CYTTA CORP 10-Q for FY2022 Q2
CYTTA CORP. (CYCA)
About this 10-Q
CYTTA CORP filed this 10-Q on May 16, 2022, covering the quarter ended March 31, 2022 (FY2022 Q2).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $936
- compared with $0 a year earlier
- Net loss
- $1.53M
- compared with a net loss of $554.15K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended:
OR
For the Transition Period from ___________ to____________
Commission File Number:
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (zip code)
(Registrant’s telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
None |
| N/A |
| N/A |
Securities registered pursuant to Section 12(g) of the Act:
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 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. ☒
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). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a smaller reporting company) | Emerging growth company | ||
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of May 16, 2022, there were
CYTTA CORP.
INDEX | |||
|
|
|
|
PART I. FINANCIAL INFORMATION |
| ||
|
|
|
|
| ITEM 1 | Financial Statements (Unaudited) |
|
|
| Condensed Balance Sheets as of March 31, 2022, and September 30, 2021 (Unaudited) | 3 |
|
| 4 | |
|
| 5 | |
|
| Condensed Statement of Cash Flows for the six months ended March 31, 2022, and 2021 (Unaudited) | 7 |
|
| 8 | |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | |
| 22 | ||
| 22 | ||
|
|
|
|
|
|
|
|
| 24 | ||
| 24 | ||
| 24 | ||
| 25 | ||
| 25 | ||
| 25 | ||
| 26 | ||
| 2 |
| Table of Contents |
Cytta Corp.
Condensed Balance Sheets
(Unaudited)
|
| March 31, |
|
| September 30, |
| ||
|
| 2022 |
|
| 2021 |
| ||
ASSETS |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Accounts Receivable |
|
|
|
|
|
| ||
Inventory |
|
|
|
|
|
| ||
Prepaid Expenses |
|
|
|
|
|
| ||
Vendor deposits |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Property and Equipment |
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Accounts payable related parties |
|
|
|
|
|
| ||
Dividend payable |
|
|
|
|
|
| ||
Deferred revenue |
|
|
|
|
|
| ||
Stock to be issued |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
|
|
|
|
|
Series C Preferred Stock par value $ |
|
|
|
|
|
| ||
Series D Preferred Stock par value $ |
|
|
|
|
|
| ||
Series E Preferred Stock par value $ |
|
|
|
|
|
| ||
Series F Preferred Stock par value $ |
|
|
|
|
|
| ||
Common stock: |
|
|
|
|
|
|
|
|
( |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated Deficit |
|
| ( | ) |
|
| ( | ) |
Total Stockholders' Equity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these statements
| 3 |
| Table of Contents |
Cytta Corp. | ||||||||||
Condensed Statements of Operations | ||||||||||
(Unaudited) |
|
| For the Three Months Ended March 31, |
|
| For the Six Months Ended March 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Related party |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| General and administrative, other |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
| Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Total Other Expenses |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before income taxes |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for income taxes |
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss per share, basic and fully diluted |
| $ | - |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding Basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these statements
| 4 |
| Table of Contents |
Cytta Corp.
Condensed Statement of Changes in Stockholders' Equity
The Three and Six Months Ended March 31, 2022
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
| Total |
| ||||||||||||||
|
| Series C Preferred Stock |
|
| Series D Preferred Stock |
|
| Series E Preferred Stock |
|
| Series F Preferred Stock |
|
| Common Stock |
|
| Paid-in |
|
| Accumulated |
|
| Stockholders' |
| ||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Equity |
| |||||||||||||
| Balance September 30, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Series F Preferred Stock issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock issued for accounts payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock issued for conversion of Series E Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock issued for conversion of Series E Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for the three months ended December 31, 2021 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for the three months ended March 31, 2022 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||||
| 5 |
| Table of Contents |
Cytta Corp.
Condensed Statement of Changes in Stockholders' Equity
The Three and Six Months Ended March 31, 2021
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
| Total |
| ||||||||||||||||||||||||
|
| Series C Preferred Stock |
|
| Series D Preferred Stock |
|
| Series E Preferred Stock |
|
| Preferred Stock to be issued |
|
| Common Stock |
|
| Paid-in |
|
| Accumulated |
|
| Stockholders' |
| ||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Equity |
| |||||||||||||
| Balance September 30, 2020 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
|
|
|
| $ |
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock issued for stock to be issued |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock cancelled |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss for the three months ended December 31, 2020 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock to be issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss for the three months ended March 31, 2021 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||||
The accompanying notes are an integral part of these statements
| 6 |
| Table of Contents |
Cytta Corp.
Condensed Statements of Cash Flows
(Unaudited)
|
| For the Six Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
| Net loss |
| $ | ( | ) |
| $ | ( | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Stock-based compensation expenses for services |
|
|
|
|
|
| ||
| Depreciation expense |
|
|
|
|
|
| ||
| Changes in Operating Assets and Liabilities: |
|
|
|
|
|
|
|
|
| Inventory |
|
|
|
|
| ( | ) | |
| Accounts Receivable |
|
|
|
|
| ( | ) | |
| Prepaid expenses |
|
|
|
|
| ( | ) | |
| Vendor deposits |
|
|
|
|
|
| ||
| Accounts payable and accrued liabilities |
|
|
|
|
| ( | ) | |
| Accounts payable-related party |
|
|
|
|
|
| ||
| Dividend payable |
|
|
|
|
|
| ||
| Deferred revenue |
|
| ( | ) |
|
|
| |
| Customer deposits |
|
|
|
|
| ( | ) | |
| Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchase of property and equipment |
|
|
|
|
| ( | ) | |
| Net cash used in investing activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from issuance of Series F Preferred Stock |
|
|
|
|
|
| ||
| Proceeds from issuance of common stock |
|
|
|
|
|
| ||
| Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| NET CHANGE IN CASH |
|
|
|
|
| ( | ) | |
| CASH AT BEGINNING OF PERIOD |
|
| 173,196 |
|
|
| 847,646 |
|
| CASH AT END OF PERIOD |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| SUPPLEMENTAL CASH FLOW DISCLOSURES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash paid for interest |
| $ |
|
| $ |
| ||
| Cash paid for income taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock issued for services |
| $ |
|
| $ |
| ||
| Common stock issued for accounts payable |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these statements
| 7 |
| Table of Contents |
Cytta Corp.
Notes to Condensed Financial Statements
March 31, 2022
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Cytta Corp., (“Cytta” or the “Company”) was incorporated on May 30, 2006 under the laws of the State of Nevada. It is located in Las Vegas, Nevada. Cytta is in the business of imagineering, developing and securing disruptive technologies.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2022, the Company had an accumulated deficit of $
In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.
The Company develops and distributes proprietary technology that radically shifts how video is streamed, consumed, transferred and stored. Our proprietary SUPR Stream is the technology at the core of our products, designed specifically for streaming and storing HD, 4K, and higher resolution video. The IGAN (Incident Global Area Network) Incident Command System (ICS) seamlessly streams and stores all relevant video and audio during emergency situations. This creates real-time situational awareness for police, firefighters, first responders, EMS, and their command centers. Our products work in size, weight, and power-constrained (SWaP) operating environments, and evolved through use in the military by meeting the need to stream multiple HD, 4K, and 4K+ video feeds with ultra-low latency, bandwidth, and power consumption. The Company is taking this streaming, storage, and transfer technology to enterprises that would like to send more high-quality videos with fewer resources. All of our products are manufactured in the USA.
The Company intends to fund operations through equity financing arrangements, which may not be sufficient to fund its capital expenditures, working capital and other cash requirements for the foreseeable future. During the six months ended March 31, 2022, the Company sold
| 8 |
| Table of Contents |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended March 31, 2022, are not necessarily indicative of the operating results for the full fiscal year or any future period.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits. The Company has no cash equivalents at March 31, 2022, and September 30, 2021.
Prepaid expenses
The Company considers expenses or services paid for prior to the period the expense is completed to be recorded as a prepaid expense. Included in this account is the value of common stock issued to consultants. Such issuances are pursuant to consulting agreements that can have a one-to-two-year term. The Company amortized the value of the stock issued over the term of the agreement. The activity for the six months ended March 31, 2022 and 2021 is summarized as:
|
| March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Balance beginning of period |
| $ |
|
| $ |
| ||
Value of common stock issued |
|
|
|
|
|
| ||
Amortization of stock-based compensation |
|
| ( | ) |
|
| ( | ) |
Other prepaid expense activity |
|
| ( | ) |
|
|
| |
|
| $ |
|
| $ |
| ||
| 9 |
| Table of Contents |
Inventory
Inventories are valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs include finished goods and component parts. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, including known trends, market conditions, currency exchange rates and other such issues. Inventory as of March 31, 2022, and September 30, 2021, was $-
Property and equipment
Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets.
The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:
| Vehicles and equipment | |
| Software |
Fair value of financial instruments
The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels of inputs to measure fair value:
| ● | Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. |
| ● | Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| ● | Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments.
| 10 |
| Table of Contents |
Revenue recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. Under ASC 606, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. Other than The Company has no outstanding contracts with any of its’ customers. The Company recognizes revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shipping terms.
Stock-based compensation
The Company accounts for its stock based compensation under the recognition and measurement principles of the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment” (“SFAS No. 123R”)(ASC 718) using the modified prospective method for transactions in which the Company obtains employee services in share-based payment transactions and the Financial Accounting Standards Board Emerging Issues Task Force Issue No. 96-18 “Accounting For Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling Goods Or Services” (“EITF No. 96-18”) for share-based payment transactions with parties other than employees provided in SFAS No. 123(R) (ASC 718). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur.
Income taxes
The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” (“SFAS No. 109”) (ASC 740). Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
Cash flows reporting
The Company follows the provisions of ASC 230 for cash flows reporting and accordingly classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230 to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.
| 11 |
| Table of Contents |
Reporting segments
ASC 280 establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. Currently, ASC 280 has no effect on the Company’s financial statements as substantially all of the Company’s operations are conducted in one industry segment.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Earnings (Loss) Per Share of Common Stock
The Company has adopted ASC 260-10-20, “Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
Recent Accounting Pronouncements
Other than the above there have no recent accounting pronouncements or changes in accounting pronouncements during the period ended March 31, 2022, that are of significance or potential significance to the Company.
NOTE 4 - PROPERTY AND EQUIPMENT
The following table represents the Company’s property and equipment as of March 31, 2022, and September 30, 2021:
|
| March 31, 2022 |
|
| September 30, 2021 |
| ||
Property and equipment |
| $ |
|
| $ |
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Property and equipment, Net |
| $ |
|
| $ |
| ||
Depreciation expense was $
| 12 |
| Table of Contents |
NOTE 5 - RELATED PARTY TRANSACTIONS
Related Party agreements and fees
For the three and six months ended March 31, 2022, and 2021, the Company recorded expenses to related parties in the following amounts:
|
| Three months ended March 31, |
|
| Six months ended March 31, |
| ||||||||||
Description |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
CEO-Management fees |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Chief Technology Officer (CTO) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Chief Administration Officer (CAO) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stock-based compensation expense, officers |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Office rent and expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Effective June 1, 2021, the Company increased the monthly fee paid to its’ CEO and CTO, from $
On October 25, 2020, the Company entered into a sublease with its CTO, whereby the Company agreed to an annual lease payment of $
Accounts payable, related parties
As of March 31, 2022, and September 30, 2021, the Company owes $
|
| March 31, 2022 |
|
| September 30, 2021 |
| ||
Management fees, Chief Executive Officer (CEO) |
| $ |
|
| $ |
| ||
Bonus, CEO |
|
|
|
|
|
| ||
Accounts payable, CTO |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
| 13 |
| Table of Contents |
NOTE 6 - CAPITAL STOCK
Common Stock
The Company has authorized
During the six months ended March 31, 2022, the following shares of common stock were issued:
| · | |
|
|
|
| · | |
|
|
|
| · | |
|
|
|
| · |
Preferred Stock
The Company has
Series D Preferred Stock
On September 30, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s Series D Preferred Stock. Under the terms of the Amendment to Certificate of Designation of Series D Preferred Stock,
| 14 |
| Table of Contents |
Series E Preferred Stock
On June 2, 2021, the Company filed a Certificate of Designation with the State of Nevada. Under the terms of the Certificate of Designation 13,650,000 (as amended on June 10, 2021) were designated as Series E Preferred Stock. Each share of Series E Preferred Stock is convertible into one share of fully paid and non-assessable Common Stock. For so long as any shares of the Series E Preferred Stock remain issued and outstanding, the Holders thereof, voting separately as a class, shall have the right to vote one share on all matters submitted to a vote of the stockholders of the Corporation. As of September 30, 2021, there were 13,650,000 shares of Series E Preferred Stock issued and outstanding. During the six months ended March 31, 2022, the Company converted the 13,650,000 shares of Series E Preferred Stock to
Series F Preferred Stock
On November 24, 2021, the Company filed a Certificate of Designation with the State of Nevada. Under the terms of the Certificate of Designation
Capital stock to be issued
As of September 30, 2021, the Company had $
NOTE 7 - COMMITMENTS AND CONTINGENCIES
On November 24, 2020, a plaintiff (the “Plaintiff”) filed a complaint in the State District Court for Clark County, Nevada, naming Cytta as a Defendant. The Plaintiff contends that the Company had breached an agreement. On or about January 15, 2021, the Defendant filed an Answer and Counterclaim in the litigation and contended that in fact the Plaintiff owed money to Cytta for having breached an earlier services agreement, of limited scope and duration, and was liable for defaming Cytta in various communications he had sent to certain persons or entities. Management has been contesting the matter vigorously. A bench trial is currently expected to take place during the first half of 2022.
| 15 |
| Table of Contents |
NOTE 8 - INCOME TAXES
The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for the realization of deferred tax assets. Based upon the historical and anticipated future income, management has determined that the deferred tax assets meet the more-likely-than-not threshold for realizability. Accordingly, no valuation allowance has been recorded against the Company’s deferred tax assets as of June 30, 2021.
NOTE 9 - DEFERRED REVENUE
During the year ended September 30, 2021, the Company received $
NOTE 10 - SUBSEQUENT EVENTS
On April 11, 2022, the Company issued
The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements.
| 16 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates.
The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q.
THE COMPANY
Cytta Corp., (“Cytta” or the “Company”) was incorporated on May 30, 2006 under the laws of the State of Nevada. It is located in Las Vegas, Nevada. Cytta is in the business of imagineering, developing and securing disruptive technologies.
Results of Operations for the three and six months ended March 31, 2022 and 2021:
Revenue
Revenues of $936 and $1,873 for the three and six months ended March 31, 2022, respectively, were from deferred revenue on subscription agreements being recognized. Revenues of $70,520 for the six months ended March 31, 2021, consist of hardware imbedded with our proprietary software, integration consulting services, tech support and product maintenance billed to the customer.
| 17 |
| Table of Contents |
Cost of goods sold
Cost of goods sold was $25,277 for the six months ended March 31, 2021.
Operating expenses were $1,524,868 and $2,643,854 for the three and six months ended March 31, 2022, respectively, compared to $553,803 and $1,071,966, respectively, for the three and six months ended March 31, 2021.
|
| Three months ended March 31, |
|
| Six months ended March 31, |
| ||||||||||
Description |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Related party expenses (excluding stock-based expenses) |
| $ | 173,801 |
|
| $ | 114,501 |
|
| $ | 600,020 |
|
| $ | 224,835 |
|
Stock based expenses |
|
| 872,419 |
|
|
| 225,156 |
|
|
| 1,289,341 |
|
|
| 391,249 |
|
Stock based compensation, officers |
|
| 39,063 |
|
|
| 39,063 |
|
|
| 78,126 |
|
|
| 78,126 |
|
Professional fees |
|
| 94,623 |
|
|
| 54,060 |
|
|
| 205,919 |
|
|
| 120,679 |
|
Consulting expenses |
|
| 47,250 |
|
|
| 24,150 |
|
|
| 65,700 |
|
|
| 47,817 |
|
Depreciation expense |
|
| 11,904 |
|
|
| 9,920 |
|
|
| 23,808 |
|
|
| 17,910 |
|
Equipment and demo expenses |
|
| 150,963 |
|
|
| 30,840 |
|
|
| 159,944 |
|
|
| 54,412 |
|
General and Administrative, officers |
|
| 14,918 |
|
|
| 22,190 |
|
|
| 18,588 |
|
|
| 54,373 |
|
Auto, travel and entertainment |
|
| 25,868 |
|
|
| 16,684 |
|
|
| 54,428 |
|
|
| 31,078 |
|
Rent expense |
|
| 4,582 |
|
|
| 4,122 |
|
|
| 8,729 |
|
|
| 8,194 |
|
Investor relations |
|
| 23,792 |
|
|
| - |
|
|
| 37,746 |
|
|
| - |
|
Other operating expenses |
|
| 65,685 |
|
|
| 13,117 |
|
|
| 101,505 |
|
|
| 43,293 |
|
Total |
| $ | 1,525,868 |
|
| $ | 553,803 |
|
| $ | 2,643,854 |
|
| $ | 1,071,966 |
|
Stock-based expenses increased in the current periods compared to the prior periods substantially as a result of $784,919 and $1,171,842 related to the amortization of stock-based compensation for the three and six months ended March 31, 2022, as well as the expense of $87,500 and $117,500 for shares issued and expensed for the three and six months ended March 31, 2022.
For the three and six months ended March 31, 2022, and 2021, the Company recorded expenses to related parties in the following amounts:
|
| Three months ended March 31, |
|
| Six months ended March 31, |
| ||||||||||
Description |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
CEO-Management fees |
| $ | 58,000 |
|
| $ | 36,000 |
|
| $ | 203,000 |
|
| $ | 72,000 |
|
Chief Technology Officer (CTO) |
|
| 58,000 |
|
|
| 36,000 |
|
|
| 203,000 |
|
|
| 72,000 |
|
Chief Administration Officer (CAO) |
|
| 45,000 |
|
|
| 30,000 |
|
|
| 165,000 |
|
|
| 60,000 |
|
Office rent and expenses |
|
| 12,801 |
|
|
| 12,501 |
|
|
| 29,020 |
|
|
| 20,835 |
|
Total |
| $ | 173,801 |
|
| $ | 114,501 |
|
| $ | 600,020 |
|
| $ | 224,835 |
|
During the three and six months ended March 31, 2022, equipment and demo expenses increased as a result of the Company utilizing existing inventory to be sent out for demo purposes.
| 18 |
| Table of Contents |
The following tables set forth key components of our balance sheet as of March 31, 2022 and September 30, 2021.
|
| March 31, 2022 |
|
| September 30, 2021 |
| ||
|
|
|
|
|
|
| ||
Current Assets |
| $ | 2,552,229 |
|
| $ | 1,102,449 |
|
|
|
|
|
|
|
|
|
|
Property and Equipment |
| $ | 146,798 |
|
| $ | 170,605 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 2,699,027 |
|
| $ | 1,273,054 |
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
| $ | 278,223 |
|
| $ | 406,089 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
| $ | 278,223 |
|
| $ | 406,089 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
| $ | 2,420,804 |
|
| $ | 866,245 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
| $ | 2,699,027 |
|
| $ | 1,273,054 |
|
Liquidity and Capital Resources
Our current capital and our other existing resources will be sufficient to provide the working capital needed for our current business Additional capital will be required to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our business development and financial results. These conditions raise substantial doubt about our ability to continue as a going concern as well as our recurring losses from operations and the need to raise addition. This “going concern” could impair our ability to finance our operations through the sale of debt or equity securities. During the six months ended March 31, 2022, the Company has raised $2,963,500 from the sale of 59,270,000 shares of Series F Preferred Stock.
As of March 31, 2022, we had cash of $2,140,497 compared to $173,196 at September 30, 2021. As of March 31, 2022, we had current assets of $2,552,229 and current liabilities of $278,223, which resulted in working capital of $2,274,006. The current liabilities are comprised of accounts payable, accounts payable-related parties, accrued expenses, dividends payable and stock to be issued.
In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.
| 19 |
| Table of Contents |
Operating Activities
For the six months ended March 31, 2022, net cash used in operating activities was $996,199 compared to $681,469 for the six months ended March 31, 2021. For the six months ended March 31, 2022, our net cash used in operating activities was primarily attributable to the net loss of $2,690,116, adjusted by stock-based compensation of $1,367,468 and depreciation of $23,808. Net changes of $302,642 in operating assets and liabilities decreased the cash used in operating activities.
For the six months ended March 31, 2021, net cash used in operating activities of $681,469 was primarily attributable to the net loss of $1,026,464, adjusted for non-cash expenses of stock- based expenses of $469,375 and depreciation of $17.910, and net changes of $142,290 in operating assets and liabilities.
Investing Activities
For the six months ended March 31, 2022, there was no cash used in investing activities and net cash used in investing activities was $34,249 for the six months ended March 31, 2021. The expenditures were for the purchases of office furniture and equipment.
Financing Activities
For the six months ended March 31, 2022, net cash provided by financing activities was $2,963,500, compared to $385,000 for the six months ended March 31, 2021. During the six months ended March 31, 2022, we received $2,963,500 of proceeds received pursuant to the sale of 59,270,000 shares of Series F Preferred Stock at $0.05 per share. For the six months ended March 31, 2021, the Company received $360,000 from the sale of preferred stock and $25,000 from the sale of 1,000,000 shares of common stock at $0.025 per share.
As of March 31, 2022, the Company had $2,140,497 in cash on hand. Management believes the working capital is sufficient to meet its’ ongoing commitments for the next year and to begin executing on its’ business plan.
Critical Accounting Policies
Our significant accounting policies are summarized in Note 3 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our results of operations, financial position or liquidity for the periods presented in this report.
Inventory
Inventories are valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs include finished goods and component parts. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, including known trends, market conditions, currency exchange rates and other such issues.
| 20 |
| Table of Contents |
Property and Equipment
Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets.
The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:
| Vehicles and equipment | 5 years |
| Software | 3 years |
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. Under ASC 606, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. Other than The Company has no outstanding contracts with any of its’ customers. The Company recognizes revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shipping terms.
Stock-Based Compensation
The Company accounts for its stock based compensation under the recognition and measurement principles of the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment” (“SFAS No. 123R”)(ASC 718) using the modified prospective method for transactions in which the Company obtains employee services in share-based payment transactions and the Financial Accounting Standards Board Emerging Issues Task Force Issue No. 96-18 “Accounting For Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling Goods Or Services” (“EITF No. 96-18”) for share-based payment transactions with parties other than employees provided in SFAS No. 123(R) (ASC 718). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur.
Earnings (Loss) Per Share
The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share.” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
| 21 |
| Table of Contents |
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 31, 2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective for the reasons discussed below.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2022, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
| 1. | We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
|
|
|
| 2. | We did not maintain appropriate cash controls – As of March 31, 2022, the Company has not maintained sufficient internal controls over financial reporting for cash, including failure to segregate cash handling and accounting functions, and did not require dual signatures on the Company’s bank accounts. |
| 22 |
| Table of Contents |
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
Changes in Internal Controls over Financial Reporting
There has been no change in our internal control over financial reporting occurred during the three months ended March 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 23 |
| Table of Contents |
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On November 24, 2020, a plaintiff (the “Plaintiff”) filed a complaint in the State District Court for Clark County, Nevada, naming Cytta as a Defendant. The Plaintiff contends that the Company had breached an agreement. On or about January 15, 2021, the Defendant filed an Answer and Counterclaim in the litigation and contended that in fact the Plaintiff owed money to Cytta for having breached an earlier services agreement, of limited scope and duration, and was liable for defaming Cytta in various communications he had sent to certain persons or entities. Management has been contesting the matter vigorously. A bench trial is currently expected to take place during the first half of 2022.
Other than the above, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 1A. RISK FACTORS
Not applicable for smaller reporting companies.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following represents all shares issued during the quarter ended December 31, 2021:
On March 22, 2022, the Company issued 250,000 shares of restricted common stock to a third-party investor, in exchange for consulting services provided to the Company. The shares were valued at $0.1432 per share, the market price on the date the Company agreed to issue the shares.
On March 22, 2022, the Company issued 250,000 shares of restricted common stock to an existing Company shareholder, in exchange for consulting services provided to the Company. The shares were valued at $0.35 per share, the market price on the date the Company agreed to issue the shares.
The Company issued the foregoing securities in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506(b) promulgated thereunder, as there was no general solicitation to the investors and the transactions did not involve a public offering.
| 24 |
| Table of Contents |
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURE
Not applicable.
Item 5. OTHER INFORMATION
| (a) | None. |
| (b) | During the quarter ended March 31, 2022, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors. |
| 25 |
| Table of Contents |
Item 6. EXHIBITS
The following documents are filed as part of this report:
Exhibit No. |
| Description |
| ||
| ||
| Amendment to Articles of Incorporation Amending Authorized Common and Preferred Stock * | |
| Amended and Restated Certificate of Designation of Series D Preferred Stock * | |
| Amended and Restated Certificate of Designation of Series E Preferred Stock * | |
| ||
| Agreement by and between Cytta Corp and Makena Investment Advisors, LLC dated April 1, 2020 * | |
| Sublease Agreement by and between Cytta Corp and Michael Collins dated October 25, 2020 * | |
| Agreement by and between Cytta Corp and Peter Rettman dated August 27, 2020 * | |
| ||
| Technology Access Agreement by and between Cytta Corp and Michael Collins dated July 19, 2018 * | |
| ||
| ||
| ||
| ||
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).*** |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document.*** |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.*** | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.*** | |
101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document.*** |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document.*** |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Incorporated by reference to the same exhibit to the registration statement filed by the Company on June 28, 2021.
** Incorporated by reference to exhibit 4.1 to the Current Report on Form 8-K filed by the Company on November 26, 2021.
*** Filed herewith
| 26 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: May 16, 2022
/s/ Gary Campbell |
|
Gary Campbell |
|
Chief Executive Officer |
|
(principal executive officer) |
|
(principal financial and accounting officer) |
|
| 27 |
EXHIBIT 31.1
CERTIFICATION
I, Gary Campbell, Chief Executive Officer of CYTTA CORP. (the “registrant”), certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of the registrant for the period ended March 31, 2022; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 16, 2022 | By: | /s/ Gary Campbell | |
|
|
| Gary Campbell |
|
|
| Chief Executive Officer |
| |
|
|
| (principal executive officer) |
|
EXHIBIT 31.2
CERTIFICATION
I, Gary Campbell, Chief Financial Officer of CYTTA CORP. (the “registrant”), certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of the registrant for the period ended March 31, 2022; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 16, 2022 | By: | /s/ Gary Campbell | |
|
|
| Gary Campbell |
|
|
| Chief Financial Officer |
| |
|
|
| (principal financial and accounting officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, in his capacity as an officer of CYTTA CORP. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
| (1) | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: May 16, 2022 | By: | /s/ Gary Campbell | |
|
|
| Gary Campbell |
|
|
| Chief Executive Officer |
| |
|
|
| (principal executive officer) |
|
|
|
| (principal financial and accounting officer) |
|