DLTI 10-Q
DLT Resolution Inc. (DLTI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact name of registrant as specified in its charter) |
| ||
(State of Incorporation) |
| (I.R.S. Employer Identification No.) |
|
|
|
| ||
(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 such 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. Yes ☐
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). Yes ☐
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 | |
(Do not check if a smaller reporting company) | Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes
As of October 31, 2025,
TABLE OF CONTENTS
FORM 10-Q
QUARTER ENDED JUNE 30, 2024
|
| Page |
| |
PART I FINANCIAL INFORMATION |
|
| ||
|
|
|
|
|
| 3 |
| ||
|
|
|
| |
| 3 |
| ||
|
|
| ||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
| 4 |
| |
|
|
|
|
|
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) |
| 5 |
|
|
|
|
|
|
| 6 |
| ||
|
|
| ||
| 7 |
| ||
|
|
| ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 15 |
| |
|
| |||
| 16 |
| ||
|
|
| ||
| 16 |
| ||
|
| |||
| ||||
|
| |||
| 19 |
| ||
|
|
|
|
|
| 19 |
| ||
|
| |||
| 19 |
| ||
|
| |||
| 19 |
| ||
|
| |||
| 19 |
| ||
|
| |||
| 19 |
| ||
|
| |||
| 20 |
| ||
| 2 |
| Table of Contents |
Item 1: Financial Statements.
DLT RESOLUTION, INC
Condensed Consolidated Balance Sheets
(Unaudited)
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||
ASSETS |
| |||||||
Current assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Accounts receivable |
|
|
|
|
|
| ||
Other receivable |
|
|
|
|
|
| ||
Total current assets and assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Notes payables, related party |
|
|
|
|
|
| ||
Liabilities from discontinued operations |
|
|
|
|
|
| ||
Total current liabilities and liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit) |
|
|
|
|
|
|
|
|
Series A convertible preferred stock, $ |
|
|
|
|
|
| ||
Series B convertible preferred stock, $ |
|
|
|
|
|
| ||
Common stock, $ |
|
|
|
|
|
| ||
Common stock subscribed |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated other comprehensive income (loss) |
|
| ( | ) |
|
|
| |
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total stockholders’ equity (deficit) |
|
|
|
| ( | ) | ||
Total liabilities and stockholders’ equity |
| $ |
|
| $ |
| ||
See accompanying notes to unaudited condensed consolidated financial statements.
| 3 |
| Table of Contents |
DLT RESOLUTION, INC. |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||||
|
| June 30, 2024 |
|
| June 30, 2023 |
|
| June 30, 2024 |
|
| June 30, 2023 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Cost of revenue and operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
| |||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| |||||
(Loss) income from operations |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign exchange gain (loss) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Other income |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Total other income (expense) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(Loss) income from continuing operations |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income (loss) from discontinued operations |
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net (loss) income |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||
Other comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign translation adjustment |
|
| ( | ) |
|
|
|
|
|
| ( | ) |
|
|
|
| |
Net (loss) income and comprehensive (loss) income |
| $ | ( | ) |
| $ |
|
|
| $ | ( | ) |
| $ |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(Loss) earnings from continuing operations per share, basic and diluted |
| $ | ( | ) |
| $ |
|
|
| ( | ) |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Earnings (loss) from discontinued operations per share |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted average basic shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted average diluted shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| |||||
| |||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 4 |
| Table of Contents |
DLT RESOLUTION, INC
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
|
| Series B Preferred Stock |
|
| Common Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Other Comprehensive |
|
| Accumulated |
|
|
|
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Subscribed |
|
| Capital |
|
| income |
|
| Deficit |
|
| Total |
| |||||||||
Balance, December 31, 2023 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock subscriptions |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock for cash proceeds |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Issuance of Common Stock for service |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Sale of DLT Resolution Corp. |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2024 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
DLT RESOLUTION, INC
Unaudited Condensed Consolidated Statements of Cash Flows
|
| Six Months Ended June 30, 2024 |
|
| Six Months Ended June 20, 2023 |
| ||
|
|
|
|
|
|
| ||
Cash flows from operating activities |
|
|
|
|
|
| ||
Net (loss) income from continuing operations |
| $ | ( | ) |
| $ | ||
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
Other income |
|
| ( | ) |
|
|
| |
Bad debt expense |
|
|
|
|
|
| ||
Share of Common Stock issued for services |
|
|
|
|
|
| ||
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
| ||
Accounts payable and accrued liabilities |
|
|
|
|
| ( | ) | |
(Repayments to) proceeds from related parties |
|
|
|
|
| ( | ) | |
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
Net cash provided by discontinued operating activities |
|
|
|
|
|
| ||
Net cash used in investing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from sales of common stock |
|
|
|
|
|
| ||
Net cash provided by (used in) financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
|
|
|
| ||
Effect of exchange rate on cash |
|
| ( | ) |
|
|
| |
Cash at beginning of period |
|
|
|
|
|
| ||
Cash at end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental cash flow information |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for income taxes |
| $ |
|
| $ |
| ||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
| Table of Contents |
DLT RESOLUTION, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2024
Note 1 – Organization and Description of Business
DLT Resolution Inc. (“DLT, the “Company”, “we” and “our”) operates in three high-tech industries including telecommunications and data services which includes Image Capture, Data Collection, Data Phone Center Services, and Payment Processing. The Company offers secure data management, Information Technology (IT) and other telecommunications services in Canada and the United States. The Company operates a Health Information Exchange providing the ability to request and retrieve medical information and records while meeting all of today’s Security & Compliance demands for HIPAA, PIPEDA and PHIPA.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flow from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date these financial statements are issued. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plans in regard to this matter include raising additional equity financing and borrowing funds under a private credit facility and/or other credit sources. There can be no assurance that additional financing will be available when needed or on acceptable terms. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, and/or suspend or curtail commercialization activities. Any of these actions could materially harm the Company’s business, results of operations, financial condition and future prospects.
Note 2 – Summary of Significant Accounting Policies
Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash
Cash includes deposits in the bank accounts of DLT Resolution Inc. and its subsidiaries with accounts denominated in Canadian dollars and U.S. dollars. Cash payments and receipts are routed through the Company’s subsidiaries and certain related parties. As of June 30, 2024 and December 31, 2023, our cash held in banks was $
Accounts Receivable
Accounts receivable balances are established for amounts owed to the Company from its customers from the sales of services and products. The Company closely monitors the collectability of outstanding accounts receivable and provide an allowance for doubtful accounts based on estimated collections of outstanding amounts.
| 7 |
| Table of Contents |
Property and equipment
Property and equipment are stated at cost less accumulated depreciation. The Company provides for depreciation using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated results of operations.
Intangible Assets
Intangible assets consist of developed technology, customer relationships, the Company’s website, non-compete agreements and domain names. The Company amortizes, to cost of revenue and operating expenses, these definite-lived intangible assets on a straight-line basis over the life of the assets which range from five to seven years.
Impairment of Long-Lived Assets and Goodwill
The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis.
The Company tests goodwill for impairment annually as of December 31, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company initially assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company compares the reporting unit’s carrying amount to its fair value. If the reporting unit’s carrying amount exceeds its fair value, an impairment charge is recorded based on that difference.
Revenue Recognition
The Company follows ASC 606 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue upon the transfer of promised services to customers in amounts that reflect the consideration to which the Company expects to be entitled the transfer of services. The Company considers revenue earned when all the following criteria are met: (i) the contract with the customer has been identified, (ii) the performance obligations have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to the performance obligations, and (v) the performance obligations have been satisfied. The Company primarily generates revenues through the sale of products through its website and at industry tradeshows.
| 8 |
| Table of Contents |
Income taxes
Income taxes are provided for using the liability method of accounting in accordance with FASB ASC Topic 740 (formally SFAS No. 109 “Accounting for Income Taxes”). A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
At June 30, 2024 and December 31, 2023, there were no uncertain tax positions that require accrual.
Earnings (Loss) Per Share
Earnings (Loss) per share is calculated in accordance with FASB ASC topic 260. Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period, assuming conversion or exercise of all potentially dilutive securities outstanding during each reporting period presented. Potentially dilutive securities are not presented or used in the computation of diluted loss per share on the statement of operations for periods when the Company incurs net losses, as their effect would be anti-dilutive.
Foreign Currency Translation
The functional currency of the Company’s subsidiaries in Canada is the Canadian Dollar. The subsidiaries’ assets and liabilities have been translated to U.S. dollars using exchange rates of
Fair Value of Financial Instruments
Fair value of certain of the Company’s financial instruments including cash, account receivable, other receivable, accounts payable and accrued liabilities, notes payable to related parties, notes payable, approximate cost because of their short maturities or bear floating rate of interest. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments. Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.
| 9 |
| Table of Contents |
Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination. Allocation of purchase consideration to identifiable assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized. During the measurement period, which is not to exceed one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. There is no significant impact from adopting ASU 2019-12 on the Company’s financial condition, results of operations, and cash flows.
In April 2021, The FASB issued ASU 2021-04 to codify the final consensus reached by the Emerging Issues Task Force (EITF) on how an issuer should account for modifications made to equity-classified written call options (hereafter referred to as a warrant to purchase the issuer’s common stock). The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. The Company adopted this guidance for the fiscal year beginning April 1, 2022. There is no significant impact from adopting ASU 2021-04 on the Company’s financial condition, results of operations, and cash flows.
On March 28, 2023, the FASB issued ASU No. 2023-01, Leases (Topic 842): Common Control Arrangements. ASU 2023-01 is designed to clarify the accounting for leasehold improvements associated with common control leases, thereby reducing diversity in practice. The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve the disclosures regarding a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The Company is required to adopt the guidance in the fourth quarter of fiscal 2025, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) to provide disaggregated income tax disclosures on rate reconciliation and income taxes paid. The Company is required to adopt the guidance in the fourth quarter of fiscal 2026, though early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated financial statements.
The Company continues to evaluate the impact of the new accounting pronouncement, including enhanced disclosure requirements, on our business processes, controls and systems.
| 10 |
| Table of Contents |
Note 3 – Discontinued Operations
In April 2024, the Company sold its
|
| 2024 |
|
| 2023 |
| ||
Assets |
|
|
|
|
|
| ||
Cash |
| $ |
|
|
|
| ||
Accounts receivable |
|
|
|
|
|
| ||
Intangible assets |
| $ |
|
| $ |
| ||
Total assets |
|
|
|
|
|
|
| |
Liabilities |
|
|
|
|
|
|
|
|
Bank overdraft |
|
|
|
|
|
| ||
Accounts payable and accrued liabilities |
|
|
|
|
|
|
| |
Notes payable |
|
|
|
|
|
|
| |
Total liabilities |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
| ||
Cost of revenue |
|
|
|
|
| ( | ) | |
General and administrative expense |
|
|
|
|
| ( | ) | |
Other expense |
|
|
|
|
| ( | ) | |
Gain on sales of subsidiaries and gain on foreign currency translation adjustment |
|
|
|
|
|
| ||
Net income from discontinued operations |
| $ |
|
| $ |
| ||
Liabilities from discontinued operations include a loan payable to the Government of Canada, which launched CEBA to assist businesses during the challenges during the COVID period by providing interest-free unsecured loans. As of December 31, 2023, the Company carries as a $
In 2021, DLT Resolution Corp borrowed $
Note 4 – Notes Payable
We issued note payable as settlement for consulting services. The note carries interest of
We issued a $
| 11 |
| Table of Contents |
Note 5 – Stockholders’ Equity
Series A Convertible Preferred Stock
The Company is authorized to issue up to
There were Nil shares of Series A convertible preferred stock issued and outstanding as of June 30, 2024 and December 31, 2023.
Series B Convertible Preferred Stock
The Company is authorized to issue up to
Common Stock
During the six months ended June 30, 2024, the Company sold
The Company issued
Note 6 – Income Taxes
We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. Pursuant to FASB ASC Topic 740, when it is more likely than not that a tax asset cannot be realized through future income, the Company must provide an allowance for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry-forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry-forward period. The Company records estimated losses from interest and penalties arising from taxes remitted late as well as unrecognized tax benefits as they are incurred as general and administrative expenses. The Company did not have accrued interest or penalties related to income taxes as of December 31, 2023 or 2022. The Company has not filed its 2023 and 2022 tax returns as of the date of this filing.
| 12 |
| Table of Contents |
The sources and tax effects of the temporary differences for the periods presented are as follows (rounded to the nearest thousand):
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
Net operating loss carry forward |
| $ |
|
| $ |
| ||
Applicable Canadian Federal and Provincial tax rates |
|
| % |
|
| % | ||
Deferred tax asset related to net operating losses |
| $ |
|
| $ |
| ||
Deferred tax asset relating to debt discounts and derivative liability (at 26.5%) |
|
|
|
|
|
| ||
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Net deferred tax asset |
| $ |
|
| $ |
| ||
The Company did not pay any income taxes during the six months ended June 30, 2024, or since inception.
The net federal operating loss carry forward will
Note 7 – Related Party Transactions
As of June 30, 2024 and December 31, 2023, the Company had outstanding amounts payable to related parties of $
As of June 30, 2024 and December 31, 2023, the Company has an outstanding receivable from a company controlled by the Company’s chief executive officer in the amounts of $
As of June 30, 2024 and December 31, 2023, the Company has an outstanding liability payable to the Company’s chief executive officer in the amounts of $
Included in amounts payable to related parties is a note payable to a related party as settlement for consulting services. The note carries interest of
The Company has issued a total of
The related parties that had material transactions for the six months ended June 30, 2024, and 2023, consist of the following:
Name | Related Party | Nature of Relationship to the Company |
Drew Reid | A | CEO and Chairman |
Gilles Trahan | B | Over 5% shareholder, consultant with the Company, and controls Mind Tech Group Ltd. |
Alkaneid Corp. | C | An entity controlled by Drew Reid |
Montelco Corp. | D | An entity controlled by Drew Reid |
MindTech Group Ltd. | E | An entity controlled by Gilles Trahan |
As of June 30, 2024, and December 31, 2023, amounts owing to related parties consist of as follows
Related Party |
| Nature of outstanding |
| June 30, 2024 |
|
| Dec 31, 2023 |
| ||
A |
| Loan Payable |
| $ |
|
| $ |
| ||
B |
| Loan Payable |
| $ |
|
| $ |
| ||
D |
| Loan Receivable |
| $ |
|
| $ |
| ||
E |
| Loan Payable |
| $ |
|
| $ |
| ||
The amounts owing to related parties are unsecured, non-interest bearing.
For the six months ended June 30, 2024, and 2023, transactions with related parties and their nature consist of as follows:
Related Party |
| Six months ended June 30, 2024 |
|
| Year ended December 31, 2023 |
|
| Nature of transactions | |||
B |
| $ |
|
| $ |
|
| Issued common stock in lieu of services. | |||
C |
| $ |
|
| $ |
|
| Issued common stock in lieu of services. | |||
| 13 |
| Table of Contents |
Note 8 – Subsequent events
From July 1, 2024 to the date of this filing, the Company issued a total
On March 11, 2024, the Company entered into a purchase agreement with Global Motor Trade LLC, Global Motor Trade International LLC, SJ Auto Trade LLC, WEC International LLC. and the beneficial owners of each entity, collectively referred to as GMTI. GMTI, based in the United States, specializes in international wholesale distribution and sale of vehicles, vehicle parts and equipment, and machinery and equipment, with a primary focus on United States, Canada, Mexico, Southeast Asia, China, Europe, Dubai, and Africa. The Company paid the purchase price by issuing
On April 14, 2025, DLT Resolution Inc. (“DLT” or the “Company”) entered into a Termination and Rescission Agreement (the “Termination Agreement”) with Global Motor Trade International LLC, WEC International LLC, SJ Auto Trade LLC, Global Motor Trade LLC (collectively, the “LLCs”), and Charles Bronfman and Abdul Matin Moosa (collectively, the “Sellers”), to terminate and rescind the Share Purchase Agreement by and between DLT and the Sellers dated March 11, 2024 (“SPA”).
Pursuant to the Termination Agreement, the LLCs remain under the Sellers’ ownership, and no interest is deemed to have transferred to DLT. The Sellers agreed to return all
On April 13, 2025, DLT Resolution Inc. (“DLT” or the “Company”), through its wholly-owned subsidiary DLT Global Motor LLC (“DLTGM”), entered into a Joint Venture Agreement (the “JV Agreement”) with Charles Brofman, Abdul Matin Moosa, and their affiliated entities, Global Motor Trade LLC and Global Motor Trade International LLC (collectively, “GMTI” and, together with Mr. Brofman and Mr. Moosa, the “JV Partners”). The JV Agreement was intended to establish an international wholesale auto trade business.
| 14 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation. Shareholders’ Equity General.
The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial condition of DLT Resolution, Inc. This discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on March 26, 2025.
Revenues
Revenues for the three and six months ended June 30, 2024 were $29,270 and $64,325, respectively, all of which were generated by DLT Telecom, Inc. For the three and six months ended June 30, 2023, revenues were $25,627 and $25,627, respectively. All 2023 revenues were generated by DLT Resolution Corp., a discontinued operation.
Cost of Revenue
Cost of revenue for the three and six months ended June 30, 2024 were $16,449 and $41,194, respectively, all of which were incurred by DLT Telecom, Inc. For the three and six months ended June 30, 2023, cost of revenue were $5,701 and $5,701, respectively. All 2023 was incurred by DLT Resolution Corp., a discontinued operation.
General and Administrative
General and administrative expense was $358,895 and $558,058 for the three and six months ended June 30, 2024, respectively. For the three and six months ended June 30, 2023, general and administrative expense was $9,141 and $9,141, respectively. The increase in general and administrative expense was primarily due to the costs incurred in 2024 to reduce the backlog in our accounting and audit our 2022 and 2023 financial statements and the increase in consulting fees.
Other (Income) Expense
We realized a foreign exchange gain of $15,886 and interest income of $1,266 for the three months ended June 30, 2024 compared to a foreign exchange loss of $121 and interest expense of $1,828 for the three months ended June 30, 2023. We realized a foreign exchange loss of ($93,669), other income $5,412 and interest expense of ($1,202) for the six months ended June 30, 2024 compared to a foreign exchange loss of $121, other income of $Nil and interest expense of $3,657 for the six months ended June 30, 2023.
Net (Loss) from Continuing Operations
For the three months ended June 30, 2024, we incurred losses from continuing operations of ($328,922). For the six months ended June 30, 2024, we incurred losses from continuing operations of ($624,386). For the three months ended June 30, 2023, we generated income from continuing operations of $8,836. For the six months ended June 30, 2023, we generated from continuing operations of $7,007.
Net Income (Loss) from Discontinued Operations
For the three and six months ended June 30, 2024, we generated net income of $277,927 from discontinued operations that resulted from our sale of DLT Resolution Corp in April 2024. For the three months ended June 30, 2023, we generated ($22,067) of net losses from discontinued operations that was DLT Resolution Corp., which had minimal activity. For the six months ended June 30, 2023, we generated $1,243,387 of net income from discontinued operations that was primarily from our sales of DLT Data Services Inc. and Union Strategies Inc, our two former subsidiaries.
Net Income (Loss)
We generated a ($50,995) Net Loss for the three months ended June 30, 2024, compared to ($13,231) for the three months ended June 30, 2023. We generated a ($346,549) Net Loss for the six months ended June 30, 2024, compared to $1,250,394 of Net Income for the six months ended June 30, 2023. The Net Income in 2023 was primarily the result of net income from discontinued operations in the amount of $1,243,387 compared to $277,927 from discontinued operations for the six months ended June 30, 2024.
Liquidity and Capital Resources
As of June 30, 2024, we had total current assets of $600,851 and current liabilities of $326,598. As of December 31, 2023, we had $727 cash on hand and total liabilities of $263,212. We must secure additional funds in order to continue our business.
Net cash used in operating activities was ($196,001) during the six months ended June 30, 2024 compared to ($108,576) for the same period in 2023. Net cash provided by discontinued operating activities was $29,843 for the six months ended June 30, 2024 compared to $120,454 in net cash provided by discontinued operations for the six months ended June 30, 2023.
| 15 |
| Table of Contents |
No cash was used in investing activities during the six months ended June 30, 2024 and 2023.
During the six months ended June 30, 2024, the Company provided $764,639 cash from financing activities, which resulted from sales of shares of our Common Stock. During the six months ended June 30, 2023, the Company used $Nil of cash in financing activities.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flow from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plans in regards to this matter include raising additional equity financing and borrowing funds under a private credit facility and/or other credit sources.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Management of DLT Resolution Inc. is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.
| 16 |
| Table of Contents |
At the end of the period covered by this report, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was carried out under the supervision and with the participation of our Principal Executive Officer, Principal Financial and Accounting Officer. Based on his evaluation of our disclosure controls and procedures, he concluded that during the period covered by this report, such disclosure controls and procedures were not effective to detect the inappropriate application of US GAAP standards. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”
The Company will continue to create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by accounting personnel. In addition, the Company will enhance and test our year-end financial close process. Additionally, the Company’s management will increase its review of our disclosure controls and procedures. Finally, we plan to designate individuals responsible for identifying reportable developments. We believe these actions will remediate the material weakness by focusing additional attention and resources in our internal accounting functions. However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2024. In assessing the effectiveness of our internal control over financial reporting as of June 30, 2024, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on its assessment, management concluded that our internal control over financial reporting as of June 30, 2024 was not effective in the specific areas described in the “Disclosure Controls and Procedures” section above and as specifically described in the paragraphs below.
As of June 30, 2024, the Principal Executive Officer/Principal Financial Officer identified the following specific material weaknesses in the Company’s internal controls over its financial reporting processes:
· | 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. |
| 17 |
| Table of Contents |
· | Representative with Financial Expertise — For the six months ended June 30, 2024, 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. |
|
|
In light of the foregoing, once we have the adequate funds, management plans to develop the following additional procedures to help address these material weaknesses: | |
|
|
· | The Company will create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by accounting personnel. In addition, we plan to enhance and test our month-end and year-end financial close process. Additionally, our audit committee will increase its review of our disclosure controls and procedures. We also intend to develop and implement policies and procedures for the financial close and reporting process, such as identifying the roles, responsibilities, methodologies, and review/approval process. We believe these actions will remediate the material weaknesses by focusing additional attention and resources in our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. |
There have been no changes in our internal control over financial reporting that occurred during the ix months ended June 30, 2024 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
| 18 |
| Table of Contents |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Not required under Regulation S-K for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
| 19 |
| Table of Contents |
Item 6. Exhibits.
The following exhibits are attached hereto:
Exhibit No. | Description of Exhibit | |
| ||
101 | Interactive data files pursuant to Rule 405 of Regulation S-T |
| 20 |
| Table of Contents |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DLT Resolution, Inc. |
|
|
| |
|
|
|
|
|
By: | /s/ Drew Reid | /s/ Shaun Power |
| |
| Drew Reid | Shaun Power |
| |
| President and Chief Executive Officer | Chief Financial Officer |
| |
| (Principal Executive Officer) | (Principal Financial Officer) |
| |
|
| |||
| October 31, 2025 | October 31, 2025 |
| |
| 21 |