OTTV Viva Entertainment Group Inc (CE)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Notice Regarding Forward Looking Statements

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview

Viva Entertainment Group Inc. (F/K/A Black River Petroleum Corp.) (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. Therefore, since the 8-K was recently filed with the SEC and we are now filing this 10-K among other SEC documents to be filed with the SEC subsequent thereto, we accordingly discuss the old and new operations herein as follows. References herein to oil and gas exploration are our older business operations and references to Viva Entertainment represent our new business operations.

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.

Plan of Operation

As at July 31, 2016 we had a working capital deficiency of $1,313,717, have not generated revenues and have an accumulated deficit of $3,129,042.

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 months ended July 31, 2016 and 2015, we incurred operating expenses in the amounts of $1,373,239, and $-0- respectively. Our operating expenses were comprised of: (i) consulting services expenses of $791,355 and $-0- for the quarters ended July 31, 2016 and 2015, respectively (ii) general and administrative expenses of $155,346 and $-0- for the quarters ended July 31, 2016 and 2015, respectively, (iii) wage expenses of $221,538 and $-0- for the quarters ended July 31, 2016 and 2015, respectively, (iv) professional fees of $55,000 and $-0- for the quarters ended July 31, 2016 and 2015, respectively, and (v) content expense of $150,000 and $-0- for the quarters ended July 31, 2016, respectively. Due to a reverse merger into an operating company with no prior operations in April of 2016, there are no prior period expenses.

For the nine months ended July 31, 2016 and 2015, we incurred operating expenses in the amounts of $2,494,258 and $-0- respectively. Our operating expenses were comprised of: (i) consulting services expenses of $1,771,912 and $-0- for the nine months ended July 31, 2016 and 2015, respectively (ii) general and administrative expenses of $179,321 and $-0- for the nine months ended July 31, 2016 and 2015, respectively, (iii) wage expenses of $311,525 and $-0- for the nine months ended July 31, 2016 and 2015, respectively, (iv) professional fees of $81,500 and $-0- for the nine months ended July 31, 2016 and 2015, respectively, and (v) content expense of $150,000 and $-0- for the nine months ended July 31, 2016, 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 months ended July 31, 2016 and 2015 was $1,993,665 and $-0-, 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.

Our net loss for the nine months ended July 31, 2016 and 2015 was $3,127,542 and $-0-, 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.

Liquidity and Capital Resources

As of July 31, 2016, we had cash and cash equivalents of $14,367. As of October 31, 2015, we had cash and cash equivalents of $-0-.

Net cash used in operating activities was $577,559 for the nine months ended July 31, 2016, which was comparable to the net cash used in operating activities of $-0- for the nine months ended July 31, 2015. The net cash provided by operations was principally attributable to net losses of $(3,127,542) and $-0- during the nine months ended July 31, 2016 and 2015, respectively, offset principally by stock based compensation of $1,916,161 and $-0- in such same periods, respectively. There is 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 $171,504 and $-0- for the nine months ended July 31, 2016 and 2015, respectively. This usage was solely as a result of the effects of the reverse merger.

Cash flows provided by financing activities were $763,430 and $-0- for the nine months ended July 31, 2016 and 2015, respectively. Cash was provided by $763,430 in proceeds of from issuance of convertible notes.

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 2016 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.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recent Accounting Pronouncements

In July 2015, FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS).  The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. 

In August 2015, FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

Subsequent Events

On August 4 ^, 2016, we executed a consulting agreement with a third party calling for total consideration of $30,000, which was paid $5,000 in cash and the balance in a convertible promissory note in the amount of $25,000. The note bears interest at the rate of 12% per annum and converts at the lower of $0.05 per share or 50% of the lowest trading price of our common stock over the 20-day period prior to conversion.