no assurances on the timing of when this may occur or whether it will occur at all.

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.






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Through VNUE, Inc., our wholly-owned subsidiary, we now carry on business as a 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.

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 RockHouse Live Media Productions, Inc. The Company has not filed any 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 Jan 9, 2020, the Company entered into an agreement with recording and performance artist, Matchbox Twenty, 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 $100,000 against sales, to Matchbox Twenty and its affiliated companies, which was paid in full in installments, with the last installment of $40,000 paid on March 4, 2020.

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 $25.00, resulting in a net payment to VNUE of approximately $20 after Ticketmaster's fees and taxes. Additionally, Wonderful Union, the VIP package sales company utilized by Matchbox Twenty agreed to buy 5,000 digital download cards from VNUE for $7 each (to include in VIP packages that they send to fans) for $35,000, which has been paid full. As of May 11, 2020, Ticketmaster has paid via wire $40,378 toward the aforementioned pre-sales.





StageIt Acquisition

During the current reporting period, we announced that the company plans to acquire live streaming innovator StageIt. The deal is expected to bring hundreds of thousands of live music fans and complementary technologies to our portfolio in addition to delivering key pioneering talent in the Music Recognition Technology (MRT) space to our roster, which the company believes will accelerate the rollout of the company's groundbreaking platform, Soundstr.

We are still in the due diligence process, and it has taken longer than expected to generate financials and an audit for the incoming business. The parties are working to structure and prepare the definitive documents to the transaction. We hope to enter into definitive documents and announce the same in the coming weeks.

Comparison for the three and nine months ended September 30, 2021, and 2020

The following discussion and analysis of our results of operations and financial condition for the three and nine months ended September 30, 2021, and 2020, should be read in conjunction with our condensed consolidated financial statements and related notes included in this report.





Revenues

In the three months ended September 30, 2021, we had revenue of $2,714 compared to $1,746 for the three months ended September 30, 2020, representing an increase of $968. In the nine months ended September 30, 2021, we had revenue of $9,295 compared to $19,932 for the nine months ended September 30, 2020, representing a decrease of $10,637. The decrease in revenue is primarily attributable to the overall impact of COVID-19, preventing live concerts from taking place.





Direct Costs of Revenues

In the three months ended September 30, 2021, we had direct costs of revenue of $5,380 compared to $-0- for the three months ended September 30, 2020, representing an increase of $5,380. In the nine months ended September 30, 2021, we had direct costs of revenue of $5,446 compared to $8,509 for the nine months ended September 30, 2020, representing a decrease of $3,063. Due to the low volume of revenue, associated costs are not indicative of the costs and margins we expect to generate from higher sales volumes.






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General and Administrative Expenses

In the three months ended September 30, 2021, we had general and administrative expense of $279,884 compared to $106,990 for the three months ended September 30, 2020, representing an increase of $172,894. In the nine months ended September 30, 2021, we had the general and administrative expense of $614,797 compared to $477,021 for the nine months ended September 30, 2020, representing an increase of $137,776. In increase in general and administrative expenses in 2021 is primarily attributable to an increase in professional fees of approximately $66,000 above 2020 levels, research and development expenses of $55,000 in 2021 compared to $-0- in 2020, and an increase of approximately $19,000 in advertising expenses over prior year levels.





Other Income (Expenses), Net

We recorded other expense of $82,611 for the three months ended September 30, 2021, compared to other expense of $6,768,988 for the three months ended September 30, 2021. We recorded other income of $3,960,991 for the nine months ended September 30, 2021, compared to other expense of $6,907,055 during the nine-month period ended September 30, 2020. The significant increase in other income for the nine months ended September 30, 2021 period was primarily attributable to a reduction of $3,156,582 in the Company's derivative liability related to convertible notes. The large expense for the nine months ended September 30, 2020 was primarily attributable to an increase in derivative liabilities of $6,413,154 in the 2020 period.





Net Income (Loss)

We recorded a net loss of $365,161 for the three months ended September 30, 2021, compared with a net loss of $6,874,231 for the three months ended September 30, 2020. We recorded net income of $3,350,043 for the nine months ended September 30, 2021, compared with a net loss of $7,372,653 for the nine months ended September 30, 2020.

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 nine months ended September 30, 2021, the Company used cash in operations of $903,466, and as of September 30, 2021, had a stockholders' deficit of $2,719,262 and negative working capital of $2,719,261. These factors raise substantial doubt about 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 financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

On September 30, 2021, the Company had cash on hand of $207,921. The continuation 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.

As of the date of this quarterly report, the Company is relying on its equity line of credit with GHS Investments, LLC, described below, to fund its operations. The Company believes that this credit line will provide sufficient liquidity for the immediate future. All other financial commitments have been terminated and we are 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.

On June 22, 2021, the Company entered into a Securities Purchase Agreement (the "SPA") with GHS Investments, LLC (the "Purchaser"), a Nevada limited liability 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 $8 million of Common Stock (subject to certain limitations) to GHS Investments. The transaction is considered an Equity Line of Credit ("ELOC")






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During the three months ended September 30, 2021, the Company raised $722,215 on its equity line of credit. As result of the successful utilization of the ELOC which is available to generate additional funding, and based on current on hand cash, of $207,921 as of September 30, 2021, the Company estimates that the current funds on hand will be sufficient to continue operations through the next 12 months.

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 U.S. generally accepted accounting principles. The preparation 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 1 - Significant and Critical Accounting Policies and Practices in the Company's Form 10-K for the period ended December 31, 2020 filed with the SEC on April 8, 2021.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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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