Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý
State issuer's revenues for the most recent fiscal year: $26,035.00.
The aggregate market value of common stock of the Company, par value $0.001 per share (“Common Stock”), held by non-affiliates of the registrant as of March 21, 2008 was $9,614,222.
There were 132,434,689 shares of Common Stock issued and outstanding as of March 21, 2008.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
DOCUMENTS INCORPORATED BY REFERENCE
Transitional Small Business Disclosure Format (Check one): Yes ¨ No ý
TABLE OF CONTENTS
PART I.
This Annual Report on Form 10-KSB contains forward-looking statements including, without limitation, statements concerning the future of the industry in which Voyant International Corporation (“We”, “Voyant” or the “Company”) operates, its product development plans, business strategy, financial estimates, continued acceptance of its products and dependence on significant distributors and customers. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimated”, “predicts”, “potential”, “continue” or the negative of such terms or other comparable terminology. You should not place undue reliance on the forward-looking statements contained in this document. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements made in this Annual Report on Form 10-KSB. Forward-looking statements, particularly those concerning anticipated events relating to the development and marketing of the Company's products and services, and the timing or magnitude of those events, are inherently uncertain. The risk factors discussed below and other considerations noted throughout this Annual Report on Form 10-KSB could cause our actual results to differ significantly from those contained in any forward-looking statements. Among those risks are market acceptance of our products, including by our beta testers of our commercial products, competition, our ability to acquire, license or develop additional technologies or content, our ability to successfully develop and market products and services that we plan, including our physical-layer communications technologies and future versions of our RocketStream products, our ability to reach agreements for transaction for which we are engaged in negotiations and consummate those transactions, our ability to accurately identify shortcomings in the evolution of the media and entertainment industries, our ability to raise sufficient capital and our ability to protect our intellectual property. We cannot provide assurances regarding our ability to meet any sales targets, as they may be affected by many factors not within our control, including acceptance of our products by customers, competition, technological advances by others, and general economic and political issues. Further, all of the potentially adverse factors that can affect a business in our line are more likely to affect a new company than an established enterprise.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. The Company is under no duty to update any of the forward-looking statements after the date of this Annual Report on Form 10-KSB to conform forward-looking statements to actual results.
ITEM 1.
DESCRIPTION OF BUSINESS
History of Voyant International Corporation
Voyant is a holding company focused on identifying and developing business opportunities at the intersection of media content and technology. In the process, we intend to pursue various media-based technologies, media assets, and strategic partnerships in order to deliver compelling, next-generation commercial and/or consumer solutions. In July, 1999, we, along with several other companies with technologies, products, and services focused on digital convergence, all merged with Commercial Labor Management, Inc., a publicly traded company. This entity became our predecessor. Immediately following that transaction, Commercial Labor Management, Inc. changed its name to “Zeros & Ones, Inc.” Under the merger the entities were combined into one company and were accounted for in a manner similar to a pooling of interests.
In December, 2005, Mark Laisure assumed control of the Company after originally joining in May, 2003. Mark Laisure currently holds the title of Executive Chairman. In November 2006 we added Dana Waldman to our Board of Directors, and in January 2007 named him our CEO. In April, 2007 we changed our name to Voyant International Corporation.
Summary of the Year End December 31, 2007
2007 was a year of significant change for our Company. During 2006 and into early 2007 we were able to bring up to date the compliance and reporting processes of the Company, have our Common Stock quoted on the Over the Counter Bulletin Board again; and then 2007 was an introductory year in our new journey together.
As part of that journey, we re-launched ourselves and created a new vision. Voyant is a media and technology holding company. We combine digital technologies and new media properties in novel ways to unlock large market opportunities.
4
The first step in our re-invention was to bring in an entire management team to help us execute. As part of this initiative, Dana Waldman came in as our Chief Executive Officer and Mark Laisure became our Executive Chairman. Together they bring over 30 years of experience in building businesses from the ground up. They have worked together off and on for over 10 years. Together they also filled out the management with a great team of business executives with successful track records.
One of the distinctive competencies of the Company and the management team is our ability to take various pieces of technology, see ways to repurpose, integrate, combine, and enhance them so as to then unlock large high growth markets. During 2007, we sought to apply this competence first and foremost to the various assets we already had in house; specifically, the assets acquired through the Rocketstream Holding Corporation (“RHC”) transaction in May 2006 (which provided the technology for the RocketStream suite of products), and the assets acquired from WAA, LLC in November 2006 (“WAA”) (see Item 7, Financial Statements, Note 3, Acquisitions and Purchases, Purchase of WAA Assets).
The first demonstration of our competence is one of our most significant accomplishments from 2007 which was to develop the RocketStream technology into a product suite. We took the technology we had acquired from RHC and we realized that the technology has great potential in content delivery applications around the web. We repurposed the technology into a middleware product initially targeted at the Enterprise market for businesses. During 2007, we created a full product family from server to clients from small business applications to large enterprise applications, from Windows to Macintosh and coming soon, Linux. In addition, we established a network of Value Added Resellers or VAR’s. These VAR’s give us a global presence to market our software products. While we have not yet established large revenue from this business, we believe that the key to success here is to work with customers directly on tailored solutions to the IT applications. We expect to see progress in this business during 2008.
Next, we turned our attention to the assets acquired through the WAA asset acquisition. These assets include various intellectual property and designs that are beyond state of the art in the areas of high speed RF and optical technologies. We have only now begun to tap into the potential these assets can bring to Voyant.
Our first application of these assets is to the Aviation sector providing the enabling technology for broadband internet service on commercial airlines. This market fits our selection criteria in that it is large and high growth. Our technology when properly repurposed and enhanced gives us a technical and financial discriminator. During 2007, we established that vision, achieved the right personnel and partners to begin entry into this market. While it remains a highly competitive market, we believe our value proposition is sound and that we will create shareholder value from this business. Amongst the key accomplishments was attracting top management, and also our recent announcement (subsequent to the year ended December 31, 2007) about a technology partnership with Harris Corp. We expect 2008 to be the year where we really start to make progress in this business.
We also launched our Voyant Productions line of business. This area is led by Mark Laisure, and is focused on ways to monetize media content and leverage our technology. As our technology and products mature, this area will become more and more critical to our success.
We are an unusual company. We are essentially a pre-revenue start-up company that happens to find itself already public. This is a challenge. During 2007, we experienced this challenge in terms of our funding capability and in terms of our Company’s value. With these challenges, we were still able to secure enough funding to support our essential operations, and set the stage for growth. Our recent Bridge Loan with MapleRidge (see Item 7, Financial Statements, Note 14, Subsequent Events) took longer to complete than we originally anticipated, but should give us the runway we need, although we expect that we will need additional financing (see Item 6, Management Discussion and Analysis, Going Concern and Liquidity and Capital Resources.).
2007 was a year of firsts for us and a year of rebirth. We have much to do and many challenges ahead. When we look at 2007, we are reminded of and inspired by a quote from Winston Churchill. 2007 is not the beginning of the end. 2007 is the end of the beginning.
5
Competitive Business Environment
Competition within the technology and data transmission industry is highly competitive and we expect this competition to intensify in the future. The industry is characterized by rapidly changing technologies and customer demands for newer and better products. Our competitors could develop products and technologies that could render our products and technologies obsolete. Many of our competitors have greater resources, including financial and scientific personnel, marketing and sales capacity, established distribution networks, significant goodwill and greater brand name recognition. As a result, these competitors may be in a better position than us to respond quickly to, or significantly influence, rapid technological change and consumer demand.
Competition within the technology and data transmission industry is characterized by several key factors, including, but not limited to, the following:
| 1. | Rapid changes in technology and customer requirements. New opportunities for existing and new competitors can quickly render existing technologies less valuable. |
| 2. | Relatively low barriers to entry. Startup capital requirements for technology companies can be very small, and software distribution over the Internet is inexpensive and easily outsourced. |
| 3. | Requirements for substantial marketing investment. While startup capital requirements for technology companies can be small, companies with easy access to large amounts of capital or with established brands may find it easier to exploit markets than other entrants.. |
| 4. | Significant price competition. Direct distribution of competing products, particularly over the Internet, may cause prices and margins to decrease in traditional sales channels. |
| 5. | Consolidations and mergers. Technology companies and their individual products have a high rate of mergers, product line sales, and other transfers and consolidations; consequently, there is a tendency to have a higher concentration of able competitors within the industry. |
In addition to the foregoing, a slowdown affecting the general growth in demand for data transmission and related products and services could harm our plan of operations and prospects for achieving profitability. The markets for our potential products and services depend upon economic conditions that affect the broader computer technology and related markets. Downturns in any of these markets may cause end-users to delay or cancel orders for such products and services.
Patents, Proprietary Technology and Other Intellectual Property
As we develop or acquire new assets that could have commercial value and would be protected under current or future patent laws, we will then rely on a combination of copyright, trademark and patent laws, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary technology. For example, we seek to avoid disclosure of any trade secrets by requiring those persons with access to the Company's proprietary information to execute confidentiality agreements with us. We also relies on unpatented proprietary know-how in developing our products and services, and employ various methods, including confidentiality agreements with our employees, consultants and others, to protect our trade secrets and know-how.
Irrespective of the foregoing, we cannot be sure that these methods of protecting our proprietary technology, information and know-how will afford complete protection. Patents may not be enforceable or provide us with meaningful protection from our competitors. If a competitor were to infringe on our patents, the costs of enforcing our patent rights might be substantial or even prohibitive. Likewise, we cannot be sure that others will not independently develop any trade secrets and know-how or obtain access to them.
Governmental Regulation
Voyant currently believes that any acquired assets in the intended entertainment or technology fields will not be subject to approval from the United States government, with the exception of export restrictions to certain countries. Any acquired business operations in such industries will likely not fall under federal, state, or local environmental regulations.
6
Research and Product Development
Voyant’s research and development expenses totaled $1,987,333 in 2007, compared to $231,613 in 2006. The actual cash spending was $727,184. See Item 6, Management’s Discussion and Analyis, Results of Operations, for further details. The majority of our development costs were focused on meeting our technical plan, which calls for further developments and enhancements of software to enable us to cater to a wider audience of users and thereby remain competitive.
Sales and Marketing
Voyant’s sales and marketing expenses totaled $1,492,684 in 2007, compared to $102,450 in 2006. The actual cash spending was $703,184. See Item 6, Management’s Discussion and Analyis, Results of Operations, for further details. The majority of our sales and marketing costs were focused on personnel expenses directly related to our sales efforts and the marketing of our brands.
Employees
As of March 21, 2008, we had 10 full-time employees, 2 of which perform general management, 2 of which perform technical management functions, 2 of which performs marketing and sales functions, 3 of which perform development functions, and 1 of which performs administrative and financial functions. All of our employees are headquartered in California. None of our employees are represented by a labor union, and we consider our employee relations to be good. We have also entered into consulting agreements to obtain counsel and services relating to marketing, media relations and financing services.
ITEM 2.
DESCRIPTION OF PROPERTY
As of March 21, 2008 we located our executive offices at 530 Lytton Avenue, 2nd Floor, Palo Alto, California. We lease this facility on a month-to-month basis.
ITEM 3.
LEGAL PROCEEDINGS
The Company is aware of pending claims filed subsequent to the period ending December 31, 2007. See Item 7, Financial Statements, Note 13, Commitments and Contingencies.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
7
PART II.
ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the quarterly high and low closing sales prices of the Common Stock for 2006 and 2007 as reported by Yahoo! Finance. Such prices represent prices between dealers and do not include retail mark-ups, mark-downs or commissions and may not represent actual transactions.
| High |
| Low |
| 2007 |
| High |
| Low |
| |||||
First Quarter |
| $ | 0.13 |
| $ | 0.06 |
| First Quarter |
| $ | 1.63 |
| $ | 0.16 |
|
Second Quarter |
| $ | 0.23 |
| $ | 0.10 |
| Second Quarter |
| $ | 1.24 |
| $ | 0.47 |
|
Third Quarter |
| $ | 0.15 |
| $ | 0.06 |
| Third Quarter |
| $ | 0.85 |
| $ | 0.25 |
|
Fourth Quarter |
| $ | 0.19 |
| $ | 0.06 |
| Fourth Quarter |
| $ | 0.39 |
| $ | 0.13 |
|
The market price of our Common Stock, like the price of shares of technology companies generally, has been and may continue to be volatile. The closing price of our Common Stock on December 31, 2007 was $0.17 and the closing price on March 21, 2008 was $0.09. If our future operating results are below the expectations of stock market analysts and investors, our stock price may decline. Public announcements of Voyant’s financial results and business developments may also have a significant impact on the market price of our Common Stock.
Common Stock Holders
As of December 31, 2007, there were approximately 470 holders of record of our Common Stock.
Dividends
We have not declared any cash dividends on our Common Stock. The declaration and payment of dividends is within the discretion of our Board of Directors and will depend, among other factors, on results of operations, capital requirements and general business conditions.
Unreported Sales of Equity Securities
Here is a summary of our unregisterd equity securities sales during the year ended December 31, 2007 not previously reported on Form 10-QSB or Form 8-K. Additional details of such sales are below at Item 7, Financial Statements, Note 6, Debt, Convertible Notes and Note 10, Stockholders’ Equity.
We issued 170,767 shares of common stock as a result of cashless warrant exercises. We received warrants exercisable for 266,738 common shares in return for this exercise. We relied on Section 3(a)(9) of the Securities Act, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.
We issued 791,667 shares of common stock pursuant to the conversion of $125,000 of Convertible Notes, at the request of the noteholders. We relied on Section 3(a)(9) of the Securities Act, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.
We issued 885,859 shares for consulting services for which we incurred a Research & Development expense of $1,500, Sales & Marketing expenses of $16,348, and General & Administrative expenses of $132,547. We relied on Section 4(2) of the Securities Act, promulgated thereunder, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.
We issued convertible notes with an aggregate principal amount of $215,000 and warrants to purchase 430,000 shares of our common stock to individual investors. We relied on Section 4(2) of the Securities Act, promulgated thereunder, as providing an exemption from registering the sale of these securities under the Securities Act.
8
Equity Compensation 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.
During the years ended December 31, 2007 and 2006, we approved the granting of 13,120,000 and 1,790,000 options, respectively, to certain employees and consultants for services under the Plan. For further information on the Company's equity compensation plan see Item 7, Financial Statements under Note 11, Stock Options.
Equity compensation plans are summarized in the table below:
Equity Compensation Plan Information | |||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| (a) | (b) | (c) |
Equity compensation plans approved by security holders | 10,000,000 | $0.42 | NONE |
Equity compensation plans not approved by security holders | NONE | N/A | NONE |
Total | 10,000,000 | $0.42 | NONE |
ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this Annual Report on Form 10-KSB. This Annual Report on Form 10-KSB, and in particular this Item 6, “Management's Discussion and Analysis or Plan of Operation,” may contain forward-looking statements regarding future events or future performance. These future events and future performance involve certain risks and uncertainties, which are described in this Annual Report on Form 10-KSB under Part 1, Item 1, “Description of Business” and under this Item. Actual events or actual future results may differ materially from any forward-looking statements due to those risks and uncertainties. The Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting our forward-looking statements. This analysis is not intended to serve as a basis for projection of future events.
Plan of Operations
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. The technology and entertainment industries are two of the wealthiest and most dynamic industries in the world, yet they employ very different approaches to business. Due to our expertise in both of these areas, we believe that there are significant business opportunities for us at the intersection of these two ecosystems and that we are well positioned to exploit these opportunities.
Voyant’s business model as a holding company combines aspects of a venture capital firm, a hedge fund, and an operating company, all in the unique context of a publicly-traded vehicle. We intend to pursue several business lines in our chosen field at the intersection of media and technology by acquiring intellectual property, developing strategic partnerships, and leveraging industry relationships to streamline and enhance the business models surrounding (a) content creation and aggregation, (b) content distribution, (c) content processing, and/or (d) content visualization and experience. We intend to employ a mix of business models for these business lines, including, but not limited to, acquisitions, joint ventures, investments, partnerships, and organic development.
9
Going Concern
Voyant is subject to the risks and uncertainties associated with a new business, has no established source of significant revenue, and has incurred significant losses from operations. These matters raise substantial doubt about our ability to continue as a going concern. Since re-entering the Development Stage we have not been profitable and have sustained substantial net losses from operations. There can be no assurance that we will generate positive operating income from our operating activities, or that we will achieve and sustain a profit during any future period, particularly if operations remain at current levels. Failure to achieve significant revenues or profitability would materially and adversely affect our business, financial condition, and results of operations. 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 2008. Subsequent to December 31, 2007 we completed a $2,000,000 bridge loan (see Note 14, Subsequent Events, Entry into a $2,000,000 Bridge Loan with MapleRidge). We anticipate that additional revenue from normal operations will occur in 2008, and those revenues could have a material impact offsetting operating expenses during the year. However, we do not expect that we will achieve profit from normal operations in 2008, 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 2008. 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.
Results of Operations
Twelve months ended December 31, 2007 and 2006
Voyant had $26,035 in revenue for the twelve months ended December 31, 2007, all of which was from the sale of our RocketStream products, compared with $0 for the corresponding period ended December 31, 2006. Our spending for the twelve months ended December 31, 2007 increased from the same period in 2006 as we raised additional financial resources to support our product development and sales and marketing efforts. Our total net loss of $12,483,979 and our actual cash loss was $2,287,819. The loss was due in part to large, non-cash charge of $5,975,039 related to issuing stock options to our officers and employees. These costs were calculated using the Black Scholes method to value stock options issued to employees. In addition, we accrued a total of $455,809 in wages for our officers and employees, and accrued a guaranteed bonus of $500,000 to our CEO. In December 2007 we converted some of these deferred amounts ($518,243) to Series B Convertible Preferred Stock. We also issued shares and options to others in return for services, which totaled $1,875,281 during the year ended December 31, 2007. We also incurred a non-cash loss of $883,335 on the use of common stock to pay for services, and incurred a non-cash charge of $435,075 on the amortization of debt discount related to the issuance of debt instruments. Last, we had depreciation and amortization expense of $71,621. The total non-cash charges were $10,196,160, or 82% of our net loss.
The detail of our spending is as follows:
·
Research and development spending increased to $1,987,333 in 2007 from $231,613 in 2006, actual cash spending was $727,184. The difference in reported and actual spending is due to non-cash charges associated with the issuance of stock options, which totaled $1,115,984, or 56% of the total expense. Also during the year we experienced increased wages and fees paid to consultants ($535,586), however $128,626 of those wages were accrued as discussed above. Last we incurred professional services of $52,539 related to the development of RocketStream and the Airline Broadband businesses, $15,539 of that was non-cash as well.
·
Our sales and marketing expenses increased to $1,492,684 in 2007 from $102,450 in 2006, the actual cash spending was $703,184. The difference from reported and actual cash spending is due to non-cash charges associated with the issuance of stock options, which totaled $695,751 or 47% of the total expense. Also during the year we experienced increased wages and fees paid to consultants ($510,204), however $93,749 of those wages were accrued as discussed above. Last, we incurred advertising costs of $56,684 related to on-line advertising for our RocketStream products.
10
·
In 2007 our total general and administrative expenses was $7,654,419, however actual cash spending was $1,479,166. Expenses were comprised of costs associated with the issuance of stock options of $4,192,562, accrued executive bonuses of $500,000 (accrued and $300,000 converted to Series B Convertible Preferred Stock as noted above), and wages of $770,947 (of which $225,101 were accrued as noted above). In addition, we incurred investor relations costs of $277,338 ($97,500 of which were non-cash) and legal services of $576,910 (of which $468,851 was paid in common stock). Other costs that were paid completely in non-cash consideration were consulting fees of $585,840, directors fees of $62,499, settlements of $42,900.
·
Total interest expense of $490,643 included $212,569 of beneficial conversion expense related to the Notes, and $152,503 related to the Warrants issued in conjunction with the issuance of notes. Actual cash interest costs were $27,349. Other expense of $883,335 was for the recognition of a gain or loss on the settlement of debt using equity instruments, which is based on the market value of the shares on the day issued, versus the negotiated amount for the services rendered.
Liquidity and Capital Resources
Following the fiscal year ended December 31, 2007, we were successful in closing additional funds as described under the Convertible Notes and through a Bridge loan (see “Item 6, Management's Discussion and Analysis or Plan of Operation, under the caption “Events Subsequent to Fiscal Year Ended December 31, 2007” below). We are considering additional sales of debt instruments and unregistered common stock during the current year, although whether we will be successful in doing so, and the additional amounts we will receive as a result, cannot be assumed or predicted.
At December 31, 2007, we had working capital of ($1,655,313) as compared to working capital of ($656,607) at December 31, 2006. The decrease was due to increased accrued wages of $237,566 (net of amounts converted to Series B Convertible Preferred Stock), a guaranteed bonus due to our CEO of $200,000 (net of amounts converted to Series B Convertible Preferred Stock) and benefits to management and employees ($79,559). We also had an increase in notes payable of $512,714. During the twelve months ended December 31, 2007, our net cash used in operations was $2,352,569 and consisted principally of a net loss of $12,483,979 which was offset by stock-based compensation and services of $5,975,039 and shares and options issued for services of $1,875,221. Cash flows were also affected by the sale of notes and convertible debt for $1,345,000, the sale of common stock for $600,000 and exercise of warrants for $440,000.
Our current cash on hand at December 31, 2007, would not be adequate to fund our operations for more than a short period if we continue to use cash in operating activities at the same rate as in prior months. We will need to rely upon continued borrowing and/or sales of additional equity instruments to support its continued growth. Our management believes we will be able to obtain sufficient cash resources and working capital to meet our present cash requirements through debt and/or equity-based fund raising.
Recent and Expected Losses
There can be no assurance that we will generate positive revenues from our operating activities, or that we will achieve and sustain a profit during any future period, particularly if operations remain at current levels. Failure to achieve significant revenues or profitability would materially and adversely affect our business, financial condition, and results of operations. For the fiscal year ended December 31, 2007, we incurred a net pre-tax loss of $12,482,379 and, for the fiscal year ended December 31, 2006, we incurred a net pre-tax loss of $1,552,839. Our auditors, Kabani & Company, Inc., Certified Public Accountants, issued an opinion in connection with our financial statements for the fiscal year ended December 31, 2007 noting that while we have recently obtained additional financing, the sustained recurring losses raise substantial doubt about its ability to continue as a going concern.
11
ITEM 7.
FINANCIAL STATEMENTS
Index to Financial Statements
| Page |
Report of Independent Registered Public Accounting Firm | |
|
|
Consolidated Balance Sheet – As of December 31, 2007 | |
|
|
Consolidated Statements of Operations – For the Years Ended December 31, 2007 and 2006, and the period from January 1, 2003 (Inception) to December 31, 2007 | |
|
|
Consolidated Statements of Cash Flows – For the Years Ended December 31, 2007 and 2006, and the period from January 1, 2003 (Inception) to December 31, 2007 | |
|
|
Consolidated Statements of changes in Stockholders’ Equity (Deficit) – For the Period from January 1, 2003 (Inception) to December 31, 2007 | |
|
|
Notes to the Consolidated Financial Statements |
12
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Voyant International Corporation
(formally known as Zeros & Ones, Inc.)
(A Development Stage Company)
We have audited the accompanying consolidated statements of operations, changes in shareholders’ equity and cash flows of Voyant International Corporation (formally known as Zeros & Ones, Inc. and subsidiary) (A Development Stage “Company”) for the year ended at December 31, 2006, and for the period from January 1, 2003 (inception) to December 31, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and the cash flows of Voyant International Corporation (formally known as Zeros & Ones, Inc. and subsidiary) for the year ended at December 31, 2006, and for the period from January 1, 2003 (inception) to December 31, 2006 in conformity with U.S. generally accepted accounting principles.
The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 14 to the consolidated financial statements, the Company’s losses from operations raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ CHANG G. PARK, CPA |
CHANG G. PARK, CPA |
|
April 4, 2008 |
San Diego, CA. 91910 |
13
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders of
Voyant International Corporation
Palo Alto, California
We have audited the accompanying consolidated balance sheet of Voyant International Corporation and subsidiaries (formally Zeros & Ones, Inc.) as of December 31, 2007, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year ended December 31, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Voyant International Corporation and subsidiaries (formally Zeros & Ones, Inc.) as of December 31, 2007, and the results of its operations and its cash flows for the year ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has losses from operations, has not generated significant revenue, and has a working capital deficiency. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Kabani & Company, Inc. |
|
Los Angeles, California |
March 20, 2008 |
14
VOYANT INTERNATIONAL CORPORATION AND SUBSIDIARIES
(Formerly Zeros & Ones, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
December 31, 2007
Assets | ||
Current Assets |
|
|
Cash and cash equivalents | $ | 73,556 |
Accounts receivable |
| 4,275 |
Prepaid expenses and other current assets |
| 25,638 |
Total Current Assets |
| 103,469 |
|
|
|
Property & Equipment, net of accumulated depreciation of $4,830 |
| 13,745 |
|
|
|
Intangible assets, net of accumulated amortization of $76,306 |
| 925,549 |
Total Assets | $ | 1,042,763 |
|
|
|
Liabilities and Stockholders’ Deficit | ||
Current Liabilities: |
|
|
Accounts payable | $ | 188,257 |
Accrued liabilities |
| 86,643 |
Due to Officers |
| 589,081 |
Due to Related Party |
| 20,000 |
Notes payable, net of discount of $2,178 |
| 310,024 |
Convertible debt, net of discount of $62,270 |
| 264,777 |
Settlements payable |
| 300,000 |
Total Current Liabilities |
| 1,758,782 |
Long-Term Liabilities: |
|
|
Notes Payable - Officers |
| 357,058 |
Total Liabilities |
| 2,115,840 |
Commitments and Contingencies |
|
|
Stockholders’ Deficit: |
|
|
Preferred stock, $.001 par value; 2,000,000 shares authorized; 1,007,774 shares issued and outstanding; $1,004,774 preference upon liquidation |
| 1,008 |
Common stock, $.001 par value; 200,000,000 shares authorized; 126,807,305 shares issued and outstanding |
| 126,808 |
Additional paid in capital |
| 34,436,606 |
Deferred compensation |
| (308,973) |
Accumulated deficit - prior operations |
| (17,711,359) |
Deficit accumulated in the development stage |
| (17,617,167) |
Total stockholders’ deficit |
| (1,073,077) |
Total Liabilities and Stockholders’ Deficit | $ | 1,042,763 |
The accompanying notes are an integral part of the consolidated financial statements.
15
VOYANT INTERNATIONAL CORPORATION AND SUBSIDIARIES
(Formerly Zeros & Ones, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2007 and 2006, and the period January 1, 2003 (Inception) to December 31, 2007
| Year Ended December 31, |
|
|
| ||||
| 2007 |
| 2006 |
| January 1, 2003 (Inception) to December 31, 2007 | |||
Revenues | $ | 26,035 |
| $ | - |
| $ | 26,035 |
Cost of Sales |
| - |
|
| - |
|
| - |
Gross Profit |
| 26,035 |
|
| - |
|
| 26,035 |
Operating Expenses: |
|
|
|
|
|
|
|
|
Research and development |
| 1,987,333 |
|
| 231,613 |
|
| 2,594,009 |
Sales and marketing |
| 1,492,684 |
|
| 102,450 |
|
| 1,695,375 |
General and administrative |
| 7,654,419 |
|
| 900,633 |
|
| 11,016,021 |
Total operating expenses |
| 11,134,436 |
|
| 1,234,696 |
|
| 15,305,405 |
Non-Operating Expenses: |
|
|
|
|
|
|
|
|
Interest expense |
| 490,643 |
|
| 148,589 |
|
| 1,422,181 |
Loss on settlement of debt |
| 883,335 |
|
| - |
|
| 883,335 |
Other expense |
| - |
|
| 169,554 |
|
| 249,669 |
Total non-operating expenses |
| 1,373,978 |
|
| 318,143 |
|
| 2,555,185 |
Loss from Continuing Operations Before Income Taxes |
| (12,482,379) |
|
| (1,552,839) |
|
| (17,834,555) |
Provision for Income Taxes |
| (1,600) |
|
| (1,035) |
|
| (5,035) |
Loss from Continuing Operations |
| (12,483,979) |
|
| (1,553,874) |
|
| (17,839,590) |
Discontinued Operations, net of tax: |
|
|
|
|
|
|
|
|
Loss from operations, net of tax ($0) |
| - |
|
| - |
|
| (257,827) |
Gain on disposal, net of tax ($0) |
| - |
|
| - |
|
| 480,250 |
Gain from discontinued operations |
| - |
|
| - |
|
| 222,423 |
Net Loss | $ | (12,483,979) |
| $ | (1,553,874) |
| $ | (17,617,167) |
Net Loss Per Share – Basic and Diluted | $ | (0.10) |
| $ | (0.02) |
|
|
|
Weighted Average Common Shares – Basic and Diluted |
| 119,658,684 |
|
| 79,362,397 |
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
16
VOYANT INTERNATIONAL CORPORATION AND SUBSIDIARIES
(Formerly Zeros & Ones, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2007 and 2006 and the period January 1, 2003 (Inception) to December 31, 2007
| Year Ended December 31, |
| January 1, 2003 (Inception) to December 31, 2007 | |||||
| 2007 |
| 2006 |
| ||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
Net Loss | $ | (12,483,979) |
| $ | (1,553,874) |
| $ | (17,617,167) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
| |||
Shares and warrants issued for services |
| 1,942,597 |
|
| 909,231 |
|
| 3,286,981 |
Share based compensation |
| 5,975,039 |
|
| - |
|
| 5,975,039 |
Depreciation |
| 4,830 |
|
| - | |||