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Viva Entertainment Group, Inc. (OTTV)FORM 10-Q | Quarterly Report
Jul. 14, 2017 2:17 PM|About: Viva Entertainment Group, Inc. (OTTV)View as PDF
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2017
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
COMMISSION FILE NUMBER: 333-163815
VIVA ENTERTAINMENT GROUP INC.
(Exact name of registrant as specified in its charter)
Nevada 1311 98-0642409
(State or other jurisdiction of
organization) (Primary Standard Industrial
Classification Code) (IRS Employer Identification #)
143-41 84th Drive
Briarwood, New York 11435
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 347-681-1668
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐
(Do not check if a smaller reporting company) Smaller reporting company ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
As of July 13, 2017, 3,046,810,436 shares of common stock, $0.00001 par value per share, were outstanding.
NOTE 5 – NOTES PAYABLE
Pursuant to the Stock Purchase Agreement, the Company issued to EMS a promissory note in the principal amount of $100,000, due six months from the Closing, which represents the purchase price paid by the Company for Viva Entertainment. All principal and interest was converted into common stock during the quarter ended April 30, 2017 (see Note 4).
NOTE 6 - COMMON STOCK
During the three months ended April 30, 2017 the Company had the following common stock transactions:
· 98,050,000 shares issued to various individuals for services previously rendered valued at a total of $9,213,195 using the share value on the date of agreement
· 14,500,000 shares issued for cash proceeds of $12,000.
· 684,093,740 shares were issued on the conversion of notes payable as follows: See latest 10-Q Page 11
Each of these issuances was made pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933.
NOTE 7 – STOCK ISSUABLE
Common stock issuable consists of the value of shares payable under employment contracts with officers of the Company. During the six months ended April 30, 2017, the Company issued 58,000,000 shares to Johnny Falcones under his employment contract, the value of which on the date the of the contract, $499,800, was offset against stock issuable. Common stock issuable was $12,600 and $512,400 as of April 30, 2017 and October 31, 2016.
NOTE 8 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist through the date of this filing apart from the following:
• Subsequent to April 30, 2017, the Company issued a total of 2,120,000,000 shares of restricted common stock to several individuals for cash proceeds of $127,500.
• Subsequent to April 30, 2017, the Company amended its Articles of Incorporation to increase the authorized common stock to 4.9 billion shares. This action was undertaken by a majority vote of Viva Entertainment Group Inc. (the “Company”) is a business that develops and markets Viva Entertainment’s over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones. The Company is based in Briarwood, New York.
We were incorporated in the State of Nevada on October 26, 2009. From inception, we were originally engaged in the development of a website and also the design and development of a catalogue to sell over the counter and prescription medications, and supplements. In 2012, we undertook a change in our focus to the natural resources sector where it was engaged in the acquisition and exploration of base metals and mineral mining properties. After an unsuccessful exploration program on our mineral properties we decided to enter the market for over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones.
On April 5, 2016, we completed the purchase from EMS Find, Inc. (“EMS”) of Viva Entertainment Group, Inc. (“Viva Entertainment”), a Delaware corporation and a subsidiary of EMS, pursuant to a stock purchase agreement (“Stock Purchase Agreement”), and Viva Entertainment’s Chief Executive Officer, Johnny Falcones, resigned from all positions at EMS and has been elected as our sole director and President and Chief Executive Officer to manage the development and marketing of Viva Entertainment’s over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones.
This purchase represents a new business and industry which we operate in. Pursuant to the Stock Purchase Agreement, the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the purchase from the Seller by the Purchaser of all 800 outstanding shares of stock of Viva Entertainment to the Company in exchange for the issuance to EMS of a 10% promissory note in the principal amount of $100,000, due six months from the Closing (the “EMS Note”), which represents the purchase price paid by us for Viva Entertainment. In connection with the closing, Alexander Stanbury, our former President and Chief Executive Officer, transferred to Johnny Falcones 26,629,371 shares of restricted common stock of the Company from the shares of common stock owned by Mr. Stanbury in exchange for payment of $93,625 from the $135,000 of financing arranged with Essex Global Investment Corp. for the acquisition of the Company (the “Acquisition Financing Facility”).
On April 6, 2016, we closed on the $135,000 Acquisition Financing Facility pursuant to a securities purchase agreement, dated April 6, 2016 (the "Essex Securities Purchase Agreement", with Essex Global Investment Corp, a Nevada corporation ("Essex", for the sale of a convertible promissory note (the "Essex Note" in the principal amount of $145,000, with an original issue discount of $10,000.
The Essex Note, which is due on March 30, 2017, bears interest at the rate of 10% per annum. All principal and accrued interest on the Note is convertible at any time into shares of our common stock at the election of Essex at a conversion price for each share of Common Stock equal to 55% of the lowest reported trading price of the Company’s common stock for the twenty prior trading days including the day upon which the conversion notice is received us or our transfer agent. The conversion price discount will be decreased to 45% if the Company experiences a DTC "chill" on its shares. If we are not current within ninety days from the date of the Note, the conversion discount will increase by 20%, so that the conversion price would be 35% of the trading price as calculated above.
We have the right to prepay the Essex Note during the first six months following the date of issuance of the Essex Note with a premium of up to 135% of all amounts owed to Essex, including default interest, depending upon when the prepayment is effectuated. The Essex Note may not be redeemed after 180 days.
The Essex Note contains default events which, if triggered and not timely cured, will result in default interest and penalties.
On April 8, 2016, in connection with the purchase of Viva Entertainment Group, Inc., our Board of Directors authorized the issuance of an aggregate of 37,170,629 shares of common stock, comprised of 22,000,000 issued to our Founder and Chief Executive Officer (5,000,000 of which are registered in name of the wife of the CEO), 13,170,629 as common shares for consulting services to various consultants and 2,000,000 common shares as consideration for an investor entering into a share purchase agreement. An additional 500,000 common shares was issued for general corporate purposes.
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Table of Contents
Plan of Operation
As of April 30, 2017 we had a working capital deficiency of $2,309,397, have not generated revenue, and have an accumulated deficit of $15,379,416.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues or profits.
We have only four officers and directors. They are responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, they will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment.
Limited Operating History
There is no historical financial information about us upon which to base an evaluation of our performance. We have not generated any revenues to date. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.
Results of Operations
Revenues
As of the date of this report, we have yet to generate any revenues from our business operations.
Operating Expenses
For the three and six months ended April 30, 2017, we incurred operating expenses in the amounts of $9,259,133 and $9,495,681, respectively. We had no operating expenses incurred during the three and six months ended April 30, 2016. Our operating expenses were comprised of: (i) consulting services expenses of $6,640 and $32,305 for the three and six months ended April 30, 2017, respectively (ii) general and administrative expenses of $484,044 and $576,085 for the three and six months ended April 30, 2017, respectively, and (iii) wage expenses of $8,768,449 and $8,887,291 for three and six months ended April 30, 2017, respectively. Due to a reverse merger into an operating company with no prior operations in April of 2016, there are no prior period expenses.
Net Loss
Our net loss for the three and six months ended April 30, 2017 was $9,647,118 and $10,625,937, respectively. The increase in net loss was the result of the increase in compensation and above mentioned costs. Due to a reverse merger into an operating company with no prior operations in April of 2016, there are no prior period expenses. During the three months ended April 30, 2017, we also incurred an income of $11,927 for a gain on change of the derivative liability, offset by the interest expense of $400,332. During the six months ended April 30, 2017, we had an expense of $250,928 for a loss on change of the derivative liability and $890,338 in interest expense. We had nothing in the comparable period in the prior year.
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Table of Contents
Liquidity and Capital Resources
As of April 30, 2017, we had cash of $372. As of October 31, 2016, we had cash of $385.
Net cash used in operating activities was $72,073 for the six months ended April 30, 2017, which was comparable to the net cash used in operating activities of $-0- for the six months ended April 30, 2016. The net cash used in operations was principally attributable to net losses of $10,625,937 and $-0- during the six months ended April 30, 2017 and 2016, respectively, offset principally by amortization of debt discount of $847,160 and $-0-, amortization expense of $3,440 and $-0-, common shares issued for services of $9,213,196 and $-0-, and loss on change in derivative liability and derivative issuance totaled $250,927 and $-0- in such same periods, respectively. There was no activity in the above mentioned categories in the prior period due to a reverse merger into an operating company with no prior operations in April of 2016.
Cash flows used for investing activities were $-0- and $-0- for the six months ended April 30, 2017 and 2016, respectively. This usage was solely as a result of the effects of the reverse merger.
Cash flows provided by financing activities were $72,060 and $-0- for the six months ended April 30, 2017 and 2016, respectively. Positive cash flows from financing activities during the six months ended April 30, 2017 were due primarily to proceeds from related party payable of $31,680, proceeds from sales of common stock and convertible notes in amount of $12,000 and $33,000, respectively. There was no activity in the above mentioned categories in the prior period due to a reverse merger into an operating company with no prior operations in April of 2016.
Currently we have no revenues and have four salaried employees including Johnny Falcones, our officer and director. We currently require very limited resources but intend to hire employees and consultants in the latter part of 2017 for the Viva Entertainment operations. In due course, should we require capital for these operations, we will need to raise additional capital. There is no guarantee that we will be able to raise further capital. At present, we have not made any arrangements to raise additional capital but are diligently working on this.
If we need additional capital and cannot raise it we will either have to suspend operations until we do raise the capital or cease operations entirely. Other than as described in this paragraph, we have no other financing plans.
As of the date of this report, we have yet to generate any revenues.
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