SCTH 10-K
Securetech Innovations, Inc. (SCTH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year 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 Number) |
(Address of principal executive offices)
Tel:
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
N/A |
| N/A |
| N/A |
Securities registered pursuant to Section 12(g) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Common Stock, $0.001 par value |
| SCTH |
| OTC Pink Tier |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨
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 ¨
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or Section 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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.
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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
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Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨
As of June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the voting stock held by non-affiliates of the registrant was $
As of May 1, 2024, there were shares of our common stock, $0.001 par value issued and outstanding; 23,071,881 of these shares were held by non-affiliates of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibits incorporated by reference are referred under Part IV.
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TABLE OF CONTENTS
Item 1B. Unresolved Staff Comments23
Item 4. Mine Safety Disclosures23
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities24
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations30
Item 7A. Quantitative and Qualitative Disclosures About Market Risk35
Item 8. Financial Statements and Supplementary Data36
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure51
Item 9A. Controls and Procedures51
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections52
Item 10. Directors, Executive Officers and Corporate Governance53
Item 11. Executive Compensation56
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters57
Item 13. Certain Relationships and Related Transactions, and Director Independence57
Item 14. Principal Accounting Fees and Services59
Item 15. Exhibits, Financial Statements Schedules60
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PART I
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Annual Report on Form 10-K, including statements regarding our future results of operations or financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” and other similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward-looking statements (collectively, “forward-looking statements”), but the absence of these words does not mean that a statement is not forward-looking. Our actual results or outcomes could differ materially from those indicated in these forward-looking statements for a variety of reasons, including, among others:
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| Our ability to execute on our growth strategies |
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| Supply chain disruptions and general price inflation |
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| Our ability to maintain favorable relationships with suppliers and manufacturers |
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| Competition from more established and better financed competitors |
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| Our ability to attract and retain competent and qualified personnel |
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| Regulatory changes and developments affecting our business |
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| Our ability to obtain additional capital to finance operations |
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| Managing a “just right” product inventory size and mix |
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| Impacts on our business from epidemics, pandemics, or natural disasters |
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| Our ability to remediate the material weakness in our internal control over financial reporting or additional material weaknesses or other deficiencies in the future or to maintain effective disclosure controls and procedures and internal control over financial reporting |
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| Other risks and uncertainties, including those listed in the section titled “Risk Factors” in our filings with the United States Securities and Exchange Commission (“SEC”) |
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in Part I, Item 1A, “Risk Factors” and elsewhere in this Annual Report for the year ended December 31, 2023. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results or outcomes could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report, and while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to rely unduly on these statements.
The forward-looking statements made in this Annual Report are based on events or circumstances as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
As used in this Annual Report, the terms "we," "us," "our," "SecureTech," “Registrant,” “Company,” and “Issuer” mean SecureTech Innovations, Inc. unless the context clearly requires otherwise.
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Item 1. Business
Business Overview
SecureTech is an emerging growth company that develops and markets security and safety devices and technologies – our products preserve life, protect property, and prevent crime. SecureTech is the maker of Top Kontrol®, the only anti-theft and anti-carjacking system known that can safely stop a carjacking without any action by the driver. SecureTech is developing advanced cybersecurity technologies for blockchain and cryptocurrency systems and platforms involving cryptocurrency mining, digital asset storage and protection, and trading exchanges through its Piranha Blockchain subsidiary.
Corporate Structure
The following diagram illustrates our corporate structure as of December 31, 2023:
Corporate History
SecureTech was incorporated under the laws of the State of Wyoming on March 2, 2017, under the name SecureTech, Inc. SecureTech amended its Articles of Incorporation on December 20, 2017, to change its name to SecureTech Innovations, Inc. On November 19, 2021 and November 25, 2021, SecureTech incorporated wholly-owned subsidiaries Piranha Blockchain, Inc. under the laws of the State of Wyoming and Piranha Blockchain, Ltd. under the International Business Company (IBC) laws of Anguilla, British West Indies, respectively.
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Top Kontrol
Top Kontrol is the world’s most advanced anti-theft and anti-carjacking system. Unlike our competitors’ products that only protect a vehicle from unattended theft, Top Kontrol takes vehicle security and passenger safety to the next level – prioritizing the driver’s and passengers’ safety. Top Kontrol is presently the only automobile security and personal safety system able to thwart an active carjacking attempt without any action by the driver.
Key Advantages of Top Kontrol:
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| Anti-theft circuits actively prevent automobile theft and carjacking |
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| Automatically prevents theft although keys are in ignition and engine is idling |
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| Active and passive prevention of carjacking |
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| Does not interfere with the vehicle’s other systems |
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| Compatible with most makes and models of cars and trucks |
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| Manual engine kill switch |
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| Key-based system prevents thieves from hacking wirelessly transmitted security codes |
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| Does not draw battery power – system works even with a disabled car battery |
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Retail Package Top |
| Retail Package Bottom |
For additional information on Top Kontrol or to view product demonstration videos, please visit the Top Kontrol website at www.topkontrol.com or the Top Kontrol YouTube Channel, respectively.
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Industry: Automobile Theft in America
Car theft in the United States continues to rise annually to new record levels. In 2023, car thefts surpassed all previous records from 2022.
Top Kontrol ensures your car’s safety even when you’re not around. It prevents thieves from stealing your parked and unattended vehicle. Here’s a snapshot of America’s auto theft crisis in 2023:
1,020,729 |
| Number of US cars stolen in 2023 |
$8.9+ Billion |
| Value of cars stolen in the US in 2023 |
$9,166 |
| Average dollar loss per theft |
Up 105% |
| Increase in US car thefts between 2019 and 2023 |
31 Seconds |
| How often a car was stolen in the US in 2023 |
Industry: Carjackings Continue Skyrocketing
Carjackings in the US nearly doubled again during 2023!
Below are some highlighted major US cities that experienced record levels of carjackings in 2023:
Increase in Carjackings 2023 |
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US City |
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98% |
| Washington, DC |
222% |
| Minneapolis, MN |
133% |
| Chicago, IL |
121% |
| New Orleans, LA |
115% |
| Oakland, CA |
Recent statistics from the National Crime Information Center reveal a significant surge in car thefts and carjackings. Between 2019 and 2023, motor vehicle thefts increased by 105%, while carjackings rose by 93% nationwide.
Top Kontrol stands out as the sole automobile safety device capable of preventing an active carjacking without any driver intervention.
Competition
SecureTech faces formidable competition in every aspect of its business. Our company’s success or failure will depend largely upon management’s ability to develop competitive products and successfully market them to attract enough new customers, enabling us to generate sufficient revenues to become profitable.
SecureTech competes against better-established competitors with more significant financial resources and longer operating histories. Our competitors’ resources and market presence may give them considerable advantages in marketing, purchasing, and negotiating leverage. Some of our better-known competitors include Viper (www.viper.com), Clifford (www.clifford.com), and OnStar (www.onstar.com). In addition to these known competitors, we are competing with lesser-known competitors and competitors presently not known to us or, possibly, not even formed yet.
Our targeted industry is sufficiently large enough that we should be able to compete successfully against our competitors with our existing and future products. However, it is essential to note that the underlying product technology is constantly evolving and expanding, with new competitors continuously innovating better products that could eventually outperform our then-offered products or, worse, possibly render them obsolete.
Manufacturing
SecureTech uses US-based contract manufacturers to manufacture its products, with final assembly performed at SecureTech’s Minnesota headquarters. SecureTech has no long-term or exclusivity agreements with any contract manufacturer and is free to change or negotiate with new contract manufacturers at its sole discretion.
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SecureTech’s products proudly carry the “Made in the USA” designation.
Piranha Blockchain
SecureTech is expanding into advanced cybersecurity and blockchain technologies through its newly formed Piranha Blockchain subsidiaries (collectively, “Piranha”). Through Piranha, SecureTech intends to:
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| Build secure low-cost green energy data centers |
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| Offer advanced cybersecurity products to secure and protect client data, identity, and digital assets from theft and ransom |
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| Develop blockchain and cryptocurrency systems and platforms for mining, storage, and trading exchanges |
Piranha intends to generate revenue through four potential sources:
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| Individual one-time product sales of cybersecurity hardware and applications |
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| Recurring monthly revenue from cybersecurity subscriptions and hosting services |
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| Cryptocurrency mining |
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| Transaction fees from cryptocurrency exchange trades and conversions into and from fiat currencies |
Piranha will pursue growth in this business expansion through a combination of internally developed products and technologies and strategic acquisitions.
Government Regulation
Our products are designed to meet all known existing or proposed governmental regulations. We currently meet all applicable standards for approvals by government regulatory agencies for our products and services.
Top Kontrol was issued a Federal Communications Commission (FCC) Declaration of Conformity certification in March 2020.
Compliance with Environmental Laws
We believe there are no material issues or costs associated with our compliance with current environmental laws. We did not incur environmental expenses in the fiscal periods ended December 31, 2023 and 2022, nor do we anticipate environmental expenses in the foreseeable future.
Intellectual Property Rights and Proprietary Information
We operate in an industry where innovation, investment in new ideas, and protection of resulting intellectual property rights are essential drivers of success. We rely on various intellectual property protections for our products and technologies, including patent, trademark and trade secret laws, and contractual obligations. We pursue a policy of vigorously enforcing our intellectual property rights.
Patents that have been issued and/or licensed to SecureTech and their dates of issuance are:
·On May 7, 2013, Shongkawh, LLC, a related party controlled by our President and CEO, was issued US Patent No. 8,436,721 entitled “Automobile Theft Protection and Disablement System,” by the US Patent & Trademark Office (“USPTO”). This patent expires on March 19, 2030. SecureTech has the exclusive license for the use of this patent through its expiration date.
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In addition to such factors as innovation, technological expertise, and experienced personnel, we believe robust product offerings that we continue to upgrade and enhance will keep us competitive. We will seek patent protection for significant technological improvements that we make. We have an ongoing policy of filing patent applications to seek legal protections for our products and technologies’ novel features. Before filing and granting patents, our policy is to disclose critical elements to patent counsel and maintain these features as trade secrets before product introduction. Patent applications may not result in issued patents covering all-important claims and could be denied in their entirety.
We also file for trade name and trademark protection when appropriate. We are the owner of federally registered trademarks, including SECURETECH INNOVATIONS® and TOP KONTROL®. Additionally, SecureTech has a pending trademark registration application with the USPTO for PIRANHA BLOCKCHAIN.
Our policy is to enter into nondisclosure agreements with each employee, consultant, or third party to whom any of our proprietary information may be disclosed. These agreements prohibit disclosing our confidential information to others during and after employment or working relationships.
Employees
As of December 31, 2023, we had two employees (two full-time employees) and three independent commission-based sales representatives.
Property and Equipment
Our principal executive offices are located at 2355 Highway 36 West, Suite 400, Roseville, MN 55113. We lease this space for $552 per month on a month-to-month basis for the time being.
We do not hold ownership or leasehold interest in any other property or equipment.
Available Information
We maintain a website with the address www.securetechinnovations.com. We make available free of charge through our Internet website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and any amendments thereto, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We are not including the information on our website as a part of, nor incorporating it by reference into, this report. Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements, and other information that issuers, including us, file electronically with the SEC. The SEC’s website address is www.sec.gov.
Note Regarding Third-Party Information
This Annual Report on Form 10-K includes market data and certain other statistical information and estimates that are based on reports and other publications from industry analysts, market research firms, and other independent sources, as well as Management’s own good faith estimates and analyses. We believe these third-party reports to be reputable, but have not independently verified the underlying data sources, methodologies, or assumptions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations section and the consolidated financial statements and related notes, before making an investment decision. The risks described below are not the only ones we face. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, could materially and adversely affect our business, financial condition, prospects, or results of operations. In such cases, the trading price of our common stock could decline, and you may lose all or part of your original investment. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.
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Additionally, macroeconomic and geopolitical developments, escalating global conflicts, supply chain disruptions, labor market constraints, rising rates of inflation, and rising interest rates may amplify many of the risks discussed below to which we are subject. Among other factors, significant disruption to our supply chain for products we sell, as a result of geopolitical conflict, or otherwise, could have a material impact on our sales and earnings.
SUMMARY OF RISK FACTORS
The following summarizes the risks facing our business, all of which are more fully described below. This summary should be read in conjunction with the Risk Factors below and should not be relied upon as an exhaustive summary of the material risks facing our business. The order of presentation is not necessarily indicative of the level of risk that each factor poses to us.
Risks Related to Our Industry and the Broader Economy
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| Our industry is highly competitive, and as a young company with a new brand, we are at a disadvantage to our competitors. |
Risks Related to Our Business
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| Our products may not achieve market acceptance, thereby reducing the chance for success. |
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| If the market chooses to buy our competitors’ products and services, SecureTech may fail. |
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| Consumer trends, seasonal fluctuations, and general global economic conditions and outlook may cause unpredictable operating results. |
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| We may not be able to successfully manage our inventory to match consumer demand. |
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| We may implement a product recall or voluntary market withdrawal, which could significantly increase our costs, damage our reputation, and disrupt our business. |
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| We may be unable to protect our proprietary rights and intellectual property. |
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| While no current lawsuits are filed against SecureTech, the possibility exists that a claim of some kind may be made in the future. |
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| Our business's success depends heavily on key personnel, particularly Kao Lee, and his business experience and understanding of our industry. |
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| Our officers and directors essentially determine and control all corporate decisions without the need for shareholder approval. |
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| Our officers and directors may be subject to conflicts of interest. |
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| Our officers and directors have other significant outside business interests. |
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| We depend on third-party contract manufacturers to produce our products. |
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| Our SEC reporting obligations and compliance requirements are both costly and time-consuming, and our Management has no experience in such matters. |
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| We have no independent Board Members, nor do we have an audit or compensation committee. |
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| We have agreed to fully indemnify our officers and directors against lawsuits. |
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Risks Related to Our Financial Condition
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| We lack an operating history and are incurring ongoing losses that we expect to continue into the future. |
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| Expenses required to operate as a public company will reduce the funds available to implement our business plan. |
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| Our auditing firm has issued a going concern warning on our ability to continue operations for the next 12 months. |
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| We need to raise additional capital, which may not be available to us in the future or on terms we find acceptable. |
Risks Related to Our Business Strategy
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| We may acquire other companies or technologies, which could fail to result in a commercial product and otherwise disrupt our business. |
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| Our operating results will be harmed if we cannot effectively manage and sustain our future growth or scale our operations. |
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| Our aspirations and disclosures related to Environmental, Social, and Governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance. |
Risks Related to Planned Green Energy Data Centers and Blockchain Operations
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| Our future cryptocurrency and other digital asset holdings may be exposed to cybersecurity threats and hacking. |
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| Risk related to technological obsolescence and difficulty in obtaining advanced hardware. |
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| Our future data centers will be subject to various property and other insurance risks. |
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| The financial performance of our future data centers may be impacted by price fluctuations in the power market, as well other market factors that are beyond SecureTech’s control. |
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| Hazards associated with high-voltage electricity transmission and industrial operations may result in the suspension of our operations or the imposition of civil or criminal penalties. |
Risks Related to Market for Our Common Stock
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| Investing in SecureTech is a risky investment and could result in the loss of your entire investment. |
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| Even though our common stock is listed on the OTC Pink Tier of the OTC Markets Group, Inc., an active trading market for shares of our common stock has yet to develop and may never develop. |
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| We do not intend to pay any dividends on our common stock. |
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| We have certain anti-takeover provisions and may issue additional securities, including common and preferred shares, without shareholder consent which may make it difficult, if not impossible, to replace or remove our current management, and could also result in significant dilution to existing investments in our common stock. |
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| We are subject to penny stock regulations and restrictions, and you may have difficulty selling shares of our common stock. |
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| Because we are not subject to compliance with rules requiring the adoption of specific corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest, and similar matters. |
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| As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us. |
RISK FACTORS
Risks Related to Our Industry and the Broader Economy
Our industry is highly competitive, and as a young company with a new brand, we are at a disadvantage to our competitors.
Our industry is highly competitive in general. We are a young company with limited financial resources and a new brand with limited recognition. Our competitors, both established and future unknown competitors, have better brand recognition and, in most cases, substantially greater financial resources than we have. Our ability to compete successfully in our industry depends on many factors, both within and outside our control. These factors include the following:
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| our success in designing and developing new or enhanced products; |
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| our ability to address the changing needs and desires of retailers and consumers; |
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| the pricing, quality, performance, reliability, features, ease of installation and use, and diversity of our products; |
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| the quality of our customer service; |
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| product or technology introductions by our competitors; and |
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| the ability of our contract manufacturing partners to deliver products on time, on price, and with acceptable quality. |
If we cannot effectively compete on a continual basis or unforeseen competitive pressures arise, such inability to compete could have a material adverse effect on our business, results of operations, and overall financial condition.
Risks Related to Our Business
Our products may not achieve market acceptance, thereby reducing the chance for success.
We continue producing and marketing our first-generation Top Kontrol product, which will be followed by our second-generation Top Kontrol product line later this fiscal year. It is unclear whether this product line and its features or other unanticipated events may result in general sales that are lower than anticipated. If this happens, it could force us to limit our expenditures on research and development, advertising, and general company requirements for improving and expanding our product and service offerings. We cannot guarantee consumer demand or interest in our current or future product or service offerings, which could have a material adverse effect on our business, results of operations, and overall financial condition.
If the market chooses to buy our competitors’ products and services, SecureTech may fail.
Although we believe our product offerings will become commercially viable, there is no verification by the marketplace that our products will be accepted by or purchased by customers. If the market chooses to buy our competitors’ products, it may be more difficult, if not impossible, for us to become profitable, which would substantially harm our business and, possibly, cause it to fail.
Consumer trends, seasonal fluctuations, and general global economic conditions and outlook may cause unpredictable operating results.
Our operating results may fluctuate significantly from period to period due to various factors, including purchasing patterns of customers, competitive pricing, and general economic conditions. There is no assurance that we will be successful in marketing our products or that any revenue from our products' sales will be significant. Consequently, our revenues may vary significantly by quarter, and our operating results may experience substantial fluctuations making it difficult to value our business and could lead to extreme volatility in our future share price.
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We may not be able to successfully manage our inventory to match consumer demand.
We base our inventory purchases, in part, on our sales forecasts. If our sales forecasts overestimate consumer demand, we may experience higher inventory levels, which could result in the need to sell products at lower than anticipated prices, leading to decreased profit margins. Conversely, if our sales forecasts underestimate consumer demand, we may have insufficient inventory to meet demand, leading to lost sales, either of which could materially adversely affect our financial performance.
We may implement a product recall or voluntary market withdrawal, which could significantly increase our costs, damage our reputation, and disrupt our business.
The manufacturing, packaging, marketing, and processing of our products involve an inherent risk that our processes do not meet applicable quality standards and requirements. In that event, we may voluntarily implement a recall or market withdrawal or may be required to do so by a regulatory authority. A recall or market withdrawal of one of our products would be costly and would divert management resources. A recall or withdrawal of one of our products, or a similar product processed by another entity, could also impair sales of our products because of confusion concerning the scope of the recall or withdrawal, or because of the damage to our reputation for quality and safety.
We may be unable to protect our proprietary rights and intellectual property.
Our future success depends partly on our proprietary technology, technical know-how, and other intellectual property. We rely on intellectual property laws, confidentiality procedures, and contractual provisions, such as nondisclosure terms, to protect our intellectual property. Others may independently develop similar technology, duplicate or copycat our products, or design around our intellectual property rights. Also, unauthorized parties may attempt to copy aspects of our products and technologies or obtain and use information that we regard as proprietary. Any of these events could significantly harm our business, financial condition, and operating results.
We also rely on technologies that we acquire from others. We may rely on third parties for further required technologies. We may purchase a product’s logic component or other technological devices from outside sources, which may require payment of annual fees to enable us to get updates/upgrades and technical support to the logic portion of the system or device. We may find it necessary or desirable in the future to obtain licenses or other rights relating to one or more of our products or current or future technologies. These licenses or other rights may not be available on commercially reasonable terms or at all. The inability to obtain specific licenses or other rights or obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could have a material adverse effect on our business, financial condition, and operating results. Moreover, using intellectual property licensed from third parties may limit our ability to protect our products' proprietary rights.
While no current lawsuits are filed against SecureTech, the possibility exists that a claim of some kind may be made in the future.
While no current lawsuits are filed against us, the possibility exists that a claim of some kind may be made in the future.
Presently we have no general liability insurance policy. While we intend to seek such coverage during the current fiscal year, we can offer no assurances that we will successfully be able to obtain such coverage or, if such coverage is offered to us, that we will be able to afford the annual premiums. Further, even with general liability coverage, there can be no guarantees that the coverage would fully protect us from legal claims arising from a future lawsuit, which could have a material adverse effect on our results of operations and financial condition.
Our business's success depends heavily on key personnel, particularly Kao Lee, and his business experience and understanding of our industry. SecureTech would likely fail if we were to lose his services.
Our business's success depends heavily upon our principal executive officer Kao Lee's abilities and experience. The loss of Mr. Lee would have a significant and immediate impact on our business, results of operations, and overall financial condition. Further, the loss of Mr. Lee would force us to seek a replacement or replacements who may have less general business experience and, in particular, experience in our industry, fewer industry contacts, and less understanding of our overall business plan. We can make no assurances that we will be able to find a suitable replacement should Mr. Lee depart, which could force us to curtail operations and/or cease operations, whereby you could lose your entire investment.
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Mr. Lee is not presently covered by an employment agreement nor is he subject to a non-compete agreement that would survive his employment termination. Mr. Lee can terminate his relationship with us at any time without cause. Further, we do not carry “key person” insurance on any employee, including Mr. Lee. The departure of Mr. Lee would most likely have a severe and negative impact on our overall business and cause us to cease operations, whereby you could lose your entire investment.
In addition to our dependency on Mr. Lee’s continued services, our future success will also depend on our ability to attract and retain additional future key personnel. We face intense competition for such qualified individuals from well-established and better-financed competitors. We may not be able to attract talented new employees or retain existing employees, which may have a material adverse effect on our results of operations and financial condition.
Our officers and directors currently control an aggregate of approximately 70.4% of our eligible votes in all voting matters. Accordingly, our officers and directors can effectively determine and control all corporate decisions, even if such decisions may not be in the best interest of minority shareholders.
As of May 1, 2024, our officers and directors currently control an aggregate of 55,000,000 votes in all voting matters, or approximately 70.4%, of all eligible votes. Accordingly, our officers and directors can effectively determine the outcome of all corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all of our assets without needing minority shareholder approval. Our directors' interests may differ from the interests of the other shareholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Our officers and directors may be subject to conflicts of interest.
Our officers and directors have potential conflicts of interest in their dealings with us. Circumstances under which conflicts of interest include:
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| We have no independent directors, so the Board of Directors is free to establish their own compensation packages without the guidance of a Compensation Committee; |
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| Future compensation agreements will not be negotiated at arm’s-length as would typically occur if such agreements were with unaffiliated third parties; |
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| Acquisitions and purchases or sales of assets and other similar transactions can be made without due diligence or extended negotiation; and |
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| Business combinations or the implementation of anti-takeover “poison pill” preventative measures without proper due diligence or consideration. |
We have not formulated a policy for potential conflicts of interest that may arise between us and our officers and directors. If a potential conflict of interest arises and cannot be resolved, the result could be contrary to the interests of other shareholders and prevent us from ever achieving profitability, have a negative impact on our overall business, and result in you losing all or part of your investment.
Our officers and directors have other significant outside business interests and will be able to devote only a portion of their professional time to SecureTech’s operations. As such, our business could fail if any of them are unable or unwilling to devote a sufficient amount of time to our business.
The responsibility of developing our core business, securing the financing we need, both primary and expansion, and fulfilling the reporting requirements of a public company all fall upon our officers and directors. As the date of this Annual Report, our officers and directors devote the following amount of their overall business time to our business:
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Officer/Director |
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Kao Lee |
| 100% |
Anthony Vang |
| 50% |
Abdikarim H. Farah |
| 25% |
It is also important to consider that none of our officers or directors are presently under any employment agreements with any of their business interests, including our business. If they were to enter into such an agreement with an outside business interest, they could be forced to resign from our business or devote even less time to our business interests than they presently do.
If any of our officers or directors are unable to fulfill any aspect of their duties or they decide to start spending more time on their competing business interests, we may experience a shortfall or complete lack of revenue resulting in little or no profits and the eventual closure of our business.
We depend on third-party contract manufacturers who may not have adequate capacity to fulfill our needs or meet our quality and delivery objectives and timetables.
We do not own our production lines or manufacturing facilities. We manufacture our products through third-party contract manufacturers.
Our current reliance on these third-party contract manufacturers involves significant risks, including reduced control over quality and logistics management, the potential lack of adequate capacity, and the discontinuance of the contractors’ assembly processes. Potential financial instability at our contract manufacturers could result in us needing to find new suppliers, potentially increasing our costs and delaying our product and installation deliveries. Our contractor manufacturers could also choose to discontinue contracting to build our products for any variety of reasons, with or without cause. Consequently, we may experience delays in the timeliness, quality, and adequacy in product and installation deliveries, any of which could have a material adverse effect on our business, results of operations, and overall financial condition.
We incur significant additional expenses and management’s time relating to SEC reporting obligations and SEC compliance requirements, and our management has no experience in such matters.
Our officers and directors are responsible for managing us, including complying with our SEC reporting obligations, maintaining disclosure controls and procedures, and preserving internal control over financial reporting. These public reporting requirements and controls are constantly changing and sometimes require us to obtain outside assistance from legal, accounting, or other compliance professionals, which may substantially increase our costs of remaining compliant with these reporting requirements. Should we fail to comply with these reporting requirements and internal controls and procedures, we may be subjected to securities law violations that may result in additional compliance costs or costs associated with SEC judgments or fines, both of which will increase our costs and negatively affect our potential profitability and our ability to conduct our business.
Because we do not have an audit or compensation committee, shareholders will have to rely on our board of directors, which is not independent, to perform these functions.
We do not have an audit or compensation committee or board of directors that is composed of independent directors. Our officers and directors perform the functions of these traditional corporate committees. Because none of our directors are deemed independent, there is a potential conflict between their and/or our interests and our shareholders’ interests since the above will participate in discussions concerning management compensation and audit issues that may affect management decisions. Until we have an audit committee or independent directors, there may be less oversight of management decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority shareholders.
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We have agreed to fully indemnify our officers and directors against lawsuits.
We are a Wyoming corporation. Wyoming law permits the indemnification of officers and directors against expenses incurred in successfully defending against a claim. Wyoming law also authorizes Wyoming corporations to indemnify their officers and directors against expenses and liabilities incurred because of their being or having been an officer or director. Our organizational documents provide for this indemnification to the fullest extent permitted by Wyoming law.
We currently do not maintain any insurance coverage. In the event that we are found liable for damages or other losses, we would incur substantial and protracted losses in paying any such claims or judgments. In the past, we have not maintained liability insurance but intend to acquire such coverage immediately upon resources becoming available. There is no guarantee that we can secure such coverage or that any insurance coverage, if ever secured, would protect us from any damages or loss claims filed against it.
Risks Related to Our Financial Condition
We lack an operating history and are incurring ongoing losses that we expect to continue into the future. There is no assurance that our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, our business will fail.
We were incorporated on March 2, 2017, and have incurred ($1,305,128) in losses through December 31, 2023. We have not achieved profitability and expect to continue incurring net losses in future fiscal periods. We anticipate incurring significant operating expenses and, as a result, will need to generate substantial revenues to achieve profitability, which may never occur. Even if we do achieve profitability, we may be unable to sustain or increase profitability on an ongoing basis, which could cause us to go out of business.
Expenses required to operate as a public company will reduce funds available to implement our business plan and could adversely affect our results of operations, cash flow, and overall financial condition.
Operating as a public company is considerably more expensive than operating as a private company, including additional funds required to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be costlier than planned. It may be necessary to hire additional staff to comply with ongoing SEC reporting requirements. We estimate that the cost of maintaining our SEC reporting status will be approximately $200,000 for the fiscal period ending December 31, 2024. As our business grows and develops, our financial statements and our SEC filings will become more complex. Increases in such complexity will likely increase our overall compliance expenses – potentially substantially – which could have an unexpected material adverse effect on our business, results of operations, and overall financial condition.
There is substantial uncertainty as to whether we will continue operations. If we discontinue operations, you could lose your entire investment.
Our independent registered public accounting firm has discussed their uncertainty regarding our business operations in their audit report dated May 1, 2024, which is part of the financial statements that are part of this Annual Report on Form 10-K. This means there is substantial doubt that we can continue as an ongoing business for the next 12 months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such, we may have to cease operations, and you could lose your entire investment.
We will need additional capital in the future, but there is no assurance that funds will be available on acceptable terms, or at all.
We must raise additional funds to achieve growth and fund other business initiatives. This financing may not be available in sufficient amounts or on terms acceptable to us and may be dilutive to existing stockholders if raised through additional equity offerings. Additionally, any securities issued to raise funds may have rights, preferences, or privileges senior to those of existing stockholders. If adequate funds are not available, or are not available on acceptable terms, our ability to expand, develop or enhance services or products, or respond to competitive pressures may be materially limited.
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Risks Related to Our Business Strategy
We may acquire other companies or technologies, which could fail to result in a commercial product or sales, divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our business.
We may seek to acquire or invest in businesses or technologies that we believe could complement or expand our portfolio, enhance our technical capabilities, or otherwise offer growth opportunities. We may not be able to successfully complete any acquisition we choose to pursue. Further, we may not be able to successfully integrate any acquired business, product, or technology in a cost-effective and non-disruptive manner. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various costs and expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. We may not be able to identify desirable acquisition targets or be successful in entering into an agreement with any particular target or obtain the expected benefits of any acquisition or investment. Similarly, we may not be able to successfully identify and acquire new technologies in a timely manner or at all. Acquisitions could also result in dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could harm our operating results. In addition, if an acquired business fails to meet our expectations, our business, financial condition, and results of operations may be negatively affected.
Our operating results will be harmed if we cannot effectively manage and sustain our future growth or scale our operations.
We may be unable to manage our growth or future growth efficiently or profitably. Our revenue and operating margins, or revenue and margin growth, may be less than expected. If we cannot scale our operations efficiently or maintain pricing without significant discounting, we may fail to achieve expected operating margins, which would have a material and adverse effect on our operating results. Growth may also stress our ability to adequately manage our operations, quality of products, safety, and regulatory compliance. If growth significantly decreases, it will negatively impact our cash reserves, and it may be necessary to obtain additional financing, which may increase indebtedness or result in dilution to shareholders. Further, we may not be able to obtain additional financing on acceptable terms, if at all.
Our aspirations and disclosures related to ESG matters expose us to risks that could adversely affect our reputation and performance.
We have established and publicly disclosed ESG goals, including our commitments to diversity and inclusion. These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance, and growth, and expose us to increased scrutiny from the investment community as well as enforcement authorities.
Our ability to achieve any ESG objective is subject to numerous risks, many of which are outside of our control. Additionally, standards for tracking and reporting ESG matters continue to evolve. Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others. This may result in a lack of consistent or meaningful comparative data from period to period or between us and other companies in the same industry. In addition, our processes and controls may not comply with evolving standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required of public companies by the SEC, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or partner could be negatively impacted. Further, our failure or perceived failure to pursue or fulfill our goals and objectives or to satisfy various reporting standards on a timely basis, or at all, could have similar negative impacts or expose us to government enforcement actions and private litigation.
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Risks Related to Planned Green Energy Data Centers and Blockchain Operations
Future cryptocurrency and other digital asset holdings, including those held by unrelated third parties, may be exposed to cybersecurity threats and hacking.
Malicious actors may seek to exploit vulnerabilities within our future data center networks and programming codes, such as by attacking the network source code, server systems, cryptocurrency miners, third-party platforms, cold and hot storage locations or software, or by other means. Discovery of flaws in or exploitations in corporate networks or programming source code that allow malicious actors to take or create money occurs somewhat regularly. For example, hackers have been able to gain unauthorized access to third-party digital wallets and cryptocurrency exchanges, which means that there is a risk that some or all of our future cryptocurrency and digital asset holdings could be lost or stolen.
Our future networks may further be vulnerable to intrusions by hackers who could interfere with and introduce defects into our data center network operations. Private keys that enable holders to transfer funds may also become lost, stolen, destroyed, or otherwise compromised, resulting in irreversible losses of cryptocurrencies and other digital assets. Any such impact on our private keys could have a material adverse effect on our business, prospects, or operations and potentially the value of any cryptocurrencies or digital assets that we might own or hold on behalf of unrelated third parties.
In the event of theft or a cybersecurity attack on our future networks, any losses from hackers to third-party accounts operating on our future networks could result in litigation against SecureTech. Should our future insurance coverage be insufficient to satisfy such losses, it could have a material adverse effect on our business and ability to attract clients to our future data center operations.
Risk related to technological obsolescence and difficulty in obtaining advanced hardware.
To remain competitive, SecureTech must continue to monitor the state of the technology available for its future data centers and invest in hardware and equipment required for successful data center operations. SecureTech’s hardware and software may become obsolete and require substantial capital to replace. There can be no assurance that such data center and networking hardware will be readily available when the need is identified.
Moreover, there can be no assurance that new and unforeseeable technology, either hardware-based or software-based, will not disrupt the existing technology platforms presently commercially available. For example, the arrival of quantum computers, which will be capable of solving certain types of mathematical problems fundamental to cybersecurity and blockchain security more quickly and efficiently than traditional computers may have a significant and negative effect on cybersecurity protection efforts and data centers in general, as well as yield our then technology platforms, both hardware-based and software-based, obsolete and outdated, which would have a material adverse effect on our business and ability to attract clients to our future data center operations.
Our future data centers will be subject to various property and other insurance risks.
SecureTech’s future data center operations and assorted computing equipment will be subject to all of the hazards and risks normally encountered for computing equipment, blockchain, and other digital asset storage companies. Such hazards include the loss of computing and technology platforms resulting from natural disasters, including floods, fires, inclement weather, mudslides, earthquakes, or other similar events beyond SecureTech’s control or its suppliers, any of which could result in damage to, or destruction of, computing and technology platforms, damage to life or property, environmental damage, and possible legal liability for which SecureTech may not be insured or is underinsured for. Further, any general hardware or software failure, including its ability to effectively manage and/or keep our data centers online and operational, could have a material adverse effect on SecureTech’s overall business, results of operations, and financial condition.
There is a risk of serious malfunctions in servers or central processing units and/or their collapse. While malfunctions in servers and/or central processing units can only occur on a specific server or part of it or for short periods of time, such crashes or failures can potentially cause the collapse of the entire data center, which could result in significant economic damage to SecureTech, it’s data center, and overall data center operations.
While SecureTech intends to maintain insurance against risks in the operation of its future data center operations and in amounts that it believes will be reasonable, such insurance will contain exclusions and limitations on coverage. If we incur losses that are material, our business, operating results and financial condition could be adversely affected, and we may not have recourse
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against an insurer. Even in the case of a loss for which SecureTech does maintain insurance, there is no guarantee that any such insurance coverage will be sufficient or that insurance proceeds will be paid to us.
The financial performance of our future data centers may be impacted by price fluctuations in the power market, as well other market factors that are beyond SecureTech’s control.
SecureTech’s future data center revenues, cost of doing business, results of operations, and operating cash flows generally may be impacted by price fluctuations in the power market and other market factors beyond SecureTech’s control. Market prices for power, capacity, and other ancillary services are unpredictable and tend to fluctuate substantially. Unlike most other commodities, electric power can only be stored on a very limited basis and generally must be produced concurrently with its use. As a result, power prices are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets. Long- and short-term power prices may also fluctuate substantially due to other factors outside of SecureTech’s control, including:
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| Changes in generation capacity in SecureTech’s markets – particularly with preferred sources such as clean hydroelectric electricity – including the addition of new supplies of power as a result of the development of new sources, expansion of existing sources, the continued operation of uneconomic sources due to state subsidies, or additional transmission capacity; |
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| Environmental regulations and legislation; |
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| Supply disruptions, including source outages and transmission disruptions; |
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| Changes in power transmission infrastructure; |
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| Weather conditions, including extreme weather conditions and seasonal fluctuations, which can significantly reduce or limit the amount of hydroelectric energy that can be produced in an area; |
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| Changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools and practices, distributed generation, and more efficient end-use technologies; |
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| Development of new sources, new technologies, and new forms of competition for the production of power; |
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| Changes in economic and political conditions; |
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| Supply and demand for energy commodities; |
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| Supply chain disruption of electrical components needed to transmit electricity; |
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| Availability of competitively priced alternative energy sources; and |
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| Changes in capacity prices and capacity markets. |
Such factors and the associated fluctuations in power and prices could affect wholesale power generation and, ultimately, the cost of electricity SecureTech must pay to operate its future data centers. Changes, especially sharp and unexpected increases, in the price of electricity SecureTech must pay at its future data centers could make our future data center operations unprofitable, which would have a material adverse effect on SecureTech’s overall business, results of operations, and financial condition.
Hazards associated with high-voltage electricity transmission and industrial operations may result in the suspension of our operations or the imposition of civil or criminal penalties.
SecureTech’s future data center operations will be subject to typical hazards associated with high-voltage electricity transmission and the supply of utilities to company facilities at an industrial scale, including explosions, fires, inclement weather, natural disasters, flooding, mechanical failure, unscheduled downtime, equipment interruptions, remediation, chemical spills, discharges or releases of toxic or hazardous substances or gases, and other environmental risks. The hazards
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can cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties, any of which could have a material adverse effect on SecureTech’s overall business, results of operations, and financial condition.
Risks Related to Market for Our Common Stock
Investing in SecureTech is a risky investment and could result in the loss of your entire investment.
Purchasing shares in SecureTech is speculative in nature and involves significant risks. Our shares should not be purchased by any person who cannot afford the loss of their entire investment. SecureTech’s business plan and objectives are also speculative, and we may not achieve those objectives successfully. Shareholders in SecureTech may be unable to realize a substantial return on their investment or any return whatsoever and may lose their entire investment. For this reason, each prospective investor should read this Annual Report on Form 10-K and all of its exhibits carefully and consult with their attorney, business advisor, and/or investment advisor.
Even though our common stock is listed on the OTC Pink Tier of the OTC Markets Group, Inc., an active trading market for shares of our common stock has yet to develop and may never develop. In the event a market may develop in the future, such future market prices for our shares may be volatile.
Our common stock trades under the symbol “SCTH” on the OTC Pink Tier of the OTC Markets Group, Inc. (“OTC Pink”), but an active trading market has yet to develop. We can offer no assurances that an active trading market will ever develop for shares of our common stock.
Further, in the event an active market may develop for shares of our common stock, the market price for our shares may be highly volatile and subject to wide fluctuations in response to various factors, including the following:
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| our failure to meet the expectations of the investment community or our estimates of our future results of operations; |
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| industry trends and the business success of our customers; |
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| loss of one or more key customers; |
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| strategic moves by our competitors, such as product or service announcements or acquisitions; |
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| regulatory developments; |
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| litigation; |
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| general economic conditions; |
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| other domestic and international macroeconomic factors unrelated to our performance; and |
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| any of the other previously noted risk factors. |
Moreover, the OTC Pink marketplace is not a recognized stock exchange. Trading of securities on the OTC Pink is often more sporadic and volatile than trading securities listed on a quotation system such as NASDAQ or a stock exchange such as NYSE. We can offer no assurances that shares of our common stock will ever obtain a listing on a recognized stock exchange such as OTCQB, OTCQX, NASDAQ, or NYSE.
If an active trading market never develops, your investment in our common stock would remain very illiquid, and you may not be able to get your original investment returned, much less realize a profit.
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We do not intend to pay any dividends on our common stock. Therefore, there are limited ways to profit from an investment in SecureTech Innovations, Inc.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we may seek additional funding in the future, our future funding sources may likely prohibit us from paying any dividends. Because we do not intend to declare dividends, any gain on an investment in our shares of common stock will need to come through the appreciation of our common stock’s share price, for which we can give no assurances that our common stock will ever appreciate in value and, even if it does appreciate in value, that you will be able to sell your shares of our common stock for a profit.
We have certain anti-takeover provisions and may issue additional securities, including common and preferred shares, without shareholder consent which may make it difficult, if not impossible, to replace or remove our current management, and could also result in significant dilution to existing investments in our common stock.
Our Articles of Incorporation, as amended, authorizes the issuance of up to 500 million shares of common stock and of up to 50 million shares of blank check preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors. Our Board of Directors may, without requiring shareholder approval, issue shares of preferred stock with dividends, liquidation, conversion, voting, or other rights that could supersede and/or adversely affect the voting power and/or other rights of the holders of our common stock. The ability of our Board of Directors to issue shares of common stock and/or preferred stock may prevent any shareholder attempt to replace or remove current management and/or could make it extremely difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. Additionally, the issuance of additional common stock or preferred stock in the future may significantly reduce your proportionate ownership and voting power.
It is important to note that as of May 1, 2024, we could issue up to an additional 421,928,119 shares of common stock without shareholder consent.
We are subject to penny stock regulations and restrictions, and you may have difficulty selling shares of our common stock.
The Securities and Exchange Commission has adopted Rule 15g-9, which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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| that a broker or dealer approve a person's account for transactions in penny stocks; and |
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| the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
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| obtain financial information, investment experience, and investment objectives of the person; and |
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| make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
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| sets forth the basis on which the broker or dealer made the suitability determination; and |
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| that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to sell shares of our common stock and/or cause a decline in the market value of our stock.
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Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Our common stock is presently deemed a “penny stock.” The continued application of the “penny stock” rules to our common stock could continue to restrict trading and liquidity in our common stock, adversely affect the market price of our common stock, or cause an increase in the transaction costs related to our common stock.
Sales of our common stock under Rule 144 could reduce our stock price.
From time to time, certain of our stockholders may be eligible to sell some or all of their shares of our common stock through ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to Rule 144 volume, manner of sale, current public information, and notice requirements.
As of May 1, 2024, we had 78,071,881 shares of our common stock issued and outstanding. Of these shares currently issued and outstanding:
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| 21,531,226 are freely tradable without restrictions (commonly referred to as the “public float”); |
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| 55,000,000 held by affiliates and are subject to the restrictions and sale limitations imposed by Rule 144; and |
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| 1,540,655 held by non-affiliates and are subject to the restrictions and sale limitations imposed by Rule 144. |
The eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect the then-prevailing market prices for our securities and cause you to lose most, if not all, of your investment in our business.
Because we are not subject to compliance with rules requiring the adoption of specific corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest, and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and NYSE AMEX Equities exchanges, and the Nasdaq Stock Market, because of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. We have not yet adopted these measures because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than necessary.
Further, we do not currently have independent audit or compensation committees. As a result, our Board of Directors has the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters, and investors may be reluctant to provide us with funds necessary to expand our operations.
As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.
Although the federal securities law provides a safe harbor for forward-looking statements made by a public company that files periodic reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, if we remain a penny stock, we will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect, which could result in potential litigation or regulatory actions taken against us.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
SecureTech’s Board of Directors actively oversees risks, including cybersecurity threats, as part of its risk management function. However, currently, there are no dedicated processes or committees specifically informing the Board of Directors about these risks. Given our company’s size and current operations, we consider the risk of significant cybersecurity incidents to be minimal.
SecureTech believes it has adequate processes and systems to maintain the confidentiality of its communications and records. Given our current level of sales and small number of employees, we do not perceive cybersecurity threats as a material risk at this time. However, SecureTech presently lacks formal processes for assessing, identifying, and managing cybersecurity risks directly or through third-party service providers. Additionally, we have not engaged any assessors, consultants, auditors, or other third parties concerning cybersecurity matters.
As of May 1, 2024, we have not encountered any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business, results of operations, or financial condition. Nevertheless, we acknowledge that complete risk elimination is challenging, and undetected incidents may still occur.
Item 2. Properties
Our principal executive offices are located at 2355 Highway 36 West, Suite 400, Roseville, MN 55113. We lease this space for $552 per month on a month-to-month basis for the time being.
We do not hold ownership or leasehold interest in any other property or equipment.
Item 3. Legal Proceedings
During the past ten years, no director, person nominated to become a director or executive officer, or promoter of SecureTech has been involved in any legal proceeding that would require disclosure hereunder.
From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the ultimate outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to our business. We currently are not a party to any claim or litigation.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Our common stock is not listed on any securities exchange, and is quoted on the OTC Pink marketplace under the symbol “SCTH.” Because our common stock is not listed on a securities exchange and its quotations on OTC Pink are limited and sporadic, there is currently no established public trading market for our common stock.
The following table reflects the high and low closing sales information for our common stock for each fiscal quarter since it first started trading on September 30, 2022. This information was obtained from OTC Pink and reflects inter-dealer prices without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
Our common stock's most recent closing price was $0.25 a share on April 26, 2024.
| COMMON STOCK | ||||
| MARKET PRICE | ||||
| HIGH |
| LOW | ||
Year Ended December 31, 2022 |
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Third Quarter (First date traded was September 30, 2022) | $ | 2.15 |
| $ | 2.15 |
Fourth Quarter | $ | 3.75 |
| $ | 2.20 |
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Year Ended December 31, 2023 |
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First Quarter | $ | 3.95 |
| $ | 2.15 |
Second Quarter | $ | 5.00 |
| $ | 0.80 |
Third Quarter | $ | 0.80 |
| $ | 0.70 |
Fourth Quarter | $ | 0.70 |
| $ | 0.51 |
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Year Ending December 31, 2024 |
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First Quarter | $ | 0.61 |
| $ | 0.25 |
Second Quarter (Through May 1, 2024) | $ | 0.25 |
| $ | 0.25 |
Holders of Record
As of May 1, 2024, we had 78,071,881 shares of our common stock issued and outstanding held by approximately 133 stockholders of record.
Dividend Policy
We have never declared or paid cash dividends. We currently intend to retain all future earnings for our business's operation and expansion and do not anticipate paying cash dividends on the common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions, and other factors deemed relevant by our directors.
Penny Stock Regulations and Restrictions on Marketability
The SEC has adopted Rule 15g-9, which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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| that a broker or dealer approve a person's account for transactions in penny stocks; and |
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| the broker or dealer receives a written agreement to the transaction from the investor, setting forth the identity and quantity of the penny stock to be purchased. |
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In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
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| obtain financial information, investment experience, and investment objectives of the person; and |
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| make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, before any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
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| sets forth the basis on which the broker or dealer made the suitability determination; and |
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| that the broker or dealer received a signed, written agreement from the investor before the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to sell shares of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities, and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Our common stock is presently deemed a “penny stock.” The continued application of the “penny stock” rules to our common stock could limit the trading and liquidity of our common stock, adversely affect the market price of our common stock, or cause an increase in the transaction costs related to our common stock.
Common Stock
Our Articles of Incorporation, as amended, authorizes us to issue up to 500,000,000 shares of common stock, $0.001 par value. Each holder of our common stock is entitled to one (1) vote for each share held of record on all voting matters we present for a vote of stockholders, including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities. There are no conversion rights, redemption, or sinking fund provisions with respect to our common stock. All shares of our common stock are entitled to share equally in dividends from sources legally available when, and if, declared by our Board of Directors.
Our Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.
In the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available for distribution to stockholders. However, the rights, preferences, and privileges of the holders of our common stock are subject to and may be adversely affected by the rights of the holders of shares of preferred stock that our Board of Directors may decide to issue in the future.
As of May 1, 2024, we had 78,071,881 shares of common stock issued and outstanding.
Preferred Stock
Our Articles of Incorporation, as amended, authorizes us to issue up to 50,000,000 shares of preferred stock, $0.001 par value. Our Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges, and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms. We believe that the Board of Directors’ power to set the terms of, and our ability to issue, preferred stock will provide flexibility in connection with possible financing or acquisition transactions in the future. However, the issuance of preferred stock could adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders. The presence of outstanding preferred stock could also have the effect of delaying, deterring, or preventing a change in control of our company.
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Series A Preferred Stock
On May 31, 2023, SecureTech’s Board of Directors created a new class of preferred stock designated as Series A Preferred Stock, $0.001 par value. SecureTech may issue up to 250,000 shares of Series A Preferred Stock with the following terms, rights, and privileges:
Designation and Amount |
| This class of preferred stock shall be designated Series A Preferred Stock (“Preferred Stock”), $0.001 par value. The Corporation’s Board of Directors may issue up to two-hundred fifty thousand (250,000) shares of this Preferred Stock. |
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Rank |
| The Preferred Stock shall rank superior to SecureTech’s common stock and all other classes, including currently outstanding or future preferred stock designations. |
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Dividends |
| The Preferred Stock is eligible for all legal dividends as may be approved by the SecureTech’s Board of Directors. If a dividend is declared across multiple classes of stock, the amount of any dividend to be received by holders of the Preferred Stock shall be calculated on a fully diluted, pro-rata basis with the other classes of stock participating in said dividend. |
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Voting Rights |
| Holders of the Preferred Stock shall have the right to vote on all matters with holders of common stock (and other eligible classes of preferred stock, if any) by aggregating votes into one (1) voting class of stock. Each share of Preferred Stock shall have ten thousand (10,000) votes for any election or other voting matter placed before the shareholders of SecureTech, regardless if the vote is taken with or without a shareholders’ meeting. Holders of the Preferred Stock may not cumulate their votes in any voting matter. |
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Redemption by SecureTech |
| After a minimum period of one (1) year from the date of issue SecureTech may, at its sole discretion, redeem some or all of the Preferred Stock in either cash (the then market value), SecureTech’s common stock at a fixed ratio of ten thousand (10,000) shares of common stock for each share of Preferred Stock redeemed, or a combination thereof. |
During the fiscal year ended December 31, 2023, SecureTech issued 3,200 Series A Preferred Stock shares pursuant to Share Exchange Agreements with four stockholders.
As of May 1, 2024, SecureTech had one class of preferred stock, Series A Preferred Stock, and 3,400 shares of it issued and outstanding.
Share Purchase Warrants
As of December 31, 2023, and May 1, 2024, we had no issued or outstanding stock purchase warrants.
Options
As of December 31, 2023, and May 1, 2024, we had no outstanding options to purchase shares of our stock.
Convertible Securities
As of December 31, 2023, and May 1, 2024, we had no convertible or derivative securities issued or outstanding.
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Shares Eligible for Future Sale
From time to time, certain of our stockholders may be eligible to sell some or all of their shares of our common stock through ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to Rule 144 volume, manner of sale, current public information, and notice requirements.
As of May 1, 2024, we had 78,071,881 shares of our common stock issued and outstanding. Of these shares currently issued and outstanding:
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| 21,531,226 are freely tradable without restrictions (commonly referred to as the “public float”); |
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| 55,000,000 held by affiliates and are subject to the restrictions and sale limitations imposed by Rule 144; and |
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| 1,540,655 held by non-affiliates and are subject to the restrictions and sale limitations imposed by Rule 144. |
The eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect the then-prevailing market prices for our securities and cause you to lose most, if not all, of your investment in our business.
Securities Authorized for Issuance Under Equity Compensation Plans
As of May 1, 2024, we did not have any authorized Equity Compensation Plans.
Transfer Agent
Globex Transfer, LLC
780 Deltona Blvd., Ste. 201
Deltona, FL 32725
(813) 344-4490 Phone
(386) 267-3124 Fax
www.globextransfer.com
Recent Sales of Unregistered Securities
Set forth below is information regarding the issuance and sales of securities without registration between January 1, 2020 through May 1, 2024.
Between February 19, 2020 and June 30, 2020, we issued an aggregate of 439,300 Units of our securities. Each Unit was comprised of the following securities:
Security Component |
| Warrant Exercise Price ($) |
| Warrant Expiration Date |
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One Share of Common Stock |
| Fully Paid and Non-Assessable |
| N/A |
One Purchase Warrant |
| $0.20 |
| December 31, 2021 |
One Purchase Warrant |
| $0.30 |
| March 31, 2022 |
One Purchase Warrant |
| $0.40 |
| June 30, 2022 |
One Purchase Warrant |
| $0.50 |
| December 31, 2022 |
These Units were sold to 12 investors in exchange for an aggregate of $65,894, or $0.15 a Unit, in cash. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
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Between April 14, 2021 and August 20, 2021, we issued an aggregate of 889,000 shares of common stock, $0.001 par value, to 37 investors in exchange for an aggregate of $222,250, or $0.25 a share, in cash. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On September 28, 2021, SecureTech canceled an aggregate of 58,000,000 shares of its common stock.
On December 31, 2021, a Warrant holder exercised 5,000 of his $0.20 Stock Purchase Warrants into 5,000 shares of SecureTech’s common stock. For this warrant exercise, the Warrant holder paid $1,000, or $0.20 a share.
On December 31, 2021, 434,300 outstanding $0.20 Stock Purchase Warrants expired unexercised.
On February 17, 2022, SecureTech canceled an aggregate of 1,700,000 shares of its common stock.
Between May 23, 2022 and June 30, 2022, SecureTech issued 113,500 shares of its common stock, $0.001 par value, to 21 investors in exchange for $113,500 in cash or $1.00 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On August 28, 2022, a Warrant holder exercised 6,000 of his $0.50 Stock Purchase Warrants into 6,000 shares of SecureTech’s common stock. For this warrant exercise, the Warrant holder paid $3,000, or $0.50 a share.
On September 28, 2022, SecureTech issued 7,716 shares of its common stock, $0.001 par value, to two investors in exchange for $13,503 in cash, or $1.75 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
Between October 10, 2022 and December 30, 2022, SecureTech issued 75,569 shares of its common stock, $0.001 par value, to seven investors in exchange for $101,995.75 in cash, or about $1.35 per Share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On February 27, 2023, SecureTech issued 11,428 shares of its common stock, $0.001 par value, to one investor in exchange for $20,000 in cash, or about $1.75 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipient of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On May 31, 2023, SecureTech canceled 25,000,000 shares of its outstanding common stock held by its President and CEO, Kao Lee, in exchange for the issuance of 2,500 shares of Series A Preferred Stock. This stock exchange was conducted pursuant to SecureTech’s Share Reduction Plan. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipient of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
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On July 10, 2023, SecureTech canceled an aggregate of 7,000,000 shares of its outstanding common stock held by three stockholders in exchange for the issuance of an aggregate of 700 shares of Series A Preferred Stock. This stock exchange was conducted pursuant to SecureTech’s ongoing Share Reduction Plan. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipients of securities in these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On August 8, 2023, SecureTech issued an aggregate of 5,714 shares of its common stock, $0.001 par value, to two investors in exchange for $10,000 in cash, or $1.75 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On September 5, 2023, SecureTech issued 3,428 shares of its common stock, $0.001 par value, to an investor in exchange for $6,000 in cash, or $1.75 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipient of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On November 18, 2023, SecureTech issued 3,000 shares of its common stock, $0.001 par value, to an investor in exchange for $5,250 in cash, or $1.75 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipient of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On January 16, 2024, SecureTech canceled 1,795,774 shares of its outstanding common stock held by a shareholder in exchange for the issuance of 200 shares of Series A Preferred Stock. This stock exchange was conducted pursuant to SecureTech’s Share Reduction Plan. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipient of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
On April 19, 2024, SecureTech issued 5,000 shares of its common stock, $0.001 par value, to an investor in exchange for $5,000 in cash, or $1.00 per share. The offers, sales, and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated under Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipient of securities in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During each month within the fourth quarter of the fiscal year ended December 31, 2023, neither we nor any “affiliated purchaser,” as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.
Item 6. [Reserved]
Not applicable.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes, and other information that are included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based on current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements due to a variety of factors, including without limitations those set forth under the cautionary note regarding “Forward-Looking Statements” contained elsewhere in this Annual Report. Additionally, you should read the “Risk Factors” section of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
SecureTech is an emerging growth company that develops and markets security and safety devices and technologies – our products preserve life, protect property, and prevent crime. SecureTech is the maker of Top Kontrol®, the only anti-theft and anti-carjacking system known that can safely stop a carjacking without any action by the driver. Through its Piranha Blockchain subsidiary, SecureTech is developing advanced cybersecurity technologies for blockchain and cryptocurrency systems and platforms involving cryptocurrency mining, digital asset storage and protection, and trading exchanges.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us upon which to evaluate our performance. We are an emerging business with limited operating history. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in marketing costs, increases in administrative expenditures associated with daily operations, increases in accounting and audit fees, and increases in legal fees related to filings and regulatory compliance.
As of December 31, 2023, we had incurred ($1,305,128) in losses since our inception on March 2, 2017. We have not achieved profitability and expect to continue incurring net losses into future fiscal periods. We anticipate incurring significant operating expenses and, as a result, will need to generate substantial revenues to achieve profitability, which may never occur. Even if we do achieve profitability, we may be unable to sustain or increase profitability on an ongoing basis, which could cause us to go out of business.
To become profitable and competitive, we must successfully sell our current product, Top Kontrol, and continue innovating and developing new products, technologies, and services that the marketplace will accept. We anticipate relying on equity sales of our common stock to continue to fund our business operations until we can generate sufficient revenues to cover our operating expenses, which may never happen. Issuances of additional shares will result in dilution to our then existing stockholders. There is no assurance that we will be able to make any additional sales of our equity securities or arrange for debt or other financings to fund our planned business activities. We may also rely on loans from our management or other significant shareholders. However, there are no assurances that management or any of our significant shareholders will provide us with any additional funds in the future.
We are continually exploring new financing sources to meet our need for additional cash, including raising funds through sales of our equity securities and loans. We cannot provide any assurances that our efforts to secure additional financing will be successful. We have no guarantee that future funding will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Further, future equity financing could result in additional and substantial dilution to existing shareholders.
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Results of Operations
Comparison of the Fiscal Years Ended December 31, 2023 and 2022
The following table sets forth the results of our operations for the fiscal years ended December 31, 2023 and 2022.
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| Fiscal Years Ended December 31, | ||
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2023 |
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2022 |
Sales | $ | 48,024 | $ | 46,803 |
Cost of goods sold |
| (12,429) |
| (12,674) |
Gross profit |
| 35,595 |
| 34,129 |
Operating expenses |
| (403,859) |
| (516,390) |
Loss from operations |
| (368,264) |
| (482,261) |
Other income (expense) |
| (206) |
| 1,334 |
Net loss | $ | (368,470) | $ | (480,927) |
Sales
Sales for the fiscal year ended December 31, 2023, were $48,024, compared to $46,803 for the same period of 2022, representing an increase of $1,221, or a 2.6% increase compared to the previous fiscal period. These sales were attributable to Top Kontrol and made by Kao Lee, our President and CEO. SecureTech anticipates bringing on new sales personnel during the fiscal year ending December 31, 2024 to accelerate Top Kontrol sales growth and allow Mr. Lee to focus more on research and development of new products and technologies.
Cost of Goods Sold
Our cost of goods sold consists primarily of purchasing components and circuitry from various vendors, and then utilizing third-party contract manufacturing facilities to produce our products with final assembly conducted at our Minnesota headquarters. Our cost of goods sold for the fiscal year ended December 31, 2023, was $12,429, compared to $12,674 for the same period of 2022. As a percentage of overall sales, the cost of goods sold was 25.9% during the fiscal year ended December 31, 2023, compared to 27.1% for the same fiscal period a year ago.
Gross Profit
Gross profit for the fiscal year ended December 31, 2023, was $35,595, compared to $34,129 for the same period of 2022. Our gross profit margin was 74.1% during the fiscal year ended December 31, 2023, compared to 72.9 % for the same fiscal period a year ago.
Operating Expenses
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| Fiscal Years Ended December 31, | |||
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2023 |
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2022 | |
Operating expenses: |
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| General and administrative | $ | 395,358 | $ | 504,316 |
| Research and development |
| 8,501 |
| 12,074 |
| Operating expenses | $ | 403,859 | $ | 516,390 |
Our operating expenses for the fiscal year consisted of two components: general and administrative expenses and research and development expenses. Total operating expenses were $403,859 during the fiscal year ended December 31, 2023, compared to $516,390 for the same period of 2022, representing a decrease in operating expenses of ($112,531), or (21.8%), from the fiscal year ended December 31, 2022. The decrease in operating expenses was primarily attributable to (i) reduced payroll expenses following the termination of non-performing sales personnel and (ii) increases in legal, accounting, and regulatory compliance expenses, which are expected to continue rising on an annual basis.
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Loss From Operations
As a result of the foregoing, our loss from operations was ($368,264) during the fiscal year ended December 31, 2023, compared with ($482,261) for the same period of 2022. This ($113,997), or (23.6%), decrease in our loss from operations was primarily attributable to (i) reduced payroll expenses following the termination of non-performing sales personnel and (ii) increases in legal, accounting, and regulatory compliance expenses, which are expected to continue rising on an annual basis.
Other Income (Expense)
Our other income (expense) is comprised of bank interest received on cash deposits, cashback rewards generated from a bank credit card, and finance charges incurred on carried outstanding balances on our bank credit card. During the fiscal year ended December 31, 2023, we incurred ($206) in other income (expense), compared to $1,334 for the same period of 2022.
Net Loss
The result was that our net loss was ($368,470) during the fiscal year ended December 31, 2023, compared with ($480,927) for the same period of 2022. This ($112,457), or (23.4%), decrease in our net loss was primarily attributable to (i) reduced payroll expenses following the termination of non-performing sales personnel and (ii) increases in legal, accounting, and regulatory compliance expenses, which are expected to continue rising on an annual basis.
Total Stockholders’ Equity (Deficit).
Our stockholders’ deficit was ($148,871) as of December 31, 2023.
Liquidity and Capital Resources
Our principal demands for liquidity are related to our efforts to generate sales, manufacture inventory, and expenditures related to sales, regulatory compliance, and general corporate purposes. We intend to meet our liquidity demands, including capital expenditures related to the manufacture of inventory and the expansion of our business, primarily through cash flow provided by operations and sales of our securities.
As of December 31, 2023, we had a cashback revolving credit line of $15,000. As of December 31, 2023, we had an outstanding balance of $14,564 on this credit line. Under the terms of this line of credit, SecureTech is to receive 1.5% back on all purchases made through this credit line. Management strives to put as many ordinary operating expenses as possible through this credit line to reduce operating expenses passively.
We rely primarily on internally generated cash flow and available working capital to support operations and growth. Although we believe that our current cash and anticipated cash receipts from sales of Top Kontrol will be sufficient to meet our planned working capital requirements and capital expenditures over the next 12 months, we are constantly exploring additional sources of new capital. Without limiting our available options, future financings will most likely be through the sale of additional shares of our common stock. We may also include warrants, options, and/or rights in conjunction with any future issuances of our common stock. However, we can give no assurance that future financing will be available to us and, if available to us, in amounts or on terms acceptable to us.
We had a net working capital deficit of ($152,357) as of December 31, 2023, a decrease of ($323,307), or (189.1%), from net working capital of $170,950 as of December 31, 2023.
The following is a summary of cash provided by or used in each of the indicated types of activities during the fiscal years ended December 31, 2023 and 2022:
| Fiscal Years Ended December 31, | |||
| 2023 |
| 2022 | |
Cash provided by (used in): |
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| |
| Operating activities | ($173,581) |
| ($301,891) |
| Investing activities | $ - |
| ($5,818) |
| Financing activities | $41,250 |
| $232,001 |
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Net cash used in operating activities during the fiscal year ended December 31, 2023 was ($173,581), a decrease of ($128,310), or (42.5%), from cash used in operating activities of ($301,891) during the same period of 2022. The decrease in our cash used by operating activities was primarily attributable to (i) reduced payroll expenses following the termination of non-performing sales personnel and (ii) increases in legal, accounting, and regulatory compliance expenses, which are expected to continue rising on an annual basis.
Net cash used in investing activities was $-0- during the fiscal year ended December 31, 2023, compared to ($5,818) used during the same period in 2022.
Net cash provided by financing activities was $41,250, a decrease of ($190,751), or (82.2%), from cash generated from financing activities of $232,001 during the same period of 2022. During the fiscal year ended December 31, 2023, we issued an aggregate of 23,570 shares of our common stock in exchange for an aggregate of $41,250 in cash, or about $1.75 a share, compared to the same period in 2022, where we sold an aggregate of 188,785 shares for an aggregate of $225,001 in cash, or about $1.19 a share.
Ongoing and Future Capital Funding Efforts
As of May 1, 2024, SecureTech was planning a Regulation A+ registered securities offering. Any funds generated from this planned securities offering will be used for general working capital and to construct Piranha Blockchain’s first hydroelectric-powered green data center. SecureTech can give no assurances this planned Regulation A+ offering will generate sufficient new capital to enable SecureTech to satisy its planned 2024 capital expenditures.
Going Concern Consideration
Our independent registered public accounting firm has issued a going concern opinion in their audit report dated May 1, 2024, which can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 1, 2024. This means that our auditors believe there is substantial doubt that we can continue as an ongoing business for the next 12 months.
Off-Balance Sheet Operations
As of December 31, 2023, we had no off-balance sheet activities or operations.
Critical Accounting Policies
Use of Estimates
The accompanying financial statements of SecureTech have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities depends on future events, the preparation of financial statements for a period necessarily involves the use of estimates made using careful judgment. Actual results may vary from these estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, SecureTech considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. As of December 31, 2023 and 2022, SecureTech had no cash equivalents.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
33
Level |
| Description |
|
|
|
Level 1 |
| Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
Level 2 |
| Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by observable market data. |
Level 3 |
| Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
Inventory and Cost of Sales
Inventories are stated at the lower of cost or realizable value, using the weighted average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, Management reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage, and a firm commitment to sell.
Net Loss per Share Calculation
Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated similarly to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. SecureTech excludes all potentially dilutive securities from its diluted net loss per share computation since their effect would be anti-dilutive because SecureTech recorded a loss for the fiscal years ended December 31, 2023 and 2022.
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers.
SecureTech’s primary source of revenue is from the sale of our Top Kontrol product.
Top Kontrol requires installation by a Certified Top Kontrol Technician. To become a Certified Top Kontrol Technician, an automotive technician must complete a free online course through the Top Kontrol website (www.topkontrol.com). Failure to have Top Kontrol installed by a Certified Top Kontrol Technician voids the product’s limited liability warranty.
Because of this professional installation requirement, SecureTech generally sells its products to and through Certified Top Kontrol Technicians and Authorized Dealers. When SecureTech sells directly to the end user, product installation still must be performed by authorized SecureTech personnel.
Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied. Revenue is recorded net of marketing allowances, volume discounts, and other forms of variable consideration. Generally, this occurs with the transfer of control of our product to the customer and payment has been received. SecureTech does not offer terms or credit to any of its customers.
Revenue Recognition; ASC 606 Five-Step Model
Under ASC 606, SecureTech recognizes revenue from the sale of service contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
34
Revenue Recognition; General Right of Return
Customers are allowed to return goods that are defective (warranty returns). In some instances, customers may be allowed to return a limited number of units for periodic stock adjustment returns. Such stock adjustment returns would be limited to no more than 5% of their total units sold.
As is standard in the industry, we only will accept returns from active customers. If a customer ceases doing business with us, we have no further obligation to accept additional product returns from that customer.
Income Taxes
SecureTech accounts for income taxes pursuant to FASB ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
SecureTech maintains a valuation allowance with respect to deferred tax assets. SecureTech establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration SecureTech’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as SecureTech generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Recent Accounting Pronouncements
There are various updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on SecureTech’s financial position, results of operations, or cash flows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
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Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of SecureTech Innovations, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of SecureTech Innovations, Inc. (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered net losses from operations and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
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financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Going Concern
As discussed in Note 2 to the consolidated financial statement, the Company had a going concern due to continual losses from operations and an accumulated deficit.
Auditing management’s evaluation of a going concern can be a significant judgment given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.
To evaluate the appropriateness of the going concern, we examined and evaluate the financial information that was the initial cause along with management’s plans to mitigate the going concern and management’s disclosure on going concern.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2017.
Firm ID
May 1, 2024
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SECURETECH INNOVATIONS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Current assets: | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Inventories | ||||||||
| Deposits | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | $ | $ | ||||||
| Total assets: | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Credit cards payable | ||||||||
| Accrued payroll | ||||||||
| Taxes payable | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value, shares authorized; and -- shares issued and outstanding, respectively | ||||||||
| Common stock, par value, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes to the financial statements are an integral part of these statements.
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SECURETECH INNOVATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues: | ||||||||
| Sales | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Expenses: | ||||||||
| General and administrative | $ | $ | ||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| (Loss) from operations | $ | ( | ) | $ | ( | ) | ||
| Other income (expense) | $ | ( | ) | $ | ||||
| Provision for income taxes | $ | $ | ||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
Loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||
The accompanying notes to the financial statements are an integral part of these statements.
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SECURETECH INNOVATIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the period from December 31, 2021 to December 31, 2023
| Series A | Additional | Accumulated | ||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid In | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance, December 31, 2021 | — | $ | $ | ($ | ) | $ | ||||||||||||||||||||||
| Issuance of common shares for cash | — | |||||||||||||||||||||||||||
| Cancellation of common shares | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Exercise of warrants into common shares | — | |||||||||||||||||||||||||||
| Stock option expense | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2022 | — | $ | $ | $ | ($ | ) | $ | |||||||||||||||||||||
| Issuance of common shares for cash | — | |||||||||||||||||||||||||||
| Share exchange – related party | ( | ) | ( | ) | ||||||||||||||||||||||||
| Share exchange – unrelated | ( | ) | ( | ) | ||||||||||||||||||||||||
| Patent royalty contribution | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
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SECURETECH INNOVATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the fiscal year ended December 31, | |||||||||
| 2023 | 2022 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net (loss) to net cash used in operating activities: | |||||||||
| Depreciation | |||||||||
| Loss on disposal of assets | |||||||||
| Stock option expense | |||||||||
| Patent royalty expense | |||||||||
| Changes in operating assets and liabilities: | |||||||||
| Decrease (increase) in inventories | |||||||||
| Increase (decrease) in accounts payable | |||||||||
| Increase (decrease) in credit cards payable | |||||||||
| Increase (decrease) in accrued payroll | |||||||||
| Decrease (increase) in deposits | ( | ) | |||||||
| Increase (decrease) in taxes payable | ( | ) | |||||||
| Net cash used in operating activities | ( | ) | ( | ) | |||||
| Cash flows from investing activities: | |||||||||
| Acquisition of office equipment | $ | $ | ( | ) | |||||
| Net cash used in investing activities | $ | $ | ( | ) | |||||
| Cash flows from financing activities: | |||||||||
| Issuance of common stock for cash | $ | $ | |||||||
| Exercise of $0.50 warrants into common shares for cash | |||||||||
| Net cash provided by financing activities | $ | $ | |||||||
| Net increase (decrease) in cash | ( | ) | ( | ) | |||||
| Cash – beginning of period | |||||||||
| Cash – end of period | $ | $ | |||||||
| Cash paid for interest | $ | $ | |||||||
| Non-cash financing activities: | |||||||||
| Exchange of common shares for preferred shares – related party | |||||||||
| Exchange of common shares for preferred shares – unrelated | |||||||||
| Cancellation of common shares | |||||||||
| $ | 32,000 | $ | 1,700 | ||||||
The accompanying notes to the financial statements are an integral part of these statements.
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SECURETECH INNOVATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
NOTE 1 – Summary of Significant Accounting Policies
Organization
SecureTech Innovations, Inc. (“Company” or “SecureTech”) was incorporated under the laws of the State of Wyoming on March 2, 2017, under the name SecureTech, Inc. The Company amended its Articles of Incorporation on December 20, 2017, to change its name to SecureTech Innovations, Inc. On November 19, 2021 and November 25, 2021, SecureTech incorporated wholly-owned subsidiaries Piranha Blockchain, Inc. under the laws of the State of Wyoming and Piranha Blockchain, Ltd. under the International Business Company (IBC) laws of Anguilla, British West Indies, respectively (collectively, “Piranha”).
SecureTech is an emerging company focused on developing and marketing advanced security and safety technologies. SecureTech’s products preserve life, protect property, and prevent crime. Under the Top Kontrol brand, SecureTech currently sells the world’s only anti-theft and anti-carjacking automobile security and safety system. Under its wholly-owned Piranha subsidiaries, SecureTech intends to develop and acquire secure green energy data centers, advanced cybersecurity technologies, and blockchain and cryptocurrency systems and platforms for mining, storage, and trading exchanges.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) for financial information and in accordance with the Securities and Exchange Commission’s (“SEC”) Regulation S-X. They reflect all adjustments that are, in the opinion of the Company’s management, necessary for a fair presentation of the financial position and operating results as of and for the fiscal periods ended December 31, 2023, and 2022.
Use of Estimates
The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities depends on future events, the preparation of financial statements for a period necessarily involves the use of estimates made using careful judgment. Actual results may vary from these estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. As of December 31, 2023 and 2022, the Company had no cash equivalents.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level |
| Description |
|
|
|
Level 1 |
| Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
Level 2 |
| Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
Level 3 |
| Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
Inventory and Cost of Sales
Inventories are stated at the lower of cost or realizable value, using the weighted average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage, and a firm commitment to sell.
Deposits
Refundable deposits are carried on the Company’s balance sheet at their fair market refundable value under current assets.
Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated similarly to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. SecureTech excludes all potentially dilutive securities from its diluted net loss per share computation since their effect would be anti-dilutive because SecureTech recorded a loss for the fiscal years ended December 31, 2023 and 2022. The Company had no dilutive securities outstanding as of December 31, 2023 and 2022.
Property and Equipment and Depreciation
Property and equipment are recorded at cost and are depreciated using the straight-line method over their estimated useful lives in years as follows:
Computer software and equipment | - |
|||
Furniture, fixtures, and equipment | - |
|||
Leasehold improvements | Life of Lease | |||
Repair and maintenance costs are expensed as incurred. Costs associated with improvements that extend the life, increase the capacity, or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on the disposition of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets.
Depreciation expenses totaled $
| December 31, | ||||||||||||
| 2023 | 2022 | Accumulated Depreciation | ||||||||||
| Computer software and equipment | $ | $ | $ | |||||||||
| Furniture, fixtures, and equipment | — | |||||||||||
| Leasehold improvements | — | |||||||||||
| $ | $ | $ | ||||||||||
Revenue Recognition
The Company’s primary source of revenue is from the sale of our Top Kontrol product.
Top Kontrol requires installation by a Certified Top Kontrol Technician. To become a Certified Top Kontrol Technician, an automotive technician must complete a free online course through the Top Kontrol website (www.topkontrol.com). Failure to have Top Kontrol installed by a Certified Top Kontrol Technician voids the product’s limited liability warranty. Top Kontrol’s warranty allows the Company to repair or replace any defective Top Kontrol parts – in either materials or workmanship – for up to six months from the original date of purchase.
Because of this professional installation requirement, the Company sells its products to and through Authorized Dealers and independent Certified Top Kontrol Technicians. When the Company sells directly to the end-user, product installation must be performed by authorized Company personnel or a third-party Certified Top Kontrol Technician to avoid voiding the Top Kontrol limited liability warranty.
Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied. Revenue is recorded net of marketing allowances, volume discounts, and other forms of variable consideration. Generally, this occurs with the transfer of control of our product to the customer and payment has been received. The Company does not offer terms or credit to any of its customers.
Revenue Recognition; ASC 606 Five-Step Model
Under ASC 606, the Company recognizes revenue from the sale of service contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Revenue Recognition; General Right of Return
Customers are allowed to return goods that are defective (warranty returns). In some instances, customers may be allowed to return a limited number of units for periodic stock adjustment returns. Such stock adjustment returns would be limited to no more than 5% of their total units sold.
As is standard in the industry, we only will accept returns from active customers. If a customer ceases doing business with us, we have no further obligation to accept additional product returns from that customer.
Revenue Recognition; Concentration
As of December 31, 2023, the Company had two customers who are Authorized Dealers, each comprised in excess of 10% of the Company’s overall revenue. In aggregate, these two dealers represented 54.3% of the Company’s revenue for the fiscal year ended December 31, 2023.
Income Taxes
The Company accounts for income taxes pursuant to FASB ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for
income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the following majority-owned subsidiaries in December 31, 2023:
| Subsidiary | Percentage Owned | |||
| Piranha Blockchain, Inc. | 100.0 | % | ||
| Piranha Blockchain, Ltd. | 100.0 | % | ||
Advertising Costs
The Company's advertising costs consist primarily of digital and Internet marketing. Advertising costs are expensed as incurred. Advertising costs totaled $43,419 and $15,612 for the fiscal years ended December 31, 2023, and 2022, respectively.
Fiscal Year
The Company elected December 31st for its fiscal year-end.
Recent Accounting Pronouncements
There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 2 – GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements during the fiscal year ended December 31, 2023, the Company has not established a source of revenues sufficient to cover its operating costs. As such, it has incurred an operating loss since its inception. Further, as of December 31, 2023, the Company had an accumulated deficit of ($
The Company’s existence depends on management’s ability to develop profitable operations and obtain additional financing sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or resolve the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
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NOTE 3 – INVENTORIES
Inventory is stated at the lower of cost or realizable value, using the weighted average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are,
among others, obsolescence, decrease in market prices, damage, and a firm commitment to sell. The following table summarizes the Company’s inventories as of December 31, 2023 and 2022:
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Inventories: | ||||||||
| Raw materials and work-in-progress | $ | $ | ||||||
| Finished goods | ||||||||
| Gross inventories | ||||||||
| Inventory valuation reserves | ||||||||
| Inventories, net | $ | $ | ||||||
NOTE 4 – INCOME TAXES
The provision (benefit) for income taxes for the years ended December 31, 2023 and 2022 were as follows, assuming a 21% effective tax rate:
| For the fiscal year ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Current tax provision: | ||||||||
| Federal | ||||||||
| Taxable income | $ | — | $ | — | ||||
| Total current tax provision | $ | — | $ | — | ||||
| Deferred tax provision: | ||||||||
| Federal | ||||||||
| Loss carryforwards | $ | $ | ||||||
| Change in valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax provision | $ | — | $ | — | ||||
As of December 31, 2023, the Company had approximately $
The Company provided a valuation allowance equal to the deferred income tax assets for the period from March 2, 2017 (inception) to December 31, 2023, because it is not presently known whether future taxable income will be sufficient to utilize the tax loss carryforwards.
The Company has no uncertain tax positions.
NOTE 5 – STOCKHOLDERS’ EQUITY
Preferred stock
The Company has authorized shares of preferred stock, par value. The Company’s Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges, and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, and sinking fund terms.
On May 31, 2023, the Company’s Board of Directors created a new class of preferred stock designated as Series A Preferred Stock, par value. The Company may issue up to shares of Series A Preferred Stock with the following terms, rights, and privileges:
Designation and Amount |
| This class of preferred stock shall be designated Series A Preferred Stock (“Preferred Stock”), $0.001 par value. The Corporation’s Board of Directors may issue up to two-hundred fifty thousand (250,000) shares of this Preferred Stock. |
|
|
|
Rank |
| The Preferred Stock shall rank superior to the Corporation’s common stock and all other classes, including currently outstanding or future preferred stock designations. |
|
|
|
Dividends |
| The Preferred Stock is eligible for all legal dividends as may be approved by the Corporation’s Board of Directors. If a dividend is declared across multiple classes of stock, the amount of any dividend to be received by holders of the Preferred Stock shall be calculated on a fully diluted, pro-rata basis with the other classes of stock participating in said dividend. |
|
|
|
Voting Rights |
| Holders of the Preferred Stock shall have the right to vote on all matters with holders of common stock (and other eligible classes of preferred stock, if any) by aggregating votes into |
|
|
|
Redemption by the Company |
| After a minimum period of one (1) year from the date of issue the Company may, at its sole discretion, redeem some or all of the Preferred Stock in either cash (the then market value), the Company’s common stock at a fixed ratio of ten thousand (10,000) shares of common stock for each share of Preferred Stock redeemed, or a combination thereof. |
During the fiscal year ended December 31, 2023, the Company issued 3,200 Series A Preferred Stock shares pursuant to Share Exchange Agreements with four stockholders.
As of December 31, 2023, the Company had one class of preferred stock, Series A Preferred Stock, and shares of it issued and outstanding.
Common stock
The Company has authorized shares of common stock, with a par value of per share.
Share Issuances
During the fiscal ended December 31, 2023, the Company sold an aggregate of shares of its common stock, par value, in exchange for $
Share Exchange and Cancellations
During the fiscal year ended December 31, 2023, the Company entered into a series of Share Exchange Agreements whereby it issued
All of the shares of common stock received in this stock exchange were subsequently canceled. No consideration was paid or received in connection to the share exchange.
As of December 31, 2023, the Company had shares of common stock issued and outstanding.
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Table of ContentsIndex to Financial Statements
NOTE 6 – WARRANTS
As of December 31, 2023, the Company had no warrants issued or outstanding.
NOTE 7 – STOCK OPTIONS
As of December 31, 2023, the Company had no stock options issued or outstanding.
NOTE 8 – RELATED PARTY TRANSACTIONS
Founder’s Shares
On March 2, 2017, the Company issued an aggregate of shares of its common stock, par value, as Founder’s Shares with $-- value.
Of these Founder’s Shares, were issued to the Company’s officers, to an entity controlled by one of the Company’s directors, and to outside consultants who assisted with the Company’s formation and early organization.
Share Exchange and Cancellations
During the fiscal year ended December 31, 2023, the Company entered into a Share Exchange Agreement with its President and CEO, Kao Lee, whereby it issued 2,500 shares of its Series A Preferred Stock in exchange for an aggregate of 25,000,000 shares of its common stock. The common shares tendered by Mr. Lee were canceled and returned to the Company’s Treasury.
Accrued Payroll
As of December 31, 2023, the Company had aggregated $
Patent Royalties
On March 2, 2017, SecureTech entered into a Patent License Agreement with Shongkawh, LLC, which is controlled by our executive officers Kao Lee and Anthony Vang (and directly owned by Mr. Lee and his brother, Thao Lee). Under this agreement, ShongKawh is to receive a royalty of 2% of all products manufactured under this covered patent.
As of December 31, 2023, ShongKawh accrued $
NOTE 9 – CONTINGENCY/LEGAL
As of December 31, 2023, and during the past ten years, no director, person nominated to become a director, executive officer, or promoter of SecureTech has been involved in any legal proceeding that would require disclosure hereunder.
From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the ultimate outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to our business. We currently are not a party to any claim or litigation.
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Table of ContentsIndex to Financial Statements
NOTE 10 – SUBSEQUENT EVENTS
Common Stock Issuance
On April 19, 2024, the Company sold an aggregate of shares of its common stock, $0.001 par value, in exchange for $
Common Stock Repurchase
On January 30, 2024, the Company repurchased shares of its common stock, $0.001 par value, in exchange for $
As of May 1, 2024, the shares have yet to be transferred to the Company. When the share transfer is completed, the Company intends to cancel the shares and return them to the Treasury.
Share Exchange and Cancellations
On January 16, 2024, a shareholder entered into a Share Exchange Agreement whereby the Company issued shares of its Series A Preferred Stock in exchange for shares of its common stock. These shares of common stock were canceled and returned to the Company’s Treasury.
As of May 1, 2024, the Company had shares of common stock issued and outstanding.
As of May 1, 2024, the Company had one class of preferred stock, Series A Preferred Stock, with shares of it issued and outstanding.
No other material events or transactions have occurred during this subsequent event reporting period that required recognition or disclosure in the financial statements.
[This space intentionally left blank]
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC.
In accordance with Rule 13a-15(b) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out under the supervision and with the participation of our Management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to assess the effectiveness of our disclosure controls and procedures as of December 31, 2023. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our Management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure due to a material weakness.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in SecureTech’s annual or interim financial statements will not be prevented or detected on a timely basis.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this report. Management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In designing and evaluating our internal control over financial reporting and related procedures, Management recognizes that because of inherent limitations, any controls and procedures, no matter how well designed and operated, may not prevent or detect misstatements and can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of internal control over financial reporting procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on Management’s assessment, we have concluded that, as of December 31, 2023, our internal control over financial reporting was not effective in timely alerting Management to the material information relating to us required to be included in our annual and interim filings with the SEC.
Management has concluded that our internal control over financial reporting had the following material weaknesses:
• |
| SecureTechs's system of internal controls failed to identify multiple journal entries that were identified by the SecureTech's external auditor; |
|
|
|
• |
| SecureTech has no formal control process related to the identification and approval of related party transactions; |
|
|
|
• |
| SecureTech could not maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function; |
|
|
|
• |
| SecureTech lacks sufficient resources to perform the internal audit function and does not have an Audit Committee; |
|
|
|
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• |
| We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert to SecureTech. The Board of Directors is comprised of two (2) members, both of whom also serve as executive officers. As a result, there is a lack of independent oversight of the management team, a lack of independent review of our operating and financial results, and a lack of independent review of disclosures made by SecureTech; and |
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|
|
• |
| Documentation of all proper accounting procedures is not yet complete. |
These weaknesses have existed since SecureTech’s inception on March 2, 2017, and have not been remedied as of December 31, 2023.
Management believes in order to cure the aforementioned material weaknesses, SecureTech needs to take the following steps:
• |
| Consider the engagement of outside consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have effective control over financial statement disclosures; |
|
|
|
• |
| Hire additional qualified financial personnel, including a seasoned Chief Financial Officer, on a full-time basis; |
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|
|
• |
| Expand our current board of directors to include additional independent individuals willing to perform directorial functions; and |
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|
|
• |
| Increase our workforce to accommodate growing sales and higher volumes. |
Management believes that effectively addressing these material weaknesses would require adding a minimum of three independent board members and one executive financial officer who is independent and not a board member. Management estimates the minimum annual expense to SecureTech to retain qualified personnel to fill these vacant roles to be at least $650,000 annually, possibly even more.
Because the aforementioned remedial actions require hiring additional personnel at a substantial cost, these material weaknesses can be expected to remain unremediated until SecureTech can generate sufficient revenues and/or raise significant outside funding necessary to remedy these material weaknesses. Until such remedial actions can be realized, we will continue to rely on the limited advice of outside professionals and consultants.
Changes in Controls and Procedures
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that has materially affected or is reasonably likely to affect our internal control over financial reporting materially.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Our executive officers and directors and their respective ages as of the date of this Annual Report are as follows:
Name | Age | Position |
|
|
|
Kao Lee | 54 | President, Chief Executive Officer, and Director |
Anthony Vang | 52 | Treasurer, Secretary, and Director |
Abdikarim H. Farah | 53 | Vice President |
Kao Lee is a co-founder and has served as our President, Chief Executive Officer, and member of our Board of Directors since our inception in March 2017. Until 2021, Mr. Lee concurrently served as the President and Chief Executive Officer of Shongkawh, LLC (since its inception in 2009 through 2021), a research and development firm focused on personal and automobile security and safety devices and technologies. At Shongkawh, Mr. Lee’s responsibilities included directing technological development, overseeing product marketing and promotion phases, and facilitating international relationships with technology buyers, particularly in Asia and Europe. Now he focuses exclusively on SecureTech’s business.
Mr. Lee is not currently an officer or director of any other reporting company and presently devotes 100%, or 40 to 45 hours per week, of his business time to our affairs.
Anthony Vang is a co-founder and has served as our Treasurer, Secretary, and member of our Board of Directors since our inception in March 2017. Mr. Vang concurrently serves as a Director of Shongkawh, LLC (since its inception in 2009), a research and development firm focused on personal and automobile security and safety devices and technologies.
Before co-founding SecureTech and Shongkawh, Mr. Vang served as a Director of Evergreen Home Healthcare Company from 2005 through 2009. At Evergreen, he assisted with obtaining regulatory licenses, procuring new business and contracts, and overseeing the company's general management.
Mr. Vang is not currently an officer or director of any other reporting company. He intends to devote approximately 50%, or 20 to 25 hours per week, of his business time to our affairs.
Abdikarim H. Farah has served as a Vice President since our inception in March 2017. Mr. Farah is concurrently a Senior Representative at African Resource Group, Inc., a position he has held since 2015.
Before joining African Resource Group and SecureTech, Mr. Farah founded Addan & Associates, LLC in 2005, a Minnesota-based consulting firm that mentors and coaches both businesses and individuals in sales and marketing strategies. Mr. Farah continues to provide these consulting services through Addan & Associates.
In addition to the preceding, Mr. Farah has worked in the health care field as a Senior Pharmacy Tech at Walgreens Pharmacy between 1997 and 2000. He also worked at the Minnesota General Hospital Hennepin County Medical Center pharmacy department between 1999 and 2014 as a Senior Pharmacy Technician and Customer Representative.
Mr. Farah is not currently an officer or director of any other reporting company. He intends to devote approximately 25%, or 5 to 10 hours per week, of his business time to our affairs.
Term of Office
Our directors are appointed for a one-year term to hold office until our shareholders' next annual general meeting or until removed from office in accordance with our Bylaws. Our Board of Directors appoints our officers who hold office until removed by the Board.
Family Relationships
There are no family relationships between or among the directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.
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Corporate Governance
Our Board of Directors has not established any committees, including an audit committee, a compensation committee, a nominating committee, or any committee performing a similar function. The functions of those committees are being undertaken by our Board of Directors. Because we do not have any independent directors, our Board of Directors believes that the establishment of committees of our Board of Directors would not provide any benefits to SecureTech and could be considered more form than substance.
Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the foreseeable future. While there have been no nominations for additional directors proposed, in the event such a proposal is made, all current members of our Board of Directors will participate in the consideration of director nominees.
As with most small, early-stage companies, until such time as SecureTech further develops its business, achieves a significant revenue base, and has sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate prospects to attract independent directors. When we can justify expanding our Board of Directors to include one or more independent directors, we intend to establish an audit committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that requires a majority of our Board of Directors members to be independent, and we are not currently otherwise subject to any law, rule, or regulation requiring that any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committee of our Board of Directors.
Audit Committee Financial Expert
Our Board of Directors does not currently have any member who qualifies as an audit committee financial expert. We believe that the cost of retaining such a financial expert at this time is prohibitive. Further, because we are a smaller reporting company, we believe the services of an audit committee financial expert are not necessary at this time.
Director Independence
None of the members of our Board of Directors qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our Board of Directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directors made these determinations, our Board of Directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.
In performing the functions of the audit committee, our Board of Directors oversees our accounting and financial reporting process. In this function, our Board of Directors performs several functions. Our Board of Directors, among other duties, evaluates and assesses the qualifications of SecureTech’s independent auditors; determines whether to retain or terminate the existing independent auditors; meets with the independent auditors and financial management of SecureTech to review the scope of the proposed audit and audit procedures on an annual basis; reviews and approves the retention of independent auditors for any non-audit services; reviews the independence of the independent auditors; reviews with the independent auditors and with SecureTech’s financial accounting personnel the adequacy and effectiveness of accounting and financial controls and considers recommendations for improvement of such controls; reviews the financial statements to be included in our annual and quarterly reports filed with the Securities and Exchange Commission; and discusses with SecureTech’s management and the independent auditors the results of the annual audit and the results of our quarterly financial statements.
Our Board of Directors as a whole considers executive officer compensation, and our entire Board of Directors participates in the consideration of director compensation. Our Board of Directors as a whole oversees our compensation policies, plans and programs, reviews and approves corporate performance goals and objectives relevant to the compensation of our executive officers, if any, and administers our equity incentive and stock option plans, if any.
54
Each of our directors participates in the consideration of director nominees. In addition to nominees recommended by directors, our Board of Directors will consider nominees recommended by shareholders if submitted in writing to our corporate secretary. Our Board of Directors believes that any candidate for director, whether recommended by shareholders or by the Board of Directors, should be considered on the basis of all factors relevant to our needs and the credentials of the candidate at the time the candidate is proposed. Such factors include relevant business and industry experience and demonstrated character and judgment.
Involvement in Legal Proceedings
None of our officers or directors – past or present – have appeared as a party to any legal proceedings during the past ten (10) years that may interfere with their ability or integrity to serve as an officer or a director of SecureTech.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to all our directors, officers (including our principal executive officer and our principal financial officer), and employees. The Code of Ethics is designed to deter wrongdoing, and to promote, among other things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to the SEC, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations of the Code of Ethics, and accountability for adherence to the Code of Ethics. A copy of our Code of Ethics may be obtained at no charge by sending a written request to our Corporate Secretary at 2355 Highway 36 W, Suite 400, Roseville, MN 55113.
Potential Conflict of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that such committees would have performed are currently performed by our Board of Directors. Thus, there is a potential conflict of interest in that our officers and directors have the authority to determine issues concerning management compensation, including their own personal compensation package and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with our officers and directors.
Board of Directors Role in Risk Oversight
The Board of Directors assesses on an ongoing basis the risks faced by SecureTech. These risks include financial, technological, competitive, and operational risks. The Board of Directors dedicates time at each of its meetings to review and consider the relevant risks faced at that time. Additionally, since SecureTech does not have an Audit Committee, the Board of Directors is also responsible for assessing and overseeing SecureTech’s financial risk exposures.
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires SecureTech’s executive officers, directors, and persons who own more than 10% of a registered class of SecureTech's equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership, and annual reports concerning their ownership of common stock and other equity securities of SecureTech on Form(s) 3, 4, and 5, respectively. Executive officers, directors, and greater than 10% shareholders are required by SEC regulations to furnish SecureTech with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that for the fiscal year ended December 31, 2023, all filing requirements applicable to our officers, directors, and greater than 10% percent beneficial owners were complied with and that there were no deficiencies.
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Item 11. Executive Compensation
The following table provides information regarding the compensation awarded to, or earned by, our named executive officers for fiscal years ended December 31, 2023 and 2022.
Summary Compensation Table
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Name and Principal Position |
Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Totals ($) |
Kao Lee, President, CEO, and Director |
2023 2022 |
56,333 52,000 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
17,333 52,000 |
Anthony Vang, Treasurer, Secretary, and Director |
2023 2022 |
28,167 26,000 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
8,666 26,000 |
Abdikarim Farah, Vice President |
2023 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
Employment Agreements
We have not entered into any employment agreements with any of our officers or directors. As of the date of this Annual Report, we had no employees other than those listed above. All future employment arrangements are subject to the discretion of our Board of Directors.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as an incentive for performance.
Outstanding Equity Awards at the End of the Fiscal Year
We do not have and have never had any equity compensation plans, and therefore, no equity awards are outstanding as of the date of this registration statement.
Bonuses and Deferred Compensation
We may pay bonuses as determined by the Board of Directors from time to time based on performance, which may either be paid in stock or cash at the Board's discretion.
Options and Stock Appreciation Rights
We do not currently have a stock option or other equity incentive plan. We may adopt one or more such programs in the future.
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Payment of Post-Termination Compensation
We do not have change-in-control agreements with any of our directors or executive officers. We are not obligated to pay severance or other enhanced benefits to executive officers upon the termination of their employment.
Director Compensation
We have no plans to begin paying our directors any cash compensation until our business becomes operationally profitable. However, we may reimburse our directors for any out-of-pocket travel and lodging expenses associated with their attendance at Board of Directors meetings.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of May 1, 2024, certain information as to shares of our common stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.
Unless otherwise noted, each shareholder's mailing address is 2355 Highway 36 West, Suite 400, Roseville, MN 55113.
Name of Beneficial Owner | Shares of Common Stock | Percentage of Class (1) |
|
|
|
Officers and Directors |
|
|
Kao Lee, President, CEO, and Director |
44,000,000 |
56.4% |
Anthony Vang, Treasurer, Secretary, and Director |
10,000,000 |
12.8% |
Abdikarim Farah, Vice President |
1,000,000 |
1.3% |
All officers and directors as a group (3 persons) |
55,000,000 |
70.5% |
|
|
|
Five Percent Stockholders |
|
|
Kue and Jay Xiong |
5,000,000 |
6.4% |
(1)Based on78,071,881 shares issued and outstanding as of May 1, 2024.
Securities Authorized for Issuance Under Equity Compensation Plans
As of December 31, 2023, we did not have any authorized Equity Compensation Plans. Further, we have no plans to create any plans during the fiscal year ending December 31, 2024.
Changes in Control
We are unaware of any contract or other arrangement that could result in a change of control of SecureTech.
Item 13. Certain Relationships and Related Transactions, and Director Independence
We do not have a formal written policy for the review and approval of transactions with related parties. However, our Code of Ethics and Corporate Governance Principles require actual or potential conflicts of interest to be reported to our executive officers and/or legal counsel. Our employees are expected to disclose personal interests that may conflict with ours, and they may not engage in personal activities that conflict with their responsibilities and obligations to us. Periodically, we inquire as to whether or not any of our directors have entered into any transactions, arrangements, or relationships that constitute related
57
party transactions. If any actual or potential conflict of interest is reported, our entire Board of Directors and outside legal counsel review the transaction and relationship disclosed and the Board makes a formal determination regarding each Director's independence. If the transaction is deemed to present a conflict of interest, the Board of Directors will determine the appropriate action to be taken.
Related Party Transactions
Patent License
On March 2, 2017, SecureTech entered into a Patent License Agreement with Shongkawh, LLC (“Licensing Agreement”), which is controlled by our executive officers Kao Lee and Anthony Vang (and directly owned by Mr. Lee and his brother, Thao Lee) is deemed a related party. This Licensing Agreement gives us exclusive use and control of United States Patent No. 8,436,721.
Under the Licensing Agreement terms, ShongKawh will receive a royalty of 2% of all products manufactured under this patent, including our Top Kontrol product. The 2% royalty is based on SecureTech’s selling price of any products utilizing this patent, which would typically be the wholesale price we offer to distributors. Royalties are to accrue and be paid in quarterly calendar payments.
As of December 31, 2023, ShongKawh accrued $2,929 in patent license royalties. These royalties have been forgiven and accounted for under Additional Paid In Capital.
Founder’s Shares
On March 2, 2017, SecureTech issued an aggregate of 175,000,000 shares of its common stock, $0.001 par value, as Founder’s Shares with $-0- value.
Of these Founder’s Shares, 80,000,000 were issued to SecureTech’s officers, 75,000,000 to an entity controlled by one of the SecureTech’s directors, and 20,000,000 to outside consultants who assisted with SecureTech’s formation and early organization.
As of December 31, 2023, an aggregate of 83,000,000 Founder’s Shares have been canceled and returned to the Treasury, including the 25,000,000 Founder’s Shares that were part of the Share Exchange Agreement described below.
Share Exchange and Cancellations
During the fiscal year ended December 31, 2023, SecureTech entered into a Share Exchange Agreement with its President and CEO, Kao Lee, whereby it issued 2,500 shares of its Series A Preferred Stock in exchange for an aggregate of 25,000,000 shares of its common stock. The common shares tendered by Mr. Lee were canceled and returned to SecureTech’s Treasury.
Accrued Payroll
As of December 31, 2023, SecureTech had aggregated $63,090 in related party accrued payroll, consisting of $58,500 in accrued payroll and $4,590 in accrued employer taxes.
Indemnification
Section 78.138 of the Wyoming Revised Statutes (“WRS”) provides that directors and officers of Wyoming corporations may, under certain circumstances, be indemnified against expenses (including attorneys’ fees) and other liabilities actually and reasonably incurred by them as a result of any suit brought against them in their capacity as a director or officer, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. WRS also provides that directors and officers may also be indemnified against expenses (including attorneys’ fees) incurred by them in connection with a derivative suit if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made without court approval if such person was adjudged liable to the corporation.
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Further, Article X of our bylaws contains provisions that allow SecureTech to indemnify its officers, directors, employees, and agents.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to the directors, officers, and controlling persons of the registrant pursuant to the preceding provisions, or otherwise, the registrant has been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer, or controlling person of the small business issuer in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless, in the opinion of counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Corporate Governance and Director Independence
Our Board of Directors has not established Audit, Compensation, and Nominating or Governance Committees as standing committees. The Board of Directors does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that requires a majority of the Board of Directors to be independent. Our directors have determined that they are not “independent” under the definition set forth in the NASDAQ Stock Market's listing standards, which is the definition that the Board has chosen to use to determine director independence. Therefore, our directors are not independent.
Disclosure of Commission Position on Indemnification for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling the registrant pursuant to the preceding provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
Item 14. Principal Accounting Fees and Services
Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the annual audit of our financial statements and review of financial statements included in our quarterly reports and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
|
| For the Fiscal Year Ended December 31, | ||
|
|
2023 |
|
2022 |
|
|
|
|
|
Audit Fees | $ | 25,500 | $ | 21,850 |
Audit Related Fees |
| -0- |
| -0- |
Tax Fees |
| -0- |
| -0- |
All Other Fees |
| -0- |
| -0- |
Total | $ | 25,500 | $ | 21,850 |
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Audit Fees
Consist of fees billed for professional services rendered for the audit of our financial statements and review of interim consolidated financial statements included in quarterly reports and services customarily provided by the principal accountants in connection with statutory and regulatory filings or engagements.
Audit Related Fees
Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”
Tax Fees
Consist of fees billed for professional services for tax compliance, tax advice, and tax planning. These services include the preparation of federal and state income tax returns.
All Other Fees
Consist of fees for products and services other than the services reported above.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Given the small size of our Board of Directors and the limited financial resources and minimal operations of SecureTech, our Board of Directors as a whole acts as our Audit Committee. Our Board of Directors pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services, and other services. Our Board of Directors approves these services on a case-by-case basis.
Before engaging its accountants to perform particular services, our Board of Directors obtains an estimate for the service to be performed. The Board of Directors approved all of the services described above per this procedure.
PART IV
Item 15. Exhibits, Financial Statements Schedules
The following documents are filed as a part of this Annual Report:
(1)Financial Statements
The financial statements required to be filed as part of this report are included in Item 8 of Part II of this Annual Report.
(2)Financial Statement Schedules
All schedules are omitted for the reason that the information is included in the financial statements and notes thereto or that they are not required or are not applicable.
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(3)Exhibits
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| Incorporated by Reference | ||||||
Exhibit Number |
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Exhibit Description |
| Filed Herewith |
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Form |
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File No. |
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Exhibit |
| Filing Date |
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| S-1 |
| 333-223078 |
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3.1 |
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2/16/2018 | ||
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| S-1 |
| 333-223078 |
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3.2 |
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2/16/2018 | ||
| Amendment to Articles of Incorporation dated December 20, 2017 |
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S-1 |
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333-223078 |
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3.3 |
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2/16/2018 | |
| Description of Securities |
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X |
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| Patent License Agreement between SecureTech, Inc. and Shongkawh, LLC dated March 2, 2017 |
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S-1 |
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333-223078 |
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10.1 |
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2/16/2018 | |
14.1 |
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8-K |
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14.1 |
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5/16/2022 | |
| List of Subsidiaries |
| X |
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| Certification of Kao Lee, Principal Executive Officer, pursuant to Rule 13a-15(e) or Rule 15d-15(e) |
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X |
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| Certification of Anthony Vang, Principal Financial Officer, pursuant to Rule 13a-15(e) or Rule 15d-15(e) |
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X |
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| Certification of Kao Lee, Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 |
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X |
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| Certification of Anthony Vang, Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 |
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X |
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101.INS |
| XBRL Instance Document |
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X |
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101.SCH |
| XBRL Taxonomy Extension Schema Document |
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X |
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101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
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X |
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101.LAB |
| XBRL Taxonomy Extension Labels Linkbase Document |
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X |
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101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
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X |
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101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
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X |
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104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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X |
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Item 16. Form 10-K Summary
Not applicable.
[This space intentionally left blank]
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, thereto duly authorized on this 1st day of May, 2024.
SECURETECH INNOVATIONS, INC.
| By: | /s/ Kao Lee |
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| Kao Lee President, Chief Executive Officer, Principal Executive Officer, and Director |
Pursuant to the requirements of the Securities Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities on May 1, 2024:
By: | /s/ Kao Lee |
| Kao Lee President, Chief Executive Officer, Principal Executive Officer, and Director |
By: | /s/ Anthony Vang |
| Anthony Vang Secretary, Treasurer, Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer, and Director |
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