Voyant International Corp - Quarterly Report of Financial Condition (10QSB)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-QSB

 

[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarter Ended September 30, 2007

 

OR

 

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number  33-26531-LA

 

VOYANT INTERNATIONAL CORPORATION

(Exact name of Registrant as specified in its charter)

NEVADA		88-0241079
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

530 Lytton Avenue, 2 nd Floor
Palo Alto, California 94301
(Address of principal executive offices)
Zeros & Ones, Inc.
(Former Name or Former Address, if changed since last report)

Registrant's telephone number, including area code:   [phone]  

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.  YES [ x ] NO [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [  ] NO [ x ] 

 

The number of shares outstanding of the registrant's Common Stock, $.001 par value, as of November 9, 2007 was 123,208,721 shares.

 

Transitional Small Business Disclosure Format (Check one):  YES [  ] NO  [ x ]

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VOYANT INTERNATIONAL CORPORATION

FORM 10-QSB

 

INDEX

	PART I FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheet at September 30, 2007 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 2007 and 2006, and for the period from January 1, 2003 (Inception) to September 30, 2007 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Month Period Ended September 30, 2007 and 2006, and for the period from January 1, 2003 (Inception) to September 30, 2007 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Controls and Procedures	19
	PART II OTHER INFORMATION	17
Item 1.	Legal Proceedings	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Submission of Matters to a Vote of Security Holders	21
Item 5.	Other Information	22
Item 6.	Exhibits	22
SIGNATURES	23
EXHIBITS

 

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

 

VOYANT INTERNATIONAL CORPORATION AND SUBSIDIARIES

(Formerly Zeros & Ones, Inc.)

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2007

(Unaudited)

Assets
Current Assets
Cash and cash equivalents	$	139,593
Accounts receivable		1,780
Prepaid expenses and other current assets		21,208
Total Current Assets		162,581
Fixed Assets
Property & Equipment, net of accumulated depreciation of  $1,710		16,865
Other Assets
Intangible assets, net of accumulated amortization of $59,471		942,384
Total Assets	$	1,121,830
Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable	$	135,279
Accrued liabilities		61,171
Notes Payable - Officers (current portion)		818,380
Due to Related Party		10,000
Notes payable, net of discount of $59,494		498,673
Convertible debt, net of discount of $1,655		25,445
Settlements payable		300,000
Total Current Liabilities		1,848,948
Long-Term Liabilities:
Notes Payable - Officers		836,531
Total Liabilities		2,685,479
Commitments and Contingencies
Stockholders’ Deficit:
Preferred stock, $.001 par value; 2,000,000 shares authorized; 3,000 shares issued and outstanding		3
Common stock, $.001 par value; 200,000,000 shares authorized; 123,208,741 shares issued and outstanding		123,209
Additional paid in capital in excess of par value		31,220,060
Deferred compensation		(482,473)
Accumulated deficit - prior operations		(17,711,359)
Deficit accumulated in the development stage		(14,713,089)
Total stockholders’ deficit		(1,563,649)
Total Liabilities and Stockholders’ Deficit	$	1,121,830

See accompanying notes to these unaudited consolidated financial statements.

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VOYANT INTERNATIONAL CORPORATION AND SUBSIDIARIES

(Formerly Zeros & Ones, Inc.)

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Nine Months Ended September 30, 2007 and 2006, and the period January 1, 2003 (Inception) to September 30, 2007

 (Unaudited)

		Three Months Ended September 30,		Nine Months Ended September 30,			January 1, 2003 (Inception) to September 30,
			2007			2006			2007			2006			2007
Revenues		$	7,420		$	-		$	22,780		$	-		$	22,780
Operating Expenses:
Research and development			519,643			85,379			1,372,903			180,005			1,979,579
Sales and marketing			421,569			50,903			1,001,775			95,216			1,204,466
General and administrative			1,616,763			283,690			6,543,497			615,396			9,902,699
Total operating expenses			2,557,975			419,972			8,918,175			890,617			13,086,744
Non-Operating Expenses:
Interest expense			146,396			30,041			175,304			102,227			1,106,842
Loss on Settlement of Debt			508,402						508,402						508,402
Other expense			-			169,554			-			169,554			249,669
Total non-operating expenses			654,798			199,595			683,706			271,781			1,864,913
Loss from Continuing Operations Before Income Taxes			(3,205,353)			(619,567)			(9,579,101)			(1,162,398)			(14,928,877)
Provision for Income Taxes			-			(235)			(800)			(235)			(6,635)
Loss from Continuing Operations			(3,205,353)			(619,802)			(9,579,901)			(1,162,633)			(14,935,512)
Discontinued Operations, net of tax:
Loss from operations, net of tax ($0)			-			-			-			-			(257,827)
Gain on disposal, net of tax ($0)			-			-			-			-			480,250
Gain from discontinued operations			-			-			-			-			222,423
Net Loss		$	(3,205,353)		$	(619,802)		$	(9,579,901)		$	(1,162,633)		$	(14,713,089)
Net Loss Per Share – Basic and Diluted		$	(0.03)		$	(0.01)		$	(0.08)		$	(0.02)
Weighted Average Common Shares – Basic and Diluted			121,413,126			95,418,943			117,830,989			70,070,160

See accompanying notes to these unaudited consolidated financial statements.

 

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VOYANT INTERNATIONAL CORPORATION AND SUBSIDIARIES

(Formerly Zeros & Ones, Inc.)

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2007 and 2006 and the period January 1, 2003 (Inception) to September 30, 2007

(Unaudited)

	Nine Months Ended September 30,						January 1, 2003 (Inception) to
		2007			2006		September 30, 2007
Cash Flows from Operating Activities
Net Loss	$	(9,579,901)		$	(1,162,633)		$	(14,713,089)
Adjustments to reconcile net loss to net cash used in operating activities
Shares and options issued for services		1,033,405			853,869			2,445,105
Share based compensation		5,090,721			-			5,090,721
Depreciation		1,710			-			1,710
Loss on Settlement of Debt		508,402						508,402
Amortization of debt discount		141,388			88,059			1,017,927
Amortization of intangible assets		49,956			-			59,471
Gain from disposal of discontinued operations		-			-			(480,250)
Changes in operating assets and liabilities
Accounts receivable		(1,780)			-			(1,780)
Prepaid expenses and other current assets		24,386			(28,086)			2,487
Other assets		(21,139)						(21,139)
Accounts payable		274,241			(133,315)			451,220
Settlements payable		(20,954)			(73,456)			234,611
Notes payable - officers		(17,535)			-			582,465
Accrued liabilities		340,305			(15,783)			439,673
Other payables		460,263			21,281			475,000
Net cash used in operating activities		(1,716,532)			(450,064)			(3,907,466)
Cash Flows from Investing Activities
Acquisition of property and equipment		(18,575)						(18,575)
Acquisition of WAA		-			-			(150,000)
Net cash used in investing activities		(18,575)			-			(168,575)
Cash Flows from Financing Activities
Proceeds from notes payable and convertible debt		775,000			405,000			2,930,663
Repayment of notes payable and convertible debt		-			(7,500)			(36,500)
Proceeds from warrants exercised		440,000			-			440,000
Common stock issued for cash		600,000			-			600,000
Net cash provided by financing activities		1,815,000			397,500			3,934,163
Net increase (decrease) in cash and cash equivalents		79,893			(52,564)			(141,878)
Cash and Cash Equivalents, beginning of period		59,700			58,175			281,471
Cash and Cash Equivalents, end of period	$	139,593		$	5,611		$	139,593

Supplemental Schedule of Non-Cash Investing and Financing Activities:
Rescission of JEG purchase	$	-		$	-		$	3,600,000
Shares issued for acquisition of WAA	$	-		$	-		$	501,855
Note issued for acquisition of WAA	$	-		$	-		$	350,000
Shares issued to retire Notes Payable - Officers	$	-		$	100,000		$	100,000
Shares issued to retire accounts payable and accrued expenses	$	413,702		$	-		$	413,702
Shares issued in payment of notes payable	$	280,000		$			$	100,000

See accompanying notes to these unaudited consolidated financial statements.

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VOYANT INTERNATIONAL CORPORATION

(Formerly Zeros & Ones, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(Unaudited)

 

Note 1 - Description of Business

 

Voyant International Corporation (“Voyant”) is a holding company focused on identifying and developing different media-based technologies, media assets, and strategic partnerships, and bringing those together to deliver next-generation commercial and consumer solutions. As of September 30, 2007, we had one active direct subsidiary, Rocketstream Holding Company, and one inactive direct subsidiary, Zeros & Ones Technologies, Inc.

Effective April 30, 2007, we changed our name to Voyant International Corporation Our former name was Zeros & Ones, Inc.

 

Note 2 - Basis of Presentation

 

Critical Accounting Policies and Estimates - Note 2 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-KSB filed on April 2, 2007, includes a summary of the significant accounting policies and methods used in the preparation of our Financial Statements.

 

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all necessary adjustments and disclosures to present fairly the financial position as of September 30, 2007 and the results of operations for the three and nine month periods ended September 30, 2007 and 2006, and the cash flows for the nine month periods ended September 30, 2007 and 2006. The results of operations for the three and nine months ended September 30, 2007 are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in our Form 10-KSB filed on April 2, 2007.

 

In preparation of our financial statements, we are required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses. Actual results could differ from the estimates used by us.

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its subsidiaries, Zeros & Ones Technologies, Inc. and Rocketstream Holding Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Estimates - The preparation of financial statements in conformity with US GAAP 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 reported periods. Management bases its estimates and assumptions on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results could differ from those estimates.

Basic and Diluted Loss Per Share - In accordance with the Financial Accounting Standards Board's (“FASB”) SFAS No. 128, “Earnings Per Share,” the basic loss per common share, which excludes dilution, is computed by dividing the net loss available to Common Stock holders by the weighted average number of common shares outstanding. Diluted loss per common share reflects the potential dilution that could occur if all potential common shares had been issued and if the additional common shares were dilutive. As a result of net losses for all periods presented, there is no difference between basic and diluted loss per common share. Potential shares of Common Stock to be issued upon the exercise of options and warrants amounted to 16,013,054 and 4,813,054 shares at December 31, 2006 and 2005, respectively.

 

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Stock-Based Compensation - In December 2004, the FASB issued SFAS No. 123R, “Share Based Payment.” SFAS No. 123R establishes the accounting for grants of stock options and other 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. SFAS No. 123R (1) revises SFAS No. 123, “Accounting for Stock-Based Compensation,” (2) supersedes Accounting Principles Bulletin (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and (3) establishes fair value as the measurement objective for share-based payment transactions. The Company has adopted SFAS No. 123R effective January 1, 2006 in accordance with the standard's early adoption provisions. Prior to December 31, 2006, the Company's Board of Directors had not approved the granting of any employee stock options. As such, the Company will follow the provisions of SFAS No. 123R on a prospective basis, and have recorded compensation expenses related to the granting of stock options to employees in 2007.

Income Taxes - The Company accounts for income taxes using the asset and liability method, as set forth in SFAS No. 109, “Accounting for Income Taxes,” wherein deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. Reserves against deferred tax assets are provided when management cannot conclude their realization probable.

Recently Issued Accounting Pronouncements – In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157). The purpose of SFAS No. 157 is to define fair value, establish a framework for measuring fair value, and enhance disclosures about fair value measurements. The measurement and disclosure requirements are effective for the company beginning in the first quarter of fiscal year 2008. The company is currently evaluating the impact that SFAS No. 157 will have on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS No. 159). SFAS No. 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS No. 159 is effective for the company beginning in the first quarter of fiscal year 2008, although earlier adoption is permitted. The company is currently evaluating the impact that SFAS No. 159 will have on its consolidated financial statements.

Note 3 - Discontinued Operations

 

In 2002 we purchased 100% of the outstanding stock of Joint Employers Group, Inc. (“JEG”) in exchange for 24.0 million shares of our own Common Stock. The transaction was valued at $3.6 million and accounted for using the purchase method of accounting. JEG operations are principally employee leasing. In early 2003 we were informed that JEG was unable to continue its normal operations due to its inability to maintain workers compensation insurance coverage with the California State Fund. As a result we sold JEG back to the original seller, in effect exchanging the consideration paid during the original transaction.

 

Operating results, including revenues of $9,905,272 and a pre-tax loss of $257,827, were included in the Consolidated Statement of Operations since the dates of the acquisition. During 2003 we determined that the operations of JEG had been discontinued, and accounted for the operating loss of $257,827 as Discontinued Operations, and recorded a gain of $480,250 on the subsequent return of consideration.

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Note 4 - Property And Equipment

The cost of property and equipment at September 30, 2007 consisted of the following:

 

Office equipment	$	18,575
Less accumulated depreciation		(1,710)
	$	16,865

Depreciation expense for the nine months ended September 30, 2007 and 2006 was $1,272 and $0, respectively.

Note 5 - Intangible Assets

Intangible assets include intellectual property acquired as part of the acquisition of WAA assets during the year ended December 31, 2006, when we entered into an Assignment (the “Assignment”) with WAA, LLC (“WAA”), pursuant to which WAA assigned to us all of WAA's right, title, and interest in certain intellectual property, including but not limited to commercial wireless and other communications related patents and license rights, and various rights in connection therewith.

Intangible assets are stated at cost. Intangible assets acquired from WAA have a weighted average useful life of approximately 15 years. The total amortization expense for the nine month periods ending September 30, 2007 and 2006 was $49,956 and $9,515. The intangible asset net of accumulated amortization as of September 30, 2007 is $942,384.

 The amortization of these intangible items over the next five years ending December 31 is as follows:

Year	Amount
2008	(66,973)
2009	(66,790)
2010	(66,790)
2011	(66,790)
2012	(66,790)

Note 6 - Debt

Convertible Notes

In January 2007, the company issued $25,000 of unsecured convertible notes (“Notes”) to an unrelated party. The Notes accrued interest at the rate of 12% per annum commencing immediately from the date of issuance. The Notes are due 1 year from the date of issuance. As of September 30, 2007 there were $25,445 of the Notes outstanding, including accrued and unpaid interest of $2,055 and net of unamortized discount of $1,665.

The Notes included 50,000 Note Warrants to purchase shares of our Common Stock at $0.25. As of September 30, 2007 none have been exercised. The Note Warrants have a 3 year term. The fair value of these warrants totaling $5,253 was computed using the Black-Scholes model under the following assumptions: (1) expected life of 3 years; (2) volatility of 160%, (3) risk free interest of 4.810% and (4) dividend rate of 0%.

The fair value of the warrants was recorded as a debt discount against the face of the Notes (based on the relative fair value of the warrants and the debt) to be amortized to interest expense over the 12 month life of the Notes. In accordance with EITF 00 27, “Application of Issue No. 98-5 to Certain Convertible Instruments,” which provides guidance on the calculation of a beneficial conversion feature on a convertible instrument, we determined that the Notes also had a beneficial conversion feature, which the Company recognized as interest expense immediately as the Notes were convertible upon issuance. 

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For the nine months ended September 30, 2007 we recorded $5,253 of warrants discount and $13,586 of beneficial conversion of which $17,184 was recorded as interest expense for the period.

For the nine months ended September 30, 2007, the interest expense was $2,055.

Promissory Notes

During the quarter ended September 30, 2007 we issued an unsecured promissory note for $150,000 and warrants to an unrelated party. The note accrues interest at 12% per annum commencing immediately from the date of issuance. The note is due six months from the date of issue or earlier if we receive financing of at least $1,000,000. As of September 30, 2007 there were $94,796 of the Notes outstanding, including accrued and unpaid interest of $4,290 and net of unamortized discount of $59,494.

The warrants are for the purchase 300,000 shares of our Common Stock at $0.40. The term of the warrants is 5 years. The fair value of these warrants totaling $113,698 was computed using the Black-Scholes model under the following assumptions: (1) expected life of 5 years; (2) volatility of 169%, (3) risk free interest of 4.540% and (4) dividend rate of 0%.

For the nine months ended September 30, 2007 we recorded $113,698 of debt discount of which $54,204 was recorded as interest expense for the period. There is $59,494 discount remaining to be expensed over the term of the note.

For the nine months ended September 30, 2007, the interest expense was $4,290.

Secured Notes

During the quarter ended September 30, 2007 we issued a short term note to the Congregation Ahavas Tzedokah Vechesed, Inc. (the “Lender”) for $600,000 secured by all company assets, and those of our subsidiaries (the “Secured Note”). The Secured Note accrued interest at 18% per annum, and was due in thirty days from the issue date. In connection with the sale of the Secured Note, we paid $15,000 to the purchaser for legal fees. The Secured Note became due and payable during the quarter ended September 30, 2007 and we entered into a Partial Settlement Agreement and Release (“September Settlement Agreement”) with the Lender to partially resolve our obligations under the Secured Note.

Under the terms of the Settlement Agreement, the Lender agreed to reduce the total obligation under the Secured Note by a minimum of $180,000 in exchange for 1,000,000 shares of our common stock (“Settlement Shares”). The $180,000 reduction will first be applied to interest and the lenders attorneys’ fees, then to the Secured Note’s principal balance. In the event that the proceeds from the sale(s) of the Settlement Shares were greater than $180,000, the Note’s principal will be reduced by 75% of the total sales amount. The Settlement Agreement does not release any other obligation under the Note or related transaction documents. On September 26, 2007, the Court entered an order granting approval of the Settlement Agreement (“Order”) after holding a hearing as to the fairness of the terms and conditions of the Settlement Agreement. As of September 30, 2007 there were $403,887 of the Notes outstanding and $70,000 was recorded as loss on settlement of debt.

Subsequent to the quarter ended September 30, 2007 we entered into two additional Settlement Agreements with the Lender and issued a total of 1,750,000 additional shares of common stock to retire the obligation in full.

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Note 7 - Other Liabilities

The other current liabilities comprise of the following as of September 30, 2007

Accrued operating expenses		$	61,171
Settlements payable			300,000
Due to officers – wages			380,880
Due to officers – executive bonus			437,500
Due to related party – director			10,000
		$	1,189,551

Accrued operating expenses increased due to an additional $127,145 in accrued compensation payable for amounts due officers, and for accrued vacation. Settlements payable decreased due to scheduled payments per the terms of the settlement agreement with former CEO of the Company. Amounts due to officers represent compensation payable in accordance with the employment agreements described in Note 11.

Note 8 - Long term Liabilities and Related Party Transactions

Long term liabilities totaled $836,531 at September 30, 2007, and represent notes payable to officers. Two notes totaling $486,531 represent unreimbursed fees and expenses due officers of the Company. The liabilities are classified as long-term since the Company has received assurances from the officers that they will not seek reimbursements of the amounts due within the next twelve months. The remaining note in the principal amount of $350,000, bearing interest at a rate of 8% per annum, was issued as a result of the WAA, LLC transaction. As of September 30, 2007 this note has no accrued and unpaid interest.

Note 9 - Sale of Restricted Common Stock

On February 13, 2007 we issued 5,333,333 shares of restricted common stock pursuant to a Stock Purchase Agreement. We received $600,000 in consideration for the sale, and issued 6,000,000 warrants in connection with the agreement priced at $0.15. The five year warrants are exercisable at the discretion of the holder and have no registration rights. We also issued 6,000,000 warrants in connection with the agreement priced at $0.20. The five year warrants are exercisable at the discretion of the holder and have no registration rights. We also issued 6,000,000 warrants in connection with the agreement priced at $0.25. The five year warrants are exercisable at the discretion of the holder and have no registration rights.

On March 9, 2007 we entered into an agreement with the warrant holders whereby the warrant holders agreed to exercise a certain number of warrants immediately in return for our commitment to register the underlying common stock for sale with the SEC. We received a commitment from the warrant holders to exercise additional warrants so that we would receive a total of $1,000,000 upon notice of effectiveness of the registration statement from the SEC. As of November 9, 2007 the warrant holders had exercised 1,666,667 warrants and the Company had received $250,000 under this amended agreement.

Note 10 - Stockholders' Equity

Common Stock

On February 1, 2007 we issued 1,000,000 shares to Kenneth P. McKinnon as a result of a warrant exercise. The warrant was originally issued October 31, 2002. We received $20,000 as a result of the exercise.

On February 13, 2007 we issued 5,333,333 shares of common stock to various accredited investors. We received $600,000 in return for these shares. (see Note 9, Sale of Restricted Common Stock”)

On March 13, 2007 we issued 1,666,667 shares to various holders as a result of a warrant exercise. We received $250,000 as a result of the exercise. (see Note 9, Sale of Restricted Common Stock”)

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On March 19, 2007 we issued 1,000,000 shares to Anako Enterprise, Inc. (and designees) as a result of a warrant exercise. The warrant was originally issued October 31, 2002. We received $20,000 as a result of the exercise.

On March 19, 2007 we issued 497,696 shares of common stock to IC Capital, LLC to retire $184,176 in amounts due. We recorded a loss on settlement of debt of $313,521.

On March 20, 2007 we issued 42,139 shares of common stock to Real Asset Management to retire $35,818 in amounts due.

On April 12, 2007 we issued 200,000 shares of common stock to a firm for business development services. 100,000 of these shares are contingent upon the achieving certain milestones. We incurred a Sales & Marketing expense of $52,000 related to this issuance. The balance of $156,000 is included in the Deferred Compensation

On May 31, 2007 we issued 500,000 shares of common stock to Greg Suess as a result of a warrant exercise. We received $125,000 in return for this exercise.

On June 11, 2007 we issued 600,000 shares of common stock for legal services performed during the year.

On June 15, 2007 we issued 300,000 shares of common stock to American Capital Ventures, Inc. for investor relations services. We incurred a General & Administrative expense of $52,397 for the period, and increased the Deferred Compensation balance by $127,603.

On June 15, 2007 we issued 350,000 shares of common stock for investor relations services. We incurred a General & Administrative expense of $61,130 for the period, and increased the Deferred Compensation balance by $148,870.

On June 22, 2007 we issued 78,000 shares of common stock to William Burnsed to settle a claim.

On June 30, 2007 we issued 276,282 shares of common stock to Volker Anhausser to retire $40,000 for services as a member of our Board of Directors.

On July 31, 2007 we issued 100,000 shares of common stock to James Fuchs as a result of a warrant exercise. We received $25,000 in return for this exercise.

On August 1, 2007 we issued 180,580 shares of common stock for legal services performed during the year. We incurred a General & Administrative expense of $69,523 related to these shares.

On August 31, 2007 we issued 26,065 shares of common stock to Glenn Weisberger for consulting services. We incurred a General & Administrative expense of $15,000 for the period.

On September 7, 2007 we issued 1,000,000 shares of common stock to Congregation Ahavas Tzedokah Vechesed, Inc. to retire a minimum of $180,000 in amounts due related to a Secured Note (see Note 6, Debt, Secured Notes).

On September 12, 2007 we issued 532,609 shares of common stock to William Walley as a result of a cashless warrant exercise. We received 217,391common shares in return for this exercise.

On September 26, 2007 we issued 526,010 shares of common stock for legal services performed during the year. We incurred a General & Administrative expense of $142,023 related to these shares.

As of September 30, 2007 we had 123,208,741 shares of Common Stock issued and outstanding.

Preferred Stock

We have 2,000,000 shares of Preferred Stock authorized, with a par value $0.001. As of September 30, 2007 we had 2,000 shares of Preferred Stock issued and outstanding and an agreement to issue an additional 1,000 shares to our Chief Executive Officer.  

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Note 11 – Employment Agreements

Employment Agreement with Dana R. Waldman, Chief Executive Officer and Secretary

Dana R. Waldman agreed to serve as our Chief Executive Officer and Secretary pursuant to an employment agreement defining the terms and conditions of his employment entered and executed February 15, 2007 with a retroactive effective date of January 1, 2007. The agreement is effective for an initial period of two years, and provides for a base annual salary of $300,000. Mr. Waldman is also eligible to participate in our executive bonus plan for a target bonus of 50% - 75% of his base salary that will be based upon certain performance milestones as established by the Compensation Committee or the Board of Directors. Mr. Waldman was also granted an additional bonus, the vesting and payment of which is subject to certain operating and financial milestones and events. Mr. Waldman remains a member of our Board of Directors.

The agreement grants Mr. Waldman options to purchase 9,500,000 shares of the Company’s common stock. The exercise price of the options is $0.37, which was the closing price of our common stock on the date preceding the February 15, 2007 resolution of the Board of Directors approving the option grant. The options will immediately vest for 6,000,000 shares, and the remaining 3,500,000 shares will vest ratably in 24 monthly installments. Vesting will accelerate upon certain change of control events and if an event constituting “good reason” occurs (whether or not Mr. Waldman chooses to leave Voyant).

In addition, the agreement provides for the grant to Mr. Waldman of 1,000 shares of Series A Preferred Stock. Pursuant to the terms set forth in our Certificate of Designation, the Series A Preferred Stock is convertible into common stock on a 1 for 1 basis. However, the Series A Preferred Stock votes on an as converted basis equal to 1 for 100,000. Accordingly, the issuance to Mr. Waldman of 1,000 shares of Series A Preferred Stock will provide Mr. Waldman with the right to vote 100,000,000 shares of common stock for or against shareholder actions (in addition to the shares of common stock he beneficially owns). Mr. Laisure and Mr. Fairbairn also hold 1,000 shares of Series A Preferred Stock.

We have the right to terminate Mr. Waldman’s employment at any time. If such termination (including constructive termination) is without cause, we are required to pay severance equal to 12 months of his base salary and the continuation of certain benefits for a 12 month period.

Employment Agreement with Mark M. Laisure, Chairman of the Board

Mark M. Laisure, our Chairman of the Board, entered into an employment agreement defining the terms and conditions of his employment entered into on February 15, 2007 with a retroactive effective date of January 1, 2007. The agreement is effective for an initial period of two years, and provides for a base annual salary of $250,000. Mr. Laisure is also eligible to participate in our executive bonus plan for a target bonus of 50% - 75% of his base salary that will be based upon certain performance milestones as established by the Board of Directors or our Compensation Committee.

The agreement grants Mr. Laisure options to purchase 2,000,000 shares of our common stock. The exercise price of the options is $0.37, which was the closing price of our common stock on the date preceding the February 15, 2007 resolution of the Board of Directors approving the option grant. The options will vest over a 2-year term vesting monthly, and expire after 10 years. Vesting will accelerate upon certain change of control events and if an event constituting “good reason” occurs (whether or not Mr. Laisure chooses to leave Voyant).

We have the right to terminate Mr. Laisure’s employment at any time. If such termination (including constructive termination) is without cause, we are required to pay severance equal to 12 months of his base salary and the continuation of certain benefits for a 12 month period.

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Employment Agreement with Scott Fairbairn, Chief Technology Officer

Scott Fairbairn, our Chief Technology Officer, has entered into an employment agreement on February 15, 2007 with a retroactive effective date of January 1, 2007. The employment agreement is effective for an initial period of two years, and provides for a base annual salary of $250,000. Mr. Fairbairn is also eligible to participate in our executive bonus plan for a target bonus of 50% - 75% of his base salary that will be based upon certain performance milestones as established by the Board of Directors or our Compensation Committee. Mr. Fairbairn remains a member of our Board of Directors and Chief Executive Officer of the Company’s wholly-owned subsidiary, Rocketstream Holding Corp., and its wholly-owned subsidiary Rocketstream, Inc.

The agreement grants Mr. Fairbairn options to purchase 2,000,000 shares of our common stock. The exercise price of the options is $0.37, which was the closing price of our common stock on the date preceding the February 15, 2007 resolution of the Board of Directors approving the option grant. The options will vest over a 2-year term vesting monthly, and expire after 10 years. Vesting will accelerate upon certain change of control events and if an event constituting “good reason” occurs (whether or not Mr. Fairbairn chooses to leave Voyant).

We have the right to terminate Mr. Fairbairn’s employment at any time. If such termination (including constructive termination) is without cause, we are required to pay severance equal to 12 months of his base salary and the continuation of certain benefits for a 12 month period.

 

Note 12 – Options & Warrants

Stock Option Plan

In July 2006, our board of directors adopted the 2006 Incentive Stock Option Plan (the "2006 Plan") that provides for the issuance of qualified stock options to our employees. Under the terms of the 2006 Plan, under which 10,000,000 shares of common stock are reserved for issuance, options to purchase common stock are granted at not less than fair market value, become exercisable over a 4 year period from the date of grant (vesting occurs annually on the grant date at 25% of the grant), and expire 10 years from the date of grant. The board also approved the cancellation of the 2000 Plan such that no new options could be issued under that plan.

The fair value of each stock option is estimated using the Black Scholes model. Expected volatility is based on management's estimate using the historical stock performance of the Company, the expected term of the options is determined using the “simplified” method described in SEC Staff Accounting Bulletin No. 107, and the risk free interest rate is based on the implied yield of U.S. Treasury zero coupon bonds with a term comparable to the expected option term.

The following table summarizes the options outstanding as of September 30, 2007:

	Options Outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding, January 1, 2007	-		-		-
Granted	22,350,000		$0.42
Forfeited/Canceled	-
Outstanding, September 30, 2007	22,350,000		$0.42		-

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Following is a summary of the status of options outstanding at September 30, 2007:

Range of Exercise Price		Total Options Outstanding		Weighted Average Remaining Life (Years)		Total Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price
$0.31 - $0.40		13,500,000		9.26		$0.37		8,812,497		$0.37
$0.41 - $0.50		8,850,000		9.28		0.49		4,359,167		0.49
		22,350,000		9.27		$0.42		13,171,664		$0.41

As of September 30, 2007 we had issued 8,850,000 options to employees under the 2006 Plan. The options had a weighted average exercise price of $0.49. Compensation expense relating to employee stock options recognized for the three and nine months ended September 30, 2007 was $525,745 and $2,014,772 respectively. An additional 4,200,000 shares were committed during the quarter and subsequent to the end of the period were granted by the Board of Directors.

During the quarter ending September 30, 2007 we did not issue new options to employees outside of the 2006 Plan (see Note 11, Employment Agreements). For the period ending September 30, 2007 the outstanding balance remained 13,500,000. The options have a weighted average exercise price of $0.37, and have a term of 10 years. For the three and nine months ending September 30, 2007 we incurred non-cash expenses of $327,228 and $3,075,949 for these options, respectively.

Warrants

The following table summarizes the warrants outstanding as of September 30, 2007:

	Warrants Outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding, January 1, 2007	15,798,239		$0.15		$ 1,384,019
Granted	18,420,000
Forfeited/Canceled/Exercised	(4,799,275)
Outstanding, September 30, 2007	29,418,964		$0.19		$ 2,781,721

All the above warrants are exercisable as of September 30, 2007

Note 13 - Commitments and Contingencies

During the quarter we were not involved in any legal proceedings. We are not aware of any outstanding litigation as of November 9, 2007, other than as noted below.

In December, 2006 we became aware that the Internal Revenue Service (“IRS”) had determined that the proper payroll tax returns were not filed during the 3rd and 4th quarters of 2001. Without response from prior management, the IRS completed returns on our behalf, assessed interest and penalties for late filing, and began collection procedures for approximately $410,000 as of December 31, 2006. We believe that the IRS claims are in error, and we have begun discussions with the IRS to resolve the matter.

 

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Note 14 - Subsequent Events

Subsequent to the period ended September 30, 2007 we issued a short term note to J & N Invest, LLC (the “Lender”) for $150,000 secured by all company assets, and those of our subsidiaries (the “Secured Note”). The Secured Note accrues interest at 18% per annum, and is due in sixty days from the issue date. In connection with the sale of the Secured Note, we paid $3,000 to the purchaser for legal fees.

Subsequent to the period ended September 30, 2007 we issued additional notes for a total of $205,000 under terms similar to our Convertible Note program (see Note 6, Debt, Convertible Notes).

Note 15 - Going Concern

Voyant is subject to the risks and uncertainties associated with a new business, has no established source of revenue, and has incurred significant losses from operations. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Our management estimates that the current funds available and on hand will not be adequate to fund operations throughout fiscal 2007. We anticipate that additional revenue from normal operations will occur in 2007, but those revenues will not have a material impact offsetting operating expenses during the year. We do not expect that we will achieve profit from normal operations in 2007, and we expect that additional capital will be required to support both on-going losses and the capital expenditures necessary to support anticipated revenue growth. Currently we have not arranged sources for, nor do we have commitments for, adequate outside investment, either in the form of debt or equity, for the funds required to continue normal operations during 2007.  Even if we obtain the capital desired, there can be no assurance that our operations will be profitable in the future, that our product development and marketing efforts will be successful, or that the additional capital will be available on terms acceptable to us, if at all.

 

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

 

Forward-Looking Statements

 

Certain statements in this Form 10-QSB 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 is a holding company focused on the intersection of media content and technology. We realize that technology has created a world where everyone is connected - at home, in the office, and in transit. In the last decade, the Internet has empowered consumers with choice, immediate gratification, and the ability to quickly evaluate, purchase, consume, contribute, and share information in an unprecedented manner. The technology and entertainment industries are two of the wealthiest and dynamic industries in the world, yet they work, play, and create using very different approaches to business.  We believe that we can combine the best of the media and technology worlds to provide meaningful and compelling solutions to the business and consumer marketplaces.

 

The following discussion and analysis of our plan of operations, the financial condition and results of operations of Voyant should be read in conjunction with the Consolidated Financial Statements and the Notes thereto, included elsewhere in this Report.

Plan of Operations

We focus on identifying and developing different media-based technologies, media assets, and strategic partnerships.  We intend to bring those elements together to deliver next-generation commercial and consumer solutions.  In the last decade, the Internet has empowered consumers with choice, immediate gratification, and the ability to quickly evaluate, purchase, consume, contribute, and share information in an unprecedented manner.

We believe that Voyant has the ability to see and exploit the intersection of media and technology in a more compelling manner than many media or technology companies can do individually.  We intend to capitalize on this vision by:

·

acquiring intellectual property

·

developing strategic partnerships

·

leveraging industry relationships.

With these properties, partnerships and relationships, we plan to streamline and enhance the business models surrounding content creation, media distribution, and consumer commerce.

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We plan on bringing innovative technologies, media assets, and strategic partnerships together to deliver next-generation commercial and consumer solutions to enhance our digital lifestyle.  To put the world of digital media to use for businesses and consumers, we plan to strategically combine:

·

content creation and aggregation

·

content processing

·

content distribution

·

content visualization and experience

In each case, our goal will be to increase the portfolio of capabilities at our disposal and to foster cooperation among our various entities. This strategy is intended to create a family of companies and ventures with a rich fabric of strategic ties, giving us a constantly increasing reach.  We believe that the result will be significant operational efficiencies and rapid times-to-market in each of our chosen ventures. We, however, cannot assure you that we will be able to acquire, develop or otherwise access the content and technologies that are described here, or that we will be able to do so successfully or upon acceptable terms.

Content Creation and Aggregation.   We intend to develop and acquire select media content, with a special focus on our proprietary distribution network. This content may lead us into merchandising opportunities, as well as opportunities to pull through our technology and integrate it into an overall end-user experience.  One example is our Voyant Productions business unit, which is dedicated to creating original television and motion picture content.  Another example is the internet portal we plan to create with Sports Immortals for sports memorabilia merchandising.  An example of other opportunities we might consider is a portal for the scientific market that might allow the user access research data on a particular topic. The portal could provide efficient access to disparate data types and would be powered by our technologies. The data in the portal would be manipulated through content processing platforms and distributed using our content distribution technology, while the end user experience would take advantage of content visualization technologies. We do not currently have any specific plans to build additional portals, including the scientific market portal described in this paragraph, but we are considering what kinds or portals to plan and implement.

Content Processing.   In order to help prepare content for efficient distribution, significant processing is required. Some specific processing technologies of interest to us include encoding, decoding and trans-coding, as well as compression.  Our staff has significant experience with these technologies and intends to pursue opportunities in these fields.  Currently, we do not have content processing technology.

Content Distribution.   Content distribution and management are significant bottlenecks in today’s digital world, and addressing these issues is a strong part of our vision to fuse content and technology.  We have already begun addressing content distribution through RocketStream, a software platform that allows existing networks to work more efficiently. We also intend to expand the fundamental network infrastructure by leveraging a wide variety of technologies. These technologies range from wireless to fiber optic platforms and include both component- and system-level intellectual property.  With these technologies, we can address many aspects of digital content distribution networks, all the way from the edge to the core.

Content Visualization and Experience.   Today, the average internet user has access to many types of data: video clips, text, audio data, graphics, photographs and more. All of this data is available to users as they learn about particular subjects. Yet today, user must experience each type of data individually, and are left to integrate the data and draw conclusions on their own.  We plan to allow users to experience content by providing an integrated, fused-data experience to the end user.  This experience will include content- and context-aware search methodologies, as well as content-interactive presentation and entertainment formats.  We do not currently have content visualization tools; we intend to acquire such tools through acquisitions, joint ventures, investments or internal development.

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Results of Operations

Three-Month Period Ended September 30, 2007

We had revenues of $7,420 for the three months ended September 30, 2007, and none for the corresponding period ended September 30, 2006. Revenue was generated from the sale of annual licenses of our RocketStream product. Our expenses for the three months ended September 30, 2007 increased from the same period in 2006 as we increased our research and development efforts, sales and marketing efforts, and increased our staff. Our research and development expenses increased by $434,264 to $519,643 for the period ended September 30, 2007. The increase was due to non-cash expenses related to the issuance of stock options ($277,917), the use of outside services of $26,037, and increased wages of $129,884. Similarly, our sales and marketing expenses increased with additional staff and because of our sales efforts for the RocketStream product line. For the three months ended September 30, 2007, expenses of $421,569 were primarily related to non-cash expenses related to the issuance of stock options ($173,322), and costs for management. General and administrative costs were $1,616,763 for the period ended September 30, 2007, as compared to $283,690 for the same period in 2006. The largest portion of the increase is due to non-cash expenses related to the issuance of options to management, which totaled $401,734 for the period ended September 30, 2007, and to the accrued and unpaid special bonus to our CEO in the amount of $75,000 pursuant to his employment contract. We also expensed $462,000 related to the issuance of common stock for services that had previously been classified as Deferred Compensation. The remaining expenses of $695,332 are for wages and employment related costs of $228,232, legal fees of $138,297, and other operating costs of $328,803. Operating costs in 2006 were nominal due to our then focus on restarting the Company.

Nine-Month Period Ended September 30, 2007

We had revenues of $22,780 for the nine months ended September 30, 2007, and none for the corresponding period ended September 30, 2006. Revenue was generated from the sale of annual licenses of our RocketStream product. Our operating expenses for the nine months ended September 30, 2007 increased substantially from the same period in 2006. Much of the increase of $8,042,462 was due to non-cash charges related to the issuance of employee stock options, which totaled $5,090,721 for the nine month period, and compared to zero for the prior year. The remaining increase was due to increased staffing costs of $951,704, contractual bonuses accrued but not paid of $475,000, investor relations costs of $213,493 and legal fees of $304,279.

Liquidity and Capital Resources

 

At September 30, 2007, we had working capital of ($1,686,367) as compared to working capital of ($656,607) at December 31, 2006. During the nine months ended September 30, 2007, net cash used in operations was $1,716,532 and consisted principally of a net loss of $9,579,901 and was offset by stock based compensation of $5,090,721 and stock based services of $1,033,405 and other non-cash charges (including interest) of $193,054. Accounts payable increased $261,210 from normal operations.

 

Our current cash on hand at September 30, 2007 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 the additional financing.

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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, 2006, we incurred a net pre tax loss of $1,552,839 and, for the fiscal year ended December 31, 2005, we incurred a net pre tax loss of $837,414. Our auditors for that period, Chang G. Park, CPA, Ph. D., issued an opinion in connection with our financial statements for the fiscal year ended December 31, 2006 noting that while we had recently obtained additional financing, the sustained recurring losses raise substantial doubt about our ability to continue as a going concern. 

ITEM 3.  CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of its senior management, including the Chief Executive Officer and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1933, as amended (the “Exchange Act”), as of September 30, 2007, the end of the period covered by this Quarterly Report (the “Evaluation Date”). Among other things, the Company evaluated its accounting procedures and control processes related to its closing procedures for timely and accurate preparation of its financial statements. It also reviewed its processes with its outside auditors to ensure erroneous data is not contained in any filings. Based on this evaluation, the Company's CEO and CFO concluded as of the Evaluation Date that the Company's disclosure controls and procedures were not effective.

In connection with the review of the Company's consolidated financial statements for the quarter ended September 30, 2007, and in light of new, recently issued interpretative guidance in relation to the assessment of the operating effectiveness of internal controls, management and the Company's independent registered public accounting firm, Chang Park, identified certain "material weaknesses" (as such term is defined under Public Company Accounting Oversight Board Auditing Standard No. 2) in its internal controls.

The Company identified the following material weaknesses as of September 30, 2007:

(1) insufficient numbers of internal personnel possessing the appropriate knowledge, experience and training in applying US GAAP and in reporting financial information in accordance with the requirements of the SEC; and

(2) lack of audit committee to oversee the Company's accounting and financial reporting processes, as well as approval of the Company's independent auditors.

These material weaknesses may also constitute deficiencies in the disclosure of controls and procedures. In light of these weaknesses, the Company's management, including the CEO and CFO, have concluded that as of the Evaluation Date, the disclosure controls and procedures were not effective, in that they did not ensure (i) that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management including our Chief Executive and Financial Officers, to allow timely decisions regarding required disclosure. To address this ineffectiveness of our disclosure controls and procedures, the Company is continuing with corrective actions, including the search for additional staff with certain qualifications and independent internal reviews of key account reconciliations, to ensure that the financial statements and other financial information included in this quarterly report are complete and accurate in all material respects.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting that occurred during the fiscal quarter for which this report is made that materially affected, or was  reasonably likely to materially affect, the Company’s internal control over financial reporting.

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During the fiscal year ended December 31, 2005, the Company made certain changes in its internal controls and procedures over financial reporting. Following a comprehensive review, the Company concluded that the weaknesses it had found, as noted above, were a direct result of its being understaffed in its accounting area. The Company retained an outside consultant to support and extend the capabilities of its internal staff. The Company intends to prepare a comprehensive set of accounting procedures for use in connection with assuring the timely, complete and accurate recording of all its transactions and the preparation and filing of its required reports under the Exchange Act. The Company will continue to engage its outside consultant until its internal staff is adequate and has demonstrated an ability to fulfill all the aforementioned requirements. During the quarter ended September 30, 2007, the Company retained certain professional services firms to provide assistance and advice to management related to the Company's financial disclosures and processes. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's internal control over financial reporting will become effective.

A material weakness is a control deficiency (within the meaning of PCAOB Auditing Standard No. 2), or combination of control deficiencies, that results in there being more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by employees in the normal course of their assigned functions.

The Company intends to continue to evaluate the remediation efforts addressing the material weaknesses identified, and to take appropriate action to correct the deficiencies identified. In addition, as part of the assessment of its internal controls over financial reporting that it will undergo in connection with the process required by Section 404 of the Sarbanes-Oxley Act of 2002, the Company intends to continue to review, evaluate and strengthen its controls and processes. The Board of Directors is performing oversight of the implementation of enhancements and improvements to our internal controls, and will transfer this responsibility to the Audit Committee once formed. 

 

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PART II - OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS

 

In December, 2006 we became aware that the Internal Revenue Service (“IRS”) had determined that the proper payroll tax returns were not filed during the 3rd and 4th quarters of 2001. Without response from prior management, the IRS completed returns on our behalf, assessed interest and penalties for late filing, and began collection procedures for approximately $410,000 as of December 31, 2006. We believe that the IRS claims are in error, and we have begun discussions with the IRS to resolve the matter.

 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On July 31, 2007 we issued 100,000 shares of common stock to James Fuchs as a result of a warrant exercise. We received $25,000 in return for this exercise. We relied on Section 4(2) of the Securities Act, and Regulation D promulgated thereunder, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.

On August 1, 2007 we issued 180,580 shares of common stock for legal services performed during the year. We incurred a General & Administrative expense of $58,917 related to these shares. We relied on Section 4(2) of the Securities Act, and Regulation D promulgated thereunder, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.

On August 31, 2007 we issued 26,065 shares of common stock to Glenn Weisberger for consulting services. We incurred a General & Administrative expense of $15,000 for the period. We relied on Section 4(2) of the Securities Act, and Regulation D promulgated thereunder, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.

On September 7, 2007 we issued 1,000,000 shares of common stock to Congregation Ahavas Tzedokah Vechesed, Inc. to retire a minimum of $180,000 in amounts due related to a Secured Note (see Note 4, Debt, Secured Notes). We relied on Section 3(a)(10) of the Securities Act as providing an exemption from registering the sale of these shares of common stock under the Securities Act.

On September 12, 2007 we issued 532,609 shares of common stock to William Walley as a result of a cashless warrant exercise. We received 217,391common shares in return for this exercise. We relied on Section 3(a)(9) of the Securities Act as providing an exemption from registering the sale of these shares of common stock under the Securities Act.

On September 26, 2007 we issued 526,010 shares of common stock for legal services performed during the year. We incurred a General & Administrative expense of $115,415 related to these shares. We relied on Section 4(2) of the Securities Act, and Regulation D promulgated thereunder, as providing an exemption from registering the sale of these shares of common stock under the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

 

None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

 

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ITEM 5.  OTHER INFORMATION

 

On November 19, 2007 we issued a short term note for $150,000 to J & N Invest, LLC.(the “Lender”) secured by all company assets, and those of our subsidiaries pursuant to a security agreement, an intercreditor agreement, and a guaranty. The note accrues interest at 18% per annum, and is due in sixty days from the issue date. In connection with the sale of the note, we paid $3,000 to the purchaser for legal fees. The note may be prepaid without penalty. The amounts due under the note can be accelerated by the Lender upon the occurrence of the following events of default: any default in the payment of any amounts due under the note; the breach of any covenant in the note (after certain applicable cure periods); any default under the security agreement, the intercreditor agreement or the gauaranty; any representation or warranty made in the note, the other transaction documents, any written statement pursuant thereto or any other report, financial statement or certificate made or delivered to the Lender was untrue or incorrect in any material respect as of the date when made; we or any of our active subsidiaries is subject to a bankruptcy event; we or any of our active subsidiaries default on any obligations under any credit arrangement for more than $50,000 and the default results in acceleration of that debt; any judgment or similar final process shall be entered or filed against us or an active subsidiary for more than $50,000, and such judgment or similar final process shall remain unvacated, unbonded or unstayed for a period of 20 calendar days; or any default under the documents governing our loan from WAA, LLC.

On various dates subsequent to the period ended September 30, 2007 we issued additional notes for a total of $205,000 under terms similar to our Convertible Note program. The notes accrue interest at various rates between 8% and 12% per annum commencing immediately from the date of issuance. The notes are generally 1 year in length. The principal balance of the notes and any accrued and unpaid interest was convertible into shares of restricted common stock. The decision to convert to restricted common stock was at the sole election of the note holder, and the conversion price is calculated using a discount to the closing price for the 5 trading days prior to the requested conversion, subject to a floor or minimum price per share calculated from the closing price of our stock on the date on the note. The discounts ranged from 25 to 35% of the average closing price. The notes included warrants to purchase shares of our common stock at various prices. Each note holder received two (2) warrants for each dollar of their original investment. The term of the warrants ranges from 2 to 6 years.

  

ITEM 6.  EXHIBITS

10.1

Senior Secured Note, dated August 9, 2007, by Voyant International Corporation

10.2

Guaranty, dated August 9, 2007 by RocketStream Holding Corporation and RocketStream, Inc.

10.3

Security Agreement dated August 9, 2007, among Voyant International Corporation, RocketStream Holding Corporation and RocketStream, Inc. and Congregation Ahavas Tzedokah Vechesed, Inc.

10.4

Intercreditor Agreement dated August 9, 2007, between WAA, LLC and Congregation Ahavas Tzedokah Vechesed, Inc.

10.5

Intercreditor Agreement dated November 16, 2007, between WAA, LLC and J & N Invest, LLC

10.6

Security Agreement dated November 16, 2007, among Voyant International Corporation, RocketStream Holding Corporation and RocketStream, Inc. and J & N Invest, LLC

10.7

Partial Settlement Agreement and Release dated September 7, 2007, between Voyant International Corporation and Congregation Ahavas Tzedokah Vechesed, Inc.

10.8

Partial Settlement Agreement and Release dated October 8, 2007, between Voyant International Corporation and Congregation Ahavas Tzedokah Vechesed, Inc.

10.9

Final Settlement Agreement and Release dated October 26, 2007, between Voyant International Corporation and Congregation Ahavas Tzedokah Vechesed, Inc.

10.10

Senior Secured Note, dated November 16, 2007, by Voyant International Corporation

10.11

Guaranty, dated November 16, 2007by RocketStream Holding Corporation and RocketStream, Inc.

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31.1

Certification of the Chief Executive Officer Pursuant to 17 C.F.R Section 240.13a-14(a)-(Section 302 of the Sarbanes-Oxley Act of 2002)

31.2

Certification of the Chief Financial Officer Pursuant to 17 C.F.R Section 240.13a-14(a)-(Section 302 of the Sarbanes-Oxley Act of 2002)

32.1

Certification of the Chief Executive Officer Pursuant to 18 U.S.C Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

32.2

Certification of the Chief Financial Officer Pursuant to 18 U.S.C Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

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SIGNATURES

 

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

	VOYANT INTERNATIONAL CORPORATION
Dated: November 19, 2007	By: /s/ Dana R. Waldman
	Dana R. Waldman,
	Chief Executive Officer

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