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: March 31, 2004
|_| Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________ to ____________
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 62,207,793 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 May 24, 2004.
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...................................................17
Item 3. Controls and Procedures.............................................20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................21
Item 2. Changes in Securities..............................................21
Item 3. Default upon Senior Securities ....................................23
Item 4. Submission of Matters to a Vote of Securityholders ................23
Item 5. Other Information .................................................23
Item 6. Exhibits and Reports on Form 8-K...................................23
Signatures....................................................................24
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET - MARCH 31, 2004
(UNAUDITED)
ASSETS
CURRENT ASSET:
Cash and cash equivalens $ 415,760
PROPERTY AND EQUIPMENT, net of
accumulated depreciation 15,591
-----------
Total assets $ 431,351
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 129,380
Accrued expenses - related party 179,000
Loans and settlement payable and accrued
interest of $126,624 1,004,862
Line of credit and accrued interest of $605,000 1,210,000
-----------
Total current liabilities $ 2,523,242
-----------
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, 62,207,795 shares issued and outstanding
Issued and outstanding 62,208
Additional paid-in capital 25,108,392
Deferred construction cost (18,304,135)
Deficit accumulated during development stage (8,962,857)
-----------
Total stockholders' deficit (2,091,892)
-----------
Total liabilities and stockholders' deficit $ 431,351
===========
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 March 1, 1997 to
March 31, 2004 March 31, 2003 March 31, 2004
-------------- -------------- --------------
NET REVENUE $ -- $ -- $ --
------------ ------------ ------------
OPERATING EXPENSES:
Professional and consulting fees 1,009,553 51,583 6,610,015
Project costs 754 628 77,878
Rent expense 6,975 6,975 67,785
Settlement expense -- -- 650,000
Other operating expenses 41,798 3,458 350,929
------------ ------------ ------------
1,059,080 62,644 7,756,607
------------ ------------ ------------
INTEREST EXPENSE 16,930 119,014 1,206,250
------------ ------------ ------------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (1,076,010) (181,658) (8,962,857)
------------ ------------ ------------
INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS (1,076,010) (181,658) (8,962,857)
------------ ------------ ------------
PREFERRED STOCK DIVIDENDS FROM AMORTIZATION
OF BENEFICIAL CONVERSION FEATURE -- -- (130,000)
------------ ------------ ------------
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS (1,076,010) (181,658) (9,092,857)
============ ============ ============
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.02) $ (0.00)
============ ============
WEIGHTED AVERAGE COMMON STOCK
SHARES OUTSTANDING - BASIC AND DILUTED 54,110,000 38,652,500
============ ============
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 MARCH 31, 2004
Preferred Stock Preferred Stock
Series A Series B Common Stock
---------------------- ----------------- ------------------ Additional
Shares Amount Shares Amount Shares Amount paid-in capital
---------- --------- --------- ------ ---------- ------- ---------------
For the period since inception on March 1, 1997
to December 31, 2000 (as restated
for reorganization) -- $ -- -- $ -- 15,000,000 $15,000 $ 20,000
Net loss for the year ended
December 31, 2001 -- -- -- -- -- -- --
---------- --------- --------- ------ ---------- ------- ------------
Balance at December 31, 2001 -- -- -- -- 15,000,000 15,000 20,000
Issuance of stock for cash and
services (pre-merger) 2,160,000 2,160 -- -- -- -- 25,840
Conversion of preferred stock
to common stock (660,000) (660) -- -- 6,600,000 6,600 (5,940)
Acquisition of net assets of Dakota -- -- -- -- 11,615,000 11,615 (11,615)
Issuance of common stock for cash -
February 15, 2002 -- -- -- -- 800,000 800 399,200
Issuance of common stock for services -
April 2002 -- -- -- -- 200,000 200 399,800
Issuance of common stock for
Architectural agreement - May 2002 -- -- -- -- 2,812,500 2,813 18,138,722
Issuance of common stock for cash -
June 2002 -- -- -- -- 50,000 50 149,950
Issuance of common stock for
Architectural agreement - October 2002 -- -- -- -- 600,000 600 162,000
Issuance of common stock for
financing costs - November 2002 -- -- -- -- 650,000 650 162,500
Issuance of stock for services - October 2002 -- -- -- -- 325,000 325 74,750
Net loss for the year ended December 31, 2002 -- -- -- -- -- -- --
---------- --------- --------- ------ ---------- ------- ------------
Balance at December 31, 2002 1,500,000 1,500 -- -- 38,652,500 38,653 19,515,207
Issuance of common stock for
financing costs - June 2003 -- -- -- -- 2,600,000 2,600 309,400
Issuance of preferred stock for cash -
June 2003 -- -- 1,000,000 1,000 -- -- 99,000
Issuance of preferred stock for cash -
August 2003 -- -- 500,000 500 -- -- 49,500
Issuance of common stock for cash
September 2003 -- -- -- -- 769,222 769 99,231
BCF associated with preferred stock 130,000 130,000
Amortization of beneficial conversion feature
in a manner similar to preferred stock dividends -- -- -- -- -- -- (130,000)
Issuance of common stock for services
September 2003 -- -- -- -- 625,000 625 99,375
Issuance of common stock for cash
December 2003 -- -- -- -- 2,307,692 2,308 297,692
Issuance of common stock for cash -
December 2003 -- -- -- -- 1,538,461 1,538 198,462
Issuance of common stock for cash -
December 2003 -- -- -- -- 1,538,461 1,538 198,462
Issuance of common stock for cash -
December 2003 -- -- -- -- 192,308 192 24,808
Issuance of common stock for cash -
December 2003 -- -- -- -- 384,616 385 49,615
Issuance of preferred stock for service RP -
December 2003 -- -- 2,500,000 2,500 -- -- 2,347,500
Issuance of common stock for services -
December 2003 -- -- -- -- 1,163,000 1,163 847,827
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 $ 24,136,078
========== ========= ========= ====== ========== ======= ============
Issuance of common stock for cash
January 2004 -- -- -- -- 192,307 192 24,808
Issuance of common stock for cash
February 2004 -- -- -- -- 384,614 385 49,615
Issuance of common stock for cash
February 2004 -- -- -- -- 250,000 250 99,750
Issuance of common stock for cash
February 2004 -- -- -- -- 500,000 500 199,500
Issuance of common stock for services
February 2004 -- -- -- -- 425,000 425 318,325
Issuance of common stock for services
February 2004 -- -- -- -- 150,000 150 119,850
Issuance of common stock for services
February 2004 -- -- -- -- 150,000 150 119,850
Conversion of preferred stock to common stock (500,000) (500) -- -- 5,000,000 5,000 (4,500)
Conversion of preferred stock to common stock (500,000) (500) -- -- 5,000,000 5,000 (4,500)
Issuance of common stock for cash
March 2004 -- -- -- -- 384,614 385 49,615
Net loss for the three months
ended March 31, 2004 -- -- -- -- -- -- --
---------- --------- --------- ------ ---------- ------- ------------
BALANCE AT MARCH 31, 2004 500,000 $ 500 4,000,000 $4,000 62,207,795 $62,208 $ 25,108,392
========== ========= ========= ====== ========== ======= ============
Deficit
accumulated
Deferred during the Total
construction development stockholders'
costs stage deficit
------------ ----------- -----------
For the period since inception on March 1, 1997
to December 31, 2000 (as restated
for reorganization) $ -- $ (87,193) $ (52,193)
Net loss for the year ended
December 31, 2001 -- (101,432) (101,432)
------------ ----------- -----------
Balance at December 31, 2001 -- (188,625) (153,625)
Issuance of stock for cash and
services (pre-merger) -- -- 28,000
Conversion of preferred stock
to common stock -- -- --
Acquisition of net assets of Dakota -- -- --
Issuance of common stock for cash -
February 15, 2002 -- -- 400,000
Issuance of common stock for services -
April 2002 -- -- 400,000
Issuance of common stock for
Architectural agreement - May 2002 (18,141,535) -- --
Issuance of common stock for cash -
June 2002 -- -- 150,000
Issuance of common stock for
Architectural agreement - October 2002 (162,600) -- --
Issuance of common stock for
financing costs - November 2002 -- -- 163,150
Issuance of stock for services - October 2002 -- -- 75,075
Net loss for the year ended December 31, 2002 -- (1,754,327) (1,754,327)
------------ ----------- -----------
Balance at December 31, 2002 (18,304,135) (1,942,952) (691,727)
Issuance of common stock for
financing costs - June 2003 -- -- 312,000
Issuance of preferred stock for cash -
June 2003 -- -- 100,000
Issuance of preferred stock for cash -
August 2003 -- -- 50,000
Issuance of common stock for cash
September 2003 -- -- 100,000
BCF associated with preferred stock
Amortization of beneficial conversion feature
in a manner similar to preferred stock dividends -- (130,000)
Issuance of common stock for services
September 2003 -- -- 100,000
Issuance of common stock for cash
December 2003 -- -- 300,000
Issuance of common stock for cash -
December 2003 -- -- 200,000
Issuance of common stock for cash -
December 2003 -- -- 200,000
Issuance of common stock for cash -
December 2003 -- -- 25,000
Issuance of common stock for cash -
December 2003 -- -- 50,000
Issuance of preferred stock for service RP -
December 2003 -- -- 2,350,000
Issuance of common stock for services -
December 2003 -- -- 848,990
Net loss for the year ended 12/31/03 -- (5,943,895) (5,943,895)
------------ ----------- -----------
BALANCE AT DECEMBER 31, 2003 $(18,304,135) $(7,886,847) $(1,999,632)
============ =========== ===========
Issuance of common stock for cash
January 2004 -- -- 25,000
Issuance of common stock for cash
February 2004 -- -- 50,000
Issuance of common stock for cash
February 2004 -- -- 100,000
Issuance of common stock for cash
February 2004 -- -- 200,000
Issuance of common stock for services
February 2004 -- -- 318,750
Issuance of common stock for services
February 2004 -- -- 120,000
Issuance of common stock for services
February 2004 -- -- 120,000
Conversion of preferred stock to common stock -- -- --
Conversion of preferred stock to common stock -- -- --
Issuance of common stock for cash
March 2004 -- -- 50,000
Net loss for the three months
ended March 31, 2004 -- (1,076,010) (1,076,010)
------------ ----------- -----------
BALANCE AT MARCH 31, 2004 $(18,304,135) $(8,962,857) $(2,091,892)
============ =========== ===========
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
Three Months Ended Three Months Ended March 1, 1997 to
March 31, 2004 March 31, 2003 March 31, 2004
------------------ ------------------ -------------------
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $ (1,076,010) $ (181,658) $ (8,962,857)
------------ ------------ ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation 1,227 426 5,308
Issuance of common stock for services 558,750 -- 4,350,815
Interest expense from the issuance of common stock -- 98,000 475,150
INCREASE (DECREASE) IN LIABILITIES:
Accounts payable and accrued expenses 24,348 (15,820) 861,003
Accrued payable - related parties -- -- 179,000
Accrued settlement obligation -- -- 650,000
------------ ------------ ------------
Net cash used for operating activities (491,685) (99,052) (2,441,581)
------------ ------------ ------------
CASH FLOWS USED FOR INVESTING ACTIVITIES -
payments to acquire property and equipment (6,659) (912) (20,898)
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from notes payable -- -- 833,239
Proceeds from sale of preferred stock -- -- 150,000
Proceeds from issuance of common stock 425,000 -- 1,895,000
------------ ------------ ------------
Net cash provided by financing activities 425,000 -- 2,878,239
------------
NET INCREASE IN CASH (73,344) (99,964) 415,760
CASH, beginning of period 489,104 112,186 --
------------ ------------ ------------
CASH, end of period $ 415,760 $ 12,222 $ 415,760
============ ============ ============
CASH PAID DURING THE PERIOD FOR:
Interest expense $ -- $ -- $ --
============ ============ ============
Income taxes $ -- $ -- $ --
============ ============ ============
NON CASH FINANCING ACTIVITY:
Common stock issued for services $ 558,750 $ -- $ 4,350,815
============ ============ ============
Common stock issued for financing costs and services $ -- $ -- $ 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)
THREE MONTHS ENDED MARCH 31, 2004 AND 2003:
(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 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 financial statements
should be read in conjunction with the 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 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, as of March 31, 2004, has an
accumulated deficit of $8,962,857, has a working capital deficit of $2,107,482,
and has incurred significant net loss and used cash for operating activities of
$491,685 during the three months ended March 31, 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.
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 and could cause the Company to be insolvent.
Accounting Policies:
There has been no change in accounting policies used by the Company during the
quarter ended March 31, 2004.
There were no stock options granted or exercised during the quarter ended March
31, 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 has agreed to pay a settlement
amount of an additional $650,000, without claiming any fault or wrong doing. As
of March 31, 2004, the total obligation including loans of $228,239 in principal
the settlement obligation of $650,000, and accrued interest, of $126,625,
amounted to an aggregate of $1,004,864. One half of this amount, or $493,698, is
due and payable at the closing of the first round of project funding and the
8
remaining balance is due and payable at the closing of any subsequent project
funding.
(3) LINE OF CREDIT:
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
March 31, 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 its debt to Mr. Fugal. As collateral for the Loan and Securtiy 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, we 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. In addition, the Company also incurred an
expense of $240,000 or $20,000 per month of consulting fees, all of which has
been paid to Synthetic Systems, LLC throughout 2003. At March 31, 2004 accounts
payable and accrued expenses, related party consists of the $179,000 unpaid
bonus balance. During the three months ended March 31, 2004, the Company paid
consulting fees of $25,000 per month to Synthetic Systems, LLC. The Company also
paid for furniture rental expenses of $3,450 and office rent expenses of $6,975
to Synthetic Systems. During the Quarter ended 3/31/04.
9
(5) 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.
(6) 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.
10
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 3/31/04, this investor had acquired 961,540 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,
Since the cash consideration received was from unrelated parties, it was
determined to best represent the fair market of the shares on the transaction
date. 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.
11
In February 2004, $300,000 was received for 750,000 common shares. The Common
Stock was offered in reliance upon the privat eoffering exemptions contained in
Sections 3(b) and 4(2) of the Securities Act of 1933, aas 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.
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.
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");
12
O 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;
O Management believes that it can identify sources and obtain adequate
amounts of such financing;
O 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;
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 We believe that we currently have the ability to continue operations
for the next two quarters;
O 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;
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
O We anticipate incurring operating losses over the next twelve
months.
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. 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.
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.
13
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.
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 renedering the
14
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.
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.
15
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
March 31, 2004, financing has not been secured for this project and no
definitive agreements have been signed.
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.
16
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 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
17
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 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.
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. No assurance can be made that such financing would be
available, and if available it may take either the form of debt or equity. In
either case, the financing could have a negative impact on our financial
condition and our stockholders. The lack of equity capital or other financing
may in turn cause the Company to become insolvent. At that time the Company
might elect 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.
We anticipate incurring operating losses over the next twelve months. Our lack
of operating history makes predictions of future operating results difficult to
ascertain. Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
development related companies. Such risks include, but are not limited to, an
evolving and unpredictable business model and the management of growth. To
address these risks we must, among other things, implement and successfully
execute our business and marketing strategy, continue to develop and upgrade
technology and products, respond to competitive developments, and attract,
retain and motivate qualified personnel. There can be no assurance that we will
be successful in addressing such risks, and the failure to do so can have a
material adverse effect on our business prospects, financial condition and
results of operations. As of March 31, 2004, the Company had current assets of $
415,760, which consisted primarily of cash on hand, and current liabilities of
$2,523,242, resulting in working capital deficit of $2,107,482.
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
18
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.
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 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.
19
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.
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.
The Company is currently seeking potential locations in Las Vegas where the
Company can resume its plans to construct and operate the L.V. Voyager Project;
however, we can offer no assurances that we will be successful in finding a
suitable location or negotiating the lease or purchase of land on terms
acceptable to the Company or favorable to its stockholders.
The Company is currently obligated to repay two of its creditors at the time we
receive adequate project FUNDING. Pursuant to the Loan and Security Agreement,
as amended, with Mr. Fugal, to whom the Company owes an aggregate of $1,210,000,
Mr. Fugal filed a UCC-1 against the assets and intellectual property of the
company which would give 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 this
the date of the Quarterley Report on Form 10-QSB, Mr. Fugal has not indicated
any intentions 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. If this occurs management may elect to seek
protection under the federal bankruptcy laws.
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 March 31, 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 March 31, 2004.
During the fiscal quarter ended March 31, 2004, there have been no changes in
the Company's
20
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.
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.
ITEM 2. CHANGES IN SECURITIES
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.
In March 2004, the Company also issued 150,000 shares of restricted Common
Stock, that was
22
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.
ITEM 3. DEFAULT 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 March 31, 2004, the total obligation including loans of $228,239 in principal
the settlement obligation of $650,000, and accrued interest, of $126,625,
amounted to an aggregate of $1,004,864. One half of this amount, or $493,698, 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 SECURITYHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(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.
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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.
(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
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 May 25, 2004 By: /s/ Richard Hannigan
--------------------------------------
Richard Hannigan,
President/Director
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