Vemanti Group, Inc 10-Q for FY2022 Q1
Vemanti Group, Inc. (VMNT)
About this 10-Q
Vemanti Group, Inc filed this 10-Q on May 16, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $37.6K
- up 3.7% from $36.24K a year earlier
- Net loss
- $296.44K
- compared with a net loss of $69.97K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the Quarterly Period Ended
or
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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None |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 13, 2022, the registrant had
VEMANTI GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
March 31, 2022
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 | |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include, among others, those statements including the words “believes”, “anticipates”, “expects”, “intends”, “estimates”, “plans” and words of similar import. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include changes in local, regional, national or global political, economic, business, competitive, market (supply and demand) and regulatory conditions.
A description of these and other risks and uncertainties that could affect our business appears in the section captioned “Risk Factors” in our Annual Report on Form 10-K which we filed with the Securities and Exchange Commission (“SEC”) on March 24, 2022 (the “Form 10-K”). The risks and uncertainties described under “Risk Factors” are not exhaustive.
Given these uncertainties, readers of this Quarterly Report on Form 10-Q (“Quarterly Report”) are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
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| Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC and should be read in conjunction with the audited financial statements and notes thereto contained in our Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
VEMANTI GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2022 (UNAUDITED)
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets at March 31, 2022 (Unaudited) and December 31, 2021 | F-2 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) | F-6 - F-12 |
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| Table of Contents |
VEMANTI GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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| March 31, 2022 |
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| December 31, 2021 |
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ASSETS |
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Current Assets: |
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Cash |
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Accounts receivable |
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Due from Fvndit, Inc. |
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Digital assets |
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Total current assets |
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Equipment, net |
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Other assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued expenses |
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Loan from stockholder |
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Total current liabilities |
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TOTAL LIABILITIES |
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STOCKHOLDERS' EQUITY: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders' equity |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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| Table of Contents |
VEMANTI GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Sales |
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Cost of sales |
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Gross margin |
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Operating expenses: |
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General and administrative expenses |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Other income |
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Other expense |
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Unrealized loss |
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Total other income (expense) |
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Loss before provision for income taxes |
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Provision (credit) for income taxes |
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Net loss |
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Loss per share: |
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Basic |
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Diluted |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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| Table of Contents |
VEMANTI GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Three months ending March 31, 2022 |
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Balance, December 31, 2021 |
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Stock issued for cash |
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Stock issued for professional services |
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Net loss |
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Balance, March 31, 2022 |
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Three months ending March 31, 2021 |
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Balance, December 31, 2020 |
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Stock issued for cash |
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Net loss |
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Balance, March 31, 2021 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-4 |
| Table of Contents |
VEMANTI GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Cash flows from operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Unrealized loss from investment in Fvndit |
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Depreciation and amortization |
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Stock-based compensation |
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Changes in assets and liabilities: |
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Accounts payable |
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Other current assets |
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Deferred revenues |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Purchase of digital assets |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Issuance of common stock for cash |
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Net cash provided by financing activities |
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Net increase in cash |
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Cash, beginning of the period |
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Cash, end of the period |
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Supplemental disclosure of cash flow information: |
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Cash paid for: |
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Interest |
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Income tax |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-5 |
| Table of Contents |
VEMANTI GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Basis of Presentation
These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K, which we filed with the Securities and Exchange Commission (“SEC”) on March 24, 2022 and notes thereto. In preparing these condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates and assumptions included in the Company’s consolidated financial statements relate to allowances for doubtful accounts, valuations for deferred income taxes and recoverability of investments.
Reclassification
Certain amounts reported in the prior year condensed consolidated financial statements have been reclassified to conform to the current year’s presentation.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, VoiceStep and Vemanti Digital. All significant intercompany transactions and balances have been eliminated. On March 1, 2022, a resolution was approved by the Board of Directors to dissolve Vemanti Digital Ltd. On April 28, 2022, Vemanti Digital was formally dissolved.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include, among others, allowances for doubtful accounts, valuations for deferred income taxes and recoverability of investments. Actual results could differ from those estimates. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. As of March 31, 2022, and December 31, 2021, the Company had no cash equivalents.
Accounts Receivables
The Company regularly reviews its accounts receivables for collectability and establishes an allowance for doubtful accounts as necessary using the allowance method. The receivables are not collateralized.
The Company estimates the ability to collect receivables by performing ongoing credit evaluations of its customers’ financial condition. Estimates are based on assumptions and other considerations, including payment history, credit ratings, customer financial performance, industry financial performance and aging analysis. The Company reviews its accounts receivable by aging category and to identify customers with known disputes or collection issues. In determining the allowance, the Company makes judgments about the creditworthiness of a majority of its customers based on ongoing credit evaluations. The Company also considers its historical level of credit losses and current economic trends that might impact the level of future credit losses. Accounts receivables are written-off when they are deemed uncollectible.
| F-6 |
| Table of Contents |
Equipment
Equipment is stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred; additions, renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:
Software licenses | |
Computer equipment |
Long-Lived Assets
The Company applies the provisions of Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at March 31, 2022, and March 31, 2021, the Company believes there was no impairment of its long-lived assets.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligation(s) in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.
The Company recognizes revenues derived from sub-leasing telecommunications infrastructure and the provision of telecommunications and colocation services. These revenues are accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s
performance on a monthly basis. These arrangements stipulate monthly billing and the Company has elected the “as invoiced” practical expedient to recognize revenue as the services are consumed as the Company has the right to payment in an amount that corresponds directly with the value of performance completed to date.
Taxes collected from customers and remitted to a governmental authority are reported on a net basis and are excluded from revenue. Most revenue is billed in advance on a fixed-rate basis. The remainder of revenue is billed in arrears on a transactional basis determined by customer usage.
The Company often bills customers for upfront charges. These charges relate to down payments or prepayments for future services or equipment and are influenced by various business factors including how the Company and customer agree to structure the payment terms. These payments are recognized as deferred revenue until the service is provided or equipment is delivered and installed. All ongoing fees are billed and recognized as revenue on a monthly basis as service is provided.
| F-7 |
| Table of Contents |
Stock-Based Compensation
The Company records stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and consultants. Nonemployee share-based payment equity awards are measured at the grant-date fair value of the equity instruments and recognized as an expense over the requisite service period.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
Basic and Diluted Earnings (Loss) Per Share
Earnings (loss) per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings (loss) per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There are no potentially dilutive securities outstanding during all periods presented.
Fair Value Measurements
The Company applies the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
| · | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
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| · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
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| · | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
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| F-8 |
| Table of Contents |
For certain financial instruments, the carrying amounts reported in the balance sheets for cash, investments, and current liabilities, each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. It is not practicable to estimate the fair value of the loan from stockholder due to its related party nature. At March 31, 2022 and December 31, 2021, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value.
Recent Authoritative Guidance
In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions to the general income tax accounting principles and clarifies and amends existing guidance to facilitate consistent application of the accounting principles. The new guidance is effective for the Company as of January 1, 2021. The adoption of the amendments in this update did not have a material impact on the Company consolidated financial position and results of operations. Management does not believe any other recently issued but not yet effective accounting pronouncement, if adopted, would have a material impact effect on the Company’s present or future financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for convertible Instruments and Contracts in an Entity’s Own Equity, to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. This ASU significantly changes the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity so that fewer conversion features will require separate recognition., and fewer freestanding instruments, like warrants with require liability treatment. ASU 2020-06 is effective for reporting periods beginning after December 15, 2021. At March 31, 2022, there is no material impact on the Company’s financial statement and disclosures.
In May 2021, the FASB issued ASU No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options – a Consensus of the FASB Emerging Issues Task Force. There has been diversity in accounting for modifications of equity-classified warrants due to a lack of explicit guidance in the Codification. Some entities recognize an expense, while other record a dividend for an economically similar warrant modification. The FASB issued the ASU to reduce this diversity and establish a principles-based recognition framework according to the substance of the modification transaction. ASU 2021-04 is effective for reporting periods beginning after December 15, 2021, and interim period within those fiscal years. At March 31, 2022, there is no material impact on the Company’s financial statement and disclosures.
NOTE 2 – Digital Assets
The following represents the change in digital assets:
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Cryptocurrencies |
|
|
|
|
|
| ||
Beginning balance |
| $ |
|
| $ |
| ||
Purchase of cryptocurrencies |
|
|
|
|
|
| ||
Impairment |
|
|
|
|
| ( | ) | |
Ending balance |
| $ |
|
| $ |
| ||
The Company does not record fair value gains (losses) associated with its digital assets. Cryptocurrencies are classified as intangible assets, and the Company continuously tests these assets for impairment.
| F-9 |
| Table of Contents |
NOTE 3 – Stockholders’ Equity
Members’ Interest
VoiceStep is governed by the terms and conditions of the Limited Liability Company Agreement (the Agreement) dated May 3, 2005, as amended on January 27, 2014. VoiceStep shall continue until terminated in accordance with the terms of the Agreement or as provided by law, including events of dissolution. VoiceStep shall be dissolved only upon any of the following events: (i) the vote of Member(s) holding a majority to the dissolution and winding up of VoiceStep, (ii) the entry of a decree of judicial dissolution of VoiceStep and (iii) at any time there are no Member(s), subject to remedy within 90 days of occurrence of termination event by the last remaining Member in writing.
VoiceStep originally consisted of two Members each owning 50% of VoiceStep. On January 27, 2014, one of the members was bought out with the remaining member owning
Equity Commitment Agreement
On March 11, 2022, the Company entered into an Equity Investment Agreement (the "Agreement”) with Alpha Sigma Capital Fund, LP ("Alpha Sigma Capital” or "ASC”), a pioneering digital asset fund focused on the blockchain economy and the shift to a decentralized Web3 infrastructure. The Agreement outlines an investment structure of up to $
Preferred stock
The Company has authorized the issuance of
The Articles of Incorporation were amended on May 1, 2014, designating
Common stock
The Company has authorized the issuance of
During the three months ended March 31, 2022, the Company issued
Stock Incentive Plan
On March 25, 2015, the Company adopted a stock incentive plan. This plan allows the Board of Directors to issue up to
| F-10 |
| Table of Contents |
Time-Based Restricted Stock
Time-based restricted stock units (“RSU”) and restricted stock awards (“RSA”) granted to employees under the 2015 Plan typically vest over 3 to 4 years and are subject to forfeiture if employment terminates prior to the vesting or lapse of the restrictions, as applicable. RSUs are not considered issued or outstanding common stock until they vest. RSAs are considered issued and outstanding on the grant date and are subject to forfeiture if specified vesting conditions are not satisfied.
There are no issued or outstanding RSAs. The following table summarizes the activity related to RSUs subject to time-based vesting requirements for the period ended March 31, 2022:
RSUs | ||||||||||||||||
|
| As of March 31, 2022 |
|
| As of March 31, 2021 |
| ||||||||||
|
| Number of Shares |
|
| Weighted Average Grant Date Fair Value |
|
| Number of Shares |
|
| Weighted Average Grant Date Fair Value |
| ||||
Non-vested, as of December 31, 2021, and 2020 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Vested |
|
| ( | ) |
| $ |
|
|
| ( | ) |
| $ |
| ||
Forfeited |
|
| ( | ) |
| $ |
|
|
| - |
|
| $ |
| ||
Non-vested as of March 31, 2022, and 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
As of March 31, 2022, there was $1,322,765 of remaining unamortized stock-based compensation expense associated with RSUs, which will be expensed over a weighted average remaining service period of approximately 3 years. The 2,643,000 outstanding non-vested and expected to vest RSUs have an aggregate intrinsic value of $2,160,652 and a weighted average remaining contractual term of 2.42 years.
NOTE 4 – Investment in Fvndit, Inc. (formerly Directus Holdings, Inc.)
On November 13, 2018, the Company purchased a
On October 5, 2020, Fvndit issued
On March 16, 2021, Tan Tran resigned as an Officer and Director of Fvndit. On that same date, Fvndit issued
This investment has been accounted for under the cost method of accounting since March 16, 2021. As of March 31, 2022, and December 31, 2021, this investment had a balance of $
| F-11 |
| Table of Contents |
NOTE 5 – Related Party Transactions
Since 2019, the Company has paid for some administrative expenses on behalf of Fvndit. The balance of those payments was $
The Company pays the health insurance premiums for the CEO and his family. The total of those health insurance premium payments was $
The Company pays a member of the CEO’s family for technical services. The total of those payments was $
On August 6, 2021, the Company borrowed $
NOTE 6 – Commitments and Contingencies
Legal Proceedings
On June 29, 2021, the Company filed a complaint against Messrs. Chenyuan Anthony Chen and Ang Hu (the “Defendants”) in the Superior Court of the State of California, County of Orange (the “Complaint”). Pursuant to a Consulting Agreement dated April 1, 2019, by and among the Company and the Defendants (the “Consulting Agreement”), the Company issued to the Defendants
NOTE 7 – Subsequent Events
The Company has evaluated subsequent events through May 13, 2022, the date on which the accompanying condensed consolidated financial statements were available to be issued, and concluded that, no material subsequent events have occurred since March 31, 2022, that require recognition or disclosure in the consolidated financial statements except as follows:
From April 1, 2022, to May 13, 2022, the Board authorized the issuance of
On April 15, 2022 the Company entered into an agreement with a consultant that granted
On May 3, 2022, the Company made the decision to divest of its investment in Fvndit, Inc. and has begun the process to complete that transaction. It is expected to complete the divestiture in the second quarter of 2022.
| F-12 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
The following management’s discussion and analysis should be read in conjunction with our historical financial statements and the related notes thereto. The management’s discussion and analysis contain forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in our Annual Report on Form 10-K, which we filed with the Securities and Exchange Commission (“SEC”) on March 24, 2022, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.
Basis of Presentation
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of consolidated financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited condensed consolidated financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such consolidated financial statements and the related notes thereto.
Overview
Vemanti, incorporated on April 3, 2014 under the laws of the State of Nevada, is a financial technology (fintech) company that seeks to generate revenues in the emerging markets of Vietnam and Southeast Asia. In particular, we intend to focus our future product and business development on digital banking platforms, fintech, and on applications using disruptive technologies aimed at making credit simpler and easier to access for small to medium enterprises (“SMEs”) in our target markets.
Through our wholly-owned subsidiary, VoiceStep, we provide a one-stop solution with regard to business-class VoIP services to our SME customers in the United States. We also have 18.6% ownership interest in Fvndit which, through its subsidiaries, operates an online short-term P2P financing platform for SMEs in Vietnam.
We began generating revenue from the sales of our VoiceStep products since its inception in 2014, but have incurred significant net losses since 2015.
For the three months ended March 31, 2022, and 2021, we recognized approximately $37,600 and $36,243, respectively, in sales, and no interest income in either period. For the three months ended March 31, 2022, and 2021, we also recorded an unrealized loss of $0, and $1,651, respectively, on our investment in Fvndit. For the three-month period ended March 31, 2022, and 2021, we incurred a net loss of $296,435 and $69,967, respectively.
As reflected in the unaudited condensed consolidated interim financial statements, we used cash in operations of $98,650 and had a net loss from operations of $296,871 and an accumulated deficit of $3,580,522 for the three months ended March 31, 2022.
While we believe in the viability of our strategy to generate sufficient revenues and in our ability to raise additional funds, there can be no assurances that we will be successful or that our cash position will be sufficient to support our daily operations. Our continued existence is dependent upon our ability to continue to execute our operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available or will be available on terms acceptable to our Company. Accordingly, we may decide to exit our existing business and explore potential strategic alternatives, including establishing a new business, or target an existing business for acquisition, without restriction to any specific business, industry or geographical location/
| 4 |
| Table of Contents |
Recent Developments
PVcomBank Platform Agreement
On March 14 2022, we entered into a master Digital Banking Platform Agreement with PVcomBank (the “Platform Agreement”) under which Vemanti agreed to partner with PVcomBank in designing, developing, and delivering a digital-only banking platform (the “Platform”) for accessing PVcomBank’s products and services to SMEs in Vietnam. The specific products and services to be provided through the Platform, as well as the terms of the agreement, including the distribution of revenues derived from each such product or service, are to be specified in annexes to the Platform Agreement (of which none have been entered into as of the date of this Quarterly Report).
Through the Platform Agreement and our collaboration with PVcomBank, Vemanti intends to utilize PVcomBank’s banking expertise and existing core banking system to connect SMEs in Vietnam with an innovative digital-only banking solution. As part of this new model, we plan to develop and utilize a Vemanti-branded platform to allow customers to sign up for accounts and get access to services entirely online, while still having the option of visiting a convenient PvcomBank branch location if needed. We intend for customers using our Platform to have SME-tailored banking services and financial products of PVcomBank and eventually will be able to seamlessly integrate them into their business operations using API-based third-party accounting software.
As of the date of this Quarterly Report, we are actively working with PVcomBank to develop and launch the first product which is expected to be a short-term working capital loan program specifically designed for small to medium enterprises in Vietnam. PVcomBank will underwrite the loans while our Platform will provide the sales channel, generating leads and qualifying customers.
Dissolution of Vemanti Digital
On April 28, 2022, we formally dissolved our wholly owned subsidiary Vemanti Digital, Ltd. (“Vemanti Digital”). Through Vemanti Digital, we had planned to work on an ERC-20 USD-backed stablecoin (“USDV”) that would have been issued for and backed by the US Dollar on a 1:1 basis. Due to the current lack of a clear legal framework specific to stablecoins, the Company did not foresee an unhindered path for USDV to become commercially available and widely adopted in any jurisdiction without regulatory and compliance risks and thus decided to end the USDV project. As of February 22, 2022, the Company has terminated its agreements with Stably and FDT, and all USDV tokens have been burned.
Alpha Sigma Capital Investment Agreement
On March 11, 2022, the Company entered into an Equity Investment Agreement (the "Agreement”) with Alpha Sigma Capital Fund, LP, a Delaware limited partnership ("Alpha Sigma Capital” or "ASC”), pursuant to which the ASC has the right to require the Company to sell it up to $2,000,000 in shares of its common stock (the “Put Shares”), subject to certain limitations. ASC was also issued a common stock purchase warrant (the “Warrant”) pursuant to which ASC shall have the right to purchase the same number of put shares that ASC purchases at an exercise price that is equal to the price of the Put Shares. On March 15, 2022, the Company received a Put Notice of $200,000 from ASC for which it issued 381,530 shares of common stock and a warrant allowing the investor to purchase up to $200,000 in common stock until its expiration under the terms described in the Agreement.
Results of Operations
The three months ended March 31, 2022, compared to the three months ended March 31, 2021
|
| 2022 |
|
| 2021 |
| ||
|
| Amount |
|
| Amount |
| ||
Sales |
| $ | 37,600 |
|
| $ | 36,243 |
|
Cost of sales |
| $ | 5,521 |
|
| $ | 5,403 |
|
Gross margin |
| $ | 32,079 |
|
| $ | 30,840 |
|
Total other income (expense) net |
| $ | 436 |
|
| $ | (1,651 | ) |
Total operating expenses |
| $ | 328,950 |
|
| $ | 99,156 |
|
Income taxes |
| $ | - |
|
| $ | - |
|
Net loss |
| $ | (296,435 | ) |
| $ | (69,967 | ) |
| 5 |
| Table of Contents |
Revenues
Revenues were $37,600 for the three months ended March 31, 2022, an increase of $1,357 or 4%, compared to $36,243 in the same period of last year. The increase was mainly due to slightly higher call usage.
Gross Profit and Gross Profit Margin
Gross profit was $32,079 for the three months ended March 31, 2022, compared to $30,840 in the same period of 2021. Our gross profit margin as a percentage of sales remained unchanged or the three months ended March 31, 2022.
General and Administrative Expenses
General and administrative (G&A) expenses were $328,950 for the three months ended March 31, 2022, compared to $99,156 for the same period in 2021, representing an increase of 232%, or $229,794. The increase was mainly due to the expenses and stock-based compensation paid to outside consultants and contractors related to the Company’s development and investment in its digital banking initiative and partnership with PVcom Bank combined with the dissolution of Vemanti Digital and the discontinuation of the Vemanti Dollar (“USDV”).
Operating Loss
Total operating loss was $296,871 for the three months ended March 31, 2022, compared to $68,316 in the same period of 2021, representing an increase of $228,555 or 335%%. The increase was mainly due to increased expenses and stock-based compensation paid to outside consultants and contractors related to the development and investment the Company’s digital banking initiative and partnership with PVcom Bank combined with the dissolution of Vemanti Digital and the discontinuation of USDV.
As of March 31, 2022, and 2021, there were no significant deferred tax assets, except for a net operating loss carryforward for which a 100% valuation allowance has been provided.
The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of March 31, 2022, and December 31, 2021. The 2018 to 2021 tax years are still subject to federal audit. The 2017 to 2021 tax years are still subject to state audit.
The Company had $2,679,077 and $1,132,304 of net operating loss carryforwards available as of December 31, 2021, and 2020, respectively, for Federal and state tax purposes. The federal net operating loss carryforward does not expire while the state net operating losses expire in various years through 2041.
Net Loss
As a result of the above factors, we had a net loss of $296,435 for the three months ended March 31, 2022, compared to a net loss of $69,967 for the same period in 2021.
| 6 |
| Table of Contents |
LIQUIDITY AND CAPITAL RESOURCES
Historically, our primary uses of cash have been to finance working capital needs. We expect that we will be able to meet our needs to fund operations, capital expenditures and other commitments in the next 12 months primarily with our cash balance and operating cash flows.
We may need to raise additional capital to fund our operating expenses, pay our obligations, and grow our Company in the future. Our current resources may be insufficient to satisfy all of our cash requirements and we may seek to sell additional equity or debt securities or obtain a credit facility. Our future operations may be dependent on our ability to secure additional financing. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.
Currently, the Company has sufficient cash to remain in business for the next 12 months.
The following table sets forth a summary of our cash flows for the periods indicated.
Item |
| For the Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net cash used in operating activities |
| $ | 98,650 |
|
| $ | 62,873 |
|
Net cash used in investing activities |
|
| - |
|
|
| 10,000 |
|
Net cash provided by financing activities |
|
| 337,500 |
|
|
| 265,000 |
|
Net increase in cash |
|
| 238,850 |
|
|
| 192,127 |
|
Cash at the beginning of period |
|
| 295,937 |
|
|
| 243,494 |
|
Cash at the end of period |
| $ | 534,787 |
|
| $ | 435,621 |
|
Operating Activities
Net cash used in operating activities was $98,650 for the three months ended March 31, 2022, as compared to $62,873 used in operating activities for the three months ended March 31, 2021, primarily due to the net losses incurred.
Investing Activities
There was no net cash used in investing activities for the three months ended March 31, 2022, compared to net cash used in investing activities of $10,000 for the purchase of a cryptocurrency for the three months ended March 31, 2021.
Financing Activities
Net cash provided by financing activities was $337,500 for the three months ended March 31, 2022, compared to $265,000 for the three months ended March 31, 2021. The change was primarily due to the issuance of shares for cash.
Quantitative and Qualitative Disclosures about Market Risks
Not applicable.
| 7 |
| Table of Contents |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable because we are a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that the information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were not, in design and operation, effective at a reasonable assurance level due to the material weaknesses in internal control over financial reporting described below. Because of our limited operations, we have a limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations, we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.
Changes in Internal Controls Over Financial Reporting
Effective as of September 7, 2021, the Company’s Board of Directors approved the appointment of Stephen R. Jones as the Company’s Chief Financial Officer, replacing Tan Tran. Mr. Tran resigned as the Chief Financial Officer effective as of September 7, 2021, and will remain as the President, Chief Executive Officer, and director of the Company. The hiring of Mr. Jones allowed us to segregate duties of the Chief Financial Officer from the Chief Executive Officer.
Effective as of January 17, 2022, the Company hired a staff accountant to bring in-house the day-to-day accounting functions and handle the basic management reporting requirements.
There were no other changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on the Effectiveness of Controls
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
| 8 |
| Table of Contents |
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On June 25, 2021, the Company filed a complaint against Messrs. Chenyuan Anthony Chen and Ang Hu (the “Defendants”) in the Superior Court of the State of California, County of Orange (the “Complaint”). Pursuant to a Consulting Agreement dated April 1, 2019, by and among the Company and the Defendants (the “Consulting Agreement”), the Company issued to the Defendants 3,250,000 shares of the Company’s common stock (the “Consulting Shares”) as compensation for certain consulting services to be performed by the Defendants. Pursuant to the Complaint, the Company alleges that the Defendants breached the Consulting Agreement by failing to perform such consulting services and thereby seeks injunctive relief to restrain Defendants from sales of the Consulting Shares, the cancellation of the Consulting Shares, and compensatory damages and legal fees. As of the date of this Quarterly Report, the Complaint is pending.
ITEM 1A. RISK FACTORS.
Not required for smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
| 9 |
| Table of Contents |
ITEM 6. EXHIBITS.
Exhibit No. |
| Description |
|
|
|
| ||
| ||
| ||
| ||
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| 10 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VEMANTI GROUP INC. | |
|
| |
Date: May 16, 2022 | By: | /s/ Tan Tran |
| Name: | Tan Tran |
| Title: | President, Chief Executive Officer |
| 11 |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
OF REGISTRANT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(RULE 13a-14(a) or 15d-14(a) OF THE EXCHANGE ACT)
I, Tan Tran, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Vemanti Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
b) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
| Date: May 16, 2022 | By: | /s/ Tan Tran |
|
|
| Name: | Tan Tran |
|
|
| Title: | Chief Executive Officer |
|
|
|
| (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
OF REGISTRANT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(RULE 13a-14(a) or 15d-14(a) OF THE EXCHANGE ACT)
I, Steve Jones, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Vemanti Group Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
| Date: May 16, 2022 | By: | /s/ Steve Jones |
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| Name: | Steve Jones |
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| Title: | Chief Financial Officer |
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| (Principal Financial and Accounting Officer) |
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EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this quarterly report on Form 10-Q of Vemanti Group, Inc. (the “Company”) for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
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| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
| Date: May 16, 2022 | By: | /s/ Tan Tran |
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| Name: | Tan Tran |
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| Title: | Chief Executive Officer |
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| (Principal Executive Officer) |
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EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this quarterly report on Form 10-Q of Vemanti Group, Inc. (the “Company”) for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
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| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
| Date: May 16, 2022 | By: | /s/ Steve Jones |
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| Name: | Steve Jones |
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| Title: | Chief Financial Officer |
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| (Principal Financial Officer) |
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