07 Sep NightCulture Inc (NGHT) – on watch
I'm putting this ticker on watch for the time being. Volume has been increasing on rumors of a possible big budget promotion in the works. The end of the day today saw some erractic trading.
The last 10Q shows a company that earned $695,019 in revenues during the 3 months ending June 30, 2012. That is all fine and dandy and will look good on a landing page or a hard copy mailer, but what investors should be more interested in is that NGHT recently converted a $480,818 debt Note into 2,869,178 shares of free trading common stock ($.1675/share).
On July 31, 2011, the Company completed a share exchange with Night Culture, Inc., a Texas corporation. Under terms of the Exchange, the Company issued 5,000,000 shares of its common stock to the shareholders of Night Culture – Texas in exchange for all the outstanding shares of Night Culture – Texas. As a result of the Exchange, Night Culture – Texas became a wholly owned subsidiary of the Company, the sole officer of the Company resigned and was replaced by the sole officer of Night Culture, Michael Long. A director of Night Culture, Surain Adyanthaya was appointed to the board of directors of the Company, the shareholders of Night Culture became the majority shareholders of the Company and the Company adopted the business plan of Night Culture. In August 2011, the Company changed its name from XXX Acquisition Corp. to NightCulture, Inc. and the Company affected an 8-for-1 forward stock split.
On May 21, 2012, the Company acquired from Michael Long and Surain Adyanthaya 100% ownership of Stereo Live, LLC, a Texas limited liability company, in exchange for the issuance of one share of stock to each and the agreement of the Company to indemnify Mr. Long and Mr. Adyanthaya against any obligations of Stereo Live that may have been guaranteed by those individuals. Stereo Live is the owner/operator of a live music venue located at 6400 Richmond Avenue, Houston, Texas. Long and Adyanthaya are the principal shareholders of the Company and, at the time of the Company’s acquisition of Stereo Live, Stereo Live was indebted to the Company in the amount of $151,500.
Authorized shares - 100,000,000
Outstanding shares - 49,322,325 (as of August 14, 2012)
Float - 8,560,755 (as of August 14, 2012)
Michael Long - 20,000,000 shares (restricted)
Surain Adyanthaya - 20,000,000 shares (restricted)
Motivation for a paid promotion
During the six months ending June 2012, the holders of the Debentures converted all $480,818 of the Debentures, and accrued interest, into 2,869,178 shares of common stock.
Those 2,869,178 shares are ready to hit the market and could be an integral part of a future paid promotion.
The smoking gun
Back in March of 2011 when the NightCulture share exchange agreement was put in place, coinciding with the share exchange agreement was a bridge financing agreement with a company called Calm Seas Capital LLC. Calm Seas Capital LLC agreed to provide up to $1,000,000 in bridge financing that could then be converted into NGHT stock at at a conversion price equal to 70% of the average of the Closing sales prices of the Issuer's Common Stock for the 20 consecutive trading days up to and including the day of conversion.
During one stretch recently, 70% of the average closing price of the stock of a 20 day stretch could have allowed for a conversion ratio of around $.16/share.
We now know who owned that $480,818 debt Note which got converted into 2,869,178 shares.
Michael McCarthy was also given the option through warrants to purchase another 500,000 shares at the same 30% discount.
So when you have a stock promoter in control of 2,869,178 free trading shares of stock worth around $623,000 (possibly as high as 3,369,178 free trading shares worth $724,000) with the potential to be worth much much more and you own a stock promotion company what do you think is going to happen?
I'd be willing to bet that some time soon we see a stock promotion that could include a hard copy mailer with some large balance budget listed in the disclaimer.
Quality Stocks does not have the best track record with successful promotions, but with full control of the budget and the timing and quantity of the dumping of the shares, this one could be interesting.
Also of note
NGHT has an outstanding $649,349 debt Note from 2007 that has accrued $444,936 in interest for a total balance owed of $1,094,285.
The Company issued that promissory note to First Bridge Capital Inc (Richard Badillo), on January 20, 2007 with interest accruing at 10%.
During the period ending March, 2009 the Company agreed to convert $258,378 of debt to 56,786,461 shares of common stock. The conversion never occurred, but that would have been a conversion ratio of $.0045/share. With those shares still owed plus the potential of well over 100,000,000 free trading shares issued if the full amount owed was converted there is the potential for tens of millions of dollars in stock to be part of a future paid promotion.
Here is the bridge loan agreement from 2007. The attorney that helped draft that agreement, Richard C. Fox, is the same attorney that helped draft all of the paper work for the NightCulture share exchange and the funding agreement with Michael McCarthy.