VIRTUAL INTERACTIVE TECHNOLOGIES CORP. - Annual Report: 2020 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934

For the year ended September 30, 2020

[  ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act Of 1934

For the transition period from __________ to __________

Commission File Number: None

Virtual Interactive Technologies Corp.

(Exact name of registrant as specified in its charter)

600 17^th Street, Suite 2800 South

Denver, CO 80202

(Address of principal executive offices, including Zip Code)

(303) 228-7120

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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). Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [  ]

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 aggregate market value of the voting and non-voting common equity held by non-affiliates as of March 31, 2020 was $16,567,215.

State the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date: 6,817,784 shares of common stock as of December 28, 2020.

VIRTUAL INTERACTIVE TECHNOLOGIES CORP.

FORM 10-K

For the Year ended September 30, 2019

TABLE OF CONTENTS

PART I

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “projects,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Virtual Interactive Technologies Corp. was incorporated in Nevada on November 3, 2011 under the name Mascota Resources Corp.

On November 25, 2019 the following became effective on the over-the-counter market

On September 27, 2019, Virtual Interactive Technologies Corp merged with Advanced Interactive Gaming Inc, and its subsidiary Advanced Interactive Gaming Ltd. (collectively “Advanced Interactive Gaming” or “AIG”), through a reverse merger transaction. Advanced Interactive Gaming was founded in 2016 to provide financing solutions for independent video game developers globally. Advanced Interactive Gaming was deemed to be the accounting acquirer of the transaction and will be the operating entity moving forward under the name of Virtual Interactive Technologies Corp (“VIT,” “the Company” or “we”).

VIT finances the development of video game projects to be released on various popular gaming platforms in exchange for a royalty stream on the games. To date the Company has financed several gaming titles including Carmageddon Max Damage, Carmageddon Crashers, Interplanetary: Enhanced Edition, Catch & Release and Worbital. Collectively these games are distributed world-wide on various gaming platforms including Sony PlayStation, Xbox, Steam and Oculus among others. In addition to financing solutions, VIT offers expertise in development solutions, publishing and marketing video game products and is actively involved in the early stages of VR/AR game development. VIT continues to reinvest its royalty income into growing its royalty contracts and intellectual property in the video game development industry.

The Company’s strategy moving forward is to continue to invest in new game development through partnerships and royalty contracts. Management believes that there is significant opportunity in VR games given the relatively early stage in the product cycle and the growing need for content to support VR hardware sales. While the Company has historically participated mostly in the PC and console market, it will continue to explore addition opportunities in the gaming space as they present themselves. In addition, the VIT may explore strategic alliances and acquisitions in order to expand its business.

Industry Overview

The video game industry is expected to grow from approximately $125 billion in revenues globally in 2018 to approximately $300 billion in revenues globally by 2025, fueled by an anticipated 2.5 billion gamers worldwide. It has been estimated that gamers spend in excess of 7 hours per week gaming, which continues to grow, with gamers between the ages of 26 and 35 spending 8.2 hours per week gaming and gamers over 60 spending about 5.6 hours per week gaming.

Generally, the video game hardware platforms are divided into mobile gaming on smartphones, PC/laptop gaming and consoles. It is estimated that in 2018, mobile gaming generated approximately $63.2 billion in revenues whereas the PC/laptop market generated approximately $33.5 billion in revenues and console gaming generated approximately $38 billion in revenues. Virtual reality games (“VR”) is still in its relative infancy and mostly in the PC/laptop and console venues but is expected to grow substantially as hardware continues to improve, becomes more affordable and becomes more prolific among mobile gamers. In addition, VR content is still in its infancy, which could provide an opportunity for content providers in the coming years.

Mobile gaming has seen the largest growth over the other hardware platforms, largely driven by affordability of the devices and availability of content. The largest growing trend within the mobile gaming market has been the free-to-play model whereby monetization comes from in game purchases. Mobile gaming has its largest footprint in Southeast Asia where mobile devices have seen substantial proliferation over the last decade, whereas console gaming has its largest footprints in North America and Europe where disposable income is higher than other regions of the world.

Competition

The video game industry is extremely competitive globally with competitors ranging from small independent developers with limited resources to very large development companies with significant financial, technical and marketing resources, such as Take-Two Interactive Software, Inc., Activision Blizzard, Inc., Electronic Arts, Inc. and Ubisoft Entertainment, S.A.

In addition, while the industry is experiencing significant growth, it also continues to evolve and create new markets, which could lead to additional competition in the future.

Employees

At this time, we have no full time or part time employees. Jason Garber is our current CEO and Director and acts as a contract employee. James W. Creamer III is our current CFO and Director and acts as a contract employee. The Company has two other contractors it utilizes for accounting and operations.

Other Information

The Company files its annual, quarterly, and current reports with the Securities and Exchange Commission (SEC), copies of which are available at www.sec.gov. The public may also read and copy any materials that the Company has filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.

There are certain inherent risks which will have an effect on the Company’s exploration in the future and the most significant risks and uncertainties known and identified by our management are described below.

We have a limited operating history and we may not be profitable.

We have recently changed our business’s focus and have an unproven business plan. Accordingly, it is difficult to evaluate our business. There can be no assurances that we will be profitable or that our common stock will have any value. Any forecasts we make concerning our operations may prove to be inaccurate. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in the early stage of development. As a result of these risks, challenges, and uncertainties, the value of your investment in our common stock could be significantly reduced or completely lost.

We need capital to implement our business plan.

We do not know what the terms of any future capital raising may be but any future sale of our equity securities will dilute the ownership of the existing stockholders and could be at prices substantially below the market price of our common stock. Our failure to obtain the capital which we require may result in the slower implementation of our business plan.

We are dependent on key personnel.

Our success depends to a significant degree upon the continued contributions of key management and other personnel, some of whom could be difficult to replace. We do not maintain key man life insurance covering certain of our officers. Our success will depend on the performance of our officers, our ability to retain and motivate our officers, our ability to integrate new officers into our operations and the ability of all personnel to work together effectively as a team. Our failure to retain and recruit officers and other key personnel could have a material adverse effect on our business, financial condition and results of operations.

As we face intense competition in the video game industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.

The video game industry is intensely competitive in all of its phases. Competition includes large established video game development companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive video game properties or financing on terms we consider acceptable. We also compete with other video game companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration programs may be slowed down or suspended.

Our stock is categorized as a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s ability to buy and sell our stock.

Our stock is categorized as a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Additionally, brokers may be less willing to execute transactions in securities subject to the penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

The sale of a significant number of our shares of common stock could depress the price of our common stock.

Sales or issuances of a large number of shares of common stock in the public market or the perception that sales may occur could cause the market price of our common stock to decline. As of September 30, 2020, there were approximately 6.8 million shares of common stock outstanding. Significant shares of common stock may be held by our principal shareholders, other Company insiders and other large shareholders.

The market price of our common stock may be volatile.

The market price of our common stock has been and is likely in the future to be volatile. Our common stock price may fluctuate in response to factors such as:

These broad market and industry factors may have a material adverse effect on the market price of our common stock, regardless of our actual operating performance. These factors could have a material adverse effect on our business, financial condition and results of operations.

We may issue shares of preferred stock that would have liquidation preferences to our common stock.

Our articles of incorporation currently authorize the issuance of 20,000,000 shares of our preferred shares, of which 645,612 shares of our preferred shares are issued and outstanding at September 30, 2020. Our board of directors has the power to issue shares without shareholder approval, and such shares can be issued with such rights, preference, and limitations as may be determined by our board of directors. The rights of holder of common stock will be subject to and may be adversely affected by the rights of any holders of preferred stock that may be issued in the future. Although we presently have no commitments or contracts to issue any shares of preferred stock, authorized and unissued preferred stock could delay, discourage, hinder or preclude an unsolicited acquisition of our company, could make it less likely that shareholders receive a premium for their shares as a result of any such attempt, and could adversely affect the market prices of, and the voting and other rights, of the holders of outstanding shares of our common stock.

We may engage in acquisitions, mergers, strategic alliances, joint ventures and divestitures that could result in financial results that are different than expected.

In the normal course of business, we may engage in discussions relating to possible acquisitions, equity investments, mergers, strategic alliances, joint ventures and divestitures. All such transactions are accompanied by a number of risks, including:

From time to time, we may engage in discussions with candidates regarding potential divestures. If a divestiture does occur, we cannot be certain that our business, operating results and financial condition will not be materially and adversely affected. A successful divestiture depends on various factors, including our ability to:

In addition, if customers of the divested business do not receive the same level of service from the new owners, this may adversely affect our other businesses to the extent that these customers also purchase other products offered by us. All of these efforts require varying levels of management resources, which may divert our attention from other business operations.

If we do not realize the expected benefits or synergies of any divestiture transaction, our consolidated financial position, results of operations, cash flows and stock price could be negatively impacted.

Our directors and officers may have conflicts of interest with the Company as a result of their relationships with other companies.

To the extent that any of our officers and directors are also directors and officers of other companies, conflicts of interest may arise between their duties as our officers and directors and as directors and officers of other companies. In addition, in the past the Company entered into supplier, financing and consulting arrangements with entities controlled by directors of the Company, and we may consider entering into such arrangements in the future. These factors could have a material adverse effect on our business, financial condition and results of operations.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws.

Without any anti-takeover provisions, there are limited deterrents for a take-over of our Company, which may result in a change in our management and directors that we cannot control.

The laws of the State of Nevada and our Articles of Incorporation and Bylaws may protect our directors from certain types of lawsuits.

The laws of the State of Nevada provide that our directors will not be liable to us or our shareholders for monetary damages for all but certain types of conduct as directors of the company. Our Articles of Incorporation and Bylaws permit us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing shareholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

Because our executive officers and directors have other business interests, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail.

Our officers have other business interests. While each officer spends a significant amount of time per week on our business, if the demands on our executive officers from their other obligations increase, they may no longer be able to devote sufficient time to the management of our business. This could negatively impact our business exploration and could cause our business to fail.

We are subject to corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.

We must comply with corporate governance requirements under the Sarbanes-Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, as well as additional rules and regulations currently in place and that may be subsequently adopted by the SEC and the Public Company Accounting Oversight Board. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. We are required to include management’s report on internal controls as part of our annual report pursuant to Section 404 of the Sarbanes-Oxley Act. We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404 of the Sarbanes-Oxley Act. The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial.

Our management has concluded that our disclosure controls and procedures were not effective due to the presence of the following material weaknesses in internal control over financial reporting:

We currently lack appropriate segregation of duties over treasury management due to lack of personnel. We expect to revise our procedures during 2021 once we have fully reconstituted our board of directors.

There is a lack of disclosure controls to ensure adequate disclosures are made in our periodic filings.

The Company subleases the office space used as its corporate headquarters located at 600 17th Street, Suite 2800 South, Denver, CO 80202 for $500 per month on a month-to-month basis.

None.

Not applicable.

PART II

During the year ended September 30, 2019 our common stock was quoted under the symbol “MACR” on the OTC Pink tier operated by OTC Markets Group, Inc. However, prior to July 3, 2019 our common stock had not traded for more than two years. On July 3, 2019, which was during our fiscal fourth quarter, our common stock began trading on the OTC Pink tier. During our fiscal fourth quarter ending September 30, 2019, the price of our common stock traded in a range between $14.00 and $50.00. These prices represent inter-dealer prices, without retail mark-up, markdown, or commission, may not represent actual transactions, and reflect the 1:20 reverse split that became effective on November 25, 2019.

In addition to the reverse split, the Company’s name changed from Mascota Resources, Inc. to Virtual Interactive Technologies Corp became effective on November 25, 2019 and our common stock began trading on the OTC Pink tier under the symbol “VRVR” on December 30, 2019.

During our fiscal year ending September 30, 2020, the price of our common stock traded in a range between $1.21 and $10.20. These prices represent inter-dealer prices, without retail mark-up, markdown, or commission, may not represent actual transactions.

As of December 28, 2020, we had 6,817,784 outstanding shares of common stock held by 87 shareholders of record.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Not applicable.

Cautionary Statement about Forward-Looking Statements

This Form 10-K contains forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “hopes,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, achieving exploration milestones, global demand for uranium, and other characterizations of future events or circumstances are forward-looking statements.

The Company is under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.

EXECUTIVE OVERVIEW

On September 27, 2019, Virtual Interactive Technologies Corp merged with Advanced Interactive Gaming Inc, and its subsidiary Advanced Interactive Gaming Ltd. (collectively “Advanced Interactive Gaming” or “AIG”), through a reverse merger transaction. Advanced Interactive Gaming was founded in 2016 to provide financing solutions for independent video game developers globally. Advanced Interactive Gaming was deemed to be the accounting acquirer of the transaction and will be the operating entity moving forward under the name of Virtual Interactive Technologies Corp (“VIT” or “the Company” or “we”)

VIT finances the development of video game projects to be released on various popular gaming platforms in exchange for a royalty stream on the games. To date the Company financed several gaming titles including Carmageddon Max Damage, Carmageddon Crashers, Interplanetary: Enhanced Edition, Catch & Release and Worbital. Collectively these games are distributed world-wide on various gaming platforms including Sony PlayStation, Xbox, Steam and Oculus among others. In addition to financing solutions, VIT offers expertise in development solutions, publishing and marketing video game products and is actively involved in the early stages of VR/AR game development. VIT continues to reinvest its royalty income into growing its royalty contracts and intellectual property in the video game development industry.

The Company’s strategy moving forward is to continue to invest in new game development through partnerships and royalty contracts. Management believes that there is significant opportunity in VR games given the relatively early stage in the product cycle and the growing need for content to support VR hardware sales. While the Company has historically participated mostly in the PC and console market, it will continue to explore addition opportunities in the gaming space as they present themselves. In addition, the VIT may explore strategic alliances and acquisitions in order to expand its business.

Results of Operations

The following discussion involves the results of operations for the years ended September 30, 2020 and September 30, 2019.

Revenue decreased 23% from $334,394 for the year ended September 30, 2019 to $256,396 for the year ended September 30, 2020. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital.

The Company continued its research and development in 2020. For the year ended September 30, 2020, we recorded $23,035 in R&D expense versus $208,116 for the year ended September 30, 2019. In 2019, most of the expense was spent on milestone payments for Worbital and Catch & Release. In 2020 we recorded the final payment for Catch & Release.

In 2016, the Company began amortizing our investment in royalty contracts for Carmageddon Crashers and Max Damage over a three-year period. During the years ended September 30, 2020 and 2019 we amortized $0 and $675,000, respectively.

General and Administrative expense for the years ended September 30, 2020 and 2019 was $274,094 and $334,515, respectively. This represents an 18% decrease over the prior year. Most of the expense recorded for both years consisted of contract services for management and operations.

For the year ended September 30, 2019 we recorded a net loss of $1,023,087. For the year ended September 30, 2020, we recorded a net loss of $9,823, a decrease of 99%. The decrease of $1,013,264 was mainly associated with the amortization of our long-term asset, forgiveness of debt and research and development associated with that asset during the year ended September 30, 2019, and decreases of interest expense and contract services in 2020. 

Liquidity and Capital Resources

For the year ended September 30, 2020, we had cash and cash equivalents of $36,244, compared to $36,136 for the year ended September 30, 2019. Working capital was $205,941 as of September 30, 2020 compared to $153,198 at September 30, 2019. The increase in working capital was $52,743. The increase in the working capital was impacted by the reverse merger in 2019 as we brought on additional current debt of $60,900, associated interest of $8,855 and accounts payable of $10,006. Other changes were related to 2020 operations of the Company that primarily included increases in notes receivable and related interest of $26,586, offset by a decrease in royalty receivable of $98,498, decrease of $11,630 in notes receivable, related party and other assets, and a decrease in accounts payable of $67,337. 

Cash Flows from Operating Activities:

Net cash provided by operating activities for the year ended September 30, 2020 was $24,913 and net cash used in operating activities for the year ended September 30, 2019 was $329,391. The decrease over the two years presented was $354,304.

This was a result of a decrease in our net loss of $1,013,264 over the two years presented. For the year ended September 30, 2020 we recorded non-cash transactions related to gain on settlement of debt of $77,118. Changes in operating activities for the year ended September 30, 2020 included decrease in other assets of $2,660, royalty receivable of $98,498, accounts payable and accrued liabilities of $87,337, and accrued interest payable of $504; offset by increases in accounts payable, related parties of $49,994, accrued interest notes receivable of $1,586, and accrued interest payable, related parties of $50,129.

For the year ended September 30, 2019, we recorded non-cash transactions related to amortization of $625,000 and stock issued for services of $1,200. Changes in operating activities for the year ended September 30, 2019 included decrease in other assets of $4,460, accounts payable, related parties of $40,000; offset by increases in royalty receivable of $91,414, accounts payable and accrued liabilities of $12,178, and accrued interest payable, related parties of $182,272.

Cash Flows from Investing Activities:

Net cash provided by investing activities for the year ended September 30, 2020 and September 30, 2019 was $11,195 and $1,812. As part of the merger transaction between AIG and VIT, the Company recorded an additional $1,812 in cash. In 2020, the Company sold land of $36,195 and advanced money to a related party in the amount of $25,000.

Cash Flows from Financing Activities:

Net cash used in financing activities for the year ended September 30, 2020 and September 30, 2019 was $36,000 and $12,140, respectively. The change of $23,860 was a direct result of proceeds from a note payable and payment to notes payable, related parties in 2020 of $32,000 and $4,000, respectively. In 2019, the Company had redemption of common shares of $22,740, and redemption of preferred stock of $100, offset by proceeds totaling $20,700 received from sales of common stock of our subsidiary and payment to notes payable, related parties of $10,000.

On September 27, 2019, the Company effected a reverse merger with Virtual Interactive Technologies, Corp (f/k/a Mascota Resources, Corp.) (“VIT”) The following are transactions associated with the reverse merger. (Additional information can be found with the 8K/A filed on January 15, 2020.)

On September 27, 2019, the Company issued 5,175,000 shares of AIG Inc common stock to various investors, at $0.004 per share for proceeds of $20,700.

On September 27, 2019 AIG, Inc executed a share exchange agreement with Virtual Interactive Technologies, Corp (f/k/a Mascota Resources, Corp.) (“VIT”). AIG, Inc. received 6,175,000 shares of VIT for all of its outstanding shares and became a wholly owned subsidiary of VIT.

On September 27, 2019, the VIT issued 595,612 shares of Series B preferred stock in full payment of outstanding loans and accrued interest totaling $2,404,900 to Velocity Capital. The loans were payable by AIG prior to the reverse merger that were paid by the issuance of the Company’s preferred stock after the merger.

Not applicable.

VIRTUAL INTERACTIVE TECHNOLOGIES CORP.

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2020 AND 2019

INDEX

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Virtual Interactive Technologies Corp.

Denver, CO

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Virtual Interactive Technologies Corp. (the “Company”) as of September 30, 2020 and 2019, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Virtual Interactive Technologies Corp.

Consolidated Balance Sheets

As of September 30, 2020 and 2019

The accompanying notes are an integral part of these consolidated financial statements.

Virtual Interactive Technologies Corp.

Consolidated Statements of Operations

For the Years Ended September 30, 2020 and 2019

The accompanying notes are an integral part of these consolidated financial statements.

Virtual Interactive Technologies Corp.

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the years ended September 30, 2020 and 2019

The accompanying notes are an integral part of these consolidated financial statements.

Virtual Interactive Technologies Corp.

Consolidated Statements of Cash Flows

For the Years Ended September 30, 2020 and 2019

The accompanying notes are an integral part of these consolidated financial statements.

Virtual Interactive Technologies Corp.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2020 and 2019

Note 1 – Nature of Business

Nature of Business

Advanced Interactive Gaming, Ltd. (“AIG Ltd”) was incorporated in Bermuda on September 19, 2016, and is in the business of assisting in the development of video games through investments and royalty contracts. AIG Ltd had several royalty contracts with video game development companies during the past three years.

On September 24, 2019, AIG Ltd was acquired by Advanced Interactive Gaming, Inc. (“AIG Inc”), a Colorado Corporation, through a reverse recapitalization and share exchange agreement. After the transaction, AIG Ltd became a wholly owned subsidiary of AIG Inc.

Virtual Interactive Technologies Corp. (f/k/a Mascota Resources, Corp.) was incorporated in the State of Nevada on November 3, 2011. On September 25, 2019, Mascota Resources, Corp. effected a name change to Virtual Interactive Technologies Corp. (“VIT”), and a 20:1 reverse stock split applicable to all existing VIT shareholders of record. The effects of the split have been retroactively applied to all periods presented.

On September 27, 2019, AIG Inc effected a reverse recapitalization via a share exchange agreement with VIT, resulting in AIG Inc becoming a wholly-owned subsidiary of VIT.

Plan of Operations

The Company has incurred losses since its inception, has limited cash on hand at September 30, 2020, and negative equity. The Company’s plan is to grow significantly over the next few years through strategic game development partnerships, through internal game development and through the acquisition of independent game development companies globally.

The Company has taken much of the cash flow from its first royalty agreement and has invested in royalty agreements for the development of several other video games. By continuing to reinvest these royalties into agreements to develop new games, along with actively managing corporate overhead, management’s plan is to substantially increase its video game royalty portfolio and cash flow over the next several years.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements herein contain the operations of VIT and its wholly-owned subsidiaries AIG Inc and AIG Ltd (collectively, the “Company”) for the periods ended September 30. 2020 and 2019.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). All intercompany transactions have been eliminated. The Company’s headquarters are located in Denver, Colorado and substantially all of its customers are outside the United States.

Fair Value of Financial Instruments

The Company accounts for fair value measurements in accordance with accounting standard ASC 820-10-50, “Fair Value Measurements.” ASC 820 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

The Company’s financial instruments consist of cash, royalties receivable, notes receivable and related accrued interest receivable, accounts payable and accrued expenses, and notes payable. The carrying value of these financial instruments approximates fair value due to the short-term nature of the instruments.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with original maturities of three months or less to be cash equivalents. The Company had no cash equivalents at September 30, 2020 or 2019.

Royalties Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. The Company has determined that no allowance is necessary as of September 30, 2020 or 2019.

Royalty Contracts and Research and Development Costs

The Company enters into agreements with third-party developers that require us to make payments for game development and production services. In exchange for our payments, we receive the exclusive publishing and distribution rights to the finished game titles as well as, in some cases, the underlying intellectual property rights. Such agreements typically allow us to fully recover these payments, plus a profit, to the developers at an agreed-upon royalty rate earned on the subsequent sales of such software, net of any agreed-upon costs. Prior to establishing technological feasibility of a product, we record any costs incurred by third-party developers as research and development expenses. Subsequent to establishing technological feasibility of a product, we capitalize all development and production service payments to third-party developers as royalty contracts. The Company had no capitalizable research and development costs during the years ended September 30, 2020 or 2019.

Long-Lived Assets

The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company compares the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. During the periods ended September 30, 2020 and September 30, 2019, the Company recorded impairment charges on royalty contracts of $0 and $0, respectively.

Revenue Recognition

On October 1, 2018, the Company adopted guidance contained in ASC 606, “Revenue Recognition.” The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of goods of services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 outlines the following five-step revenue recognition model (along with other guidance impacted by this standard): (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; (5) recognize revenue when or as the entity satisfies a performance obligation.

The Company has several contracts with video game developers that entitle us to royalty streams as a percentage of revenues generated by the game sales, which vary from contract to contract. As of September 30, 2020, the Company has four royalty contracts with three developers that are generating royalty revenue, and two royalty contracts for games that are in development.

Once a game has been developed and has met the terms of the underlying royalty agreement, the game is released for commercial sales. Per each contract, the Company will receive reports on a regular basis from the game developers’ sales platforms that identify the amount of game sales, from which consideration expected to be collected from the commercial customers is computed based on the applicable royalty percentages. Royalty revenue is based on a percentage of net receipts as defined in each customer agreement, and is recognized in accordance with the sale-based royalty provisions of ASC 606, which requires revenue recognition after the subsequent sales occur. The Company’s performance obligation under each royalty contract as an investor in the game is complete once funds are advanced to the gaming developer. Subsequent consideration is then received by the Company from the developers in the amount of the Company’s percentage fee of royalty income (net receipts) received by the customer. Net receipts include all gross revenues received by the customer as a result of sales of the games or related exploitation less certain taxes, refunds, manufacturing costs, freight, and other items specified in the underlying contract.

Foreign Currency

The Company’s functional currency is the US dollar. With the exception of stockholders’ equity (deficit), all transactions that are originally denominated in foreign currency are translated to US dollars by our international customers, on a monthly basis, when recognized by them and prior to paying royalties to the Company. All royalty revenues that are received and recognized by the Company are recorded in US dollars.

The Company has a Euro currency bank account located in Bermuda. This account is used for payments to vendors that bill the Company in a currency other than US dollars and for funds received from shareholders located outside the United States. As of September 30, 2020 and 2019, the Euro account had a balance of $0 and $0 Euros.

Foreign currency translation gains/losses are recorded in other accumulated comprehensive income (“AOCI”) based exchange rates prevalent on reporting dates for balance sheet items, and at weighted average exchange rates during the reporting period for the statement of operations. Foreign currency transaction gains/losses are recorded as other expense in the period of settlement. No AOCI items were present during the years ended September 30, 2020 and 2019, as all financial statement items were denominated in the US dollar. Gains (losses) from foreign currency transactions during the years ended September 30, 2020 and 2019 totaled $331 and ($7,517), respectively.

Use of Estimates

The preparation of financial statements in accordance 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, as well as revenues and expenses reported for the period presented. The most significant estimates relate to the useful life and impairment of intangible assets and allowance for doubtful accounts. The Company regularly will assess these estimates and, while actual results may differ, management believes that the estimates are reasonable.

Concentration of Credit Risk

Some of our US dollar balances are held in a Bermuda bank that is not insured. As of September 30, 2020 and 2019, uninsured deposits in the Bermuda bank totaled $20,649 and $27,612, respectively. Our management believes that the financial institution is financially sound, and the risk of loss is low. The Company is in the process of migrating its banking to the institutions in the United States, which are insured by the FDIC up to $250,000.

Income Taxes

The Company did not accrue corporate income taxes for AIG Ltd during the year ended September 30, 2019, as it is incorporated in the country of Bermuda where there is no corporate income tax. The Company is subject to US Federal and state income taxes commencing the year ended September 30, 2020 due to its business combinations with two US companies in September 2019.

Deferred taxes for the VIT (Nevada) and AIG Inc (Colorado) are provided on a liability method in accordance with ASC 740, “Income Taxes,” whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards, 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 basis. 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. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax position will more likely than not be sustained by the applicable tax authority and has determined that there are no significant uncertain tax positions.

Net Income (Loss) Per Share

In accordance with ASC 260 “Earnings per Share,” the basic net income (loss) per share (“EPS”) is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding adjusted on an “if-converted” basis (for convertible preferred stock). As of September 30, 2020 and 2019, the Company had Series B Preferred stock issued and outstanding that was convertible into 595,612 and 1,000,000, respectively, shares of common stock. These potentially dilutive securities were excluded from the EPS computation due to their anti-dilutive effect resulting from the Company’s net losses.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718, “Stock Compensation.” All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the grant date fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Recent Account Pronouncements

The Company has evaluated all other recently issued or enacted accounting pronouncements, and has determined that all such pronouncements either do not apply or their impact is insignificant to the financial statements.

COVID-19 Uncertainties

The COVID-19 pandemic could have an impact on our ability to obtain financing to fund the operations. The Company is unable to predict the ultimate impact at this time.

Note 3 - Royalty Contracts

The Company has valued their acquired royalty contracts with customers using the “lower of cost or net realizable value” method. Ultimately the market value of the contracts is equal to the present value of the anticipated future cash flow. Royalty contracts are amortized over the life of the contact (generally three-to-five years). Management assesses the value of each royalty contract asset on an annual basis and should it be apparent that the market value of the royalty contract becomes less than the carrying value, the Company would then recognize an impairment of the asset at that time. During the years ended September 30, 2020 and 2019, the Company recognized an impairment on royalty contracts in the amount of $0 and $0. Amortization expense on royalty contracts during the years ended September 30, 2020 and 2019 totaled $0 and $625,000, respectively. Net book value of royalty contract assets at September 30, 2020 and 2019 totaled $0 and $0, respectively.

The Company has three major royalty agreements (Customer A, Customer B and Customer C). Customer A represented approximately 30% and 30% of revenues and royalty receivables, respectively, as of and for the year ended September 30, 2019. Customer B represented approximately 54% and 48% of revenues and royalty receivables, respectively, as of and for the year ended September 30, 2019. Customer C represented approximately 16% and 22% of revenues and royalty receivables, respectively, as of and for the year ended September 30, 2019.

Customer A represented approximately 31% and 31% of revenues and royalty receivables as of and for the year ended September 30, 2020. Customer B represented approximately 46% and 14% of revenues and royalty receivables as of and for the year ended September 30, 2020. Customer C represented approximately 22% and 54% of revenues and royalty receivables as of and for the year ended September 30, 2020.

Note 4 – Related Party Transactions

Accounts Payable, Related Party

During the years ended September 30, 2020 and September 30, 2019, the Company incurred $35,000 and $120,000, respectively, in contract management services rendered by an affiliate of our CEO. As of September 30, 2020 and September 30, 2019, the Company owed $0 and $0, respectively, for these services.

During the year ended September 30, 2019 the Company had accrued $40,000 of contract management services payable to our CEO that was forgiven and was written off against additional paid in capital as of September 30, 2020.

During the years ended September 30, 2020 and 2019, the Company incurred $96,000 and $60,000, respectively, in contract management services rendered by an affiliate of our CFO. As of September 30, 2020 and 2019, the Company owed $9,994 and $0, respectively, for these services.

Notes Payable, Related Party

On March 29, 2018, the Company issued a $750,000, unsecured promissory note to the Company’s CEO for a potential acquisition and working capital. The actual funds received by the Company were $741,030, with $8,970 recorded under note receivable, related party as of September 30, 2019. As of September 30, 2020, the Company applied the $8,970 that was recorded as a note receivable to the outstanding promissory note. The Company amended the note payable principal to $741,030 to correspond with the funds actually received. The note carries an interest rate of 6% per annum, compounding annually, and matures on December 31, 2022. All principal and interest are due at maturity and there is no prepayment penalty for early repayment of the note. As of September 30, 2020 and September 30, 2019, total balance on the debt was $741,030 and $750,000 and accrued interest of $118,263 and $69,341, respectively.

From 2017 to 2019, a former executive member of VIT, (not considered a related party as of September 30, 2020), loaned VIT a total of $59,900. The notes carried a 6% interest rate and matured through October 2022, on which dates principal and interest payments were due in full. At September 30, 2019, accrued interest on the notes totaled $3,371. On October 23, 2019 the Company sold its property in Anchorage, Alaska for $36,195. On October 29, 2019, the Company paid $4,000 in cash and issued 100 shares of common stock for the remaining balance of the notes payable of $55,900 and accrued interest of $3,656. The fair value of the 100 shares of stock was approximately $1.40 a share, or $139. This resulted in a gain on forgiveness of debt of $59,417. Due to the former executive no longer being a related party of the Company on date the note was paid off, the gain was recognized in other income.

Notes payable, related party summary:

As of September 30, 2020

As of September 30, 2019

Note 5 - Notes Payable

On November 20, 2017, VIT issued $45,000 in unsecured notes payable to two unrelated individuals. The notes carried a 6% interest rate and were payable upon the earlier of October 31, 2022 or the sale of the Company’s Anchorage, Alaska property. On October 23, 2019 the Company sold its property in Anchorage, Alaska for $36,195. On October 29, 2019, the Company paid $32,000 in cash and issued 200 shares of common stock for the remaining balance on the notes payable of $13,000 and accrued interest of $4,981. The fair value of the 200 shares of stock was $1.40 a share or $280. This resulted in a gain on extinguishment of debt of $17,701.

On March 20, 2019, an unrelated individual loaned VIT $10,000. The note carries 6% interest rate and is payable March 20, 2020. No payments had been made on the note through September 30, 2020. Accrued interest on the note totaled $921 and $718 at September 30, 2020 and September 30, 2019, respectively.

Notes payable summary:

As of September 30, 2020

As of September 30, 2019

Our future maturities under our debt obligations as of September 30, 2020 are as follows:

Note 6 – Stockholders’ Equity

Common Stock

The Company is authorized to issue 90,000,000 shares of common stock at par value of $0.001. At September 30, 2020 and 2019, the Company had 6,817,784 and 6,817,484, respectively, shares of common stock issued and outstanding.

During the year ended September 30, 2020, the Company issued 300 shares of common stock as part of a payoff on notes payable and accrued interest. Of the 300 shares issued, 100 shares were issued to a related party for notes payable and accrued interest.

Preferred Stock

The Company is authorized to issue 10,000,000 each of Series A and B preferred shares at a par value of $0.01, respectively. At September 30, 2020 and September 30, 2019, the Company had 50,000 of Series A preferred shares 595,612 shares of preferred B stock issued and outstanding. The 50,000 Series A preferred shares currently outstanding are not convertible.

Note 7 – Long-Lived Assets

As part of the reverse merger between VIT and AIG Inc (Note 8), the Company acquired a parcel of undeveloped land from VIT in Anchorage, Alaska with a fair market value on the merger date of $36,195. In October 2019, the Company sold the property for $36,195.

Note 8 – Business Combination

On September 27, 2019, AIG Inc and VIT executed an agreement to exchange 6,175,000 shares of VIT for all of its outstanding shares of AIG Inc on a 1:1 basis, thus making AIG a wholly-owned subsidiary of VIT. The quoted price of VIT’s common stock on the purchase date was $.05 per share, or $308,750 total value. The acquisition was accounted for as a reverse merger because (1) AIG has the ability to elect majority of the members of the Board of Directors, (2) the management of the combined entity will consist primarily of management of AIG, and (3) the operations of AIG will be the operations of the combined entity moving forward. The pre-merger assets and liabilities of VIT were brought forward at their fair value which approximated the purchase price. As there was deminimus excess purchase price due to the control premium obtained by VIT stock exchanges between the companies and commensurate deemed values thereof, no intangibles or goodwill were recorded in connection with the business combination.

In conjunction with the reverse merger, VIT issued 300,000 shares of common stock to AIG’s CFO for services valued at $1,200, as well as 595,612 shares of Series B preferred stock valued at $4.04 per share to Velocity Capital, Ltd., in satisfaction of $2,404,900 in debts owed by AIG Ltd to Velocity.

Note 9. Note Receivable

On December 11, 2019, the Company issued a $25,000, unsecured promissory note receivable to a non-related entity. The note carries an interest rate of 6% per annum and is due on demand. There is no prepayment penalty for early repayment of the note. Accrued interest on the note totaled $1,586 at September 30, 2020.

Note 10 – Provision for Income Taxes

The Company provides for income taxes under ASC 740,”Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the following reasons:

Net deferred tax assets consist of the following components as of:

As of September 30, 2020, the Company had approximately $2,063 of net operating losses (“NOL”) carried forward to offset taxable income in future years which expire commencing in fiscal 2039. There were no NOLs generated in tax years prior to September 30, 2019. NOLs generated after September 30, 2019 can be carried forward indefinitely. NOL carry forwards may be subject to an annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). These ownership changes may limit the amount of the NOL carry forwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders.

Note 11 - Subsequent Events

On November 20, 2020, the Company invested $7,500 in a Convertible Note from 3GTK, LLC, a Delaware Company developing The Mine Life, a freemium gaming concept that combines online auctions and gift card purchasing. The note matures on November 20, 2022, carries a 4% interest rate and is convertible into 1.25% of 3GTK, LLC at the Company’s option.

The Company has evaluated events occurring from September 30, 2020 through the date of the issuance of these financial statements, and noted no additional events requiring disclosure.

None

Disclosure Controls and Procedures

We have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2020. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of September 30, 2020 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). As a result of this assessment, management concluded that, as of September 30,2020, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many smaller reporting companies with limited resources to employ a large staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending for the year ended September 30, 2020: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the year ended September 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

None.

PART III

Our current executive officers and directors and their ages are as follows:

Set forth below is information relating to the business experience of each of our directors and executive officers.

Jason D, Garber

Mr. Garber was appointed as the Company’s CEO and Director on December 31, 2019

Mr. Garber has been the CEO of Advanced Interactive Gaming, Ltd, a video game financier and development company, since its inception in September 2016. Mr. Garber has been in the video game industry since the early 1990’s. Starting as producer and designer with titles for the edutainment industry, he moved on to running studios and projects for multiple platforms such as PC, Nintendo DS, PS2, PS3, PS4, Xbox, Xbox360, Xbox One and Nintendo Switch. After having garnered a significant amount of managerial and entrepreneurial experience in game development and corporate management he decided to start investments into videogames and established several projects with investors for the video game industry during the early 2010’s.

Prior to founding Advanced Interactive Gaming, Ltd., Mr. Garber served as Publishing Director at Stainless Games Ltd., presiding over new projects, intellectual property and game releases – with the PS4, XB1, PC game Carmageddon: Max Damage as its most recent game release. From 2012 to 2013, Jason was the COO and co-founder of the start-up eelusion GmbH in Berlin, Germany.

James W. Creamer III

Mr. Creamer was appointed as the Company’s CFO and Director on December 31, 2019

Mr. Creamer has served in leadership roles for several publicly traded companies since 2005 following a fifteen-year Investment Banking career. Since 2011, Mr. Creamer has been the Principle of Corporate Solution Advisors, LLC which offers contract CFO services to small, growth-oriented companies. From 2014 to 2016 Mr. Creamer served as Chief Financial Officer of WestMountain Gold, Inc. and served as a Director for the Company during 2016. From 2010 to 2011, Mr. Creamer served as Chief Financial Officer of NexCore Healthcare Capital Corp. following its acquisition of CapTerra Financial Group, Inc. In 2005, Mr. Creamer was hired by CapTerra Financial Group, Inc. as its Chief Financial Officer and served in that capacity until 2009 when he was named CapTerra’s President and Chief Executive Officer and served in that position until CapTerra’s acquisition by NexCore in 2010.

Between 1990 and 2005, Mr. Creamer held positions as Vice President of Commercial Banking at Vectra Bank Colorado, Vice President of Investment Banking at J.P. Turner & Company, Director of Equity Research at Global Capital Securities and Vice President of Institutional Fixed Income Sales at Hanifen Imhoff, Inc.

Mr. Creamer received a Bachelor of Science degree in Finance from Arizona State University and holds the Chartered Financial Analyst (CFA) designation.

Jerry Lewis

Mr. Lewis was appointed as a director of the Company on February 21, 2018.

During the past five years Mr. Lewis has been the president of Tri Valley Vending, LLC (supplier of food, snack, beverage and gaming vending machines), ATM Alaska, Inc. (supplier of ATM machines) and Sugarloaf Marketing of Alaska, Inc. (supplier of stuffed animal crane machines).

Janelle Gladstone

Ms. Gladstone was appointed as director of the Company on December 16, 2020.

Prior to joining the Company’s board of directors, Ms. Gladstone spent the majority of her past 37 years in all aspects of the dental industry. In early 2016 Ms. Gladstone made a change to her career goals and obtained her real estate license. For the past five years Ms. Gladstone has been a residential realtor. She has also been involved with a number of businesses, including an electric mountain bike distributor, a PPE and COVID19 test distribution company, and a medical finance company providing financing options to the general public to assist in covering health care expenses. Ms. Gladstone’s passion for growing companies and developing lifelong personal and professional relationships will make her an excellent addition to the board.

Our Directors are appointed for a one-year term to hold office until the next annual meeting of our shareholders or until removed from office. Our officers are appointed by our board of directors and hold office until removed by the board.

As of January 10, 2020, we had not adopted a Code of Ethics for our principal executive, principal financial, principal accounting, or persons performing similar functions.

Neither Jason Garber nor James Creamer are independent directors, as that term is defined by the Securities and Exchange Commission. James Creamer acts as our financial expert.

Given our limited operations to date, our Board of Directors believes that its current members have sufficient knowledge and experience to fulfill the duties and obligations of an audit committee. Only one of the current Board members is an “audit committee financial expert” within the meaning of the rules and regulations of the Securities and Exchange Commission. The Board has determined that each of its members is able to read and understand fundamental financial statements and has substantial business experience that results in that member’s financial sophistication.

Our directors are generally elected at our annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. Our executive officers are elected by our directors and serve at their discretion.

The table below summarizes all compensation awarded to, earned by, or paid to each named executive officer for our last two completed fiscal years for all services rendered to us.

Summary Compensation Table

The following table lists, as of January 10, 2020, the number of shares of our common stock that are beneficially owned by (i) each person or entity known to us to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 6,8147,484 shares of our common stock and issued and outstanding as of December 28, 2020.

Accounts Payable, Related Party

During the years ended September 30, 2020 and September 30, 2019, the Company incurred $35,000 and $120,000, respectively, in contract management services rendered by an affiliate of our CEO. As of September 30, 2020 and September 30, 2019, the Company owed $0 and $0, respectively, for these services.

During the year ended September 30, 2019 the Company had accrued $40,000 of contract management services payable to our CEO that was forgiven and was written off against additional paid in capital as of September 30, 2020.

During the years ended September 30, 2020 and 2019, the Company incurred $96,000 and $60,000, respectively, in contract management services rendered by an affiliate of our CFO. As of September 30, 2020 and 2019, the Company owed $9,994 and $0, respectively, for these services.

Notes Payable, Related Party

On March 29, 2018, the Company issued a $750,000, unsecured promissory note to the Company’s CEO for a potential acquisition and working capital. The actual funds received by the Company were $741,030, with $8,970 recorded under note receivable, related party as of September 30, 2019. During the fiscal year ended September 30, 2020, the Company applied the $8,970 that was recorded as a note receivable to the outstanding promissory note. The Company amended the note payable principal to $741,030 to correspond with the funds actually received. The note carries an interest rate of 6% per annum, compounding annually, and matures on December 31, 2022. All principal and interest are due at maturity and there is no prepayment penalty for early repayment of the note. As of September 30, 2020 and September 30, 2019, total balance on the debt was $741,030 and $750,000 and accrued interest of $118,263 and $69,341, respectively.

From 2017 to 2019, a former executive member of VIT, (not considered a related party as of September 30, 2020), loaned VIT a total of $59,900. The notes carried a 6% interest rate and matured through October 2022, on which dates principal and interest payments were due in full. At September 30, 2019, accrued interest on the notes totaled $3,371. On October 23, 2019 the Company sold its property in Anchorage, Alaska for $36,195. On October 29, 2019, the Company paid $4,000 in cash and issued 100 shares of common stock for the remaining balance of the notes payable of $55,900 and accrued interest of $3,656. The fair value of the 100 shares of stock was approximately $1.40 a share, or $139. This resulted in a gain on forgiveness of debt of $59,417. Due to the former executive no longer being a related party of the Company on date the note was paid off, the gain was recognized in other income.

Below is the table of Audit Fees (amounts in US$) billed by our current auditor, Pinnacle Accountancy Group of Utah (a DBA of Heaton & Company, PLLC) in connection with the audit of our annual financial statements for the years ended September 30, 2020 and 2019.

(1) Incorporated by reference to the same exhibit filed with the Company’s registration statement on Form S-1 (File #333-190265).

* Provided herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 29th day of December 2020.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.