UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number: 000-33151
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
(Exact name of registrant 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 89118
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number: (702) 221-8070
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: Common Stock, $.001
par value
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
[ ] Large accelerated filer
[ ] Accelerated filer
[ ] Non-accelerated filer
[X] Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last business day of the registrant's most recently completed second
fiscal quarter. As of June 30, 2009, the aggregate market value of shares held
by non-affiliates (based on the close price on that date of $0.02) was
approximately $263,390.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 149,902,287 shares
of common stock as of March 19, 2010.
2
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2009
TABLE OF CONTENTS
Page
PART I
Item 1. Business 4
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 9
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial Condition and 11
Results of Operation
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 17
Item 8. Financial Statements and Supplementary Data F-1
Item 9. Changes in and Disagreements With Accountants on Accounting and 45
Financial Disclosure
Item 9A. Controls and Procedures 45
Item 9B. Other Information 46
PART III
Item 10. Directors and Executive Officers and Corporate Governance 47
Item 11. Executive Compensation 49
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 51
Item 13. Certain Relationships and Related Transactions, and Director Independence 53
Item 14. Principal Accountant Fees and Services 54
PART IV
Item 15. Exhibits and Financial Statement Schedules 55
SIGNATURES 57
3
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K contains forward-looking statements within the meaning of the
federal securities laws. These forward-looking statements are based on certain
assumptions and are subject to significant risks and uncertainties. These
forward-looking statements are based on management's expectations as of the date
hereof, and the Company does not undertake any responsibility to update any of
these statements in the future. Actual future performance and results could
differ from that contained in or suggested by these forward-looking statements
as a result of factors set forth in this Form 10-K (including those sections
hereof incorporated by reference from other filings with the Securities and
Exchange Commission), in particular as set forth in the "Plan of Operation"
under Item 7.
In this filing references to "Company," "we," "our," and/or "us," refers to
Voyager Entertainment International, Inc. and, unless the context indicates
otherwise, its consolidated subsidiaries.
PART I
ITEM 1. BUSINESS.
HISTORY
Voyager Entertainment International, Inc. (the "Company"), a North Dakota
corporation formerly known as Dakota Imaging, Inc., was formed on January 31,
1991. The Company is in the entertainment development business with plans to
develop the world's tallest Observation Wheel within 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. The
Company's wholly-owned subsidiaries include Voyager Ventures, Inc. ("Ventures"),
a Nevada corporation, Outland Development, LLC ("Outland"), a Nevada Limited
Liability Corporation, Voyager Entertainment Holdings, Inc. ("VEHI"), a Nevada
corporation, and Voyager Viridian, LLC ("Viridian"), a Nevada Limited Liability
Corporation. Voyager Ventures, Inc. was a dormant company and was discontinued
as of December 31, 2007. Outland Development, LLC has been a dormant company and
was discontinued as of June 30, 2009. Voyager Viridian LLC, was formed on August
3, 2009. All organizational costs were paid by the parent.
By written consent dated April 23, 2003, a majority of the Company's
stockholders elected to reincorporate the Company in the State of Nevada,
pursuant to a reincorporation merger between the Company and its then
wholly-owned subsidiary, Voyager Entertainment International, Inc. The
reincorporation became effective on June 23, 2003. In connection with the
reincorporation, the Company increased its authorized $0.001 par value common
stock from 100,000,000 shares to 200,000,000 shares and its authorized Preferred
Stock, $0.001 par value, from 25,000,000 shares to 50,000,000 shares.
OUR BUSINESS
Our current business plan is to build multiple observation ferris wheels
("Observation Wheels"). The Company is currently evaluating several 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. An observation wheel could be constructed by a competitor before
Voyager's 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.
L.V. Voyager Project
--------------------
For the past 8 years, through its subsidiaries, the Company has extensively
planned and/or evaluated the available locations on the Las Vegas Strip as well
as other off-strip locations in Las Vegas, Nevada for the construction of the
L.V. Voyager Project.
The L.V. Voyager Project is intended to be designed as a visual icon and
experience overlooking the "Las Vegas Strip". With 30 vehicles called Orbiters,
the L.V. Voyager Project is intended to be a revolving ferris 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 an on-board Navigator, who will be
part entertainer and part steward, and who will also be skilled in life-safety
and security. The Company has not been able find a suitable location to
successfully launch the project.
The L.V. Voyager Project will 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 will manage the project
4
pursuant to a performance-based contract between the Company and VEHI (and an
as-yet unidentified partner of the Company). All covenants, restrictions and
protocols will be detailed in the performance-based contract.
As the management company, VEHI will be responsible for the design, development,
construction, and operation of the L.V. Voyager Project, and will 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 L.V. Voyager Project is fundamentally an entertainment attraction, and it's
operational and maintenance requirements are very similar to those found in the
theme park industry. In addition, Las Vegas is a unique marketplace, and each
visitor, when placed in the environment, is also unique. The ability to
understand each visitor, and successfully attract customers to the L.V. Voyager
Project will come as a result of clearly understanding the marketing strategies
of the gaming industry. VEHI intends to employ highly skilled individuals from
the theme park industry and combine their specialized skills with those from the
gaming industry.
Voyager Viridian Development, LLC ("Viridian") was formed as a wholly owned
subsidiary of Voyager Entertainment International, Inc. ("VEII"). The formation
of Viridian is designed to incorporate all the latest technologies within the
renewable energy industry into the design and construction of the Voyager
Observation wheels, as well as, advancing those technologies into separate
development projects.
Viridian is also exploring wind, solar and geothermal projects within Nevada and
neighboring states. All three technologies are being considered for a project in
Northern Nevada. These renewable energy technologies use and in particular
geothermal are currently under financial and project cost analysis. Viridian has
commissioned a Member of Appraisal Institute ("MAI") Appraisal to verify land
cost of the targeted project location.
Upon completion of that appraisal and project analysis a decision will be made
on whether to proceed with the project. All future Viridian "green" projects are
subject to successful project financing.
Other "Observation Wheels"
The Company has initiated efforts to build a 600ft Observation Wheel in the
United Arab Emirates ("UAE"). The current focus is to find a suitable location.
Due to the continuing dynamic changes to the economic environment in the UAE,
the Company may take advantage of any favorable financing arrangements with
prospective partners. As of the date of this filing, an adequate site for the
Observation Wheel has not been determined. At this time there have been no funds
raised for this project.
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 we will thus be forced to rely on additional debt
and/or equity financing. Management believes it can identify sources and obtain
adequate amounts of such financing. We intend to enter into a cooperative
arrangement with distributors or vendors, whereby we will receive marketing and
sales benefits from the professional staff of such distributors or vendors. To
date, we have not established any such arrangements. In the event we are
unsuccessful in generating equity capital, the Company will be unable to
continue with product development and/or marketing. The lack of equity capital
may in turn cause the Company to become insolvent.
COMPETITION
We compete with numerous other hospitality and entertainment companies. Many of
these competitors have substantially greater resources than we do. Should a
larger and better financed company decide to directly compete with us, and be
successful in its competitive efforts, our business could be adversely affected.
Other competitors could announce and build an observation wheel that is better
financed. If this occurs it would make it very difficult for the Company to have
a successful project within the same city.
There have been other companies that have announced to the public plans to build
an observation wheel in Las Vegas. If any of these companies are successful it
would diminish the possibility of the Company obtaining financing or acquiring a
proper location. At this time there have been no other companies successful at
obtaining locations on or off the Las Vegas Strip.
We have a limited operating history, which could make it difficult to evaluate
our business.
RAW MATERIALS AND SUPPLIES
5
Currently, the Company is a development stage corporation. Until production
planning for the Observation Wheel begins, we have no raw materials or principal
suppliers.
DEPENDENCE ON MAJOR CUSTOMERS
The Company is not currently dependent on one or a few major customers.
PATENTS, TRADEMARKS, LICENSES
Currently there are no patents, trademarks or copyrights filed on behalf of the
Company protecting the current design of the Observation Wheel.
GOVERNMENT APPROVAL
We currently do not have a site for the Observation Wheel. However, when a
proper site is obtained, the Company will be required to obtain proper
permitting and government approvals unless that site is currently approved for
the construction of an Observation Wheel. There can be no guarantees that the
Company will be successful in securing a suitable site or the appropriate
approvals needed.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS
The Company's common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934 ("1934 Act"). As a result of such registration,
the Company is subject to Regulation 14A of the "1934 Act," which regulates
proxy solicitations. Section 14(a) requires all companies with securities
registered pursuant to Section 12(g) thereof to comply with the rules and
regulations of the Commission regarding proxy solicitations, as outlined in
Regulation 14A. Matters submitted to stockholders of the Company at a special or
annual meeting thereof or pursuant to a written consent will require the Company
to provide its stockholders with the information outlined in Schedules 14A or
14C of Regulation 14; preliminary copies of this information must be submitted
to the Commission at least 10 days prior to the date that definitive copies of
this information are forwarded to stockholders.
Aside from required compliance with federal and state securities laws,
regulations and rules, and federal, state and local tax laws, regulations and
rules, the Company is not aware of any other governmental regulations now in
existence or that may arise in the future that would have an effect on the
business of the Company.
RESEARCH AND DEVELOPMENT
We are not the traditional Company that has the standard research and
development expenses. As a result, most of our research and development expenses
consist of presentation materials and architectural designs. Upon funding of the
project the initial expense will be engineering and architectural.
COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
The Company is not currently required to comply with any environmental laws.
EMPLOYEES
As of December 31, 2009, we only had Officers and Directors. We are dependent
upon Richard Hannigan, President, CEO and a Director of the Company; Tracy
Jones, COO and Director, and Myong Hannigan, Secretary/Treasurer and a Director.
We do not have any employees at this time and do not anticipate the need to hire
any employees until such time as we have been sufficiently capitalized.
Our future success also depends on our ability to attract and retain other
qualified personnel, for which competition is intense. The loss of Mr. Hannigan,
Mr. Jones or our inability to attract and retain other qualified employees could
have a material adverse effect on us.
FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
We have initiated efforts to build a Voyager Project in the UAE, however there
has been no activity relating to this project since inception.
Voyager has no transactions with foreign countries and operates solely in Las
Vegas, Nevada.
6
AVAILABLE INFORMATION
The Company is required to file annual reports on Form 10-K and quarterly
reports on Form 10-Q with the Securities and Exchange Commission ("SEC") on a
regular basis, and will be required to disclose certain events in a timely
manner, (e.g. changes in corporate control; acquisitions or dispositions of a
significant amount of assets other than in the ordinary course of business; and
bankruptcy) in a Current Report on Form 8-K.
The public may read and copy any materials filed by the Company with the SEC at
the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549, on
official business days during the hours of 10:00 am to 3:00 pm. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC at http://www.sec.gov.
Voyager Entertainment International, Inc.'s Internet website is available for
public viewing at http://www.voyager-ent.com.
REPORTS TO SECURITY HOLDERS
Security holders may obtain our annual and quarterly reports directly from the
SEC Internet website. These reports are reviewed by an independent public
accountant quarterly. Our annual reports filed on form 10-K contain financial
information that has been examined and reported on, with an opinion expressed by
an independent public accountant.
ITEM 1A. RISK FACTORS.
Operations
----------
We have yet to establish any history of profitable operations. Although some of
our affiliates have been engaged in the acquisition and administration of
various industries for several years, we have a limited operating history. As a
result, we may not be able to successfully achieve profitability. The likelihood
of our success must be considered in light of the problems, expenses and
complications frequently encountered in connection with the development of a
project this size and the competitive environment in which we operate.
Accordingly, our limited operating history makes an effective evaluation of our
potential success difficult. Our viability and continued operation depend on
future profitability, our ability to generate cash flows and our successful
development and management of other business opportunities. There can be no
assurance that we will be able to successfully implement our business plan or
that if implemented, it will be profitable.
We may be unable to obtain the appropriate funding to run our Company.
We do not presently have sufficient financial resources and have no assurance
that sufficient funding will be available to us to build our project. There can
be no assurance that we will be able to obtain adequate financing in the future
or that the terms of such financing will be favorable. Failure to obtain such
additional financing could result in delay or indefinite postponement of
constructing an Observation Wheel.
Stock
-----
We must comply with penny stock regulations which could affect the liquidity and
price of our stock.
The Securities and Exchange Commission ("SEC") has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
the Financial Industry Regulatory Authority ("FINRA"), provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. Prior to a transaction in a penny stock, a
broker-dealer is required to: Deliver a standardized risk disclosure document
prepared by the SEC; Provide the customer with current bid and offers quotations
for the penny stock; Explain the compensation of the broker-dealer and its
salesperson in the transaction; Provide monthly account statements showing the
market value of each penny stock held in the customer's account; Make a special
written determination that the penny stock is a suitable investment for the
purchaser and Provide a written agreement to the transaction. These requirements
may have the effect of reducing the level of trading activity in the secondary
market for our stock. Because our shares are subject to the penny stock rules,
you may find it more difficult to sell your shares.
We may in the future issue additional shares of our common stock which would
reduce investors' percentage ownership and may dilute our share value.
7
Our articles of incorporation authorize the issuance of 200,000,000 shares of
$0.001 par value common stock. As of March 19, 2010, we have 149,902,287 shares
of our common stock issued and outstanding. We are also authorized to issue
50,000,000 shares of preferred stock and have designated 1,500,000 shares of
Series A Preferred stock at par value $0.001 with no face value, convertible to
common stock at 10 to 1 and 10,000,000 shares of Preferred B Stock at par value
$0.001 with a face value of $0.10 convertible to common stock at 2 to 1. The
future issuance of all or part of our remaining authorized common stock,
preferred stock or any combination of either, may result in substantial dilution
in the percentage of our common stock held by our then existing shareholders.
The issuance of common stock for future services or acquisitions or other
corporate actions will have the effect of diluting the value of the shares held
by our investors, and might have an adverse effect on any trading market for our
common stock.
We are a development stage company 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.
Since our reorganization in 2002, 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 project, the
level of our competition and our ability to attract and maintain key management
and employees.
Our auditor's report 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
have included a paragraph in their report regarding substantial doubt about our
ability to continue as a going concern. Our plans in this regard are to seek
additional funding through future equity private placements or debt facilities.
Without funding for one of our projects the Company would have to rely primarily
on raising capital through investors. There can be no guarantee that we are
capable of continuing to raise additional capital.
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. During the fiscal years ending December 31, 2009 and
2008, our common stock sold at an average high of $0.02 and $0.07 respectively.
The stock market in general has experienced volatility that has often been
unrelated to the operating performance of individual companies. These broad
market fluctuations may adversely affect the trading price of our common stock,
regardless of our actual performance, and could enhance the effect of any
fluctuations that do relate to our operating results. As a result of the
foregoing, stockholders may be unable to liquidate their shares for any reason.
Global Economy
--------------
Current and future conditions in the global economy and global capital markets
may adversely affect our results of operations, financial condition and cash
flow.
Our business and operating results have been and will continue to be affected by
worldwide economic conditions. As a result of slowing global economic growth,
the credit market crisis, declining consumer and business confidence,
fluctuating commodity prices, and other challenges currently affecting the
global economy, our investors and potential investors may experience
deterioration of their businesses, cash flow shortages, and difficulty obtaining
financing. As a result, existing or potential investors may delay or cancel
plans to invest in our Company. Further, our vendors may be experiencing similar
conditions, which may impact their ability to fulfill their obligations to us.
If the global economic slowdown continues for significant periods or
deteriorates significantly, our results of operations, financial condition, and
cash flows could be materially adversely affected.
Operating in Foreign Countries
------------------------------
We have initiated efforts to build a Voyager Project in the UAE. Operating in a
foreign country provides additional risks such as, permitting and licensing can
be more difficult to obtain, obtaining personnel for the daily operations could
present significant challenges, and if the local government were to become
unstable, our results could be severely affected.
Since its inception, there has been no activity relating to the UAE project.
8
Acts of Terrorism
-----------------
Because the Voyager Project will depend upon tourism, if there is a terrorist
attack in the city or country where the project is located, the anticipated
results could be dramatically affected, including complete closure of the
project.
Sarbanes-Oxley Act
------------------
We are required to comply with the provisions of Section 404 of the
Sarbanes-Oxley Act of 2002, which require us to maintain an ongoing evaluation
and integration of the internal controls of our business. We were required to
document and test our internal controls and certify that we are responsible for
maintaining an adequate system of internal control procedures for the year ended
December 31, 2009. In subsequent years, our independent registered public
accounting firm may be required to opine on those internal controls and
management's assessment of those controls. In the process, we may identify areas
requiring improvement, and we may have to design enhanced processes and controls
to address issues identified through this review.
We cannot be certain that we will be able to successfully complete the
procedures, certification and attestation requirements of Section 404 or that
our auditors will not have to report a material weakness in connection with the
presentation of our financial statements. If we fail to comply with the
requirements of Section 404 or if our auditors report such material weakness,
the accuracy and timeliness of the filing of our annual report may be materially
adversely affected and could cause investors to lose confidence in our reported
financial information, which could have a negative effect on the trading price
of our common stock. In addition, a material weakness in the effectiveness of
our internal controls over financial reporting could result in an increased
chance of fraud and the loss of customers, reduce our ability to obtain
financing and require additional expenditures to comply with these requirements,
each of which could have a material adverse effect on our business, results of
operations and financial condition.
Further, if we begin production of an observation wheel, we believe that the
out-of-pocket costs, the diversion of management's attention from running the
day-to-day operations and operational changes caused by the need to comply with
the requirements of Section 404 of the Sarbanes-Oxley Act could be significant.
If the time and costs associated with such compliance exceed our current
expectations, our results of operations could be adversely affected.
Going Concern
-------------
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. Management intends to initiate their business plan and will
continue to seek out joint venture partners, attempt to locate the appropriate
location for the L.V. Project as well as other projects and continually seek
funding opportunities.
Management intends to use borrowings and security sales to mitigate the effects
of its cash position. However, no assurance can be given that debt or equity
financing, if and when required, will be available. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets and classification of liabilities that might
be necessary should the Company be unable to continue existence.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES
We currently lease 2,100 square feet of office space in Las Vegas, Nevada from
Synthetic Systems, Inc., of which our President is the owner. We lease the
office space at cost with no mark-up for approximately $2,850 per month on a
month-to-month basis. We believe that the property leased from Synthetic
Systems, Inc., is in reasonably good condition and is suitable for our current
and anticipated needs for the near future. As Synthetic Systems, Inc. does not
own the office space directly, all rental payments are made to the independent
third party property owner.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET INFORMATION
Our common stock is traded in the over-the-counter bulletin board through the
Financial Industry Regulatory Authority ("FINRA"), under the symbol "VEII". The
following table sets forth the trading history of the Common Stock for each
quarter of fiscal years ended December 31, 2009 and 2008, as reported by
stockhouse.com. The quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission, and may not represent actual transactions.
High Low
----------------
2009
----
First Quarter 0.035 0.0001
Second Quarter 0.03 0.01
Third Quarter 0.019 0.01
Fourth Quarter 0.016 0.005
2008
----
First Quarter 0.10 0.05
Second Quarter 0.06 0.03
Third Quarter 0.05 0.03
Fourth Quarter 0.045 0.02
HOLDERS OF COMMON STOCK
As of March 19, 2010, we had approximately 110 active stockholders on record
(not including shares held by brokers or in street name), of the 149,902,287
shares of common stock outstanding. The closing bid stock price on March 19,
2010 was $0.004.
DIVIDENDS
We have never declared or paid dividends on our common stock. We intend to
follow a policy of retaining earnings, if any, to finance the growth of the
business and do not anticipate paying any cash dividends in the foreseeable
future. The declaration and payment of future dividends on the common stock will
be at the sole discretion of the Board of Directors and will depend on our
profitability and financial condition, capital requirements, statutory and
contractual restrictions, future prospects and other factors deemed relevant by
the Board.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The Company's stockholders approved the 2002 Stock Option Plan on April 2, 2002
at the Company's annual meeting. The plan authorizes the Company to issue
5,000,000 shares of common stock for issuance upon exercise of options.
The plan is intended to encourage directors, officers, employees and consultants
of the Company to acquire ownership of common stock. Officers (including
officers who are members of the Board of Directors), directors (other than
members of the Stock Option Committee (the "Committee") to be established to
administer the Stock Option Plan) and other employees and consultants of the
Company and its subsidiaries (if established) will be eligible to receive
options under the planned Stock Option Plan. The Committee will administer the
Stock Option Plan and will determine those persons to whom options will be
granted, the number of options to be granted, the provisions applicable to each
grant and the time periods during which the options may be exercised. No options
may be granted more than ten years after the date of the adoption of the Stock
Option Plan.
Unless the Committee, in its discretion, determines otherwise, non-qualified
stock options will be granted with an option price equal to the fair market
value of the shares of common stock to which the non-qualified stock option
relates on the date of grant. In no event may the option price with respect to
an incentive stock option granted under the Stock Option Plan be less than the
fair market value of such common stock to which the incentive stock option
relates on the date the incentive stock option is granted. Each option granted
under the Stock Option Plan will be exercisable for a term of not more than ten
years after the date of grant. Certain other restrictions will apply in
connection with this Plan when some awards may be exercised.
10
In the event of a change of control (as defined in the Stock Option Plan), the
date on which all options outstanding under the Stock Option Plan may first be
exercised will be accelerated. Generally, all options terminate 90 days after a
change of control. As of December 31, 2009, no options have been issued under
this plan.
RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS
Equity securities that were sold by the Company for the fiscal year ending
December 31, 2009 that were not registered under the Securities Act and were not
previously included in a Quarterly Report filed on Form 10-Q or in a Current
Report on Form 8-K are as follows:
In December 2009, the Company sold 1,500,000 shares of common stock valued at
$30,000 or $0.02 per share. Proceeds from the sale of shares were used for
operating expenses.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable to smaller reporting companies.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
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 subsidiaries on a consolidated basis unless the context indicates
otherwise.
This annual 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.
This annual report does not include an attestation report of the Company's
registered accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission.
Our Management, Discussion and Analysis ("MD&A") is provided as a supplement to
our audited financial statements to help provide an understanding of our
financial condition, changes in financial condition and results of operations.
The MD&A section is organized as follows:
o Executive Summary, Overview and Development of our Business. These sections
provide a general description of the Company's business, as well as recent
developments that we believe are important in understanding our results of
operations as well as anticipating future trends in our operations.
o Critical Accounting Policies. This section provides an analysis of the
significant estimates and judgments that affect the reported amounts of
assets, liabilities, revenues, expenses, and the related disclosure of
contingent assets and liabilities.
o Results of Operations. This section provides an analysis of our results of
operations for the year ended December 31, 2009 compared to the year ended
December 31, 2008. A brief description of certain aspects, transactions and
events is provided, including related-party transactions that impact the
comparability of the results being analyzed.
o Liquidity and Capital Resources. This section provides an analysis of our
financial condition and cash flows as of and for the year ended December
31, 2009.
EXECUTIVE SUMMARY
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
11
wholly-owned subsidiary of the Company. As a result of the merger, Ventures was
deemed to be the purchaser and surviving company for accounting purposes.
On January 30, 2002, Ventures entered into an agreement and Plan of
Reorganization (the "Reorganization") with Outland Development, LLC ("Outland"),
a limited liability company formed under the laws of the State of Nevada on
March 1, 1997. Pursuant to the Reorganization, Ventures issued 15,000,000 shares
of its common stock in exchange for 100% of Outland's membership interest.
This transaction was accounted for in the consolidated financial statements as a
reverse acquisition. As a result of this transaction, the former members of
Outland acquired or exercised control over a majority of the shares of the
Company before and after the reorganization. Accordingly, the transaction was
treated for accounting purposes as a recapitalization of Outland. Therefore,
these consolidated financial statements represent a continuation of Outland, not
Ventures.
The consolidated financial statements presented include the accounts of Outland
from its inception (March 1, 1997) through December 31, 2009.
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.
Voyager Ventures, Inc. has been a dormant company since 2002 and was
discontinued as of December 31, 2007. Outland Development, LLC has been a
dormant company and was discontinued as of June 30, 2009. Voyager Viridian LLC,
a wholly-owned subsidiary, was formed on August 3, 2009.
Plan of Operations
------------------
During the next 12 months, we are continuing our efforts on the development of
an Observation Wheel in Las Vegas, Nevada; however, actual production will not
commence until we have sufficient capital for construction and marketing. As of
the year ending December 31, 2009, the Company did not have enough cash on hand
to continue operations through the next year. From time-to-time the officers of
the Company loan funds to provide for operations however, there can be no
guarantees that the Company's officers and directors will continue to loan funds
to the Company on an ongoing basis. We will continue to seek alternative funding
sources, however if we do not receive a substantial amount of funding it will be
unlikely we can continue operations.
We have been successful in the past in selling our common stock in private
transactions to provide for minimal 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 continue to be
successful in completing those transactions. The significant expenses for the
Company consist of consulting fees that are primarily paid by the issuance of
our common stock and the costs of being a public company and remaining current
with our periodic filings.
We are not the traditional Company that has the standard research and
development expenses. As a result, most of our research and development expenses
consist of presentation materials and architectural designs. Upon funding of the
project the initial expense will be engineering and architectural.
Our primary costs consist mainly of professional and consulting, legal and
accounting fees along with those fees paid to related parties for rent expenses
and printing expenses. As the project is being developed we are incurring
additional architectural and travel related fees. If this project is successful
there will be a significant increase in expenses for all aspects of the
construction process to include an additional office set up, additional
employees and continual travel.
We plan to focus primarily on the development of the Observation Wheel in Las
Vegas over the next 12 months although we may entertain discussions with any
interested party in other locations. Other than presentation materials, if a
suitable site is acquired and selected, the primary focus will be on completing
engineering and starting the construction of an Observation Wheel.
We will face considerable risk in each of our business plan steps, such as
difficulty of hiring competent personnel within our budget and a shortfall of
funding due to our inability to raise capital in the equity securities market.
If no funding is received during the next twelve months, we will be forced to
rely on existing cash in the bank. As stated above, our current cash reserves
are not sufficient to fund operations for the next twelve months.
We have no operating history, no significant current operations, minimum cash on
hand, and no profit. Because of these factors, our auditors have issued an audit
opinion for us which includes a statement describing doubts about our ability to
continue as a going concern status. This means there is substantial doubt about
our ability to continue as a going concern. While we believe we have made good
12
faith estimates of our ability to secure additional capital in the future to
reach our goals, there is no guarantee that we will receive sufficient funding
to implement any future business plan steps. In the event that we do not receive
additional financing, we will not be able to continue our operations.
The timing of most of our capital expenditures is discretionary. Currently there
are no material long-term commitments associated with our capital expenditure
plans. Consequently, we have a significant degree of flexibility to adjust the
level of such expenditures as circumstances warrant. The level of our capital
expenditures will vary in future periods depending on market conditions and
other related economic factors.
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 accounting for stock based compensation.
Stock Based Compensation
------------------------
Stock based compensation is accounted for using the Equity-Based Payments to
Non-Employee Topic of the FASB ASC, which establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity's equity instruments or that may be settled by the issuance of
those equity instruments. We determine the value of stock issued at the date of
grant. We also determine at the date of grant the value of stock at fair market
value or the value of services rendered (based on contract or otherwise)
whichever is more readily determinable.
Shares issued to employees are expensed upon issuance.
Stock based compensation for employees is accounted for using the Stock Based
Compensation Topic of the FASB ASC. We use the fair value method for equity
instruments granted to 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.
RESULTS OF OPERATIONS
As of December 31, 2009, we have not constructed an Observation Wheel and
therefore have not generated revenues. Our officers and directors have assessed
possible site locations for other Observation Wheel projects outside of Las
Vegas, Nevada. As of December 31, 2009, we have not settled on any additional
Observation Wheel projects and are continuing to focus on the L.V. Project in
2010.
Results of operations for the year ended December 31, 2009 compared to the year
ended December 31, 2008 consist of the following:
December 31, 2009 December 31, 2008 $ Change % Change
-------------------------------------------------------------------
Revenue $ -- $ -- $ -- 0%
Professional and consulting fees 627,041 643,478 (16,437) (3)%
Project costs 134,857 32,004 102,853 321%
General and administrative expenses 380,788 137,198 243,590 178%
------------------------------------------------------
Operating loss $(1,142,686) $ (812,680) $ (330,006) 41%
We had operating expenses of $1,142,686 for the year ended December 31, 2009
versus operating expenses of $812,680 for the year ended December 31, 2008 which
primarily consisted of professional and consulting fees, project costs, and bad
debts. General and administrative expenses remained constant from 2008 to 2009.
In general, we are reducing costs where able in an attempt to prolong our cash
reserves.
If the Company receives funding for the L.V. Project, we expect these expenses
to increase substantially, including support for employees that will be required
and other operating expenses related to the construction of the project.
Additionally, we anticipate issuing bonuses to management for services rendered
at a time when the Company is more fiscally able.
13
Professional and Consulting Fees
--------------------------------
We incurred professional and consulting fees of $627,041 for the year ending
December 31, 2009 versus $643,478 for the year ending December 31, 2008.
Professional and consulting fees are primarily satisfied by the issuance of
common stock as a result of insufficient cash for payment for services. In 2009
we issued shares for services of $243,750 versus $218,000 in 2008.
We have expensed professional fees to Synthetic Systems, Inc. totaling $444,000
as of December 31, 2009 compared to $420,000 as of December 31, 2008 due to a
fee increase of $2,000 per month. We anticipate these professional fees to total
$444,000 for the next twelve months ending December 31, 2010. As of December 31,
2009, there is an accrued unpaid balance of $1,778,000 consisting of
professional fees of $1,018,000 and bonuses in lieu of salaries of $760,000 that
were incurred for the fiscal years ending 2007 and 2006. There were no bonuses
issued for the year ending December 31, 2009 or 2008. Synthetic Systems, Inc. is
jointly controlled by our Chief Executive Officer and Secretary. See Note 8 of
our financial statements.
Other professional fees recognized include fees associated to the preparation,
review, and filing of our financial statements with the Securities and Exchange
Commission of approximately $68,000 in 2009 compared to $112,000 in 2008. The
cash savings of $44,000 is a result of our efficient accounting and reporting
process, small business transactions, and a $22,000 decrease in legal fees in
2009 compared to 2008.
During 2009, we incurred consulting expenses of approximately $115,000 compared
to $209,000 in 2008. We engage consultants to assist us in analyzing possible
business prospects inside and outside of the Las Vegas area and to assess the
real estate needed in connection with the project. As of December 31, 2009, we
have identified several locations for the L.V. Project but have yet to agree
upon a definitive site. These engagements allow us to focus our efforts on the
progress of our project. In the event that a project site is secured, we
anticipate incurring consulting fees relating to the construction of the
project.
Blue Prints/Project Costs
-------------------------
Blue Prints/Project Costs for the year ended December 31, 2009 were $134,857
which is $102,853, or 321%, more than the $32,004 of project costs incurred for
the year ended December 31, 2008. Project costs are the expenses related to the
materials used to attract investors. These expenses consisted primarily of
presentation and development materials provided to prospective funding sources.
This increase is a result of services incurred in the progression towards the
execution of our project and the assessment of additional projects. Our total
project costs since inception are $330,797. We anticipate that we will continue
incurring project costs as a result of seeking business opportunities for our
Observation Wheel, should we be able to continue our planning efforts.
Bad Debts
---------
At December 31, 2009, we analyzed the collectability of our advance of $500,000
to a related party. The repayment of this advance is predicated upon the
production of our project. Based on current economic conditions, we have
determined that an allowance of $250,000 of the advance is appropriate. It is
unknown whether we will be able to secure a site and begin construction on the
project in the next twelve months, facilitating repayment of the advance. In the
event that we secure a project site and sufficient project funding, the
allowance against the advance will be reversed in reevaluation for realizable
collectability. As of December 31, 2008, there was no allowance on the advance.
LIQUIDITY
Years Ended December 31, 2009 and December 31, 2008.
December 31, 2009 December 31, 2008 $ Change % Change
----------------------------------------------------------
Cash $ 7,488 $ 15,234 $ (7,746) (51)%
Accounts payable and accrued expenses $1,638,121 $1,286,380 $ 351,741 27%
Due to related parties $2,354,000 $1,810,000 $ 544,000 30%
Total current liabilities $6,725,360 $5,829,619 $ 895,741 15%
Cash proceeds from the sale of common stock $ 90,000 $ 195,000 $ (105,000) (54)%
We have financed our operations during the year primarily through the use of
cash on hand, issuance of stock for services, issuance of stock for cash, and
aging of our payables.
As of December 31, 2009, we had total current liabilities of $6,725,360 compared
to $5,829,619 as of December 31, 2008. The 15% increase in total current
liabilities is primarily a result of expenses incurred that are due to related
parties, which remain unpaid. These items increased as our lack of cash has
resulted in longer aging of payables and need for additional cash infusion.
14
Accounts Payable
----------------
Our accounts payable increased by approximately $95,000, or 378%, as of December
31, 2009 compared to December 31, 2008 due to incurrence of travel expenses and
project costs. As a result of current economic conditions, travel expenses and
project costs were incurred to explore alternative observation wheel locations
outside of Las Vegas for possible business opportunities.
For the year ending 2010, we anticipate to incur normal reoccurring expenses of
approximately $600,000 as a result of related party consulting, furniture and
equipment lease, office cleaning, utilities, accounting, health insurance and
rent expense.
Accrued Expenses
----------------
Accrued Expenses increased $256,753, or 21%, as of December 31, 2009 compared to
December 31, 2008 which consisted primarily of accrued interest. Payment of our
loans and their corresponding interest will be made upon our first initial
project financing. Until such time, it is likely that our interest expense will
continue to accumulate at a steady rate.
Due to Related Parties
----------------------
December 31, 2009 December 31, 2008 $ Change % Change
-----------------------------------------------------------------------
Accrued Expenses - Related Party $1,778,000 $1,470,000 $ 308,000 21%
Due To - Related Party 576,000 340,000 236,000 69%
---------------------------------------------------
Total Related Party Liability $2,354,000 $1,810,000 $ 544,000 30%
Our total related party liabilities increased $544,000, or 30%, as of December
31, 2009 compared to December 31, 2008. These items increased as our lack of
cash has resulted in longer aging of payables to our related parties and need
for additional cash infusion from our related parties.
We received $236,000 in related party loans during the fiscal year ended
December 31, 2009 compared to $215,000 during the fiscal year ended December 31,
2008. The receipt of funds allowed us to pay our vendors so that we could
continue our operating efforts. Future borrowings may be deemed necessary to
sustain our operations until alternative funding can be received.
As of December 31, 2009, we owe $576,000 in related party loans and $1,778,000
for professional fees and unpaid bonuses. No bonuses were issued for the fiscal
year ending December 31, 2009 or 2008.
These related party trends are likely to continue throughout 2010 and until
fiscal stability can be reached, either by project funding or through the
generation of operating revenues.
CAPITAL RESOURCES
Cash decreased by $7,746, or 51%, as of December 31, 2009 due to the payment of
some of our payables throughout 2009. Additionally, common stock issuances and
subscriptions for cash decreased by $105,000, or 54%, for the year ended
December 31, 2009 compared to the year ended December 31, 2008. It is more
likely than not that the issuance of shares for cash will continue to decrease
in the next twelve months as a result of the apprehensions shareholders have
towards the volatility of the stock market. For the year ended December 31,
2009, we issued common stock for $60,000 cash. An additional $30,000 was
received for the purchase of common stock, however the related sales are yet to
be finalized and no shares were issued as of December 31, 2009. The issuance of
common stock for cash assists us in continuing our operating efforts. Should we
be unable to issue common stock for cash sufficient enough to sustain our
operations, either alternative capital raising efforts will proceed or
operations will halt until the proper funding can be obtained.
We had $7,488 cash on hand as of December 31, 2009 compared to $15,234 as of
December 31, 2008. 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. It is unlikely that
an agreement finalizing the security of a project site and the corresponding
construction of an observation wheel will begin in the next twelve months.
Assuming no such occurrences, our anticipated minimum cash payments for 2010
will be approximately $600,000.
There is no assurance we will be able to obtain additional capital as required,
or obtain the capital on acceptable terms and conditions. Our failure to obtain
sufficient funding may result in our need to halt operations until such funding
can be obtained. A halt in operations could significantly setback the progress
we have made in negotiating a project site and the related financing.
Additionally, during this time, a stronger competitor may prevail with a similar
project.
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
15
to pursue our strategic plan, we may have to cease or significantly curtail our
operations. This would materially impact our ability to continue operations.
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. The acquisition of
sufficient funding presents a challenge in the current economy that we may be
unable to overcome. 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.
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.
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.
NOTES PAYABLE
December 31, 2009 December 31, 2008 $ Change % Change
----------------------------------------------------------------------
Related Party $ 576,000 $ 340,000 $ 236,000 69%
Line of Credit 605,000 605,000 -- 0%
Diversified 1,250,000 1,250,000 -- 0%
Settlement Payable 878,239 878,239 -- 0%
--------------------------------------------------
Total Debt $3,309,239 $3,073,239 $ 236,000 8%
As of December 31, 2009, we have debt of $3,309,239 compared to $3,073,239 as of
December 31, 2008. The increase of $236,000 is a result of related party loans
as indicated above.
Our remaining debt obligations consist of loans due as a result of notes that,
upon renegotiations with our creditors, are not considered in default and are to
be paid upon our initial substantial project fundings. As of December 31, 2009,
the total project funding required to repay our principal payments is
$2,733,239. Per the terms of the modifications of the debts, the principal
balance will not vary from this balance until payments have begun. However,
certain obligations will continue to accrue interest until payment is made as
discussed below.
Line of Credit
--------------
On November 15, 2002, we entered into a loan and security agreement with Mr. Dan
Fugal, an unaffiliated individual, whereby Mr. Fugal was to provide us with a
credit facility in the form of a secured line of credit not to exceed $2.5
million.
On February 15, 2003, we executed an amendment to the Loan and Security
Agreement to amend the term date from February 15, 2003 to April 15, 2003. As of
the year ending December 31, 2005, Mr. Fugal has loaned $605,000 to the Company.
The loan and security agreement with Mr. Fugal has expired and requires the
Company to repay $605,000 to Mr. Fugal as well as a one time interest payment of
$605,000. Any agreements or amendments for Mr. Fugal to provide additional funds
have been canceled, and the Company is obligated to repay a total of $1,210,000.
As a requirement of the Agreement, the Company is obligated to repay Mr. Fugal
when an adequate amount of funding is received. At this time, unless funding is
received, it is likely that the Company will be unable to repay the debt. As
collateral for the Loan and Security Agreement with Mr. Fugal, Mr. Fugal filed a
UCC-1 against the assets and intellectual property of the Company which would
give Mr. Fugal the right to institute foreclosure proceedings toward the
Company. Mr. Fugal could institute foreclosure proceedings at any time if he
believes that he will not be repaid. As of this date 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. This credit facility is deemed closed and will not
increase.
16
Diversified Lending
-------------------
On September 5, 2006, the Company entered into a note payable with Diversified
Lending Group, Inc. for $1,250,000. The Company is a joint tenant with Western
Architectural Services, LLC ("Western") in this debt which bears interest of 14%
and is due upon our first substantial project funding. As of December 31, 2007,
Western paid directly to Diversified Lending Group, Inc. six months of interest
for the original loan. We have accounted for this as both interest income and
interest expense of $87,500 for the fiscal year ended December 31, 2007. As
stated in the agreement, the Company could extend the Maturity Date of the loan
one time for a period of six months, which the Company exercised for a fee of 3%
of the loan amount or $37,500 (Western paid to the Company $18,750 as their part
of the loan extension). We accounted for Western's three months of interest due
to the extension as both interest income and interest expense of $43,750 for the
fiscal year ended December 31, 2008.
In February 2009, management and the note holder negotiated an amendment to the
note payable, effective February 5, 2008, to extend the terms of the note. Per
the amended agreement, the note is not in default and interest is to continue to
be accrued on the principal balance of $1,250,000 at the original rate of 14%
per annum. An original maturity date of one year from the issuance was amended
so that the unpaid interest and principal balances are due sixty days pursuant
to our first substantial project funding that exceeds $15,000,000. As of
December 31, 2009, an aggregate balance of $1,597,863 remained unpaid.
As consideration for the loan, the Company was required to pay $50,000 and issue
4,000,000 shares of its common stock, both of which have been completed. Also,
to collateralize the loan, the Company was required to issue 7,500,000 shares of
its common stock. The promissory note also holds an anti-dilution clause where
the Company is required to issue additional shares of its common stock to the
debt holder so their 4% ownership is not diluted. As of December 31, 2009 and
2008, respectively, our loan fees paid with common stock have been fully
expensed and our loan collateral paid with common stock was $750,000 at both
period end dates.
At December 31, 2009 and December 31, 2008, we accrued an additional $12,585 and
$22,903 respectively, of interest relating to the year end dilution calculation.
As a result, 1,307,431 additional shares are to be issued upon the publication
of the financial statements.
As the loan collateral, loan fees and anti-dilution components of the agreement
(as described above) are dominated in the Company's common stock, the Company
maintains the full risk of loss and we have recorded the full debt component on
our balance sheet.
From the proceeds of the debt facility we issued $500,000 to Western and
recorded an Advance - Related Party on our balance sheet. Our Chief Operating
Officer is also the Chief Executive Officer of Western Architectural Services,
LLC.
Settlement Payable
------------------
Our loans and settlement payable have no stated interest rate, are due on demand
and are unsecured. Interest has been accrued at an estimated market interest
rate of 8%, is included in accrued expenses, and totaled $533,709 as of December
31, 2009 and $462,277 as of December 31, 2008.
The original loan balance was $228,239. 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 Company's business plan, a settlement agreement was
executed with the lender in August 2003. Pursuant to the Settlement Agreement,
the Company agreed to pay a settlement amount of an additional $650,000, without
claiming any fault or wrong doing.
As of December 31, 2009, the total obligation included loans of $228,239 in
principal and the settlement obligation of $650,000, plus total accrued interest
of $533,709 amounting to an aggregate of $1,411,948. One half of this amount, or
$705,974 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, neither of which have occurred as of December 31, 2009. Since
the loan payable does not have a maturity date, the entire balance has been
presented as a current liability. The debt holder is a shareholder in our
Company and owns approximately 7.4 million shares of our common stock.
OFF BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements and does not
participate in non-exchange traded contracts requiring fair value accounting
treatment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
DECEMBER 31, 2008
CONTENTS
Page
REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON THE CONSOLIDATED FINANCIAL STATEMENTS F-2
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statement of Stockholders' Deficit F-5
Consolidated Statements of Cash Flows F-11
Notes to Consolidated Financial Statements F-13
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors and Shareholders
Voyager Entertainment International Inc. and Subsidiaries
Las Vegas, NV
We have audited the accompanying balance sheets of Voyager Entertainment
International, Inc. and Subsidiaries as of December 31, 2009 and 2008, and the
related statements of operations, stockholders' deficit, and cash flows for the
years then ended and from inception (March 1, 1997) through December 31, 2009.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Voyager Entertainment
International, Inc. and Subsidiaries as of December 31, 2009 and 2008, and the
results of its operations and cash flows for the years then ended and from
inception (March 1, 1997) through December 31, 2009 in conformity with U.S.
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations, which
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
Henderson, NV
March 26, 2010
F-2
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2009 2008
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 7,488 $ 15,234
Prepaids 1,874 1,862
Deferred financing costs -- 50,000
Advances - related party, net of allowance
of $250,000 and $0, respectively 250,000 500,000
------------ ------------
Total current assets 259,362 567,096
FIXED ASSETS, net of accumulated depreciation of
$42,214 and $43,391, respectively 4,976 5,937
------------ ------------
Total assets $ 264,338 $ 573,033
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,638,121 $ 1,286,380
Accrued expenses - related party 1,778,000 1,470,000
Notes payable 1,855,000 1,855,000
Due to related parties 576,000 340,000
Loans and settlement payable 878,239 878,239
------------ ------------
Total current liabilities 6,725,360 5,829,619
------------ ------------
Total liabilities 6,725,360 5,829,619
COMMITMENTS & CONTINGENCIES -- --
STOCKHOLDERS' DEFICIT
Preferred stock: $0.001 par value; authorized 50,000,000 shares
Series A - 1,500,000 designated, none outstanding -- --
Series B - 10,000,000 designated, 0 and 1,000,000 outstanding
respectively -- 1,000
Common stock: $0.001 par value; authorized 200,000,000 shares;
issued and outstanding:151,402,287 and 132,027,287 respectively 151,402 132,027
Additional paid-in capital 13,199,583 12,937,489
Deferred construction costs paid with common stock (21,093) (84,375)
Loan collateral paid with common stock (750,000) (750,000)
Common stock payable, net common stock receivable of $75,000 and $0, respectively 50,000 135,000
Accumulated deficit during the development stage (19,090,914) (17,627,727)
------------ ------------
Total stockholders' deficit (6,461,022) (5,256,586)
------------ ------------
Total liabilities and stockholders' deficit $ 264,338 $ 573,033
============ ============
The accompanying notes form an integral part of these consolidated financial
statements.
F-3
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve Months Ended From inception
December 31, December 31, March 1, 1997 to
2009 2008 December 31, 2009
------------------------------- -----------------
Revenues $ -- $ -- $ --
Operating Expenses:
Professional and consulting fees 627,041 643,478 13,360,604
Project costs 134,857 32,004 330,797
Bad debt expense 250,000 -- 250,000
Depreciation 3,270 7,180 46,661
Settlement expense & nullification fee expense -- -- 1,025,000
Other expense 127,518 130,018 1,287,639
------------- ------------- -------------
1,142,686 812,680 16,300,701
Operating loss (1,142,686) (812,680) (16,300,701)
Other income (expense):
Interest income -- 43,751 132,528
Interest expense (259,264) (419,418) (2,861,504)
Financing fees (59,008) -- (59,008)
Loss on disposal of fixed assets (2,229) -- (2,229)
------------- ------------- -------------
(320,501) (375,667) (2,790,213)
Net Loss (1,463,187) (1,188,347) (19,090,914)
Preferred stock dividends -- -- (130,000)
------------- ------------- -------------
Net loss allocable to common stockholders $ (1,463,187) $ (1,188,347) $ (19,220,914)
============= ============= =============
Net loss per common share - basic and
diluted $ (0.01) $ (0.01)
============= =============
Weighted average number of common
shares outstanding 141,635,849 127,699,957
============= =============
The accompanying notes form an integral part of these consolidated financial
statements.
F-4
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MARCH 1, 1997) TO DECEMBER 31, 2009
Additional Deferred
Preferred Preferred paid-in construction
Stock Series A Stock Series B Common stock capital costs
--------------- --------------- ------------------- ------------- ----------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Balance at inception - March 1, 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 (18,141,535)
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 (162,600)
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 $(18,304,135)
========= ======= ====== ====== ========== ======= =========== =============
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 --
Amortization of beneficial conversion
feature in a manner similar to
preferred stock dividends -- -- -- -- -- -- (130,000) --
Deficit
accumulated
during the Total
Acquisition Loan Loan Stock development stockholders'
Deposit collateral Fee Payable stage deficit
---------- ---------- ----- ------- ------------- -------------
Balance at inception - March 1, 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 -- -- -- -- -- --
Issuance of common stock for cash
June 2002 -- -- -- -- -- 150,000
Issuance of common stock for
Architectural agreement - October 2002 -- -- -- -- -- --
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 $ -- $ -- $ -- $ -- $(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 -- -- -- -- -- 130,000
Amortization of beneficial conversion
feature in a manner similar to
preferred stock dividends -- -- -- -- -- (130,000)
F-5
Additional Deferred
Preferred Preferred paid-in construction
Stock Series A Stock Series B Common stock capital costs
--------------- --------------- ------------------- ------------- ----------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
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 $ 24,136,079 $(18,304,135)
========= ======= ========= ====== ========== ======= ============ =============
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 March 2004 (500,000) (500) -- -- 5,000,000 5,000 (4,500) --
Conversion of preferred stock to
common stock March 2004 (500,000) (500) -- -- 5,000,000 5,000 (4,500) --
Issuance of common stock for cash
March 2004 -- -- -- -- 384,614 385 49,615 --
Issuance of common stock for services
June 2004 -- -- -- -- 650,000 650 322,350 --
Issuance of common stock for cash
September 2004 -- -- -- -- 333,333 333 49,667 --
Issuance of common stock for cash
October 2004 -- -- -- -- 1,000,000 1,000 149,000 --
Issuance of common stock for services
October 2004 -- -- -- -- 500,000 500 54,500 --
Deficit
accumulated
during the Total
Acquisition Loan Loan Stock development stockholders'
Deposit collateral Fee Payable stage deficit
---------- ---------- ----- ------- ------------- -------------
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 $ -- $ -- -- $ -- $(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 March 2004 -- -- -- -- -- --
Conversion of preferred stock to
common stock March 2004 -- -- -- -- -- --
Issuance of common stock for cash
March 2004 -- -- -- -- -- 50,000
Issuance of common stock for services
June 2004 -- -- -- -- -- 323,000
Issuance of common stock for cash
September 2004 -- -- -- -- -- 50,000
Issuance of common stock for cash
October 2004 -- -- -- -- -- 150,000
Issuance of common stock for services
October 2004 -- -- -- -- -- 55,000
F-6
Additional Deferred
Preferred Preferred paid-in construction
Stock Series A Stock Series B Common stock capital costs
--------------- --------------- ------------------- ------------- ----------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Net loss for the year ended
December 31, 2004 -- -- -- -- -- -- -- --
--------- ------- --------- ------ ---------- ------- ----------- -------------
Balance at December 31, 2004 500,000 $ 500 4,000,000 $4,000 64,691,128 $64,691 $25,683,909 $(18,304,135)
========= ======= ========= ====== ========== ======= =========== =============
Issuance of common stock for services
January 2005 -- -- -- -- 500,000 500 74,500 --
Issuance of common stock for cash
February 2005 -- -- -- -- 500,000 500 99,500 --
Issuance of common stock for services
March 2005 -- -- -- -- 500,000 500 159,500 --
Issuance of common stock for cash
March 2005 -- -- -- -- 375,000 375 74,625 --
Issuance of common stock for cash
June 2005 -- -- -- -- 666,667 667 99,333 --
Issuance of common stock for cash
June 2005 -- -- -- -- 2,000,000 2000 298,000 --
Issuance of common stock for cash
July 2005 -- -- -- -- 200,000 200 69,800 --
Issuance of common stock for cash
July 2005 -- -- -- -- 666,667 667 99,333 --
Issuance of common stock for cash
July 2005 -- -- -- -- 166,666 166 24,834 --
Conversion of preferred stock to common
Stock August 2005 -- --(2,500,000) (2,500) 5,000,000 5,000 (2,500) --
Issuance of common stock for cash
September 2005 -- -- -- -- 100,000 100 32,900 --
Issuance of common stock for cash
September 2005 -- -- -- -- 500,000 500 164,500 --
Issuance of common stock for cash
November 2005 -- -- -- -- 333,333 333 49,667 --
Issuance of common stock for cash
November 2005 -- -- -- -- 800,000 800 119,200 --
Issuance of common stock for cash
November 2005 -- -- -- -- 666,667 667 99,333 --
Issuance of common stock for cash
December 2005 -- -- -- -- 166,667 167 24,833 --
Net loss for the year ended
December 31, 2005 -- -- -- -- -- -- -- --
--------- ------- --------- ------ ----------- ------- ------------ ------------
Balance at December 31, 2005 500,000 $ 500 1,500,000 $1,500 77,832,795 $77,833 $ 27,171,267 $(18,304,135)
========= ======= ========= ====== =========== ======= ============ =============
Issuance of common stock for cash
February 2006 -- -- -- -- 166,667 167 24,833 --
Conversion of preferred series B stock
To common stock April 2006 -- -- (500,000) (500) 1,000,000 1,000 (500) --
Issuance of common stock for Services
April 2006 -- -- -- -- 950,000 950 141,550 --
Deficit
accumulated
during the Total
Acquisition Loan Loan Stock development stockholders'
Deposit collateral Fee Payable stage deficit
---------- ---------- ----- ------- ------------- -------------
Net loss for the year ended
December 31, 2004 -- -- -- -- (2,455,886) (2,455,886)
--------- ---------- ------ ------- ------------- ------------
Balance at December 31, 2004 $ -- $ -- -- $ -- $(10,342,731) $(2,893,766)
========= ========== ====== ======= ============= ============
Issuance of common stock for services
January 2005 -- -- -- -- -- 75,000
Issuance of common stock for cash
February 2005 -- -- -- -- -- 100,000
Issuance of common stock for services
March 2005 -- -- -- -- -- 160,000
Issuance of common stock for cash
March 2005 -- -- -- -- -- 75,000
Issuance of common stock for cash
June 2005 -- -- -- -- -- 100,000
Issuance of common stock for cash
June 2005 -- -- -- -- -- 300,000
Issuance of common stock for cash
July 2005 -- -- -- -- -- 70,000
Issuance of common stock for cash
July 2005 -- -- -- -- -- 100,000
Issuance of common stock for cash
July 2005 -- -- -- -- -- 25,000
Conversion of preferred stock to common
Stock August 2005 -- -- -- -- -- --
Issuance of common stock for cash
September 2005 -- -- -- -- -- 33,000
Issuance of common stock for cash
September 2005 -- -- -- -- -- 165,000
Issuance of common stock for cash
November 2005 -- -- -- -- -- 50,000
Issuance of common stock for cash
November 2005 -- -- -- -- -- 120,000
Issuance of common stock for cash
November 2005 -- -- -- -- -- 100,000
Issuance of common stock for cash
December 2005 -- -- -- -- -- 25,000
Net loss for the year ended
December 31, 2005 -- -- -- -- (1,736,658) (1,736,658)
--------- ---------- ------ -------- ------------- ------------
Balance at December 31, 2005 $ -- $ -- -- $ -- $(12,079,389) $(3,132,424)
========= ========== ====== ======== ============= ============
Issuance of common stock for cash
February 2006 -- -- -- -- -- 25,000
Conversion of preferred series B stock
To common stock April 2006 -- -- -- -- -- --
Issuance of common stock for Services
April 2006 -- -- -- -- -- 142,500
F-7
Additional Deferred
Preferred Preferred paid-in construction
Stock Series A Stock Series B Common stock capital costs
--------------- --------------- ------------------- ------------- ----------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Issuance of common stock for Acquisition
Deposit April 2006 -- -- -- -- 3,000,000 3,000 447,000 --
Issuance of common Stock for services
May 2006 -- -- -- -- 100,000 100 15,900 --
Issuance of common stock for services
June 2006 -- -- -- -- 250,000 250 34,750 --
Conversion of Preferred Series A
To common Stock July 2006 (500,000) (500) -- -- 5,000,000 5,000 (4,500) --
Issuance of common stock for loan
August 2006 -- -- -- -- 4,000,000 4,000 396,000 --
Issuance of common Stock for collateral
August 2006 -- -- -- -- 7,500,000 7,500 742,500 --
Issuance of common stock for services
November 2006 -- -- -- -- 9,812,500 9,813 740,188 --
Issuance of common stock as deposit
For acquisition November 2006 -- -- -- -- 2,000,000 2,000 298,000 --
Issuance of common stock for additional
Debt interest December 2006 -- -- -- -- 464,278 464 27,392 --
Issuance of common stock for cash
December 2006 -- -- -- -- 166,667 167 24,833 --
Issuance of common stock for services
December 2006 -- -- -- -- 1,600,000 1,600 91,400 --
Fair market adjustment to stock for
Deferred Construction Costs,
December 2006 -- -- -- -- -- -- (18,107,260) 18,107,260
Accretion of loan costs to interest
Expense, December 2006 -- -- -- -- -- -- -- --
Net loss as of December 31, 2006 -- -- -- -- -- -- -- --
------ ------- --------- ------ ----------- -------- ------------ -----------
Balance at December 31, 2006 -- -- 1,000,000 $1,000 113,842,905 $113,843 $ 12,043,353 $ (196,875)
====== ======= ========= ====== =========== ======== ============ ===========
Issuance of common stock for services
March 2007 -- -- -- -- 1,000,000 1,000 97,000 --
Expense of Acquisition Deposit as
Nullification Fee March 2007 -- -- -- -- -- -- -- --
Issuance of common stock for services
April 2007 -- -- -- -- 500,000 500 59,500 --
Issuance of common stock for services
May 2007 -- -- -- -- 1,100,000 1,100 114,400 --
Issuance of common stock for interest
April 2007 -- -- -- -- 89,438 89 6,171 --
Issuance of common stock for Cash
July 2007 -- -- -- -- 2,000,000 2,000 198,000 --
Issuance of common stock for interest
July 2007 -- -- -- -- 39,800 40 7,124 --
Issuance of common stock for services
August 2007 -- -- -- -- 1,300,000 1,300 187,200 --
Deficit
accumulated
during the Total
Acquisition Loan Loan Stock development stockholders'
Deposit collateral Fee Payable stage deficit
---------- ---------- ----- ------- ------------- -------------
Issuance of common stock for Acquisition
Deposit April 2006 (450,000) -- -- -- -- --
Issuance of common Stock for services
May 2006 -- -- -- -- -- 16,000
Issuance of common stock for services
June 2006 -- -- -- -- -- 35,000
Conversion of Preferred Series A
To common Stock July 2006 -- -- -- -- -- --
Issuance of common stock for loan
August 2006 -- -- (400,000) -- -- --
Issuance of common Stock for collateral
August 2006 -- (750,000) -- -- -- --
Issuance of common stock for services
November 2006 -- -- -- -- -- 750,000
Issuance of common stock as deposit
For acquisition November 2006 (300,000) -- -- -- -- --
Issuance of common stock for additional
Debt interest December 2006 -- -- -- -- -- 27,857
Issuance of common stock for cash
December 2006 -- -- -- -- -- 25,000
Issuance of common stock for services
December 2006 -- -- -- -- -- 93,000
Fair market adjustment to stock for
Deferred Construction Costs,
December 2006 -- -- -- -- -- --
Accretion of loan costs to interest
Expense, December 2006 -- -- 130,000 -- -- 130,000
Net loss as of December 31, 2006 -- -- -- -- (1,886,694) (1,886,694)
---------- ---------- ---------- ------- ------------- -------------
Balance at December 31, 2006 $(750,000) $(750,000) $(270,000) $ -- $(13,966,083) $ (3,774,762)
========== ========== ========== ======= ============= =============
Issuance of common stock for services
March 2007 -- -- -- -- -- 98,000
Expense of Acquisition Deposit as
Nullification Fee March 2007 375,000 -- -- -- -- 375,000
Issuance of common stock for services
April 2007 -- -- -- -- -- 60,000
Issuance of common stock for services
May 2007 -- -- -- -- -- 115,500
Issuance of common stock for interest
April 2007 -- -- -- -- -- 6,260
Issuance of common stock for Cash
July 2007 -- -- -- -- -- 200,000
Issuance of common stock for interest
July 2007 -- -- -- -- -- 7,164
Issuance of common stock for services
August 2007 -- -- -- -- -- 188,500
F-8
Additional Deferred
Preferred Preferred paid-in construction
Stock Series A Stock Series B Common stock capital costs
--------------- --------------- ------------------- ------------- ----------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Issuance of common stock for cash
August 2007 -- -- -- -- 1,200,000 1,200 118,800 --
Issuance of common stock for interest
August 2007 -- -- -- -- 149,369 149 21,438 --
Issuance of common stock for cash
October 2007 -- -- -- -- 100,000 100 9,900 --
Issuance of common stock for services
November 2007 -- -- -- -- 500,000 500 49,500 --
Issuance of common stock for cash
December 2007 -- -- -- -- 1,450,000 1,450 58,550 --
Issuance of common stock for services
December 2007 -- -- -- -- 200,000 200 19,800 --
Issuance of common stock for interest
December 2007 -- -- -- -- 105,775 106 14,703 --
Fair market adjustment to stock for
Deferred Construction Costs,
December 2007 -- -- -- -- -- -- (14,063) 14,063
Accretion of loan costs to interest
Expense December 2007 -- -- -- -- -- -- -- --
Net loss as of December 31, 2007 -- -- -- -- -- -- -- --
------ ------- --------- ------ ----------- -------- ----------- ----------
Balance at December 31, 2007 -- $ -- 1,000,000 $1,000 123,577,287 $123,577 $12,991,376 $(182,813)
====== ======= ========= ====== =========== ======== =========== ==========
Cancellation of shares in relation
To Architecture Acquisition Rescission -- -- -- -- (3,000,000) (3,000) (447,000) --
Issuance of common stock for cash,
March 2008 -- -- -- -- 1,000,000 1,000 49,000 --
Issuance of common stock for cash,
April 2008 -- -- -- -- 625,000 625 24,375 --
Issuance of common stock for services,
April 2008 -- -- -- -- 2,375,000 2,375 95,625 --
Issuance of common stock for cash, May 2008 -- -- -- -- 1,000,000 1,000 29,000 --
Issuance of common stock for cash, June 2008 -- -- -- -- 1,000,000 1,000 29,000 --
Issuance of common stock for interest
Expense and services, June 2008 -- -- -- -- 5,200,000 5,200 254,800 --
Issuance of common stock for cash,
August 2008 -- -- -- -- -- -- -- --
Issuance of common stock for services,
October 2008 -- -- -- -- 250,000 250 9,750 --
Issuance of common stock for cash,
December 2008 -- -- -- -- -- -- -- --
Fair market value adjustment to stock
For Deferred Construction Costs,
December 2008 -- -- -- -- -- -- (98,438) 98,438
Net loss as of December 31, 2008 -- -- -- -- -- -- -- --
------ ------- --------- ------ ----------- -------- ----------- ----------
Balance at December 31, 2008 -- $ -- 1,000,000 $1,000 132,027,287 $132,027 $12,937,489 $ (84,375)
====== ======= ========= ====== =========== ======== =========== ==========
Deficit
accumulated
during the Total
Acquisition Loan Loan Stock development stockholders'
Deposit collateral Fee Payable stage deficit
---------- ---------- ----- ------- ------------- -------------
Issuance of common stock for cash
August 2007 -- -- -- -- -- 120,000
Issuance of common stock for interest
August 2007 -- -- -- -- -- 21,587
Issuance of common stock for cash
October 2007 -- -- -- -- -- 10,000
Issuance of common stock for services
November 2007 -- -- -- -- -- 50,000
Issuance of common stock for cash
December 2007 -- -- -- -- -- 60,000
Issuance of common stock for services
December 2007 -- -- -- -- -- 20,000
Issuance of common stock for interest
December 2007 -- -- -- -- -- 14,809
Fair market adjustment to stock for
Deferred Construction Costs,
December 2007 -- -- -- -- -- --
Accretion of loan costs to interest
Expense December 2007 -- -- 270,000 -- -- 270,000
Net loss as of December 31, 2007 -- -- -- -- (2,473,297) (2,473,297)
---------- ---------- -------- ------- ------------- ------------
Balance at December 31, 2007 $(375,000) $(750,000) $ -- $ -- $(16,439,382) $(4,631,242)
========== ========== ======== ======= ============= ============
Cancellation of shares in relation
To Architecture Acquisition Rescission 375,000 -- -- 75,000 -- --
Issuance of common stock for cash,
March 2008 -- -- -- -- -- 50,000
Issuance of common stock for cash,
April 2008 -- -- -- -- -- 25,000
Issuance of common stock for services,
April 2008 -- -- -- -- -- 98,000
Issuance of common stock for cash,
May 2008 -- -- -- -- -- 30,000
Issuance of common stock for cash,
June 2008 -- -- -- -- -- 30,000
Issuance of common stock for interest
Expense and services, June 2008 -- -- -- -- -- 260,000
Issuance of common stock for cash,
August 2008 -- -- -- 20,000 -- 20,000
Issuance of common stock for services,
October 2008 -- -- -- -- -- 10,000
Issuance of common stock for cash,
December 2008 -- -- -- 40,000 -- 40,000
Fair market value adjustment to stock
For Deferred Construction Costs,
December 2008 -- -- -- -- -- --
Net loss as of December 31, 2008 -- -- -- -- (1,188,347) (1,188,347)
---------- ---------- -------- -------- ------------- ------------
Balance at December 31, 2008 $ -- $(750,000) $ -- $135,000 $(17,627,727) $(5,256,586)
========== ========== ======== ======== ============= ============
F-9
Additional Deferred
Preferred Preferred paid-in construction
Stock Series A Stock Series B Common stock capital costs
--------------- --------------- ------------------- ------------- ----------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Issuance of common stock for services,
February 2009 -- -- -- -- 250,000 250 4,750 --
Issuance of common stock for services,
March 2009 -- -- -- -- 1,500,000 1,500 43,500 --
Issuance of common stock for cash,
March 2009 -- -- -- -- 2,000,000 2,000 38,000 --
Issuance of common stock for services,
April 2009 -- -- -- -- 375,000 375 7,125 --
Issuance of common stock for services,
May 2009 -- -- -- -- 3,000,000 3,000 72,000 --
Issuance of common stock for services,
August 2009 -- -- -- -- 7,250,000 7,250 104,000 --
Issuance of common stock for cash,
August 2009 -- -- -- -- 3,000,000 3,000 57,000 --
Conversion of preferred series B stock
to common stock, September 2009 -- -- (1,000,000) (1,000) 2,000,000 2,000 (1,000) --
Issuance of common stock for cash,
December 2009 -- -- -- -- -- -- -- --
Common stock returned to treasury,
December 2009 -- -- -- -- -- -- -- --
Fair market value adjustment to stock
For Deferred Construction Costs,
December 2009 -- -- -- -- -- -- (63,282) 63,282
Net loss as of December 31, 2009 -- -- -- -- -- -- -- --
------ ------- --------- ------ ----------- -------- ----------- ----------
Balance at December 31, 2009 -- $ -- -- $ -- 151,402,287 $151,402 $13,199,583 $ (21,093)
====== ======= ========= ====== =========== ======== =========== ==========
Deficit
accumulated
during the Total
Acquisition Loan Loan Stock development stockholders'
Deposit collateral Fee Payable stage deficit
---------- ---------- ----- ------- ------------- -------------
Issuance of common stock for services,
February 2009 -- -- -- -- -- 5,000
Issuance of common stock for services,
March 2009 -- -- -- -- -- 45,000
Issuance of common stock for cash,
March 2009 -- -- -- (40,000) -- --
Issuance of common stock for services,
April 2009 -- -- -- -- -- 7,500
Issuance of common stock for services,
May 2009 -- -- -- -- -- 75,000
Issuance of common stock for services,
August 2009 -- -- -- -- -- 111,250
Issuance of common stock for cash,
August 2009 -- -- -- -- -- 60,000
Conversion of preferred series B stock
to common stock, September 2009 -- -- -- -- -- --
Issuance of common stock for cash,
December 2009 -- -- -- 30,000 -- 30,000
Common stock returned to treasury,
December 2009 -- -- -- (75,000) -- (75,000)
Fair market value adjustment to stock
For Deferred Construction Costs,
December 2009 -- -- -- -- -- --
Net loss as of December 31, 2009 -- -- -- -- (1,463,187) (1,463,187)
---------- ---------- -------- -------- ------------- ------------
Balance at December 31, 2009 $ -- $(750,000) $ -- $ 50,000 $(19,090,914) $(6,461,022)
========== ========== ======== ======== ============= ============
The accompanying notes form an integral part of these consolidated financial
statements.
F-10
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
From inception
December 31, December 31, March 1, 1997 to
2009 2008 December 31, 2009
------------ ------------ -----------------
Cash Flows from Operating Activities:
Net Loss $ (1,463,187) $ (1,188,347) $(19,090,914)
Adjustments to reconcile net loss to net cash used by operating
activities:
Bad debt expense 250,000 -- 250,000
Depreciation 3,270 7,180 46,661
Loss on disposal of fixed assets 2,229 -- 2,229
Issuance of common stock for services 243,750 218,000 6,512,065
Issuance of common stock for nullification fee -- -- 375,000
Issuance of common stock for accrued bonus -- -- 750,000
Interest expense from the issuance of common stock -- 150,000 709,088
Accretion of debt issuance costs 50,000 -- 500,000
Changes in assets and liabilities:
Prepaid expenses (12) (68) (1,874)
Accounts payable and accrued expenses 276,742 158,874 1,557,382
Accrued expenses - related party 308,000 220,000 1,778,000
Accrued settlement obligation -- -- 650,000
------------ ------------ ------------
Net cash used in operating activities (329,208) (434,361) (5,962,363)
Cash flows from Investing Activities:
Payments to acquire fixed assets (4,538) (2,481) (54,388)
Proceeds from advances - related party -- -- (500,000)
------------ ------------ ------------
Net cash used in investing activities (4,538) (2,481) (554,388)
Cash flows from Financing Activities:
Proceeds from notes payable, short term debt -- -- 2,103,239
Proceeds from notes payable, due to related parties 238,000 225,500 588,500
Payment on notes payable, short term debt -- -- (20,000)
Payment on notes payable, due to related parties (2,000) (10,500) (12,500)
Proceeds from the sale of preferred stock -- -- 150,000
Proceeds from the sale of common stock 60,000 135,000 3,725,000
Proceeds from common stock payable 30,000 60,000 90,000
Payments for loan fees -- -- (50,000)
Payments for deferred financing costs -- -- (50,000)
------------ ------------ ------------
Net cash provided by financing activities 326,000 410,000 6,524,239
Net (decrease) increase in cash (7,746) (26,842) 7,488
Cash, beginning of year 15,234 42,076 --
------------ ------------ ------------
Cash, end of year $ 7,488 $ 15,234 $ 7,488
============ ============ ============
Cash paid for:
Interest $ 132 $ 83 $ 93,212
Income Taxes $ -- $ -- $ --
The accompanying notes form an integral part of these consolidated financial
statements.
F-11
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
From inception
December 31, December 31, March 1, 1997 to
2009 2008 December 31, 2009
------------ ------------ -----------------
Supplemental schedule of non-cash Investing and Financing Activities:
Disposal of fixed assets $ 4,447 $ -- $ 4,447
Common stock issued for financing costs $ -- $ -- $ 988,300
Common stock issued for loan collateral $ -- $ -- $ 750,000
Deferred construction costs, adjusted to fair value $ 63,282 $ 98,438 $ 21,093
Conversion of preferred shares into common stock $ 2,000 $ -- $ 14,600
Common stock issued as acquisition deposit $ -- $ -- $ 750,000
Common stock cancelled due to business combination
cancellation $ -- $ 375,000 $ 375,000
Common stock receivable (issued) $ (75,000) $ -- $ (75,000)
Common stock issued to satisfy common stock payable $ (40,000) $ 75,000 $ 125,000
------------ ------------ ------------
The accompanying notes form an integral part of these consolidated financial
statements.
F-12
VOYAGER ENTERTAINMENT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND ORGANIZATION
Voyager Entertainment International, Inc. (the "Company"), a Delaware
corporation formerly known as Dakota Imaging, Inc., was organized on January 31,
1991. The Company is in the entertainment development business with plans to
develop the world's tallest Observation Wheel on the Las Vegas strip area. As
the result of a reverse triangular merger that was completed in 2002, the
financial statements are reflected from the period of inception of Outland
Development in 1997. During April 2002, the Company changed its name from Dakota
Imaging, Inc. to Voyager Entertainment International, Inc. and adopted a new
fiscal year of December 31. On June 11, 2003, the Company became a Nevada
Corporation.
As used in these Notes to the 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, Voyager Entertainment
Holdings, Inc. ("VEHI"), a Nevada corporation, and Voyager Viridian, LLC
("Viridian"), a Nevada Limited Liability Corporation. Voyager Ventures, Inc. was
discontinued as of December 31, 2007. Outland Development, LLC has been a
dormant company and was discontinued as of June 30, 2009. Voyager Viridian LLC,
a wholly-owned subsidiary, was formed on August 3, 2009.
The Company is considered a development stage company. The accompanying
financial statements have been prepared in accordance with authoritative
guidance for development stage entities. A development stage entity is one in
which planned principal operations has not commenced or if its operations have
commenced, there has been no significant revenues there from.
The 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 $1,463,187 and $1,188,347 for the years
ended December 31, 2009 and 2008, and a working capital deficiency of $6,465,998
at December 31, 2009. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The Company will need to raise a
substantial amount of capital in order to continue its business plan. Management
intends to initiate their business plan and will continue to seek out joint
venture partners, attempt to locate the appropriate location for the L.V.
Project, as well as other projects, and continually seek funding opportunities.
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.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates
---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash
----
For the Statements of Cash Flows, all highly liquid investments with maturity of
three months or less are considered to be cash equivalents. There were no cash
equivalents as of December 31, 2009 or December 31, 2008.
Concentrations
--------------
The Company maintains cash balances at a financial institution in Nevada.
Accounts at this institution are insured by the Federal Deposit Insurance
Corporation ("FDIC") up to $250,000. From time to time the Company's cash
balance may exceed the FDIC limits. At December 31, 2009 and December 31, 2008,
the Company did not have any accounts in excess of the FDIC limits.
F-13
Due to the uniqueness of the Observation Wheel, we may encounter concentrations
with certain vendors who specialize in this type of construction. As of December
31, 2009 and 2008, construction activities had not started.
Fixed Assets
------------
Furniture, fixtures and equipment are stated at cost less accumulated
depreciation. Depreciation is provided for in amounts sufficient to relate the
cost of depreciable assets to operations over their estimated service lives,
principally on a straight-line basis. Estimated service lives of property and
equipment is 3 years.
Income Taxes
------------
Income taxes are provided for using the liability method of accounting in
accordance with the Income Taxes Topic of the Financial Accounting Standards
Board ("FASB") Accounting Standards Codification ("ASC"). Deferred tax assets
and liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse. A valuation allowance is established when necessary to
reduce deferred tax assets to the amount expected to be realized. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The computation of limitations relating to the amount of
such tax assets, and the determination of appropriate valuation allowances
relating to the realizing of such assets, are inherently complex and require the
exercise of judgment. As additional information becomes available, we
continually assess the carrying value of our net deferred tax assets.
Stock Based Compensation
------------------------
Stock based compensation is accounted for using the Equity-Based Payments to
Non-Employee Topic of the FASB ASC, which establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity's equity instruments or that may be settled by the issuance of
those equity instruments. We determine the value of stock issued at the date of
grant. We also determine at the date of grant the value of stock at fair market
value or the value of services rendered (based on contract or otherwise)
whichever is more readily determinable.
Shares issued to employees are expensed upon issuance.
Stock based compensation for employees is account for using the Stock Based
Compensation Topic of the FASB ASC. We use the fair value method for equity
instruments granted to 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.
Net Loss Per Common Share
-------------------------
Earnings per share is calculated in accordance with the Earnings per Share Topic
of the FASB ASC. The weighted-average number of common shares outstanding during
each period is used to compute basic earnings (loss) per share. Diluted earnings
per share is computed using the weighted average number of shares plus dilutive
potential common shares outstanding. Potentially dilutive common shares consist
of employee stock options, warrants, and other convertible securities, and are
excluded from the diluted earnings per share computation in periods where the
Company has incurred net loss. During the years ended December 31, 2009 and
2008, respectively, the Company incurred a net loss, resulting in no potentially
dilutive common shares.
Fair Value
----------
The carrying amounts reflected in the consolidated balance sheets for cash,
accounts payable and accrued expenses approximate the respective fair values due
to the short maturities of these items. The Company does not hold any
investments that are available-for-sale.
Advertising
-----------
Advertising costs are charged to operations as incurred. Advertising costs for
the years ended December 31, 2009 and 2008 were $0 and $75, respectively.
Fair Value Accounting
---------------------
As required by the Fair Value Measurements and Disclosures Topic of the FASB
ASC, fair value is measured based on a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value as follows: (Level 1)
observable inputs such as quoted prices in active markets; (Level 2) inputs,
other than the quoted prices in active markets, that are observable either
directly or indirectly; and (Level 3) unobservable inputs in which there is
little or no market data, which require the reporting entity to develop its own
assumptions.
F-14
The three levels of the fair value hierarchy are described below:
Level 1 Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or
liabilities;
Level 2 Quoted prices in markets that are not active, or inputs that are
observable, either directly or indirectly, for substantially the
full term of the asset or liability;
Level 3 Prices or valuation techniques that require inputs that are both
significant to the fair value measurement and unobservable
(supported by little or no market activity).
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING GUIDANCE
Adopted
-------
On September 30, 2009, the Company adopted changes issued by the FASB to the
authoritative hierarchy of GAAP. These changes establish the FASB Accounting
Standards CodificationTM as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the Securities and Exchange Commission ("SEC") under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The FASB no longer issues new standards in the form of
Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts;
instead the FASB issues Accounting Standards Updates. Accounting Standards
Updates are not authoritative in their own right as they only serve to update
the Codification. These changes and the Codification itself do not change GAAP.
Other than the manner in which new accounting guidance is referenced, the
adoption of these changes had no impact on the Financial Statements.
In April 2009, the FASB issued authoritative guidance for "Interim Disclosures
about Fair Value of Financial Instruments," which requires disclosures about
fair value of financial instruments for interim reporting periods of publicly
traded companies as well as in annual financial statements. This guidance also
requires those disclosures to be in summarized financial information at interim
reporting periods. This guidance is effective for interim reporting periods
ending after June 15, 2009. The Company adopted this guidance in the second
quarter of 2009 and it did not have a material impact on the financial
statements.
In April 2009, the FASB issued authoritative guidance for the "Recognition and
Presentation of Other-Than-Temporary Impairments" in order to make existing
guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. The Company adopted this guidance in the second quarter of 2009 and
it did not have a material impact on the financial statements.
In April 2009, the FASB issued authoritative guidance for "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly." This
guidance provides additional direction for estimating fair value in accordance
with established guidance for "Fair Value Measurements," when the volume and
level of activity for the asset or liability have significantly decreased. This
guidance also includes direction on identifying circumstances that indicate a
transaction is not orderly. This guidance is effective for interim and annual
reporting periods ending after June 15, 2009. The Company adopted this guidance
in the second quarter of 2009 and it did not have a material impact on the
financial statements.
In June 2009, the FASB issued authoritative guidance which establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. This guidance applies to both interim financial statements and
annual financial statements and is effective for interim or annual financial
periods ending after June 15, 2009. This guidance does not have a material
impact on our financial statements.
Issued
------
In June 2009, the FASB issued authoritative guidance for "Accounting for
Transfers of Financial Assets," which eliminates the concept of a "qualifying
special-purpose entity," changes the requirements for derecognizing financial
assets, and requires additional disclosures in order to enhance information
reported to users of financial statements by providing greater transparency
about transfers of financial assets, including securitization transactions, and
an entity's continuing involvement in and exposure to the risks related to
transferred financial assets. This guidance is effective for fiscal years
beginning after November 15, 2009. The Company will adopt this guidance in
fiscal 2010 and does not expect that the adoption will have a material impact on
the consolidated financial statements.
In June 2009, the FASB issued authoritative guidance amending existing guidance.
The amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is necessary
to reassess who should consolidate a variable-interest entity. This guidance is
effective for the first annual reporting period beginning after November 15,
F-15
2009 and for interim periods within that first annual reporting period. The
Company will adopt this guidance in fiscal 2010. The Company does not expect
that the adoption will have a material impact on the consolidated financial
statements.
In October 2009, the FASB issued changes to revenue recognition for
multiple-deliverable arrangements. These changes require separation of
consideration received in such arrangements by establishing a selling price
hierarchy (not the same as fair value) for determining the selling price of a
deliverable, which will be based on available information in the following
order: vendor-specific objective evidence, third-party evidence, or estimated
selling price; eliminate the residual method of allocation and require that the
consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method, which allocates any
discount in the arrangement to each deliverable on the basis of each
deliverable's selling price; require that a vendor determine its best estimate
of selling price in a manner that is consistent with that used to determine the
price to sell the deliverable on a standalone basis; and expand the disclosures
related to multiple-deliverable revenue arrangements. These changes become
effective on January 1, 2011. The Company has determined that the adoption of
these changes will not have an impact on the consolidated financial statements,
as the Company does not currently have any such arrangements with its customers.
NOTE 2. DEFERRED FINANCING COSTS
The Company entered into a financing agreement dated July 11, 2007 which expired
July 11, 2009. Deferred financing costs of $50,000 were paid towards this
agreement in 2007. No services have been performed or additional financing
received in relation to the agreement since its inception. These deferred
financing costs have been fully accreted as of December 31, 2009.
NOTE 3. ADVANCES - RELATED PARTY
In 2006, the Company entered into a note with Diversified Lending, see Note 6.
From the proceeds of the debt facility we issued $500,000 to Western
Architectural Services, LLC ("Western") and recorded an Advance - Related Party
on our balance sheet. Our Chief Operating Officer is also the Chief Executive
Officer of Western. The repayment of this advance is contingent upon the
production of the project. We have analyzed the collectability of this note as
of December 31, 2009 and concluded that, with current economic conditions, it is
unknown whether production can be secured within the next twelve months. The
Company has recognized an allowance of $250,000 as of December 31, 2009. In the
event that the Company secures a project site and sufficient project funding,
the allowance against the advance will be reversed in reevaluation for
realizable collectability. No allowance for collectability was deemed necessary
at December 31, 2008.
NOTE 4. FIXED ASSETS
Fixed assets and accumulated depreciation consists of the following:
December 31, December 31,
2009 2008
----------------------------
Computer equipment $ 47,190 $ 49,328
Accumulated depreciation (42,214) (43,391)
----------------------------
$ 4,976 $ 5,937
============================
NOTE 5. ACCRUED EXPENSES
Accrued expenses consist of the following:
December 31, December 31,
2009 2008
-----------------------------
Accounts Payable $ 151,320 $ 56,331
Accrued Interest 1,486,801 1,230,049
-----------------------------
$1,638,121 $1,286,380
=============================
NOTE 6. NOTES PAYABLE
Line of Credit
--------------
On November 19, 2002, the Company entered into a line of credit financing
agreement which entitled the Company to borrow from a creditor up to an
aggregate of $2,500,000. Advances under this line of credit were based on
F-16
achievement of certain milestones pursuant to the agreement. Upon the receipt of
funds, the Company was required to issue up to 1,500,000 shares of its common
stock on a pro rata basis.
The Company borrowed $605,000 against this line of credit and issued 1,500,000
shares. The balance payable under this line of credit was due on April 15, 2003
and was 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 in accrued expenses in the accompanying consolidated
financial statements.
As of December 31, 2009 and 2008, the total obligation including loans of
$605,000, and accrued interest of $605,000, amounted to $1,210,000. The debt
holder 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 the debt. As collateral for the Loan and
Security Agreement the debt holder filed a UCC-1 against the assets and
intellectual property of the Company giving the debt holder the right to
institute foreclosure proceedings against the Company. Foreclosure proceedings
could be instituted at any time if the debt holder believes that he will not be
repaid. As of the date of these financial statements the debt holder has not
indicated any intentions to institute foreclosure proceedings.
This line of credit, in addition to our other debt obligations, is to be repaid
upon our initial project funding.
Diversified Lending
-------------------
On September 5, 2006, the Company entered into a note payable with Diversified
Lending Group, Inc. for $1,250,000. The Company is a joint tenant with Western
Architectural Services, LLC ("Western") in this debt which bears interest of 14%
and is due upon our first substantial project funding. As of December 31, 2007,
Western paid directly to Diversified Lending Group, Inc. six months of interest
for the original loan. We accounted for this as both interest income and
interest expense of $87,500 for the fiscal year ended December 31, 2008. As
stated in the agreement, the Company could extend the Maturity Date of the loan
one time for a period of six months, which the Company exercised for a fee of 3%
of the loan amount or $37,500 (Western paid to the Company $18,750 as their part
of the loan extension). We accounted for Western's three months of interest due
to the extension as both interest income and interest expense of $43,750 for the
fiscal year ended December 31, 2008.
In February 2009, management and the note holder negotiated an amendment to the
note payable, effective February 5, 2008, to extend the terms of the note. Per
the amended agreement, the note is not in default and interest is to continue to
be accrued on the principal balance of $1,250,000 at the original rate of 14%
per annum. An original maturity date of one year from the issuance was amended
so that the unpaid interest and principal balances are due sixty days after our
first substantial project funding exceeding $15,000,000. As of December 31,
2009, an aggregate balance of $1,597,863 remained unpaid.
This loan, in addition to our other debt obligations, is to be repaid upon our
initial project funding.
As consideration for the loan, the Company was required to pay $50,000 and issue
4,000,000 shares of its common stock, both of which have been completed. Also,
to collateralize the loan, the Company was required to issue 7,500,000 shares of
its common stock. The promissory note also holds an anti-dilution clause where
the Company is required to issue additional shares of its common stock to the
debt holder so their 4% ownership is not diluted. As of December 31, 2009 and
2008, respectively, our loan fees paid with common stock have been fully
expensed and our loan collateral paid with common stock was $750,000 at both
period end dates.
At December 31, 2009 and December 31, 2008, we accrued an additional $12,585 and
$22,903 respectively, of interest relating to the year end dilution calculation.
As a result, 1,307,431 additional shares are to be issued upon the publication
of the financial statements.
As the loan collateral, loan fees and anti-dilution components of the agreement
(as described above) are dominated in Company's common stock, the Company
maintains the full risk of loss and we have recorded the full debt component on
our balance sheet.
From the proceeds of the debt facility we issued $500,000 to Western and
recorded an Advance - Related Party on our balance sheet, see Note 3.
F-17
NOTE 7. LOAN AND SETTLEMENT PAYABLE
Our loans and settlement payable have no stated interest rate, are due on demand
and are unsecured. Interest has been accrued at an estimated market interest
rate of 8%, is included in accrued expenses, and totaled $533,709 as of December
31, 2009 and $462,277 as of December 31, 2008.
The original loan 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 Company's business plan, a settlement agreement was
executed with the lender in August 2003. Pursuant to the Settlement Agreement,
the Company agreed to pay a settlement amount of an additional $650,000, without
claiming any fault or wrong doing.
As of December 31, 2009, the total obligation included loans of $228,239 in
principal and the settlement obligation of $650,000, plus total accrued interest
of $533,709 amounting to an aggregate of $1,411,948. One half of this amount, or
$705,974 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, neither of which have occurred as of December 31, 2009. Since
the loan payable does not have a maturity date, the entire balance has been
presented as a current liability. The debt holder is a shareholder in our
Company and owns approximately 7.4 million shares of our common stock.
This settlement, in addition to our other debt obligations, is to be repaid upon
our initial project fundings.
NOTE 8. RELATED PARTY TRANSACTIONS AND ACQUISITION
December 31, 2009 December 31, 2008
Accrued Expenses - Related Party
Bonuses $ 760,000 $ 760,000
Consulting Fees 1,018,000 710,000
-----------------------------
1,778,000 1,470,000
Due to Related Party
Officer and Director Loans -- 210,000
Western Loans 576,000 130,000
-----------------------------
576,000 340,000
-----------------------------
Total Related Party Liability $2,354,000 $1,810,000
=============================
As of December 31, 2009, the Company had accrued expenses due to related parties
of $1,778,000 and loans due to related parties of $576,000. We have a total
liability to related parties of $2,354,000 as of December 31, 2009 compared to
$1,810,000 as of December 31, 2008. The increase of $544,000, or 30%, is
primarily due to the lack of funds to pay our related parties and our other
creditors. As a result of the lack of funds, our related parties have provided
loans to the Company throughout the operating year.
Synthetic Systems, Inc.
-----------------------
During each of the years ended December 31, 2007 and 2006, the Company awarded a
bonus of $380,000 payable to Synthetic Systems, Inc., an entity jointly owned by
its Chief Executive Officer and Secretary. No bonuses were issued for the years
ending December 31, 2009 or 2008.
During the years ended December 31, 2009 and 2008, the Company incurred
consulting fees of approximately $37,000 and $35,000, respectively, per month to
Synthetic Systems, Inc., for a respective total of $444,000 and $420,000 in each
years then ending. The Company paid furniture and equipment lease of $13,800, or
$1,150 per month, as of December 31, 2009 and 2008. The Company also paid on
behalf of Synthetic Systems Inc., office rent expenses of $34,122 and $34,172
for the fiscal years ending December 31, 2009 and 2008, respectively.
At December 31, 2009, accrued expenses - related party consists of the $760,000
unpaid bonus balance plus $1,018,000 in unpaid consulting fees to Synthetic
Systems discussed above.
Directors and Officers
----------------------
On occasion, our Officers and Directors will loan funds to the Company so that
we can continue our operations.
F-18
In December, 2007, we borrowed $25,000 from our Chief Operating Officer ("COO").
The amount is unsecured, carries no interest and is due upon demand.
During 2008, we borrowed $185,000 from our COO. The amounts are unsecured, carry
no interest and are due upon demand.
As an incentive for the borrowed funds, the Company issued the COO 3,000,000
shares of common stock valued at $0.05 per share on June 13, 2008. The issuance
of common stock resulted in a $150,000 increase in interest expense.
As of December 31, 2008 an aggregate amount of $210,000 remained payable to the
COO.
The COO of the Company is also the Chief Executive Officer of Western
Architectural Services, LLC ("Western"). During the fourth quarter of 2009, we
have assessed and clarified the loans received from both the COO and Western.
The Company has determined that the $210,000 loan is payable to Western. This
reclassification has no financial statement ramifications and has been made to
better streamline the related party transactions of the Company.
During 2008, we borrowed and repaid $10,500 from our Secretary. In addition to
the loans, we paid $83 in interest expense.
During 2009, we borrowed and repaid $2,000 from our Secretary. In addition to
the loans, we paid $9 in interest expense.
As of December 31, 2009, there were no loans payable to Officers and Directors
of the Company.
Western Architectural Services, LLC
-----------------------------------
During February 2004, the Company paid $300,000 in cash to Western, an entity
owned by the Company's Chief Operating Officer and director of the Company
pursuant to a Contractor Agreement between Western and the Company to design and
build a car for the Voyager project and conduct a feasibility study. As site
locations have been modified for the project, the feasibility study has been
modified by Western under this contract.
On May 30, 2002, the Company executed a Contractor Agreement with Western where
Western will provide to the Company certain architectural services for the L.V.
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 our Chief Operating Officer, a 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 $0.001 to $0.035.
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, Tracy Jones, 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 December 31, 2009, we have marked these shares to market in accordance with
authoritative guidance, using the year end closing price of our stock. The
change in valuation adjusts additional-paid in capital due to the deferred
construction cost nature of these shares. As of December 31, 2009 and 2008, the
value of the deferred construction costs was $21,093 and $84,375, respectively.
In 2006, the Company entered into a note with Diversified Lending, see Note 6.
From the proceeds of the debt facility we issued $500,000 to Western and
recorded an Advance - Related Party on our balance sheet with an allowance of
$250,000 as of December 31, 2009. In the event that the Company secures a
project site and sufficient project funding, the allowance against the advance
will be reversed in reevaluation for realizable collectability.
In March 2007, we borrowed $100,000 from Western. The amount is unsecured,
carries no interest and is due upon demand.
In December 2008, we borrowed $30,000 from Western. The amount is unsecured,
carries no interest and is due upon demand.
During 2009, we borrowed $236,000 from Western. The amount is unsecured, carries
no interest and is due upon demand.
During the fourth quarter of 2009, we have assessed and clarified the loans
received from both the COO of the Company and Western. The Company has
reclassified $210,000 in related party loans to Western. This reclassification
has no financial statement ramifications and has been made to better streamline
the related party transactions of the Company. These loans are unsecured, carry
no interest, and are due upon demand.
F-19
As of December 31, 2009, an aggregate of $576,000 payable to Western remained.
Acquisition
-----------
On April 10, 2006, Voyager entered into a Unit Purchase (Buy-Sell) Agreement
("Agreement") to acquire all the outstanding units of Western in exchange for a
total of 5,000,000 shares of Voyager's common stock. On September 11, 2006,
Voyager believed it had fully completed the necessary due diligence pursuant to
the 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 was 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 and therefore
canceled the Agreement 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 were to be returned to the Company for cancellation and returned to the
treasury. The remaining 2,500,000 shares were accounted for as a fee for the
nullification in our statement of operations as of December 31, 2007. The shares
were valued at fair value of $0.15 per share for a total value of $375,000. On
February 7, 2008, the share certificate for 3,000,000 shares was returned to the
Company under the March 30, 2007 agreement. We have accounted for the 500,000
excess shares as a common stock payable due to Western for $75,000 at December
31, 2009.
NOTE 9. EXTINGUISHMENT OF ACCRUED EXPENSE
On August 12, 2002, the Company entered into a consulting agreement with an
independent third party to assist us in financing objectives. Per the agreement,
the Company was required to pay a $100,000 commitment fee which we accrued at
the time expecting performance from the third party. Performance never occurred
and the commitment fee was not paid; therefore, the agreement was never
executed.
In accordance with the Nevada statute of limitations law, the Company's promise
to pay has expired and was written off, resulting in a $100,000 decrease in
consulting fees as of December 31, 2008.
NOTE 10. COMMITMENTS AND CONTINGENCIES
The Company shares office space with Synthetic Systems as previously disclosed
in Note 8. The lease is a month to month sublease. The Company has no other
commitments.
NOTE 11. STOCKHOLDERS' EQUITY
The authorized stock of the Company consists of 200,000,000 shares of $0.001 par
value common stock and 50,000,000 shares of $0.001 par value preferred stock.
For our preferred stock we have designated two series: 1,500,000 shares of
Series A Preferred Stock and 10,000,000 shares of Series B Preferred Stock.
PREFERRED STOCK
Convertible Preferred Stock - Series A
--------------------------------------
The Series A convertible preferred stock carries the following rights and
preferences:
o 10 to 1 voting rights per share
o Each share has 10 for 1 conversion rights to shares of common stock
o No redemption rights
During 2002, prior to the conversion of Dakota Imaging Inc. and Voyager
Entertainment International, Inc., the Company issued 2,160,000 shares of
convertible preferred stock as consideration for cash and services, of which
660,000 shares were immediately converted to shares of common stock, resulting
in the Company having 3,660,000 shares of common stock outstanding.
In February 2002, upon the conversion of Dakota Imaging Inc. and Voyager
Entertainment International, Inc., 2,160,000 shares of the Series A convertible
preferred stock were immediately converted into 21,600,000 shares of common
stock, resulting in a balance of 1,500,000 shares of convertible preferred stock
designated.
F-20
On March 5, 2004, Richard Hannigan, the Company's CEO, converted 500,000 Series
A Preferred shares into 5,000,000 shares of common stock of the Company.
On March 31, 2004, a former officer and director converted 500,000 Series A
Preferred shares into 5,000,000 shares of common stock of the Company.
In September 2006, 500,000 Series A Preferred shares were converted into
5,000,000 shares of common stock of the Company by a non-officer.
Convertible Preferred Stock - Series B
--------------------------------------
The Series B convertible preferred stock carries the following rights and
preferences:
o 2 to 1 voting rights per share
o Each share has 2 for 1 conversion rights to shares of common stock
o No redemption rights
o Preferential liquidation rights to Series A preferred stock and common
stock
o Anti-dilution clauses in the event of a reverse split
In June 2003, the Company sold 1,000,000 of the Series B Preferred Stock Shares
for total cash consideration of $100,000 to one investor at $0.10 per share. The
Company recognized a beneficial conversion feature of $80,000 accounted for as a
preferred stock dividend during the year. Since these shares are immediately
convertible into common stock of the Company, the Company recognized the
dividend immediately.
In August 2003, the Company sold 500,000 of the Series B Preferred Stock Shares
for total cash consideration of $50,000 to one investor at $0.10 per share. The
Company recognized a beneficial conversion feature of $50,000 accounted for as a
preferred stock dividend during the year. Since these shares are immediately
convertible into common stock of the Company, the Company recognized the
dividend immediately.
In December 2003, the Company issued 2,500,000 of the Series B Preferred Stock
Shares for total consideration valued at $2,350,000, or $0.94 per share, to its
officer-stockholders. The fair value of the services received was determined
based on the fair value of the underlying trading common stock.
In August 2005, the Company's CEO converted 1,000,000 Series B Preferred shares
into 2,000,000 shares of common stock of the Company.
In August 2005, the Company's Secretary converted 1,000,000 Series B Preferred
shares into 2,000,000 shares of common stock of the Company.
In August 2005, an entity controlled by an officer and director of the Company
converted 500,000 Series B Preferred shares into 1,000,000 shares of common
stock of the Company.
In May 2006, an officer and director of the Company converted 500,000 Series B
Preferred Shares into 1,000,000 shares of common stock of the Company.
In September 2009, an investor converted 1,000,000 Series B Preferred shares
into 2,000,000 shares of common stock of the Company.
No preferred shares were issued as of December 31, 2009.
Common Stock Issuances
----------------------
On February 15, 2002, the Company sold 800,000 restricted shares of common stock
at a price of $0.50 per share for $400,000, which represented the fair market
value of the common stock on date of issuance.
On April 5, 2002, the Company issued 200,000 restricted shares of common stock
in exchange for services performed totaling $200,000. The fair market value of
the common stock on the date of issuance totaled $400,000. Therefore, the
Company has recognized stock discount expense of $200,000.
On May 30, 2002, the Company executed a Contractor Agreement with Western where
Western will provide to be determined architectural services to the Company for
its Las Vegas Observation Wheel Project. The Company issued 2,812,500 shares of
restricted common stock in consideration for Western's contract sum of
$18,141,533 classified as deferred construction costs. See Note 8 above.
F-21
During June 2002, the Company sold 50,000 restricted shares of common stock at a
price of $3.00 per share solely to accredited investors for cash consideration
totaling $150,000, which represents the fair market value of the common stock on
date of issuance. Since the cash consideration received was from unrelated
parties, it was determined to best represent the fair market value of the shares
on the transaction date.
On October 28, 2002, the Company entered into a professional architectural
services agreement with an architect firm in exchange for 600,000 shares of
common stock. The Company's stock must be issued within 10 days of the
agreement. In addition, the Company is responsible for reimbursement of
expenses.
On November 19, 2002, the Company entered into a line of credit financing in the
amount of $1,000,000 in exchange for 650,000 shares of common stock. The fair
market value of the trading common stock on the date of issuance totaled
$163,150.
On December 9, 2002, the Company entered into a consulting agreement in exchange
for 325,000 shares of common stock. The fair market value of the trading common
stock on the date of issuance totaled $75,075.
In September 2003, the Company sold 769,222 shares of common stock for total
cash consideration of $100,000 to one investor, which represents the fair market
value of the common stock on date of issuance. Since the cash consideration
received was from unrelated parties, it was determined to best represent the
fair market value 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 there under.
In September 2003, the Company also issued 625,000 shares of restricted common
stock to two individuals for consulting services rendered. These shares were
valued at the trading fair market value of $0.16 per share or total compensation
cost of $100,000.
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. These shares
were purchase and issued as follows: In January 2004, $25,000 was received from
the sale of 192,307 shares of common stock pursuant to a purchase agreement from
December 2003, In February 2004, $50,000 was received from the sale of 384,614
shares of common stock pursuant to a purchase agreement from December 2003, In
March 2004, $100,000 was received from the sale of 769,228 shares of common
stock pursuant to a purchase agreement from December 2003,
The common stock above 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 there under.
In February 2004, $300,000 was received for 750,000 shares of common stock. 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 there under.
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, the Company's CEO converted 500,000 Series A Preferred shares
into 5,000,000 shares of common stock of the Company.
On March 31, 2004, a former officer and director converted 500,000 Series A
Preferred shares into 5,000,000 shares of common stock of the Company.
On June 17, 2004, the Company initiated negotiations to potentially purchase a
parcel of property in Las Vegas, Nevada. At that time, the Company issued
500,000 shares of common stock as an incentive to the owner of that property
which will not be recovered regardless of whether the Company completes the
transaction. The shares were valued at the fair market value of $0.49 per share
for a total of $245,000.
On June 30, 2004, the Company issued 150,000 shares of common stock to an
individual for services rendered. These shares were valued at the fair market
value of $0.52 per share for total consideration of $78,000.
F-22
In September 2004, $50,000 was received for 333,333 shares of common stock. 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 there under.
In October 2004, $150,000 was received for 1,000,000 shares of common stock. The
common stock was offered in reliance upon the private offering exemptions
contained in Sections 3(b) and 4(6) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated there under.
In October 2004, the Company issued 500,000 shares of common stock to an
individual for services rendered. These shares were valued at the fair market
value of $0.11 per share for total consideration of $55,000.
In January 2005, the Company issued 500,000 shares of common stock for
consulting services rendered in the first quarter of 2005. These shares were
valued at the fair value of $0.15 per share for total compensation of $75,000.
In February 2005, $100,000 was received for 500,000 shares of common stock at
$0.20 per share.
In March 2005, $75,000 was received for 375,000 shares of common stock at $0.20
per share.
In March 2005, the Company issued 500,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value of $0.32 per share
for total compensation of $160,000.
In June 2005, $400,000 was received for 2,666,667 shares of common stock at
$0.15 per share.
In July 2005, $125,000 was received for 833,333 shares of common stock at $0.15
per share.
In July 2005, the Company issued 200,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value of $0.35 per share
for total compensation of $70,000.
In August 2005, the Company's CEO converted 1,000,000 Series B Preferred shares
into 2,000,000 shares of common stock of the Company.
In August 2005, the Company's Secretary converted 1,000,000 Series B Preferred
shares into 2,000,000 shares of common stock of the Company.
In August 2005, an entity controlled by an officer and director of the Company
converted 500,000 Series B Preferred shares into 1,000,000 shares of common
stock of the Company.
In September 2005, the Company issued 600,000 shares of common stock for
consulting services rendered. These shares were valued at the fair value of
$0.33 per share for total compensation of $198,000.
In November 2005, $25,000 was received for 166,667 shares of common stock at
$0.15 per share.
In December 2005, $270,000 was received for 1,800,000 shares of common stock at
$0.15 per share.
In February 2006, $25,000 was received for 166,667 shares of common stock at
$0.15 per share.
In April 2006, the Company issued 3,000,000 shares of common stock in
anticipation of the Western merger, see Note 8. These shares were valued at fair
value of $0.15 per share or $450,000.
In April 2006, the Company issued 950,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value on the date of
grant of $0.15 per share for total compensation of $142,500.
In May 2006, an officer and director of the Company converted 500,000 Series B
Preferred Shares into 1,000,000 shares of common stock of the Company.
In May 2006, the Company issued 100,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value of $0.16 per share
on the date of grant for total compensation of $16,000.
In June 2006, the Company issued 250,000 shares of common stock for consulting
services rendered. These shares were valued at the fair value per share of $0.14
per share on the date of grant for total compensation of $35,000.
F-23
In September 2006, 500,000 Series A Preferred shares were converted into
5,000,000 shares of common stock of the Company by a non-officer.
In August 2006, the Company issued 4,000,000 and 7,500,000 shares of common
stock in association with loan origination costs and collateral for the loan,
valued at fair value on the issuance date at $0.10 per share for a total value
of $400,000 and $750,000, respectively.
In November 2006, the Company issued 9,812,500 shares of common stock for
consulting services rendered. These shares were valued at the fair value of
$0.08 per share on the date of grant for total compensation of $750,000.
In November 2006, the Company issued 2,000,000 shares of common stock in
anticipation of the Western merger, see Note 8. These shares were valued at fair
value of $0.15 per share for a total value of $300,000.
In December 2006, the Company issued 464,278 shares of common stock due to the
anti-dilution clause in our debt agreement, see Note 6 above. The shares were
valued at the fair value of $0.06 per share
In December 2006, $25,000 was received for 166,667 shares of common stock at
$0.15 per share.
In December 2006, the Company issued 1,000,000 shares of common stock for
consulting services rendered. 1, 000,000 shares were valued at the fair value of
$.058 per share on the date of grant for total compensation of $58,000 and
600,000 shares were valued at the fair value of $0.06 per share for a total
value of $36,000.
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 April 2007, the Company issued 89,438 shares of common stock for interest
which was accrued at December 31, 2006 for $6,260 or $0.07 per share, relating
to our Diversified Lending Group, Inc. note.
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.
In July 2007, the Company issued 2,000,000 shares of common stock as a result of
shares purchased through a private placement offering for $200,000 or $0.10.
In July 2007, the Company issued 39,800 shares of common stock for the accrued
$7,164 or $0.18 per share in interest accrued at June 30, 2007 for charges
relating to the Diversified Lending Group, Inc. note.
In August 2007, the Company issued 1,300,000 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 $188,500 or $0.145.
In August 2007, the Company issued 1,200,000 shares of common stock as a result
of shares purchased through a private placement offering for $120,000 or $0.01.
In August 2007, the Company issued 149,369 shares of common stock for interest
which was for the accrued interest at September 30, 2007 for $21,587 or $0.14
per share relating to our Diversified Lending Group, Inc. note.
In October 2007, the Company issued 100,000 shares of common stock as a result
of shares purchased through a private placement offering for $10,000 or $0.01.
In November 2007, the Company issued 500,000 shares of common stock for
professional services rendered. These shares were valued at the fair value on
the date of grant for total compensation of $50,000 or $0.10.
In December 2007, the Company issued 1,450,000 shares of common stock as a
result of shares purchased through a private placement offering for $60,000 or
$0.04.
In December 2007, the Company issued 200,000 shares of common stock for
professional services rendered. These shares were valued at the fair value on
the date of grant for total compensation of $20,000 or $0.10.
In December 2007, the Company issued 105,775 shares of common stock for interest
which was for the accrued interest at September 30, 2007 for $14,809 or $0.14
per share relating to our Diversified Lending Group, Inc. note.
F-24
In March 2008, the Company issued 1,000,000 shares of common stock as a result
of shares purchased through a private placement offering for $50,000 cash or
$0.05.
In April 2008, the Company issued 625,000 shares of common stock as a result of
shares purchased through a private placement offering for $25,000 cash or $0.04.
In April 2008, the Company issued 2,375,000 shares of common stock for
professional services rendered. These shares were valued at the fair value on
the date of grant for total compensation of $98,000 or $0.04.
In May 2008, the Company issued 1,000,000 shares of common stock as a result of
shares purchased through a private placement offering for $30,000 cash or $0.03.
In June 2008, the Company issued 1,000,000 shares of common stock as a result of
shares purchased through a private placement offering for $30,000 cash or $0.03.
In June 2008, the Company issued 5,200,000 shares of common stock for
professional services rendered and interest expense incurred. These shares were
valued at the fair value on the date of grant for total compensation of $260,000
or $0.05.
In October 2008, the Company issued 250,000 shares of common stock for services
rendered. These shares were valued at fair value on the date of grant for total
compensation of $10,000 or $0.04.
In February 2009, the Company issued 250,000 shares of common stock for
professional services rendered for total compensation of $5,000 or $0.02 per
share.
In March 2009, the Company issued 1,500,000 shares of common stock for
professional services rendered for total compensation of $45,000 or $0.03 per
share.
In March 2009, the Company issued 2,000,000 shares of common stock payable or
$0.02 per share for which, $40,000 cash was received in 2008.
In April 2009, the Company issued 375,000 shares of common stock for
professional services rendered for total compensation of $7,500 or $0.02 per
share.
In May 2009, the Company issued 3,000,000 shares of common stock for
professional services rendered for total compensation of $75,000 or $0.03 per
share. As of December 31, 2009, the vendor has chosen to accept cash at a later
date when financing has been secured; the shares are listed as part of our
common stock receivable and have been returned to treasury on March 2, 2010.
In August 2009, the Company issued 7,250,000 shares of common stock for
professional services rendered for total compensation of $111,250 or $0.02 per
share.
In August 2009, the Company issued 3,000,000 shares of common stock for $60,000
cash or $0.02 per share.
Common stock payable, net consists of:
o $75,000 payable relating to 2008 Western Acquisition Recession.
o $20,000 payable relating to 2008 investor who has not completed
investment paperwork so that management can release the shares.
o $75,000 receivable from a vendor who has chosen to accept cash at a
later date for services, returned to treasury in 2010.
o $30,000 payable purchased in 2009, issued in 2010.
Stock Option Plan
-----------------
The Company's stockholders approved the 2002 Stock Option Plan on April 2, 2002
at the Company's annual meeting. The plan authorizes the Company to issue
5,000,000 shares of common stock for issuance upon exercise of options.
The plan is intended to encourage directors, officers, employees and consultants
of the Company to acquire ownership of common stock. Officers (including
officers who are members of the Board of Directors), directors (other than
members of the Stock Option Committee (the "Committee") to be established to
administer the Stock Option Plan) and other employees and consultants of the
Company and its subsidiaries (if established) will be eligible to receive
F-25
options under the planned Stock Option Plan. The Committee will administer the
Stock Option Plan and will determine those persons to whom options will be
granted, the number of options to be granted, the provisions applicable to each
grant and the time periods during which the options may be exercised. No options
may be granted more than ten years after the date of the adoption of the Stock
Option Plan.
Unless the Committee, in its discretion, determines otherwise, non-qualified
stock options will be granted with an option price equal to the fair market
value of the shares of common stock to which the non-qualified stock option
relates on the date of grant. In no event may the option price with respect to
an incentive stock option granted under the Stock Option Plan be less than the
fair market value of such common stock to which the incentive stock option
relates on the date the incentive stock option is granted. Each option granted
under the Stock Option Plan will be exercisable for a term of not more than ten
years after the date of grant. Certain other restrictions will apply in
connection with this Plan when some awards may be exercised.
In the event of a change of control (as defined in the Stock Option Plan), the
date on which all options outstanding under the Stock Option Plan may first be
exercised will be accelerated. Generally, all options terminate 90 days after a
change of control. As of December 31, 2009, no options have been issued under
this plan.
NOTE 12. INCOME TAXES
We did not provide any current or deferred U.S. federal income tax provision or
benefit for the period presented because we have experienced operating losses
since inception. Per authoritative guidance pursuant to accounting for income
tax and uncertainty in income taxes, when it is more likely than not that a tax
asset cannot be realized through future income, the Company must allow for this
future tax benefit. We provided a full valuation allowance on the net deferred
tax asset, consisting of net operating loss carry forwards, because management
has determined that it is more likely than not that we will not earn income
sufficient to realize the deferred tax assets during the carry forward period.
The components of the Company's deferred tax asset as of December 31, 2009 and
2008 are as follows:
2009 2008
----------- -----------
Net operating loss carry forward $ 6,356,500 $ 5,844,400
Valuation allowance (6,356,500) (5,844,400)
----------- -----------
Net deferred tax asset $ -- $ --
=========== ===========
A reconciliation of income taxes computed at the statutory rate to the income
tax amount recorded is as follows:
Since
2009 2008 Inception
----------- ----------- -----------
Tax at statutory rate (35%) $ 512,100 $ 415,900 $ 6,356,500
Increase in valuation allowance (512,100) (415,900) (6,356,500)
----------- ----------- -----------
Net deferred tax asset $ -- $ -- $ --
=========== =========== ===========
The Company had no gross unrecognized tax benefits that, if recognized, would
favorably affect the effective income tax rate in future periods. The Company
has not accrued any additional interest or penalties. No tax benefit has been
reported in connection with the net operating loss carry forwards in the
consolidated financial statements as the Company believes it is more likely than
not that the net operating loss carry forwards will expire unused. Accordingly,
the potential tax benefits of the net operating loss carry forwards are offset
by a valuation allowance of the same amount. Net operating loss carry forwards
start to expire in 2019.
The Company files income tax returns in the United States federal jurisdiction.
With a few exceptions, the Company is no longer subject to U.S. federal, state
or non-U.S. income tax examination by tax authorities on tax returns filed
before January 31, 2006. The Company will file its U.S. federal return for the
year ended December 31, 2009 upon the issuance of this filing. These U.S.
federal returns are considered open tax years as of the date of these
consolidated financial statements. No tax returns are currently under
examination by any tax authorities.
NOTE 13. FAIR VALUE
In accordance with authoritative guidance, the table below sets forth the
Company's financial assets and liabilities measured at fair value by level
within the fair value hierarchy. Assets and liabilities are classified in their
entirety based on the lowest level of input that is significant to the fair
value measurement.
F-26
Fair Value at September 30, 2009
------------------------------------------
Total Level 1 Level 2 Level 3
------------------------------------------
Assets:
Deferred construction costs $21,093 $21,093 $ -- $ --
------------------------------------------
$21,093 $21,093 $ -- $ --
==========================================
Liabilities:
None $ -- $ -- $ -- $ --
NOTE 14. SUBSEQUENT EVENTS
On February 21, 2010, the Company issued 1,500,000 shares of common stock that
were purchased for $30,000 on December 17, 2009.
On March 2, 2010, 3,000,000 shares were returned to treasury by a vendor of the
Company.
Management evaluated all activity of the Company through March 29, 2010 (the
issue date of the Financial Statements).
F-27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
We maintain "disclosure controls and procedures," as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Principal Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating our
disclosure controls and procedures, management recognized that disclosure
controls and procedure, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Additionally, in designing disclosure controls
and procedures, our management was required to apply its judgment in evaluating
the cost-benefit relationship of possible disclosure controls and procedures.
The design of any disclosure controls and procedures also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions.
As of December 31, 2009, we carried out an evaluation, under the supervision and
with the participation of our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Chief Executive Officer
and Principal Financial Officer concluded that our disclosure controls and
procedures were effective to ensure that information required to be disclosed by
us in our periodic reports is recorded, processed, summarized and reported,
within the time periods specified for each report and that such information is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
MANAGEMENT'S ASSESSMENT
The management of Voyager Entertainment International, Inc. is responsible for
establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process
designed by, or under the supervision of, the company's principal executive and
principal financial officers and effected by the company's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States of America and includes those policies and
procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of December 31, 2009. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework.
45
Based on its assessment, management concluded that, as of December 31, 2009, the
Company's internal control over financial reporting is effective based on those
criteria.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
During the quarter ended December 31, 2009, there were no changes to our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Rule 13(a)-15 or Rule 15(d)-15(f) that
has materially affected, or is reasonably likely to materially affect our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
On March 23, 2010, the Company determined that a financing agreement dated July
11, 2007 expired July 11, 2009. Deferred financing costs of $50,000 were paid
towards this agreement in 2007. No services have been performed in relation to
the financing agreement since its inception. These deferred financing costs
should have been fully accreted as of September 30, 2009. On March 29, 2010, the
Company filed an amended Form 10-Q for the quarter ended September 30, 2009 to
adjust accreted financing costs in the proper period.
46
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth the names and positions of our executive officers
and directors. Directors will be elected at our annual meeting of stockholders
and serve for one year or until their successors are duly elected and qualified.
Officers are elected by the Board and their terms of office are, except to the
extent governed by employment contract, at the discretion of the Board.
Name Age Positions and Offices Held
--------------------------------------------------------------------------------
Richard Hannigan 61 President, CEO and Director
Tracy Jones 58 Chief Operating Officer and Director
Myong Hannigan 63 Secretary, Treasurer and Director
SIGNIFICANT EMPLOYEES
None.
FAMILY RELATIONSHIPS
Myong Hannigan is the wife of Richard Hannigan, President, Chief Executive
Officer and Director of the Company.
BUSINESS EXPERIENCE AND DIRECTORSHIPS
President, CEO
--------------
Richard L. Hannigan, Sr., has been the Company's President and a director since
February 8, 2002 and Chief Executive Officer since April 2003. Mr. Hannigan also
serves as the President, Chief Executive Officer and a Director of Voyager
Entertainment Holdings, Inc. ("VEHI"), and is a managing member of Voyager
Viridian ("Viridian"), our wholly-owned subsidiaries. Mr. Hannigan has been
President of a design and construction company, Synthetic Systems, Inc., since
1991. This Company specializes in custom designs for interior and exterior
casino construction. Under Mr. Hannigan's control, Synthetic Systems, Inc. has
been involved in several casino projects in Las Vegas, including the Luxor Hotel
Casino, its interior themed areas and exterior main entry Sphinx. Prior to
forming Synthetic Systems, Inc., Mr. Hannigan owned and operated two consulting
and construction companies from 1983-1991. These companies, Architectural
Services, Inc. and Architectural Systems, Inc., respectively, have been
responsible for construction projects located in Las Vegas, Palm Springs, Los
Angeles and Salt Lake City. Mr. Hannigan has also consulted for exterior glazing
and exotic fenestrations on commercial as well as casino companies in Las Vegas.
Chief Operating Officer
-----------------------
Tracy Jones has been the Company's Chief Operating Officer and became a Board
member, on May 26, 2003. Mr. Jones also serves as the Chief Operating Officer of
VEHI. Mr. Jones formed Western Architectural Services, LLC ("Western") in 1982,
as an architectural design and fabrication company. Over the past 20 years Mr.
Jones has been instrumental in the development of "themed" environments for the
Hotel/Casino, Restaurant, and Theme Park industry. At Western, Mr. Jones has
revolutionized the use of digitized computer enhancement for the replication of
historical features.
Mr. Jones created methods that reduced the time to produce large-scale projects
such as the Statue of Liberty at the New York - New York Hotel and Casino in Las
Vegas. Previously, this project would have taken almost 1-1/2 years to recreate.
However, with methods developed at Western, this project was fabricated in just
over 6 months.
Mr. Jones has a history of producing the most difficult projects on time, and on
budget. With his position at the Company, Mr. Jones can take this same approach
to developing the Observation Wheels. Mr. Jones brings his expertise of
manufacturing to this world class project. Mr. Jones will focus on product
development, quality control, safety, state and federal regulations, freight
issues, and on-time production and overall construction review.
Secretary, Treasurer
--------------------
Myong Hannigan has served as Secretary of the Company, and a Board member, since
April 4, 2004. Ms. Hannigan also serves as the Secretary and Treasurer of VEHI
and is a managing member of Viridian. Ms. Hannigan attended college at Seoul
University in Seoul, South Korea for general studies and business management.
Ms. Hannigan has been a managing partner of a design and construction company,
Synthetic Systems, Inc., since 1991. This Company specializes in custom design
for interior and exterior casino construction. Prior to Synthetic Systems, Inc.,
Ms. Hannigan was a managing partner for Architectural Services, Inc. and
Architectural Systems, Inc., from 1983-1991.This company specialized in design
and installation of custom glass and glazing systems. Prior to Architectural
Services, Inc. and Architectural Systems, Ms. Hannigan owned and managed Antiqua
47
Stain Glass Company in Honolulu, Hawaii from 1979-1981, which was relocated from
Bloomington, Illinois (1976-1979). This company specialized in design,
manufacturing, installation and retail/wholesale products.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years, no present director, executive officer or person
nominated to become a director or an executive officer of the Company:
1. had a petition under the federal bankruptcy laws or any state
insolvency law filed by or against, or a receiver, fiscal agent or
similar officer appointed by a court for the business or property of
such person, or any partnership in which he was a general partner at
or within two years before the time of such filing, or any corporation
or business association of which he was an executive officer at or
within two years before the time of such filing;
2. was convicted in a criminal proceeding or subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any of the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such
activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation
of federal or state securities laws or federal commodities laws;
or
4. was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of a federal or state authority
barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph
(3) (i), above, or to be associated with persons engaged in any such
activity; or
5. was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and for which the judgment has not been reversed,
suspended or vacated.
PROMOTERS AND CONTROL PERSONS
None.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires our executive officers and directors, and persons who
beneficially own more than ten percent of our common stock, to file initial
reports of ownership and reports of changes in ownership with the SEC. Executive
officers, directors and greater than ten percent beneficial owners are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. Based upon a review of the copies of such forms furnished to us, and
written representations from our executive officers and directors, our belief is
that during and prior to the year ended 2008, all reports were not filed timely
as required.
As of March 31, 2010, a Form 5 is pending for the change in ownership due to the
return and the issuance of 3,000,000 shares of our common stock during the
fiscal year ending December 31, 2008 for our Chief Operating Officer, Tracy
Jones.
48
CODE OF ETHICS
The Company has adopted a code of ethics that applies to our principal executive
officer, principal financial officer, directors, and potential employees.
CORPORATE GOVERNANCE
As of December 31, 2009, there have been no material changes to the procedures
by which security holders may recommend nominees to the Company's Board of
Directors.
Committees of the Board of Directors
------------------------------------
Currently, the Company's Board of Directors does not have any standing audit,
nominating or compensation committees, or committees performing similar
functions. Richard Hannigan, President, oversees the compensation of our
executive officers.
Audit Committee and Financial Expert
------------------------------------
The Board of Directors does not have a separate Audit Committee; rather the
Board as a whole performs all functions of an Audit Committee. The Board
currently does not have an "audit committee financial expert" as defined by the
Securities and Exchange Commission Regulation S-K, Item 407(d)(5). The Board
believes that, given the developmental stage of the Company, the Company is not
currently in a position to attract the services of a Board member who does
qualify as a financial expert. However, the Board will continue its search for
an individual who would qualify as a financial expert.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the compensation for the fiscal period(s) for the
past three years for our Executive Officers who served in those positions, and
the remaining two executive officers of the Company who were serving as
executive officers as of December 31, 2009.
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Compensation Award(s) Options/ Payouts Compensation
Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)
---------------------------------------------------------------------------------------------------------------------
Richard Hannigan
President/CEO/Director 2009 -- -- 222,000 -- -- -- --
Tracy Jones
COO/Director 2009 -- -- -- -- -- -- --
Myong Hannigan
Secretary 2009 -- -- 222,000 -- -- -- --
Richard Hannigan
President/CEO/Director 2008 -- -- 210,000 -- -- -- --
Tracy Jones
COO/Director 2008 -- -- -- -- -- -- --
Myong Hannigan
Secretary 2008 -- -- 210,000 -- -- -- --
49
Long Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Compensation Award(s) Options/ Payouts Compensation
Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)
---------------------------------------------------------------------------------------------------------------------
Richard Hannigan
President/CEO/Director 2007 -- 190,000 210,000 -- -- -- --
Tracy Jones
COO/Director 2007 -- -- -- -- -- -- --
Myong Hannigan
Secretary 2007 -- 190,000 210,000 -- -- -- --
(1) 2006-2007 Bonus: The Company awarded a cash bonus of $380,000 payable to
Synthetic Systems, Inc. for each respective year. Synthetic Systems, Inc.
is jointly owned equally by Richard L. Hannigan Sr., our President/CEO, and
Myong Hannigan, our Secretary. No bonuses were issued for 2009 or 2008. As
of December 31, 2009, the total bonus of $760,000 remains unpaid by the
Company. The bonus will be issued to Synthetic Systems at the appropriate
time when the Company deems it practicable. However, the Company has the
option of retiring the accrued bonuses by issuing shares of our common
stock.
(2) 2007-2009: Other Annual Compensation includes (i) $444,000 for the year
ended December 31, 2009 and $420,000 for each of the years ended December
31, 2008 and 2007 in professional consulting fees paid by the Company to
Synthetic Systems, Inc., an entity owned by Richard and Myong Hannigan. As
of December 31, 2009, $1,018,000 of the cumulative salaries remains unpaid
by the Company.
(3) Myong Hannigan is the wife of Richard Hannigan, Sr.
COMPENSATION PURSUANT TO PLANS
None.
PENSION BENEFITS
None.
OTHER COMPENSATION
None.
COMPENSATION OF DIRECTORS
None.
50
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN
Plan Category Number of securities to Weighted-average Number of securities remaining
be issued upon exercise exercise price of available for future issuance
of outstanding options, outstanding options, under equity compensation plans
warrants and rights warrants and rights (excluding securities reflected in
column (a))
(a) (b) (c)
Equity compensation plans approved by
security holders -- -- 5,000,000
Equity compensation plans not
approved by security holders -- -- --
Total -- -- 5,000,000
(1) On April 2, 2002, the Company's stockholders approved the 2002 Stock Option
Plan, authorizing the issuance of up to 5,000,000 shares of common stock
under the Plan.
There were no stock options issued to any employee or consultants for the year
ending December 31, 2009 and there have not been any options issued since
inception. The Board of Directors determines on an individual basis as to
whether the Company should issue stock for services. There are no current plans
to issue additional stock for services. However, as the Company conducts
business there may be situations from time to time where the Company may elect
to issue stock for services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 19, 2010 with respect to
the beneficial ownership of the Company's common stock, Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock by (i) each person who,
to the knowledge of the Company, beneficially owned or had the right to acquire
more than 5% of the outstanding common stock, Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock, (ii) each director and executive
officer of the Company and (iii) all executive officers and directors of the
Company as a group.
(1) (2) (3) (4)
Name and Address Amount and
Title of Class of Beneficial Owner Nature of Percent of
Beneficial Owner Class
-------------------------------------------------------------------------------------------------------------
Common Stock Cede & Co. (7)
PO Box 20
Bowling Green Station
New York, NY 10004 45,806,606 31%
Diversified Lending Group, Inc. (7)
15260 Ventura Blvd, Ste 1240
Sherman Oaks, CA 91403 12,348,660 8%
51
Gregg Giuffria (7)
8761 Rainbow Ridge Dr
Las Vegas, NV 89117 10,000,000 7%
Richard Hannigan (5)
President, CEO
4483 West Reno Avenue
Las Vegas, NV 89118 24,412,500 16%
Myong Hannigan (5)
Secretary
4483 West Reno Avenue
Las Vegas, NV 89118 24,197,500 16%
Tracy Jones (6)
COO/Director
4483 West Reno Avenue
Las Vegas, NV 89118 9,217,500 6%
All Directors & Officers as a Group (7) 33,630,000 22%
Series A Preferred stock Richard Hannigan
President, CEO - -
Myong Hannigan
Secretary - -
Tracy Jones
COO/Director - -
All Directors & Officers as a Group (7) - -
Series B Preferred Stock Richard Hannigan
President, CEO - -
Myong Hannigan
Secretary - -
Tracy Jones
COO/Director - -
All Directors & Officers as a Group (7) - -
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
shown as "beneficially" owned include those shares over which the
individual has voting power, including power to vote, or direct the voting
of, such security, and/or investment power, including the power to dispose
or direct the disposition of such security, and includes all shares the
individual has the right to acquire beneficial ownership of within 60 days,
including, but not limited to, any right to acquire shares (a) through the
exercise of any options, warrants, or other right, (b) through conversion
of a security, (c) pursuant to the power to revoke a trust, discretionary
account or similar arrangement, and (d) pursuant to the automatic
52
termination of a trust, discretionary account or similar arrangement. This
information is not necessarily indicative of beneficial ownership for any
other purpose. The directors and executive officers of the Company have
sole voting and investment power over the shares of the Company's common
stock, Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock held in their names, except as noted in the following
footnotes.
(2) Calculations are based on 149,902,287 shares of common stock outstanding as
of March 19, 2010.
(4) Includes all shares beneficially owned as reported on most recent Form 4.
(5) Richard Hannigan and Myong Hannigan are husband and wife, Richard Hannigan
directly owns 12,135,000 shares of common stock and has voting power over
an additional 215,000 shares. Myong Hannigan is the direct owner of
12,062,500 shares of common stock.
(6) Mr. Jones is the direct owner of 6,335,000 shares of common stock and
70,000 shares of common stock owned by the Tracy Jones Charitable Remainder
Trust. In addition, Mr. Jones (i) is the sole owner of Western
Architectural Services, LLC ("Western") and deemed to beneficially own the
2,812,500 shares of common stock owned by Western.
(7) Includes all shares beneficially owned as reported by the Company's
transfer agent Nevada Agency and Trust Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
TRANSACTIONS WITH RELATED PERSONS
Synthetic Systems
-----------------
We have numerous related party transactions with Synthetic Systems, Inc.
("Synthetic"). Synthetic is a company owned jointly by Richard L. Hannigan, Sr.,
our President and CEO and Myong Hannigan, Secretary, Mr. Hannigan's spouse. We
are obligated to pay to Synthetic $37,000 per month for management and
consulting fees.
During 2007 and 2006, bonuses were awarded to Synthetic in the amount of
$380,000. In November 2006, the Company issued shares of our common stock in
order to retire the accrued salary and bonuses from prior years. At December 31,
2008, bonuses for 2007 and 2006 remained unpaid. No bonuses were awarded during
2009 or 2008.
We currently lease 2,100 square feet of office space on a month-to-month basis
from Synthetic for approximately $2,850 per month and paid as of December 31,
2009 an aggregate of $34,122.
In addition, the Company leases office furniture and equipment from Synthetic at
a monthly rental rate of $1,150. During 2009 and 2008, the Company paid an
aggregate of $13,800 to Synthetic for the lease of this office furniture and
equipment.
As of December 31, 2009, our accounts payable due to related parties was
$1,778,000 as compared to $1,470,000 at December 31, 2008. For the year ending
December 31, 2009, the Company had paid a total of $149,800 to Synthetic Systems
for professional and consulting fees and the lease of furniture and equipment.
The unpaid balance consists of unpaid bonuses in 2007 and 2006 of $760,000 and
unpaid consulting and professional fees of $1,018,000. See Note 8 to our
financial statements.
Western Architectural Services, LLC
-----------------------------------
During 2008, we borrowed $30,000 from Western Architectural ("Western"). The
amount is unsecured, carries no interest, and is due upon demand
During 2009, we borrowed $236,000 from Western. The amount is unsecured, carries
no interest and is due upon demand.
During the fourth quarter of 2009, we have clarified the loans received from
both the Chief Operating Officer ("COO") of the Company and Western. The Company
has reclassified $210,000 in related party loans to Western. This
reclassification has no financial statement ramifications and has been made to
better streamline the related party transactions of the Company. These loans are
unsecured, carry no interest, and are due upon demand.
As of December 31, 2009, an aggregate amount of $576,000 remained payable to
Western.
Officers and Directors
----------------------
On occasion, our Officers and Directors will loan funds to the Company so that
we can continue our operations.
53
During 2008, we borrowed $185,000 from our COO, Tracy Jones. The amounts are
unsecured, carry no interest and are due upon demand.
As an incentive for the borrowed funds, the Company issued Mr. Jones 3,000,000
shares of common stock valued at $0.05 per share on June 13, 2008. The issuance
of common stock resulted in a $150,000 increase in interest expense.
As of December 31, 2008 an aggregate amount of $210,000 remained payable to the
COO.
The COO of the Company is also the Chief Executive Officer of Western. During
the fourth quarter of 2009, we have assessed and clarified the loans received
from both the COO and Western. The Company has determined that the $210,000 loan
is payable to Western. This reclassification has no financial statement
ramifications and has been made to better streamline the related party
transactions of the Company.
During 2008, we borrowed and repaid $10,500 from our Secretary. In addition to
the loans, we paid $83 in interest expense.
During 2009, we borrowed and repaid $2,000 from our Secretary. In addition to
the loans, we paid $9 in interest expense.
As of December 31, 2009, there were no loans payable to Officers and Directors
of the Company.
Acquisition
-----------
On April 10, 2006, Voyager entered into a Unit Purchase (Buy-Sell) Agreement
("Agreement") to acquire all the outstanding units of 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 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 was
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 and therefore
canceled the Agreement 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 were to be returned to the Company for cancellation and returned to the
treasury. The remaining 2,500,000 shares were accounted for as a fee for the
nullification in our statement of operations as of December 31, 2007. The shares
were valued at fair value of $0.15 per share for a total value of $375,000. As
March 31, 2008, 3,000,000 shares were returned to the Company under the March
30, 2007 agreement. We have accounted for the 500,000 excess shares as a common
stock payable due to Western at December 31, 2009.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
----------
The aggregate fees billed for the fiscal years ending December 31, 2009 and 2008
were $23,500 and $42,500 respectively, for professional services rendered by our
principal accountant for the audit of our annual financial statements and review
of financial statements included in our Form 10-Q or services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for those fiscal years.
Audit-Related Fees
------------------
For the fiscal years ending December 31, 2009 and 2008, we did not incur any
additional audit-related fees, as defined by the Securities and Exchange
Commission, for assurance and related services by our principal accountant that
were not included in our usual audit fees.
Tax Fees
--------
For the fiscal years ending December 31, 2009 and 2008, we did not incur any tax
fees for professional services rendered by our principal accountant for tax
compliance, tax advice, or tax planning.
All Other Fees
--------------
No other fees, as defined by the Securities and Exchange Commission, were paid
for the fiscal years ended December 31, 2009 and 2008 for products or services
provided by our principal accountant that were not included in our usual audit
fees.
The Company currently does not have an audit committee.
54
For the fiscal years ending December 31, 2009 and 2008, no hours were expended
on our principal accountant's engagement to audit our financial statements that
were attributed to work performed by persons other than the principal
accountant's full-time, permanent employees.
55
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Number Description
2.1 Plan and Agreement of Merger of Voyager Entertainment International,
Inc. (North Dakota) into Voyager Entertainment International, Inc.
(Nevada) (incorporated by reference to Exhibit 3.3 to the Company's
Quarterly Report on Form 10-QSB for the period ended September 30,
2003 filed on November 14, 2003).
2.2 Nevada Articles of Merger (incorporated by reference to Exhibit 3.4 to
the Company's Quarterly Report on Form 10-QSB for the period ended
September 30, 2003 filed on November 14, 2003).
2.3 North Dakota Certificate of Merger (incorporated by reference to
Exhibit 3.5 to the Company's Quarterly Report on Form 10-QSB for the
period ended September 30, 2003 filed on November 14, 2003).
2.4 Completion of Acquisition of Western Architectural Services, LLC by
the Company (incorporated by reference to exhibit 2.1 to the Company's
Current Report on Form 8-K filed on September 12, 2006).
2.5 Completion of Disposition of Western Architectural Services, LLC by
the Company (incorporated by reference to exhibit 2.1 to the Company's
Current Report on Form 8-K filed on March 30, 2007).
3.1 Nevada Articles of Incorporation (incorporated by reference to Exhibit
.1 to the Company's Quarterly Report on Form 10-QSB for the period
ended September 30, 2003 filed on November 14, 2003).
3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2
to the Company's Quarterly Report on Form 10-QSB for the period ended
September 30, 2003 filed on November 14, 2003).
4.1 Certificate of Designation of Series A Convertible Preferred Stock
(incorporated by reference to Exhibit 4.1 to the Company's Quarterly
Report on Form 10-QSB for the period ended September 30, 2003 filed on
November 14, 2003).
4.2 Certificate of Designation of Series B Convertible Preferred Stock
(incorporated by reference to Exhibit 10.3 to the Company's Quarterly
Report on Form 10-QSB for the period ended September 30, 2003 filed on
November 14, 2003).
4.3 2002 Stock Plan for Voyager Entertainment International, Inc.
(incorporated by reference to Exhibit 99 to the Company's Current
Report on Form 8-K filed on April 15, 2002).
10.1 Loan and Security Agreement (by and between the Company and Dan Fugal,
dated November 15, 2002) (incorporated by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on November 22, 2002).
10.2 Amendment No. 1 to Loan and Security Agreement (by and between the
Company and Dan Fugal, dated February 15, 2003) (incorporated by
reference to Exhibit 10(k) to the Company's Form 10-KSB filed on April
16, 2003).
10.3 Amendment No. 2 to Loan and Security Agreement (by and between the
Company and Dan Fugal, dated April 23, 2003) (incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form
10-QSB for the period ended March 31, 2003 filed on May 20, 2003).
10.4 Contractor Agreement by and between the Company and Western
Architectural Services, LLC, dated May 30, 2002 (incorporated by
reference as exhibit 10.1 to for the Quarter ending September 30, 2004
and filed with the 10-QSB on November 23, 2004).
56
10.5 Definitive Joint Venture Agreement between Allied Investment House,
Inc. and Voyager to build a Voyager Project in the United Arab
Emirates dated March 15, 2005 (incorporated by reference as filed and
attached as exhibit 99.1 to the 8-K filed on March 17, 2005).
10.6 Settlement and General Release Agreement (incorporated by reference as
exhibit 10.6 as filed with the 10-QSB for the Quarter Ending September
30, 2004 and filed on November 23, 2004).
10.7 Secured Promissory Note between the Company and Diversified Lending
Group, Inc. dated September 5, 2006 (incorporated by reference as
exhibit 10.1 filed with the 8-K filed on September 12, 2006).
10.8 Extension of repayment of Secured Promissory Note between the Company
and Diversified Lending Group, Inc. dated September 5, 2006
(incorporated by reference as exhibit 10.3 filed with the 8-K filed on
November 6, 2007).
14 Code of Ethics applicable to the principal executive and financial
officers (incorporated by reference to Exhibit14 to the Company's
Annual Report on Form 10-K for the period ended December 31, 2008
filed on March 31, 2009).
31 Rule 13a-14 (a) / 15d-14 (a) Certifications
32 Section 1350 Certifications
(b) Reports on Form 8-K
* On November 5, 2007, the Company filed with the SEC a Current
Report pursuant to Item 2.03 and 9.01of Form 8-K, "Creation of a
Direct Financial Obligation or an Obligation Under an Off-Balance
Sheet Arrangement of a Registrant."
57
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VOYAGER ENTERTAINMENT INTERNATIONAL, INC.
By: /s/ Richard Hannigan
--------------------
Richard Hannigan,
President/Director
Dated: March 29, 2010
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
March 29, 2010
By: /s/ Myong Hannigan
------------------
Myong Hannigan
Secretary/Treasurer/Director
March 29, 2010
By: /s/Tracy Jones
--------------
Tracy Jones
COO/Director
March 29, 2010
58