UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: September 30, 2004
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission File Number: 000-33151
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
-----------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 54-2110681
------------------------ ----------------
(State of incorporation) (I.R.S. Employer
Identification No.)
4483 West Reno Avenue, Las Vegas, NV 89118
------------------------------------------
(Address of Principal Executive Offices)
(702) 221-8070
------------------------------------------
(Issuer's Telephone Number, Including Area Code)
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Name, Former Address and Former Fiscal Year, if Changed Since Last Report.)
Check whether the issuer (1) 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. Yes [X] No [ ]
There were 64,691,126 shares of Common Stock issued and outstanding 500,000
shares of Series A Preferred Stock and 4,000,000 shares of Series B Preferred
Stock issued and outstanding as of the latest practicable date.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements............................................ 3
Consolidated Balance Sheet (Unaudited).......................... 3
Consolidated Statements of Operations (Unaudited)............... 4
Consolidated Statements of Stockholders' Deficit (Unaudited).... 5
Consolidated Statements of Cash Flows (Unaudited)............... 6
Notes to Consolidated Financial Statements...................... 7
Item 2. Plan of Operation............................................... 16
Item 3. Controls and Procedures......................................... 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................... 21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..... 21
Item 3. Defaults Upon Senior Securities................................ 23
Item 4. Submission of Matters to a Vote of Security holders............ 23
Item 5. Other Information............................................... 23
Item 6. Exhibits....................................................... 24
Signatures................................................................. 25
2
PART I - FINANCIAL INFORMATION
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET - SEPTEMBER 30, 2004
(UNAUDITED)
ASSETS
Current asset:
Cash and cash equivalents $ 22,552
Property and equipment, net of
accumulated depreciation 9,913
------------
Total assets $ 32,465
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 187,140
Accrued expenses - related party 125,000
Loans and settlement payable and accrued
interest of $161,558 1,039,797
Notes payable and accrued interest of $605,000 1,210,000
------------
Total current liabilities $ 2,561,937
Stockholders' deficit:
Preferred stock - Series A; $.001 par value; 1,500,000 shares
authorized, 500,000 shares outstanding 500
Preferred stock - Series B; $.001 par value; 10,000,000 shares
authorized, 4,000,000 shares outstanding 4,000
Common stock; $.001 par value; 200,000,000 shares
authorized, 63,191,128 shares issued and outstanding
Issued and outstanding 63,191
Additional paid-in capital 25,480,409
Deferred construction cost (18,304,135)
Deficit accumulated during development stage (9,773,437)
------------
Total stockholders' deficit (2,529,472)
------------
Total liabilities and stockholders' deficit $ 32,465
============
The accompanying notes form an integral part of these consolidated financial
statements
3
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the period
since inception on
Three Months Ended Nine Months Ended March 1, 1997 to
September 30, September 30, September 30, September 30, September 30,
2004 2003 2004 2003 2004
------------ ------------ ------------ ------------ ------------
Net revenue $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Operating expenses:
Professional and consulting fees 158,949 156,059 1,686,385 242,967 7,286,847
Stock discount expense -- -- -- -- --
Project costs 465 7,822 2,943 10,282 80,067
Rent expense 6,975 7,083 20,925 21,033 81,735
Settlement expense -- -- -- 711,854 711,854
Other operating expenses 35,722 70,457 124,742 140,933 372,019
------------ ------------ ------------ ------------ ------------
202,111 241,421 1,834,995 1,127,069 8,532,522
------------ ------------ ------------ ------------ ------------
Interest (income) expense, net (840) 46,996 51,595 514,312 1,240,915
------------ ------------ ------------ ------------ ------------
Loss from operations before income taxes (201,271) (288,417) (1,886,590) (1,641,381) (9,773,437)
------------ ------------ ------------ ------------ ------------
Income taxes -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net loss (201,271) (288,417) (1,886,590) (1,641,381) (9,773,437)
============ ============ ============ ============ ============
Preferred stock dividends from amortization
of beneficial conversion feature -- (100,000) -- (100,000) (130,000)
============ ============ ============ ============ ============
Net loss attributed to common stockholders $ (201,271) $ (388,417) $ (1,886,590) $ (1,741,381) $ (9,903,437)
============ ============ ============ ============ ============
Net loss per share - basic and diluted $ (0.00) $ (0.01) $ (0.03) $ (0.44)
============ ============ ============ ============
Weighted average common stock
shares outstanding - basic and diluted 62,853,000 37,078,000 59,764,000 3,961,000
============ ============ ============ ============
The accompanying notes form an integral part of these consolidated financial
statements
4
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)
FOR THE PERIOD SINCE INCEPTION ON MARCH 1, 1997 TO JUNE 30, 2004
Preferred Preferred
Stock Series A Stock Series B Common Stock
------------------ -------------------- --------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
For the period since inception on March 1, 1997
to December 31, 2000 (as restated
for reorganization) -- $ -- -- $ -- 15,000,000 $15,000.00
Net loss for the year ended
December 31, 2001 -- -- -- -- -- --
--------- ------ --------- ------ ---------- ----------
Balance at December 31, 2001 -- -- -- -- 15,000,000 15,000
Issuance of stock for cash and
services (pre-merger) 2,160,000 2,160 -- -- -- --
Conversion of preferred stock
to common stock (660,000) (660) -- -- 6,600,000 6,600
Acquisition of net assets of Dakota -- -- -- -- 11,615,000 11,615
Issuance of common stock for cash -
February 15, 2002 -- -- -- -- 800,000 800
Issuance of common stock for services -
April 2002 -- -- -- -- 200,000 200
Issuance of common stock for
Architectural agreement - May 2002 -- -- -- -- 2,812,500 2,813
Issuance of common stock for cash -
June 2002 -- -- -- -- 50,000 50
Issuance of common stock for
Architectural agreement - October 2002 -- -- -- -- 600,000 600
Issuance of common stock for
financing costs - November 2002 -- -- -- -- 650,000 650
Issuance of stock for services - October 2002 -- -- -- -- 325,000 325
Net loss for the year ended December 31, 2002 -- -- -- -- -- --
--------- ------ --------- ------ ---------- ----------
Balance at December 31, 2002 1,500,000 1,500 -- -- 38,652,500 38,653
Issuance of common stock for
financing costs - June 2003 -- -- -- -- 2,600,000 2,600
Issuance of preferred stock for cash -
June 2003 -- -- 1,000,000 1,000 -- --
Issuance of preferred stock for cash -
August 2003 -- -- 500,000 500 -- --
Issuance of common stock for cash
September 2003 -- -- -- -- 769,222 769
BCF associated with preferred stock -- -- -- -- -- --
Amortization of beneficial conversion feature
in a manner similar to preferred stock dividends -- -- -- -- -- --
Issuance of common stock for services
September 2003 -- -- -- -- 625,000 625
Issuance of common stock for cash
December 2003 -- -- -- -- 2,307,692 2,308
Issuance of common stock for cash -
December 2003 -- -- -- -- 1,538,461 1,538
Issuance of common stock for cash -
December 2003 -- -- -- -- 1,538,461 1,538
Issuance of common stock for cash -
December 2003 -- -- -- -- 192,308 192
Issuance of common stock for cash -
December 2003 -- -- -- -- 384,616 385
Issuance of preferred stock for service RP -
December 2003 -- -- 2,500,000 2,500 -- --
Issuance of common stock for services -
December 2003 -- -- -- -- 1,163,000 1,163
Net loss for the year ended 12/31/03 -- -- -- -- -- --
--------- ------ --------- ------ ---------- ----------
Balance at December 31, 2003 1,500,000 $1,500 4,000,000 $4,000 49,771,260 $ 49,771
========= ====== ========= ====== ========== ==========
Issuance of common stock for cash
January 2004 -- -- -- -- 192,307 192
Issuance of common stock for cash
February 2004 -- -- -- -- 384,614 385
Issuance of common stock for cash
February 2004 -- -- -- -- 250,000 250
Issuance of common stock for cash
February 2004 -- -- -- -- 500,000 500
Issuance of common stock for services
February 2004 -- -- -- -- 425,000 425
Issuance of common stock for services
February 2004 -- -- -- -- 150,000 150
Issuance of common stock for services
February 2004 -- -- -- -- 150,000 150
Conversion of preferred stock to common stock
March 2004 (500,000) (500) -- -- 5,000,000 5,000
Conversion of preferred stock to common stock
March 2004 (500,000) (500) -- -- 5,000,000 5,000
Issuance of common stock for cash
March 2004 -- -- -- -- 384,614 385
Issuance of common stock for services
June 2004 -- -- -- -- 650,000 650
Issuance of common stock for cash
September 2004 -- -- -- -- 333,333 333
Net loss for the nine months
ended September 30, 2004 -- -- -- -- -- --
--------- ------ --------- ------ ---------- ----------
Balance at September 30, 2004 500,000 $ 500 4,000,000 $4,000 63,191,128 $ 63,191
========= ====== ========= ====== ========== ==========
Deficit
accumulated
Deferred during the Total
Additional construction development stockholders'
paid-in capital costs stage deficit
---------------- ------------ ------------ --------------
For the period since inception on March 1, 1997
to December 31, 2000 (as restated
for reorganization) $ 20,000.00 $ -- $ (87,193.00) $ (52,193.00)
Net loss for the year ended
December 31, 2001 -- -- (101,432) (101,432)
------------ ------------ ------------ -------------
Balance at December 31, 2001 20,000 -- (188,625) (153,625)
Issuance of stock for cash and
services (pre-merger) 25,840 -- -- 28,000
Conversion of preferred stock
to common stock (5,940) -- -- --
Acquisition of net assets of Dakota (11,615) -- -- --
Issuance of common stock for cash -
February 15, 2002 399,200 -- -- 400,000
Issuance of common stock for services -
April 2002 399,800 -- -- 400,000
Issuance of common stock for
Architectural agreement - May 2002 18,138,722 (18,141,535) -- --
Issuance of common stock for cash -
June 2002 149,950 -- -- 150,000
Issuance of common stock for
Architectural agreement - October 2002 162,000 (162,600) -- --
Issuance of common stock for
financing costs - November 2002 162,500 -- -- 163,150
Issuance of stock for services - October 2002 74,750 -- -- 75,075
Net loss for the year ended December 31, 2002 -- -- (1,754,327) (1,754,327)
------------ ------------ ------------ -------------
Balance at December 31, 2002 19,515,207 (18,304,135) (1,942,952) (691,727)
Issuance of common stock for
financing costs - June 2003 309,400 -- -- 312,000
Issuance of preferred stock for cash -
June 2003 99,000 -- -- 100,000
Issuance of preferred stock for cash -
August 2003 49,500 -- -- 50,000
Issuance of common stock for cash
September 2003 99,231 -- -- 100,000
BCF associated with preferred stock 130,000 -- -- 130,000
Amortization of beneficial conversion feature
in a manner similar to preferred stock dividends (130,000) -- -- (130,000)
Issuance of common stock for services
September 2003 99,375 -- -- 100,000
Issuance of common stock for cash
December 2003 297,692 -- -- 300,000
Issuance of common stock for cash -
December 2003 198,462 -- -- 200,000
Issuance of common stock for cash -
December 2003 198,462 -- -- 200,000
Issuance of common stock for cash -
December 2003 24,808 -- -- 25,000
Issuance of common stock for cash -
December 2003 49,615 -- -- 50,000
Issuance of preferred stock for service RP -
December 2003 2,347,500 -- -- 2,350,000
Issuance of common stock for services -
December 2003 847,827 -- -- 848,990
Net loss for the year ended 12/31/03 -- -- (5,943,895) (5,943,895)
------------ ------------ ------------ -------------
Balance at December 31, 2003 $ 24,136,079 $(18,304,135) $ (7,886,847) $ (1,999,632)
============ ============ ============ ============
Issuance of common stock for cash
January 2004 24,808 -- -- 25,000
Issuance of common stock for cash
February 2004 49,615 -- -- 50,000
Issuance of common stock for cash
February 2004 99,750 -- -- 100,000
Issuance of common stock for cash
February 2004 199,500 -- -- 200,000
Issuance of common stock for services
February 2004 318,325 -- -- 318,750
Issuance of common stock for services
February 2004 119,850 -- -- 120,000
Issuance of common stock for services
February 2004 119,850 -- -- 120,000
Conversion of preferred stock to common stock
February 2004 (4,500) -- -- --
Conversion of preferred stock to common stock
March 2004 (4,500) -- -- --
Issuance of common stock for cash
March 2004 49,615 -- -- 50,000
Issuance of common stock for services
June 2004 322,350 -- -- 323,000
Issuance of common stock for cash
September 2004 49,667 -- -- 50,000
Net loss for the nine months
ended September 30, 2004 -- -- (1,886,590) (1,886,590)
------------ ------------ ------------ -------------
Balance at September 30, 2004 $ 25,480,409 $(18,304,135) $ (9,773,437) $ (2,529,472)
============ ============ ============ ============
The accompanying notes form an integral part of these consolidated financial
statements
5
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the period
since inception on
Nine Months Ended Nine Months Ended March 1, 1997 to
September 30, 2004 September 30, 2003 September 30, 2004
------------------ ------------------ ------------------
Cash flows provided by (used for) operating activities:
Net loss $ (1,886,590) $ (1,641,381) $ (9,773,437)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 3,887 1,556 7,968
Issuance of common stock for services 881,750 100,000 4,673,815
Interest expense from the issuance of common stock -- 425,150 475,150
Changes in assets and liabilities:
(Increase) decrease in assets:
Prepaid expenses -- (35,000) --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 117,042 26,328 953,697
Accrued payable - related parties (54,000) -- 125,000
Accrued settlement obligation -- 711,854 650,000
------------ ------------ ------------
Net cash used for operating activities (937,911) (411,493) (2,887,807)
------------ ------------ ------------
Cash flows used for investing activities -
payments to acquire property and equipment (3,641) (7,186) (17,880)
------------ ------------ ------------
Cash flows provided by (used for) financing activities:
Proceeds from notes payable -- 105,000 833,239
Proceeds from sale of preferred stock -- 250,000 150,000
Proceeds from issuance of common stock 475,000 -- 1,945,000
------------ ------------ ------------
Net cash provided by financing activities 475,000 355,000 2,928,239
------------ ------------ ------------
Net increase (decrease) in cash (466,552) (63,679) 22,552
Cash, beginning of period 489,104 112,186 --
------------ ------------ ------------
Cash, end of period $ 22,552 $ 48,507 $ 22,552
============ ============ ============
Cash paid during the period for:
Interest expense $ -- $ -- $ --
============ ============ ============
Income taxes $ -- $ -- $ --
============ ============ ============
Non cash financing activity:
Common stock issued for services $ 881,750 $ 100,000 $ 4,673,815
============ ============ ============
Common stock issued for financing costs and services $ -- $ 312,000 $ 588,300
============ ============ ============
Common stock issued for Architectural Agreement $ -- $ -- $ 18,304,135
============ ============ ============
Conversion of preferred stock to common stock $ -- $ -- $ 6,600
============ ============ ============
The accompanying notes form an integral part of these consolidated financial
statements
6
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2004
(1) Summary of Significant Accounting Policies:
Business Activity:
------------------
The Company is in the entertainment development business and is plans to develop
the world's tallest Ferris Wheels on the Las Vegas Strip and in other locations
inside and outside the United States. The Company is currently a development
stage enterprise reporting under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 7.
Plan of Reorganization and Basis of Presentation:
-------------------------------------------------
The accompanying consolidated financial statements include the accounts of
Voyager Entertainment International, Inc. (the "Company"), formerly known as
Dakota Imaging, Inc., ("Dakota"), incorporated under the laws of the state of
North Dakota on January 31, 1991 and its subsidiaries:
a) Voyager Ventures, Inc. ("Ventures"), incorporated under the laws of the State
of Nevada on January 15, 2002 (owned 100% by the Company); b) Outland
Development, LLC ("Outland"), a limited liability company formed under the laws
of the State of Nevada on March 1, 1997(owned 100% by Ventures); and c) Voyager
Entertainment Holdings, Inc. ("Holdings"), incorporated under the laws of the
State of Nevada on May 2, 2002 (owned 100% by the Company).
Interim Financial Statements:
-----------------------------
The accompanying consolidated financial statements include all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the periods presented. Interim results are not necessarily indicative of the
results to be expected for the full year ending December 31, 2004. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements included in the annual report of Voyager
Entertainment International, Inc. and its subsidiaries (the "Company") on Form
10-KSB for the year ended December 31, 2003.
7
Going Concern
-------------
The Company's consolidated financial statements have been presented on the basis
that the Company will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has no established source of revenue, and as of
September 30, 2004, has an accumulated deficit of $9,773,437 has a working
capital deficit of $2,539,385 and has incurred significant net loss and used
cash for operating activities of $937,911 during the nine months ended September
30, 2004, all of which raise substantial doubt about its ability to continue as
a going concern. The Company's large losses are attributed mainly to the
issuance of common stock for services and professional fees.
The Company has limited operations and is still in the development stage. The
Company will need to raise a substantial amount of capital in order to continue
its business plan. This situation raises substantial doubt about its ability to
continue as a going concern. The accompanying consolidated financial statements
do not include any adjustments relative to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty. Management is currently
initiating their business plan and in the process raising additional capital.
The company is currently indebted to two creditors and will not have the ability
to repay either of the creditors if significant project funding is not received.
If repayment does not occur, it is possible that a creditor could foreclose on
the assets of the company causing the Company to be insolvent.
Accounting Policies:
--------------------
There has been no change in "accounting" policies used by the Company during the
nine months ended September 30, 2004. There were no stock options granted or
exercised during the nine months ended September 30, 2004.
(2) Loan Payable:
Loans payable had no stated interest rate, were due on demand and unsecured.
Interest has been accrued at an estimated market interest rate of 8% and is
included with the principal balance. The original balance was $228,239 and the
proceeds were received and used for operating capital during the year ended
December 31, 2002. In March 2003, a claim of $1,460,000 was asserted by the
lender. Although management believed the claims were frivolous, due to the
additional resources needed by management to defend against these claims and the
likely distraction of management's efforts from moving forward with the business
plan, a settlement agreement was executed with the lender in August 2003.
Pursuant to the Settlement Agreement, the Company agreed to pay a settlement
amount of an additional $650,000, without claiming any fault or wrong doing. As
of September 30, 2004, the total obligation including loans of $228,239 in
principal the settlement obligation of $650,000, and accrued interest of
$161,558 amounted to an aggregate of $1,039,797. One half of this amount, or
$519,898 is due and payable at the closing of the first round of project funding
and the remaining balance is due and payable at the closing of any subsequent
project funding.
8
(3) Note Payable:
On November 19, 2002, the Company entered into a line of credit financing
agreement which entitled the Company to borrow of from Dan Fugal up to an
aggregate of $2,500,000. Advances under this line of credit are based on
achievement of certain milestones pursuant to the agreement. Upon the receipt of
funds, the Company was required to issue up to 1,500,000 shares of its Common
Stock on a pro rata basis. The Company has borrowed $605,000 against this line
of credit and issued 1,500,000 shares. The balance payable under this line of
credit was due on April 15, 2003 and is secured by all of the Company's assets.
The original line of credit bore interest at the rate of 12% per annum. This
line of credit has expired and no principal or accrued interest has been paid
back. Consequently, during the year ended December 31, 2003, the Company agreed
to pay 100% interest related to this line of credit. Interest of $605,000 has
been accrued and included with the principal balance in the accompanying
consolidated financial statements. As of September 30, 2004, the total
obligation including loans of $605,000, and accrued interest of $605,000,
amounted to $1,210,000. Mr. Fugal has agreed to be repaid from those funds
received by the Company at its next project funding. If the Company does not
receive significant project funding it will not be able to repay Mr. Fugal. As
collateral for the Loan and Security Agreement with Mr. Fugal, Mr. Fugal filed a
UCC-1 against the assets and intellectual property of the company which gives
Mr. Fugal the right to institute foreclosure proceedings against the Company.
Mr. Fugal could institute foreclosure proceedings at any time if he believes
that he will not be repaid. As of the date of this Quarterly Report on Form
10-QSB, Mr. Fugal has not indicated any intentions to institute foreclosure
proceedings. However, management can not guarantee that Mr. Fugal will not
attempt to institute foreclosure proceedings against the Company.
(4) Related Party Transactions:
During February 2004, the Company paid $300,000 in cash to Western Architectural
Services, LLC, an entity owned by an officer-stockholder and director of the
Company pursuant to a Contractor Agreement between Western Architectural
Services and the Company to design and build a car for the Voyager project and
conduct a feasibility study.
During the year ended December 31, 2003, the Company and its board of directors
approved a bonus of $189,000 payable to Synthetic Systems, LLC, an entity wholly
owned by its Chief Executive Officer. At September 30, 2004 accounts payable and
accrued expenses, related party consists of the $100,000 unpaid bonus balance.
During the nine months ended September 30, 2004, the Company paid consulting
fees of $25,000 per month to Synthetic Systems, LLC. The Company also paid for
furniture rental expenses of approximately $3,450 and office rent expenses of
approximately $6,975 to Synthetic Systems for the three months ending September
30, 2004 and a total of $10,350 and $20,925 for the nine months ended September
30, 2004.
9
(4) Litigation
On May 3, 2004, the Company filed a complaint in the U.S. District Court for the
District of Nevada (Case No. CV-S-04-0558) against Donald and Nancy Tyner, who
are significant stockholders of the Company, alleging that Mr. and Mrs. Tyner
are liable to the Company pursuant to Section 16(b) of the Securities Exchange
Act of 1934 for short-swing profits realized by Mr. and Mrs. Tyner in connection
with their sales and purchases of the Company's Common Stock between December 3,
2003 and February 4, 2004. While the complaint was filed in this matter, Mr. And
Mrs. Tyner have not been served.
In June 2004 the Company withdrew the complaint filed on May 3, 2004 in the U.S.
District Court for the District of Nevada (Case No. CV-S-04-0558) against Donald
and Nancy Tyner.
(5) Stockholders' Deficit
On March 5, 2004, Richard L. Hannigan, Sr. an officer and director converted
500,000 Series A Preferred shares into 5,000,000 Common shares of the Company.
On March 31, 2004 , Gregg Giuffria, a former officer and director converted
500,000 Series A Preferred shares into 5,000,000 Common shares of the Company.
Common Stock Issuances
----------------------
In December 2003, an investor entered into an agreement to purchase 1,346,154
additional shares of Common Stock for cash proceeds of $175,000. During the
three months ended March 31, 2004, this investor had acquired 961,535 Common
shares for total proceeds of $125,000 as follows:
In January 2004, $25,000 was received from the sale of 192,307 Common
shares pursuant to a purchase agreement from December 2003,
In February 2004, $50,000 was received from the sale of 384,614 common
shares pursuant to a purchase agreement from December 2003,
In March 2004, $50,000 was received from the sale of 384,614 common shares
pursuant to a purchase agreement from December 2003,
The Common Stock was offered in reliance upon the private offering exemptions
contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated thereunder.
10
In February 2004, $300,000 was received for 750,000 common shares. The Common
Stock was offered in reliance upon the private offering exemptions contained in
Sections 3(b) and 4(2) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D promulgated thereunder.
During February 2004, the Company also issued 725,000 shares of restricted
Common Stock to three consultants for services rendered. These shares were
valued at the fair market value ranging from $0.75 to $0.80 per share for total
consideration of $558,750.
On March 5 2004, an Richard L. Hannigan, Sr., an officer-stockholder converted
500,000 Series A Preferred shares into 5,000,000 Common shares of the Company.
On March 31, 2004, Gregg Giuffria, a former officer-stockholder converted
500,000 Series A Preferred shares into 5,000,000 Common shares of the Company.
On June 17, 2004 the Company initiated negotiations to potentially purchase a
parcel of property in Las Vegas, Nevada. The Company at that time issued 500,000
shares of Common Stock as an incentive to the owner of that property which will
not be recovered regardless of whether the Company completes the transaction.
The shares were valued at the fair market value of $0.49 per share for a total
of $245,000.
On June 30, 2004 the company issued 150,000 shares of Common Stock to an
individual for services rendered. These shares were valued at the fair market
value of $0.52 per share for total consideration of $78,000.
In September 2004, $50,000 was received for 333,333 common shares. The Common
Stock was offered in reliance upon the private offering exemptions contained in
Sections 3(b) and 4(2) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D promulgated thereunder.
SUBSEQUENT EVENT
----------------
In October 2004, $150,000 was received for 1,000,000 common shares. The Common
Stock was offered in reliance upon the private offering exemptions contained in
Sections 3(b) and 4(2) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D promulgated thereunder.
In October, 2004 the company issued 500,000 shares of Common Stock to an
individual for services rendered. These shares were valued at the fair market
value of $0.11 per share for total consideration of $55,000.
ITEM 2. PLAN OF OPERATION
The following discussion should be read in conjunction with the Company's
financial statements and the notes thereto contained elsewhere in this filing.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, this quarterly report on
Form 10-QSB includes certain "forward-looking statements" within the meaning of
that term in Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act of 1934, including, among others, those statements preceded by,
followed by, or including the words "estimates," "believes," "expects,"
"anticipates," "plans," "projects," or similar expressions. Forward-looking
statements include, but are not limited to, statements concerning anticipated
trends in revenues and net income, projections concerning operations and
available cash flow. The Company's actual results could differ materially from
the results discussed in such forward-looking statements. The following
discussion of the Company's financial condition and results of operations should
be read in conjunction with the Company's financial statements and the related
notes thereto appearing elsewhere herein.
11
These forward-looking statements are based largely on our current expectations
and are subject to a number of risks and uncertainties. These forward-looking
statements include, but are not limited to:
o The Company's wholly-owned subsidiary, Voyager Entertainment Holdings, Inc.
("VEHI"), intends to manage the Las Vegas Voyager Project pursuant to a
performance-based contract between the Company and VEHI and potentially an
as-yet unidentified partner of the Company;
o VEHI intends to employ highly skilled individuals from the theme park
industry and combine their specialized skills with those from the gaming
industry;
o The western bank (Puxi) of the Huangpu River, the Bund, is our anticipated
location for a master planned development with the "Star of Shanghai"
Observation Wheel as the dominant feature (the "Star of Shanghai Voyager
Project");
o The Company intends to design the Star of Shanghai Voyager Project as a
special tribute to the legendary figure Huang Daopo who invented the
"spinning wheel" that reformed the technique of cotton weaving, and gained
fame for its production of clothing;
o Management believes that it can identify sources and obtain adequate
amounts of such financing;
o The Company intends to enter into a cooperative arrangement with
distributors, whereby we will receive marketing and sales benefits from the
professional staff of such distributors;
o The Company believes that it cannot satisfy the cash requirements of its
plan of operation for the next twelve months without raising additional
funds through debt or equity financings;
o Our near term cash requirements are anticipated to be offset through the
receipt of funds from private placement offerings and loans obtained
through private sources;
o During the next 12 months, we plan to focus our efforts on our development
of the Observation Wheels; however actual construction will not commence
until we have sufficient capital for construction and marketing;
o We anticipate that our monthly cash need is approximately $60,000 per
month;
o The Company plans to focus primarily on the development of the Observation
Wheel in Las Vegas over the next 12 months. However, we will also actively
seek partnerships and locations for other Observation Wheels throughout the
United States and foreign countries;
o Over the next twelve months, we believe that existing capital and
anticipated funds from operations will not be sufficient to sustain
operations and planned development. Consequently, we will be required to
seek additional capital in the future to fund growth and expansion through
additional equity or debt financing or credit facilities; and
12
o In the event we are unsuccessful in generating equity capital, then the
Company will be unable to continue with product development and/or
marketing. The lack of equity capital or other financing may in turn cause
the Company to become insolvent and may cause the Company to seek
protection under the federal bankruptcy laws.
o As of the date hereof the Company anticipates that it has enough cash to
fund operations for the next six months however, the Company does not have
sufficient capital to initiate or complete construction of any of the
Voyager Projects.
o There have been other companies that have announced possible development of
a large Observation Wheel.
o The Company has a limited operating history, which could make it difficult
to evaluate our business.
We have yet to establish any history of profitable operations. Although some of
our affiliates have been engaged in the acquisition and administration of
various industries for several years, we have a limited operating history. As a
result, we may not be able to successfully achieve profitability. The likelihood
of our success must be considered in light of the problems, expenses and
complications frequently encountered in connection with the development of a
project this size and the competitive environment in which we operate.
Accordingly, our limited operating history makes an effective evaluation of our
potential success difficult. Our viability and continued operation depend on
future profitability, our ability to generate cash flows and our successful
development and management of other business opportunities. There can be no
assurance that we will be able to successfully implement our business plan or
that if implemented, it will be profitable.
Management may be unable to obtain the appropriate funding to run our company.
The Company does not presently have sufficient financial resources and have no
assurance that sufficient funding will be available to us to build our project.
There can be no assurance that we will be able to obtain adequate financing in
the future or that
13
the terms of such financing will be favorable. Failure to obtain such additional
financing could result in delay or indefinite postponement of constructing an
Observation Wheel
The Company wishes to caution investors that any forward-looking statements made
by or on behalf of the Company are subject to uncertainties and other factors
that could cause actual results to differ materially from such statements. These
uncertainties and other factors include, but are not limited to the Risk Factors
listed below (many of which have been discussed in prior SEC filings by the
Company). Though the Company has attempted to list comprehensively these
important factors, the Company wishes to caution investors that other factors
could in the future prove to be important in affecting the Company's results of
operations. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
Readers are further cautioned not to place undue reliance on such
forward-looking statements as they speak only of the Company's views as of the
date the statement was made. The Company undertakes no obligation to publicly
update or revise any forward- looking statements, whether as a result of new
information, future events or otherwise.
Recent Developments
On April 30, 2004, the Company and The Rio All-Suite Hotel & Casino in Las
Vegas, Nevada mutually agreed to discontinue negotiations to build "The World's
Tallest Observation Wheel" at the property of The Rio All-Suite Hotel & Casino.
On May 3, 2004, the Company filed a complaint in the U.S. District Court for the
District of Nevada (Case No. CV-S-04-0558) against Donald and Nancy Tyner, who
are stockholders of the Company, alleging that Mr. and Mrs. Tyner are liable to
the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934 for
short-swing profits realized by Mr. and Mrs. Tyner in connection with their
sales and purchases of the Company's Common Stock between December 3, 2003 and
February 4, 2004. While the complaint in this matter has been filed, Mr. And
Mrs. Tyner have not been served with the complaint.
In June 2004 the Company withdrew the complaint filed in the U.S. District Court
for the District of Nevada (Case No. CV-S-04-0558) against Donald and Nancy
Tyner.
The Company is currently evaluating site locations in Las Vegas, Nevada where
the Observation Wheel could be constructed by the Company . If the Company is
unsuccessful in obtaining a site and negotiating terms acceptable to both
Voyager and a prospective property owner for a Las Vegas location, the Company
will be required to identify a location outside of Las Vegas where an
Observation Wheel could be constructed before an Observation Wheel could be
built in Las Vegas forcing our management to focus its efforts elsewhere for a
significant amount of time.. While there are several locations outside of Las
Vegas which are currently proposed, there can be no guarantees that the Company
will obtain financing or any definitive agreements for any other locations.
The Company is currently dependent upon funding operations through the sale of
its Common Stock and securing debt through private individuals. If the Company
can not continue to raise funds through the sale if its Common Stock and
securing loans from private individuals, the Company may have to cease
operations thus rendering the Company insolvent or requiring the Company to seek
protection under the federal bankruptcy laws. While the company is seeking
funding there can be no guarantee that funding will be attained.
14
Business of the Company
Our current business plan is to build multiple observation Ferris wheels
("Observation Wheels"). Currently proposed sites for the construction of
Observations Wheels include Las Vegas, Nevada; Dallas, Texas and Shanghai,
China.
L.V. Voyager Project
For the past 5 years, through its subsidiaries, the Company has planned and/or
evaluated the available locations at both the North and South ends of the Las
Vegas Strip as well as other off-strip locations in Las Vegas, Nevada for the
construction of an Observation Wheel in Las Vegas ( the "L.V. Voyager Project").
The Las Vegas Voyager Project is intended to be one of the most unique
architectural and engineering designs making it a "must see" attraction that
will give the patron an experience overlooking the "Las Vegas Strip." With 30
vehicles called "Orbiters" the Las Vegas Voyager Project is intended a revolving
Observation Wheel that will overlook the Las Vegas Strip as it revolves higher
than a 60 story building at approximately 600 feet. One rotation in an Orbiter
will last approximately 27 minutes. Each Orbiter will be controlled by and
onboard Navigator, who will be part entertainer and part steward, and who will
also be trained in life safety and security.
Organization and Operation
--------------------------
The L.V. Voyager Project would be owned by the Company, however, it will be
designed, developed, built and operated by Voyager Entertainment Holdings, Inc.,
("VEHI"), a wholly owned subsidiary of the Company. VEHI intends to manage the
project pursuant to a performance-based contract between the Company and VEHI
[and potentially an as-yet unidentified partner of the Company]. All covenants,
restrictions and protocols would be detailed in the performance-based contract.
As the management company, VEHI would be responsible for the design,
development, construction, and operation of the L.V. Voyager Project, and would
provide the following: concept development, project design, location assessment
and acquisition, strategic alliances in both entertainment and gaming, business
plans and budgets, financial oversight and management during both construction
and operation, marketing plans, insurance procurement and risk management,
senior operational management including development of policies and procedures,
and overall strategic focus for the L.V. Voyager Project.
The initial management team at VEHI is anticipated to consist of Richard
Hannigan, President, CEO and a Director, Tracy Jones, COO and a Director, Myong
Hannigan, Secretary and Treasurer and Director, Michael Schaunessy, CFO, and Sig
Rogich, Director of Public Relations & Communications. The Company was in
negotiations to construct an observation wheel at the Rio All Suites Hotel and
Casino in Las Vegas Nevada owned by Harrahs, Inc. however, neither party was
able to come to an agreement.
Dallas Voyager Project
----------------------
The Company is operating through a signed non-binding Memorandum of
Understanding with Bennett Realty Group pursuant to which Bennett Realty Group
and Voyager are seeking to be joint venture partners to build an Observation
Wheel in Dallas Texas (the "Dallas Voyager Project"). As of the period ending
September 30, 2004, financing has not been secured for this project and no
definitive agreements have been signed.
15
Star of Shanghai Voyager Project
--------------------------------
The western bank (Puxi) of the Huangpu River, the Bund, is our anticipated
location for a master planned development with the "Star of Shanghai"
Observation Wheel as the dominant feature (the "Star of Shanghai Voyager
Project"). We intend to design the Star of Shanghai Voyager Project as a special
tribute to the legendary figure Huang Daopo who invented the "spinning wheel"
that reformed the technique of cotton weaving, and gained fame for its
production of clothing. The Company does not currently have any agreements for a
proposed site and has not secured financing for the planned project. Therefore
the Company does not currently have a suitable site and we can offer no
assurances that we will find a suitable site.
The Company requires substantial additional funds to build its Las Vegas Voyager
Project and to fulfill its business plan and successfully develop its three
Observation Wheel projects. The Company intends to raise these needed funds from
private placements of its securities, debt financing or internally generated
funds from the licensing of its intellectual property or service fees. As of the
date of this filing the Company has not received a firm commitment for financing
of any of the projects. The company continues to receive and evaluate
opportunities throughout Asia as well as Shanghai, China.
Other "Observation Wheels"
Currently, the Company is primarily focusing on the L.V. Voyager Project.
However, the Company has plans to build additional Observation Wheels in other
various locations in addition to Las Vegas, Dallas and Shanghai.
Market Overview
---------------
Management believes that, in the foreseeable future, cash generated from
operations will be inadequate to support full marketing roll out and ongoing
product development, and that we will thus be forced to rely on additional debt
and/or equity financing. Management believes that it can identify sources and
obtain adequate amounts of such financing. We intend to enter into a cooperative
arrangement with distributors, whereby we will receive marketing and sales
benefits from the professional staff of such distributors. To date, we have not
established any such arrangements.
In the event we are unsuccessful in generating equity capital, then the Company
will be unable to continue with product development and/or marketing. The lack
of equity capital or other financing may in turn cause the Company to become
insolvent and may cause the Company to seek protection under the federal
bankruptcy laws.
As of the date hereof the Company anticipates that it has enough cash to fund
operations for the next six months however, the Company does not have sufficient
capital to initiate or complete construction of any of the Voyager Projects.
Plan of Operation
During the next 12 months, the Company plans to focus its efforts on its
development of the Observation Wheels; however actual production will not
commence until the Company has sufficient capital for production and marketing..
The Company believes that it cannot satisfy the cash requirements of its plan of
operation for the next twelve months without raising additional
16
funds through debt or equity financings. However, if the Company receives
adequate funding, the Company anticipates that there will be a need to purchase
a significant amount of equipment and materials as well as significant need to
hire additional employees throughout the next twelve months. The Company also
believes that in this event there will also be a significant amount of research
and development such as building mock-ups, statistical modeling and engineering.
The Company is dependent upon Richard Hannigan, CEO, President and Director,
Myong Hannigan, Secretary/Treasurer and Director, and Tracy Jones, COO and
Director. The Company does not have any employees at this time and does not
anticipate the need to hire any employees until such time as the Company has
been sufficiently capitalized.
Risks that could cause actual performance to differ from expected performance
are detailed in the remainder of this section, and under the section titled
"Factors That May Affect the Company's Future Operating Results."
Liquidity and Capital Resources
A critical component of our operating plan impacting our continued existence is
the ability to obtain additional capital through additional equity and/or debt
financing. We do not anticipate enough positive internal operating cash flow
until such time as we can generate substantial revenues, which may take the next
few years to fully realize. In the event we cannot obtain the necessary capital
to pursue our strategic plan, we may have to cease or significantly curtail our
operations. This would materially impact our ability to continue operations. If
this occurs, there could be a possibility that management of the company could
seek protection under the federal bankruptcy laws.
In the event we are unsuccessful in generating equity capital, then the Company
will be unable to continue with product development and/or marketing. The lack
of equity capital or other financing may in turn cause the Company to become
insolvent and may cause the Company to seek protection under the federal
bankruptcy laws. As of the date hereof the Company has enough cash to fund
operations for the next six months however, the Company does not have sufficient
capital to initiate or complete construction of any of the Voyager Projects.
Our near term cash requirements are anticipated to be offset through the receipt
of funds from private placement offerings and loans obtained through private
sources. Since inception, we have financed cash flow requirements through debt
financing and issuance of Common Stock for cash and services. As we initiate
operational activities, we may continue to experience net negative cash flows
from operations, pending receipt of servicing or licensing fees, and will be
required to obtain additional financing to fund operations through stock
offerings and bank borrowings to the extent necessary to provide working
capital.
During the next 12 months, we plan to focus our efforts on our development of
the Observation Wheels; however actual construction will not commence until we
have sufficient capital for construction and marketing. Currently, we anticipate
that our monthly cash need is approximately $60,000 per month. These costs
consist primarily of professional fees (including legal and accounting fees) and
consulting fees, including those paid to related parties, as well as rent
expenses and printing expenses. We believe that we currently have the ability to
continue operations for the next two quarters. However, if we do not receive a
substantial amount of funding it will be unlikely we can continue operations. We
plan to seek additional funding
17
through debt transactions and the sale of our Common Stock either privately or
publicly. There can be no guarantees we will be successful. We plan to focus
primarily on the development of the Observation Wheel in Las Vegas over the next
12 months. However, we will also actively seek partnerships and locations for
other Observation Wheels throughout the United States and foreign countries.
If a suitable site is acquired and selected the primary focus will be on
completing engineering and starting the construction of an Observation Wheel.
The Company is currently obligated to repay two of its creditors at the time we
receive adequate project funding. One of the creditors, Mr. Fugal, to whom the
Company owes an aggregate of $1,210,000, filed a UCC-1 against the assets and
intellectual property of the Company which gives Mr. Fugal the right to
institute foreclosure proceedings against the Company. Mr. Fugal could institute
foreclosure proceedings at any time if he believes that he will not be repaid.
As of the date of this Quarterly Report on Form 10-QSB, Mr. Fugal has not
indicated any intention to institute foreclosure proceedings. However, we can
not guarantee that Mr. Fugal will not attempt to institute foreclosure
proceedings against the Company in the future.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's Discussion and Plan of Operations discusses the Company's
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to financing operations,
and contingencies and litigation.
18
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The most significant accounting estimates inherent in
the preparation of the Company's financial statements include estimates as to
the appropriate carrying value of certain assets (including deferred
construction costs of approximately $18.3 million) and liabilities which are not
readily apparent from other sources, primarily accruals for operating costs, and
the classification of net operating loss and tax credit carryforwards.
FACTORS THAT MAY AFFECT THE COMPANY'S FUTURE OPERATING RESULTS We are a
development stage company, recently reorganized and have minimal operating
history, which makes an evaluation of us extremely difficult. At this stage of
our business operations, even with our good faith efforts, potential investors
have a high probability of losing their investment. As a result of our recent
reorganization we have yet to generate revenues from operations and have been
focused on organizational, start-up, market analysis and fund raising
activities. Although we have a project to market, there is nothing at this time
on which to base an assumption that our business operations will prove to be
successful or that we will ever be able to operate profitably. Our future
operating results will depend on many factors, including our ability to raise
adequate working capital, demand and acceptance of our product, the level of our
competition and our ability to attract and maintain key management and
employees.
While Management believes its estimates of projected occurrences and events are
within the timetable of its business plan, there can be no guarantees or
assurances that the results anticipated will occur.
Our auditor's report filed with our Annual Report on Form 10-KSB for the year
ended December 31, 2003 reflects the fact that without realization of additional
capital, it would be unlikely for us to continue as a going concern. If we are
unable to continue as a going concern, it is unlikely that we will continue in
business.
As a result of our deficiency in working capital and other factors, our auditors
included a paragraph in their report filed with our Annual Report on Form 10-KSB
for the year ended December 31, 2003, regarding substantial doubt about our
ability to continue as a going concern.
Our plans in this regard are to seek additional funding through future equity
private placements or debt facilities.
There is a limited current public market for our Common Stock.
19
Although our Common Stock is listed on the Over-the-Counter Bulletin Board,
there is a limited volume of sales, thus providing a limited liquidity into the
market for our shares. As a result of the foregoing, stockholders may be unable
to liquidate their shares for any reason.
We are uncertain about the possible demand for our Observation Wheels. Their can
be no assurances that if built there will be adequate demand for our Project in
Las Vegas or other proposed sites in Shanghai, China or Dallas, Texas.
The Company is highly dependent upon management's ability to execute the
Company's business plan. We believe our officers and directors have a great deal
of experience in the construction industry but do not have experience in
managing an attraction. We will be highly dependent upon securing the
appropriate management personnel in order for the attraction to operate
correctly. If adequate funding is not received or management elects to manage
the attraction itself, there can be no assurance that the Company can
effectively execute its business plan.
ITEM 3. CONTROLS AND PROCEDURES
As of September 30, 2004, an evaluation was performed under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and the Chief Accounting Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the Chief Executive
Officer and the Chief Accounting Officer, concluded that the Company's
disclosure controls and procedures were effective as of September 30, 2004.
During the fiscal quarter ended September 30, 2004, there have been no changes
in the Company's internal control over financial reporting or in other factors,
that has materially affected, or is reasonably likely to affect, our internal
control over financial reporting.
20
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 3, 2004, the Company filed a complaint in the U.S. District Court for the
District of Nevada (Case No. CV-S-04-0558) against Donald and Nancy Tyner, who
are stockholders of the Company, alleging that Mr. and Mrs. Tyner are liable to
the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934 for
short-swing profits realized by Mr. and Mrs. Tyner in connection with their
sales and purchases of the Company's Common Stock between December 3, 2003 and
February 4, 2004. Although the complaint has been filed, Mr. And Mrs. Tyner have
not been served with the complaint.
In June 2004, the Company withdrew the complaint filed in the U.S. District
Court for the District of Nevada (Case No. CV-S-04-0558) against Donald and
Nancy Tyner.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In January 2004, the Company issued 1,163,000 shares of restricted Common Stock
to five individuals for consulting services that were performed during the
quarter ending December 31, 2003. The Company believes that the issuance of the
shares was exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933 by virtue of Section 4(2). The shares were issued
directly by the Company and did not involve a public offering or general
solicitation. The recipients of the shares had a preexisting relationship with
our management, had performed services for the Company and had full and complete
access to the Company and had the opportunity to speak with management with
regards to their investment decision.
On January 5, 2004, the Company sold 192,307 shares of Common Stock for $25,000.
The Common Stock was offered in reliance upon the private offering exemptions
contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated thereunder. The purchaser was an
"accredited" investor within the meaning of Rule 501(a) of Regulation D. We
received net proceeds in the offering of $25,000. The purchaser represented that
he was acquiring the Common Stock for investment purposes only and not with a
view to distribute. The purchaser further represented that he (a) had such
knowledge and experience in financial and business matters and was capable of
evaluating the merits and risks of the investment, (b) is able to bear the
complete loss of the investment, (c) has had the opportunity to ask questions
of, and receive answers from, the Company and its management concerning the
terms and conditions of the offering and to obtain additional information, and
(d) qualifies as an "accredited investor" as such term is defined in Rule 501(a)
of Regulation D. This sale of securities was part of the agreement dated
December 3, 2003 to purchase a total of 1,538,461 shares of Common Stock at a
price of $0.13 per share for $200,000.
On February 2, 2004, the Company sold 384,614 shares of Common Stock for
$50,000. The Common Stock was offered in reliance upon the private offering
exemptions contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as
amended, and Rule 506 of Regulation D promulgated thereunder. The purchaser was
an "accredited" investor within the meaning of Rule 501(a) of Regulation D. We
received net proceeds in the offering of $50,000. The purchaser
21
represented that he was acquiring the Common shares for investment purposes only
and not with a view to distribute. The purchaser further represented that he (a)
had such knowledge and experience in financial and business matters and was
capable of evaluating the merits and risks of the investment, (b) is able to
bear the complete loss of the investment, (c) has had the opportunity to ask
questions of, and receive answers from, the Company and its management
concerning the terms and conditions of the offering and to obtain additional
information, and (d) qualifies as an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D. This sale of securities was part of the
agreement dated December 3, 2003 to purchase a total of 1,538,461 shares of
Common Stock at a price of $0.13 per share for $200,000.
In February 2004, the Company sold 750,000 shares of Common Stock for $300,000.
The Common Stock was offered in reliance upon the private offering exemptions
contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated thereunder. All purchasers were
"accredited" investors within the meaning of Rule 501(a) of Regulation D. We
received net proceeds in the offering of $300,000. All purchasers represented
that they were acquiring the Common shares for investment purposes only and not
with a view to distribute. The purchasers further represented that they (a) have
such knowledge and experience in financial and business matters and are capable
of evaluating the merits and risks of the investment, (b) are able to bear the
complete loss of the investment, (c) have had the opportunity to ask questions
of, and receive answers from, the Company and its management concerning the
terms and conditions of the offering and to obtain additional information, and
(d) qualify as "accredited investors" as such term is defined in Rule 501(a) of
Regulation D.
In February 2004, the Company also issued 575,000 shares of restricted Common
Stock to four individuals for consulting services. The Company believes that the
issuance of the shares was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of Section 4(2). The shares
were issued directly by the Company and did not involve a public offering or
general solicitation. The recipient of the shares had a preexisting relationship
with our management, had performed services for the Company and had full and
complete access to the Company and had the opportunity to speak with management
with regards to their investment decision.
On February 27, 2004, the Company sold 384,614 shares of Common Stock for
$50,000. The Common Stock was offered in reliance upon the private offering
exemptions contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as
amended, and Rule 506 of Regulation D promulgated thereunder. The purchaser was
an "accredited" investor within the meaning of Rule 501(a) of Regulation D. We
received net proceeds in the offering of $50,000. The purchaser represented that
he was acquiring the Common Stock for investment purposes only and not with a
view to distribute. The purchaser further represented that he (a) had such
knowledge and experience in financial and business matters and was capable of
evaluating the merits and risks of the investment, (b) is able to bear the
complete loss of the investment, (c) has had the opportunity to ask questions
of, and receive answers from, the Company and its management concerning the
terms and conditions of the offering and to obtain additional information, and
(d) qualifies as an "accredited investor" as such term is defined in Rule 501(a)
of Regulation D. This sale of securities was part of the agreement dated
December 3, 2003 to purchase a total of 1,538,461 shares of Common Stock at a
price of $0.13 per share for $200,000.
22
In March 2004, the Company also issued 150,000 shares of restricted Common
Stock, that was approved in February 2004, to two individuals for consulting
services. The Company believes that the issuance of the shares was exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2). The shares were issued directly by the Company
and did not involve a public offering or general solicitation. The recipients of
the shares had a preexisting relationship with our management, had performed
services for the Company and had full and complete access to the Company and had
the opportunity to speak with management with regards to their investment
decision.
On March 5 2004, the Company issued 5,000,000 shares of Common Stock to Richard
L. Hannigan Sr., an officer and director of the corporation as a result of the
officer converting 500,000 shares of Series A Preferred Stock that converted at
the rate of ten Common shares for every one share of Series APreferred Stock
owned by such officer. The Company believes that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The shares were issued
directly by the Company and did not involve a public offering or general
solicitation. The recipient of the shares had a preexisting relationship with
our management, had performed services for the Company and had full and complete
access to the Company and had the opportunity to speak with management with
regards to his investment decision.
On March 31 2004, the Company issued 5,000,000 shares of Common Stock to Gregg
Giuffria, a former officer and director of the corporation as a result of the
officer converting 500,000 shares of Series A Preferred Stock that converted at
the rate of ten Common shares for every one share of Series A Preferred Stock
owned by such officer. The Company believes that the issuance of the shares was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2). The shares were issued
directly by the Company and did not involve a public offering or general
solicitation. The recipient of the shares had a preexisting relationship with
our management, had performed services for the Company and had full and complete
access to the Company and had the opportunity to speak with management with
regards to his investment decision.
On June 17, 2004 the Company entered in to negotiations to purchase a parcel of
property located in Las Vegas, Nevada. As a result the Company issued 500,000
shares of Common Stock to the owner of the parcel of property. The shares will
remain outstanding regardless of whether or not the Company completes the
transaction.
On June 30, 2004, the Company also issued 150,000 shares of restricted Common
Stock, to an individual for consulting services. The Company believes that the
issuance of the shares was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of Section 4(2). The shares
were issued directly by the Company and did not involve a public offering or
general solicitation. The recipients of the shares had a preexisting
relationship with our management, had performed services for the Company and had
full and complete access to the Company and had the opportunity to speak with
management with regards to their investment decision.
In September 2004, the Company sold 333,333 shares of Common Stock for $50,000.
The Common Stock was offered in reliance upon the private offering exemptions
contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated thereunder. All purchasers were
"accredited" investors within the meaning of Rule 501(a) of Regulation D. We
received net proceeds in the offering of $50,000. All purchasers represented
that they were acquiring the Common shares for investment purposes only and not
with a view to distribute. The purchasers further represented that they (a) have
such knowledge and experience in financial and business matters and are capable
of evaluating the merits and risks of the investment, (b) are able to bear the
complete loss of the investment, (c) have had the opportunity to ask questions
of, and receive answers from, the Company and its management concerning the
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terms and conditions of the offering and to obtain additional information, and
(d) qualify as "accredited investors" as such term is defined in Rule 501(a) of
Regulation D.
SUBSEQUEBT EVENT
----------------
In October 2004, the Company sold 1,000,000 shares of Common Stock for $150,000.
The Common Stock was offered in reliance upon the private offering exemptions
contained in Sections 3(b) and 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated thereunder. All purchasers were
"accredited" investors within the meaning of Rule 501(a) of Regulation D. We
received net proceeds in the offering of $50,000. All purchasers represented
that they were acquiring the Common shares for investment purposes only and not
with a view to distribute. The purchasers further represented that they (a) have
such knowledge and experience in financial and business matters and are capable
of evaluating the merits and risks of the investment, (b) are able to bear the
complete loss of the investment, (c) have had the opportunity to ask questions
of, and receive answers from, the Company and its management concerning the
terms and conditions of the offering and to obtain additional information, and
(d) qualify as "accredited investors" as such term is defined in Rule 501(a) of
Regulation D.
In October, 2004, the Company also issued 500,000 shares of restricted Common
Stock, to an individual for consulting services. The Company believes that the
issuance of the shares was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of Section 4(2). The shares
were issued directly by the Company and did not involve a public offering or
general solicitation. The recipients of the shares had a preexisting
relationship with our management, had performed services for the Company and had
full and complete access to the Company and had the opportunity to speak with
management with regards to their investment decision.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Loans payable had no stated interest rate, were due on demand and unsecured.
Interest has been accrued at an estimated market interest rate of 8% and is
included with the principal balance. The original balance was $228,239 and the
proceeds were received and used for operating capital during the year ended
December 31, 2002. In March 2003, a claim of $1,460,000 was asserted by the
lender. Although management believed the claims were frivolous, due to the
additional resources needed by management to defend against these claims and The
likely distraction of management's efforts from moving forward with the business
plan, a settlement agreement was executed with the lender in August 2003.
Pursuant to the Settlement Agreement, the Company has agreed to pay a settlement
amount of an additional $650,000, without claiming any fault or wrong doing. As
of September 30, 2004, the total obligation including loans of $228,239 in
principal the settlement obligation of $650,000, and accrued interest, of
$161,558 amounted to an aggregate of $1,039,797. One half of this amount, or
$519,898, is due and payable at the closing of the first round of project
funding and the remaining balance is due and payable at the closing of any
subsequent project funding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
(a) Exhibits
10.1 Agreement between the Company and Western Architectural Services Dated May
30, 2002.
10.2 Loan and Security Agreement between the Company and Dan Fugal Dated
November 15, 2002
10.3 Revolving Promissory Note Issued By Dan Fugal Dated November 15, 2002
10.4 Amendment to Loan and Security Agreement Dated February 2003.
10.5 Second Amendment to Loan and Security Agreement dated February 15, 2003
10.6 Settlement and General Release Agreement between the Company and Don and
Nancy Tyner Dated August 19, 2003.
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended, filed herein.
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended, filed herein.
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herein.
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herein.
99.1 Press Release Dated June 2, 2004 attached to 8-K filed on June 3, 2004.
99.2 Press Release Dated October 19, 2004 attached to 8-K filed on October 19,
2004
(b) Reports on Form 8-K
o On May 6, 2004, the Company filed with the SEC a Current Report
pursuant to Item 5 of Form 8-K, "Other Events and Reported FD
Disclosure
o On June 3, 2004 the Company filed with the SEC a Current Report
pursuant to Item 5 of Form 8-K, "Other Events and Reported FD
Disclosure
o On October 19, 2004 the Company filed with the SEC a Current Report
pursuant to Item 5 of Form 8-K, "Other Events and Reported FD
Disclosure
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
-----------------------------------------
(Registrant)
Dated November 22, 2004
By: /s/ Richard Hannigan
----------------------------------------
Richard Hannigan,
President/Director
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