See accompanying notes to these unaudited consolidated financial statements.
See accompanying notes to these unaudited consolidated financial statements.
See accompanying notes to these unaudited consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2007
(Unaudited)
Note 1 - Description of Business
Voyant International Corporation (Voyant) is a holding company focused on identifying and developing different media-based technologies, media assets, and strategic partnerships, and bringing those together to deliver next-generation commercial and consumer solutions. As of September 30, 2007, we had one active direct subsidiary, Rocketstream Holding Company, and one inactive direct subsidiary, Zeros & Ones Technologies, Inc.
Effective April 30, 2007, we changed our name to Voyant International Corporation Our former name was Zeros & Ones, Inc.
Note 2 - Basis of Presentation
Critical Accounting Policies and Estimates
-
Note 2 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-KSB filed on April 2, 2007, includes a summary of the significant accounting policies and methods used in the preparation of our Financial Statements.
In our opinion, the accompanying unaudited condensed consolidated financial statements contain all necessary adjustments and disclosures to present fairly the financial position as of September 30, 2007 and the results of operations for the three and nine month periods ended September 30, 2007 and 2006, and the cash flows for the nine month periods ended September 30, 2007 and 2006. The results of operations for the three and nine months ended September 30, 2007 are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in our Form 10-KSB filed on April 2, 2007.
In preparation of our financial statements, we are required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from the estimates used by us.
Principles of Consolidation
- The consolidated financial statements include the accounts of the Company and its subsidiaries, Zeros & Ones Technologies, Inc. and Rocketstream Holding Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
- The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Management bases its estimates and assumptions on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results could differ from those estimates.
Basic and Diluted Loss Per Share
- In accordance with the Financial Accounting Standards Board's (FASB) SFAS No. 128, Earnings Per Share, the basic loss per common share, which excludes dilution, is computed by dividing the net loss available to Common Stock holders by the weighted average number of common shares outstanding. Diluted loss per common share reflects the potential dilution that could occur if all potential common shares had been issued and if the additional common shares were dilutive. As a result of net losses for all periods presented, there is no difference between basic and diluted loss per common share. Potential shares of Common Stock to be issued upon the exercise of options and warrants amounted to 16,013,054 and 4,813,054 shares at December 31, 2006 and 2005, respectively.
6
Stock-Based Compensation
- In December 2004, the FASB issued SFAS No. 123R, Share Based Payment. SFAS No. 123R establishes the accounting for grants of stock options and other transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. SFAS No. 123R (1) revises SFAS No. 123, Accounting for Stock-Based Compensation, (2) supersedes Accounting Principles Bulletin (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and (3) establishes fair value as the measurement objective for share-based payment transactions. The Company has adopted SFAS No. 123R effective January 1, 2006 in accordance with the standard's early adoption provisions. Prior to December 31, 2006, the Company's Board of Directors had not approved the granting of any employee stock options. As such, the Company will follow the provisions of SFAS No. 123R on a prospective basis, and have recorded compensation expenses related to the granting of stock options to employees in 2007.
Income Taxes
- The Company accounts for income taxes using the asset and liability method, as set forth in SFAS No. 109, Accounting for Income Taxes, wherein deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. Reserves against deferred tax assets are provided when management cannot conclude their realization probable.
Recently Issued Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). The purpose of SFAS No. 157 is to define fair value, establish a framework for measuring fair value, and enhance disclosures about fair value measurements. The measurement and disclosure requirements are effective for the company beginning in the first quarter of fiscal year 2008. The company is currently evaluating the impact that SFAS No. 157 will have on its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS No. 159 is effective for the company beginning in the first quarter of fiscal year 2008, although earlier adoption is permitted. The company is currently evaluating the impact that SFAS No. 159 will have on its consolidated financial statements.
Note 3 - Discontinued Operations
In 2002 we purchased 100% of the outstanding stock of Joint Employers Group, Inc. (JEG) in exchange for 24.0 million shares of our own Common Stock. The transaction was valued at $3.6 million and accounted for using the purchase method of accounting. JEG operations are principally employee leasing. In early 2003 we were informed that JEG was unable to continue its normal operations due to its inability to maintain workers compensation insurance coverage with the California State Fund. As a result we sold JEG back to the original seller, in effect exchanging the consideration paid during the original transaction.
Operating results, including revenues of $9,905,272 and a pre-tax loss of $257,827, were included in the Consolidated Statement of Operations since the dates of the acquisition. During 2003 we determined that the operations of JEG had been discontinued, and accounted for the operating loss of $257,827 as Discontinued Operations, and recorded a gain of $480,250 on the subsequent return of consideration.
7
Note 4 - Property And Equipment
The cost of property and equipment at September 30, 2007 consisted of the following:
|
|
|
Office equipment
|
$
|
18,575
|
Less accumulated depreciation
|
|
(1,710)
|
|
$
|
16,865
|
Depreciation expense for the nine months ended September 30, 2007 and 2006 was $1,272 and $0, respectively.
Note 5 - Intangible Assets
Intangible assets include intellectual property acquired as part of the acquisition of WAA assets during the year ended December 31, 2006, when we entered into an Assignment (the Assignment) with WAA, LLC (WAA), pursuant to which WAA assigned to us all of WAA's right, title, and interest in certain intellectual property, including but not limited to commercial wireless and other communications related patents and license rights, and various rights in connection therewith.
Intangible assets are stated at cost. Intangible assets acquired from WAA have a weighted average useful life of approximately 15 years. The total amortization expense for the nine month periods ending September 30, 2007 and 2006 was $49,956 and $9,515. The intangible asset net of accumulated amortization as of September 30, 2007 is $942,384.
The amortization of these intangible items over the next five years ending December 31 is as follows:
|
|
Year
|
Amount
|
2008
|
(66,973)
|
2009
|
(66,790)
|
2010
|
(66,790)
|
2011
|
(66,790)
|
2012
|
(66,790)
|
Note 6 - Debt
Convertible Notes
In January 2007, the company issued $25,000 of unsecured convertible notes (Notes) to an unrelated party. The Notes accrued interest at the rate of 12% per annum commencing immediately from the date of issuance. The Notes are due 1 year from the date of issuance. As of September 30, 2007 there were $25,445 of the Notes outstanding, including accrued and unpaid interest of $2,055 and net of unamortized discount of $1,665.
The Notes included 50,000 Note Warrants to purchase shares of our Common Stock at $0.25. As of September 30, 2007 none have been exercised. The Note Warrants have a 3 year term. The fair value of these warrants totaling $5,253 was computed using the Black-Scholes model under the following assumptions: (1) expected life of 3 years; (2) volatility of 160%, (3) risk free interest of 4.810% and (4) dividend rate of 0%.
The fair value of the warrants was recorded as a debt discount against the face of the Notes (based on the relative fair value of the warrants and the debt) to be amortized to interest expense over the 12 month life of the Notes. In accordance with EITF 00 27, Application of Issue No. 98-5 to Certain Convertible Instruments, which provides guidance on the calculation of a beneficial conversion feature on a convertible instrument, we determined that the Notes also had a beneficial conversion feature, which the Company recognized as interest expense immediately as the Notes were convertible upon issuance.
8
For the nine months ended September 30, 2007 we recorded $5,253 of warrants discount and $13,586 of beneficial conversion of which $17,184 was recorded as interest expense for the period.
For the nine months ended September 30, 2007, the interest expense was $2,055.
Promissory Notes
During the quarter ended September 30, 2007 we issued an unsecured promissory note for $150,000 and warrants to an unrelated party. The note accrues interest at 12% per annum commencing immediately from the date of issuance. The note is due six months from the date of issue or earlier if we receive financing of at least $1,000,000. As of September 30, 2007 there were $94,796 of the Notes outstanding, including accrued and unpaid interest of $4,290 and net of unamortized discount of $59,494.
The warrants are for the purchase 300,000 shares of our Common Stock at $0.40. The term of the warrants is 5 years. The fair value of these warrants totaling $113,698 was computed using the Black-Scholes model under the following assumptions: (1) expected life of 5 years; (2) volatility of 169%, (3) risk free interest of 4.540% and (4) dividend rate of 0%.
For the nine months ended September 30, 2007 we recorded $113,698 of debt discount of which $54,204 was recorded as interest expense for the period. There is $59,494 discount remaining to be expensed over the term of the note.
For the nine months ended September 30, 2007, the interest expense was $4,290.
Secured Notes
During the quarter ended September 30, 2007 we issued a short term note to the Congregation Ahavas Tzedokah Vechesed, Inc. (the Lender) for $600,000 secured by all company assets, and those of our subsidiaries (the Secured Note). The Secured Note accrued interest at 18% per annum, and was due in thirty days from the issue date. In connection with the sale of the Secured Note, we paid $15,000 to the purchaser for legal fees. The Secured Note became due and payable during the quarter ended September 30, 2007 and we entered into a Partial Settlement Agreement and Release (September Settlement Agreement) with the Lender to partially resolve our obligations under the Secured Note.
Under the terms of the Settlement Agreement, the Lender agreed to reduce the total obligation under the Secured Note by a minimum of $180,000 in exchange for 1,000,000 shares of our common stock (Settlement Shares). The $180,000 reduction will first be applied to interest and the lenders attorneys fees, then to the Secured Notes principal balance. In the event that the proceeds from the sale(s) of the Settlement Shares were greater than $180,000, the Notes principal will be reduced by 75% of the total sales amount. The Settlement Agreement does not release any other obligation under the Note or related transaction documents. On September 26, 2007, the Court entered an order granting approval of the Settlement Agreement (Order) after holding a hearing as to the fairness of the terms and conditions of the Settlement Agreement. As of September 30, 2007 there were $403,887 of the Notes outstanding and $70,000 was recorded as loss on settlement of debt.
Subsequent to the quarter ended September 30, 2007 we entered into two additional Settlement Agreements with the Lender and issued a total of 1,750,000 additional shares of common stock to retire the obligation in full.
9
Note 7 - Other Liabilities
The other current liabilities comprise of the following as of September 30, 2007
|
|
|
|
Accrued operating expenses
|
|
$
|
61,171
|
Settlements payable
|
|
|
300,000
|
Due to officers wages
|
|
|
380,880
|
Due to officers executive bonus
|
|
|
437,500
|
Due to related party director
|
|
|
10,000
|
|
|
$
|
1,189,551
|
Accrued operating expenses increased due to an additional $127,145 in accrued compensation payable for amounts due officers, and for accrued vacation. Settlements payable decreased due to scheduled payments per the terms of the settlement agreement with former CEO of the Company. Amounts due to officers represent compensation payable in accordance with the employment agreements described in Note 11.
Note 8 - Long term Liabilities and Related Party Transactions
Long term liabilities totaled $836,531 at September 30, 2007, and represent notes payable to officers. Two notes totaling $486,531 represent unreimbursed fees and expenses due officers of the Company. The liabilities are classified as long-term since the Company has received assurances from the officers that they will not seek reimbursements of the amounts due within the next twelve months. The remaining note in the principal amount of $350,000, bearing interest at a rate of 8% per annum, was issued as a result of the WAA, LLC transaction. As of September 30, 2007 this note has no accrued and unpaid interest.
Note 9 - Sale of Restricted Common Stock
On February 13, 2007 we issued 5,333,333 shares of restricted common stock pursuant to a Stock Purchase Agreement. We received $600,000 in consideration for the sale, and issued 6,000,000 warrants in connection with the agreement priced at $0.15. The five year warrants are exercisable at the discretion of the holder and have no registration rights. We also issued 6,000,000 warrants in connection with the agreement priced at $0.20. The five year warrants are exercisable at the discretion of the holder and have no registration rights. We also issued 6,000,000 warrants in connection with the agreement priced at $0.25. The five year warrants are exercisable at the discretion of the holder and have no registration rights.
On March 9, 2007 we entered into an agreement with the warrant holders whereby the warrant holders agreed to exercise a certain number of warrants immediately in return for our commitment to register the underlying common stock for sale with the SEC. We received a commitment from the warrant holders to exercise additional warrants so that we would receive a total of $1,000,000 upon notice of effectiveness of the registration statement from the SEC. As of November 9, 2007 the warrant holders had exercised 1,666,667 warrants and the Company had received $250,000 under this amended agreement.
Note 10 - Stockholders' Equity
Common Stock
On February 1, 2007 we issued 1,000,000 shares to Kenneth P. McKinnon as a result of a warrant exercise. The warrant was originally issued October 31, 2002. We received $20,000 as a result of the exercise.
On February 13, 2007 we issued 5,333,333 shares of common stock to various accredited investors. We received $600,000 in return for these shares. (see Note 9, Sale of Restricted Common Stock)
On March 13, 2007 we issued 1,666,667 shares to various holders as a result of a warrant exercise. We received $250,000 as a result of the exercise. (see Note 9, Sale of Restricted Common Stock)
10
On March 19, 2007 we issued 1,000,000 shares to Anako Enterprise, Inc. (and designees) as a result of a warrant exercise. The warrant was originally issued October 31, 2002. We received $20,000 as a result of the exercise.
On March 19, 2007 we issued 497,696 shares of common stock to IC Capital, LLC to retire $184,176 in amounts due. We recorded a loss on settlement of debt of $313,521.
On March 20, 2007 we issued 42,139 shares of common stock to Real Asset Management to retire $35,818 in amounts due.
On April 12, 2007 we issued 200,000 shares of common stock to a firm for business development services. 100,000 of these shares are contingent upon the achieving certain milestones. We incurred a Sales & Marketing expense of $52,000 related to this issuance. The balance of $156,000 is included in the Deferred Compensation
On May 31, 2007 we issued 500,000 shares of common stock to Greg Suess as a result of a warrant exercise. We received $125,000 in return for this exercise.
On June 11, 2007 we issued 600,000 shares of common stock for legal services performed during the year.
On June 15, 2007 we issued 300,000 shares of common stock to American Capital Ventures, Inc. for investor relations services. We incurred a General & Administrative expense of $52,397 for the period, and increased the Deferred Compensation balance by $127,603.
On June 15, 2007 we issued 350,000 shares of common stock for investor relations services. We incurred a General & Administrative expense of $61,130 for the period, and increased the Deferred Compensation balance by $148,870.
On June 22, 2007 we issued 78,000 shares of common stock to William Burnsed to settle a claim.
On June 30, 2007 we issued 276,282 shares of common stock to Volker Anhausser to retire $40,000 for services as a member of our Board of Directors.
On July 31, 2007 we issued 100,000 shares of common stock to James Fuchs as a result of a warrant exercise. We received $25,000 in return for this exercise.
On August 1, 2007 we issued 180,580 shares of common stock for legal services performed during the year. We incurred a General & Administrative expense of $69,523 related to these shares.
On August 31, 2007 we issued 26,065 shares of common stock to Glenn Weisberger for consulting services. We incurred a General & Administrative expense of $15,000 for the period.
On September 7, 2007 we issued 1,000,000 shares of common stock to Congregation Ahavas Tzedokah Vechesed, Inc. to retire a minimum of $180,000 in amounts due related to a Secured Note (see Note 6, Debt, Secured Notes).
On September 12, 2007 we issued 532,609 shares of common stock to William Walley as a result of a cashless warrant exercise. We received 217,391common shares in return for this exercise.
On September 26, 2007 we issued 526,010 shares of common stock for legal services performed during the year. We incurred a General & Administrative expense of $142,023 related to these shares.
As of September 30, 2007 we had 123,208,741 shares of Common Stock issued and outstanding.
Preferred Stock
We have 2,000,000 shares of Preferred Stock authorized, with a par value $0.001. As of September 30, 2007 we had 2,000 shares of Preferred Stock issued and outstanding and an agreement to issue an additional 1,000 shares to our Chief Executive Officer.
11
Note 11 Employment Agreements
Employment Agreement with Dana R. Waldman, Chief Executive Officer and Secretary
Dana R. Waldman agreed to serve as our Chief Executive Officer and Secretary pursuant to an employment agreement defining the terms and conditions of his employment entered and executed February 15, 2007 with a retroactive effective date of January 1, 2007. The agreement is effective for an initial period of two years, and provides for a base annual salary of $300,000. Mr. Waldman is also eligible to participate in our executive bonus plan for a target bonus of 50% - 75% of his base salary that will be based upon certain performance milestones as established by the Compensation Committee or the Board of Directors. Mr. Waldman was also granted an additional bonus, the vesting and payment of which is subject to certain operating and financial milestones and events. Mr. Waldman remains a member of our Board of Directors.
The agreement grants Mr. Waldman options to purchase 9,500,000 shares of the Companys common stock. The exercise price of the options is $0.37, which was the closing price of our common stock on the date preceding the February 15, 2007 resolution of the Board of Directors approving the option grant. The options will immediately vest for 6,000,000 shares, and the remaining 3,500,000 shares will vest ratably in 24 monthly installments. Vesting will accelerate upon certain change of control events and if an event constituting good reason occurs (whether or not Mr. Waldman chooses to leave Voyant).
In addition, the agreement provides for the grant to Mr. Waldman of 1,000 shares of Series A Preferred Stock. Pursuant to the terms set forth in our Certificate of Designation, the Series A Preferred Stock is convertible into common stock on a 1 for 1 basis. However, the Series A Preferred Stock votes on an as converted basis equal to 1 for 100,000. Accordingly, the issuance to Mr. Waldman of 1,000 shares of Series A Preferred Stock will provide Mr. Waldman with the right to vote 100,000,000 shares of common stock for or against shareholder actions (in addition to the shares of common stock he beneficially owns). Mr. Laisure and Mr. Fairbairn also hold 1,000 shares of Series A Preferred Stock.
We have the right to terminate Mr. Waldmans employment at any time. If such termination (including constructive termination) is without cause, we are required to pay severance equal to 12 months of his base salary and the continuation of certain benefits for a 12 month period.
Employment Agreement with Mark M. Laisure, Chairman of the Board
Mark M. Laisure, our Chairman of the Board, entered into an employment agreement defining the terms and conditions of his employment entered into on February 15, 2007 with a retroactive effective date of January 1, 2007. The agreement is effective for an initial period of two years, and provides for a base annual salary of $250,000. Mr. Laisure is also eligible to participate in our executive bonus plan for a target bonus of 50% - 75% of his base salary that will be based upon certain performance milestones as established by the Board of Directors or our Compensation Committee.
The agreement grants Mr. Laisure options to purchase 2,000,000 shares of our common stock. The exercise price of the options is $0.37, which was the closing price of our common stock on the date preceding the February 15, 2007 resolution of the Board of Directors approving the option grant. The options will vest over a 2-year term vesting monthly, and expire after 10 years. Vesting will accelerate upon certain change of control events and if an event constituting good reason occurs (whether or not Mr. Laisure chooses to leave Voyant).
We have the right to terminate Mr. Laisures employment at any time. If such termination (including constructive termination) is without cause, we are required to pay severance equal to 12 months of his base salary and the continuation of certain benefits for a 12 month period.
12
Employment Agreement with Scott Fairbairn, Chief Technology Officer
Scott Fairbairn, our Chief Technology Officer, has entered into an employment agreement on February 15, 2007 with a retroactive effective date of January 1, 2007. The employment agreement is effective for an initial period of two years, and provides for a base annual salary of $250,000. Mr. Fairbairn is also eligible to participate in our executive bonus plan for a target bonus of 50% - 75% of his base salary that will be based upon certain performance milestones as established by the Board of Directors or our Compensation Committee. Mr. Fairbairn remains a member of our Board of Directors and Chief Executive Officer of the Companys wholly-owned subsidiary, Rocketstream Holding Corp., and its wholly-owned subsidiary Rocketstream, Inc.
The agreement grants Mr. Fairbairn options to purchase 2,000,000 shares of our common stock. The exercise price of the options is $0.37, which was the closing price of our common stock on the date preceding the February 15, 2007 resolution of the Board of Directors approving the option grant. The options will vest over a 2-year term vesting monthly, and expire after 10 years. Vesting will accelerate upon certain change of control events and if an event constituting good reason occurs (whether or not Mr. Fairbairn chooses to leave Voyant).
We have the right to terminate Mr. Fairbairns employment at any time. If such termination (including constructive termination) is without cause, we are required to pay severance equal to 12 months of his base salary and the continuation of certain benefits for a 12 month period.
Note 12 Options & Warrants
Stock Option Plan
In July 2006, our board of directors adopted the 2006 Incentive Stock Option Plan (the "2006 Plan") that provides for the issuance of qualified stock options to our employees. Under the terms of the 2006 Plan, under which 10,000,000 shares of common stock are reserved for issuance, options to purchase common stock are granted at not less than fair market value, become exercisable over a 4 year period from the date of grant (vesting occurs annually on the grant date at 25% of the grant), and expire 10 years from the date of grant. The board also approved the cancellation of the 2000 Plan such that no new options could be issued under that plan.
The fair value of each stock option is estimated using the Black Scholes model. Expected volatility is based on management's estimate using the historical stock performance of the Company, the expected term of the options is determined using the simplified method described in SEC Staff Accounting Bulletin No. 107, and the risk free interest rate is based on the implied yield of U.S. Treasury zero coupon bonds with a term comparable to the expected option term.
The following table summarizes the options outstanding as of September 30, 2007:
|
|
|
|
|
|
|
Options Outstanding
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
|
Outstanding, January 1, 2007
|
-
|
|
-
|
|
-
|
Granted
|
22,350,000
|
|
$0.42
|
|
|
Forfeited/Canceled
|
-
|
|
|
|
|
Outstanding, September 30, 2007
|
22,350,000
|
|
$0.42
|
|
-
|
13
Following is a summary of the status of options outstanding at September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise Price
|
|
Total Options Outstanding
|
|
Weighted Average Remaining Life
(Years)
|
|
Total Weighted Average Exercise Price
|
|
Options Exercisable
|
|
Weighted Average Exercise Price
|
$0.31 - $0.40
|
|
13,500,000
|
|
9.26
|
|
$0.37
|
|
8,812,497
|
|
$0.37
|
$0.41 - $0.50
|
|
8,850,000
|
|
9.28
|
|
0.49
|
|
4,359,167
|
|
0.49
|
|
|
22,350,000
|
|
9.27
|
|
$0.42
|
|
13,171,664
|
|
$0.41
|
As of September 30, 2007 we had issued 8,850,000 options to employees under the 2006 Plan. The options had a weighted average exercise price of $0.49. Compensation expense relating to employee stock options recognized for the three and nine months ended September 30, 2007 was $525,745 and $2,014,772 respectively. An additional 4,200,000 shares were committed during the quarter and subsequent to the end of the period were granted by the Board of Directors.
During the quarter ending September 30, 2007 we did not issue new options to employees outside of the 2006 Plan (see Note 11, Employment Agreements). For the period ending September 30, 2007 the outstanding balance remained 13,500,000. The options have a weighted average exercise price of $0.37, and have a term of 10 years. For the three and nine months ending September 30, 2007 we incurred non-cash expenses of $327,228 and $3,075,949 for these options, respectively.
Warrants
The following table summarizes the warrants outstanding as of September 30, 2007:
|
|
|
|
|
|
|
Warrants Outstanding
|
|
Weighted Average
Exercise Price
|
|
Aggregate Intrinsic Value
|
Outstanding, January 1, 2007
|
15,798,239
|
|
$0.15
|
|
$ 1,384,019
|
Granted
|
18,420,000
|
|
|
|
|
Forfeited/Canceled/Exercised
|
(4,799,275)
|
|
|
|
|
Outstanding, September 30, 2007
|
29,418,964
|
|
$0.19
|
|
$ 2,781,721
|
All the above warrants are exercisable as of September 30, 2007
Note 13 - Commitments and Contingencies
During the quarter we were not involved in any legal proceedings. We are not aware of any outstanding litigation as of November 9, 2007, other than as noted below.
In December, 2006 we became aware that the Internal Revenue Service (IRS) had determined that the proper payroll tax returns were not filed during the 3rd and 4th quarters of 2001. Without response from prior management, the IRS completed returns on our behalf, assessed interest and penalties for late filing, and began collection procedures for approximately $410,000 as of December 31, 2006. We believe that the IRS claims are in error, and we have begun discussions with the IRS to resolve the matter.
14
Note 14 - Subsequent Events
Subsequent to the period ended September 30, 2007 we issued a short term note to J & N Invest, LLC (the Lender) for $150,000 secured by all company assets, and those of our subsidiaries (the Secured Note). The Secured Note accrues interest at 18% per annum, and is due in sixty days from the issue date. In connection with the sale of the Secured Note, we paid $3,000 to the purchaser for legal fees.
Subsequent to the period ended September 30, 2007 we issued additional notes for a total of $205,000 under terms similar to our Convertible Note program (see Note 6, Debt, Convertible Notes).
Note 15 - Going Concern
Voyant is subject to the risks and uncertainties associated with a new business, has no established source of revenue, and has incurred significant losses from operations. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Our management estimates that the current funds available and on hand will not be adequate to fund operations throughout fiscal 2007. We anticipate that additional revenue from normal operations will occur in 2007, but those revenues will not have a material impact offsetting operating expenses during the year. We do not expect that we will achieve profit from normal operations in 2007, and we expect that additional capital will be required to support both on-going losses and the capital expenditures necessary to support anticipated revenue growth. Currently we have not arranged sources for, nor do we have commitments for, adequate outside investment, either in the form of debt or equity, for the funds required to continue normal operations during 2007. Even if we obtain the capital desired, there can be no assurance that our operations will be profitable in the future, that our product development and marketing efforts will be successful, or that the additional capital will be available on terms acceptable to us, if at all.
15