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| VOYT.OB > SEC Filings for VOYT.OB > Form 10-Q on 18-May-2009 | All Recent SEC Filings |
18-May-2009
Quarterly Report
Forward-Looking Statements
Certain statements in this Form 10-Q are forward-looking and should be read in conjunction with cautionary statements in Voyant's other SEC filings, reports to stockholders and news releases. Such forward-looking statements, which reflect our current view of product development, adequacy of cash and other future events and financial performance, involve known and unknown risks that could cause actual results and facts to differ materially from those expressed in the forward-looking statements for a variety of reasons. These risks and uncertainties include, but are not limited to lack of timely development of products and services; lack of market acceptance of products, services and technologies; inadequate capital; adverse government regulations; competition; breach of contract; inability to earn revenue or profits; dependence on key individuals; inability to obtain or protect intellectual property rights; inability to obtain listing for the company's securities; lower sales and higher operating costs than expected; technological obsolescence of the company's products; limited operating history and risks inherent in the company's markets and business. Investors should take such risks into account when making investment decisions. Future SEC filings, future press releases and oral or written statements made by us or with our approval, which are not statements of historical fact, may also contain forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they were made; we undertake no obligation to update any forward-looking statements. Although we believe that the expectations reflected in these statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We do not intend to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
Voyant International Corporation is a holding company that identifies and combines emerging digital technologies and new media properties to capitalize on large market opportunities. We excel at identifying opportunities in these emerging technologies that others may miss, and we operate at the intersection of digital media and technology. Our unique and multi-faceted business structure contributes to our success. The nature of our business model combines elements of a venture investor, an incubator, and a business operator, all while being a publicly traded company.
Over the years, Voyant has acquired a portfolio of intellectual property and know-how, portions of which have been re-aligned to address new, large commercial market applications that range from aviation broadband services to data acceleration transfer to new radio spectrum opportunities. Our leading-edge technologies and the strong foundation of our management team give us the ability to address a disconnect between digital media content and technology. The media and technology industries are two of the largest and most dynamic industries in the world, and Voyant sees these fields as complementary. Given the world's current rapid transformation to digital media, Voyant plans to capitalize on these changing dynamics by leveraging its intellectual property, making strategic acquisitions, and forging industry relationships to streamline and enhance the way businesses and consumers interact with digital content.
Plan of Operations
Voyant has several business units and subsidiaries. Currently, we have active programs in the following areas:
RocketStream
A wholly owned subsidiary of Voyant, RocketStream, Inc. designs and delivers software technology to accelerate and manage large data transfers over IP networks such as the Internet. RocketStream essentially shrinks the digital world, removing the barriers of geography from digital communications. With its powerful, proprietary protocols, RocketStream's technologies can dramatically accelerate the transfer of data, revolutionizing the concept of distributed digital communication. RocketStream, Inc. currently has two primary product families, marketed under the brand names RocketStream® and RocketConnect™.
The RocketStream data transfer technology can be applied to a host of applications, from file transfer to web delivery to streaming video. The combined suite of technologies is comprised of components based on RocketStream's proprietary packet protocols, data encryption technologies, and transport acceleration.
The first RocketStream-branded product was introduced to the market in March, 2007. This software product suite is targeted at enterprise users and provides file transfer acceleration, automation and security functions. Users can set up hot folders, synchronize files with remote servers, and schedule file transfers in advance, all while relying on RocketStream's on-the-fly encryption and lossless compression to move data securely and reliably. This product can be used to send large files over long distances, which can be applied to the large market verticals such as oil and gas, mining, entertainment, legal, financial services, military, and medical. Though not our primary focus, we currently sell RocketStream as a discrete software product through a combination of direct sales and a global value-added reseller (VAR) network.
RocketStream's primary focus extends far beyond discrete RocketStream product sales, to the embedding of the RocketStream technology into third-party applications. This effort, which has already begun, is intended to place the RocketStream engine within a host of industry-specific software offerings, greatly extending the reach of the technology. In this fashion, RocketStream intends to leverage its customers' diverse array of marketing resources, thereby opening multiple avenues for recurring revenue streams.
In June of 2008 RocketStream announced a new partnership agreement with Proginet Corporation, a leading developer of enterprise software for advanced managed file transfer and security applications. Under the terms of the agreement, the companies are embedding RocketStream's technology for data transfer acceleration into the CyberFusion Integration Suite (CFI)™, Proginet's flagship solution for advanced managed file transfer (MFT), to deliver ultra-fast file transfer capabilities to customers worldwide. Through this partnership Proginet also resells RocketStream's discrete products through its distribution network and through an online e-commerce site. This partnership will give Voyant a new revenue stream in the MFT industry and provides for further development of the RocketStream technology and the tools to embed it.
In December, 2008, the company introduced RocketConnect, a software-based product designed to accelerate data traversing the sol-called "last mile" between a telephone switching center and a consumer's premises. In January, 2009, additional functionality was announced that extends RocketConnect to mobile devices, as well. RocketConnect was developed in a partnership with Sunbay, AG of Switzerland.
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With the introduction of RocketConnect, the company now provides data transfer acceleration technologies that directly benefit consumer. RocketConnect applies to landline (fiber, DSL, cable modem, or dial-up), satellite, or wireless connections, and can speed data transfers by up to a factor of 10.
RocketConnect is marketed to telecommunications companies and Internet Service Providers (ISPs). The product is designed to improve the on-line experience of these companies' customers while providing the companies with substantial capital and operating savings.In August, 2008 RocketStream and Voyant announced the hiring of Jay Elliot, who has been appointed Voyant's General Manager of Software Products and Services. As part of his responsibilities for managing Voyant's software businesses, Mr. Elliot became the President of RocketStream. Mr. Elliot comes to Voyant with over 30 years of operations experience at some of Silicon Valley's best-known technology companies. He served as senior vice president of operations at Apple Computer, overseeing the development of the original Macintosh software, which raised Apple's revenue from $150M to over $2B. He has served as director of IBM's 16,000-employee Santa Teresa software laboratory and as director of Intel's California operations. More recently, Mr. Elliot was the founder of Migo Software, a pioneer of content synchronization software and a global provider of content mobility software that is now distributed by several industry-leading companies, including Kingston, HP, and Memorex.
Aviation Broadband
Voyant's Aviation Broadband business is aimed at bringing true broadband connectivity to commercial air passengers in flight. We intend to provide an array of network-based products and services while airborne, including Internet access, e-mail, PDA access, and dedicated advertising and multimedia content. According to independent industry analysts, commercial airline Internet connectivity is expected to become a billion-dollar market by 2012, and our plan is to take advantage of this market by building an end-to-end network providing connectivity at data rates significantly higher than those of our competitors at similar price points.
We plan to be a network owner/operator in this market, not just an equipment provider. We believe that this will unlock significantly greater value by allowing us to monetize all of the traffic through the network, as well as the broadband equipment itself.
Many of our competitors rely on satellites to provide in-flight connectivity to airplanes. Due to the high cost of satellite bandwidth, we believe that these competitors will not be able to scale their service offerings to market-demanded data rates at acceptable cost point. Voyant's solution involves connectivity directly from the air-to-ground (ATG). While ATG limits our solution to intra-continental air travel, Voyant's technology is expected to enable us to provide such connectivity at a much higher data rate, and therefore a far lower cost/bit, than competing solutions. The result is that intra-continental airplane passengers will enjoy a true broadband experience and remain as connected in flight as they are in their homes and offices.
While one other competitor is deploying ATG service in the United States today, Voyant believes that our service will offer substantially more bandwidth to each airplane in flight. We believe that this technological advantage will enable Voyant to provide a superior customer experience, whereas other ATG approaches will provide a customer experience that will be unacceptably slow once fully deploy. Voyant intends to provide a true broadband experience, whereas we believe that our competitors are providing the equivalent of a dial-up experience.
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Voyant International Corporation and Harris Corporation have a collaboration to address the aviation broadband market. This collaboration began with a Letter of Intent that was signed in March of 2008 and was subsequently formalized in a Definitive Agreement that was signed in September of 2008. As part of this partnership, Harris is providing Voyant with access to its advanced software-defined radio (SDR) technology, access to test aircraft, collaboration on in-flight technology testing, and potential access to Harris' considerable terrestrial network infrastructure.
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The Aviation Broadband market is expected to reach one billion dollars by 2012, according to industry analyst firm Multimedia Intelligence.
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Continental Europe, United States, and parts of the Middle East and Asia are the markets of particular interest to Voyant. Flights that remain within these regions make up over 82% of commercial airplane flights.
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Voyant has successfully completed the first flight tests of this aviation broadband technology, demonstrating both streaming video and file transfers from an aircraft in flight to a ground station.
Voyant is drawing on its intellectual property and expertise in the field of wireless technologies to produce novel, remotely configurable, broadband radios that are capable of operating in the so-called white space portion of the spectrum between VHF and UHF television stations. The Federal Communications Commission (FCC) has mandated that all television broadcasters cease analog broadcasting in February, 2009, opening up significant amounts of additional white space. This frequency range supports high-capacity, long-range wireless communications, and the release of this spectrum is expected to opportunities for large new markets. Voyant has positioned itself to be a leader in this new white space radio (WSR) market by leveraging its considerable stable of wireless technology and know-how to become an early entrant in this nascent market.
Voyant has received a $2 million initial purchase order, from a party undisclosed for competitive reasons, to develop and produce frequency-agile radios based on Voyant's WSR technology. This first of Voyant's next-generation radios will be a custom-designed radio used for "green," energy-efficient, utility and power management. This flexible radio design can easily be adapted for a host of new, high-capacity, long-range and reliable wireless services, including so-called WiFi 2.0 applications. In fact, the broad spectral capability of Voyant's radio design will also make it usable by auction winners of the lower and upper 700 MHz bands, as well as in the 900 MHz unlicensed band.
Voyant Productions/Voyant Digital media
Voyant Productions, also known as Voyant Digital Media, was a business unit dedicated to the production and aggregation of digital media content, potentially including feature-length motion pictures, television, Internet, and short form content. In February, 2009, following a strategic review of our businesses and available resources, the activities of this business unit were suspended indefinitely. The company may elect to resume these activities in the future, as business conditions change.
Ongoing Opportunity Evaluation
As a holding company, Voyant continually evaluates new opportunities at the intersection of media and technology. Our core expertise is the ability to combine disparate technologies and skill sets to achieve novel results and create new value. We note that Voyant had communicated to shareholders regarding one specific acquisition that we had intended to make during the quarter ended March 31, 2009. Due to the changing business climate, changes in the business conditions of our acquisition target, and changes in financial markets, we have elected not to consummate that transaction.
Voyant continues to evaluate a significant number of other such new opportunities. We intends to announce those business activities that we choose to pursue as competitive and regulatory constraints permit.
Results of Operations
Three-Month Period Ended March 31, 2009
We had $136,194 in revenue for the three months ended March 31, 2009 compared with $14,677 for the corresponding period ended March 31, 2008. Our revenue was derived mostly from the sale of our RocketStream products ($124,194), and $12,000 related to services in the Wireless segment. Our development with Proginet was completed last quarter and no revenue from the sale of products was recognized this quarter. Our net loss increased for the period from 2008 due to increased interest charges. For the three months ended March 31, 2009 our net loss was $2,866,378 as compared to $2,439,959 for the same period in 2008. Our non-cash charges for the quarter ending March 31, 2009 included $489,913 related to the amortization of debt discount and $508,337 related to the amortization of debt issue costs. It also includes the use of stock and warrants for services of $358,515
The detail of our spending is as follows:
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Research and development spending decreased to $461,526 in 2009 from $564,512 in 2008. We incurred non-cash charges associated with the issuance of stock options in the amount of $88,264 and accrued wages of $70,457. Costs associated with outside Professional Services totaled $111,726 and Developer Services of $59,395.
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Sales and marketing spending decreased to $172,972 in 2009 from $316,696 in 2008. We incurred non-cash charges associated with the issuance of stock options in the amount of $53,970, and accrued wages of $31,291. We incurred advertising costs of $20,817 related to on-line advertising for our RocketStream products, and public relations expenses of $5,957.
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General and administrative expenses were $1,033,375 and $1,066,200 for the quarters ending March 31, 2009 and 2008, respectively. Expenses were comprised of wages of $265,328 ($148,843 of which were accrued), non-cash costs associated with the issuance of stock options of $193,466, and legal fees of $198,559, all of which were paid in common stock.
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Total interest expense for the three months ended March 31, 2009 of $1,285,032 related primarily to non-cash charges for amortization of debt discount ($489,913) and debt issue costs ($508,337). For the three months ended March 31, 2009, the cash interest expense amounted to $3,404.
At March 31, 2009, we had working capital of ($5,941,481) as compared to working capital of ($4,380,159) at December 31, 2008. During the three months ended March 31, 2009, net cash used in operations was $476,445 and consisted principally of a net loss of $2,866,378 and was offset by stock based compensation of $358,515, stock based services of $81,677, depreciation and amortization of intangibles of $18,879, amortization of debt issue costs of $508,337, amortization of debt discount of $489,913 and a loss on settlement of debt of $27,833. The balance sheet accounts provided $907,482 in working capital through normal operations, including increases in accounts payable of $518,181 and accrued liabilities of $170,507.
Our current cash on hand at March 31, 2009 would not be adequate to fund our operations for more than a short period if we were to continue to use cash in operating activities at the same rate as in prior months. We will need to rely upon continued borrowing and/or sales of additional equity instruments to support our continued growth. Our management believes we will be able to obtain sufficient cash resources and working capital to meet our present cash requirements through debt and/or equity based fund raising. We contemplate additional sales of debt instruments during the current year, although whether we will be successful in doing so, and the additional amounts we will receive as a result, cannot be assumed or predicted. We cannot provide any assurance that additional financing will be available on acceptable terms, or at all. If adequate funds are not available or not available on acceptable terms, our business and results of operations may suffer. We cannot provide any assurance that we can continue as a going concern unless we raise such additional financing.
Recent and Expected Losses
There can be no assurance that we will generate positive revenues from our operating activities, or that we will achieve and sustain a profit during any future period, particularly if operations remain at current levels. Failure to achieve significant revenues or profitability would materially and adversely affect our business, financial condition, and results of operations. For the fiscal year ended December 31, 2008, we incurred a net pre tax loss of $13,726,477 and, for the fiscal year ended December 31, 2007, we incurred a net pre tax loss of $12,482,379. Our auditors, Kabani & Company, Inc., Certified Public Accountants, issued an opinion in connection with our financial statements for the fiscal year ended December 31, 2008 noting that while we have recently obtained additional financing, the sustained recurring losses raise substantial doubt about our ability to continue as a going concern.
Item 3.
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