CYCA 10-Q
CYTTA CORP. (CYCA)
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: Common Stock, $0.001 par value
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | 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 August 21, 2023, there were
CYTTA CORP.
INDEX
PART I. FINANCIAL INFORMATION |
|
|
| |
|
|
|
|
|
ITEM 1 | Financial Statements (Unaudited) |
|
|
|
| Condensed Balance Sheets as of June 30, 2023, and September 30, 2022 (Unaudited) |
| 3 |
|
|
| 4 |
| |
|
| 5 |
| |
| Condensed Statement of Cash Flows for the nine months ended June 30, 2023, and 2022 (Unaudited) |
| 7 |
|
|
| 8 |
| |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 22 |
| |
| 27 |
| ||
| 27 |
| ||
|
|
|
|
|
|
| |||
|
|
|
|
|
| 29 |
| ||
| 29 |
| ||
| 29 |
| ||
| 29 |
| ||
| 29 |
| ||
| 30 |
| ||
| 30 |
| ||
| 2 |
| Table of Contents |
CYTTA CORP
BALANCE SHEETS
(Unaudited)
|
|
|
|
| ||||
|
| June 30, |
|
| September 30, |
| ||
|
| 2023 |
|
| 2022 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ |
|
| $ |
| ||
Related party liabilities |
|
|
|
|
|
| ||
Dividend payable |
|
|
|
|
|
| ||
Deferred revenue |
|
|
|
|
|
| ||
Note payable |
|
|
|
|
|
| ||
Convertible notes payable |
|
|
|
|
|
| ||
Stock to be issued |
|
|
|
|
|
| ||
Total Current Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
|
|
|
|
Convertible notes payable, net of discount |
|
|
|
|
|
| ||
Total Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit) |
|
|
|
|
|
|
|
|
Preferred stock PAR VALUE $ |
|
|
|
|
|
|
|
|
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 par value $ |
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ||
Accumulated Deficit |
|
| ( | ) |
|
| ( | ) |
Total Stockholders' Equity (Deficit) |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these statements
| 3 |
| Table of Contents |
CYTTA CORP
STATEMENT OF OPERATIONS
(Unaudited)
|
| For the Three Months Ended June 30, |
|
| For the Nine Months Ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administration- related party expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
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 diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding Basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these statements
| 4 |
| Table of Contents |
Cytta Corp.
Statement of Changes in Stockholders' Equity (Deficit)
The Three and Nine Months June 30, 2023
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| |||||||||||||||||||||||||
|
| Series C |
|
| Series D |
|
| Series E |
|
| Series F |
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Stockholders' |
| |||||||||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Common Stock |
|
| Paid-in |
|
| Accumulated |
|
| Equity |
| ||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| (Deficit) |
| |||||||||||||
Balance September 30, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended December 31, 2022 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for accounts payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for common stock payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for accrued liabilities, related party |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and warrants issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in conjunction with notes payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended March 31, 2023 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for accounts payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended June 30, 2023 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
| $ | ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances June 30, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||||||
| 5 |
| Table of Contents |
Cytta Corp.
Statement of Changes in Stockholders' Equity
The Three and Nine Months Ended June 30, 2022
(Unaudited)
|
| Series C |
|
| Series D |
|
| Series E |
|
| Series F |
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Total |
| |||||||||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| 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 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series F Preferred stock issued for cash |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for accounts payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of Series E Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of Series F Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended December 31, 2021 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended March 31, 2022 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended June 30, 2022 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances June 30, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||||
The accompanying notes are an integral part of these statements
| 6 |
| Table of Contents |
Cytta Corp.
Statements of Cash Flows
(Unaudited)
|
| For the Nine Months Ended June 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
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 |
|
|
|
|
|
| ||
Amortization of note discounts |
|
|
|
|
|
| ||
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 |
|
|
|
|
| ( | ) | |
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from stock subscriptions |
|
|
|
|
|
| ||
Proceeds from issuance of note payable |
|
|
|
|
|
| ||
Proceeds from issuance of short-term convertible notes payable |
|
|
|
|
|
| ||
Proceeds from issuance of long-term convertible notes payable |
|
|
|
|
|
| ||
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
|
| ( | ) |
|
|
| |
CASH AT BEGINNING OF PERIOD |
|
|
|
|
|
| ||
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 accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Common stock issued for accrued expenses, related party |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these statements
| 7 |
| Table of Contents |
Cytta Corp.
Notes to Financial Statements
June 30, 2023
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 June 30, 2023, the Company had an accumulated deficit of $
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.
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 and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). 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 June 30, 2023, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended June 30, 2023, 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.
| 8 |
| Table of Contents |
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 as of June 30, 2023, and 2022.
Accounts Receivable
The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience.
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 nine months ended June 30, 2023, and 2022, is summarized as:
|
| June 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Balance beginning of period |
| $ |
|
| $ |
| ||
Value of common stock issued |
|
|
|
|
|
| ||
Amortization of stock-based compensation |
|
|
|
|
| ( | ) | |
Other prepaid expense activity |
|
|
|
|
| ( | ) | |
|
| $ |
|
| $ |
| ||
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 June 30, 2023, and September 30, 2022, 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 |
| 9 |
| Table of Contents |
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.
GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
In August 2020, the FASB issued Accounting Standards Update 2020-06 (ASU 2020-06). ASU 2020-06 eliminates the beneficial conversion feature and cash conversion models in Accounting Standards Codification 470-20 that require separate accounting for embedded conversion features in convertible instruments. The new guidance also eliminates some of the conditions that must be met for equity classification under ASC 815-40-25. The standard is effective for smaller reporting companies for annual periods beginning after December 15, 2023. Early adoption is permitted. The Company chose to early adopt this standard. As a result, financial results contained herein are reported in accordance with this standard as applicable.
The convertible debt issued by the company referred to in Note 7, did not require separate accounting for the conversion feature as it was not considered to be a derivative. The company issued warrants in connection with the debt financing and in accordance with ASC 470-20-25-2 the proceeds from the sale of the debt instruments have been allocated to the debt and warrants based on the relative fair value of the two components. The amount allocated to the warrants has been recorded as a debt discount to be amortized of the life of the note.
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. 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.
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.
| 11 |
| Table of Contents |
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 been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2023, 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 June 30, 2023, and September 30, 2022:
|
| June 30, 2023 |
|
| September 30, 2022 |
| ||
Property and equipment |
| $ |
|
| $ |
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Property and equipment, net |
| $ |
|
| $ |
| ||
Depreciation expenses were $
NOTE 5 - RELATED PARTY TRANSACTIONS
Related Party agreements and fees
For the three and nine months ended June 30, 2023, and 2022, the Company recorded expenses to related parties in the following amounts:
|
| Three months ended June 30, |
|
| Nine months ended June 30, |
| ||||||||||
Description |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
CEO-Management fees |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Chief Technology Officer (CTO) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Chief Administration Officer (CAO), through January 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Chief Operating Officer (COO) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stock-based compensation expense, officers |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Office rent and expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
| 12 |
| Table of Contents |
Effective June 1, 2021, the Company increased the monthly fee paid to its’ CEO and CTO, from $
Effective February 1, 2023, the Company entered a Consulting Executive Officer Agreement with a three- year term to an entity to provide the services of a Chief Operating Officer (the “COO”) of the Company. Pursuant to the agreement, the Company agreed to a monthly fee of $
On October 25, 2020, the Company entered a sublease with its CTO, whereby the Company agreed to an annual lease payment of $
Accounts payable, related parties
As of June 30, 2023, and September 30, 2022, the Company owes $
|
| June 30, 2023 |
|
| September 30, 2022 |
| ||
Management fees, Chief Executive Officer (CEO) |
| $ |
|
| $ |
| ||
Bonus, CEO |
|
|
|
|
|
| ||
Management fees, CTO |
|
|
|
|
|
| ||
Stock payable, COO |
|
|
|
|
|
| ||
Option expense |
|
|
|
|
|
|
| |
Bonus and accounts payable |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
NOTE 6 – NOTE PAYABLE
On January 10, 2023, the Company entered into an 8%, $
| 13 |
| Table of Contents |
NOTE 7 - CONVERTIBLE NOTES PAYABLE
On February 10, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
On February 17, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
On February 24, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
On February 28, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
| 14 |
| Table of Contents |
On March 3, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
On May 3, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
On June 16, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
The Company has the following convertible notes payable outstanding as of June 30, 2023:
SCHEDULE OF NOTES PAYABLE
Convertible note payable, interest at |
| $ |
| |
Convertible note payable, interest at |
|
|
| |
Convertible note payable interest at |
|
|
| |
Convertible note payable interest at |
|
|
| |
Convertible note payable interest at |
|
|
| |
Convertible note payable $50,000 face value, interest at |
|
|
| |
Convertible note payable $50,000 face value, interest at |
|
|
| |
Sub-total notes payable, net of discount of $64,340 |
|
|
| |
Less long-term portion, net of discount of $64,340 |
|
|
| |
Current portion of notes payable |
| $ |
|
NOTE 8 - CAPITAL STOCK
Common Stock
The Company has authorized
As of June 30, 2023, pursuant to consulting agreements, the Company recorded stock-based compensation of $
| 15 |
| Table of Contents |
During the nine months ended June 30, 2023, the following shares of common stock were issued:
| · | |
|
|
|
| · | |
| · | 288,000 shares of common issued for payment of $
|
| · | 54,750 shares of common stock were issued in settlement of stock payable. |
|
|
|
| · |
Preferred Stock
The Company has 100,000,000 shares authorized as preferred stock, par value $0.001 (the “Preferred Stock”), which such Preferred Stock shall be issuable in such series, and with such designations, rights and preferences as the Board of Directors may determine from time to time.
Series C Preferred Stock
Under the terms of the Certificate of Designation of Series C Preferred Stock,
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,
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
| 16 |
| Table of Contents |
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
Stock Payable (Capital stock to be issued)
As of September 30, 2021, the Company had $
Stock Options
On February 1, 2023, pursuant to a three-year consulting agreement, the Company granted an option to purchase
On March 3, 2023, pursuant to a one-year consulting agreement, the Company granted an option to purchase
The following table summarizes activities related to stock options of the Company for the nine months ended June 30, 2023.
|
| Number of Options |
|
| Weighted- Average Exercise Price per Share |
|
| Weighted- Average Remaining Life (Years) |
| |||
Outstanding at October 1, 2022 |
|
| - |
|
| $ |
|
|
| - |
| |
Issued |
|
|
|
| $ |
|
|
|
| |||
Outstanding at June 30, 2023 |
|
|
|
| $ |
|
|
|
| |||
Exercisable at June 30, 2023 |
|
| - |
|
| $ | - |
|
|
| - |
|
As of June 30, 2023, 20,000,000 options to purchase shares of common stock remain unvested and $850,485 of stock compensation expense remains unrecognized and is being expensed over a weighted average period of
| 17 |
| Table of Contents |
Warrants
On February 1, 2023, pursuant to a three-year consulting agreement, the Company granted a warrant to purchase
On February 8, 2023, an investor paid $
On February 10, 2023, pursuant to a convertible note with a current shareholder of the Company, the Company issued a warrant to the investor to purchase
On March 1, 2023, an investor paid $5,000 to acquire a warrant to purchase
On March 3, 2023, pursuant to a convertible note with a current shareholder of the Company, the Company issued a warrant to the investor to purchase
On March 3, 2023, pursuant to a one-year consulting agreement with a Company shareholder, the Company issued to the shareholder a warrant to purchase 250,000 shares of RM Stock with an exercise price of $1,00 and an expiration date of July 1, 2025. The Company valued the warrant at $
The following table summarizes activities related to warrants of the Company for the nine months ended June 30, 2023.
|
| Number of Warrants |
|
| Weighted Average Exercise Price Per Share |
|
| Weighted Average Remining Life (Years) |
| |||
Outstanding at October 1, 2022 |
| -0- |
|
| $ | -0- |
|
| -0- |
| ||
Issued |
|
|
|
|
|
|
|
|
| |||
Outstanding and exercisable at June 30, 2023 |
|
|
|
| $ |
|
|
|
| |||
| 18 |
| Table of Contents |
The following table summarizes activities related to warrants to purchase RM Stock from the Company for the nine months ended June 30, 2023.
|
| Number of Warrants |
|
| Weighted Average Exercise Price Per Share |
|
| Weighted Average Remining Life (Years) |
| |||
Outstanding at October 1, 2022 |
| -0- |
|
| $ | -0- |
|
| -0- |
| ||
Issued |
|
|
|
|
|
|
|
|
| |||
Outstanding and exercisable at June 30, 2023 |
|
|
|
| $ |
|
|
|
| |||
NOTE 9 - 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 contended that the Company had breached a written contract, or, in the alternative was liable to the Plaintiff for unjust enrichment. Cytta contended that no contract formation had ever occurred and that it had not been unjustly enriched by the Plaintiff. 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. A bench trial was held in June of 2022. In May of 2023, the Court which had presided over the bench trial ruled against the Plaintiff and in favor of Cytta, as to all the Plaintiff’s claims against Cytta, all of which were rejected. The Court also awarded damages to Cytta, and against the Plaintiff, on one of Cytta’s counterclaims, and subsequently also ruled that Cytta is entitled to recover certain of its costs and fees from the Plaintiff. The Plaintiff’s lawyer has subsequently withdrawn from representing the Plaintiff, and the Plaintiff has filed a pro se appeal without a lawyer. Cytta will not be required to respond to the pro se Plaintiff’s appeal brief unless directed by the Nevada Supreme Court to do so.
On July 19, 2022, the Company entered an Investor Awareness Advisory Services Agreement with a third party. Pursuant to the agreement in exchange for $
On August 4, 2022 (the “Effective Date”), the Company entered a Consulting Agreement with a third party. Pursuant to the agreement in exchange for
On November 16, 2022 (the “Effective Date”), the Company entered a Consulting Agreement with a third party. Pursuant to the agreement in exchange for
On December 2, 2022 (the “Effective Date”), the Company entered a Consulting Agreement with a third party. Pursuant to the agreement in exchange for
On December 5, 2022, the Company issued
Effective February 1, 2023, the Company entered a Consulting Executive Officer Agreement with a three- year term to an entity to provide the services of a Chief Operating Officer of the Company. Pursuant to the agreement, the Company agreed to a monthly fee of $
| 19 |
| Table of Contents |
On March 3, 2023, the Company entered a Consulting Agreement with an investor. Pursuant to the agreement, the Company issued
NOTE 10 – LICENSE AGREEMENT
On August 9, 2022, the Company signed an Intellectual Property License Agreement (the “IPLA”) with Reticulate Micro, Inc. (“RM”). Pursuant to the ten-year term (the “Term”) of IPPA, RM agreed to issue to the Company
RM, a Nevada corporation, was formed on June 22, 2022. Mr. Collins, the Company’s’ CTO was a co-founder, and the former Director and President and Treasurer of RM. Mr. Chermak, the Company’s former COO is a co-founder, Director and Vice-president and Secretary of RM. Mr. Ansari is a co-founder and former Director of RM. RM had initially issued
The Company accounts for its interest in RM under the cost method of accounting. Due to RM just being formed at the time of the license agreement no value has been assigned to the investment.
NOTE 11 - 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 do not meet the more-likely-than-not threshold for realizability. Accordingly, there is a full valuation allowance provided against the Company’s deferred tax assets as of June 30, 2023, and September 30, 2022.
| 20 |
| Table of Contents |
As of June 30, 2023, and September 30, 2022, the Company has approximately $
NOTE 12 - DEFERRED REVENUE
During the nine months ended June 30, 2023, the Company delivered $
NOTE 13 - SUBSEQUENT EVENTS
On July 10, 2023, the Company issued
On July 10, 2023, the Company issued
On August 2, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
On August 7, 2023, (the “Issuance Date”) the Company issued a convertible promissory note, in the principal amount of $
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.
| 21 |
| 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 nine months ended June 30, 2023, and 2022:
Revenues were $8,117 and $11,941 for the three and nine months ended June 30, 2023, respectively, compared to $936 and $2,809 for the three and nine months ended June 30, 2022, respectively. All of the revenue for the three and nine months ended June 30, 2023, and 2022, was the result of the recognition of deferred revenue of subscription agreements.
Revenues consist of our proprietary software, integration consulting services, tech support and product maintenance billed to the customer. Revenues increased for the three and nine months ended June 30, 2023, compared to the three and nine months ended June 30, 2022, due to an increase in customers and the associated deferred revenue recognized on subscription agreements entered and being recognized in the current three and nine months.
Operating expenses increased by $101,768 for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, and decreased by $775,522 for the nine months ended June 30, 2023, compared to the nine months ended June 30, 2022, as shown in the table below:
|
| Three months ended June 30, |
|
| Nine months ended June 30, |
| ||||||||||
Description |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Related party expenses (excluding stock-based expenses) |
| $ | 75,000 |
|
| $ | 177,869 |
|
| $ | 385,737 |
|
| $ | 777,889 |
|
Stock based expenses |
|
| 608,377 |
|
|
| 444,319 |
|
|
| 1,445,237 |
|
|
| 1,733,661 |
|
Stock based compensation, officers |
|
| 339,008 |
|
|
| 39,063 |
|
|
| 431,755 |
|
|
| 117,189 |
|
Professional fees |
|
| 58,037 |
|
|
| 152,254 |
|
|
| 171,592 |
|
|
| 358,173 |
|
Consulting expenses |
|
| 112,000 |
|
|
| 124,839 |
|
|
| 311,887 |
|
|
| 190,539 |
|
Depreciation expense |
|
| 10,909 |
|
|
| 11,904 |
|
|
| 34,550 |
|
|
| 35,712 |
|
Equipment and demo expenses |
|
| 399 |
|
|
| 44,894 |
|
|
| 26,184 |
|
|
| 204,839 |
|
General and Administrative, officers |
|
| 5,234 |
|
|
| 11,958 |
|
|
| 13,128 |
|
|
| 30,545 |
|
Auto, travel and entertainment |
|
| 9,606 |
|
|
| 27,812 |
|
|
| 57,038 |
|
|
| 82,239 |
|
Rent expense |
|
| 6,515 |
|
|
| 6,446 |
|
|
| 19,206 |
|
|
| 15,175 |
|
Investor relations |
|
| 27,855 |
|
|
| 20,757 |
|
|
| 78,267 |
|
|
| 58,504 |
|
Other operating expenses |
|
| 24,148 |
|
|
| 113,205 |
|
|
| 69,071 |
|
|
| 214,709 |
|
Total |
| $ | 1,277,088 |
|
| $ | 1,175,320 |
|
| $ | 3,043,652 |
|
| $ | 3,819,174 |
|
| 22 |
| Table of Contents |
For the three and nine months ended June 30, 2023, and 2022, the Company recorded expenses to related parties in the following amounts:
|
| Three months ended June 30, |
|
| Nine months ended June 30, |
| ||||||||||
Description |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
CEO-Management fees |
| $ | 45,000 |
|
| $ | 60,000 |
|
| $ | 150,000 |
|
| $ | 263,000 |
|
Chief Technology Officer (CTO) |
|
| - |
|
|
| 60,000 |
|
|
| 105,000 |
|
|
| 263,000 |
|
Chief Administration Officer (CAO) |
|
| - |
|
|
| 45,000 |
|
|
| 55,000 |
|
|
| 210,000 |
|
Chief Operation Officer (COO) |
|
| 30,000 |
|
|
| - |
|
|
| 50,000 |
|
|
| - |
|
Office rent and expenses |
|
| - |
|
|
| 12,869 |
|
|
| 25,737 |
|
|
| 41,889 |
|
Total |
| $ | 75,000 |
|
| $ | 177,869 |
|
| $ | 385,737 |
|
| $ | 777,889 |
|
Effective June 1, 2021, the Company increased the monthly fee paid to its’ CEO and CTO, from $12,000 to $15,000, respectively. On January 1, 2022, the Company increased the monthly fee to $18,000 for the CEO and CTO, respectively, and on February 1, 2022, the monthly fee for the CEO and CTO was increased to $20,000. Effective January 1, 2023, the monthly fee for the CEO and CTO was reduced to $15,000. For the nine months ended June 30, 2022, the Company also recorded bonus expenses of $100,000, $100,000, and $90,000 for the CEO, CTO and CAO, respectively.
On October 25, 2020, the Company entered a sublease with its CTO, whereby the Company agreed to an annual lease payment of $50,000. On October 26, 2021, the Company renewed the lease for an additional year for $3,500 per month, and on October 26, 2022, the lease was renewed on a month-to-month basis. The Company ceased thee month to month lease after March 1, 2023. Included in office rent for the three and nine months ended June 30, 2023, is $-0- and $21,000 respectively, and $10,500 and $35,663, for the three and nine months ended June 30, 2022, respectively.
Effective February 1, 2023, the Company entered a Consulting Executive Officer Agreement with a three- year term to an entity to provide the services of a Chief Operating Officer (COO) of the Company. Pursuant to the agreement, the Company agreed to a monthly fee of $10,000.
Stock based compensation, officers for the three and nine months ended June 30, 2023, was comprised pursuant to the agreement with the COO to issue 250,000 shares per month, to be certificated semi-annually. Additionally, the Company granted an option to purchase 10,000,000 shares of the Company’s common stock at $0.02 per share with an expiry date of July 1, 2025 (the CYCA Option”). The CYCA option vests at the rate of 25% beginning on the first six-month anniversary of the agreement, as well as an option to purchase 250,000 shares of the Reticulate Micro common stock the Company owns (the “RM Option”). The RM option has an exercise price of $1.00 per share and an expiry date of July 1, 2025. For the three and nine months ended June 30, 2023, the Company recorded an expense of $33,675 and $56,200 related to the 250,000 shares per month. The Company valued the CYCA Option at $639,543 based on the Black-Scholes option pricing method and will be amortized through the term of the agreement, and accordingly, $35,530 is included in stock-based compensation expense for the three and nine months ended June 30, 2023. The Company valued the RM Option at $624,458 based on the Black-Scholes option pricing method and will be amortized through the term of the agreement, and accordingly, $52,038, and $86,730 is included in stock-based compensation expense for the three and nine months ended June 30, 2023. On May 11, 2023, the Company issued 5,000,000 shares to the Company’s COO as a bonus pursuant to their Consulting Agreement. The Company valued the shares at $0.04 per share and included stock-based compensation expense-related party of $200,000 for the three and nine months ended June 30, 2023.
| 23 |
| Table of Contents |
Stock based compensation, officers for the three and nine months ended June 30, 2022, included the amortization of stock-based compensation expense of $39,063 and $117,189, respectively, for shares previously issued to the CAO.
Stock based expense for the three and nine months ended June 30, 2023, were related to shares issued to consultants of $200,000 and $802,950, respectively, as well as the amortization of warrants of $268,552 and $502,462 for the three and nine months ended June 30, 2023. Additionally, for the three and nine months ended June 30, 2023, the Company recorded stock-based compensation expense of $139,825 and recorded accrued liabilities for the stock to be issued. Stock-based expenses for the three and nine months ended June 30, 2022, of $210,844 and $1,382,686 were related to the amortization of stock-based compensation as well as the expense of $233,475 and $350,975 for shares issued and expensed for the three and nine months ended June 30, 2022.
Professional fees decreased in the current periods compared to the prior periods, substantially due to lower legal fees due to less costs associated with the Skoblow case in the current periods.
Consulting expenses decreased during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, and increased for the nine months ended June 30, 2023, compared to the nine months ended June 30, 2022. For the nine months ended June 30, 2023, additional consulting costs related to sales and marketing and finance of $120,848 were recognized compared to the nine months ended June 30, 2022.
During the three and nine months ended June 30, 2023, equipment and demo expenses decreased due to the Company during the three- and nine-months ending June 30, 2022, sent existing inventory out for demo purposes.
Investor relations fees increased for the three- and nine-months ending June 30, 2023, compared to the three- and nine-months ending June 30, 2022. The three and nine-month increases were primarily a result of the Company engaging additional consultants as well as the Company attending trade shows and conferences to expose the Company to potential investors.
Other expense, net, for the three and nine months ended June 30, 2023, was $34,046 and $45,325, respectively, compared to $22 and $48,157, respectively, for the three and six months ended June 30, 2022.
|
| Three months ended June 30, |
|
| Nine months ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Interest expense |
| $ | 29,528 |
|
| $ | 22 |
|
| $ | 31,487 |
|
| $ | 330 |
|
Loss on debt extinguishment |
|
| 4,613 |
|
|
| - |
|
|
| 13,988 |
|
|
| - |
|
Dividend expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 48,491 |
|
Interest income |
|
| (95 | ) |
|
| - |
|
|
| (150 | ) |
|
| (664 | ) |
Total other expense |
| $ | 34,046 |
|
| $ | 22 |
|
| $ | 45,325 |
|
| $ | 48,157 |
|
The increase in interest expense for the three months ended June 30, 2023, is primarily a result of the interest on convertible notes issued in the nine months ended June 30, 2023, as well as the amortization of note discounts. The decrease in other expenses for the nine months ended June 30, 2023, compared to the nine months ended June 30, 2022, is a result of the dividends recorded in the nine months ended June 30, 2022, were higher than the interest expense recorded for the nine months ended June 30, 2023, on the new notes issued in the current period.
| 24 |
| Table of Contents |
The following tables set forth key components of our balance sheet as of June 30, 2023, and September 30, 2022.
|
| June 30, 2023 |
|
| September 30, 2022 |
| ||
|
|
|
|
|
|
| ||
Current Assets |
| $ | 602,395 |
|
| $ | 788,019 |
|
|
|
|
|
|
|
|
|
|
Property and Equipment |
| $ | 88,440 |
|
| $ | 122,990 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 690,835 |
|
| $ | 911,009 |
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
| $ | 1,829,513 |
|
| $ | 449,217 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
| $ | 1,865,173 |
|
| $ | 449,217 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (Deficit) |
| $ | (1,174,338 | ) |
| $ | 461,792 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
| $ | 690,835 |
|
| $ | 911,009 |
|
Liquidity and Capital Resources
As of June 30, 2023, we had limited operating capital. Our current capital and our other existing resources will not be sufficient to provide the working capital needed for our current business. Additional capital will be required to meet our obligations, and 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 additional capital to fund operations. This “going concern” could impair our ability to finance our operations through the sale of debt or equity securities.
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 June 30, 2023, the Company had an accumulated deficit of $30,942,043 and has also generated losses since inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern.
As of June 30, 2023, we had cash of $487,018 compared to $755,122 on September 30, 2022. As of June 30, 2023, we had current assets of $602,395 and current liabilities of $1,829,513, which resulted in working capital deficiency of $1,227,118. The current liabilities are comprised of accounts payable, accounts payable-related parties, accrued expenses, note payable, convertible notes payable and deferred revenue.
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.
Operating Activities
For the nine months ended June 30, 2023, net cash used in operating activities was $1,118,104 compared to $1,567,329 for the nine months ended June 30, 2022. For the nine months ended June 30, 2023, our net cash used in operating activities was primarily attributable to the net loss of $3,067,036 adjusted by stock-based compensation of $1,876,993, depreciation of $34,550, and non-cash interest expense of $22,661. Net changes of $14,728 in operating assets and liabilities decreased the cash used in operating activities.
For the nine months ended June 30, 2022, our net cash used in operating activities was primarily attributable to the net loss of $3,864,522, adjusted by stock-based compensation of $1,850,850 and depreciation of $35,711. Net changes of $410,632 in operating assets and liabilities decreased the cash used in operating activities.
| 25 |
| Table of Contents |
Investing Activities
For the nine months ended June 30, 2023, and 2022, there was no cash flows in investing activities.
Financing Activities
For the nine months ended June 30, 2023, cash provided by financing activities was $850,000; comprised of $100,000 from sale of common stock and warrants, $710,000 from the issuance of convertible promissory notes and $40,000 from the issuance of a promissory note. For the nine months ended June 30, 2022, net cash provided by financing activities was $2,963,500, pursuant to the sale of 59,270,000 shares of Series F Preferred Stock at $0.05 per share.
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.
Accounts Receivable
The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience.
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. 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.
| 26 |
| Table of Contents |
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.
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 June 30, 2023. 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.
| 27 |
| Table of Contents |
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 June 30, 2023, 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 June 30, 2023, 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. |
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 June 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 28 |
| 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 contended that the Company had breached a written contract, or, in the alternative was liable to the Plaintiff for unjust enrichment. Cytta contended that no contract formation had ever occurred and that it had not been unjustly enriched by the Plaintiff. 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. A bench trial was held in June of 2022. In May of 2023, the Court which had presided over the bench trial ruled against the Plaintiff and in favor of Cytta, as to all of the Plaintiff’s claims against Cytta, all of which were rejected. The Court also awarded damages to Cytta, and against the Plaintiff, on one of Cytta’s counterclaims, and subsequently also ruled that Cytta is entitled to recover certain of its costs and fees from the Plaintiff. The Plaintiff’s lawyer has subsequently withdrawn from representing the Plaintiff, and the Plaintiff has filed a pro se appeal without a lawyer. Cytta will not be required to respond to the pro se Plaintiff’s appeal brief unless directed by the Nevada Supreme Court to do so.
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 March 31, 2023:
On May 11, 2023, the Company issued 5,000,000 shares to the Company’s COO as a bonus pursuant to their Consulting Agreement. The Company valued the shares at $0.04 per share, the market price, on the date the Company agreed to issue the shares.
On May 11, 2023, the Company issued 5,000,000 shares to an existing Company shareholder in exchange for services provided to the Company. The Company valued the shares at $0.04 per share, the market price, on the date the Company agreed to issue the shares.
On May 11, 2023, the Company issued 90,000 shares of restricted common stock in settlement of $2,250 of accrued interest.
On May 18, 2023, the Company issued 45,000 shares of restricted common stock in settlement of $1,125 of accrued interest.
On May 25, 2023, the Company issued 45,000 shares of restricted common stock in settlement of $1,125 of accrued interest.
On May 29, 2023, the Company issued 18,000 shares of restricted common stock in settlement of $450 of accrued interest.
On June 1, 2023, the Company issued 90,000 shares of restricted common stock in settlement of $2,250 of accrued interest.
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.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURE
Not applicable.
| 29 |
| Table of Contents |
Item 5. OTHER INFORMATION
| (a) | None. |
| (b) | During the quarter ended June 30, 2023, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors. |
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
| 30 |
| 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: August 21, 2023
/s/ Gary Campbell |
|
Gary Campbell |
|
Chief Executive Officer |
|
(principal executive officer) |
|
(principal financial and accounting officer) |
|
| 31 |