UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2007.
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION 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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4483 West Reno Avenue, Las Vegas, Nevada 89119
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (702) 221-8070
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 / /
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.) Yes / / No /X /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
There were outstanding 118,572,143 shares Common Stock issued and outstanding as
of August 8, 2007.
Transitional Small Business Disclosure Format: Yes / / No /X/
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis or Plan of Operation 13
Item 3. Controls and Procedures 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits 16
SIGNATURES 17
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2007
4
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED Balance Sheet
(UNAUDITED)
ASSETS June 30, 2007
-------------
CURRENT ASSETS
Cash $ 8,145
Loan origination costs, net of amortization of $25,000 8,750
Deferred financing costs 50,000
-------------
Total current assets 66,895
NOTE RECEIVABLE 500,000
FIXED ASSETS, net of accumulated depreciation of $31,557 11,095
-------------
Total assets $ 577,990
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,136,607
Accrued expenses - related party 815,000
Loans and settlement payable 878,239
Notes payable 1,975,000
-------------
Total current liabilities 4,804,846
-------------
Total liabilities 4,804,846
COMMITMENTS & CONTINGENCIES --
STOCKHOLDERS' DEFICIT
Preferred stock: $.001 par value; authorized 50,000,000 shares
Series A - 1,500,000 designated, none outstanding --
Series B - 10,000,000 designated, 1,000,000 outstanding 1,000
Common stock: $.001 par value; authorized 200,000,000 shares;
issued and outstanding: 116,532,343 116,533
Additional paid-in capital 12,545,428
Deferred construction costs paid with common stock (421,875)
Receivable for return of stock related to canceled acquisition (375,000)
Loan collateral paid with common stock (750,000)
Loan fees paid with common stock, net of amortization of $200,000 (70,000)
Accumulated deficit during the development stage (15,272,942)
-------------
Total stockholders' deficit (4,226,856)
-------------
Total liabilities and
stockholders' deficit $ 577,990
=============
See accompanying notes to these financial statements.
5
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED Statements of operations
(UNAUDITED)
From inception
Three Months Ended Six Months Ended March 1, 1997 to
June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006 June 30, 2007
------------- ------------- ------------- ------------- -------------
Revenues $ -- $ -- $ -- $ -- $ --
Operating Expenses:
Professional and consulting fees 321,985 314,280 913,817 460,000 11,573,538
Project costs 3,743 2,587 6,391 24,705 144,689
Depreciation 4,137 -- 5,052 -- 32,169
Rent expense -- 8,672 -- 17,153
Settlement expense -- -- -- -- 650,000
Other expense 39,772 31,597 71,627 57,996 926,542
------------- ------------- ------------- ------------- -------------
369,637 357,136 996,887 559,854 13,326,938
Operating loss (369,637) (357,136) (996,887) (559,854) (13,326,938)
Other income (expense):
Interest income 43,765 -- 43,843 -- 44,984
Interest expense (184,528) (17,621) (353,814) (34,944) (1,990,988)
------------- ------------- ------------- ------------- -------------
(140,763) (17,621) (309,971) (34,944) (1,946,004)
Net Loss (510,400) (374,757) (1,306,858) (594,798) (15,272,942)
Preferred stock dividends -- -- -- -- (130,000)
------------- ------------- ------------- ------------- -------------
Net loss allocable to
common stockholders $ (510,400) $ (374,757) $ (1,306,858) $ (594,798) $ (15,402,942)
============= ============= ============= ============= =============
Net loss per common share -
basic and diluted $ (0.00) $ (0.00) $ (0.01) $ (0.01)
============= ============= ============= =============
Weighted average number of
common shares outstanding 115,628,728 82,048,856 114,896,629 79,952,747
============= ============= ============= =============
See accompanying notes to these financial statements.
6
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FROM JANUARY 1, 2007 THROUGH JUNE 30, 2007
(UNAUDITED)
Preferred Stock Series A Preferred Stock Series B Common stock
------------------------ ------------------------ ------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Balance at December 31, 2006 -- -- 1,000,000 $1,000 113,842,905 $113,844
======= ======= ========= ====== =========== ========
Issuance of common stock for services
March 2007 -- -- -- -- 1,000,000 1,000
Fee associated with canceled acquisition -- -- -- -- -- --
Issuance of common stock for services
April 2007 -- -- -- -- 500,000 500
Issuance of common stock for services
May 2007 -- -- -- -- 1,100,000 1,100
Issuance of common stock for interest -- -- -- -- 89,438 89
Fair market adjustment to stock for
Deferred Construction Costs, June 2007 -- -- -- -- -- --
Accretion of loan costs to interest expense
June 2007 -- -- -- -- -- --
Net loss as of June 30, 2007 -- -- -- -- -- --
------- ------- --------- ------ ----------- --------
Balance at June 30, 2007 -- -- 1,000,000 $1,000 116,532,343 $116,533
======= ======= ========= ====== =========== ========
Deficit
accumulated
Deferred Receivable during the Total
Additional construction for return Loan Loan development stockholders'
paid-in capital costs of stock collateral Fee stage deficit
--------------- ------------ ---------- ---------- ------ ----------- -------------
Balance at December 31, 2006 $12,043,353 $ (196,875) $(750,000) $(750,000) $(270,000) $(13,966,083) $(3,774,761)
=========== ============ ========== ========== ========== ============= ============
Issuance of common stock for services
March 2007 97,000 -- -- -- -- -- 98,000
Fee associated with canceled acquisition -- -- 375,000 -- -- -- 375,000
Issuance of common stock for services
April 2007 59,500 -- -- -- -- -- 60,000
Issuance of common stock for services
May 2007 114,400 -- -- -- -- -- 115,500
Issuance of common stock for interest 6,171 -- -- -- -- -- 6,261
Fair market adjustment to stock for
Deferred Construction Costs, June 2007 225,000 (225,000) -- -- -- -- --
Accretion of loan costs to interest expense
June 2007 -- -- -- -- 200,000 -- 200,000
Net loss as of June 30, 2007 -- -- -- -- -- (1,306,858) (1,306,858)
----------- ------------ ---------- --------- ---------- ------------- ------------
Balance at June 30, 2007 $12,545,428 $ (421,875) $(375,000) $(750,000) $ (70,000) $(15,272,942) $(4,226,856)
=========== ============ ========== ========= ========== ============= ============
See accompanying notes to these financial statements.
7
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED Statements of cash flows
(UNAUDITED)
From inception
March 1, 1997 to
June 30, 2007 June 30, 2006 June 30, 2007
------------- ------------- -------------
Cash Flows from Operating Activities:
Net Loss $ (1,306,858) $ (594,798) $(15,272,942)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 5,052 4,713 32,169
Issuance of common stock for services 654,760 193,500 6,173,075
Issuance of common stock for accrued
bonus -- -- 750,000
Interest expense from the issuance of
common stock -- -- 509,268
Accretion of debt issuance costs 225,000 -- 371,250
Changes in assets and liabilities:
Accounts payable and accrued expenses 93,950 56,676 1,130,260
Accrued expenses - related party 190,000 195,000 815,000
Accrued settlement obligation -- -- 650,000
------------ ------------ ------------
Net cash used in operating
activities (138,096) (144,909) (4,841,920)
Cash flows used in Investing Activities:
Payments to acquire fixed assets -- (8,453) (43,174)
Proceeds from Note Receivable -- -- (500,000)
------------ ------------ ------------
Net cash used in investing activities -- (8,453) (543,174)
Cash flows provided by Financing Activities:
Proceeds from notes payable, short term debt 120,000 25,000 2,203,239
Proceeds from the sale of preferred stock -- -- 150,000
Proceeds from the sale of common stock -- 25,000 3,140,500
Payments for loan fees -- -- (50,000)
Payments for financing costs (50,000) -- (50,000)
------------ ------------ ------------
Net cash provided by financing
activities 70,000 50,000 5,393,239
Net increase (decrease) in cash (68,096) (103,362) 8,145
Cash, beginning of year 76,241 108,552 --
------------ ------------ ------------
Cash, end of year $ 8,145 $ 5,190 $ 8,145
============ ============ ============
Cash paid for:
Interest $ 43,750 $ -- $ 103,750
Income Taxes $ -- $ -- $ --
8
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED Statements of cash flows
(UNAUDITED)
(CONTINUED)
From inception
March 1, 1997 to
June 30, 2007 June 30, 2006 June 30, 2007
------------- ------------- -------------
Supplemental schedule of non-cash Investing
and Financing Activities:
Common stock issued for financing costs $ -- $ -- $ 988,300
Common stock issued for loan collateral $ -- $ -- $ 750,000
Deferred construction costs, adjusted
to fair value $ 225,000 $ -- $ 421,875
Conversion of preferred shares $ -- $ -- $ 12,600
Common stock issued as acquisition deposit $ -- $ 450,000 $ 750,000
Common stock issued for services $ -- $ 193,500 $ 193,500
9
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation and Organization and Significant Accounting
Policies
Basis of Presentation and Organization
--------------------------------------
The accompanying Condensed Consolidated Financial Statements of Voyager
Entertainment International, Inc. (the "Company") should be read in conjunction
with the Company's Annual Report on Form 10-KSB for the year ended December 31,
2006. Significant accounting policies disclosed therein have not changed except
as noted below.
The accompanying Condensed Consolidated Financial Statements and the related
footnote information are unaudited. In the opinion of management, they include
all normal recurring adjustments necessary for a fair presentation of the
condensed consolidated balance sheets of the Company at June 30, 2007, the
condensed consolidated results of its operations and cash flows for the three
months ended June 30, 2007 and 2006. Results of operations reported for interim
periods are not necessarily indicative of results for the entire year.
Voyager Entertainment International, Inc. (the "Company"), a North Dakota
corporation formerly known as Dakota Imaging, Inc. formed on January 31, 1991,
is in the entertainment development business with plans to develop the world's
tallest Observation Wheel on the Las Vegas strip area. During April 2002, the
Company changed its name from Dakota Imaging, Inc. to Voyager Entertainment
International, Inc. and adopted a new fiscal year.
As used in these Notes to the Condensed Consolidated Financial Statements, the
terms the "Company", "we", "us", "our" and similar terms refer to Voyager
Entertainment International, Inc. and, unless the context indicates otherwise,
its consolidated subsidiaries. The Company's wholly owned subsidiaries include
Voyager Ventures, Inc. ("Ventures"), a Nevada corporation, Outland Development,
LLC ("Outland"), a Nevada Limited Liability Corporation, and Voyager
Entertainment Holdings, Inc. ("Holdings"), a Nevada corporation.
These Condensed Consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation.
Going Concern
-------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, the Company has not begun generating
revenue, is considered a development stage company, has experienced recurring
net operating losses, had a net loss of $1,306,858 and $594,798 for the six
months ended June 30, 2007 and 2006, and a working capital deficiency of
$(4,737,951) at June 30, 2007. These factors raise substantial doubt about the
Company's ability to continue as a going concern. These financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that might
result from this uncertainty.
RECLASSIFICATION
Certain reclassifications, which have no effect on net income (loss), have been
made in the prior period financial statements to conform to the current
presentation. Specifically, we have presented accrued interest relating to the
debt on our balance sheet in accrued expenses.
NEW ACCOUNTING PROUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," an
interpretation of FASB Statement No. 109, "Accounting for Income Taxes." FIN 48
prescribes a minimum recognition threshold and measurement attribute for the
financial statement recognition of a tax position taken or expected to be taken
in a tax return. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition for tax related positions. FIN 48 becomes effective for the Company
on January 1, 2007. The Company is currently in the process of determining the
effect, if any, the adoption of FIN 48 will have on the consolidated financial
statements.
10
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 2. Stockholder's Equity
The authorized common stock of the Company consists of 200,000,000 shares of
common stock with par value of $0.001, 50,000,000 shares of series A preferred
stock with a par value of $0.001 an 10,000,000 shares of Series B Preferred
Stock.
In March 2007, the Company issued 1,000,000 shares of common stock for
consulting services rendered. These shares were valued at the fair value on the
date of grant for total compensation of $98,000 or $0.098.
In April 2007, the Company issued 500,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value on the date of
grant for total compensation of $60,000 or $0.12.
In May 2007, the Company issued 1,100,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value on the date of
grant for total compensation of $115,500 or $0.105.
The Company issued 89,438 shares of common stock for interest which was accrued
at December 31, 2006 for $6,261 relating to our Diversified Lending Group, Inc.
note.
No preferred share transactions occurred as of June 30, 2007.
Note 3. Related Party Transactions and Acquisitions
Related Party Transactions
--------------------------
During the quarters ended June 30, 2007 and 2006, the Company paid consulting
fees of approximately $35,000 per month to Synthetic Systems, LLC, for a total
of $210,000 in each year. Synthetic Systems is jointly owned by our Chief
Executive Officer and Secretary. The Company also paid to Synthetic Systems
LLC., office rent expenses of approximately $17,700 and $17,000 and furniture
and equipment lease of $6,900 or $1,150 per month as of June 30, 2007 and 2006,
respectively.
As previously disclosed in our 2006 Form 10-KSB, on May 30, 2002, the Company
executed a Contractor Agreement with Western Architectural Services, LLC
("Western") where Western would provide to the Company certain architectural
services for the Las Vegas Observation Wheel Project in exchange for which the
Company issued 2,812,500 shares of restricted common stock to Western. Although
he was not an affiliate of the Company upon execution of the Contractor
Agreement, Western's Chief Executive Officer is currently an executive officer,
director and significant stockholder of the Company. We have accounted for these
shares as Deferred Construction Costs in these financial statements.
Western plans to sell the amount of common stock at the time before and during
the contract to purchase supplies and pay subcontractors. At the time the
contract was issued the shares of the Company were trading at $6.50 per share.
The current stock price of the Company has a trading range of $0.09 to $0.18. If
at the time Western performs the services contracted and the share price is
below $6.50 per share, the Company will be required to issue new shares to
Western in order for the contract to be fulfilled. Western's Chief Executive
Officer is currently an affiliate of the Company which will also limit the
amount of shares that can be sold based on the trading volume and shares
outstanding in accordance with Rule 144 of the Securities Act of 1933. As of
June 30, 2007, we have marked these shares to market in accordance with EITF No.
96-18 "Accounting for Equity Instruments That Are Issued to Other Than Employees
for Acquiring, or in Conjunction with Selling, Goods or Services", Issue 3,
using the period end closing price of our stock. The change in valuation was
credited to additional-paid in capital due to the deferred construction cost
nature of these shares.
As of June 30, 2007, we have borrowed $100,000 from Western. The amount is
unsecured, carries no interest and is due upon the demand of Western.
Acquisitions
------------
On April 10, 2006, we entered into a Unit Purchase (Buy-Sell) Agreement
("Agreement") to acquire all the outstanding units of Western Architectural
Services, LLC ("Western") in exchange for a total of 5,000,000 shares of
Voyager's common stock ("Shares"). On September 11, 2006, Voyager believed it
had fully completed the necessary due diligence pursuant to the
11
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Agreement and consequently delivered the Shares consideration as required for
the final closing. Upon further evaluation of Voyager's due diligence of Western
pursuant to Section 2.02 of the Agreement, it has been determined that the
existing limited liability company ("LLC") operating agreement of Western would
need to be modified in order for Voyager to continue the existing operations of
Western.
On March 30 2007, Voyager and Western were not able to come to acceptable terms
with regards to the needed changes to the LLC operating agreement. The Agreement
was cancelled since the transaction did not meet all the requirements of Section
2.02 of the Agreement and was deemed as if the acquisition transaction was never
closed.
As a result, the acquisition was nullified effective March 30, 2007. As a result
of the nullification of the acquisition transaction 2,500,000 shares of common
stock will be returned to the Company for cancellation and returned to the
treasury. The remaining 2,500,000 shares is accounted for as a fee for the
nullification. The shares were valued at fair value of $0.15 per share for a
total value of $375,000. As of the date of these financial statements, the
Company and Western are in the process of canceling the necessary shares under
the March 30, 2007 agreement. At the date of this filing the shares have not
been cancelled. We have expensed $375,000 as of June 30, 2007.
Note 4. Deferred Financing Costs
In March 2007, the Company began discussions with an external third party for
financing arrangements. We have paid $50,000 toward any services provided by the
external third party and have accounted for this as short term deferred
financing costs. We will net this expense against any financing proceeds
received.
Note 5. Notes Payable
On May 10, 2007, the Company received a loan from CLC/Las Vegas, LLC, in the
amount of $20,000. The terms of the loan call for one payment of all principal
funded to date, interest and other amounts unpaid due and payable in full one
month from the date of funds received by the Company. The loan bears interest at
a rate of 10% per annum, calculated daily on the basis of a 360-day year.
Interest accrued at June 30, 2007 is $283.33. The principal, interest, and
$1,000 late fee was repaid in full as of August 10, 2007.
Note 6. Subsequent Events
Subsequent to June 30, 2007, we issued 2,000,000 shares of common stock as a
result of shares purchased through a private placement offering for $200,000 and
issued 39,800 shares for the accrued $7,164 in interest charges relating to our
Diversified Lending Group, Inc. note.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this report. References in
this section to "Voyager Entertainment International, Inc.," the "Company,"
"we," "us," and "our" refer to Voyager Entertainment International, Inc. and our
direct and indirect subsidiaries on a consolidated basis unless the context
indicates otherwise.
This interim report contains forward looking statements relating to our
Company's future economic performance, plans and objectives of management for
future operations, projections of revenue mix and other financial items that are
based on the beliefs of, as well as assumptions made by and information
currently known to, our management. The words "expects, intends, believes,
anticipates, may, could, should" and similar expressions and variations thereof
are intended to identify forward-looking statements. The cautionary statements
set forth in this section are intended to emphasize that actual results may
differ materially from those contained in any forward looking statement.
EXECUTIVE SUMMARY AND OVERVIEW
Our current business plan is to build multiple observation Ferris wheels
("Observation Wheels"). Proposed sites for the construction of Observation
Wheels include Las Vegas, Nevada, United Arab Emirates ("UAE"), and Shanghai,
China.
We plan to focus primarily on the development of the Observation Wheel in Las
Vegas and the UAE over the next 6 and 18 months respectively. However, we will
also actively seek partnerships and locations for other Observation Wheels
throughout the United States and other foreign countries.
For additional detailed discussion regarding the Company's business and business
trends affecting the Company and certain risks inherent in the Company's
business, see "Item 6: Management's Discussion and Analysis or Plan of
Operations" in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2006.
DEVELOPMENT OF OUR BUSINESS
Voyager Entertainment International, Inc., formerly named Dakota Imaging, Inc.,
was incorporated in North Dakota on January 31, 1991. Effective February 8,
2002, the Company completed a reverse triangular merger between Dakota
Subsidiary Corp. ("DSC"), a wholly owned subsidiary of the Company, and Voyager
Ventures, Inc., a Nevada Corporation ("Ventures"), whereby the Company issued
3,660,000 shares of its Series A preferred stock in exchange for 100% of
Ventures outstanding common stock. Pursuant to the terms of the merger, DSC
merged with and into Ventures and ceased to exist, and Ventures became a wholly
owned subsidiary of the Company.
On April 2, 2002, we amended our Certificate of Incorporation to change our name
from Dakota Imaging, Inc. to Voyager Entertainment International, Inc.
In June 2003, the Company reincorporated in the State of Nevada. The
reincorporation became effective in the states of North Dakota and Nevada on
June 23, 2003, the date the Certificate of Merger was issued by the Secretary of
State of North Dakota.
CRITICAL ACCOUNTING POLICIES
The methods, estimates and judgments we use in applying our accounting policies
have a significant impact on the results we report in our financial statements,
which we discuss under the heading "Results of Operations" following this
section of our MD&A. Some of our accounting policies require us to make
difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Our most critical accounting
estimates include the assessment of value of our deferred construction costs.
We believe the following critical accounting policy reflects our most
significant estimates and assumptions used in the preparation of our
consolidated financial statements:
STOCK BASED COMPENSATION
On January 1, 2006, we adopted the fair value recognition provisions of SFAS No.
123(R), "Accounting for Stock-Based Compensation", to account for compensation
costs under our stock option plans. We previously utilized the intrinsic value
method under Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (as amended).
We use the fair value method for equity instruments granted to non-employees and
will use the Black Scholes model for measuring the fair value of options, if
issued. The stock based fair value compensation is determined as of the date of
the grant or the date at which the performance of the services is completed
(measurement date) and is recognized over the vesting periods.
We do not have any of the following:
* Off-balance sheet arrangements.
* Certain trading activities that include non-exchange traded contracts
accounted for at fair value.
13
* Relationships and transactions with persons or entities that derive
benefits from any non-independent relationships other than related party
transactions discussed herein.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2006
Results of operations consist of the following:
June 30, 2007 June 30, 2006 $ Change % Change
Revenue $ -- $ -- $ -- 0%
General and administrative expenses 369,637 357,136 12,501 4%
-------------------------------------------------
Operating loss $(369,637) $(357,136) $ (12,501) 4%
As of June 30, 2007, we have not constructed an Observation Wheel and therefore
have not generated revenues. All costs for the three months of the second
quarter of 2007 remained relatively consistent when compared to the three months
ended June 30, 2006.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2006
Results of operations consisted of the following:
June 30, 2007 June 30, 2006 $ Change %Change
Revenue $ -- $ -- $ -- 0%
General and administrative expenses 996,887 559,854 437,033 78%
-------------------------------------------------
Operating loss $(996,887) $(559,854) $(437,033) 78%
The increase in general and administrative expenses of 78% is due primarily to a
233% increase in common stock issued for services of $654,760 as of June 30,
2007 compared to $193,500 as of June 30, 2006. The increase in common stock
issued for services is a result of insufficient funds for payment of services
and an increase in consulting services compared to prior periods. This is offset
by a significant decrease in project costs of $6,391 as of June 30, 2007
compared to $24,705 as of June 30, 2006. Project costs are the expenses related
to the materials used to attract investors. The demand for project costs
decreased in 2007 as we obtained additional investors. All other costs in the
second quarter of 2007 remained relatively consistent when compared to June 30,
2006.
LIQUIDITY AND CAPITAL RESOURCES
We plan to focus primarily on the development of the Observation Wheel in Las
Vegas and the UAE over the next 12 months. However, we will also actively seek
partnerships and locations for other Observation Wheels throughout the United
States and other foreign countries.
June 30, 2007 June 30, 2006 $ Change %Change
Cash $ 8,145 $ 76,241 $ (68,096) (89%)
Accounts payable and accrued expenses $1,136,607 $1,042,660 $ 93,947 9%
Cash proceeds from the sale of common stock $ -- $ 50,000 $ (50,000) (100%)
We have financed our operations during the quarter primarily through the use of
cash on hand, issuance of stock for services and aging of our payables. As of
June 30, 2007, we had total current liabilities of $4,804,846 compared to
$4,400,899 as of December 31, 2006. The increase in total current liabilities is
primarily due to an increase in Accounts Payable of approximately $46,000, Due
to Related Parties of $190,000, Accrued Expenses of approximately $35,000 and
short term debt of $120,000. These items increased as our lack of cash has
resulted in longer aging of payables and need for additional cash infusion. We
had no long term liabilities during any of these periods.
Cash decreased 89% as of June 30, 2007 due to payment of some of our payables
throughout the first and second quarters of 2007.
We did not issue any common stock for cash in the second quarter of 2007.
We had $8,145 cash on hand as of June 30, 2007 compared to $76,241 as of
December 31, 2006. We will continue to need additional cash during the following
twelve months and these needs will coincide with the cash demands resulting from
our general operations and implementing our business plan. There is no assurance
that we will be able to obtain additional capital as required, or obtain the
capital on acceptable terms and conditions.
14
ITEM 3. CONTROLS AND PROCEDURES.
As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our chief executive officer
and chief financial officer of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon
this evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are effective to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission's rules and forms. There was
no change in our internal controls or in other factors that could affect these
controls during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
15
PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In March 2007, the Company issued 1,000,000 shares of common stock for
consulting services rendered. These shares were valued at the fair value on the
date of grant for total compensation of $98,000 or $0.098.
In April 2007, the Company issued 500,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value on the date of
grant for total compensation of $60,000 or $0.12
In May 2007, the Company issued 1,100,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value on the date of
grant for total compensation of $115,500 or $0.105.
The Company issued 89,438 shares of common stock for interest for the accrued
$6,261 in interest charges relating to our Diversified Lending Group, Inc. note.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
(1) Committees and financial reviews.
The board of directors has not established an audit committee. In addition, we
do not have any other compensation or executive or similar committees. We will
not, in all likelihood, establish an audit committee until such time as we
increase our revenues, of which there can be no assurance. We recognize that an
audit committee, when established, will play a critical role in our financial
reporting system by overseeing and monitoring management's and the independent
auditor's participation in the financial reporting process.
Until such time as an audit committee has been established, the board of
directors will undertake those tasks normally associated with an audit committee
to include, but not by way of limitation, the (i) review and discussion of the
audited financial statements with management, and (ii) discussions with the
independent auditors with respect to the matters required to be discussed by the
Statement On Auditing Standards No. 61, "Communications with Audit Committees",
as may be modified or supplemented.
ITEM 6 - EXHIBITS.
(a) The following exhibits are filed with this report.
31.1 Certification by Chief Executive Officer pursuant to Sarbanes Oxley
Section 302.
32.1 Certification by Chief Financial Officer pursuant to Sarbanes Oxley
Section 302.
32.1 Certification by Chief Executive Officer pursuant to 18 U.S. C.
Section 1350
32.2 Certification by Chief Financial Officer pursuant to 18 U.S. C.
Section 1350
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
-----------------------------------------
(Registrant)
Dated August 14, 2007
By: /s/ Richard Hannigan
-------------------------------------
Richard Hannigan,
President/Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated
By: /s/ Richard Hannigan, Sr.
-------------------------------------
Richard Hannigan, Sr.
President/CEO/Director
August 14, 2007
By: /s/ Myong Hannigan
-------------------------------------
Myong Hannigan
Secretary/Treasurer/Director
August 14, 2007
By: /s/ Tracy Jones
-------------------------------------
Tracy Jones
COO/Director
August 14, 2007
17