Caution Regarding Forward-Looking Statements
This Form 10-K contains forward-looking statements regarding future events and future results of the Company that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 ( the “Exchange Act”). These statements are based on current expectations, estimates, forecasts and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “hopes”, “expects”, “anticipates”, “aims”, “goals”, “projects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “continues, “”may”, variations of these words and similar expressions are intended to identify such forward-looking statements. In addition, any statements referring to projections of the Company’s future financial performance and other characterizations of future events or circumstances are forward-looking statements.
The Company undertakes no obligation to update these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.
At September 27, 2019, Virtual Interactive Technologies Company merged with
Advanced Interactive Games Inc., and its subsidiary Advanced Interactive Gaming Ltd. (collectively “Advanced Interactive Gaming” or “AIG”), by way of a reverse merger transaction. Advanced Interactive Gaming was founded in 2016 to provide funding solutions to independent video game developers around the world. Advanced Interactive Gaming has been deemed to be the accounting acquirer of the transaction and will be the operating entity going forward as Virtual Interactive Technologies Company (“VRVR” or “the Company” or “we”)
VRVR funds the development of video game projects to be published on various popular game platforms in exchange for a stream of game royalties. To date, the company has funded several game titles, including Carmageddon Max Damage, Carmageddon Crashers, Interplanetary: Enhanced Edition, Catch & Release, and Worbital. Collectively, these games are distributed worldwide across various gaming platforms, including Sony PlayStation, Xbox, Steam, and Oculus, among others. In addition to financing solutions, VRVR offers expertise in solutions for developing, publishing and marketing video game products and actively participates in the early stages of VR/AR game development. VRVR continues to reinvest its royalty revenue into growing its royalty deals and intellectual property in the video game development industry.
The company’s strategy moving forward is to continue investing in the development of new games through partnerships and royalty deals. Management believes there are significant opportunities in VR games given the relatively early stage of the product cycle and the growing need for content to support VR hardware sales. Although the company has historically participated primarily in the PC, console, and mobile market, it will continue to explore additional opportunities in the gaming space as they arise. Additionally, the VRVR may explore strategic alliances and acquisitions to expand its business.
Results of Operations
The following analysis relates to the results of operations for the years ended
September 30, 2021 and 2020.
Revenues were down 24% from $256,396 for the year ended September 30, 2020 at
$194,350 for the year ended September 30, 2021. Revenue came from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition, and Worbital.
The Company continued its research and development activities in 2020 but not in 2021. For the year ended September 30, 2020, we have registered $23,035 of R&D expenditure vs.
$-0– for the year ended September 30, 2021. In 2020, we recorded the final payment for Catch & Release.
General and administrative expenses for the years ended September 30, 2021 and 2020 was $265,027 and $274,094, respectively. This represents a decrease of 3.3% over the years. Most of the expenditures recorded for both years were for contractual management and operational services.
For the years ended September 30, 2021 and 2020, we recorded a loss of $119,021
and $9,823, respectively. The increase of $109,198 was mainly related to lower revenues and operating expenses in 2021 offset by a gain on extinguishment of debt of $77,118 in 2020.
Cash and capital resources
For the year ended September 30, 2021, we had cash and cash equivalents of
$251,064, compared to $36,244 for the year ended September 30, 2020. Working capital was $293,754 from September 30, 2021 compared to $205,941 at September 30, 2020. The increase in working capital was $87,813. The increase in the working capital requirement was impacted by the increase in the additional current debt of
$52,375 and the associated interest of $1,170. The other changes were related to the Company’s normal operations, which mainly included increases in interest on convertible notes receivable from $1,754 and accounts payable $29,944, offset by a decrease in royalties receivable from $55,266, and $9,994 in accounts payable, related parties.
Cash flow from operating activities:
Net cash provided by operating activities for the year ended September 30, 2021
and 2020 was $4,945 and $24,913, respectively. The decrease over the two years presented of $19,968 stemmed from the decrease in our gain on the extinguishment of the debt of $77,118, royalty receivable from $43,232, accounts payable and accrued liabilities of $117,281, interest payable of $1,674, other assets of $2,660 and interest receivable from $168 which was offset by increases in accounts payable, related parties of $59,988, and interest payable, related parties of $795.
Cash flow from investing activities:
Net cash used in investing activities for the year ended September 30, 2021 has been
$7,500. Net cash provided by investing activities for the year ended September 30, 2020 has been $11,195. In 2021, the Company advanced funds from $7,500 to an unrelated party. In 2020, the Company sold land for proceeds of $36,195 and advanced money to an unrelated party in the amount of $25,000.
Cash flow from financing activities:
Net cash provided by financing activities for the year ended September 30, 2021
has been $217,375. Net cash used in financing activities for the year ended September 30, 2020 has been $36,000. The change of $253,375 was the direct result of $217,375 proceeds of a note payable in 2021, and payments on notes payable and notes payable, related parties in 2020 of $32,000 and $4,000, respectively.
At September 23, 2021, an unrelated third party lent VRVR $235,000 consisting of cash received by the Company for an amount of $204,300, $13,075
paid to other contractual services, and an initial issue discount of $17,625. This discount will be amortized over the life of the note from October 1, 2021. The note bears interest at an annual rate of 12.5% and matures on March 23, 2022.
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