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.
Until June 16, 2022, we also held an 18.6% ownership interest in Fvndit which,
through its subsidiaries, operates an online short-term P2P financing platform
for SMEs in Vietnam. On June 16, 2022, the Company executed and consummated the
transactions contemplated by a stock purchase agreement (the "Stock Purchase
Agreement") entered into by and between the Company and Fvndit. Pursuant to the
terms of the Stock Purchase Agreement, Fvndit purchased from the Company all of
the shares of Fvndit's common stock then owned by the Company and certain
accounts receivable of approximately $25,000 that were due from Fvndit to the
Company in consideration for certain assets of Fvndit related to providing a
peer-to-peer investment marketplace in Vietnam that matches companies needing
working capital funds with investors wishing to provide those funds. As a result
of the sale, the Company no longer owns any shares of Fvndit, and no longer
holds the securities of any other entity other than those of our wholly owned
subsidiary, VoiceStep.
For the nine months ended September 30, 2022, and 2021, we recognized
approximately $108,880 and $111,039, respectively, in sales, and no interest
income in either period. For the nine months ended September 30, 2022, and 2021,
we also recorded an unrealized loss of $0, and $1,651, respectively, on our
former investment in Fvndit. For the nine-month period ended September 30, 2022,
and 2021, we incurred a net loss of $777,911 and $1,092,085, respectively.
As reflected in the unaudited condensed consolidated interim financial
statements, we used cash in operations of $320,838 and had a net loss from
operations of $777,911 and an accumulated deficit of $4,061,998 as of and for
the nine months ended September 30, 2022.
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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.
Recent Developments
Sale of Fvndit, Inc. Investment
On June 16, 2022, the Company executed and consummated the Stock Purchase
Agreement entered into by and between the Company and Fvndit, Inc., a Nevada
corporation ("Fvndit"). Pursuant to the terms of the Stock Purchase Agreement,
Fvndit purchased from the Company all of the shares of Fvndit's common stock,
par value $0.0001 currently owned by the Company (the "Shares") and certain
accounts receivable of approximately $25,000 (the "Accounts Receivable") that
were due from Fvndit to the Company. As a result of the sale, the Company no
longer owns any shares of Fvndit.
As consideration for the sale of the shares and the accounts receivable to
Fvndit, the Company acquired certain proprietary information and copyrights
associated with Fvndit's online investment marketplace business in Vietnam, the
right to the name Fvndit, ownership of the "fvndit.com" domain name, and certain
information related to Fvndit's customers (collectively, the "Consideration").
Other than standard post-closing liabilities related to the Consideration, the
Company assumed no liabilities of Fvndit, its business or any pre-closing
liabilities related to the Consideration.
Jefferson Street Capital Equity Financing Agreement
On November 7, 2022, the Company entered into an equity financing agreement (the
"Equity Financing Agreement"), dated as of October 25, 2022, with Jefferson
Street Capital LLC ("Jefferson"), a New Jersey limited liability company.
Pursuant to the Equity Financing Agreement, Jefferson agreed to purchase up to
$10 million shares of the Company's common stock, par value $0.0001 per share,
over the course of twenty-four (24) months following the effectiveness of the
Company's registration statement (the "Effective Date") registering such shares.
Concurrently with the execution and delivery of the Equity Financing Agreement,
the Company and Jefferson entered into a registration rights agreement, pursuant
to which the Company agreed to use commercially reasonable best efforts to file
a registration statement with the SEC registering the shares issued pursuant to
the Equity Financing Agreement no later than 30 calendar days and have it
declared effective no more than 90 calendar days after the filing.""""
Results of Operations
The nine months ended September 30, 2022, compared to the nine months ended
September 30, 2021
2022 2021
Amount Amount
Sales $ 108,880 $ 111,039
Cost of sales $ 17,402 $ 16,256
Gross margin $ 91,478 $ 94,783
Total other expense net $ 6,745 $ 7,294
Total operating expenses $ 862,644 $ 1,177,954
Income taxes $ - $ 1,620
Net loss $ 777,911 $ 1,092,085
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Revenues
Revenues were $108,880 for the nine months ended September 30, 2022, a decrease
of $2,159 or 2%, compared to $111,039 in the same period of last year. The
decrease was mainly due to the loss of a customer and account credit applied to
several customers for reduction in service.
Gross Profit and Gross Profit Margin
Gross profit was $91,478 for the nine months ended September 30, 2022, compared
to $94,783 in the same period of 2021. Our gross profit margin as a percentage
of sales for the nine months ended September 30, 2022, was 84%, compared to 85%
for the same period in 2021, essentially remaining constant.
General and Administrative Expenses
General and administrative (G&A) expenses were $862,644 for the nine months
ended September 30, 2022, compared to $1,177,954 for the same period in 2021,
representing a decrease of 27%, or $315,310. The decrease was mainly due to
lower consulting fees as the Company exited from its stable coin project due to
the lack of regulatory framework for crypto currencies.
Operating Loss
Total operating loss was $771,166 for the nine months ended September 30, 2022,
compared to $1,083,171 in the same period of 2021, representing a decrease of
29%, or $312,005. The decrease was mainly due to the reduction of general and
administrative (G&A) expenses.
As of September 30, 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 September 30, 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 carryforwards do 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 $777,911 for the nine
months ended September 30, 2022, compared to a net loss of $1,092,085 for the
same period in 2021.
The three months ended September 30, 2022, compared to the three months ended
September 30, 2021
2022 2021
Amount Amount
Sales $ 35,099 $ 37,112
Cost of sales $ 5,229 $ 5,804
Gross margin $ 29,870 $ 31,308
Total other expense net $ 7,181 $ 1,068
Total operating expenses $ 239,870 $ 607,207
Income taxes $ - $ 820
Net loss $ 217,181 $ 577,787
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Revenues
Revenues were $35,099 for the three months ended September 30, 2022, a decrease
of $2,013 or 5%, compared to $37,112 in the same period of last year. The
decrease was mainly due to the loss of a customer and account credit applied to
several customers for reduction in service.
Gross Profit and Gross Profit Margin
Gross profit was $29,870 for the three months ended September 30, 2022, compared
to $31,308 in the same period of 2021. Our gross profit margin increased
approximately 1% for the three months ended September 30, 2022. The decrease was
mainly due to the loss of a customer and account credit applied to several
customers for reduction in service.
General and Administrative Expenses
General and administrative (G&A) expenses were $239,870 for the three months
ended September 30, 2022, compared to $607,207 in the same period in 2021,
representing a decrease of 61%, or $367,337. The decrease was mainly due to
lower consulting fees as the Company exited from its stable coin project due to
the lack of regulatory framework for crypto currencies.
Operating Loss
Total operating loss was $210,000 for the three months ended September 30, 2022,
compared to $575,899 in the same period of 2021, representing a decrease of
$365,899 or 64%. The decrease was mainly due to the reduction of general and
administrative (G&A) expenses.
Net Income
As a result of the above factors, we had a net loss of $217,181 for the three
months ended September 30, 2022, compared to net loss of $577,787 for the same
period in 2021.
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.
For the Nine Months
Item Ended September 30,
2022 2021
Net cash used in operating activities $ 320,838 $ 345,689Net cash provided by (used in) investing activities 5,886 (10,000 )
Net cash provided by financing activities
337,500 540,000
Net increase in cash 22,548 184,311
Cash at the beginning of period 295,937 243,494
Cash at the end of period $ 318,485 $ 427,805
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Operating Activities
Net cash used in operating activities was $320,838 for the nine months ended
September 30, 2022, as compared to $345,689 used in operating activities for the
nine months ended September 30, 2021, a decrease primarily due to the reduction
of cash operating expenses.
Investing Activities
There was net cash provided by investing activities of $5,886 for the nine
months ended September 30, 2022, compared to net cash used in investing
activities of $10,000 for the nine months ended September 30, 2021. As of May
26, 2022, we liquidated our investment in Bitcoin and we do not currently hold,
nor do we intend to acquire or hold, digital assets in the future.
Financing Activities
Net cash provided by financing activities was $337,500 for the nine months ended
September 30, 2022, compared to $540,000 for the nine months ended September 30,
2021. The change was primarily due to less of a need to raise capital for
operations.
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VEMANTI GROUP, INC. 
