Cautionary Statement about Forward-Looking Statements

This Form 10-Q 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, 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 ("VRVR" or "the Company" or "we")

VRVR 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, VRVR offers expertise in development solutions, publishing and marketing video game products and is actively involved in the early stages of VR/AR game development. VRVR continues to reinvest its royalty income into growing its royalty contracts and intellectual property in the video game development industry.

On December 1, 2021 the Company entered into an agreement with a production entity for the services of Duane "Dog" Chapman, also known as "Dog the Bounty Hunter." Pursuant to the agreement, the Company and Mr. Chapman will develop and market a line of video games in cooperation with the other and will use Mr. Chapman's name, image, and likeness in connection with the advertisement, promotion, and sale of the video games.

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 VRVR may explore strategic alliances and acquisitions in order to expand its business.





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Results of Operations

The following discussion involves the results of operations for the three and nine months ended June 30, 2022 and June 30, 2021.

For the Three Months Ended June 30, 2022 and 2021

Revenue decreased from $35,767 for the three months ended June 30, 2021 to $20,689 for the three months ended June 30, 2022. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital.

General and Administrative expense for the three months ended June 30, 2022 and 2021 was $523,282 and $48,382, respectively. This increase was due to fees incurred for investor relations, marketing, professional services, and director fees.

Research and development expense for the three months ended June 30, 2022 and 2021 was $16,539 and $0, respectively. The Company is in the beginning stages of planning and designing a new product. All research and development costs for the three months ended June 30, 2022, was associated with fees paid to an external developer.

Other income (expense) for the three months ended June 30, 2022 and 2021 was ($148,219) and ($12,006), respectively. This increase in expense was mainly due to non-cash transactions associated with the amortization of debt discount in the current period of $117,764. The Company incurred interest expense associated with additional debt brought on in the second quarter. Interest expense recorded for the three months ended June 30, 2022 and 2021 was $16,741 and $150, respectively. Interest expense recorded for related parties for the three months ended June 30, 2022 and 2021 was $14,084 and $12,300, respectively.

For the three months ended June 30, 2022 we recorded a net loss of $667,351. For the three months ended June 30, 2021, we recorded a net loss of $24,591. The increase in loss of $642,760 was mainly associated with the decrease in revenue, additional general and administrative expenses and research and development expenses identified above, and debt discount amortization and interest expense associated with our related party and convertible notes payable.

For the Nine Months Ended June 30, 2022 and 2021

Revenue decreased from $130,898 for the nine months ended June 30, 2021 to $80,719 for the nine months ended June 30, 2022. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital.

General and Administrative expense for the nine months ended June 30, 2022 and 2021 was $836,879 and $175,383, respectively. This increase was due to fees incurred for investor relations, marketing, professional services, and director fees. During nine months ended June 30, 2022, the Company issued 220,000 shares for services which totaled $381,000.

Research and development expense for the nine months ended June 30, 2022 and 2021 was $16,539 and $0, respectively. The Company is in the beginning stages of planning and designing a new product. All research and development costs for the nine months ended June 30, 2022, was associated with fees paid to an external developer.

Other income(expense) for the nine months ended June 30, 2022 and 2021 was ($384,663) and ($35,428), respectively. This increase in expense was mainly due to non-cash transactions associated with the amortization of debt discount in the current period of $310,203. The Company incurred interest expense associated with additional debt brought on in the second quarter. Interest expense recorded for the nine months ended June 30, 2022 and 2021 was $32,784 and $449, respectively. Interest expense recorded for related parties for the nine months ended June 30, 2022 and 2021 was $42,373 and $36,899, respectively.

For the nine months ended June 30, 2022, we recorded a loss of $1,157,362. For the nine months ended June 30, 2021, we recorded a loss of $79,913. The increase in loss of $1,077,449 was mainly associated with the decrease in revenue, increase in general and administrative expenses and research and development expenses identified above, and debt discount amortization and interest expense associated with our related party and convertible notes payable.

Liquidity and Capital Resources

As of June 30, 2022, we had cash and cash equivalents of $72,684. As of September 30, 2021, we had cash and cash equivalents of $251,064. Working capital was ($921,766) as of June 30, 2022 compared to $293,754 at September 30, 2021. The decrease in working capital of $1,215,520 was primarily the result of the Company's related party debt of $950,999 (notes payable and accrued interest) due in the current year and is recorded as a current liability at June 30, 2022 and as a long term liability of $908,627 at September 30, 2021 (note is set to mature in December 2022).





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Cash Flows from Operating Activities:

Net cash used in operating activities for the nine months ended June 30, 2022 was $415,630. Net cash provided by operating activities for the nine months ended June 30, 2021 was $12,080. The change over the two periods presented was $427,710.

Changes in operating activities for the nine months ended June 30, 2022 included decreases in accounts payable and accrued liabilities of $34,714, and royalties receivable of $26,202, offset by increases in interest receivable of $1,347, accrued interest payable, related party of $42,372 and accrued interest payable of $18,016. The Company had non-cash activities of $381,000 and $310,203 related to stock issued for services and debt discount amortization, respectively.

Changes in operating activities for the nine months ended June 30, 2021 included decreases in accounts payable and accrued liabilities of $4,970, accounts payable-related party of $5,994, and royalty receivable of $66,912, offset by increases in accrued interest receivable of $1,301, accrued interest payable, related parties of $36,898, and accrued interest payable of $448.

Cash Flows from Investing Activities:

Net cash used in investing activities for the nine months ended June 30, 2022 and 2021 was $0 and $7,500, respectively. During the nine months ended June 30, 2021, the Company advanced money in the form of a convertible note receivable in the amount of $7,500.

Cash Flows from Financing Activities:

Net cash provided by financing activities for the nine months ended June 30, 2022 and 2021 was $237,250 and $0, respectively. During the nine months ended June 30, 2022, the Company received money in the form of two convertible notes payable, net of discounts of $434,750. In addition, an existing convertible note in the amount of $235,000, plus interest, was paid off during this period presented. In June 2022, the Company received $37,500 in cash and issued 22,000 shares of common stock at a price of $1.25 per share.

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