Item 1. Financial Statements.
|
VIVA ENTERTAINMENT GROUP INC.
|
|
Condensed Balance Sheets
|
|
|
|
|
|
|
|
|
April 30, 2018
|
|
|
|
October 31, 2017
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
5,462
|
|
|
$
|
2,682
|
|
|
Total Current Assets
|
|
|
5,462
|
|
|
|
2,682
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Software, net of amortization of $17,499 and $14,035
|
|
|
51,053
|
|
|
|
54,518
|
|
|
Total Other Assets
|
|
|
51,053
|
|
|
|
54,518
|
|
|
Total Assets
|
|
$
|
56,515
|
|
|
$
|
57,200
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Liabilities
|
|
$
|
413,549
|
|
|
$
|
413,549
|
|
|
Accrued Interest
|
|
|
84,899
|
|
|
|
61,520
|
|
|
Accrued Salary and Wages
|
|
|
462,583
|
|
|
|
439,343
|
|
|
Related Party Payable
|
|
|
76,770
|
|
|
|
66,070
|
|
|
Convertible Notes Payable, net of discount
|
|
|
639,737
|
|
|
|
514,402
|
|
|
Derivative Liability
|
|
|
1,577,083
|
|
|
|
1,463,047
|
|
|
Total Current Liabilities
|
|
|
3,254,621
|
|
|
|
2,957,931
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
(6,900,000,000 shares authorized, par value $0.00001, 5,253,676,602 and 4,134,740,009 shares issued and outstanding at April
30, 2018 and October 31, 2017, respectively)
|
|
|
52,979
|
|
|
|
41,348
|
|
|
Common Stock Issuable
|
|
|
1,808,250
|
|
|
|
3,079,200
|
|
|
Additional paid-in capital
|
|
|
19,110,362
|
|
|
|
15,012,970
|
|
|
Accumulated deficit
|
|
|
(24,169,697
|
)
|
|
|
(21,034,249
|
)
|
|
Total Stockholders’ Deficit
|
|
|
(3,198,106
|
)
|
|
|
(2,900,731
|
)
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
56,515
|
|
|
$
|
57,200
|
|
|
|
|
|
|
|
|
|
|
|
|
The Accompanying Notes are an Integral Part of These Financial Statements
|
|
VIVA ENTERTAINMENT GROUP INC.
Condensed Statements of Operations
(Unaudited)
|
|
|
|
|
|
For the Three Months Ended April 30, 2018
|
|
For the Three Months Ended April 30, 2017
|
|
For the Six Months Ended April 30, 2018
|
|
For the Six Months Ended April 30, 2017
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
|
|
$
|
14,350
|
|
|
$
|
—
|
|
|
$
|
27,451
|
|
|
$
|
—
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting services
|
|
|
78,400
|
|
|
|
6,640
|
|
|
|
151,200
|
|
|
|
32,305
|
|
|
Professional fees
|
|
|
20,450
|
|
|
|
3,500
|
|
|
|
279,797
|
|
|
|
7,500
|
|
|
Content
|
|
|
21,106
|
|
|
|
—
|
|
|
|
53,254
|
|
|
|
—
|
|
|
General and administrative
|
|
|
1,322,887
|
|
|
|
480,544
|
|
|
|
2,057,049
|
|
|
|
568,585
|
|
|
Wages
|
|
|
71,485
|
|
|
|
8,768,449
|
|
|
|
173,850
|
|
|
|
8,887,291
|
|
|
Total Operating Expenses
|
|
|
1,514,328
|
|
|
|
9,259,113
|
|
|
|
2,715,150
|
|
|
|
9,495,681
|
|
|
Loss from operations
|
|
|
(1,499,978
|
)
|
|
|
(9,259,133
|
)
|
|
|
(2,687,699
|
)
|
|
|
(9,495,681
|
)
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on settlement of debt
|
|
|
—
|
|
|
|
420
|
|
|
|
(33,762
|
|
|
|
11,010
|
|
|
Gain/(Loss) on change in derivative liability
|
|
|
147,734
|
|
|
|
—
|
|
|
|
(48,116
|
)
|
|
|
(120,588
|
)
|
|
Interest
and derivative expense
|
|
|
(202,550
|
)
|
|
|
(388,405
|
)
|
|
|
(365,869
|
)
|
|
|
(1,020,678
|
)
|
|
Total other expense
|
|
|
(54,816
|
)
|
|
|
(387,985
|
)
|
|
|
(447,748
|
)
|
|
|
(1,130,256
|
)
|
|
Net Loss
|
|
|
(1,554,794
|
)
|
|
|
(9,647,118
|
)
|
|
$
|
(3,135,447
|
)
|
|
|
(10,625,937
|
)
|
|
Net Loss Per Common Share – Basic and Diluted
|
|
|
(0.00
|
)
|
|
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
(0.02
|
)
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
7,001,970,422
|
|
|
|
794,350,790
|
|
|
|
5,913,417,481
|
|
|
|
476,781,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Accompanying Notes are an Integral Part of These Financial Statements
|
|
VIVA ENTERTAINMENT GROUP INC.
|
|
Condensed Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
For the Six Months Ended
|
|
|
|
|
April 30, 2018
|
|
|
|
April 30, 2017
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,135,447
|
)
|
|
$
|
(10,625,937
|
)
|
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Amortization of other assets
|
|
|
3,464
|
|
|
|
3,440
|
|
|
Amortization of debt discount
|
|
|
450,727
|
|
|
|
847,160
|
|
|
Penalties incurred on debt
|
|
|
5,123
|
|
|
|
—
|
|
|
Loss
on conversion of debt
|
|
|
33,763
|
|
|
|
—
|
|
|
Change in fair value of derivative liability
|
|
|
351,207
|
|
|
|
250,927
|
|
|
Common stock issued and payable for services
|
|
|
1,888,410
|
|
|
|
9,213,196
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
23,379
|
|
|
|
—
|
|
|
Accrued payroll
|
|
|
23,240
|
|
|
|
76,635
|
|
|
Accounts payable and accrued liabilities
|
|
|
35,814
|
|
|
|
163,506
|
|
|
Net Cash Used in Operating Activities
|
|
|
(320,320
|
)
|
|
|
(72,073
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowing from related parties
|
|
|
12,700
|
|
|
|
31,680
|
|
|
Proceeds from sale of common stock
|
|
|
—
|
|
|
|
12,000
|
|
|
Payment on debt
|
|
|
(2,000
|
)
|
|
|
(4,620
|
)
|
|
Proceeds from issuance of convertible notes
|
|
|
312,400
|
|
|
|
33,000
|
|
|
Net Cash Used in Operating Activities
|
|
|
323,100
|
|
|
|
72,060
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash
|
|
|
2,780
|
|
|
|
(13
|
)
|
|
Cash - Beginning of Period
|
|
|
2,682
|
|
|
|
385
|
|
|
Cash - End of Period
|
|
$
|
5,462
|
|
|
$
|
372
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
Derivative issuances
|
|
$
|
352,400
|
|
|
$
|
280,795
|
|
|
Derivative conversions
|
|
$
|
589,571
|
|
|
$
|
705,588
|
|
|
Derivative adjustment from debt extinguishment
|
|
$
|
—
|
|
|
$
|
10,590
|
|
|
Debt converted into common stock
|
|
$
|
360,092
|
|
|
$
|
468,047
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
The Accompanying Notes are an Integral Part of These Financial Statements
|
VIVA ENTERTAINMENT GROUP INC.
Notes to Consolidated Financial Statements
For the Six Months Ended April 30,
2018 and 2017
NOTE 1 – NATURE OF OPERATIONS
Description of Business and History
The Company was incorporated on October
26, 2009 in the State of Nevada. The Company 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, the Company undertook a change
in focus to the natural resources sector where it was engaged in the acquisition and exploration of base metals and mineral mining
properties.
On April 5, 2016, the Company
completed the purchase of Viva Entertainment Group, Inc. (“Viva Entertainment”), a Delaware corporation, from EMS Find,
Inc. (“EMS”) pursuant to a stock purchase agreement. Viva Entertainment’s Chief Executive Officer, Johnny Falcones,
was appointed as the Company’s sole director, 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.
Pursuant to the stock purchase agreement, the
Company and EMS agreed to transfer control of Viva Entertainment to the Company through the purchase of all outstanding shares
of stock of Viva Entertainment by 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”), and the issuance of 22,000,000 shares of common stock
to Johnny Falcones. For accounting purposes, the transaction was treated as a reverse merger since the acquired entity now forms
the basis for operations and the transaction resulted in a change in control, with the acquired company electing to become the
successor issuer for reporting purposes. The accompanying financial statements have been prepared to reflect the assets, liabilities
and operations of Viva Entertainment Group, Inc. exclusive of Black River Petroleum since all predecessor operations were discontinued.
As part of the transaction, stock payable and amounts due to former officers were forgiven, with the balances recorded as Contributed
Capital. For equity purposes, additional paid-in capital and retained deficit shown are those of Viva, exclusive of Black River
Petroleum. Viva had no operations prior to the quarter ended April 30, 2016.
In management’s opinion, all adjustments
necessary for a fair statement of the results for the presented periods have been made. All adjustments made were of a normal
recurring nature.
Viva Entertainment Group Inc.
(F/K/A Black River Petroleum Corp.) (the “Company”) 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.
Going Concern
These financial statements have been
prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations
for the next fiscal year. Realization value may be substantially different from carrying values as shown and these
financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern. As of April 30,
2018, the Company has a working capital deficiency and has an accumulated deficit of $24,169,697. The continuation
of Viva Entertainment Group as a going concern is dependent upon the continued financial support from its shareholders, the ability
of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These
factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
Revenue Recognition
Effective January 1, 2018, the Company adopted
ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales
of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract
with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the
transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is
satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue
Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement
exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid
by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.
There was no impact on
the Company’s financial statements as a result of adopting Topic 606 for the three and six months ended April 30, 2018
and 2017, or the twelve months ended October 31, 2017.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim information Regulation S-K. Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management,
all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. These
financial statements should be read in conjunction with the audited financial statements for the year ended October 31, 2017.
Use of Estimates
The preparation of financial statements
in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue
and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to the useful life and recoverability
of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions
on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs
and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely
from our estimates. To the extent there are material differences between our estimates and the actual results, our future results
of operations will be affected.
Loss Per Common Share
The Company reports net loss per
share in accordance with provisions of the FASB. The provisions require dual presentation of basic and diluted
loss per share. Basic net loss per share excludes the impact of common stock equivalents. Diluted net loss per share utilizes
the average market price per share when applying the treasury stock method in determining common stock equivalents. As of
April 30, 2018 and October 31, 2017, there were no dilutive common stock equivalents outstanding.
Fair Value of Financial Instruments
Pursuant to ASC No. 820, “Fair
Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included
on its balance sheet as of April 30, 2018 and October 31, 2017. The Company’s financial instruments consist of cash and derivative
liabilities. The Company considers the carrying value of such amounts in the financial statements to approximate their
fair value due to the short-term nature of these financial instruments.
The Company adopted ASC No. 820-10 (ASC
820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines
fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of
America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting
pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value
of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level
3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
|
|
•
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
•
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
•
|
Level 3
|
Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and July include the Company's own data.)
|
The following presents the Company's
fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of April 30, 2018 and
October 31, 2017:
April 30, 2018:
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Convertible Notes Payable, net of discount
|
|
$
|
639,737
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
639,737
|
|
|
Derivative Liability
|
|
|
1,577,083
|
|
|
|
|
|
|
|
|
|
|
|
1,577,083
|
|
|
Total
|
|
$
|
2,216,820
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,216,820
|
|
October 31, 2017:
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Convertible Notes Payable, net of discount
|
|
$
|
514,402
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
514,402
|
|
|
Derivative Liability
|
|
|
1,463,047
|
|
|
|
|
|
|
|
|
|
|
|
1,463,047
|
|
|
Total
|
|
$
|
1,977,449
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,977,449
|
|
Derivative Financial Instruments
Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing
model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional
convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered
conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once determined, derivative liabilities are
adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in
results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments
such as warrants, are also valued using the Black-Scholes option-pricing model.
Cash and Cash Equivalents
For purposes of the Condensed Financial
Statements, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.
As of April 30, 2018 and October 31, 2017, the Company had no cash equivalents.
NOTE 3 – RELATED PARTY TRANSACTIONS
The detail composition of the
$462,583 in accrued wages as of April 30, 2018 includes amounts owed to Company officers, Johnny Falcones ($144,515), John
Sepulveda ($134,288), and Alberto Gomez ($183,781). This accrual covered services rendered by the employees for the period
from April, 2016 through April 30, 2018 less payments made to such employees during the period.
Common Stock Issuable includes
$1,808,250 in stock payable with related parties as of April 30, 2018. This stock payable is due to unissued shares earned on the
employment agreements and for services performed since April 2016.
John Sepulveda, a Company director,
funded $10,000 to the Company for working capital during the year ended October 31, 2016. This amount was repaid during the 2017
fiscal year.
The Company periodically receives cash
advances from officers and directors or their family members for routine working capital purposes. As of April 30, 2018, a balance
of $76,770 was owed to the spouse of the Company’s Chief Executive Officer. The advance is non-interest bearing and payable
on demand.
During the three months ended April
30, 2018, a total of 232,000,000 shares were issued for services valued at $2,493,194 using the share price on the date of the
agreements as well as the share price on the stock issuance date for shares issued outside of the terms of the initial employment
agreements. Included in this total is shares that were previously recorded as Stock Payable, resulting in a decrease in Stock
payable of $2,343,638.
During the year ended October 31, 2017, the Company issued a total of 14,500,000 shares of restricted
common stock for cash proceeds of $12,500.
NOTE 4 – CONVERTIBLE NOTES
PAYABLE
During the six months ended April 30,
2018 and in prior fiscal years, the Company issued multiple convertible notes payable to several entities. The notes bear interest
at rates between 8% and 15% and are convertible at rates between 40-60% of the lowest trading price of company’s common stock
over a period ranging from 5-20 days prior to the date of conversion. All of the outstanding notes are either currently due or
become due on or before January 31, 2019. The notes are summarized as follows:
|
Total convertible notes payable at April 30, 2018
|
|
$
|
964,258
|
|
|
Less: Current portion of notes payable
|
|
|
(964,258
|
)
|
|
Long term portion of notes payable
|
|
$
|
—
|
|
The following table summarized the convertible
note activity in the six months ended April 30, 2018 and the year ended October 31, 2017:
|
|
|
Principal Balance
|
|
Loan Discount
|
|
Accrued interest
|
|
October 31, 2016
|
|
$
|
975,100
|
|
|
$
|
(607,777
|
)
|
|
$
|
43,426
|
|
|
Issued in the year
|
|
|
1,026,202
|
|
|
|
(1,111,092
|
)
|
|
|
—
|
|
|
Converted into stock or repaid
|
|
|
(1,013,778
|
)
|
|
|
—
|
|
|
|
(28,765
|
)
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
1,335,747
|
|
|
|
—
|
|
|
Interest accrued
|
|
|
—
|
|
|
|
—
|
|
|
|
46,589
|
|
|
October 31, 2017
|
|
$
|
897,524
|
|
|
$
|
(383,122
|
)
|
|
$
|
61,520
|
|
|
Issued in the quarter
|
|
|
352,400
|
|
|
|
(352,400
|
)
|
|
|
—
|
|
|
Converted into stock or repaid
|
|
|
(324,278
|
)
|
|
|
—
|
|
|
|
(35,815
|
)
|
|
Assignments, net
|
|
|
38,612
|
|
|
|
(39,726
|
)
|
|
|
|
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
450,727
|
|
|
|
—
|
|
|
Interest accrued
|
|
|
—
|
|
|
|
—
|
|
|
|
59,194
|
|
|
April 30, 2018
|
|
$
|
964,258
|
|
|
$
|
(324,521
|
)
|
|
$
|
84,899
|
|
The Company evaluated the terms of the conversion
features of its convertible debentures in accordance with ASC Topic No. 815 - 40,
Derivatives and Hedging - Contracts in Entity's
Own Stock
and determined they are indexed to the Company's common stock and the conversion features meet the definition of
a liability, and therefore bifurcated the conversion features and accounted for them as a separate derivative liability.
Changes in Derivative Liabilities were as follows:
|
October 31, 2016
|
|
|
1,248,689
|
|
|
Issuance of derivative
|
|
|
1,086,089
|
|
|
Conversion into stock or assignment
|
|
|
(1,827,309
|
)
|
|
Extinguishment of debt
|
|
|
(10,590
|
)
|
|
Change in fair value
|
|
|
966,168
|
|
|
October 31, 2017
|
|
$
|
1,463,047
|
|
|
Issuance of derivative
|
|
|
352,400
|
|
|
Conversion into stock or assignment
|
|
|
(589,571
|
)
|
|
Extinguishment of debt
|
|
|
—
|
|
|
Change in fair value
|
|
|
351,207
|
|
|
April 30, 2018
|
|
|
1,577,083
|
|
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. The note bears interest at the rate of 10% per annum. During the
year ended October 31, 2017, all principal and interest was converted into common stock.
NOTE 6 - COMMON STOCK
During the six months ended April
30, 2018, the Company had the following common stock transactions:
|
|
•
|
A total of 552,903,260 shares were issued on the conversion of notes payable, interest, and associated penalties totaling $360,092.
|
|
|
|
|
|
|
•
|
During the three months ended January 31, 2018, a total of 378,333,333 shares were issued for services valued at $666,167 using the share price on the date of the agreements. Included in this total is services to we performed over a 12-month period that immediately vested.
|
|
|
|
|
|
|
•
|
During the three months ended April 30, 2018, a total of 232,000,000 shares were issued for services valued at $2,493,194 using the share price on the date of the agreements as well as the share price on the stock issuance date for shares issued outside of the terms of the initial employment agreements. Included in this total is shares that were previously recorded as Stock Payable, resulting in a decrease in Stock payable of $2,343,638.
|
|
|
|
|
|
|
•
|
During the year ended October 31, 2017, the Company
issued a total of 14,500,000 shares of restricted common stock for cash proceeds of $12,000.
|
Each of these issuances was made
pursuant to an exemption from registration under Rule 144 of the Securities Act of 1933.
NOTE 7 - LITIGATION
The Company has been involved in a protracted
dispute with one of its creditors regarding the conversion of notes payable, applicable penalties and interest. As a result, the
Company is the subject of a lawsuit filed in December 2017 in New York. Management believes that all obligations to the creditor
have been met and that additional claims are usurious and unjustified. The Company has recorded a liability of $55,175 in Convertible
Notes Payable for the value of the notes the creditor considers outstanding and has recorded an additional $150,000 in accrued
expenses to account for the potential exposure in the event either a settlement is reached or the Company loses in litigation.
NOTE 8 – SUBSEQUENT EVENTS
The Company reviewed material events Subsequent to April
30, 2018. None were noted.
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.
(the “Company”) 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.
Internet Protocol Television
(IPTV/OTT) is a system through which television services are delivered using the Internet protocol suite over a network such as
the Internet, instead of being delivered through traditional terrestrial, satellite signal, and cable television formats.
IPTV services may be classified
into three main groups: 1) Live television, with or without interactivity related to the current TV show; 2) Time-shifted television:
catch-up TV (replays a TV show that was broadcast hours or days ago), start over TV (replays the current TV show from its beginning);
3) Video On Demand (VOD): browse a catalog of videos, not related to TV programming.
A Content Delivery Network (CDN) is
an interconnected system of computers on the Internet that provides Web content rapidly to numerous users by duplicating the content
on multiple servers and directing the content to users based on proximity. CDNs are used by Internet Service Providers (ISPs) to
deliver static or dynamic Web pages but the technology is especially well suited to streaming audio, video, and Internet Television
( IPTV ) programming Over-The-Top (OTT) content, describes broadband delivery of video and audio without a multiple system operator
being involved in the control or distribution of the content itself. Consumers can access OTT content through internet-connected
devices such as PCs, laptops, tablets, smart phones including iPhones and Droid phones, set-top boxes, Smart TVs and gaming consoles.
Platform:
The company’s subscription offering
provides the components and systems to build up a CDN and along with Viva Middleware (the heart of the system), allows the provision
of IPTV (Live and VOD) and other value added services, no matter the type of network (managed or unmanaged) or the number of subscribers.
Middleware:
Interactive TV Middleware is
a multi service delivery platform (MSDP), providing converged and interactive IPTV services for the ISP, Telco, Cable and Campus/Hospitality
market. The platform enables end users to enjoy rich multimedia services any time - any place. Services can be delivered over IP,
DVB-C/T/S or 3G/4G access networks using several different devices in managed network or Over The Top, via open Internet. In addition,
this innovative approach enables third parties to develop attractive first or second screen applications on different devices like
PC, mobile phones, tablets, Smart TV sets or various STB devices.
Competitive Edge:
The platform represents the heart
of the IPTV ecosystem, enabling service providers to accomplish attractive visual and functional differentiation of their IPTV
service. Agile development allows service providers quick response to competitive market conditions. The company's main competitive
advantages are field proven application platform, platform openness and flexibility, unique bouquet of IPTV converged multimedia
services and customizable, responsive and graphics-rich user interface. Pay as you grow approach enables service providers to start
slowly and extend the system according to the actual growth of the subscriber base. The platform comes with comprehensive system
management module, which enables total control over operational parameters and central customer, device and service provisioning.
The company enables the service provider to manage its video, audio and information assets and to offer these assets within reliable
and compelling platform. It offers a rich information support for Live TV service with customizable channel list and e-program
guide in various shapes. TV channel recording functionality is available in various flavors to satisfy user's needs and lifestyle:
program recording, Time-shifting, Pause Live TV and Instant TV recording. Middleware is offered as a standalone solution, as the
most important building block for the complete end to end IPTV solution, whether in the multicast, DVB or Over the Top environment.
The company's IPTV solution is
based on the best of breed components and solutions from the leading vendors in the IPTV world that have been proven in many wide
and varied cases and environments in the past. End-2-End solutions designed by the company are based on the Open Standards Systems
and Standards adopted in the DVB and IP world.
Distribution
Our company operates three main specific
segments of business. They are the following: (1) Broadcast and Digital Content Syndication to media distribution affiliated
companies; (2) Direct-To-Consumer content subscription and on demand content services; (3) Consumer Electronic Subscription Sales
that are company branded and sold to engaged customers on our owned and/or affiliated media platforms to ensure an enhanced audience
participation experience. Each are dependent on some common variables including brand recognition and reinforcement, ability
to adequately market our services, and the continued use of available technology tools to enable efficient growth and management
of the business. We operate and derive revenues for the aforementioned areas of businesses mentioned herein as follows:
(1) Broadcast
and Digital Content Syndication:
a. This
business relies on the continued increase of content offerings into the marketplace offered to media companies in both the broadcast
and digital media space.
b. There’s
a heavy reliance factor on the levels of audience, customer engagements, and ratings that determine the levels of participation
that our content has.
c. The
successful sale of advertising associated with our syndicated content depends to the aforementioned levels of active consumer engagements
with our media affiliated partners.
d. Part
of the business model is to license the content to these media entities that become our content affiliates.
e. The
company will derive revenue from the sale of advertising offerings that are directly associated with the content subscription
being syndicated to these media affiliated entities.
(2) Direct-To-Consumer
Content Subscription and On Demand Content Services:
a. This
business relies on the successful completion and launch of our company’s own content software application.
b. The
application branded as, “Oi2” is being engineered to be a full cross-platform accessible software application that
will be made available on most mobile devices, media enabled set-top boxes and connected devices, as well as, other available distribution
outlets in an effort to accommodate various consumer behaviors as it relates to content consumption.
c. The
company has secured affiliation agreements to provide a wide offering of content subscription available to consumers including
but not limited to live and linear broadcast and cable television networks, on demand prime time television shows, pay-per-view
and purchase options for an estimated 7,000+ Hollywood films/movies, and hundreds of audio channels in a wide variety of genres
and formats.
d. The
content subscription offerings for this business derives revenues from active consumer subscriptions of content, as well as, per
instance or pay-per-view and on demand offerings that require the consumer to pay using a bank credit or debit card per transaction.
(3) Consumer
Electronic Subscription Sales:
a. This
part of the business is based on a joint venture with third party partners under our JV with Oi2.
b. The
third party partner owns and controls a consumer electronics sourcing company that provides electronic consumer goods to certain
retail store chains and e-commerce sales outlets.
c. The
joint venture agreement allows for the company to open e-commerce stores on its own consumer directed media software applications
and/or third party affiliated distribution partner platforms.
d. Once
launched revenues will be derived from the sales of consumer electronics subscription for a revenue share of the sales (after manufacturing,
sourcing, shipping, and other related expenses are accounted for).
Growth Strategy
The company has a multifaceted approach
to marketing its services and offerings. These are mainly based on the business unit:
(1) Broadcast
and Digital Content Syndication:
a. The
company engages in direct calls to prospective media affiliated partners using its in-house staff of affiliate sales and affiliate
relations personnel.
b. The
company markets on a regular basis most of its content offerings via industry targeted bulk email offerings or participation in
industry related trade shows and sponsored events.
c. The
company also brings market awareness of its content services and offerings using widely distributed press releases to known industry
related trade publishers.
(2) Direct-To-Consumer
Content Subscription and On Demand Content Services:
a. The
company plans to utilize unsold media inventory from its broadcast and digital content syndication business to promote the Oi2
App brand awareness and content subscription offerings in an aim to drive audiences to download or seek the application in the
device of their choosing.
b. The
company also plans to leverage its existing relationships with industry media affiliated partners that desire to bring awareness
of their own content offerings in our App thus driving their consumer base to actively be incentive to download or seek the application
in the device of their choosing.
c. The
company is currently actively in deployment of a social media marketing initiative to bring awareness and drive incentives to consumers
to actively download or seek the application in the device of their choosing.
d. The
company is currently working with a certain increasing number of “social media influencers” or well-known talents that
have been incentivized by the company to provide them with their own space to feature their branded content on our App.
As such their main task is to drive their social media followers to actively pursue their respective featured content on our App
thus aiding in the increase of consumer downloads of the app and active user engagements.
(3) Consumer
Electronic Subscription Sales:
a. The
company plans to utilize unsold media inventory from its broadcast and digital content syndication business to promote our App
Consumer Electronic Subscriptions brand awareness and content subscription offerings in an aim to drive audiences to download or
seek the application in the device of their choosing.
b. The
company also plans to leverage its existing relationships with industry media affiliated partners that desire to bring awareness
of their own content offerings in our App Consumer Electronic Subscription thus driving their consumer base to actively be incentive
to download or seek the application in the device of their choosing.
c. The
company is currently actively in deployment of a social media marketing initiative to bring awareness and drive incentives to consumers
to actively download or seek the application in the device of their choosing.
Plan of Operation
As of April 30, 2018 we had a working
capital deficiency of $3,249,159 and accumulated deficit of $24,169,697. We had revenues from subscription in amount of $14,350
and $27,451 during the three and six months ended April 30, 2018, respectively.
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 material 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. The revenues generated to date was small. 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
We had revenues from subscription in
amount of $14,350 and $27,451 during the three and six months ended April 30, 2018, respectively, compared to zero revenues during
the comparative periods in 2017.
Operating Expenses
For the three months ended April 30,
2018, we incurred operating expenses in the amounts of $1,514,328, compared to the operating expenses in the amounts of $9,259,113
during the three months ended April 30, 2017. Our operating expenses were comprised of: (i) consulting services expenses of $78,400
and $6,640 for the three months ended April 30, 2018 and 2017, respectively (ii) content expenses of $21,106 for the three months
ended April 30, 2018, which was $0 during the comparative period in 2017 (iii) professional fees of $20,450 and $3,500 for the
three months ended April 30, 2018 and 2017, respectively (iv) general and administrative expenses of $1,322,887 and $480,544 for
the three months ended April 30, 2018 and 2017, respectively, and (v) wage expenses of $71,485 and $8,768,449 for the three
months ended April 30, 2018 and 2017, respectively.
For the six months ended April 30, 2018,
we incurred operating expenses in the amounts of $2,715,150, compared to the operating expenses in the amounts of $9,495,681 during
the six months ended April 30, 2017. Our operating expenses were comprised of: (i) consulting services expenses of $151,200 and
$32,305 for the six months ended April 30, 2018 and 2017, respectively (ii) content expenses of $53,254 for the six months ended
April 30, 2018, which was $0 during the comparative period in 2017 (iii) professional fees of $279,797 and $7,500 for the six months
ended April 30, 2018 and 2017, respectively (iv) general and administrative expenses of $2,057,049 and $568,585 for the six months
ended April 30, 2018 and 2017, respectively, and (v) wage expenses of $173,850 and $8,887,291 for the six months ended April
30, 2018 and 2017, respectively.
Net Loss
Our net loss for the three and six months
ended April 30, 2018 was $1,554,794 and $3,135,447, respectively, compared to the net loss of $9,647,118 and $10,625,937 for the
three and six months ended April 30, 2017, respectively. The decrease in net loss in 2018 was the result of the decrease in wages
by approximately $7.5 million and above mentioned costs.
Inflation
We do not believe that inflation has
had a material effect on our results of operations.
Liquidity and Capital Resources
As of April 30, 2018, we had cash of
$5,462. Current liabilities exceeded current assets by $3,249,159 at April 30, 2018, which included derivative liabilities of $1,577,083,
accrued salaries due to officers of $462,583, net convertible debt of $639,737, related party payable of $76,770, and accounts
payable and accrued expenses of $413,549. Other long term assets consisted of capitalized software development costs of $51,053,
net of accumulated amortization.
Net cash used in
operating activities was $320,320 and $72,073 for the six months ended April 30, 2018 and 2017, respectively. The net cash
used in operations was primarily attributable to net losses of $3,135,447 and $10,625,937 during the six months ended April
30, 2018 and 2017, respectively, partially offset by amortization of debt discount of $450,727 and $847,160, penalties
incurred on debt of $5,123 and $-0-, amortization expense of $3,464 and $3,440, common shares issued for services of
$1,888,410 and $9,213,196, loss on conversion of debt of $33,763 and $0, change in fair value of derivative of $351,207 and
$250,927 and increase in accrued expenses of $82,433 and $240,141, in such same periods, respectively.
There was no cash flows from investing
activities during the six months ended April 30, 2018 and 2017.
Cash flows provided by financing activities
were $323,100 and $72,060 for the six months ended April 30, 2018 and 2017, respectively. Positive cash flows from financing activities
during the six months ended April 30, 2018 were due primarily to proceeds of $312,400 from convertible notes, which was $33,000
during the same period in 2017. The Company also had proceeds of $12,700 from related party loan in 2018, which was $31,680 during
the same period in 2017, offset by the payment on debt in amount of $2,000 and $4,620 during the six months ended April 30, 2018
and 2017, respectively. During the six months ended April 30, 2017, the Company issued a total of 14,500,000 shares of restricted common
stock for cash proceeds of $12,000.
We had revenues from subscription
in amount of $14,350 and $27,451 during the three and six months ended April 30, 2018, respectively, and have eight 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 2018 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.
Future Contractual Obligations
and Commitment
We incur contractual
obligations and financial commitments in the normal course of our operations and financing activities. Contractual obligations
include future cash payments required under existing contracts, such as debt and lease agreements. These obligations may result
from both general financing activities and from commercial arrangements that are directly supported by related operating activities.
As of the date of this prospectus, we
have no future contractual obligations or commitments.
Off-Balance Sheet Arrangements
As of the date of this prospectus, we
have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated under which it
has:
|
|
•
|
a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;
|
|
|
•
|
liquidity or market risk support to such entity for such assets;
|
|
|
•
|
an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or
|
|
|
•
|
an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to us, where such entity provides financing, liquidity, market risk or credit risk support to or engages in leasing, hedging, or research and development services with us.
|
Recent Accounting Pronouncements
In March 2016, the FASB issued ASU 2016-09,
“Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The standard
is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact,
classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2016, and early adoption is permitted. The Company elected to early adopt the new guidance
in the second quarter of fiscal year 2016 which requires us to reflect any adjustments as of January 1, 2016, the beginning of
the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of additional
stock compensation expense and paid-in capital for all periods in fiscal year 2016. Additional amendments to the recognition of
excess tax benefits, accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings
as of January 1, 2016, where the cumulative effect of these changes is required to be recorded. We have elected to account for
forfeitures as they occur to determine the amount of compensation cost to be recognized in each period.
In November 2016, the FASB issued ASU
No. 2016-18, “Statement of Cash Flows (Topic 230).” ASU No. 2016-18 requires that restricted cash be included with
cash and cash equivalents when reconciling the change in cash flow. This guidance is reflected in these financial statements.
In January 2017, the FASB issued ASU
2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test.
Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess
of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting
unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider
income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment
loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after
December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after
January 1, 2017. The Company has not elected early adoption of this standard and is currently in the process of evaluating the
impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption.
In May 2017, the FASB issued ASU No.
2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in
this update provide guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification
accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted.
The Company does not expect this ASU to materially impact the Company’s consolidated financial statements.
Accounting standards that have been
issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected
to have a material impact on the consolidated financial statements upon adoption.
Subsequent Events
The Company reviewed material events subsequent to April
30, 2018. None were noted.
