DLT Resolution Inc 10-K for FY2021

DLT Resolution Inc. (DLTI)

10-K 2023-03-13 For: 2021-12-31

Added on April 06, 2026

About this 10-K

DLT Resolution Inc filed this 10-K on March 13, 2023, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $391.96K; down 3.0% from $403.92K a year earlier
Net loss: $2.43M; compared with a net loss of $503.93K a year earlier

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Nevada		20-8248213
(State of Incorporation)		(I.R.S. Employer Identification No.)

5940 S. Rainbow Blvd., Ste 400-32132, Las Vegas, NV		89118
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

		PAGE NO
PART I

ITEM 1	BUSINESS	3
ITEM 1A	RISK FACTORS	7
ITEM 1B	UNRESOLVED STAFF COMMENTS	7
ITEM 2	PROPERTIES	7
ITEM 3	LEGAL PROCEEDINGS	7
ITEM 4	MINE SAFETY DISCLOSURES	7

PART II

ITEM 5	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	8
ITEM 6	SELECTED FINANCIAL DATA	8
ITEM 7	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	10
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	10
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	10
ITEM 9A	CONTROLS AND PROCEDURES	11
ITEM 9B	OTHER INFORMATION	13

PART III

ITEM 10	DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	14
ITEM 11	EXECUTIVE COMPENSATION	15
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	15
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	16
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	16

PART IV

ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	17

SIGNATURES		18

	December 31, 2021		December 31, 2020
Revenues	$	391,693	$	403,919

Operating Expenses	$	536,364	$	758,054

Loss	$	2,429,226	$	(503,929	)

Total Assets	$	1,358,657	$	3,523,068

Liabilities	$	1,228,181	$	2,834,195

Stockholders’ Equity	$	130,746	$	688,873

	•	Policies and Procedures for the Financial Close and Reporting Process — Currently there are no policies or procedures that clearly define the roles in the financial close and reporting process. The various roles and responsibilities related to this process should be defined, documented, updated and communicated. Failure to have such policies and procedures in place amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

	•	Representative with Financial Expertise — For the year ending December 31, 2021, the Company did not have a representative with the requisite knowledge and expertise to review the financial statements and disclosures at a sufficient level to monitor the financial statements and disclosures of the Company. Failure to have a representative with such knowledge and expertise amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

	•	Adequacy of Accounting Systems at Meeting Company Needs — The accounting system in place at the time of the assessment lacks the ability to provide high quality financial statements from within the system, and there were no procedures in place or built into the system to ensure that all relevant information is secure, identified, captured, processed, and reported within the accounting system. Failure to have an adequate accounting system with procedures to ensure the information is secure and accurately recorded and reported amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

	•	Segregation of Duties — Management has identified a significant general lack of definition and segregation of duties throughout the financial reporting processes. Due to the pervasive nature of this issue, the lack of adequate definition and segregation of duties amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

Name of Officer		Age		Office
John Wilkes		60		President, CEO and CFO

Beneficial Owner	Number of Shares Owned		Percent Ownership
Mind Tech Group		5,000,000		24	%
John Wilkes		4,003,000		19	%
Total		9,003,000		43	%

		Page
Report of Independent Registered Public Accounting Firm – 2021		F-3
Report of Independent Registered Public Accounting Firm – 2020		F-4
Consolidated Balance Sheets		F-5
Consolidated Statements of Operations		F-6
Consolidated Statement of Stockholders' Deficit		F-8
Consolidated Statements of Cash Flows		F-9
Notes to Consolidated Financial Statements		F-10-20

EXHIBIT NUMBER		DESCRIPTION

3.1		Articles of Incorporation (Incorporated by reference to the Registration Statement on Form SB-2, previously filed with the SEC on January 9, 2008)

3.2		Incorporated by reference to the Registration Statement on Form SB-2, previously filed with the SEC on January 9, 2008)

31.1*		Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive data files pursuant to Rule 405 of Regulation S-T.

/s/ John Wilkes		/s/ John Wilkes
John Wilkes		John Wilkes
President and Chief Executive Officer		Chief Financial Officer, Secretary and Treasurer
(Principal Executive Officer)		(Principal Financial Officer)

March 10, 2023		March 10, 2023

		Page(s)
Report of Independent Registered Accounting Firm (PCAOB ID #5041)		F-3

Consolidated Balance Sheets		F-4

Consolidated Statements of Operations		F-5

Consolidated Statement of Changes in Stockholders’ Deficit		F-7

Consolidated Statements of Cash Flows		F-8

Notes to the Consolidated Financial Statements		F-9 - F-17

DLT RESOLUTION, INC
Consolidated Balance Sheets As of December 31

	2021			2020

ASSETS
Current assets
Cash and cash equivalents	$	33,862		$	7,666
Accounts receivable		62,420			45,604
Total current assets		96,282			53,270
Assets from discontinued operations		1,048,633			3,193,072
Intangible assets, net of accumulated amortization		213,742			276,726
Total assets	$	1,358,657		$	3,523,068

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued liabilities	$	318,575		$	171,156
Accounts payable, related party		15,000			15,000
Interest payable, related party		47,067			41,565
Related party payables		60,017			20,884
Notes payables, related party		81,500			81,500
Notes payable, current portion		62,612			62,730
Liabilities from discontinued operations		638,410			548,649
Total current liabilities		1,223,181			941,484

Notes payable, net of current portion		5,000			5,000
Other long term liability		-			1,887,711
Total liabilities		1,228,181			2,834,195

Stockholders' equity
Series A convertible preferred stock, $1.00 par value; 5,000,000 shares authorized; 0 issued and outstanding at December 31, 2021 and December 31, 2020		-			-
Series B convertible preferred stock, $1.00 par value; 500,000 shares authorized; 64,000 issued and outstanding at December 31, 2021 and December 31, 2020		64,000			64,000
Common stock, $0.001 par value; 275,000,000 shares authorized; 26,926,287 and 25,926,287 issued; 23,111,287 and 22,111,287 outstanding at December 31, 2021 and December 31, 2020		26,926			25,926
Common stock subscribed		14,000			14,000
Additional paid in capital		6,762,010			4,913,010
Other comprehensive income		(182,345	)		816,396
Treasury stock, 3,815,000 shares at December 31, 2021 and 2020		(5,300	)		(5,300	)
Accumulated deficit		(6,548,815	)		(5,139,159	)
Total stockholders’ equity		130,476			688,873

Total liabilities and stockholders' equity	$	1,358,657		$	3,523,068

See accompanying notes to consolidated financial statements.

DLT RESOLUTION, INC.
Consolidated Statements of Operations

	Year ended December 31,
	2021			2020
Revenue	$	391,963		$	403,919
Cost of revenue and operating expenses
Cost of revenue		154,190			170,963
General and administrative		182,833			227,773
Depreciation and amortization		61,264			103,916
Professional fees		138,077			91,182
Goodwill impairment loss		-			164,180
Total operating expenses		536,364			758,014

Loss from operations		(144,401	)		(354,095	)

Other income (expense)
Foreign exchange gain/(loss)		(284	)		33
Loss on investment		-			-
Interest expense		(2,094	)		(7,375	)
Total other expense		(2,378	)		(7,342	)

Net loss from continuing operations	$	(146,779	)	$	(361,437	)

Loss from discontinued operations	$	(2,282,447	)	$	(142,490	)

Net loss	$	(2,429,226	)	$	(503,929	)

Loss per common share, basic and diluted	$	0.03		$	(0.02	)
Weighted average basic shares outstanding		26,544,419			25,806,082
Weighted average diluted shares outstanding		26,544,419			25,806,082

See accompanying notes to consolidated financial statements.

DLT RESOLUTION, INC.
Consolidated Statements of Comprehensive Income

	Year ended December 31,
	2021			2020
Net loss	$	(2,429,226	)	$	(503,929	)
Other comprehensive income
Gain on valuation adjustment to other long-term liabilities		1,022,240			360,024
Foreign currency translation adjustment		(408,245	)		490,802
Total other comprehensive income		1,430,485			850,826

Comprehensive (loss) income	$	(998,741	)	$	346,897

See accompanying notes to consolidated financial statements.

Year Ended December 31, 2021

	Series B Preferred Stock				Common Stock				Common Stock		Additional Paid-in		Treasury			Other Comprehensive			Accumulated			Non-Controlling
	Shares		Amount		Shares		Amount		Subscribed		Capital		Stock			income			Deficit			Interest		Total
Balance, December 31, 2020		64,000	$	64,000		25,926,287	$	25,926	$	14,000	$	4,913,010	$	(5,300	)	$	816,396		$	(5,139,159	)		-	$	688,873
		-		-																			-		-
Issuance of common stock for acquisitions		-		-		1,000,000		1,000		-		1,849,000		-			-			-			-		1,850,000

Foreign currency translation adjustment		-		-		-		-		-		-		-			(378,742	)		-			-		(378,742	)

Gain on adjusted value of other long-term liability		-		-		-		-		-		-		-			1,022,240			-			-		610,000

Net loss		-		-		-		-		-		-					-			(1,406,986	)		-		(503,929	)

Balance, December 31, 2021		64,000	$	64,000		26,926,287	$	26,926	$	14,000	$	6,762,010	$	(5,300	)	$	(182,345	)	$	(6,548,815	)		-	$	130,476

Year Ended December 31, 2020

Balance, December 31, 2019		64,000	$	64,000		24,395,037	$	24,395	$	-	$	4,218,265	$	(5,300	)	$	(34,430	)	$	(4,635,230	)		-		(368,300	)

Issuance of common stock for cash proceeds						31,250		315		-		24,969		-			-			-			-		25,000

Issuance of common stock for acquisitions		-		-		1,500,000		1,500		-		669,776		-			-			-			-		671,276

Sale of common stock subscription										14,000															14,000

Foreign currency translation adjustment		-		-		-		-		-		-		-			490,802			-			-		490,802

Gain on adjusted value of other long-term liability		-		-		-		-		-		-		-			360,024			-			-		360,024

Net loss		-		-		-		-		-		-		-			-			(503,929	)				(503,929	)

Balance December 31, 2020		64,000	$	64,000		25,926,287	$	25,926	$	14,000	$	4,913,010	$	(5,300	)	$	816,396		$	(5,139,159	)		-	$	688,873

DLT RESOLUTION, INC
Consolidated Statements of Cash Flows

	December 31,
	2021			2020
Cash flows from operating activities
Net loss from continuing operations	$	(146,779	)	$	(361,437	)

Adjustments to reconcile net loss to net cash used in operating activities
Goodwill impairment loss		-			164,180
Bad debt expense		5,682			-
Depreciation and amortization expense		61,264			370,552
Changes in operating assets and liabilities
Accounts receivable		(21,252	)		(142,378	)
Prepaid expenses and other current assets		-			(108,791	)
Interest payable, related party		5,502			7,375
Accounts payable and accrued liabilities		60,901			138,165
Accounts payable, related party		57,894			-
Lease obligation					(6,771	)
(Repayments) proceeds from related parties, net		-			(57,683	)
Net cash used in operating activities		23,212			3,213

Cash flows from investing activities		-			-

Cash flows from financing activities
Proceeds from notes payable		-			61,404
Proceeds (repayments) from bank overdrafts		-			(20,317	)
Proceeds from sale of common stock subscription		-			14,000
Proceeds from sale of common stock		-			25,000
Net cash provided by financing activities		-			80,087

Net change in cash from continuing operations		23,212			(4,336	)
Effect of exchange rate on cash		2,984			(1,138	)
Cash and cash equivalents at beginning of year		7,666			13,140
Cash and cash equivalents at end of year		33,862		$	7,666

Supplemental cash flow information
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities
Other long term liability entered into for acquisition of Union Strategies, Inc.	$	-		$	1,240,000
Common shares issued for acquisition of Union Strategies, Inc.	$	1,850,000		$	2,400,000

See accompanying notes to consolidated financial statements.

	2021			2020

Developed technology	$	316,976		$	317,572
Customer relationships		101,745			101,937
Website		-			119,000
Domain and trade name		3,913			3,921
Non-compete		36,785			36,854
Accumulated amortization		(245,677	)		(302,558	)
Total intangible assets, net	$	213,742		$	276,726

For the Twelve Months ended December 31,
2022	$	71,247
2023		71,247
2024		71,248
2025		-
2026		-
Thereafter
	$	213,742

	December 31, 2021			December 31 2020
Net operating loss carry forward	$	4,970,000		$	2,541,000
Applicable Canadian Federal and Provincial tax rates		26.5	%		26.5	%
Deferred tax asset related to net operating losses		1,317,000			673,000
Deferred tax asset relating to debt discounts and derivative liability (at 26.5%)		-			-
Valuation allowance		(1,317,000	)		(673,000	)
Net deferred tax asset	$	-		$	-

	December 31, 2021 (21%)			December 31, 2022 (21%)
Tax benefit at United States Federal statutory rate	$	510,000		$	141,000
Differences in U.S. and Canadian tax rates on provision		136,000			53,000
Increase in valuation allowance		(374,000	)		(88,000	)
Income tax provision	$	-		$	-

	DLT Resolution, Inc.

Date: March 10, 2023	By:	/s/ John Wilkes
		John Wilkes Chief Executive Officer (Principal Executive Officer)