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 June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ________

Commission File No. 000-56558

SMC ENTERTAINMENT, INC.

(Exact name of the small business issuer as specified in its charter)

Nevada

(State of either jurisdiction of

Incorporation or Organization)

59170 Glades Road Suite 150

Boca Raton, FL 33434

(Address of principal executive offices)

(360) 820-5973

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting Company	☒
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐   No ☒

The number of shares of Common Stock, $0.001 par value of the registrant outstanding at August 20, 2024 was 1,352,951,483

FORM 10-Q

For the Quarterly Period Ended June 30, 2024

INDEX

PART I	Financial Information
Item 1.	Financial Statements (unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
PART II	Other Information
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	20
Signatures		21

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INDEX TO FINANCIAL STATEMENTS

Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	4
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	5
Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	6
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited)	8
Notes to the Consolidated Financial Statements (unaudited)	9

3

SMC ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2024			2023
ASSETS	(Unaudited)			(Audited)
Current Assets:
Cash	$	1,418		$	7,269
Receivable		-			300,000
Total Current Assets		1,418			307,269
Goodwill		64,194			64,194
Intangible assets		29,600			-
Total Assets	$	95,212		$	371,463
LIABILITIES & STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities	$	78,219		$	87,887
Accrued compensation		39,750			1,486,335
Due to related parties		16,810			22,394
Notes payable – related party		1,111,460			—
Convertible notes		8,923,771			846,269
Accrued interest		533,127			465,064
Derivative liability		6,524,745			792,575
Total Current Liabilities		17,227,882			3,700,524
Total Liabilities		17,227,882			3,700,524
Stockholders’ Deficit:
Series A Preferred stock, $0.001 par value, 1,000,000 shares authorized; 990,346 shares issued and outstanding		990			990
Series B Preferred stock, $10.00 par value, 4,500,000 shares authorized; 2,500,000 and 2,500,000 shares issued and outstanding, respectively		32,500			32,500
Common stock $0.001 par value, 3,000,000,000 shares authorized; 1,352,951,483 and 1,379,960,743 shares issued and outstanding, respectively		1,352,952			1,379,961
Common stock to be issued		—			22,000
Additional paid-in capital		13,505,174			12,796,175
Accumulated deficit		(32,024,286	)		(17,560,687	)
Total Stockholders’ Deficit		(17,132,670	)		(3,329,061	)
Total Liabilities and Stockholders’ Deficit	$	95,212		$	371,463

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

SMC ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Operating Expenses:
General and administrative	$	42,083		$	92,575		$	129,166		$	134,850
Compensation expense – related party		116,000			144,050			233,800			288,400
Bad debt expense		300,000			—			300,000			—
Development expense		30,000			—			30,000			—
Total operating expenses		488,083			236,625			692,966			423,250
Loss from operations		(488,083	)		(236,625	)		(692,966	)		(423,250	)
Other income (expense):
Interest expense		(52,312	)		(5,470	)		(68,063	)		(13,426	)
Gain on conversion of debt		—			7,638			—			7,638
Loss on conversion of debt		—			(57,500	)		—			(57,500	)
Transaction expense		(7,970,400	)		—			(7,970,400	)		—
Change in fair value of derivative		(6,108,617	)		(67,174	)		(5,732,170	)		(303,500	)
Total Other Expense		(14,131,329	)		(122,506	)		(13,770,633	)		(366,788	)
Net Loss	$	(14,619,412	)	$	(359,131	)	$	(14,463,599	)	$	(790,038	)
Net loss per share – basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Weighted average shares outstanding, basic and diluted		1,433,371,101			1,049,261,042			1,429,545,043			1,028,336,525

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

SMC ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT For the Three and Six Months Ended June 30, 2024 (Unaudited)
	Series A Preferred Stock				Series B Preferred Stock				Common Stock						Additional			Common						Total
	Shares		Amount		Shares		Amount		Shares			Amount			Paid-in Capital			Stock to Be Issued			Accumulated Deficit			Stockholders’ Deficit
Balance, December 31, 2023		990,346	$	990		2,500,000	$	32,500		1,379,960,743		$	1,379,961		$	12,796,175	$	$	22,000		$	(17,560,687	)	$	(3,329,061	)
Common stock issued for services – related party		—		—		—		—		19,000,000			19,000			4,800			(22,000	)		—			1,800
Common stock issued for services		—		—		—		—		75,000,000			75,000			—			—			—			75,000
Net income		—		—		—		—		—			—			—			—			155,813			155,813
Balance, March 31, 2024		990,346		990		2,500,000		32,500		1,473,960,743			1,473,961			12,800,975			—			(17,404,874	)		(3,096,448	)
Common stock issued for accrued compensation – related party		—		—		—		—		121,990,740			121,991			82,509			—			—			204,500
Common stock issued for accrued compensation		—		—		—		—		7,000,000			7,000			7,000			—			—			14,000
Common stock cancelled		—		—		—		—		(250,000,000	)		(250,000	)		250,000			—			—
Forgiveness of debt – related party		—		—		—		—		—			—			364,690			—			—			364,690
Net loss		—		—		—		—		—			—			—			—			(14,619,412	)		(14,619,412	)
Balance, June 30, 2024		990,346	$	990		2,500,000	$	32,500		1,352,951,483		$	1,352,952		$	13,505,174	$	$	—		$	(32,024,286	)	$	(17,132,670	)

6

SMC ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT For the Three and Six Months Ended June 30, 2023 (Unaudited)
	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional		Discount to			Common						Total
	Shares		Amount		Shares		Amount		Shares		Amount		Paid-in Capital		Preferred Stock			Stock to Be Issued			Accumulated Deficit			Stockholders’ Deficit
Balance, December 31, 2022		989,626	$	990		—	$	—		962,535,830	$	962,536	$	12,657,620	$	—		$	23,500		$	(16,000,004	)	$	(2,355,358	)
Common stock issued for conversion of debt		—		—		—		—		63,000,000		63,000		88,200		—			—			—			151,200
Common stock issued for services – related party		—		—		—		—		—		—		—		—			4,350			—			4,350
Common stock issued for services		—		—		—		—		17,206,731		17,207		12,793		—			(15,000	)		—			15,000
Net loss		—		—		—		—		—		—		—		—			—			(430,907	)		(430,907	)
Balance, March 31, 2023		989,626		990		—		—		1,042,742,561		1,042,743		12,758,613		—			12,850			(16,430,911	)		(2,615,715	)
Common stock issued for services – related party		—		—		—		—		—		—		—		—			4,050			—			4,050
Common stock issued for services		—		—		—		—		19,318,182		19,318		3,182		—			—			—			22,500
Common stock issued for conversion of debt		—		—		—		—		100,000,000		100,000		40,000		—			—			—			140,000
Preferred stock issued for acquisition		—		—		2,500,000		25,000,000		—		—		—		(24,967,500	)		—			—			32,500
Net loss		—		—		—		—		—		—		—		—			—			(359,131	)		(359,131	)
Balance, June 30, 2023		989,626	$	990		2,500,000	$	25,000,000		1,162,060,743	$	1,162,061	$	12,801,795	$	(24,967,500	)	$	16,900		$	(16,790,042	)	$	(2,775,796	)

The accompanying notes are an integral part of these unaudited consolidated financial statements. 

7

SMC ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended June 30,
	2024			2023
Cash Flows from Operating Activities:
Net loss	$	(14,463,599	)	$	(790,038	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services – related party		1,800			8,400
Common stock issued for services		75,000			37,500
Change in fair value of derivative		5,732,170			303,500
Gain on conversion of debt		—			(7,638	)
Loss on conversion of debt		—			57,500
Bad debt expense		300,000			—
Transaction expense		7,970,400			—
Changes in operating assets and liabilities:
Prepaid expenses		—			6,000
Accounts payable and accrued liabilities		(9,668	)		24,254
Accrued interest		68,063			9,338
Accrued compensation – related party		244,251			280,000
Net cash used in operating activities		(81,583	)		(71,184	)
Cash Flows from Investing Activities:		—			—
Cash Flows from Financing Activities:
Cash overdraft assumed with acquisition		—			(425	)
(Repayment) / proceeds from loan – related party		(1,771	)		5,000
Proceeds from loans		77,503			105,350
Net cash provided by financing activities		75,732			109,925
Net change in cash		(5,851	)		38,741
Cash at beginning of period		7,269			2,350
Cash at end of period	$	1,418		$	41,091
Supplemental schedule of cash flow information:
Cash paid for interest	$	—		$	—
Cash paid for taxes	$	—		$	—
Supplemental non-cash disclosure:
Acquisition of intangible assets	$	29,600		$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

8

SMC ENTERTAINMENT, INC.

Notes to Unaudited Consolidated Financial Statements

June 30, 2024

NOTE 1 — DESCRIPTION OF BUSINESS AND HISTORY

SMC Entertainment, Inc. (the “Company” or “SMC”) was incorporated in the State of Nevada on January 23, 1998, under the name of Professional Recovery Systems, Ltd.

On April 21, 2023, the Company completed its acquisition of AI-enabled wealth management technology platform provider, Fyniti Global Equities EBT Inc. (“Fyniti”) for 2,500,000 shares of Series B $10.00 Preferred Stock.

Fyniti (www.fyniti.com, www.fynitiiq.com) is a Fintech developer and provider of technology that combines Artificial Intelligence/Machine Learning (AI/ML) driven Quantitative investing (IQ Engine) with AI-enabled wealth management Electronic Block Trading (“EBT”) technology.

NOTE 2 — SUMMARY OF SIGNIFICANT POLICIES

Basis of Presentation

The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2024. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2023.

Use of Estimates,

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Significant estimates include the fair value for derivatives, calculations used for stock based compensation, fair value of net assets acquired in a business combination and the estimate of the valuation allowance on deferred taxes. Actual results could differ from those estimates.

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”).

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of June 30, 2024 and December 31, 2023.

Basic and Diluted Earnings Per Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. Diluted amounts are not presented when the effect of the computations are anti-dilutive due to the losses incurred. Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.

9

Stock-Based Compensation

We account for equity-based transactions with employees and non-employees under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation” (Topic 718), which establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar equity or liability instruments in active markets are the best evidence of fair value and, if available, should be used as the basis for the measurement for equity and liability instruments awarded in these share-based payment transactions. However, if observable market prices of identical or similar equity or liability instruments are not available, the fair value shall be estimated by using a valuation technique or model that complies with the measurement objective, as described in FASB ASC Topic 718.

Revenue Recognition

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:

● Identification of a contract with a customer;

● Identification of the performance obligations in the contract;

● Determination of the transaction price;

● Allocation of the transaction price to the performance obligations in the contract; and

● Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Derivative Financial Instruments

The Company evaluates its convertible notes to determine if such instruments have 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 statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. 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.

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

10

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.

The following table classifies the Company’s asset measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2024:

Description	Level 1		Level 2		Level 3
Derivative	$	-	$	-	$	6,524,745
Total	$	-	$	-	$	6,524,745

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2023:

Description	Level 1		Level 2		Level 3
Derivative	$	-	$	-	$	792,575
Total	$	-	$	-	$	792,575

Recently issued accounting pronouncements

The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 — GOING CONCERN

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses since inception and has no assurance of future profitability. The Company will continue to require financing from external sources to finance its operating and investing activities until sufficient positive cash flows from operations can be generated. There is no assurance that financing or profitability will be achieved, accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.

11

NOTE 4— CONVERTIBLE NOTES PAYABLE

A summary of all the Company’s convertible loans is as follows.

	Date Issued		Maturity Date		Rate			Balance 12/31/2023		Additions		Conversions/ Payments		Balance 6/30/2024		Conv Terms
FV Investments	5/27/2016		5/27/2017			12	%	$	16,596	$	-	$	-	$	16,596	$	0.001
FV Investments	3/14/2017		3/14/2018			12	%	$	15,000	$	-	$	-	$	15,000	$	0.001
Christopher Whitcomb	7/7/2016		7/7/2017			18	%	$	2,393	$	-	$	-	$	2,393		(1	)
Christopher Whitcomb	1/25/2017		1/25/2018			18	%	$	29,050	$	-	$	-	$	29,050		(1	)
Christopher Whitcomb	5/30/2017		5/30/2018			18	%	$	32,640	$	-	$	-	$	32,640		(1	)
Kanno Group Holdings ll Ltd	10/1/2019		10/1/2020			12	%	$	42,601	$	-	$	-	$	42,601	$	0.00466
Kanno Group Holdings ll Ltd	1/6/2020		1/6/2021			12	%	$	14,977	$	-	$	-	$	14,977	$	0.00615
Kanno Group Holdings ll Ltd	6/30/2020		6/30/2021			12	%	$	7,732	$	-	$	-	$	7,732	$	0.00615
Kanno Group Holdings ll Ltd	12/31/2020		12/31/2021			12	%	$	9,527	$	-	$	-	$	9,527	$	0.00185
Kanno Group Holdings ll Ltd	3/31/2021		3/31/2022			12	%	$	5,112	$	-	$	-	$	5,112	$	0.00628
Kanno Group Holdings ll Ltd	7/24/2021		7/24/2022			12	%	$	5,406	$	-	$	-	$	5,406	$	0.00603
Kanno Group Holdings ll Ltd	11/1/2021		11/1/2022			12	%	$	2,828	$	-	$	-	$	2,828	$	0.00544
Kanno Group Holdings ll Ltd	12/31/2021		12/31/2022			12	%	$	37,391	$	-	$	-	$	37,391	$	0.00509
Mammoth Corporation	1/12/2022		1/12/2023			12	%	$	231,652	$	-	$	-	$	231,652		(3	)
Mammoth Corporation	1/21/2022		1/21/2023			12	%	$	157,300	$	-	$	-	$	157,300		(4	)
Kanno Group Holdings ll Ltd	3/31/2022		3/31/2023			12	%	$	7,606	$	-	$	-	$	7,606	$	0.00222
Kanno Group Holdings ll Ltd	4/25/2022		4/25/2023			12	%	$	50,000	$	-	$	-	$	50,000	$	0.00206
Kanno Group Holdings ll Ltd	7/12/2022		7/12/2023			12	%	$	2,388	$	-	$	-	$	2,388	$	0.00163
Kanno Group Holdings ll Ltd	11/3/2022		11/3/2023			n/a		$	11,357	$	-	$	-	$	11,357	$	0.00167
Kanno Group Holdings ll Ltd	12/31/2022		12/31/2023			n/a		$	6,407	$	-	$	-	$	6,407	$	0.00096
Kanno Group Holdings ll Ltd	3/31/2023		3/31/2024			n/a		$	13,312	$	-	$	-	$	13,312	$	0.00054
Kanno Group Holdings ll Ltd	6/30/2023		6/30/2024			n/a		$	89,038	$	-	$	-	$	89,038	$	0.00084
Kanno Group Holdings ll Ltd	9/30/2023		9/30/2024			n/a		$	36,230	$	-	$	-	$	36,230	$	0.00042
Kanno Group Holdings ll Ltd	12/31/2023		9/30/2024			n/a		$	19,726	$	-	$	-	$	19,726	$	0.00035
Kanno Group Holdings ll Ltd	3/31/2024		3/31/2025			n/a		$	-	$	9,918	$	-	$	9,918	$	0.0003
Kanno Group Holdings ll Ltd	6/30/2024		6/30/2025			n/a		$	-	$	67,584	$	-	$	67,584	$	0.00117
ChainTrade, Ltd	5/30/2024		11/30/2025			5	%	$	-	$	8,000,000	$		$	8,000,000	$	1.00
								$	846,269	$	8,077,502	$	-	$	8,923,771
Kanno Group Holdings ll Ltd – accrued interest		n/a		n/a		n/a		$	339,077	$	13,267	$	-	$	352,344
Other accrued interest		n/a		n/a		n/a		$	125,987	$	54,796	$	-	$	180,783
Total convertible debt and accrued interest								$	1,311,333		8,145,565	$	-	$	9,456,898

(1)	75% discount to the lowest closing price within the 60 previous trading sessions.
(2)	Note was assigned to Mammoth Corporation
(3)	Conversion rate depends on what part of the loan and when the conversion occurs.
(4)	50% of market price.

All notes past their maturity date are considered to be default.

A summary of the activity of the derivative liability for the notes above is as follows:

Balance at December 31, 2022	$	536,399
Decrease to derivative due to conversion		(231,367	)
Derivative loss due to mark to market adjustment		487,543
Balance at December 31, 2023		792,575
Decrease to derivative due to modification of debt		(478,815	)
Derivative loss due to mark to market adjustment		6,210,985
Balance at June 30, 2024	$	6,524,745

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A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of June 30, 2024, is as follows:

Inputs	June 30, 2024				Initial Valuation
Stock price	$	0.0055		$	0.006 – 0.0115
Conversion price	$	0.0003 – 0.0004		$	0.0016 – 0.0098
Volatility (annual)		264.12	%		163.53%–214.94%
Risk-free rate		5.48	%		0.39%–1.55%
Dividend rate		-				-
Years to maturity		0.25				1

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management.

NOTE 5 — COMMON STOCK

During Q1 2024, the Company granted 75,000,000 shares of common stock to a service provider. The shares were valued at 0.001, the closing stock price on the date of grant for total non-cash stock compensation expense of $75,000.

During Q2 2024, the Company issued 7,000,000 shares of common stock for conversion of accrued compensation of $14,000. The shares were value at $0.002, the closing stock price on the date of grant

On June 7, 2024, the Company cancelled 250,000,000 shares of common stock.

Refer to Note 8 for shares issued to related parties.

NOTE 6 — PREFERRED STOCK

Series A Preferred Stock

The Company has 1,000,000 shares of preferred stock designated as Series A. The Series A preferred stock, par value $0.001, are entitled to dividends, if declared, and are convertible into common stock by dividing the issue price of $1.00 by a 20% discount to the current market price.

Series B Preferred Stock

On December 16, 2021, the Company amended its Articles of Incorporation, creating a series of Preferred Stock designating 4,500,000 shares of Series B Convertible Preferred Stock, par value $10.00 per share. The Series B preferred stock are entitled to dividends, if declared, and are convertible into common stock at a rate of 10% to the preceding ten day weighted average price.

On April 21, 2023, the Company completed its acquisition of AI-enabled wealth management technology platform provider, Fyniti Global Equities EBT Inc. (“Fyniti”) for 2,500,000 shares of Series B $10.00 Preferred Stock.

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NOTE 7 — RELATED PARTY TRANSACTIONS

On December 26, 2023, Xuqiang (Adam) Yang, was appointed as Chief Financial Officer (“CFO”) of the Company to replace Mr. Blum, who was serving as the Interim CFO. Per the terms of the consulting agreement to serve as the Company’s CFO Mr. Yang will be compensated $7,000 per month, beginning November 1, 2023. On June 15, 2024, Mr. Yang converted $55,000 of accrued compensation into 27,500,000 shares of common stock. As of June 30, 2024 and December 31, 2023, there is $0 and $14,000 due to Mr. Yang, respectively.

On March 25, 2024, the Company issued 9,500,000 shares of common stock to JW Price LLC. 2,000,000 shares are for shares earned in the current period. Those shares were valued at $0.0006, the closing price on the date of grant, for total non-cash compensation expense of $1,200. All other shares issued were earned in the prior period and had been disclosed as common stock to be issued.

On March 25, 2024, the Company issued 9,500,000 shares of common stock to Ronald Hughes for services. 1,000,000 shares are shares earned in the current period. Those shares were valued at $0.0006, the closing price on the date of grant, for total non-cash compensation expense of $600. All other shares issued were earned in the prior period and had been disclosed as common stock to be issued.

On March 31, 2024, the Company entered into a new consulting agreement with Ronald Hughes and North Arm Capital LLC. Per the terms of the agreement, effective January 1, 2024, Mr. Hughes is to be compensated $5,000 per month. In addition, the Company issued to Mr. Hughes a convertible promissory note for all accrued compensation as of December 31, 2023. The note for $517,000 is non-interest bearing and convertible into shares of common stock at $0.0006 per share. On June 15, 2024, Mr. Hughes converted $25,000 of accrued compensation into 12,500,000 shares of common stock. As of June 30, 2024 and December 31, 2023, there is $5,000 and $0 due to Mr. Hughes, respectively, for accrued consulting services.

On March 31, 2024, the Company entered into a new consulting agreement with Erik Blum and J W Price LLC. Per the terms of the agreement, effective January 1, 2024, Mr. Blum is to be compensated $26,666 per month. In addition, the Company issued to Mr. Blum a convertible promissory note for all accrued compensation as of December 31, 2023. The note for $594,460 is non-interest bearing and convertible into shares of common stock at $0.00055 per share. During the six months ended June 30, 2024, Mr. Blume converted $124,500 of accrued compensation into 81,990,740 shares of common stock. As of June 30, 2024 and December 31, 2023, there is $34,750 and $0 due to Mr. Blum, respectively, for accrued consulting services.

NOTE 8 – ACQUISITIONS

On April 21, 2023, the Company completed its acquisition of AI-enabled wealth management technology platform provider, Fyniti Global Equities EBT Inc. (“Fyniti”) for 2,500,000 shares of Series B $10.00 Preferred Stock.  The shares of preferred were valued using the number of common shares the preferred stock can be converted into and the trading price of the common stock of $0.0013, on April 21, 2023.

The Company accounted for the transaction as a business combination under ASC 805 and as a result, allocated the fair value of the book value of identifiable assets acquired and liabilities assumed as of the acquisition date as outlined in the table below. The consolidated income statement for the six months ended June 30, 2024, includes $0 and $1,191 of income and expenses, respectively, from Fyniti.

The excess of the purchase price over the estimated fair values of the underlying identifiable assets acquired and liabilities assumed was allocated to goodwill.

Consideration
Consideration issued	$	32,500
Identified assets, liabilities, and noncontrolling interest
Cash overdraft		(425	)
Accounts payable		(29,500	)
Accrued Expenses		(1,769	)
Total identified assets, liabilities, and noncontrolling interest		(31,694	)
Excess purchase price allocated to goodwill	$	64,194

On June 21, 2024, the Company closed on the May 30, 2024 Acquisition Agreement (the “Acquisition Agreement”) with ChainTrade, LTD (“ChainTrade”), to purchase 100% of the assets of ChainTrade’s AI-powered Trading Platform (the “Platform”). Under the terms of the Acquisition Agreement, the Company purchased the ChainTrade Assets in exchange for an $8,000,000 promissory note, with a term of 18 months, and a 5% interest rate. The Note is convertible into shares of the Company’s Common Stock at $1 per share. The Company has also committed to provide total working capital of $500,000, in tranches, over 18 months. The first tranche of $30,000 was paid during the quarter ended June 30, 2024. The purchase price is based on an estimate of the fair value of the convertible shares. The excess of the purchase price over the net assets acquired and liabilities assumed of $7,970,400 has been recorded as a transaction expense. The balance of $29,600 has been capitalized to intangible assets and will be amortized over the estimated useful life of the assets of three years.

On June 25, 2024, as required by the Acquisition Agreement, Paul (Prem) Couture, CEO of ChainTrade, and Red Matter Capital, was appointed as the Company’s Chief Technology Officer. Mr. Couture and the Company entered into an Employment Agreement under which he is to be paid a salary of $7,500 per month, for a term of one year for his service as Chief Technology Officer. Also on June 25, 2024, Bryan Feinberg was appointed to our Board of Directors. Mr. Feinberg also entered into a Technology Consulting Agreement with the Company under which he will be paid a monthly consulting fee of $7,500.

NOTE 9— SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, Subsequent Events, from the balance sheet date through the date the financial statements were issued and has determined that there are the following material subsequent events.

Subsequent to June 30, 2024, the Company exchanged $516,004 of debt in the form of convertible promissory notes (the “Debt”) for Series D Preferred Shares (“Preferred Shares”). The Debt is comprised of $516,004 held in two previous convertible notes; $313,323 and $202,681 respectively. The Company shall issue 55,000 Preferred Shares in exchange for the Debt. The Preferred Shares shall convert into the Company’s common stock at a share price of the lesser of $0.005 or 65% of the average closing price in the preceding 90 trading sessions. The conversion of Preferred Shares to common stock is permitted after two years from Preferred Share issuance with a maximum of 4.99% per conversion.

Subsequent to June 30, 2024, the Company exchanged $436,884 of debt in the form of consulting fees and management conversion of accrued earnings (the “Debt”). The Debt is comprised of $300,374 held by one of our non-affiliate debt holders. The balance of $136,500 is comprised of accrued consulting fees held by current insiders, and all of the Debt was converted to the Company’s common shares at $0.002 per share, for a total of 68,250,000.

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

Our Management’s Discussion and Analysis should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included elsewhere in this quarterly report.

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward-looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, our actual results may differ significantly from management’s expectations. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or, in the case of documents referred to or incorporated by reference, the date of those documents.

The following discussion and analysis should be read in conjunction with our unaudited financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Company Overview and Description of Business

On April 21, 2023, the Company completed its acquisition of AI-enabled wealth management technology platform provider, Fyniti Global Equities EBT Inc. (“Fyniti”) for 2,500,000 shares of Series B $10.00 Preferred Stock.

Fyniti, (www.fyniti.com, www.fynitiiq.com) is a Fintech developer and provider of technology that combines Artificial Intelligence/Machine Learning (AI/ML) driven Quantitative investing (IQ Engine) with AI-enabled wealth management Electronic Block Trading (“EBT”) technology.

On August 14, 2023, the Company filed a Certificate of Change with the Nevada Secretary of State to increase the authorized shares of the Company’s common stock to 3,000,000,000.

On June 21, 2024, the Company closed on the May 30, 2024 Acquisition Agreement (the “Acquisition Agreement”) with ChainTrade, LTD (“ChainTrade”), to purchase 100% of the assets of ChainTrade’s AI-powered Trading Platform (the “Platform”). Chaintrade, a UK-registered and licensed Fintech company is a joint Venture between Plato Data Intelligence and Redmatter.Capital and was built to revolutionize trading and investing by leveraging AI's predictive capabilities. The Platform allows users to trade Equities, ETFs, Commodities, and Indices with the support of a personalized AI-powered trading assistant. The Platform, ready for commercial launch, was built to revolutionize trading and investing by leveraging AI's predictive capabilities. This will improve research, risk management and asset allocation. The Platform provides personalized and custom investment strategies and utilizes AI to evaluate assets within a portfolio.

Results of Operations

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) includes a discussion of the consolidated results from operations of SMC Entertainment, Inc. and its subsidiary.

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Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Revenue

We had no revenue for the three months ended June 30, 2024 and 2023.

General and Administrative Expenses

General and Administrative expenses (“G&A”) for the three months ended June 30, 2024, were $42,083 as compared to $92,575 for the comparable prior period, a decrease of $50,492 or 54.5%. During the current period we had a decrease to our audit and legal fees of approximately $17,000, to filing fees of $6,000 and other G&A expense of approximately $11,000.

Compensation Expense – Related Party

Compensation Expense – Related Party for the three months ended June 30, 2024, was $116,000 as compared to $144,050 for the comparable prior period, a decrease of $28,050 or 19.5%. The decrease is the result of a new consulting agreement for Ronald Hughes, that decreased his monthly compensation.

Bad Debt Expense

During the three months ended June 30, 2024, the Company wrote off a $300,000 note receivable to bad debt expense.

Other Income (Expense)

Total other expense for the three months ended June 30, 2024, was $14,131,329 as compared to total other expense of $122,506 for the comparable prior period. In the current period we had interest expense of $52,312 and a loss of $6,108,617 related to the change in the fair value of derivatives. We also recognized a $7,970,400 transaction expense related to the acquisition of ChainTrade, LTD (Note 9). In the prior period we had interest expense of $5,470, a loss on conversion of debt of $57,500, a loss of $67,174 related to the change in the fair value of derivatives and a gain on conversion of debt of $7,638.

Net Loss

For the three months ended June 30, 2024, we had a net loss of $14,619,412, mainly due to the loss from the change in fair value of our derivatives and the transaction expense. For the three months ended June 30, 2023, we had a net loss of $359,131.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Revenue

We had no revenue for the six months ended June 30, 2024 and 2023.

General and Administrative Expenses

General and Administrative expenses (“G&A”) for the six months ended June 30, 2024, were $129,166 as compared to $134,850 for the comparable prior period, a decrease of $5,684 or 4.2%.

Compensation Expense – Related Party

Compensation Expense – Related Party for the six months ended June 30, 2024, was $233,800 as compared to $288,400 for the comparable prior period, a decrease of $54,600 or 18.9%. The decrease is the result of a new consulting agreement for Ronald Hughes, that decreased his monthly compensation.

Bad Debt Expense

During the six months ended June 30, 2024, the Company wrote off a $300,000 note receivable to bad debt expense.

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Other Income (Expense)

Total other expense for the six months ended June 30, 2024, was $13,770,633 as compared to total other expense of $366,788 for the comparable prior period. In the current period we had interest expense of $68,063 and a loss of $5,732,170  related to the change in the fair value of derivatives. In the prior period we had interest expense of $13,426, a loss on conversion of debt of $57,500, a loss of $303,500 related to the change in the fair value of derivatives and a gain on conversion of debt of $7,638.

Net Loss

For the six months ended June 30, 2024, we had a net loss of $14,463,599, mainly due to the loss from the change in fair value of our derivatives and the transaction expense. For the six months ended June 30, 2023, we had a net loss of $790,038.

Liquidity and Capital Resources

During the six months ended June 30, 2024, we used $81,583 of cash in operations compared to $71,184 used in the prior period.

During the six months ended June 30, 2024, we received $75,732 of cash from financing activities compared to $109,925 received in the prior period.

As of June 30, 2024, we have convertible notes, including accrued interest, due of $9,456,898. We also have notes payable to related parties of $1,111,460.

Off-Balance Sheet Arrangements

As of June 30, 2024, the Company had no off-balance sheet arrangements.

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Going Concern

Our auditors have expressed substantial doubt as to our ability to continue as a going concern. The accompanying unaudited consolidated financial statements have been prepared on a going concern basis. For the six months ended June 30, 2024, the Company had a net loss of $14,463,599; however, this was largely due to a loss on the fair value of our derivatives and the transaction cost incurred with our recent acquisition. We had net cash used in operating activities of $81,583 and an accumulated deficit of $32,024,286. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future. Management plans to provide for the Company’s capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies

Refer to Note 2 for a condensed discussion of our critical accounting policies and to our Form K, which includes our audited financial statements for the year ended December 31, 2023, for a full discussion of our critical accounting policies.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures during the six months ended June 30, 2024 were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The term “disclosure controls and procedures,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Notwithstanding the identified material weaknesses, management believes the financial statements included in this quarterly report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during quarter ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. Legal Proceedings

There are no claims, actions, suits, proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On June 24, 2024, the Board of Directors received notice from Olayinka Oyebola & Co (“Olayinka”), the independent registered public accounting firm of SMC Entertainment, Inc. (the “Company”), that they were resigning as the Company’s registered accounting firm effective immediately, following the appointment by the Company of RBSM, LLP (“RBSM”), effective June 24, 2024, as its new registered accounting firm.

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 Item 6. Exhibits.

(a) Exhibits.

Exhibit No.	Description
31.1	Rule 13a14(a)/15d-14(a) Certification of Chief Executive Officer
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS*	Inline XBRL Instance Document(1)
101.SCH*	Inline XBRL Taxonomy Extension Schema Document(1)
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document(1)
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document(1)
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document(1)
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document(1)

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 SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 22, 2024	SMC ENTERTAINMENT, INC.
	By:	/s/ Erik Blum
		Name: Erik Blum
		Title: Chief Executive Officer
		(Principal Executive Officer) and Director
	By:	/s/ Adam Yang
		Name: Adam Yang
		Title: Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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