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, VIT merged with AIG Inc, and its subsidiary AIG 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 three and six months ended March 31, 2021 and 2020.

Three Months Ended March 31, 2021 over March 31, 2020:

Revenue increased from $51,938 for the three months ended March 31, 2020 to $61,726 for the three months ended March 31, 2021. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital. The increase was the result of increased sales in all five games.





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Operating expense for the three months ended March 31, 2021 and 2020 was $45,334 and $98,916, respectively. This decrease is due to a significant decrease in general and administrative expenses, primarily attributable to the professional fees incurred in 2020 related to the merger that occurred at the end of the year ended September 31, 2019. In addition, the Company did not incur any research and development costs during the three months ended March 31, 2021.

For the three months ended March 31, 2021 and March 31, 2020, we recorded a total Other Expense of $11,958 and $10,906, respectively. The primary expense for both periods presented is interest expense, related party.

For the three months ended March 31, 2021, we recorded a profit of $4,433. For the three months ended March 31, 2020, we recorded a loss of $57,884. The increase of $62,317 was mainly associated with the increase in royalty revenue and decrease in contract outside services.

Six Months Ended March 31, 2021 over March 31, 2020:

Revenue increased from $76,982 for the six months ended March 31, 2020 to $95,131 for the six months ended March 31, 2021. Revenue was derived from royalty interests in five games, Carmageddon Max Damage, Carmageddon Crashers, Catch & Release, Interplanetary: Enhanced Edition and Worbital. The increase was the result of increased sales in all five games.

General and Administrative expense for the six months ended March 31, 2021 and 2020 was $127,031 and $152,413, respectively. Decrease in expense is due to decrease in professional services incurred during 2021, as the Company did not engage in any business combinations during the 2021 period as they had done in the 2020 period.

Research and development expenses for the six months ended March 31, 2021 and 2020 was $0 and $48,906, respectively. In 2021 the Company did not invest in new game development but our continued strategy is to continue to invest in new game development through partnerships and royalty contracts.

For the six months ended March 31, 2021 and March 31, 2020, we incurred net non-operating expenses of $23,422 and net operating income of $46,197, respectively. The difference of $69,89 is mainly due to the gain on extinguishment of debt recorded in offset by the bad debt expense of $8,970 for the six months ended March 31, 2020 that were non recurring items (no such expense or income in 2021).

For the six months ended March 31, 2021 we recorded a loss of $55,322. For the six months ended March 31, 2020, we recorded a loss of $78,140, a decrease of 29%. The decrease of $22,818 was mainly associated with increased revenue in 2021 and decreased research and development costs as there were no games in development during the six months ended March 31, 2021.

Liquidity and Capital Resources

As of March 31, 2021, we had cash and cash equivalents of $33,008. As of September 30, 2020, we had cash and cash equivalents of $36,244. Working capital was $175,218 at March 31, 2021 compared to $205,941 at September 30, 2020. The decrease in working capital of $30,723 was primarily the result of the Company collecting $40,004 on royalty receivables, offset by payments on accounts payable, related party of $1,494, and accounts payable and accrued liabilities of $2,970, offset by increases in interest payable of $24,898, advances to related parties of $7,500, and interest on notes receivable of $852.

Cash Flows from Operating Activities:

Net cash provided by operating activities for the six months ended March 31, 2021 and March 31, 2020 was $4,264 and $22,526, respectively. The change over the two periods presented was $18,262. This was primarily a result of a decrease in our net loss of $22,818 over the two periods presented.

Changes in operating activities for the six months ended March 31, 2021 included increases in accrued interest notes receivable of $852, accrued interest payable, related parties of $24,599, accrued interest payable of $299; offset by decreases in accounts payable and accrued liabilities of $2,970, royalty receivable of $40,004, and accounts payable, related parties of $1,494.

For the six months ended March 31, 2020 we recorded non-cash transactions of $68,148. Changes in operating activities for the six months ended March 31, 2020 included increases in accounts payable related parties of $40,000, and accrued interest payable, related parties of $23,874, accrued interest payable of $117 and interest receivable of $830; offset by decreases in other assets of $2,660, royalty receivable of $125,895, and accounts payable and accrued liabilities of $22,902.

Cash Flows from Investing Activities:

Net cash used in investing activities for the six months ended March 31, 2021 was $7,500. Net cash provided by investing activities for the six months ended March 31, 2020 was $11,195. During the six months ended March 31, 2021, the Company advanced money in the form of a convertible note receivable in the amount of $7,500. During the six months ended March 31, 2020, the Company advanced $25,000 to a related party as well as sold its land for $36,195.

Cash Flows from Financing Activities:

Net cash used in financing activities for the six months ended March 31, 2021 and March 31, 2020 was $0 and $36,000, respectively. During the six months ended March 31, 2020, the Company paid down $32,000 of notes payable and $4,000 notes payable, related party.

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