UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act Of 1934 |
For
the quarterly period end
| Transition Report Under Section 13 or 15(d) of the Securities Exchange Act Of 1934 |
For the transition period from __________ to __________
Commission File Number: None
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including Zip Code)
(Issuer’s telephone number, including area code)
Check
whether the issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 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.
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by checkmark 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 ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: shares of common stock as of May 29, 2024.
Virtual Interactive Technologies Corp.
Index
| 2 |
Virtual Interactive Technologies Corp.
Condensed Consolidated Balance Sheets
As of March 31, 2024 and September 30, 2023
(UNAUDITED)
| March 31, 2024 | September 30, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Royalties receivable | ||||||||
| Total current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Notes payable | ||||||||
| Convertible note payable, net of discounts | ||||||||
| Interest payable | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES: | ||||||||
| Note payable | ||||||||
| Interest payable | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Series A Preferred Stock, $ par value; authorized; shares issued and outstanding | ||||||||
| Series B Convertible Preferred Stock $ par value; authorized; shares issued and outstanding | ||||||||
| Series C Convertible Preferred Stock $ par value; authorized; issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized, shares issued and shares outstanding | ||||||||
| Additional paid-in-capital | ||||||||
| Treasury stock ( shares at cost) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
Virtual Interactive Technologies Corp.
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended March 31, 2024 and 2023
(UNAUDITED)
| For the three months ended, | For the six months ended, | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue – royalties | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Marketing and advertising | ||||||||||||||||
| General, administrative and selling | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income | ||||||||||||||||
| Bad debt expense | ( | ) | ( | ) | ||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||||||||||
| Interest expense, related party | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) from foreign currency transactions | ( | ) | ||||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share – basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
Virtual Interactive Technologies Corp.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Three and Six Months Ended March 31, 2024 and 2023
(UNAUDITED)
For the three months ended March 31, 2024
| Preferred Stock | Preferred Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Convertible | Series B Convertible | Series C Convertible | Common Stock | Paid-In | Treasury | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Shares | Par Value | Shares | Par Value | Capital | Stock
Shares | Cost | Accumulated
Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Options issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||
For the three months ended March 31, 2023
| Preferred Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||
| Series A Convertible | Series B Convertible | Common Stock | Paid-In | Treasury | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Shares | Par Value | Capital | Stock
Shares | Cost | Accumulated
Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
For the six months ended March 31, 2024
| Preferred Stock | Preferred Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Convertible | Series B Convertible | Series C Convertible | Common Stock | Paid-In | Treasury | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Shares | Par Value | Shares | Par Value | Capital | Stock
Shares | Cost | Accumulated
Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Options issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||
For the six months ended March 31, 2023
| Preferred Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||
| Series A Convertible | Series B Convertible | Common Stock | Paid-In | Treasury | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Shares | Par Value | Capital | Stock
Shares | Cost | Accumulated
Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued for prepaid services | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Warrants issued for prepaid services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
Virtual Interactive Technologies Corp.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 2024 and 2023
(UNAUDITED)
| For the six months ended, | ||||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock issued for services | ||||||||
| Amortization of prepaid stock-based compensation | ||||||||
| Debt discount amortization | ||||||||
| Bad debt expense | ||||||||
| Changes in operating assets and operating liabilities: | ||||||||
| Interest receivable | ( | ) | ( | ) | ||||
| Royalties receivable | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Accounts payable, related party | ||||||||
| Interest payable, related party | ||||||||
| Interest payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Schedule of Non-Cash Investing and Financing Activities | ||||||||
| Common stock issued for prepaid services | $ | $ | ||||||
| Warrants issued for prepaid services | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
VIRTUAL INTERACTIVE TECHNOLOGIES CORP.
Notes to Unaudited Condensed Consolidated Financial Statements
For the Three and Six Months Ended
March 31, 2024
Note 1. Basis of Presentation
While the information presented in the accompanying March 31, 2024 financial statements is unaudited and condensed, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s September 30, 2023 audited financial statements (and notes thereto). Operating results for the three and six months ended March 31, 2024 are not necessarily indicative of the results that can be expected for the year ending September 30, 2024.
The accompanying unaudited condensed consolidated financial statements herein contain the operations of Virtual Interactive Technologies Corp. (OTCPINK: VRVR), and its wholly-owned subsidiaries Advanced Interactive Gaming Inc. (“AIG Inc.”) and Advanced Interactive Gaming Ltd. (“AIG Ltd”) (collectively, the “Company” or “VIT”). All significant intercompany balances and transactions have been eliminated.
Note 2. Business
Nature of Operations
The Company is a next generation game and metaverse developer that creates immersion experiences by harnessing the latest technologies, including Blockchain and digital assets. The Company’s newly launched brand, Extrosive, is building a metaverse that replaces traditional boring financial experiences with a new paradigm, “global Prosperity space” (“gPs”). This new asset class dynamically augments global and local realities and builds communities of aligned financial values, virtuous economies, and a trusted network. The result would be a metaverse game for the glamourous world of Wall Street, High-Speed trading involving community building, quantified self, and NFTs – a pure adrenal rush! In addition, the Company continues to build on its successful catalog that includes Carmageddon Max Damage, Carmageddon Crashers, Interplanetary: Enhanced Edition, Catch & Release, and Worbitol. The Company also entered into a joint development partnership with Duane Lee “Dog” Chapman, of the “Dog The Bounty Hunter” fame, to develop and promote multiple games across several platforms.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimated.
Cash Equivalents
The
Company considers all highly liquid instruments purchased with original maturities of three months or less to be cash equivalents. The
Company had
| 7 |
Fair Value of Financial Instruments
The Company accounts for fair value measurements in accordance with accounting standard ASC 820-10-50, Fair Value Measurements. ASC 820 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
| - | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| - | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| - | Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. |
The Company’s financial instruments consist of cash, royalties receivable, accounts payable and accrued liabilities, and notes payable and related accrued interest payable. The carrying value of these financial instruments approximates fair value due to the short-term nature of the instruments.
In
accordance with ASC 260 Earnings per Share, the basic net income (loss) per share (“EPS”) is computed
by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding during the period,
excluding the effects of any potentially dilutive securities. Diluted EPS is computed by dividing the net loss available to common stockholders
by the weighted average number of common shares outstanding adjusted on an “if-converted” basis. During the three months
ended March 31, 2024 and 2023, the Company had shares, respectively, of Series B Convertible Preferred stock issued and outstanding
that are convertible into shares of common stock on a one-for-one basis. During the three months ended March 31, 2024 and 2023, the Company
had and -- vested options outstanding respectively. Applying the treasury method, the dilutive effect on the options was
shares on March 31, 2024. In addition, in March 2022 the Company issued two $
Stock Based Compensation
We follow ASC Topic 718, Compensation–Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Share-based payments to employees and non-employees, including grants of stock warrants, are recognized as compensation expense in the financial statements based on the stock awards’ fair values on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Upon repurchase of the award, any unrecognized compensation, net of cash payments are expensed immediately. Awards forfeited due to unfulfillment of obligations, such as termination of employment prior to the award being fully vested, for no cash or other consideration, are not recognized as an expense and any previously recognized costs are reversed in the period of forfeiture.
| 8 |
Foreign Currency
The Company’s functional currency is the US dollar. With the exception of stockholders’ equity (deficit), all transactions that are originally denominated in foreign currency are translated to US dollars by our international customers, on a monthly basis, when recognized by them and prior to paying royalties to the Company. All royalty revenues that are received and recognized by the Company are recorded in US dollars.
Foreign
currency translation gains/losses are recorded in other accumulated comprehensive income (“AOCI”) based on exchange rates
prevalent on reporting dates for balance sheet items, and at weighted average exchange rates during the reporting period for the statement
of operations. Foreign currency transaction gains/losses are recorded as other income (expense) in the period of settlement. No AOCI
items were present during the three and six months ended March 31, 2024 and 2023, as all financial statement items were denominated in
the US dollar. Gain (losses) from foreign currency transactions during the three months ended March 31, 2024 and 2023 totaled $
Concentration of Credit Risk
Some
of our US dollar balances are held in a Bermuda bank that is not insured. As of March 31, 2024 and September 30, 2023, uninsured deposits
in the Bermuda bank totaled $
Income Taxes
The Company did not accrue corporate income taxes for AIG Ltd, as it is incorporated in the country of Bermuda where there is no corporate income tax. The Company has been subject to US Federal and state income taxes commencing the year ended September 30, 2020, due to its business combinations with two US companies.
Deferred taxes for the VRVR (Nevada) and AIG Inc (Colorado) are provided on a liability method in accordance with ASC 740, Income Taxes, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax position will more likely than not be sustained by the applicable tax authority and has determined that there are no significant uncertain tax positions.
Revenue Recognition
The Company follows the guidance contained in ASC 606, Revenue Recognition. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of goods of services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 outlines the following five-step revenue recognition model (along with other guidance impacted by this standard): (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; (5) recognize revenue when or as the entity satisfies a performance obligation.
| 9 |
The Company enters into agreements with third-party developers that require us to make payments for game development and production services. In exchange for our payments, we receive the exclusive publishing and distribution rights to the finished game titles as well as, in some cases, the underlying intellectual property rights. The Company has several contracts with video game developers that entitle us to royalty streams as a percentage of revenues generated by the game sales, which vary from contract to contract. As of March 31, 2024, the Company has four royalty contracts with three developers that are generating royalty revenue.
Once a game has been developed and has met the terms of the underlying royalty agreement, the game is released for commercial sales. Per each contract, the Company will receive reports on a regular basis from the game developers’ sales platforms that identify the amount of game sales, from which consideration expected to be collected from the commercial customers is computed based on the applicable royalty percentages. Royalty revenue is based on a percentage of net receipts as defined in each customer agreement and is recognized in accordance with the sale-based royalty provisions of ASC 606, which requires revenue recognition after the subsequent sales occur. The Company’s performance obligation under each royalty contract as an investor in the game is complete once funds are advanced to the gaming developer. Subsequent consideration is then received by the Company from the developers in the amount of the Company’s percentage fee of royalty income (net receipts) received by the customer. Net receipts include all gross revenues received by the customer as a result of sales of the games or related exploitation less certain taxes, refunds, manufacturing costs, freight, and other items specified in the underlying contract.
During
the three months ended March 31, 2024 and 2023, the Company recognized revenue from royalties of $
Allowance for Credit Losses
The
Company provides an allowance for doubtful accounts equal to the estimated uncollectible royalties. The Company’s estimate is based
on historical collection experience and a review of the current status of royalties receivable. It is reasonably possible that the Company’s
estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts
estimated in determining the allowance. The Company had royalties receivable of $
Going Concern
The accompanying condensed consolidated financial statements have been prepared in conformity with US GAAP, which contemplates the Company’s continuation as a going concern. The Company has not established profitable operations and has incurred significant losses since its inception. The Company’s plan is to grow significantly over the next few years through strategic game development partnerships, through internal game development and through the acquisition of independent game development companies globally.
The Company has taken much of the cash flow from its first royalty agreement and has invested in royalty agreements for the development of several other video games. By continuing to reinvest these royalties into agreements to develop new games, along with actively managing corporate overhead, management’s plan is to substantially increase its video game royalty portfolio and cash flow over the next several years. The Company intends to continue to grow its game portfolio over the next several years, focusing on console games, virtual reality games and mobile games.
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or debt financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or debt financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.
| 10 |
Due to uncertainties related to these matters, there exists a substantial doubt about the ability of the Company to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
New Accounting Pronouncements
The Company has evaluated all recently issued or enacted accounting pronouncements, and has determined that all such pronouncements either do not apply or their impact is insignificant to the condensed consolidated financial statements.
Note 3. Stockholders’ Equity (Deficit)
The Company’s common stock is quoted under the symbol “VRVR” on the OTC Pink tier operated by OTC Markets Group, Inc. To date, an active trading market for the Company’s common stock has not developed.
Treasury Stock
The
Company accounts for treasury stock using the cost method. At March 31, 2024 and September 30, 2023, the Company held shares in treasury, at a cost of $
| 11 |
Common Stock
The Company is authorized to issue shares of common stock at par value of $. At March 31, 2024 and September 30, 2023, the Company had shares issued and shares outstanding, with shares held as treasury stock.
Preferred Stock
The Company is authorized to issue shares each of Series A and B preferred shares at a par value of $. Series A preferred shares are not convertible, whereas Series B preferred shares are convertible into common stock on a one-for-one basis at the option of the holder and there is no redemption feature.
At March 31, 2024 and September 30, 2023, the Company had , for both periods presented, of Series B convertible preferred stock issued and outstanding.
The
Company is authorized to issue
Series C convertible preferred shares at a par value of $. On
July 14, 2023 the Company issued
shares of its Series C preferred stock to a private investor for $
per share, raising an aggregate amount of $
Options
In
connection with a consulting agreement with the Company’s new Director dated June 5, 2023, the Company issued a ten-year option
to purchase
Underlying Shares | Weighted Average Exercise Price | Weighted Average Term (Years) | ||||||||||
| Options outstanding at September 30, 2023 | $ | | ||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited | - | |||||||||||
| Options outstanding at March 31, 2024 | $ | |||||||||||
| Options exercisable at March 31, 2024 | $ | |||||||||||
The intrinsic value of options outstanding as of March 31, 2024 was $.
Note 4. Notes and Convertible Notes Payable
On March 20, 2019, an unrelated individual loaned VRVR $. The note carries a % interest rate and was initially payable March 20, 2020. The maturity date has been amended twice and is now due on March 20, 2025. As of March 31, 2024 and September 30, 2023, the note balance was $, and accrued interest on the note totaled $and $, respectively.
| 12 |
On March 15, 2022, an unrelated third party loaned VRVR $that consisted of cash received by the Company in the amount of $and an original issue discount of $. This discount is being amortized over the life of the note commencing March 15, 2022. The note carries a % annual interest rate and matures on . For the six months ended March 31, 2024, the Company paid $ to extend the maturity date to . The note is currently in default; however, we are negotiating an extension. As of March 31, 2024 and September 30, 2023, the note balance was $, and the accrued interest was $and $, respectively. The note is convertible at a price of $per share.
On March 21, 2022, an unrelated third party, loaned VRVR $that consisted of cash received by the Company, on April 4, 2022, in the amount of $and an original issue discount of $. This discount is being amortized over the life of the note commencing March 15, 2022. The note carries a % annual interest rate and matures on . For the six months ended March 31, 2024, the Company paid $ to extend the maturity date to . The note is currently in default; however, we are negotiating an extension. As of March 31, 2024 and September 30, 2023, the note balance was , and the accrued interest was $and $, respectively. The note is convertible at a price of $per share.
Debt discount amortization on the above notes totaled $ and $during the three months ended March 31, 2024 and 2023, respectively. Debt discount amortization on the above notes totaled $ and $ during the six months ended March 31, 2024 and 2023, respectively. There was no unamortized debt discount remaining at March 31, 2024 or September 31, 2023.
On March 29, 2018, the Company issued a $
Note 5. Related Party Transactions
As mentioned in Note 4, prior to July 2023, the Company had a note payable to its CEO in the amount of $
On March 31, 2024 and September 30, 2023, the Company
owed its Chief Financial Officer $
Note 6. Note Receivable
On
December 11, 2019, the Company issued a $
Note 7. Subsequent Events
The Company has evaluated all events and transactions occurring subsequent to March 31, 2024 through the date these condensed consolidated financial statements were issued and noted no additional events or transactions requiring adjustment or disclosure.
| 13 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Cautionary Statement about Forward-Looking Statements
This Form 10-Q contains forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “hopes,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, and other characterizations of future events or circumstances are forward-looking statements.
The Company is under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.
EXECUTIVE OVERVIEW
Virtual Interactive Technologies Corp. (OTCPINK: VRVR) (“VIT”) or (“the Company”) is a next generation game and metaverse developer that creates immersion experiences by harnessing the latest technologies, including Blockchain and digital assets. The Company’s newly launched brand, Extrosive, is building a metaverse that replaces traditional boring financial experiences with a new paradigm, “global Prosperity space” (“gPs”). This new asset class dynamically augments global and local realities and builds communities of aligned financial values, virtuous economies, and a trusted network. The result would be a metaverse game for the glamourous world of Wall Street, High-Speed trading involving community building, quantified self, and NFTs – a pure adrenal rush! In addition, the Company continues to build on its successful catalog that includes Carmageddon Max Damage, Carmageddon Crashers, Interplanetary: Enhanced Edition, Catch & Release, and Worbitol. The Company also entered into a joint development partnership with Duane Lee “Dog” Chapman, of the “Dog The Bounty Hunter” fame, to develop and promote multiple games across several platforms. For more information, please visit www.vrvrcorp.com.
Results of Operations
The following discussion involves the results of operations for the three and six months ended March 31, 2024 and March 31, 2023.
For the Three Months Ended March 31, 2024 and 2023
Revenue decreased from $33,373 for the three months ended March 31, 2023 to $19,338 for the three months ended March 31, 2024. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital.
Operating expenses for the three months ended March 31, 2024 and 2023 were $57,164 and $740,620, respectively. This decrease was primarily due to professional fees incurred in the prior period through issuances of stock and warrants that were associated with three vendor contracts.
Other income (expense) for the three months ended March 31, 2024 and 2023 was ($32,685) and ($133,499), respectively. This decrease in expense was mainly due to non-cash transactions associated with the amortization of debt discount in the current period of $0 versus $94,457 for the three-month period ended March 31, 2023. Interest expense recorded for the three months ended March 31, 2024 and 2023 was $32,810 and $25,792, respectively. Interest expense recorded for related parties for the three months ended March 31, 2024 and 2023 was $0 and $13,666, respectively.
For the three months ended March 31, 2024 we recorded a net loss of $70,511. For the three months ended March 31, 2023, we recorded a net loss of $840,746. The decrease in loss of $770,235 was mainly associated with additional operating expenses, debt discount amortization, and interest expense associated with our related party and convertible notes payable identified above that were incurred in the prior period.
For the Six Months Ended March 31, 2024 and 2023
Revenue decreased from $53,385 for the six months ended March 31, 2023 to $49,439 for the six months ended March 31, 2024. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital.
Operating expense for the six months ended March 31, 2024 and 2023 was $120,854 and $1,505,623, respectively. This increase was primarily due to professional fees incurred in the prior period through issuances of stock and warrants that were associated with three vendor contracts.
| 14 |
Other income (expense) for the six months ended March 31, 2024 and 2023 was ($76,383) and ($276,124), respectively. This decrease in expense was mainly due to non-cash transactions associated with the amortization of debt discount in the current period of $0 versus $207,314 for the six-month period ended March 31, 2023. Interest expense recorded for the six months ended March 31, 2024 and 2023 was $75,979 and $41,937, respectively. Interest expense recorded for related parties for the six months ended March 31, 2024 and 2023 was $0 and $27,637, respectively.
For the six months ended March 31, 2024 we recorded a net loss of $147,798. For the six months ended March 31, 2023, we recorded a net loss of $1,728,362. The decrease in loss of $1,580,564 was mainly associated with additional operating expenses, debt discount amortization, and interest expense associated with our related party and convertible notes payable identified above that were incurred in the prior period.
Liquidity and Capital Resources
As of March 31, 2024, we had cash and cash equivalents of $16,913. As of September 30, 2023, we had cash and cash equivalents of $40,829. Working capital was ($1,658,029) as of March 31, 2024 compared to ($1,529,115) at September 30, 2023. The decrease in working capital of $128,914 was primarily the result of increases in accounts payable and accrued liabilities, and accrued interest payable.
Cash Flows from Operating Activities:
Net cash used in operating activities for the six months ended March 31, 2024 and 2023 was $23,916 and $33,807, respectively. The change over the two periods presented was $9,891.
Changes in operating activities for the six months ended March 31, 2024 included increases in accounts payable and accrued liabilities of $16,157, accounts payable, related party of $16,000, and interest payable of $65,978, and decreases in royalty receivable of $7,163. The Company also had non-cash expenses of $18,584 in stock issued for services.
Changes in operating activities for the six months ended March 31, 2023 included increases in accounts payable of $38,477, interest receivable of $748, royalties receivable of $20,135, interest payable, related party of $27,637, and interest payable of $31,940. The Company also had non-cash expenses of $14,875 in stock issued for services, $1,395,195 in amortization of stock and warrants issued for prepaid services, and debt discount amortization of $207,314.
| ITEM 4. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2024. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive and Financial Officer.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted 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. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, our Chief Executive and Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the six months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 15 |
PART II
Item 6. Exhibits
Exhibits
| 3.1 | Articles of Incorporation (1) | |
| 3.2 | Amended Articles of Incorporation (1) | |
| 3.3 | Bylaws (1) | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 32.1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 32.2* | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
(1) Incorporated by reference to the same exhibit filed with the Company’s registration statement on Form S-1 (File #333-190265).
* Provided herewith
| 16 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 6th day of June, 2024.
| VIRTUAL INTERACTIVE TECHNOLGIES CORP. | ||
| By: | /s/ Jason D. Garber | |
| Jason D. Garber | ||
| Principal Executive Officer | ||
| By: | /s/ James W. Creamer III | |
| James W. Creamer III | ||
| Principal Financial and Accounting Officer | ||
| 17 |