Forward-Looking Statements
The following management's discussion and analysis should be read in conjunction
with our historical financial statements and the related notes thereto. The
management's discussion and analysis contain forward-looking statements, such as
statements of our plans, objectives, expectations and intentions. Any statements
that are not statements of historical fact are forward-looking statements. When
used, the words "believe," "plan," "intend," "anticipate," "target," "estimate,"
"expect" and the like, and/or future tense or conditional constructions ("will,"
"may," "could," "should," etc.), or similar expressions, identify certain of
these forward-looking statements. These forward-looking statements are subject
to risks and uncertainties, including those under "Risk Factors" in our Annual
Report on Form 10-K, which we filed with the Securities and Exchange Commission
("SEC") on March 24, 2022, that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements.
Our actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of several factors.
We do not undertake any obligation to update forward-looking statements to
reflect events or circumstances occurring after the date of this Quarterly
Report.
Basis of Presentation
The following discussion highlights our results of operations and the principal
factors that have affected our financial condition as well as our liquidity and
capital resources for the periods described and provides information that
management believes is relevant for an assessment and understanding of the
statements of consolidated financial condition and results of operations
presented herein. The following discussion and analysis are based on our
unaudited condensed consolidated financial statements contained in this
Quarterly Report, which we have prepared in accordance with United States
generally accepted accounting principles. You should read the discussion and
analysis together with such consolidated financial statements and the related
notes thereto.
Overview
Vemanti, incorporated on April 3, 2014 under the laws of the State of Nevada, is
a financial technology (fintech) company that seeks to generate revenues in the
emerging markets of Vietnam and Southeast Asia. In particular, we intend to
focus our future product and business development on digital banking platforms,
fintech, and on applications using disruptive technologies aimed at making
credit simpler and easier to access for small to medium enterprises ("SMEs") in
our target markets.
Through our wholly-owned subsidiary, VoiceStep, we provide a one-stop solution
with regard to business-class VoIP services to our SME customers in the United
States. We also have 18.6% ownership interest in Fvndit which, through its
subsidiaries, operates an online short-term P2P financing platform for SMEs in
Vietnam.
We began generating revenue from the sales of our VoiceStep products since its
inception in 2014, but have incurred significant net losses since 2015.
For the three months ended March 31, 2022, and 2021, we recognized approximately
$37,600 and $36,243, respectively, in sales, and no interest income in either
period. For the three months ended March 31, 2022, and 2021, we also recorded an
unrealized loss of $0, and $1,651, respectively, on our investment in Fvndit.
For the three-month period ended March 31, 2022, and 2021, we incurred a net
loss of $296,435 and $69,967, respectively.
As reflected in the unaudited condensed consolidated interim financial
statements, we used cash in operations of $98,650 and had a net loss from
operations of $296,871 and an accumulated deficit of $3,580,522 for the three
months ended March 31, 2022.
While we believe in the viability of our strategy to generate sufficient
revenues and in our ability to raise additional funds, there can be no
assurances that we will be successful or that our cash position will be
sufficient to support our daily operations. Our continued existence is dependent
upon our ability to continue to execute our operating plan and to obtain
additional debt or equity financing. There can be no assurance the necessary
debt or equity financing will be available or will be available on terms
acceptable to our Company. Accordingly, we may decide to exit our existing
business and explore potential strategic alternatives, including establishing a
new business, or target an existing business for acquisition, without
restriction to any specific business, industry or geographical location/
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Recent Developments
PVcomBank Platform Agreement
On March 14 2022, we entered into a master Digital Banking Platform Agreement
with PVcomBank (the "Platform Agreement") under which Vemanti agreed to partner
with PVcomBank in designing, developing, and delivering a digital-only banking
platform (the "Platform") for accessing PVcomBank's products and services to
SMEs in Vietnam. The specific products and services to be provided through the
Platform, as well as the terms of the agreement, including the distribution of
revenues derived from each such product or service, are to be specified in
annexes to the Platform Agreement (of which none have been entered into as of
the date of this Quarterly Report).
Through the Platform Agreement and our collaboration with PVcomBank, Vemanti
intends to utilize PVcomBank's banking expertise and existing core banking
system to connect SMEs in Vietnam with an innovative digital-only banking
solution. As part of this new model, we plan to develop and utilize a
Vemanti-branded platform to allow customers to sign up for accounts and get
access to services entirely online, while still having the option of visiting a
convenient PvcomBank branch location if needed. We intend for customers using
our Platform to have SME-tailored banking services and financial products of
PVcomBank and eventually will be able to seamlessly integrate them into their
business operations using API-based third-party accounting software.
As of the date of this Quarterly Report, we are actively working with PVcomBank
to develop and launch the first product which is expected to be a short-term
working capital loan program specifically designed for small to medium
enterprises in Vietnam. PVcomBank will underwrite the loans while our Platform
will provide the sales channel, generating leads and qualifying customers.
Dissolution of Vemanti Digital
On April 28, 2022, we formally dissolved our wholly owned subsidiary Vemanti
Digital, Ltd. ("Vemanti Digital"). Through Vemanti Digital, we had planned to
work on an ERC-20 USD-backed stablecoin ("USDV") that would have been issued for
and backed by the US Dollar on a 1:1 basis. Due to the current lack of a clear
legal framework specific to stablecoins, the Company did not foresee an
unhindered path for USDV to become commercially available and widely adopted in
any jurisdiction without regulatory and compliance risks and thus decided to end
the USDV project. As of February 22, 2022, the Company has terminated its
agreements with Stably and FDT, and all USDV tokens have been burned.
Alpha Sigma Capital Investment Agreement
On March 11, 2022, the Company entered into an Equity Investment Agreement (the
"Agreement") with Alpha Sigma Capital Fund, LP, a Delaware limited partnership
("Alpha Sigma Capital" or "ASC"), pursuant to which the ASC has the right to
require the Company to sell it up to $2,000,000 in shares of its common stock
(the "Put Shares"), subject to certain limitations. ASC was also issued a common
stock purchase warrant (the "Warrant") pursuant to which ASC shall have the
right to purchase the same number of put shares that ASC purchases at an
exercise price that is equal to the price of the Put Shares. On March 15, 2022,
the Company received a Put Notice of $200,000 from ASC for which it issued
381,530 shares of common stock and a warrant allowing the investor to purchase
up to $200,000 in common stock until its expiration under the terms described in
the Agreement.
Results of Operations
The three months ended March 31, 2022, compared to the three months ended March
31, 2021
2022 2021
Amount Amount
Sales $ 37,600 $ 36,243
Cost of sales $ 5,521 $ 5,403
Gross margin $ 32,079 $ 30,840
Total other income (expense) net $ 436 $ (1,651 )
Total operating expenses $ 328,950 $ 99,156
Income taxes $ - $ -
Net loss $ (296,435 ) $ (69,967 )
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Revenues
Revenues were $37,600 for the three months ended March 31, 2022, an increase of
$1,357 or 4%, compared to $36,243 in the same period of last year. The increase
was mainly due to slightly higher call usage.
Gross Profit and Gross Profit Margin
Gross profit was $32,079 for the three months ended March 31, 2022, compared to
$30,840 in the same period of 2021. Our gross profit margin as a percentage of
sales remained unchanged or the three months ended March 31, 2022.
General and Administrative Expenses
General and administrative (G&A) expenses were $328,950 for the three months
ended March 31, 2022, compared to $99,156 for the same period in 2021,
representing an increase of 232%, or $229,794. The increase was mainly due to
the expenses and stock-based compensation paid to outside consultants and
contractors related to the Company's development and investment in its digital
banking initiative and partnership with PVcom Bank combined with the dissolution
of Vemanti Digital and the discontinuation of the Vemanti Dollar ("USDV").
Operating Loss
Total operating loss was $296,871 for the three months ended March 31, 2022,
compared to $68,316 in the same period of 2021, representing an increase of
$228,555 or 335%%. The increase was mainly due to increased expenses and
stock-based compensation paid to outside consultants and contractors related to
the development and investment the Company's digital banking initiative and
partnership with PVcom Bank combined with the dissolution of Vemanti Digital and
the discontinuation of USDV.
As of March 31, 2022, and 2021, there were no significant deferred tax assets,
except for a net operating loss carryforward for which a 100% valuation
allowance has been provided.
The Company annually conducts an analysis of its tax positions and has concluded
that it has no uncertain tax positions as of March 31, 2022, and December 31,
2021. The 2018 to 2021 tax years are still subject to federal audit. The 2017
to 2021 tax years are still subject to state audit.
The Company had $2,679,077 and $1,132,304 of net operating loss carryforwards
available as of December 31, 2021, and 2020, respectively, for Federal and state
tax purposes. The federal net operating loss carryforward does not expire while
the state net operating losses expire in various years through 2041.
Net Loss
As a result of the above factors, we had a net loss of $296,435 for the three
months ended March 31, 2022, compared to a net loss of $69,967 for the same
period in 2021.
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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 Three Months Ended
Item March 31,
2022 2021
Net cash used in operating activities $ 98,650 $ 62,873
Net cash used in investing activities
- 10,000
Net cash provided by financing activities 337,500 265,000
Net increase in cash
238,850 192,127
Cash at the beginning of period 295,937 243,494
Cash at the end of period $ 534,787 $ 435,621
Operating Activities
Net cash used in operating activities was $98,650 for the three months ended
March 31, 2022, as compared to $62,873 used in operating activities for the
three months ended March 31, 2021, primarily due to the net losses incurred.
Investing Activities
There was no net cash used in investing activities for the three months ended
March 31, 2022, compared to net cash used in investing activities of $10,000 for
the purchase of a cryptocurrency for the three months ended March 31, 2021.
Financing Activities
Net cash provided by financing activities was $337,500 for the three months
ended March 31, 2022, compared to $265,000 for the three months ended March 31,
2021. The change was primarily due to the issuance of shares for cash.
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VEMANTI GROUP, INC. 