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| VOYT.OB > SEC Filings for VOYT.OB > Form 10-K/A on 19-Jun-2009 | All Recent SEC Filings |
19-Jun-2009
Annual Report
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-K. This Annual Report on Form 10-K, 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-K 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.
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 inception 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 2009. Subsequent to December 31, 2009, we completed the sale of $100,000 of common stock (see Note 13, Subsequent Events, Equity Sale). We anticipate that additional revenue from normal operations will occur in 2009, and those revenues could have a material impact offsetting operating expenses during the year. However, we are not certain that we will achieve profit from normal operations in 2009, 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 2009. 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, 2008 and 2007
Voyant generated $478,528 in revenue for the twelve months ended December 31, 2008, compared with $26,035 for the corresponding period ended December 31, 2007. Our revenue was derived from two of our three business lines. Sales of our RocketStream products, including amounts generated from the development of our products with Proginet, is responsible for $370,528. The remaining $108,000 is related to our contract in the White Space Radio business line. Costs associated with this revenue total $140,154.
Our spending for the twelve months ended December 31, 2008 decreased from the same period in 2007 due mainly to reduced non-cash charges associated with the expensing of employee stock options. Our total net loss was $13,728,077, however management estimates that approximately $3.5 million was spent in cash on the operating business during 2008. The loss was due in part to large, non-cash charge of $2,986,401 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 increased our accrued wages for our officers and employees by $255,270 before factoring in the conversion of $473,308 in amounts due that were converted to Series B Convertible Preferred Stock. Also we accrued a guaranteed bonus of $250,000 to our CEO. We also issued shares and options to others in return for services, which totaled $1,336,853 during the year ended December 31, 2008. We also incurred a non-cash loss of $3,228,733 on the amortization of debt discount and issue costs related to the issuance of debt instruments. We also incurred a non-cash charge of $469,607 on the settlement of certain debts with common stock. Last, we had depreciation and amortization expense of $76,805. The total non-cash charges were $8,950,099, or 65% of our net loss.
The detail of our spending is as follows:
·
Research and development spending increased to $2,438,368 in 2008 from $1,987,333 in 2007, actual cash spending was $1,096,298. The difference in reported and actual spending is due mainly to non-cash charges associated with the issuance of stock options, which totaled $1,220,614, or 50% of the total reported expense. Spending for consultants increased as we further our development of certain RocketStream products, and developed our White Space Radio product in anticipation of shipping product under our contract during 2009.
·
Our sales and marketing expenses decreased to $1,295,320 in 2008 from $1,492,684 in 2007, the actual cash spending was $447,329. The difference from reported and actual cash spending is due mainly to non-cash charges associated with the issuance of stock options, which totaled $770,386 or
·
In 2008 our total general and administrative expenses was $4,769,848, this was reduced from 2007 when we reported expenses of 7,654,419. The reduction of $2,884,571 was due a decrease in the expenses related to the issuance of stock options of $3,197,161, and was offset by a charge of $160,585 related to a proposed acquisition and an increase in management wages of $147,649. Actual cash spending was $1,948,150. Expenses were comprised of costs associated with the issuance of stock options of $995,401, accrued executive bonuses of $250,000, and wages of $918,597. In addition, we incurred investor relations costs of $382,696 and legal and patent services of $450,536. During the year ended December 31, 2008, we issued 4,250,000 shares of common stock issued as a deposit for an asset acquisition that was ultimately abandoned. These shares were not refundable and the entire amount of $566,667 was impaired during the year ended December 31, 2008.
·
Total interest expense of $4,104,553 which increased from 2007 by $3,613,910 included $1,745,241 in non-cash interest costs associated with the issuance of the Brown Notes, amortization of $1,599,794 related to the Warrants issued in conjunction with the issuance of notes, $274,603 related to interest on our various notes, $63,380 of beneficial conversion expense related to the issuance of convertible notes and $431,212 of registration rights accrued expenses. Other expense of $890,095 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, 2008, we were successful in closing additional funds as described under the Equity Sale (see "Item 7, Management's Discussion and Analysis or Plan of Operation, under the caption "Events Subsequent to Fiscal Year Ended December 31, 2008" below). We are considering additional sales of debt instruments and registered 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, 2008, we had working capital of ($4,380,159) as compared to working capital of ($1,655,313) at December 31, 2007. The decrease was due to increased Notes payable of $3,003,868 and deferred income of $242,000. During the twelve months ended December 31, 2008, our net cash used in operations was $3,295,879 and consisted principally of a net loss of $13,728,077 which was offset by stock-based compensation and services of $2,986,401, shares and options issued for services of $770,186, impairment of deposit of $566,667, registration right expense of $431,212, and amortization of debt discount and issue costs of $3,228,733. Cash flows were also affected by the sale of notes and convertible debt for $4,174,873.
Our current cash on hand at December 31, 2008, 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, 2008, we incurred a net pre-tax loss of $13,726,477 and, for the fiscal year ended December 31, 2007, we incurred a net pre-tax loss of $12,482,379. Our auditors, Kabani & Company, Inc., Certified Public Accountants, issued an opinion in connection with our financial statements for the fiscal year ended December 31, 2008 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.
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