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WYTEC INTERNATIONAL, INC.
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2024
Index to Report on Form 10-K
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PART I
Unless otherwise stated or the context requires otherwise, references in this annual report on Form 10-K to “Wytec,” the “Company,” “we,” “us,” or “our” refer to Wytec International, Inc., a Nevada corporation.
Item 1. Business.
General
Wytec is a designer and developer of wide area networks (“WAN”) designed to support 5G network deployments utilized in multiple Internet of Things (“IoT”) solutions across the United States. In June 2014, we filed a provisional patent for our small cell technology, which we call the “LPN-16,” and in December 2017 we were granted a patent by the United States Patent and Trademark Office (“USPTO”), patent number 9,807,032. The patent is described as an “Upgradeable, High Data Transfer Speed, Multichannel Transmission System” (“UHTMTS”) designed to transmit both Wi-Fi and cellular signals from a height of approximately 30 feet and to be installed in locations such as utility poles or building rooftops. The LPN-16 device is equipped with micro radios, software, and network connectors enabling cable or other wireless connections. In conjunction with ongoing design and development of our LPN-16, we currently generate revenue with an in-building cellular solution known “CelFi” under an agreement with Nextivity, Inc. (“Nextivity”).
In October 2019, Wytec participated in a Request for Proposal (the “RFP”) issued by the Laredo Independent School District (“ISD”) in Laredo, Texas involving in-building cellular enhancement solutions for the ISD. Wytec won the RFP and was awarded a contract with the Laredo ISD to provide its in-building cellular enhancement solutions to utilizing the Nextivity Cel-Fi solution to 42 buildings within the Laredo ISD (the “Laredo Contract”). The Laredo Contract has generated over $1M in installation revenue. Although Wytec has completed its installation in all 42 buildings, Wytec continues to receive additional revenue from a long-term renewable maintenance agreement. Due to the successful completion of the Laredo Contract, Wytec was recommended to two other ISDs, Highland Park ISD in Amarillo, Texas and Round Rock ISD in Austin, Texas for multiple in-building cellular solutions utilizing the Cel-Fi product. Our other Cel-Fi installs include the Johnson Space Center in Houston, Texas, the 62 story commercial high-rise building known as the Fountain Place in Dallas, Texas, and the 1,080 restaurant chain Whataburger.
In 2019, Wytec engaged Southwest Research Institute along with Bexar County, Texas to develop a private LTE network pilot project utilizing the Nokia CBRS small cell technology. Wytec served as the general contractor of the pilot project and provided a wireless internet connection to a limited number of homes within the Southwest Independent School District (“SWISD”) within Bexar County, Texas. Upon completing the pilot project, SWISD determined that the government funds available to move forward with additional coverage of the SWISD would be better served by directing the funds to teachers rather than students and the pilot project was never expanded. Since this event, Wytec has now begun developing new technologies, such as gunshot detection, to be included in its in-building and private LTE services to enhance its service offerings.
In August 2023, we entered into an agreement with Trabus Technologies (“Trabus”) and in October 2023, we entered into an agreement with Lemko Corporation (“Lemko”), which together we believe will enable us to commercialize a multichannel transmission product that integrates in-building cellular, private LTE, and multiple sensor solutions, including gunshot detection and drug sensing technologies. We expect to have a prototype with the gunshot detection technology (“Prototype”) for use in a pilot program (“Pilot Program”) in the second or third quarter of 2025. The integrated solution is expected to include artificial intelligence (“AI”), machine learning (“ML”), and encryption technologies capable of supporting our smart-sensor technology.
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On October 15, 2023, we filed a provisional patent application with the USPTO related to this “smart-sensor technology” capable of detecting gunshot sound, motion, and chemicals which we expect to be integrated with our current in-building cellular and private LTE solutions. In October 2024, we split the provisional patent into four separate patent applications, one of which we filed with the USPTO (“Smart Sensor System for Threat Detection,” filed as U.S. Application No. 18/902,824, describing a process for firearm discharge detection using multiple machine learning models) and all four of which we filed with the Patent Cooperation Treaty (“PCT”). In January 2025, we received notice of allowance for the patent we filed with the USPTO. We expect to file patent applications for the other three with the USPTO in 2025. We believe that these advanced solutions will be instrumental in providing the highest level of public safety within ISDs, as well as on America’s city streets. Our agreement with Lemko makes Lemko’s small cell technology, which utilizes the latest FCC Citizens Broadband Radio Service (“CBRS”), available to us to use in combination with Trabus’ software which provides AI, ML, and encryption technologies to create our advanced gunshot detection sensors and drug sensing technology solutions. We are currently designing a high-definition video presentation to illustrate the combined benefit of our integrated technology solutions to both cities and schools across America and internationally.
On October 5, 2024, Wytec participated in an RFP issued for the TXShare cooperative purchasing program (“TXShare Program”) under the request of the North Texas Council of Governments (“NCTCOG”). The TXShare Program is a membership organization of more than 170 U.S. cities, 50 counties and over 40 special districts, including transit authorities, water utility boards, bridge and highway authorities, police departments, school districts, and hospitals. The RFP requested by the NCTCOG specifically sought an experienced vendor(s) to provide a gunshot detection system as, given the frequency of shooter incidents, such systems are becoming an essential part of security infrastructure in various settings, including schools, airports, and public buildings. On January 28, 2025, we were notified by the NCTCOG that we were awarded the contract and have already signed an agreement with the NCTCOG pursuant to which we will provide our advanced gunshot detection technology to TXShare Program members in through the Pilot Program once the Prototype is available.
Industry Overview
Since the 1990s, a series of intergovernmental summit meetings have been conducted to resolve what has been popularly defined as the “Digital Divide.” The Digital Divide refers to the gap between those able to benefit from the internet and those who are not. This movement has energized solutions in public safety policy, technology design, finance, and management allowing all U.S citizens equal connectivity to the latest broadband advancements. In 2021, the movement was further empowered by the massive economic and social disturbance of COVID-19. Thus, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law providing $1.9 trillion in funding to bridge the Digital Divide, with $122 billion being allocated for Elementary and Secondary Emergency Relief continuing the program started under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
As a result of the increased need for greater data capacity and school safety initiatives, there has been an emergence of new technologies to address public safety concerns as well as to support the aggressive growth of the IoT solutions. The next generation of wireless communication services, 5G, has been introduced to America’s future communications needs for supporting both wired and wireless broadband connectivity. For the U.S. cellular industry to meet this challenge, a radical change has occurred in network architecture introducing the concept of “densified” networks involving millions of small cells to be installed throughout the U.S. utility infrastructure utilizing America’s existing utility poles. Wytec is an owner of patented small cell technology called the LPN-16 designed to be installed on utility poles. We have most recently seen the aggressive emergence of AI, ML, and encryption technologies. Wytec has embraced these technologies in its next generation LPN-16 small cell.
Today, 4G depends significantly on “Macro” cell towers for the majority of America’s cellular traffic. These towers, which are easily recognized across America’s landscape, stand several hundred feet in height and support antennas six to nine feet in length. These sizeable towers cost mobile operators billions of dollars to construct and millions more to operate. Macro towers were originally designed to support cellular signals in a radius of two to three miles or more and provide service for thousands of subscribers. This design is no longer adequate in meeting current consumer demand or the anticipated speeds of 5G.
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To overcome this inadequacy, Wytec believes that 5G network architecture will need to densify coverage areas with the use of small cells, which are designed to be mounted on transmission locations approximately 30 feet high, such as existing utility poles, permitting the flexibility of placement throughout a city supporting citywide ubiquitous coverage. Small cells are designed with three primary objectives in mind: increase data capacity, reduce latency in support of IOT solutions, and reduce higher-power transmission signals thus reducing dangerous radiation transmission. Wytec believes that small cells will be the driving force behind 5G and the upcoming 6G services enabling faster speeds on current and future communication devices, including Smartphones and other smart devices. According to an article from Nybsys, dated June 18, 2023, “NHN (Neutral Host Network) is a cost-effective architecture. It uses private 5G to extend public carrier cellular signals into locations or areas with poor signal strength. In terms of performance, neutral host networks are superb as they offer more flexibility without being dependent on the operator’s rollout plans.”
Connectivity for All
Wytec owns patented small cell technology known as the “LPN-16.” Its neutral-host design is its key differentiator from other small cell technologies, with its ability to support multiple spectrum (frequency) usage owned and utilized by multiple mobile operators simultaneously. We expect this multi-operator architecture to be overwhelmingly accepted by city governments due to the desire of multiple carriers to use the same utility pole to expand their 5G coverage. Additionally, we believe that our small cell solution provides a substantially lower cost than existing macro towers due to reduced installation cost and speed of deployment.
Today, carriers dominate the mobile cellular industry, but due to 5G deployment requiring small cells to be installed on utility poles, city governments have significant influence over small cell deployments in accordance with “right of way” regulations requiring pole access. This legal authority of municipalities has had a major impact on the slow speed of 5G deployment throughout America’s cities. Without this legal authority, municipal governments fear that carriers could further dominate their presence by overcrowding America’s utility poles with small cells leaving both an eyesore and potential hazards. We believe that Wytec’s LPN-16 diminishes these concerns due to its multi-carrier features allowing for multiple operators to gain access to poles and utilize the network simultaneously.
Revenue Opportunities
Small Cell Market. According to Fortune Business Insight, the small cell 5G network market size was valued at $5.46 billion in 2024 and is projected to grow from $7.54 billion in 2025 to 74.62 billion by 2032, exhibiting a compound annual growth rate (“CAGR”) of 38.7% with public safety representing growth from $583.47 billion in 2024 to $1,197.49 billion in 2032 exhibiting a CAGR of 9.4% during the forecast period. A large portion of Wytec’s small cell deployment includes the installation on U.S. utility poles. According to the U.S. Energy Information Administration (“EIA”) there are more than 185 million utility poles currently in service in the United States, consisting of 169 investor owned, 812 managed by cooperatives, and 1,958 serviced and owned by public utility districts. Wytec has developed patented technology in both small cell and AI designed to be installed on utility poles with the primary advantage of Wytec’s neutral host design allowing multiple carriers to transmit from the “same” small cell.
Artificial Intelligence. According to Statista, the market size for AI is projected to reach $243.7 billion by the end of 2025, representing an annual CAGR between 2025 to 2030 of 27.67%, resulting in an expected market volume of $826 billion by 2030.
Drug Sensor Technology Market. According to Precedence Research, the global sensor market size is estimated at $245.97 billion in 2024 and is predicted to grow to $551.03 billion by 2034, expanding at a CAGR of 8.40% between 2024 and 2034.
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In October 2019, Wytec, participated in a RFP issued by the Laredo ISD in Laredo, Texas involving in-building cellular enhancement for the ISD. Wytec won the RFP with the lowest bid and desired technology choice and was awarded the Laredo Contract consisting of 42 buildings within the district with a contract value of approximately $1M. Laredo ISD is a member of the Central Texas Purchasing Alliance (“CTPA”) consisting of over 200 other ISDs. Due to language within the Laredo Contract under Section 791.001 of the Texas Government Code, all members of the CTPA became eligible to utilize the same winning bid as the Laredo ISD. The CTPA consists of more than 4,300 buildings, representing approximately 513,270,000 square feet. The Laredo ISD winning bid was $0.39 per square feet. In October 2022, the Laredo Contract was renewed and extended to October 2024 with the price per square foot increased to $1.54. Although we are past the renewal date of the Laredo Contract, we are still able to offer in-building CelFi services to CTPA members, but at the current market price for our services which is $2.05 per square foot.
In addition to Wytec’s revenue potential involving cellular enhancement and private LTE, the Company plans to utilize its LPN-16 technology to offer public-private partnerships (“PPP”) to municipalities to investor owned, cooperative managed, and municipality serviced and owned utility poles thereby enabling access for U.S. carriers and Mobile Virtual Network Operators (“MVNOs”) to expand their 5G services to retail customers. Today, cable operators are aggressively pursuing mobile cellular solutions due to their eroding subscriber base to the carriers. Cellular service is currently offered to cable operators through wholesale access by virtually all carriers, but cable operators struggle to achieve acceptable profit margins due the competitive nature of obtaining cellular customers. Wytec’s LPN-16, through its neutral host features, promotes equal cost benefits for both carriers and cable operators without favoring greater profit margins to one or the other. The Company anticipates wide acceptance of the LPN-16 by city governments due to its multi-carrier service availability. There are 450 cable operators aggressively pursuing MVNO services in the United States. This initiative by cable operators is anticipated to create a substantial revenue opportunity for Wytec.
As described above, we believe that Wytec’s LPN-16 offers two significant revenue opportunities involving both a potential sale of the LPN-16 to private LTE clients (such as schools and cities) and as a 5G (Wytec owned) network to support PPP initiatives with municipalities to support wholesale clients such as carriers, cable operators, and Wireless Internet Service Providers (“WISPs”).
Wytec’s Network Infrastructure- Supporting Wytec Products/Services
The LPN-16, recognized by USPTO patent number 9,807,032, as expanded by USPTO patent number 10868775 B2, is an “Upgradeable, High Data Transfer Speed, Multichannel Transmission System.” The LPN-16 is a local area network system that includes modular, multi-frequency, multi-channel, upgradable transmission nodes. The transmission nodes can include one or more independent RF modules. However, due to the recent Federal Communications Commission (“FCC”) commercialization of the CBRS spectrum, Wytec is able to expand its private LTE network configuration more rapidly to support other technologies such as a distributed antenna system (“DAS”) for public safety, gunshot detection, remote learning, and multiple other IoT applications. The LPN-16 provides transmission and network services for wireless data, wireless video, wireless voice, voice over internet protocol (“VoIP”), local portal for emergency services, mesh node from one transmission to the next, single channel transmission, multi-channel transmission, Wi-Fi access as well as a number of other similar services. We believe this range of services and the timeline of 5G networks needing small cell capabilities squarely places Wytec in the path of serving several substantial markets such as small cells as a service, outdoor Wi-Fi, the IoT, and a host of other related telecommunications services.
We believe Wytec offers a powerful alternative to the in-building cellular enhancement market which consists of signal boosters, small cells, and related indoor DAS (“SmartDAS”). DAS is designed to strengthen cellular signals in facilities where materials interfere with cellular frequencies and diminish the quality of a cellular call or data usage. DAS may be deployed indoors (an “iDAS”) or outdoors (an “oDAS”), and is a way to deal with isolated spots of poor cellular coverage inside a large building by installing a network of relatively small antennas throughout the building to serve as repeaters. Traditional DAS requires the support of the carrier to allow access to their network and can take months to obtain and cost substantially more.
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We believe that our SmartDAS solution, which costs about one third (1/3) of the cost of traditional DAS, is a viable alternative solution without the tedious and sometimes delayed support of the carriers. The Company has already deployed the service in more than 20 building facilities. Wytec has established valuable vendor relationships for in-building solutions with Nokia, Ericsson, Samsung, and Nextivity.
Wytec, with its preferred vendor relationships, plans to generate the majority of its future revenues from its smart-sensor technology products.
Customer Concentration
During the year ended December 31, 2024, we received approximately 77% of our gross revenues from our cellular enhancement contract with the Laredo ISD in Bexar County, Texas. Total revenues for the year ended December 31, 2024 were $131,077, and revenue from the Laredo Contract during this period was $98,306. Although the Laredo Contract has expired, we believe there are still selling opportunities based on the relationship we have cultivated with the CTPA. For example, we have been approached by the Highland Park ISD and the Amarillo ISD, for in-building cellular solutions. We have, however, only completed a few projects for private commercial enterprises (although we have installed cellular enhancement solutions on some notable buildings, such as the Johnson Space Center in Houston, Texas), and have not extensively pursued business in that sector of the market. Our customer base is diversifying with the recent signing of a contract with the NCTCOG whose TXShare Program members include both school districts and other government entities. The loss of our relationship with the CTPA would have a material adverse impact on our future results of operations, financial condition, and business performance.
Agreement with Trabus Technologies
On August 7, 2023, we entered into an agreement with Trabus to utilize Trabus’ algorithms for artificial intelligence (“AI”) and machine learning (“ML”) to facilitate the development of our gunshot detection and other smart sensors. Our agreement with Trabus also addresses the Prototype to be developed for the Pilot Program to be offered to TXShare Program members in the second or third quarter of 2025, which is expected to include our gunshot detection technology.
Agreement with Lemko Corporation
On October 24, 2023, Wytec entered into an agreement with Lemko in order to provide the wireless gateway and to enhance our LPN-16 technology in conjunction with our development of an integrated solution to supplement our in-building solution. We plan to include our gunshot detection and drug sensing technology solutions, utilizing the algorithms currently being developed by Trabus with Lemko’s private LTE networking capabilities, which use the latest FCC CBRS, serving as a wireless communications channel. This allows a “private network solution” in order to prevent radio interference from competing carrier transmissions.
Competition
There are numerous existing and commercially available methods of providing both small cell technology and high-speed Internet to multi-tenant commercial and residential units. This makes the telecommunications industry highly competitive, rapidly evolving, and subject to rapid technological changes. Additionally, there are numerous telecommunications service companies that conduct extensive advertising campaigns to capture market share in the highly competitive 5G market. We believe the principal competitive factor affecting our lines of business include not only the “neutral host” feature of LPN-16 allowing multiple carriers to host on one small cell, but the recent development of Wytec’s gunshot detection and drug sensing technology of which there is less competition. Additionally, Wytec’s business model invokes a public private partnership strategy with local government through its relationship with cities interested in providing support to its school districts. We believe this has placed Wytec in a unique position.
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Competition by Service (Internet). There are a substantial number of local, regional, and national residential and commercial Internet Service Providers (“ISPs”) hosting data, voice, and texting services in the United States. Publicly traded brands such AT&T, Verizon, T-Mobile, Sprint, Cox Communications, Spectrum, Comcast, and Tower Stream all provide both commercial and/or residential cellular and wired Internet services. We believe our competitive advantage is our smart-sensor technology, in particular our gunshot detection and drug sensing technology, which we believe is superior to other solutions currently available on the market and for which we have received a notice of allowance from the USPTO regarding our patent application.
Wytec’s focus in not to compete with larger providers delivering 5G services, but to provide accelerated access to utility poles thereby allowing these larger providers to give a better 5G experience to their customers. Additionally, we believe that next generation IoT solutions will require the benefit of neutral host small cells with reduced latency essential for IoT services related to public safety, including newer threats facing the United States such as cyber security of the electric grid and other utilities.
Competition for Tower Site Location Rentals (Access). For the deployment of Wytec’s small cell, adequate access to rights-of-way on buildings and utility poles is necessary. There are a number of other local, regional, and national parties interested in building/utility pole space access. This includes the equipment used by various public utilities, including electric utilities, major cellular carriers, fiber optic companies, and cable companies, and may also include equipment placed by the municipality for public safety. We believe Wytec’s unique PPP program allows budget challenged utility companies to receive much needed funding to support 5G initiatives.
Intellectual Property
In October 2017, Wytec was granted a patent for its LPN-16 technology by the USPTO, patent number 9,807,032. In December of 2020, Wytec was granted a second patent for additional claims to its LPN-16 and device by the USPTO, patent number 10868775 B2. In October 2023, Wytec filed a provisional patent application related to upgrading its LPN-16 software to include AI, ML, and encryption technologies capable of detecting gunshot sound, motion, and chemicals. In October 2024, we split the provisional patent into four separate patent applications, one of which we filed with the USPTO (“Smart Sensor System for Threat Detection,” filed as U.S. Application No. 18/902,824, describing a process for firearm discharge detection using multiple machine learning models) and all four of which we filed with the PCT. In January 2025, we received notice of allowance for the patent we filed with the USPTO. We expect to file patent applications for the other three, including (1) “Smart Sensor System for Threat Detection and Method Thereof,” which outlines a system and method for detecting and communicating threats using various communication protocols, (2) “Threat Detection System Employing Multiple Models,” which focuses on artificial intelligence processes performed by an intelligent computing node that utilizes dataset models for firearm discharge detection in both sterile and noisy environments, and (3) Smart Sensor System and Method for Threat Detection and Response Based on Detection of a Vocal Phrase,” which centers on a smart sensor system and method for threat detection based on vocal phrase recognition, with the USPTO in 2025. We may be subject to legal proceedings and claims in the ordinary course of business and third parties may sue us for intellectual property infringement or initiate proceedings to invalidate our intellectual property. Moreover, should we be found liable for infringement, we may be required to enter into licensing agreements (if available on acceptable terms or at all), pay damages or curtail our product and service offerings. We may also need to redesign some of our products or services to avoid future infringement liability. Any of the foregoing could prevent us from competing effectively and could adversely affect our business.
Government Regulation
Wytec generally is subject to all of the governmental regulations that regulate businesses generally such as compliance with regulatory requirements of federal, state, and local agencies and authorities, including regulations concerning the environment, permits for certain activities, workplace safety, labor relations, employee rights, and government taxes. The adoption of any additional laws or regulations may decrease the growth of our business, decrease the demand for services and increase our cost of doing business. Changes in tax laws also could have a significant adverse effect on our operating results and financial condition.
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Employees
As of December 31, 2024, we have four full-time employees. Currently, there are no organized labor agreements or union agreements between us and our employees. Assuming we can earn additional revenue through organic growth, acquisitions and strategic alliances during 2025, we may need to hire additional employees. In the interim, we intend to use the services of independent consultants and contractors to perform various professional services when appropriate. We believe the use of third-party service providers may enhance our ability to control general and administrative expenses and operate efficiently.
Seasonality
Our operations are not expected to be materially affected by seasonality.
Item 1A Risk Factors
The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-K. The following information should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
The business, financial condition and operating results of the Company can be affected by several factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
Because of the following factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
Risks Related to Our Business and Marketplace
We have a history of operating losses and expect to continue incurring losses for the foreseeable future. Our current business was launched in 2011 and has incurred losses in each year of operation. We cannot anticipate when, if ever, our operations will become profitable. We expect to incur significant net losses as we invest in our technology, expand our markets and pursue our business strategy. We intend to invest significantly in our business before we expect cash flow from operations to be adequate to cover our operating expenses. If we are unable to execute our business strategy and grow our business, either as a result of the risks identified in this section or for any other reason, our business, prospects, financial condition and results of operations will be adversely affected and we may be unable to continue to operate as a going concern.
The private LTE services and LPN-16 telecommunications equipment and services that we are selling are relatively new in our portfolio, and the revenue model for them is uncertain. We do not have extensive experience in pricing and billing in-building cellular and private LTE services, nor have we yet deployed LPN-16 with our networks or charged anyone for its capabilities. There is a risk that we may not price and bill sufficiently for our products and services to earn a profit, especially in the early stages of our sale and installation of them. We may continue to incur operating losses even as our sales and revenue increase.
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Our Link program was terminated, and we may have liability with respect to the remaining outstanding Links. Through January 2016, Wytec had been relying primarily on the sale of registered links and related equipment and services (“Links”) through Wylink, Inc., a former wholly owned subsidiary which we dissolved in 2020, for revenue and working capital. Wylink terminated the offer and sale of Links in January 2016, except for two sales in July 2016. From June 2016 to December 2017, Wytec had been offering to buy back Links in consideration for the issuance of its Series B Preferred Stock and warrants at $3.00 per unit (i.e., one share of Series B Preferred Stock and one warrant exercisable at $1.50 per share until December 31, 2018). Subsequently, in 2018, 2019 and 2022, Wytec has been making exchange offers for Links by offering shares of common stock and warrants for them. As of December 31, 2024, we had repurchased all but 22 outstanding Links that currently remain with third party owners. Those outstanding Links include 8 that are activated and 14 that are not yet and may not be activated. We are generally retaining activated (“live”) Links that are repurchased by us and letting pending Links lapse for the present. Once Links were sold, Wytec incurred substantial costs to provide equipment and make related lease payments on activated Links. We have recently shifted its focus to in-building cellular and private LTE services, respectively, and to its patented LPN-16 technology. Consequently, we do not plan to sell, lease, use, or activate any additional Links. Wytec has executed a plan to repurchase the Links connected to its registered Link program and in the process of purchasing the remaining 22 links in order to strengthen our balance sheet by having holders exchange them for equity. We may offer Link holders the opportunity to exchange such Links based on the reference price. We have recorded a current liability for “other payables” on our balance sheet for the remaining outstanding Links of $895,000 of which a total of $560,000 of the Links have been converted into common stock as of December 31, 2024, which results in an outstanding other payable balance of $335,000, We cannot assure that we will be able to retire the rest of the outstanding Links, or that we will not have claims asserted by Link holders against us for forced activations and lease renewals or refunds.
Our success depends in part on the results of current and planned tests of our proprietary LPN-16 technology. Testing thus far has included environmental and radio frequency interference testing with our manufacturer and multiple speed tests utilizing an integrated 2.4GHz and 5GHz Qualcomm 802.11ac chipset which we completed in December 2014. Additional tests are expected to include proof of concept testing for network load balancing, public safety Band 14 and mobile network operator mobile data offloading, and WiFi and backhaul network testing. While we expect future tests of our LPN-16 to go well since preliminary testing of the technology in San Antonio, Texas was positive, the LPN-16 may not work as we have currently designed and constructed it, causing us material delays and harm. If the LPN-16 fails the upcoming tests or the tests are materially delayed, it could have a material adverse impact on our financial condition, operating results, and business performance. The timing of the commencement of the launch of the LPN-16 product line is currently uncertain, and may be delayed until we have more capital to fund it. We cannot assure that our LPN-16 or any other proprietary technology that we develop will be successful, will work as planned, or can be commercialized or monetized profitably.
If our planned comprehensive testing of the LPN-16 with Trabus Technologies does not yield favorable results, the execution of our business plan could be delayed or otherwise adversely effected. We are planning to conduct comprehensive trials in the near future with Trabus Technologies to test the efficacy of the LPN-16, and while we expect good results with respect to transmission speed, capacity, latency, clarity, and related performance parameters, we cannot assure that the actual results will not be less than expected. We cannot assure the date on which the trials will be conducted and completed. The trials with satisfactory results are a necessary predicate to commercializing and deploying our LPN-16 small cell technology. We cannot assure that performance results that will be experienced in the upcoming trials. If the results are not satisfactory, we will be delayed in the execution of our business plan, our costs will rise as we make necessary adjustments to the prototypes, and our anticipated revenue will be reduced or delayed.
We must adapt quickly to changes in technology. Telecommunications technology is a rapidly evolving technology. We must keep abreast of this technological evolution. To do so, we must continually improve the performance, features and reliability of our equipment and related products. If we fail to maintain a competitive level of technological expertise, then we will not be able to compete in our market.
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We could be subject to reduced revenues, increased costs, liability claims, or harm to our competitive position as a result of cyber security threats or other security vulnerabilities. Cybersecurity risks and attacks continue to grow. Cybersecurity attacks are evolving and not always predictable. Any cyberattack, unauthorized intrusion, malicious software infiltration, network disruption, corruption of data, theft of private or other sensitive information, or inadvertent acts or omissions by our vendors or our own employees could result in the loss, disclosure, or misuse of confidential or proprietary information, and could lead to interruption of our operations or business, unauthorized release or use of information, compromise of data, damage to our reputation, damage to our customers or vendors, and increased costs to prevent, respond to, or mitigate any events. We may not have adequate insurance coverage to compensate us for losses from a security incident. Accordingly, the impact of a data security incident could have a material adverse effect on our business, results of operations, and financial condition.
Our revenues are concentrated in a small number of customers and they may decrease significantly if we were to lose one of these customers. Laredo ISD generated approximately 77% of our revenue during the year ended December 31, 2024 and 88% of revenue during the year ended December 31, 2023. Although we have preferred vendor status with the CTPA of which Laredo is a member, along with over 200 other school districts in Texas, the high concentration of revenue from a limited number of customers creates a risk that our revenue may decrease substantially if we were to lose any significant customer. We cannot assure that our current main customers will continue to purchase our products and services in the future.
Our inability to respond timely to technological advances could have an adverse effect on our business. We must be able to respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. We can offer no assurance that we will be able to successfully use new technologies effectively or adapt our products and services in a timely manner to a competitive standard. If we are unable to adapt in a timely manner to changing technology, market conditions or customer requirements, then we may not be able to successfully compete in our market.
Our ability to protect our intellectual property is uncertain. We assigned our five patents to our former subsidiary, Wytec, LLC, which was then managed and 50% owned by General Patent Corporation. General Patent Corporation (“GPC”), the oldest patent enforcement firm in the United States, represents clients on patent enforcement rights and licensing transactions on a contingency basis. GPC was the manager of Wytec, LLC until 2017, when it assigned all of its rights in Wytec, LLC back to us. After extensive research and analysis, GPC elected not to assert infringement claims for the patents on behalf of us and itself through Wytec, LLC. All five previous patents prior to 2017 have expired. In 2017, we re-acquired the 50% of Wytec, LLC that we did not already own, and became the manager of it. In 2014, we filed a new provisional patent application for our proprietary LPN-16 data transmission technology. On October 31, 2017, we received our first patent on the LPN-16 (patent number 9,807,032). In December of 2020, Wytec was granted a second patent (patent number 10868775 B2), for our additional claims to our original 2017 patent. In October 2023, we filed a provisional patent to be integrated with our two previous patents while including both AI, ML, and encryption technologies. In October 2024, we split the provisional patent into four separate patent applications, one of which we filed with the USPTO and all four of which we filed with the PCT. Although we have applied for additional patents and may continue to do so in the future, we cannot assure that these patents or any other patents that may be granted to us, if any, in the future will be enforceable. We will have limited resources to fight any infringements on our proprietary rights and if we are unable to protect our proprietary rights or if such rights infringe on the rights of others, our business would be materially adversely affected. The current manufacturer of our LPN-16 owns the intellectual property rights to certain software used in the device which has now expired and is no longer usable. Wytec plans to replace the software components with its own proprietary software, for which we filed patent applications in October 2024, designed with AI, ML, and encryption technologies.
Our business may be adversely affected by competition. The telecommunications industry is highly competitive. Many of our current and potential competitors have financial, personnel and other resources, including brand name recognition, substantially greater than ours, as well as other competitive advantages over us. Certain competitors may be able to secure products from vendors on more favorable terms, devote greater resources to marketing and promotional campaigns, and adopt more aggressive pricing than we will. We cannot assure that we will be able to compete successfully against these competitors, which ultimately may have a materially adverse effect on our business, results of operations, financial condition, and potential products in the future.
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Our business is subject to government regulation. Aspects of our telecommunication business are subject to and designed to comply with the regulations of the Federal Communications Commission (“FCC”). A change in those regulations or significant diminution of the right to access, use or license of the spectrum that we seek may have a material adverse effect on our operating results, financial condition, and business prospects and performance. We are also subject to regulations applicable to businesses generally, including without limitation those governing employment, construction, permit requirements, the environment, and health and safety, those governing the telecommunications industry, and the FCC. The adoption of any additional laws or regulations may decrease the growth of our business, decrease the demand for services and increase our cost of doing business. Changes in tax laws also could have a significant adverse effect on our operating results and financial condition.
We cannot provide assurance that we will achieve profitability. We cannot provide assurance that we will be able to operate profitably in the future. Profitability, if any, will depend in part upon our ability to successfully develop and market our proprietary telecommunications technology, and other products and services. We may not be able to successfully transition from our current stage of business to a stabilized operation having sufficient revenues to cover expenses. While attempting to make this transition, we will be subject to all the risks inherent in a small business, including the need to adequately service and expand our customer base and to maintain and enhance our current services.
We may be exposed to various possible claims relating to our business and we may not have sufficient insurance to fully protect us. We cannot assure that we will not incur uninsured liabilities and losses because of the conduct of our business, even though we currently maintain insurance policies for liability and property insurance coverage, along with workmen’s compensation and related insurance. Should uninsured losses occur, our investors could lose their invested capital.
We may incur additional indebtedness. We cannot assure that we will not incur additional debt in the future, that we will have sufficient funds to repay our indebtedness, or that we will not default on our debt, jeopardizing our business viability. Furthermore, we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to conduct our business. We currently have debt as of December 31, 2024 of $730,000 of promissory notes due and payable on various dates through December 2025 and $615,000 of convertible promissory notes due and payable through December 2025.
We expect to incur losses for the near future. We project that we will incur development and administrative expenses and operate at a loss for the foreseeable future unless we are able to generate substantial revenues from our existing and planned proprietary products and services. We cannot be certain whether or when we will be able to achieve profitability because of the significant uncertainties with respect to our business.
We may incur cost overruns. We may incur substantial cost overruns in the development and deployment of our proprietary products and services. Management is not obligated to contribute capital to us. Unanticipated costs may force us to obtain additional capital or financing from other sources or may cause us to lose our entire investment in our business if we are unable to obtain the additional funds necessary to implement our business plan. We cannot assure that we will be able to obtain sufficient capital to successfully implement our business plan. If a greater investment is required in the business because of cost overruns, the probability of earning a profit or a return on investment in us is diminished.
We could be subject to liens. If we fail to pay for materials and services for our business on a timely basis, our assets could be subject to material men’s and workmen’s liens. We may also be subject to bank liens in the event that we default on loans from banks, if any.
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We may face litigation in the future. We may incur substantial legal fees and costs in connection with future litigation, if any. The Company carries officers’ and directors’ liability insurance, as well as other forms of insurance customarily carried by companies such as Wytec, but we cannot assure that our insurance policies will be adequate to cover all of our litigation costs. There is also a risk that we could face litigation and regulatory claims that could have a material adverse effect on our financial condition, operating results, and business. For example, a former Link holder and current common stockholder of Wytec has requested a refund of her payments to Wytec. While we do not believe that this individual is entitled to a refund, Wytec has been amenable to refunding her, but not in excess of the amount she paid to Wytec. To date Wytec has refunded $80,000 to her, but she has not properly returned the shares of common stock so they may be canceled. If this individual commences litigation or we become involved in other litigation, there could be a material adverse effect on Wytec.
We may not have adequate funds to implement our business plan. We have limited capital available to us. Although we anticipate securing additional funding from the issuance of additional securities, we cannot assure that we will secure all or any of the funding we anticipate. If our entire original capital is fully expended and additional costs cannot be funded from borrowings or capital from other sources, then our financial condition, results of operations and business performance would be materially adversely affected. We cannot assure that we will have adequate capital or financing to conduct our business or to grow.
Our limited resources may prevent us from retaining key employees or inhibit our ability to hire and train a sufficient number of qualified management, professional, technical and regulatory personnel. Our success may also depend on our ability to attract and retain other qualified management and personnel familiar in telecommunications industry. Currently, we have a limited number of personnel that are required to perform various roles and duties as a result of our limited financial resources. We intend to use the services of independent consultants and contractors to perform various professional services, when appropriate to help conserve our capital. If and when we determine to acquire additional personnel, we will compete for such persons with other companies and other organizations, some of which have substantially greater capital resources than we do. We cannot provide any assurance that we will be successful in recruiting or retaining personnel of the requisite caliber or in adequate numbers to enable us to conduct our business.
The loss of the services of any or our management or key executives could adversely affect our business. Our success is substantially dependent on the performance of our executive officers and key employees. The loss of an officer or director could have a material adverse impact on us. We are generally dependent upon our primary executive officer, William H. Gray, for the direction, management and daily supervision of our operations. We do not currently have any employment agreements with any members of our management team.
The consideration being paid to management has not been determined at arm’s-length. The common stock and cash consideration being paid by us to our management have not been determined based on arm’s-length negotiation. We may grant stock options and other equity incentives to our executive officers and directors, which may further dilute our shareholders’ ownership of us. While management believes that the consideration is fair for the work being performed, there is no assurance that the consideration to management reflects the true market value of its services.
Directors and officers have limited liability. As permitted by the Nevada General Corporation Law, our certificate of incorporation and by-laws limit the personal liability of our directors and officers and authorize our indemnification of them, but such provision does not eliminate or limit the liability of a director or officer in certain circumstances, such as for: (i) any breach of the director’s or officer’s duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Nevada General Corporate Law; or (iv) for any transaction from which the director derived an improper personal benefit. If we were called upon to perform under our indemnification agreement, then the portion of our assets expended for such purpose would reduce the amount otherwise available for our business.
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Global and regional economic conditions could materially adversely affect our business, results of operations, financial condition and growth. Adverse macroeconomic conditions, including inflation, slower growth, or recession, new or increased tariffs, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations could materially adversely affect demand for our products and services. In addition, consumer confidence and spending could be adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, changes to fuel and other energy costs, labor and healthcare costs and other economic factors.
In addition to an adverse impact on demand for our products, uncertainty about, or a decline in, global or regional economic conditions could have a significant impact on our suppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel partners. Potential effects include financial instability; inability to obtain credit to finance operations and purchases of our products; and insolvency.
A downturn in the economic environment could also lead to increased credit and collectability risk on our trade receivables; the failure of derivative counterparties and other financial institutions; limitations on our liquidity, which is currently minimal; and declines in the fair value of our financial instruments. These and other economic factors could materially adversely affect our business, results of operations, financial condition, and growth.
Our ability to compete successfully depends heavily on our ability to ensure a continuing and timely introduction of innovative new products, services and technologies to the marketplace.
We could be subject to changes in our tax rates, the adoption of new U.S. or state tax legislation or exposure to additional tax liabilities. We are subject to taxes in the U.S. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. Our effective tax rates could be affected by changes in the mix of earnings in states with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. We are also subject to the examination of our tax returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. We cannot assure the outcome of these examinations.
Impact of supply chain issues on Wytec’s business. Wytec expects delays in the commencement of various installations because of material and equipment shipping delays as a result of supply chain issues that began during the COVID-19 pandemic. Until the disruption to commerce at all levels of industry subsides, we expect that we will continue to experience delays in our supply chain. Although we are taking measures to mitigate the effect of these supply chain issues on our business as much as possible, we are unable to predict the overall impact of continued delays in our receipt of necessary materials and equipment on us at this time.
Risks Related to Our Common Stock
Shares of our common stock are thinly traded, the price may not reflect our value, there is no assurance that there will be an active market for our shares of common stock either now or in the future, and our stock price may fluctuate significantly. Shares of our common stock are thinly traded on the OTCQB Market, and the price, if traded, may not reflect our value. An active trading market for our common stock may not develop or may not be sustained in the future. The lack of an active market may make it more difficult for stockholders to sell our shares and could lead to our share price and trading volume being depressed or volatile. We cannot predict the prices at which our common stock may trade. The market price of the common stock may fluctuate widely and decline, depending on many factors, some of which may be beyond our control.
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If our common stock remains subject to the Securities and Exchange Commission’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected. The Securities and Exchange Commission (“SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. Our common stock is not listed on a national securities exchange and has a market price per share of less than $5.00. Accordingly, transactions in our common stock are subject to the SEC’s “penny stock” rules. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. If our common stock remains subject to the penny stock rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. In addition to the penny stock rules described above, the Financial Industry Regulatory Authority, Inc. (“FINRA”), has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. The FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares, as well as overall liquidity, of our common stock.
Your percentage ownership in us may be diluted in the future. Our board of directors has the authority to cause us to issue additional securities and convertible securities at such prices and on such terms as it determines in its discretion without the consent of the stockholders, including without limitation common stock, preferred stock, warrants, stock options, and convertible notes. Consequently, our shareholders are subject to the risk that their ownership in us will be substantially diluted in the future.
We may not pay dividends in the future. Any return on investment may be limited to the value of our common stock. We do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition, and other business and economic factors affecting us at such time as our board of directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and marketing. Prospective investors seeking or needing dividend income should therefore not purchase our common stock. If we do not pay dividends, our common stock may be less valuable because a return on investment will only occur if our stock price appreciates.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline. If our stockholders sell substantial amounts of our common stock in the public market if one ever develops, or upon the expiration of any statutory holding period under Rule 144 or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang”, in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
Our stock price may be volatile. The market price of our common stock may be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control. In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock in general.
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Item 1B. Unresolved Staff Comments.
None.
Item 1C Cybersecurity.
In
the ordinary course of our day-to-day business, we receive, process, use, store, and share digitally data, including user data as well
as confidential, sensitive, proprietary, and personal information.
To this end, we have implemented a Security Incident Response Plan (“SIRP”) designed to assess, identify, and manage risks from potential unauthorized occurrences on or through our information technology systems that may result in adverse effects on the confidentiality, integrity, and availability of these systems and the data residing in them. Our SIRP is managed and monitored by a dedicated security/information systems team and includes mechanisms, controls, technologies, systems, policies, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the systems and data residing in them.
Our SIRP is as follows:
| 1. | Preparation—perform a risk assessment and identify sensitive assets. Our team includes an outside security/information systems team that provides managed services on a regular basis. |
| 2. | Identification—monitor information technology systems and detect deviations from normal operations and see if they represent actual security incidents. When an incident is discovered, collect additional evidence, establish its type and severity, and document the incident. |
| 3. | Containment—perform short-term containment, for example by isolating the network segment that is under attack; then focus on long-term containment, which involves temporary fixes to allow systems to be used in production, while rebuilding clean systems. |
| 4. | Eradication—remove malware from all affected systems, identify the root cause of the attack, and take action to prevent similar attacks in the future. |
| 5. | Recovery—bring affected production systems back online carefully, to prevent additional attacks. Test, verify, and monitor affected systems to ensure they are back to normal activity. |
| 6. | Lessons learned—no later than two weeks from the end of the incident, perform a retrospective of the incident. Prepare complete documentation of the incident, investigate the incident further, understand what was done to contain it, and determine whether anything in the incident response process could be improved. |
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Item 2. Properties.
We currently lease approximately 3,395 square feet of office space at 19206 Huebner Road, Suite 202, San Antonio, Texas 78258 and 2,210 square feet of office space at 19206 Huebner Road, Suite 201, San Antonio, Texas 78258 for approximately $6,100 per month on a month to month basis.
Item 3. Legal Proceedings.
None.
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.
Market Information
On July 30, 2024, we received our permission for quotation on the OTCQB market under the symbol “WYTC.” Prior to receiving our acceptance for trading, there was no public market for our common stock.
As of March 20, 2025, there were approximately 878 holders of record of our common stock, not including shares held in “street name” in brokerage accounts which is unknown.
Dividend Policy
We have not declared or paid any cash dividends on our common stock and do not anticipate declaring or paying any cash dividends in the foreseeable future. We can give no assurances that we will ever have excess funds available to pay dividends.
Common Stock
The Company is authorized to issue 495,000,000 shares of common stock, par value $0.001 per share. Holders of common stock are entitled to one vote per share. The common stock does not have cumulative voting rights in the election of directors. Accordingly, the holders of a majority of the outstanding shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election.
As of March 20, 2025, there were 878 record holders of our common stock, not including shares held in “street name” in brokerage accounts which is unknown, and we had 16,750,730 shares of common stock issued and outstanding.
Equity Compensation Plan and Information
In November 2023, the board of directors of the Company approved a compensation plan for the directors of the Company pursuant to which each quarter each director will receive the share equivalent of $18,750 of the Company’s common stock in consideration for such director’s valuable services as a director of the Company (i) based on the most recent valuation report received by the Company for its common stock if the Company’s common stock is not quoted on the NASDAQ Capital Market or equivalent or higher public securities trading market (each a “Trading Market”) during the applicable quarter or (ii) based on the average closing price that is quoted on a Trading Market (if more than one, the one with the then highest trading volume) during the applicable quarter if the Company’s common stock is quoted on a Trading Market at any time during applicable quarter. For services provided during 2024 each director received a total of 15,000 shares of the Company’s common stock.
In July 2024, the director of operations and corporate secretary of the Company received 25,000 common stock purchase warrants exercisable on a cash or cashless basis at an exercise price of $5.00 per until December 31, 2025 in consideration for her services to the Company.
We have not yet, but may in the future, establish a management equity incentive plan pursuant to which stock options and restricted stock awards may be authorized and granted to the executive officers, directors, employees, and key consultants of Wytec.
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Recent Sales of Unregistered Equity Securities
During the fourth quarter of 2024, the Company issued a total of $310,000 of 9.5% secured convertible promissory notes (the “2024 Notes”) to a total of six investors, including $75,000 of 2024 Notes to a director of the Company pursuant to a private placement in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The 2024 Notes together with all accrued and unpaid interest are payable on or before December 31, 2025 and are secured by a perfected recorded subordinate security interest in the Company’s LP-16 patent. If the Company’s common stock is listed on the NASDAQ Capital Markets on or before the maturity date, the outstanding 2024 Notes will automatically be converted into shares of the Company’s common stock at a rate equal to the price per share in a public offering or, in the event of a direct listing of the Company’s common stock, the reference price on the closing date of the listing. If the 2024 Notes have not otherwise been automatically converted into shares of the Company’s common stock, these noteholders will have the option, on or before the maturity date, to convert all or a portion of their outstanding 2024 Notes into shares of the Company’s common stock at a rate equal to $5.00 per share and, immediately upon the conversion, the converting noteholders will be issued a number of new warrants from the Company equal to the dollar amount of the conversion divided by $5.00. These warrants will be exercisable until December 31, 2025 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public trading price if the Company’s securities are trading on the NASDAQ Capital Markets.
In December 2024, the Company issued a total of 18,750 shares of common stock to the Company’s five directors as compensation for services rendered during the third quarter of 2024 in accordance with Rule 506(b) of Regulation D of the Securities Act.
Purchases of Equity Securities by Issuer
None.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statements
This Form 10-K contains financial projections and other “forward-looking statements,” as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others, statements concerning the potential for revenues and expenses and other matters that are not historical facts. These statements may be made expressly in this Form 10-K. You can find many of these statements by looking for words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” and variations of such words or other words that convey uncertainty of future events or outcomes in this Form 10-K.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by us in those statements. The most important facts that could prevent us from achieving our stated goals include, but are not limited to, the following:
| (a) | volatility or decline of our stock price; | |
| (b) | potential fluctuation in quarterly results; |
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| (c) | our failure to earn revenues or profits; | |
| (d) | inadequate capital to continue business; | |
| (e) | insufficient revenues to cover operating costs; | |
| (f) | barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; | |
| (g) | dilution experienced by our shareholders in their ownership of the Company because of the issuance of additional securities by us, or the exercise of warrants or conversion of outstanding convertible securities; | |
| (h) | inability to complete research and development of our technology with minimal revenue; | |
| (i) | lack of demand for our products and services; | |
| (j) | loss of customers | |
| (k) | rapid and significant changes in markets; | |
| (l) | technological innovations causing our technology to become obsolete; | |
| (m) | increased competition from existing competitors and new entrants in the market; | |
| (n) | litigation with or legal claims and allegations by outside parties; | |
| (o) | inability to start or acquire new businesses, or lack of success of new businesses started or acquired by us, if any; | |
| (p) | inability to effectively develop or commercialize our technology; and | |
| (q) | inability to obtain patent or other protection for our proprietary intellectual property. |
Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. We caution you not to place undue reliance on the statements, which speak only as of the date of this Form 10-K. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our audited financial statements and notes to those statements. In addition to historical information, the following discussion and other parts of this annual report contain forward-looking statements and information that involves risks and uncertainties.
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Overview of Current Operations
Wytec is a designer and developer of small cell technology and wide area networks designed to support 5G network deployments across the United States. Currently we offer in-building cellular (known as a distributed antenna system, “DAS”) and private Long-term Evolution “private LTE” solutions utilizing agreements with multiple vendors and a channel agreement with Synnex Corporation, a leading distributor and solutions aggregator hosting more than 22,000 technology vendors across the world. Concurrently, Wytec is the owner of patented small cell technology, known as the “LPN-16,” designed to support a dense neutral host citywide 5G network coverage. Small cell technology is purported by PricewaterhouseCoopers International Limited to be the key component to 5G deployment.
In August 2023, we entered into an agreement with Trabus to utilize Trabus’ algorithms for AI, and ML to facilitate the development of our gunshot detection and other smart sensors. Our agreement with Trabus also addresses the prototype to be developed for the Pilot Program to be offered to TXShare Program members in the second or third quarter of 2025, which is expected to include our gunshot detection technology.
In October 2023, we entered into an agreement with Lemko to provide the wireless gateway and to enhance our LPN-16 technology in conjunction with our development of an integrated solution to supplement our in-building solution, including our gunshot detection and drug sensing solutions, utilizing the algorithms currently being developed by Trabus with Lemko’s small cells serving as a wireless communications channel. The Pilot Program is expected to utilize Lemko’s small cell technology employing the latest FCC CBRS radio with our in-building cellular services.
In October 2023, we filed a provisional patent the USPTO for our smart-sensor technology. In October 2024, we split the provisional patent into four separate patent applications, one of which we filed with the USPTO (“Smart Sensor System for Threat Detection,” filed as U.S. Application No. 18/902,824, describing a process for firearm discharge detection using multiple machine learning models) and all four of which we filed with the PCT. In January 2025, we received notice of allowance for the patent we filed with the USPTO. We expect to file patent applications for the other three with the USPTO in 2025. With these additional patents we anticipate that we will be able to adapt our technology to different service industries.
We expect 5G to have a transformative impact on the economy and we believe that 5G citywide deployments will rely substantially on small cell technology to facilitate this impact. We believe our enhanced LPN-16 technology with our recent addition of AI and ML can solve many of the long-term challenges faced by operators needing access to implement their 5G initiatives. It can also assist cities challenged with on-going technology upgrades, network growth demands, political hurdles, and new business models needed to realize the benefits of a 5G network. In addition to aligning with technical and governmental issues, the LPN-16 is designed to meet the standards for 5G deployment and, for operator needs, adheres to the FCC policy initiatives addressing public safety and First Responder initiatives. Specifically, the FCC’s Report and Order 14-153, Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies, adopts rules to help spur wireless broadband deployment by facilitating the sharing of wireless transmission equipment using “neutral host” functionality to simultaneously support multiple providers. The LPN-16 was specifically designed to support neutral host features and performance. The FCC’s goal of “shared use” and “neutral host” seeks to expand coverage and capacity more quickly, reduce costs, and promote access to infrastructure which reduces barriers to deployment and incentivize the sharing of resources, rather than relying on new builds for every stakeholder, thereby safeguarding environmental, aesthetic, historic and local land-use values.
We have implemented an aggressive intellectual property strategy and continue to pursue patent protection for new innovations. In addition to the LPN-16 covered by our current patent, we have identified additional upgrades and additions to the LPN-16 which further tie it to the goals and timelines of Wytec’s 5G development business model, FCC policy initiatives, and customer business usage which we believe could lead to additional patentable property. We intend to file for patent protection on these developments. Our strategy is to continually monitor the costs and benefits of our patent applications and pursue those that will best protect our business and expand the core values of the Company.
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We have recruited and hired a seasoned management team with both private and public company experience and relevant technical and industry experience to develop and execute our operating plan. In addition, we have identified key engineering resources for intellectual property development, antenna development, hardware, software, and firmware engineering, as well as integration and testing that we believe will allow us to continue to expand our technology and intellectual property.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments, particularly those related to the determination of the estimated recoverable amounts of trade accounts receivable, impairment of long-lived assets, revenue recognition and deferred tax assets. We believe the following critical accounting policies require more significant judgment and estimates used in the preparation of the financial statements.
Revenue and Cost Recognition. Wytec International, Inc. follows the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606).” The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Revenue is recognized in accordance with that core principle by applying the following five 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 the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
Our contracts for the sale of Cel-Fi systems generally include the performance obligation to sale and install (including testing, commissioning and integration services) equipment. The performance obligation is deemed satisfied once the equipment has been installed, placed in service and customer signs off on their acceptance, at a point in time.
Revenue is recorded and recognized when installation is complete. Maintenance and monitoring rates are pre-set based upon the building’s square footage. Cost of sales includes all equipment and labor that is connected to a project and all other costs are general and administrative. Laredo Independent School District projects are subject to contracted rates
Network service revenues are recognized each month as services are rendered.
The Company generally provides a one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and will pass on the warranties from its vendors, if any, which generally covers this one year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At December 31, 2023, the Company has estimated no product warranty accrual given the Company’s de minimis historical financial warranty experience.
Stock Based Compensation and Warrant Award: The Company measures stock-based compensation expense for stock and warrant awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
| 20 |
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The Company previously engaged valuation specialists to assist with determining the fair value of our common stock prior to being listed on the OTCQB market in August 2024. The Company provided the specialist with judgmental inputs and assumptions such as cash flow projections and future results of operations to the specialist. After July 30, 2024 and being listed for trading on the OTCQB market, the fair value of the Company’s common stock is valued at the OTCQB market trading value.
The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
Results of Operations for the Years Ended December 31, 2024 and 2023
Revenues for the year ended December 31, 2024 were $131,077 compared to revenues of $255,634 for the year ended December 31, 2023, which resulted in a decrease of $124,557, or 49%. Our revenues decreased in 2024 compared to 2023 due to a decrease in revenue from our Cel-Fi services. Revenues from the sale and installation of Cel-Fi systems, including fixed wireless, SmartDAS, and 4G LTE, totaled $105,110 in 2024 and $225,388 in 2023, which resulted in a decrease of $120,278. Our revenues decreased from network and other services including fixed wireless services, which totaled $25,967 in 2024 and $30,246 in 2023, representing a decrease of $4,279. The revenue decrease in network services is predominately due to a decrease in monitoring and maintenance services provided.
Cost of sales for the year ended December 31, 2024 was $55,571, a decrease of $115,333 or 67%, from $170,904 for the year ended December 31, 2023. Our cost of sales decreased primarily due to decreased costs related predominately to the decrease in revenues related to our contract with the Laredo ISD.
Selling and general and administrative expenses were $2,755,418 for the year ended December 31, 2024 compared to $2,999,384 for the year ended December 31, 2023, which resulted in a decrease of $241,127 or 8%. The decrease in our selling and general and administrative expenses is largely due to a decrease in stock compensation of $159,952, a decrease in professional fees of $86,120, and a decrease in payroll related expenses of $39,333 which were offset by an increase in marketing and advertising of $43,883. Salaries and wages expenses were $732,962 for the year ended December 31, 2024 compared to $772,295 for the year ended December 31, 2023, which resulted in a decrease of $39,333 or 5%. The decrease in salaries and wages is due to fewer employees employed by the Company during 2024.
Other income (expense) was ($586,551) for the year ended December 31, 2024 compared to ($222,245) for the year ended December 31, 2023, which resulted in an increase in the net expense of $364,306. The increase in the expense was a result of the impairment on loss of investment for $600,000 offset by a decrease in interest expense of $154,110.
Research and development costs were $379,940 for the year ended December 31, 2024 compared to $131,759 of research and development costs for the year ended December 31, 2023, which resulted in an increase of $248,181. The increase in research and development costs is due to an increase in expenses incurred in the development of our LPN-16.
Depreciation expense was $25,964 for the year ended December 31, 2024 compared to $42,355 for the year ended December 31, 2023, resulting in a decrease of $16,391 or 39%. The decrease in depreciation expense is principally due to fewer asset additions in the last two to three years.
| 21 |
Liquidity and Capital Resources
While we have raised capital to meet our working capital and financing needs in the past, additional financing will be required in order to meet our current and projected cash requirements for operations. As of December 31, 2024, we had a working capital deficit of $2,358,251. The $335,000 other payable account balance at December 31, 2024 and 2023, represents Link sales that have been funded by customers, for which the Company no longer expects to fulfill the related obligations to justify presenting as deferred revenue. The Company intends to relieve the liability through a combination of exchanges for common stock and cash.
We estimate that we could need approximately $4,200,000 of capital or financing over the next twelve months to fund our planned operations, including the commercialization of our LPN-16 for supporting our private LTE services and paying down $1,345,000 of existing note payables that is expected to come due in the next twelve months as well as to pay out the $335,000 included in other payables. Until the $335,000 is converted to common stock, the amounts are due on demand and, therefore, while unlikely to be demanded, the monies are included as an outflow over the next twelve months. Additionally, Wytec will look to extend or convert into common stock the debt of $1,345,000 that comes due in 2025, however, until negotiated, it is included as a cash need for the next twelve months. Approximately $2,577,000 of the cash needs relates to operational needs, including paying down current accounts payable of approximately $617,000, accrued interest of $183,715, and $1,776,000 of operations, including research and development expenses, that cannot be extended.
We anticipate that we will incur operating losses in the next twelve months. Our prospective customers budgetary allowances and funding, must be considered while considering the risks, expenses, and difficulties frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek growth opportunities through investment and acquisitions, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.
Cash Flow from Operating Activities
Cash flows used in operating activities during the year ended December 31, 2024 were $1,704,485 compared to $1,858,322 during the year ended December 31, 2023.
Cash Flow from Investing Activities
In 2024, the Company invested $1,899 in computer equipment. In contrast, our 2023 investing activities consisted of a $600,000 investment in Insurance Resources LLC.
Cash Flow from Financing Activities
Cash flows provided from financing activities during the year ended December 31, 2024 were $1,252,323 compared to $2,929,334 during the year ended December 31, 2023. During the year ended December 31, 2024, we received $668,932 from the exercise of common stock purchase warrants, and during the year ended December 31, 2023, we received $605,865 from the exercise of common stock purchase warrants. During the year ended December 31, 2024, we also obtained debt financing of $605,000 while during the year ended December 31, 2023, we obtained financing of $2,376,515.
| 22 |
Satisfaction of Our Cash Obligations for the Next Twelve Months
As of December 31, 2024, our cash balance was $110,699. Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, including revenue from our installation contracts with the Texas school districts, private placements of our capital stock, exercise of warrants, third party financing, and/or traditional bank financing. We anticipate sales-generated income during that same period, but do not anticipate generating sufficient revenue to meet our working capital requirements. Consequently, we intend to attempt to find sources of additional capital in the future to fund our growth and expansion through additional equity or debt financing or credit facilities. There is no assurance that we will be able to meet our working capital requirements through the private placement of equity or debt or from any other source.
Other Funding Arrangements
On September 28, 2023, (the “Effective Date”), we entered into a Share Purchase Agreement (the “SPA”) with Gem Global Yield LLC SCS (“GEM” or the “Purchaser”) and Gem Yield Bahamas Limited (“GYBL”). Pursuant to the SPA, we may sell to the Purchaser from time to time up to $100,000,000 (the “Aggregate Limit”) in shares of our common stock during the 36 month period after the first day on which the Company’s common stock trades on a nationally recognized United States stock exchange or any other exchange platform in the world (the “Public Listing Date”). Pursuant to the SPA, after the Public Listing Date, the Company may issue a draw down notice pursuant to which the Company may sell the Purchaser an amount of shares that shall not exceed 400% of the average daily trading volume for the 30 days immediately preceding the date on which the Company delivers the draw down notice. The per share price shall equal 90% of the average applicable Daily Closing Price (as defined in the SPA) of the Company’s common stock during the applicable Draw Down Pricing Period (as defined in the SPA). Notwithstanding the foregoing, within five trading days after the Public Listing Date, the Company may issue a draw down notice for an amount up to $10,000,000 of the Aggregate Limit. Unless earlier terminated as provided in the SPA, the SPA terminates automatically on the earliest of (i) thirty-six (36) consecutive months after the Public Listing Date; (ii) thirty-six (36) months from the Effective Date (as may be extended as provided in the SPA), and (iii) the date the Purchaser shall have purchased the Aggregate Limit.
Pursuant to the SPA, in consideration for these services, we agreed to pay GYBL the following consideration: (i) a commitment fee equal to two (2) percent of the Aggregate Limit (the “Commitment Fee”) payable in cash from the proceeds of the Draw Downs (as defined in the SPA) or in freely tradeable shares of common stock of the Company valued at the Daily Closing Price (as defined in the SPA) at the time of each Draw Down (as defined in the SPA), at the option of Wytec, deliverable as described in the SPA so long as the entire Commitment Fee is paid on or before the first anniversary of the Public Listing Date and (ii) a warrant granting GYBL the right to purchase shares of our common stock having an expiration date that is the third anniversary of the Public Listing Date at the exercise price and upon the terms set forth more fully in the SPA, up to the number of shares of common stock that is equal to 3.7% of the total number of shares of common stock outstanding calculated on a fully diluted basis as of the Public Listing Date (the “Warrant”). The Commitment Fee will not be payable and the Warrant will not be issuable if the Company’s common stock does not become publicly listed.
Pursuant to a Registration Rights Agreement, dated September 28, 2023, between us and the Purchaser and GYBL (the “Registration Rights Agreement”), no later thirty (30) calendar days after the Public Listing Date, we are obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) to register the shares of common stock issuable pursuant to the SPA. Pursuant to the Registration Rights Agreement, we are obligated to have the registration statement declared effective by the SEC on the earlier of (A) the 45th calendar day after the date on which the registration statement is filed with the SEC and (B) the fifth business day after the date the Company is notified by the SEC that the registration statement will not be reviewed.
| 23 |
Other Payable
The $335,000 other payable account balance at December 31, 2024 and 2023, represents Link sales that have been funded by customers, for which the Company no longer expects to fulfill the related obligations to justify presenting as deferred revenue. The Company intends to relieve the remaining amount of this liability through a combination of exchanges for common stock and cash.
Going Concern
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $34,781,581 at December 31, 2024, and have reported negative cash flows from operations. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months from the date of this report. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.
Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, we cannot assure that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
Recently Issued Accounting Standards
We have reviewed the standards issued by the Financial Accounting Standards Board (“FASB”) through December 31, 2024 and which are not yet effective. The following is a list of pronouncements that the Company has or will adopt:
On December 14, 2023, FASB issued ASU 2023-09: Improvements to Income Tax Disclosures (Topic 740). The new standard was issued with the intent of expanding income tax expense presentation and note disclosure requirements. The new standard becomes effective on January 1, 2025, but the Company does not expect the standard to have a significant impact on the Company’s financial statements.
| 24 |
Item 8. Financial Statements and Supplementary Data
WYTEC INTERNATIONAL, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
CONTENTS
| 25 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Wytec International, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Wytec International, Inc. (the “Company”) as of December 31, 2024 and 2023, the related statements of operations, stockholders' deficit and cash flows for the years then ended, and the related notes to the financial statements (collectively, “the financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the financial statements, the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters.
We have served as the Company's auditor since 2023.
March __, 2025
| F-1 |
WYTEC INTERNATIONAL, INC.
BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Employee retention credit receivable | ||||||||
| Inventory | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Investment in limited liability company | ||||||||
| Operating lease, right-of-use assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Other payable | ||||||||
| Operating lease, right-of-use obligation, current portion | ||||||||
| Contract liability | ||||||||
| Notes payable | ||||||||
| Convertible promissory notes | ||||||||
| Promissory notes, shareholders | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Operating lease, right-of-use obligation, long term portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note N) | ||||||||
| Stockholders' deficit: | ||||||||
| Preferred stock, par value $ per share, shares authorized: | ||||||||
| Series A convertible preferred stock, par value $ per share, shares designated, shares issued and shares outstanding at December 31, 2024 and 2023 | ||||||||
| Series B convertible preferred stock, par value $ per share, shares designated, shares issued and shares outstanding at December 31, 2024 and 2023 | ||||||||
| Series C convertible preferred stock, par value $ per share, shares designated, and shares issued and outstanding at December 31, 2024 and 2023 | ||||||||
| Common stock, par value $ per share, shares authorized, and shares issued and outstanding at December 31, 2024 and 2023 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Repurchased shares | ( | ) | ( | ) | ||||
| Subscriptions payable | ||||||||
| Treasury stock: | ||||||||
| Series A convertible preferred stock, at cost, shares and shares | ( | ) | ( | ) | ||||
| Series B convertible preferred stock, at cost, shares and shares | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
See accompanying notes to the financial statements.
| F-2 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Expenses: | ||||||||
| Selling, general, and administrative | ||||||||
| Research and development | ||||||||
| Depreciation and amortization | ||||||||
| Operating expenses, net | ||||||||
| Net operating loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Other income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Impairment loss on investment | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - basic and fully diluted | ||||||||
| Net loss per share - basic and fully diluted | $ | ) | $ | ) | ||||
See accompanying notes to the financial statements.
| F-3 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
| Class A | Class B | Class C | ||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Conversion of note payable into common stock | – | – | – | |||||||||||||||||||||||||||||
| Cancellation of subscription payable | – | – | – | – | ||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | – | |||||||||||||||||||||||||||||
| Cashless warrants exercised | – | – | – | |||||||||||||||||||||||||||||
| Extension of warrants | – | – | – | – | ||||||||||||||||||||||||||||
| Warrants issued as compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | – | |||||||||||||||||||||||||||||
| Net loss for the year ended December 31, 2023 | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||||||||||||||
| Conversion of note payable into common stock | – | – | – | |||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | – | |||||||||||||||||||||||||||||
| Cashless warrant exercised | – | – | – | |||||||||||||||||||||||||||||
| Extension of warrants | – | – | – | – | ||||||||||||||||||||||||||||
| Conversion of series C stock for common stock | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | – | |||||||||||||||||||||||||||||
| Stock issued to existing holders | – | – | – | |||||||||||||||||||||||||||||
| Stock issued as compensation | – | – | – | |||||||||||||||||||||||||||||
| Warrants issued as compensation | – | – | – | – | ||||||||||||||||||||||||||||
| Net loss for the year ended December 31, 2024 | – | – | – | – | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| F-4 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT (CONTINUED)
| Class A Preferred | Class B Preferred | Additional | Total | |||||||||||||||||||||||||||||||||
| Treasury Stock | Treasury Stock | Paid-in | Repurchased | Subscriptions | Accumulated | Stockholders' | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Shares | Payable | Deficit | (Deficit) | ||||||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of note payable into common stock | – | – | ||||||||||||||||||||||||||||||||||
| Cancellation of subscription payable | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | ||||||||||||||||||||||||||||||||||
| Cashless warrants exercised | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Extension of warrants | – | – | ||||||||||||||||||||||||||||||||||
| Warrants issued as compensation | – | – | ||||||||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | ||||||||||||||||||||||||||||||||||
| Net loss for the year ended December 31, 2023 | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Conversion of note payable into common stock | – | – | ||||||||||||||||||||||||||||||||||
| Warrants exercised for cash | – | – | ||||||||||||||||||||||||||||||||||
| Cashless warrant exercised | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Extension of warrants | – | – | ||||||||||||||||||||||||||||||||||
| Conversion of series C stock for common stock | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Stock issued for board member compensation | – | – | ||||||||||||||||||||||||||||||||||
| Stock issued to existing holders | – | – | ||||||||||||||||||||||||||||||||||
| Stock issued as compensation | – | – | ||||||||||||||||||||||||||||||||||
| Warrants issued as compensation | – | – | ||||||||||||||||||||||||||||||||||
| Net loss for the year ended December 31, 2024 | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying notes to the financial statements.
| F-5 |
WYTEC INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
| For the Year | ||||||||
| Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Reversal of stock-based compensation | ( | ) | ||||||
| Warrant expense | ||||||||
| Stock-based compensation | ||||||||
| Non-cash lease expense | ||||||||
| Impairment of investment | ||||||||
| Decrease (increase) in operating assets | ||||||||
| Accounts receivable | ||||||||
| Employee retention credit receivable | ( | ) | ||||||
| Inventory | ||||||||
| Increase (decrease) in operating liabilities | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable, related party | ( | ) | ||||||
| Contract liability | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of investment | ( | ) | ||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from promissory notes, shareholders | ||||||||
| Proceeds from issuance of convertible promissory notes | ||||||||
| Payments on promissory notes, shareholders | ( | ) | ||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from exercise of warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Conversion of accrued interest and note payable into common stock | $ | $ | ||||||
| ROU assets and operating lease obligations recognized | $ | $ | ||||||
See accompanying notes to the financial statements.
| F-6 |
WYTEC INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A – SIGNIFICANT ACCOUNTING POLICIES
Description of Business: Wytec International, Inc. (“Wytec,” “we,” “our,” “us,” or the “Company”), a Nevada corporation, designs, manufactures, and installs carrier-class Wi-Fi solutions in the 70 and 80 gigahertz licensed frequency program to local government, Mobile Service Operations, National Telecommunications Operators, and corporate enterprises. Wytec was previously involved in the sale of wired and wireless services, including products, wireless data cards, back-office platform and rate plans to their commercial and enterprise clients and has been engaged in the sale of Federal Communications Commission (“FCC”) registered links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allowed qualified individuals to own a segment of the “backhaul” infrastructure of Wytec’s city-wide business deployment.
Basis of Accounting: The accompanying financial statements have been prepared by the Company’s management in accordance with U. S. generally accepted accounting principles (“GAAP”) and applied on a consistent basis.
Revenue and Cost Recognition. Revenue is recognized by applying the following five 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 the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
The Company earns revenues from contracts with customers for sales and installation of cellular enhancement equipment and support agreements. Revenue from the sale and installation of cellular enhancement equipment is recognized either when the installation is completed or as the Company installs the cellular enhancement equipment, depending on the complexity of the system, such as the degree of customization of the equipment being installed, and the agreement with the customer. Revenue from the installation of systems which management believes have an alternative use is recognized upon customer acceptance. This assessment, at contract inception, is based on the combination of equipment ordered, the services performed and whether or not material effort, within the context of the contract, would be required to rework the equipment for another project. For example, such contracts are usually completed within 30-45 days. In larger more complex projects where the Company is creating an asset for the customer with no alternative use and has an enforceable right to payment for performance prior to contract completion, we recognize revenue utilizing the percentage of completion method. This method measures completion based on management’s estimate of total costs to complete each contract because management considers total costs to be the best available measure of progress on the contract. During 2024 and 2023, all sales and installation revenue was recognized when the installation was completed.
Support agreements entered into with customers are generally for a period of one year, during which the Company stands ready to provide service and support for installed systems at the customer site. Support agreement amounts are billed in advance to the customer, as agreed in the contract, and recorded as a contract liability. During the period, the Company provides unspecified firmware upgrades to installed client equipment as they are available. Management estimates that straight line recognition of revenue over the period of the support agreement contract is representative of the pattern of delivery on the Company’s obligation under these agreements.
The Company has applied the practical expedient that permits the Company to recognize revenue without regard to significant financing components based on the Company’s expectations about the transfer of services and the receipt of payment from customers. The effect of this practical expedient is not material to the Company’s financial statements.
Sales tax is recorded on a net basis and excluded from revenue.
| F-7 |
Cash: The Company considers all bank deposits and short-term securities with an original purchase maturity of three months or less to be cash equivalents.
Inventory: Inventory is stated at the lower of cost and selling price less costs to complete and sell. Specific identification is used to track inventory and record cost of goods sold when the inventory is sold.
Allowance for Credit Losses: The allowance for credit losses is evaluated on a regular basis through periodic reviews of the collectability of the receivables in light of historical experience, adverse situations that may affect our customers' ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and those considered uncollectible are charged against the allowance account in the period they are deemed uncollectible. No allowance for trade accounts receivable was determined to be necessary at December 31, 2024 and December 31, 2023.
Property and Equipment: Property and equipment are stated at cost. Depreciation is computed using the estimated useful lives of the related assets, generally ranging from five to ten years. Expenditures for repairs and maintenance are charged to costs and expensed as incurred, while expenditures for renewal and betterments are capitalized. Leasehold improvements are amortized over the remaining term of the lease. Upon retirement or replacement, the cost of capitalized assets and the related accumulated depreciation and amortization is eliminated with the resulting gain or loss recognized.
Operating Leases Right-of-use Assets and Operating Lease Obligations: If we determine that an arrangement is or contains a lease, we recognize a right-of-use (“ROU”) asset and lease obligation at the commencement date of the lease. ROU assets represent our right to use an underlying asset for the lease term and lease obligations represent our lease payments arising from the lease. Operating lease ROU assets and obligations are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Impairment of Long-lived Assets: The Company reviews the carrying value of construction in process and property and equipment for impairment whenever events and circumstances indicate that the carrying value of the assets may not be recoverable from the estimated future cash flows expected to result from their use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of long-lived assets. The factors considered by management in performing this assessment include current operating results, trends, and prospects, as well as the effects of obsolescence, demand, competition, and other economic factors. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need to revise the useful lives.
Income Taxes: The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.
| F-8 |
Stock Based Compensation and Warrant Awards: The Company measures stock-based compensation expense for stock and warrant awards at the grant date, based on the fair value-based measurement of the award, and the expense is recorded over the related service period, generally the vesting period, net of estimated forfeitures. The Company calculates the fair value-based measurement of warrants using the Black-Scholes valuation model and the simplified method and recognizes expense using the straight-line attribution approach.
Estimating the fair value of share-based awards requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the warrants and stock price volatility. The Company previously engaged valuation specialists to assist with determining the fair value of our common stock prior to being listed on the OTCQB market in August 2024. The Company provided the specialist with judgmental inputs and assumptions such as cash flow projections and future results of operations to the specialist. After July 30, 2024 and being listed for trading on the OTCQB market, the fair value of the Company’s common stock is valued at the OTCQB market trading value.
The expected term of the warrant is estimated using the contractual life as the Company has no historical information from which to develop reasonable expectations about future exercise patterns. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of warrants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
Fair Value of Financial Instruments: The Company’s financial instruments include cash and cash equivalents, accounts receivable, investments, accounts payable, accrued expenses, convertible promissory notes and notes payable. The recorded values of these financial instruments approximate their fair values based on their short-term nature. The carrying value of long-term notes payable approximates fair value since the related rates of interest approximate market rates.
The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:
Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3: inputs to the valuation methodology are unobservable and significant to the fair value
Cost Method Investment: Investments made
by the Company are currently classified as cost method investment, or investments that do not hold any significant influence or control
and do not have a readily-determinable fair value. As the investment does not have a readily-determinable fair value and as the investment
is not into an investment fund, the measurement alternate approach, in accordance with ASC 321, is used to measure the fair value of the
investment. The measurement alternate approach is defined as cost, less impairment, adjusted (increased or decreased) for information
about fair value of the investment from observable price changes, whenever those occur. During the year ended December 31, 2024, the Company’s
investment in Insurance Resources, LLC was considered impaired and a loss on impairment was recognized for $
| F-9 |
Concentrations of Credit Risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments. The Company maintains cash deposits with financial institutions and limits the amount of credit exposure to any one financial institution. Deposits with financial institutions may on occasion exceed the federally insured limits. The Company periodically assesses the financial institutions and believes the risk of any loss is minimal.
Government Regulations: The Company is subject to federal, state and local provisions regulating the discharge of materials into the environment. Management believes that its current practices and procedures for the control and disposition of such wastes comply with applicable federal, state and local requirements.
Use of Estimates: The preparation of the financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the stock-based compensation expense for warrants issued for services (see Note I for further details on estimates used to calculate warrant expense). Actual results could differ from those estimates.
New Accounting Standards:
On December 14, 2023, FASB issued ASU 2023-09: Improvements to Income Tax Disclosures (Topic 740). The new standard was issued with the intent of expanding income tax expense presentation and note disclosure requirements. The new standard becomes effective on January 1, 2025, but the Company does not expect the standard to have a significant impact on the Company’s financial statements.
NOTE B – GOING CONCERN
The financial statements are prepared in accordance
with U.S. GAAP applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal
course of business. The Company has incurred continuous losses from operations, has an accumulated deficit of $
Since inception, operations have primarily been funded through private equity financing. Management expects to continue to seek additional funding through private or public equity sources and will seek debt financing. The Company’s ability to continue as a going concern is ultimately dependent on its ability to generate sufficient cash from operations to meet cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance that the Company will be successful in these efforts. These factors, among others, indicate substantial doubt that the Company will be able to continue as a going concern for a period of one year from the filing of these financial statements. Management plans to raise additional funding through a capital raise associated with a public offering and/or additional private capital raises.
| F-10 |
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should it be unable to continue as a going concern.
NOTE C – REVENUES AND ACCOUNTS RECEIVABLE
The Company recognizes revenue in accordance with its accounting policy. The Company invoices customers and recognizes accounts receivable in an amount equivalent to which it has an unconditional right and expects to receive aligned with the agreement with the customer. The Company has contracted payment terms with its customer of net 30 days. The Company recognized revenue from performance obligations satisfied as of a point in time and over time as disaggregated in the table below.
Timing of Revenue Recognition
| For the Year Ended | ||||||||
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Point in Time | $ | $ | ||||||
| Over Time | ||||||||
| $ | $ | |||||||
The Company earns revenues from in-building cellular
systems and network services. Revenues from the sale and installation of in-building cellular systems, including fixed wireless, SmartDAS,
and 4G LTE, totaled $
Revenues from network and other services totaled
$
Due to the Company billing service agreements in advance and recognizing revenue for service agreements over time as more fully described in its accounting policy, the Company carries a contract liability balance proportional to the time remaining on each customer agreement. The Company issues invoices to customers for completed work as performance obligations satisfied as of a point in time are fulfilled and does not carry a contract asset balance for these performance obligations.
The Company’s contracts for support services
are typically for terms of one year or less. The aggregate amount of contract performance obligation as of December 31, 2024 that the
Company expects to recognize over the next year is $
| F-11 |
The Company is under no obligation and is not in the practice of providing customers with returns, rebates, discounts, or refunds. The Company, accordingly, does not recognize these obligations at the time of revenue recognition. The Company may receive future consideration from customers who enter into support agreements. Those services are delivered as of a point in time when the customer requests the service. Future consideration as described is excluded from the transaction price calculated for support agreement performance obligations.
The Company has applied the practical expedient that permits the Company to recognize revenue without regard to significant financing components based on the Company’s expectations about the transfer of services and the receipt of payment from customers. The effect of this practical expedient is not material to the Company’s financial statements.
NOTE D – INVESTMENT IN LIMITED LIABILITY COMPANY
The Company made an investment into another company
in the amount of $
NOTE E – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Telecommunications equipment and computers | $ | $ | ||||||
| Vehicle | ||||||||
| Office furniture and fixtures | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense for the year ended December 31, 2024 and 2023
was $
| F-12 |
NOTE F – DEBT
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Notes payable to a financial institution, at 8.75% per annum, with the equipment purchased pledged as collateral and varying due dates through November 2024 | $ | $ | ||||||
| Unsecured promissory note payable to a director of the Company, at 7% per annum, due in August 2025 | ||||||||
| Unsecured promissory note payable to president of the Company, at 5% per annum, due in April 2025 | ||||||||
| Secured convertible promissory notes payable to various investors, at 9.5% per annum, due on December 31, 2025 | ||||||||
| Secured convertible promissory notes payable to various investors, at 9.5% per annum, due on December 31, 2025 | ||||||||
| Unsecured convertible promissory note payable to a shareholder, at 9.5% per annum, due on June 30, 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due on March 31, 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due in October 2025 | ||||||||
| Unsecured promissory note payable to the president of the Company, at 7% per annum, due in December 2025 | ||||||||
| Total | $ | $ | ||||||
In February 2020, we issued a note in the amount
of $
In October 2021, the president of the Company
loaned the Company $
In January 2023, the president of the Company
loaned the Company $
| F-13 |
In February 2023, we commenced an offering of
up to $25,000,000 of 9.5% secured convertible promissory notes (“2023 Notes”) pursuant to a private placement in accordance
with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the “2023 Offering”). The 2023 Notes together
with all accrued and unpaid interest will be payable on or before December 31, 2024 and will be secured by a perfected recorded first
priority security interest in the Company’s LPN-16 patent. If the Company’s common stock is listed on the NASDAQ Capital Markets
on or before the maturity date, the outstanding Notes will automatically be converted into shares of the Company’s common stock
at a rate equal to the price per share in the public offering. If the Notes have not otherwise been automatically converted into shares
of the Company’s common stock, the noteholders (“2023 Noteholders”) will have the option, on or before the maturity
date, to convert all or a portion of their outstanding 2023 Notes into shares of the Company’s common stock at a rate equal to $5.00
per share and, immediately upon the conversion, the converting Noteholders will be issued a number of new warrants from the Company equal
to the dollar amount of the conversion divided by $5.00 (the “2023 Warrants”). The 2023 Warrants will be exercisable until
December 31, 2024 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day
moving average of the Company’s public trading price if the Company’s securities are trading on a public securities trading
market. As of December 31, 2024, the Company has issued a total of $
In July 2024, we commenced
an offering of up to $10,000,000 of 9.5% secured convertible promissory notes (“2024 Notes”) pursuant to a private
placement in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933, as amended. The 2024 Notes together with all
accrued and unpaid interest will be payable on or before December 31, 2025 and will be secured by a perfected recorded subordinate
security interest in the Company’s LP-16 patent. If the Company’s common stock is listed on the NASDAQ Capital Markets
on or before the maturity date, the outstanding 2024 Notes will automatically be converted into shares of the Company’s common
stock at a rate equal to the price per share in a public offering or, in the event of a direct listing of the Company’s common
stock, the reference price on the closing date of the listing. If the 2024 Notes have not otherwise been automatically converted
into shares of the Company’s common stock, these noteholders will have the option, on or before the maturity date, to convert
all or a portion of their outstanding 2024 Notes into shares of the Company’s common stock at a rate equal to $5.00 per share
and, immediately upon the conversion, the converting noteholders will be issued a number of new warrants from the Company equal to
the dollar amount of the conversion divided by $5.00. These warrants will be exercisable until December 31, 2025 at an exercise
price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the
Company’s public trading price if the Company’s securities are trading on the NASDAQ Capital Markets. As of December 31,
2024, the Company issued a total of $
In October 2024, the president of the Company
loaned the Company $
In December 2024,
we amended an unsecured promissory note issued to one investor in the amount of $
In December 2024, the president of the Company
loaned the Company $
| F-14 |
Future minimum payments consist of the following:
| December 31, | ||||
| 2025 | $ | |||
| Total future payments | $ | |||
NOTE G – REPURCHASE AGREEMENT
In April 2020, we entered into a Repurchase and
General Release Agreement with one shareholder pursuant to which we promised to pay the amount of $200,000 due on December 31, 2020 in
exchange for 40,000 shares of common stock and 40,000 shares of Series B Preferred Stock (which shares automatically converted into 40,000
shares of common stock in April 2022). The agreement stated that the Company was to make $10,000 monthly installments with the balance
payable on the maturity date. The agreement contains a feature that allows the Company to extend the maturity date of the amount payable
to March 31, 2021 in the Company’s sole discretion, and if the Company exercises this option, the $10,000 monthly installments will
continue until the extended maturity date on which date the remaining balance will be due. During the quarter ended December 31, 2020,
the Company extended the maturity date under the terms of the agreement to March 2021. The Company made payments in the amount of $80,000
during the period, however, the shareholder has not properly returned the shares so they may be canceled. As the shares had not been properly
returned, the Company is not obligated, per the agreement, to pay any monies and the $80,000 was paid in good faith that the shares would
be returned. The Company is pursuing action against the shareholder to get the shares returned or get the monies paid returned. Until
such time, the $
NOTE H – LEASES
Short Term Leases
The Company previously leased facilities on a
month-to-month basis through February 29, 2024. Total lease expense related to short term leases for the year ended December 31, 2024
and 2023, totaled $
Operating Leases
The Company leases its office space and leased
data centers under operating leases. The leases for the data centers were cancelled as of June 20, 2023. For the year ended December 31,
2024 and 2023, operating lease expense under these leases was $
The remaining weighted average lease term is
Future minimum lease payments as of December 31, 2024 are as follows:
| 2025 | $ | |||
| 2026 | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of minimum lease payments | ||||
| Less: current portion of lease obligation | ||||
| Long-term lease obligation | $ |
| F-15 |
NOTE I – WARRANTS
The
Company has common stock purchase warrants outstanding at December 31, 2024 to purchase
To calculate the fair value of stock warrants at the date of grant, we use the Black-Scholes option pricing model. The volatility used is based on historical volatilities of selected peer group companies. Management estimated the fair value of the underlying common stock by utilizing the discounted cash flow method and the prior transaction method approaches and determined a fair value of $5.00 before July 30, 2024 and at trading value after being listed on July 30, 2024. Management estimates the average volatility considering current and future expected market conditions. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Each issuance is individually valued according to this procedure as of the date of issue with maturity dates through October 11, 2026, volatility estimates between 27.72% to 37.58% and risk-free rates 4.50% to 5.54% in the period.
During June 2023, the Company issued common
stock purchase warrants (“Warrants”) pursuant to its offering of up to $25,000,000 of 9.5% secured convertible promissory
notes (“Notes”) pursuant to a private placement in accordance with Rule 506(c) of Regulation D of the Securities Act of 1933,
as amended (the “2022 Offering”), and
During the third quarter of 2023, the Company
issued
During October 2023, the Company issued
common stock purchase warrants as compensation to the director of operations of the Company. The total cost of the warrants was $,
which was recorded as additional paid in capital and which was reduced by $
During the fourth quarter of 2023, the Company
issued
During December 2023, the Company issued
| F-16 |
During December 2023, the Company issued
In December 2023, the Company extended the expiration date of all warrants expiring on December 31, 2023 to January 31, 2024. Due to the modification of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before modification was recorded as a warrant expense, which was only applicable to service warrants. Total incremental increase in the warrants was $, which was recorded as stock compensation expense and is included in the general and administrative expenses in the accompanying statement of operations for the year ended December 31, 2023.
During December 2023, the Company issued a total
of shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants, and other common
stock purchase warrants by several investors at an exercise price of $5.00 per share or a total of $
During December 2023, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of a total of common stock purchase warrants by several investors.
In January 2024, the Company extended the
expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company, to December 31, 2025. Due to the modification
of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before
the modification was recorded as a warrant expense, which was only applicable to service warrants. The total incremental increase in
the warrants was $
During the first quarter of 2024, the Company
issued
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of
shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants and, other common stock
purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $
In January 2024, the Company extended the expiration
date of
In May 2024, the Company issued shares of the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $.
| F-17 |
In May 2024, the Company made an offer to existing
warrant holders who obtained their warrants upon the conversion of their 9.5% convertible promissory notes pursuant to which such warrant
holders who agreed, on or before May 31, 2024, to exercise at least 50% of their warrants on or before June 30, 2024 would receive (i)
an extension of the expiration date of the balance of such warrants to December 31, 2025; (ii) removal of the following language related
to the exercise price of the warrants “provided, that ten (10) days after the common stock of the Company commences trading on a
public securities trading market, the amount per Share shall thereafter be the greater of (i) $5.00 or (ii) 85% of the average closing
price of the Company’s common stock, as quoted on the public securities trading market on which the Company’s common stock
is then traded with the highest volume, for ten (10) consecutive trading days immediately prior to the date of exercise;” and (iii)
payment of the legal expense to remove the 144 legend, after the applicable holding period, for both the shares issuable upon the exercise
of such warrants and the shares issued upon the conversion of their 9.5% convertible promissory notes. Pursuant to this offer, in May
2024, the Company issued a total of shares of the Company’s common stock upon the exercise of 2023 Warrants and
other common stock purchase warrants by a total of eight investors, including ERI, at an exercise price of $5.00 per share for total proceeds
of $
In July 2024, the Company issued
In July 2024, the Company issued shares of the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $.
In August 2024, the Company issued a total of
In December 2024, the Company extended the expiration
date of
The following is a summary of activity and outstanding common stock warrants:
| Number of Warrants | ||||
| Balance, December 31, 2023 | ||||
| Warrants granted | ||||
| Warrants exercised | ( | ) | ||
| Warrants expired/cancelled | ( | ) | ||
| Balance, December 31, 2024 | ||||
| Exercisable, December 31, 2024 | ||||
As of December 31, 2024, the outstanding and exercisable warrants have a weighted average remaining term of years. As of December 31, 2024 and 2023, the warrants have a weighted average exercise price of $ and $, respectively.
| F-18 |
NOTE J – STOCKHOLDERS’ EQUITY
Holders of common stock are entitled to one vote per share. The common stock does not have cumulative voting rights in the election of directors. Accordingly, the holders of a majority of the outstanding shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Subject to preferential rights with respect to any series of preferred stock that may be issued, holders of the common stock are entitled to receive ratably such dividends as may be declared by the board of directors on the common stock out of funds legally available therefore and, in the event of liquidation, dissolution or winding-up of affairs, are entitled to share equally and ratably in all the remaining assets and funds.
Series A preferred stock is nonvoting capital stock but may be converted into voting common stock. Each share of series A preferred stock is convertible at the option of the holder at any time after the issuance into one share of common stock, subject to adjustment from time to time in the event (i) the Company subdivides or combines its outstanding common stock into a greater or smaller number of shares, including stock splits and stock dividends; or (ii) of a reorganization or reclassification of common stock, the consolidation or merger with or into another company, the sale, conveyance or other transfer of substantially all of the Company assets to another corporation or other similar event, whereby securities or other assets are issuable or distributable to the holders of the outstanding common stock upon the occurrence of any such event; or (iii) of the issuance to the holders of Company common stock of securities convertible into, or exchangeable for, such shares of common stock.
Each outstanding share of series A preferred stock will automatically convert into one share of common stock (a) if the common stock commences public trading on the NASDAQ capital market or better, (b) if the series A preferred stockholder receives distributions from the net profits pool equal to the original purchase price paid for their registered links, or (c) five years after the date of issuance of the series A preferred stock. The Company does not have any other right to require a conversion of the series A preferred stock into common stock. The Company does not have the option to redeem outstanding shares of series A preferred stock. A holder of the series A preferred stock has no preemptive rights to subscribe for any additional shares of any class of stock or for any issue of bonds, notes or other securities convertible into any class of stock. In the event of a liquidation, dissolution or winding-up whether voluntary or otherwise, after payment of debts and other liabilities, the holders of the series A preferred stock will be entitled to receive from the remaining net assets, before any distribution to the holders of the common stock, the amount of $1.50 per share. After payment of the liquidation preference to the holders of series A preferred stock and payment of any other distributions that may be required with respect to any other series of preferred stock, the remaining assets, if any, will be distributed ratably to the holders of the common stock and the holders of the series A preferred stock on an as-if converted basis.
The series B preferred stock is voting capital stock. The holders of the series B preferred stock will vote on an as-converted basis with the common stock on all matters submitted to a vote of the shareholders. The holders of the series B preferred stock are not entitled to any dividends unless and until the series B preferred stock is converted into common stock. Each share of series B preferred stock is convertible at the option of the holder at any time after issuance into one share of common stock, subject to adjustment from time to time in the event (i) the Company subdivides or combines into outstanding common stock into a greater or smaller number of shares, including stock splits and stock dividends; or (ii) of a reorganization or reclassification of common stock, the consolidation or merger with or into another company, the sale, conveyance or other transfer of substantially all of the Company assets to another corporation or other similar event, whereby securities or other assets are issuable or distributable to the holders of the outstanding common stock upon the occurrence of any such event; or (iii) of the issuance by us to the holders of common stock of securities convertible into, or exchangeable for, such shares of common stock.
Each outstanding share of series B preferred stock will automatically convert into one share of common stock at a conversion rate equal to the lesser of $3.00 per share or 75% of the average closing price of the Company’s common stock as quoted on the public securities trading market on which our common stock is then traded with the highest volume, for ten (10) consecutive trading days immediately after the first day of public trading of common stock if common stock commences public trading on the NASDAQ capital market or better, but in any event no less than $2.50 per share or at $3.00 per share five years after the date of issuance of the series B preferred stock. In the event of a liquidation, dissolution or winding-up whether voluntary or otherwise, after payment of debts and other liabilities, the holders of the series B preferred stock will be entitled to receive from the remaining net assets, before any distribution to the holders of the common stock, and pari pasu with the payment of a liquidation preference of $1.50 per share to the holders of the series A preferred stock, the amount of $3.00 per share. After payment of the liquidation preference to the holders of the series A preferred stock and the series B preferred stock, and payment of any other distribution that may be required with respect to any other series of preferred stock, the remaining assets, if any, will be distributed ratably to the holders of the common stock, the holders of the series A preferred stock, and the holders of the series B preferred stock on an as-if converted basis.
| F-19 |
The series C preferred stock is voting capital stock. For so long as any shares of the series C preferred stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have the right, on or after July 20, 2016, to vote in an amount equal to 51% of the total vote (representing a super majority voting power) with respect to all matters submitted to a vote of the shareholders of Wytec. Such vote shall be determined by the holder(s) of a majority of the then issued and outstanding shares of series C preferred stock. For example, if there are 10,000 shares of our common stock issued and outstanding at the time of such shareholder vote, the holders of the series C preferred stock, voting separately as a class, will have the right to vote an aggregate of 10,408 shares, out of a total number of 20,408 shares voting.
Additionally, the Company is prohibited from adopting any amendments to the Company’s bylaws or articles of incorporation, as amended, making any changes to the certificate of designation establishing the series C preferred stock, or effecting any reclassification of the series C preferred stock, without the affirmative vote of at least 66-2/3% of the outstanding shares of series C preferred stock. The Company may, however, by any means authorized by law and without any vote of the holders of shares of series C preferred stock, make technical, corrective, administrative or similar changes to such certificate of designation that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of series C preferred stock.
The holders of the series C preferred stock are not entitled to any dividends. Holders of the series C preferred stock have no conversion rights. The shares of the series C preferred stock shall be automatically redeemed by us at their par value of $0.001 per share on the date that Mr. Gray ceases, for any reason, to serve as officer, director or consultant of Wytec. A holder of the series C preferred stock has no preemptive rights to subscribe for any additional shares of any class of stock of Wytec or for any issue of bonds, notes or other securities convertible into any class of stock of Wytec. The holders of the Series C preferred stock are not entitled to any liquidation preference. In August 2024, in accordance with that certain exchange agreement, dated October 6, 2022, as amended on November 15, 2022 and on July 30, 2024, shares of common stock were issued to the president of the Company in exchange for the shares of Series C Preferred Stock owed by him. As of August 2024, there are no shares of series C preferred stock issued and outstanding.
During the second quarter of 2023, the Company
converted $
During the second quarter of 2023, the Company cancelled the subscription payable shares owed pursuant to the Consulting Agreement. The subscription payable shares were originally recorded upon the signing of the Consulting Agreement, but were never issued. Subsequently, the Company entered into the Recession Agreement which rescinded and terminated the Consulting Agreement. Accordingly, the subscription payable shares have been removed.
During the third quarter of 2023, the Company
converted $
During the fourth quarter of 2023, the Company
converted $
During the fourth quarter of 2023, the Company
issued a total of shares of common stock for the exercise of Warrants, 2023 Warrants, and other common stock
purchase warrants at an exercise price of $
During December 2023, a total of common stock purchase warrants were exercised by several investors for a total of shares of Wytec’s common stock on a cashless basis.
| F-20 |
During December 2023, the Company issued a total of shares to the Company’s directors as compensation valued at $ for current and past services performed.
During the first quarter of 2024, the Company
issued
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by Mr. Christopher Stuart, a director of the Company. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by ERI. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of shares of the Company’s common stock upon the cashless exercise of common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $.
In January 2024, the Company issued a total of
shares of the Company’s common stock upon the exercise of Warrants, 2023 Warrants and, other common stock
purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $
In May 2024, the Company issued shares of the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $.
In May 2024, in conjunction with the Company’s
offer to existing warrant holders described in Note I, the Company issued a total of shares of the Company’s common stock
upon the exercise of 2023 Warrants and other common stock purchase warrants by a total of eight investors, including ERI,
at an exercise price of $5.00 per share for total proceeds of $
In July 2024, the Company issued shares of the Company’s common stock upon the exercise of 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $.
In August 2024, the Company issued a total of
During November 2024, the Company issued a total
of
During the year ended December 31, 2024, the Company issued a total of shares to the Company’s directors as compensation valued at $ for services performed during 2024 with an additional $ recorded as compensation for an additional shares accrued for at year end December 31, 2024.
| F-21 |
NOTE K – INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows at:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | $ | $ | ||||||
| Other | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
The Company has net operating loss carry forwards
for tax purposes of approximately $
The Company does
The federal income tax benefit expected by the application of the corporate income tax rates to pre-tax net loss differs from the actual benefit recognized due to the valuation allowance recorded for 2024 and 2023.
The U.S. Statutory Tax Rate is
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Pre-tax GAAP loss at U.S. Statutory rate | $ | ( | ) | $ | ( | ) | ||
| Change in valuation allowance | ||||||||
| Income tax expense | $ | $ | ||||||
NOTE L – RELATED PARTY TRANSACTIONS
The Company has an accounts payable balance owed
to Richardson & Associates in the amount of $
| F-22 |
In
2021, ERI loaned the Company a total of $
In
August 2023, ERI purchased $
In
January 2022, the Company issued warrants to purchase up to
In February 2020,
Mr. Christopher Stuart, a director of the Company, purchased 12.5 units, each unit consisting of $
In February 2022, Mr. Stuart purchased for $175,000
the unit, consisting of a $175,000 7% promissory note with a maturity date of August 31, 2023 and 17,500 common stock purchase warrants
exercisable on a cash or cashless basis until December 31, 2024 at an exercise price of $5.00 per share, offered by the Company in its
private placement pursuant to Rule 506(b) of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended,
commenced by the Company in February 2022. In December 2024, the Company extended the expiration date of the 17,500 warrants from December
31, 2024 to December 31, 2025 in consideration for allowing the Company to extend the maturity date of the $
| F-23 |
In November and December 2022, we borrowed a total
of $
In August 2023, Mr. Stuart purchased $
In January
2024, a total of
In August
2024, Mr. Stuart purchased $
In the
fourth quarter of 2024, Mr. Stuart purchased $
In October 2021, the president
of the Company loaned the Company $
In September 2022, the president of the Company
loaned the Company $
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company to December 31, 2025.
In October 2022, the president of the Company entered into an agreement with the Company, as amended in November 2022 and in July 2024, to exchange shares of the Company’s Series C Preferred Stock owned by him for shares of the Company’s common stock. In August 2024, shares of common stock were issued to the president of the Company in exchange for the shares of Series C Preferred Stock owed by him.
In January
2023, the president of the Company loaned $
| F-24 |
In October
2024, the president of the Company loaned the Company $
In December
2024, the president of the Company loaned the Company $
The Company
has an accounts payable balance owed to Mr. Robert Cook in the amount of $
NOTE M – CONCENTRATIONS
The Company derived $
NOTE N – COMMITMENTS AND CONTINGENCIES
We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceedings that management believes could have a material adverse effect on our financial statements.
The other payable of $
See Note C in regards to commitments related to contracts with customers. See Note H in regards to commitments related to leases.
NOTE O – EMPLOYEE RETENTION CREDIT
During the year ended December 31, 2022, the Company
applied for an employee retention credit for the third quarter 2021 under the COVID-19 Economic Relief Legislation. During 2024, based
on that application, the Company was awarded a total of $
NOTE P – SUBSEQUENT EVENTS
In January 2025, the president of the Company loaned the Company $15,000 and $20,000 pursuant to two unsecured promissory notes initially due on January 3, 2026 and January 23, 2026, respectively. The notes bear simple interest at a rate of 7% per annum. The maturity dates of the notes may be extended by an additional six months in the sole discretion of the Company up to four times.
In January 2025, the Company issued a total of 18,750 shares of the Company’s common stock to the Company’s five directors as compensation for services provided to the Company during the fourth quarter of 2024, valued at a total of $93,750.
| F-25 |
In February 2025, we commenced an offering of up to $1,000,000 of convertible promissory notes (“2025 Notes”) pursuant to a private placement in accordance with Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “2025 Offering”). The 2025 Notes will be payable on or before May 31, 2025 unless extended by the Company for six months up to two times (the “Maturity Date”). The 2025 Notes will automatically be converted into shares of the Company’s common stock at price per share of $1.00 if on any trading day following the issuance of the 2025 Notes the Company’s common stock (i) trades an average daily trading volume of 50,000 or greater and (ii) achieves an intraday or closing price of $5.00 (together, the “Trading Thresholds”). Upon the automatic conversion of the 2025 Notes, the Company will, no later than 30 days from the date of such conversion following satisfaction of the Trading Thresholds, file with the Securities and Exchange Commission a registration on Form S-1 (or such other form as may be available) to register the shares underlying all outstanding 2025 Notes included; provided, however, that if such registration statement is due at a time in which the Company cannot file such registration statement because the Company has stale financial statements, then the Company shall file such registration statement by not later than ten days following the date on which the filing of such financial statements are due. If the 2025 Notes have not otherwise been automatically converted into shares of the Company’s common stock, the noteholders (“Noteholders”) will have the option, on or before the Maturity Date, to convert all or a portion of their outstanding 2025 Notes into shares of the Company’s common stock at a rate equal to $1.00 per share and, immediately upon the conversion, the converting Noteholders will be issued a number of new warrants from the Company equal to the dollar amount of the conversion divided by $1.00 (the “2025 Warrants”). The 2025 Warrants will be exercisable until December 31, 2025 at an exercise price equal to the greater of (i) one dollar ($1.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public trading price as quoted on the OTC Markets or equivalent or higher public securities trading market on which the Company’s common stock is then traded with the highest volume. As of March 24, 2025, the Company has issued a total of $488,000 of 2025 Notes pursuant to this offering, including $20,000 of 2025 Notes issued to Mr. Christopher Stuart, a director of the Company.
In February 2025, the Company adopted its Insider Trading Policy.
In March 2025, the Company issued a total of 5,262 2024 Warrants, 25,000 2025 Warrants, and 30,262 shares of the Company’s common stock to one investor upon the conversion of $25,000 of 2024 Notes along with $1,308 of accrued interest and $25,000 of 2025 Notes.
| F-26 |
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
Our principal executive officer and principal financial officer during the year ended December 31, 2024, William Gray, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15I under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, Mr. Gray has concluded that our disclosure controls and procedures are not effective, which are discussed below in more detail, in timely alerting him to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework of 2013. Based upon this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2024 for the following reasons.
| 26 |
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 of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management identified the following material weaknesses, due in part to the limited number of accounting and financial reporting personnel as of December 31, 2024:
| (1) | An inability to complete our financial statement close process in a timely and accurate manner. | |
| (2) | An insufficient degree of segregation of duties among our accounting and financial reporting personnel. | |
| (3) | Limited technical competency in review and approval of financial reporting processes. |
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the year ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
No Attestation Report by Independent Registered Accountant
The effectiveness of our internal control over financial reporting as of December 31, 2024 and December 31, 2023 have not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.
Item 9B. Other Information.
During the quarter ended December
31, 2024, no director or officer of the Company
On October 4, 2024, to be effective as of October 1, 2024, Wytec amended its compensation arrangement with Mr. William H. Gray, the chief executive officer, president, and interim chief financial officer of Wytec (the “Amendment”). Pursuant to the Amendment, Mr. Gray’s salary has been increased from $275,000 per year to $425,000 per year in consideration for the valuable services Mr. Gray has performed for Wytec.
| 27 |
PART III
Item 10. Directors, Executive Officers, and Corporate Governance.
The members of the board of directors of the Company will serve until the next annual meeting of stockholders, or until their successors have been elected. The officers serve at the pleasure of the board of directors. Officers are elected by the board of directors and their terms of office are, except to the extent governed by employment contract, at the discretion of the board. Information as to the directors and executive officers of the Company is as follows:
| Name | Age | Position | ||
| William H. Gray | 74 | Chairman of the Board, Chief Executive Officer, President, and interim Chief Financial Officer | ||
| Erica Perez | 45 | Secretary and Director | ||
| Robert Sanchez | 62 | Interim Chief Technology Officer | ||
| Robert Cook | 78 | Director | ||
| Christopher Stuart | 72 | Director | ||
| Dr. Samuel Khoury | 70 | Director |
William H. Gray has been the chairman and chief executive officer of Wytec since November 2011, the president of Wytec since April 2020, the interim chief financial officer of Wytec since November 2024, a director of Competitive Companies, Inc., a Nevada corporation and the former parent company of Wytec (“CCI”), since November 2008, and the chief executive officer, president, and chief financial officer of CCI since February 10, 2009. Mr. Gray was the president of Wytec from November 2011 to September 2019, the chief financial officer of Wytec from November 2011 to January 2020, the interim chief financial officer from May 2021 to January 2022, and the corporate secretary of Wytec from November 2011 to April 2014 and again from November 2015 to February 2019. Mr. Gray was the secretary of CCI from February 2009 to April 2014 and again since July 2015. Mr. Gray has over 19 years of experience in the planning, development, and implementation of wide area networks in both wired and wireless configurations. As the president and chief executive officer of Wireless Wisconsin, LLC, a wholly owned subsidiary of CCI, he developed one of the state’s first ISPs to enter into the internet industry by forming and developing a statewide telecommunications network in the state of Wisconsin starting in 1995. Wireless Wisconsin, LLC later became one of the first ISPs to become a competitive local exchange carrier in the state of Wisconsin.
Erica Perez has been the corporate secretary of Wytec since September 2021 and a director of Wytec since November 2021. She has also been the director of operations of Wytec since January 2020 and was the technical systems administrator from January 2014 to January 2020. From 2005 to 2014, Ms. Perez worked for Present Carpet Supply Co. in various positions, including business manager, installations manager, and administrative assistant. Ms. Perez earned an Associate of Applied Science degree in wide area telecommunications from Victoria College in 2003.
Robert Sanchez has been the interim chief technology officer of Wytec since August 2023 and has worked as a consultant to Wytec since June 2023. Since 2022, Mr. Sanchez has worked as an independent consultant to various technology companies, including Pivotal Commware (designing and developing the 5G and IoT protocol between smart repeaters and an Azure based intelligent beam management system), Lemko Corporation (supporting the deployment and integration of software defined 4G/5G wireless systems in the Citizens Broadband Radio System band for a Southern California utility company), and Toyota Motor Corporation (assisting with the deployment of Toyota’s telematics and connected car initiatives). From 2017 to 2021, Mr. Sanchez served as the interim chief technology officer for AppTech Corporation, an innovative Fintech company whose mission is to deliver a better way for businesses to provide their customers with immersive commerce experiences. From October 2006 to July 2017, Mr. Sanchez was the chief executive officer and president of Globaltel Media, Inc., a technology-enabling software firm which was purchased by AppTech Corporation in July 2017. From 1998 to 2006, Mr. Sanchez was an executive (chief executive officer from 1998 to 2001 and vice president and chief architect from 2001 to 2006) with inCode Telecom Group (“inCode”), a San Diego-based consulting firm of over 500 people which he co-founded in 1998. While with inCode, he was responsible for developing technologies and implementing strategies in wireless such as radio frequency modulation schemes, system architectures, and solutions and managing the operations and integration of inCode’s Wireless Technology Lab which was licensed by the Federal Communication Commission to operate in the Personal Communications Service and Multichannel Multipoint Distribution Service bands consisting of wireless infrastructure, core network systems, and operations support system and business support system platforms. From 1990 to 1998, Mr. Sanchez worked for Qualcomm where he led Globalstar’s worldwide system deployment, integration, and test program, was the general manager for the Ancillary Test Products and Optimization Group, and led the initial Code-Division Multiple Access research and development program through concept validation and testing. From 1984 to 1990, he was a staff systems engineer and section head at TRW/Military Electronics and Avionics Division (now Northrop Grumman) managing several defense surveillance systems ranging from high frequency through super high frequency for signals intelligence, communications intelligence, and electronic intelligence networks. From 1982 to 1984, Mr. Sanchez was a systems analyst at General Dynamics/Electronics Division designing simulations and coding software for avionics systems in the Tomahawk cruise missile digital imaging system prior to GPS. Mr. Sanchez received a master’s degree in electrical engineering from the University of Southern California in 1987 and a bachelor’s degree in mathematics from the University of California at San Diego in 1982. In 2006, he was awarded an honorary PhD in humanities from RMTU in the Philippines for his work with World War II veterans.
| 28 |
Robert Cook has been a director and a member and chairman of the Audit Committee of Wytec since January 2024 and was a director and member and chairman of the Audit Committee of Wytec from January 2022 to March 2023. He has over 30 years of executive management experience in a variety of industries. Since May 2020, Mr. Cook has worked as an independent consultant. From 2015 until May 2020, he served as the chief executive officer and chief financial officer of Tecomate Holdings, LLC, a wildlife product and TV production company. From 2013 to 2014, Mr. Cook served as the president and chief financial officer of Solid Green Holdings, a product development and construction firm, in Austin, Texas. From 2011 to 2013, he served as senior director, strategy & implementation at Goodman Networks, in Plano, Texas, a project management and construction company. From 2008 to 2011, he served as senior controls manager for South Texas at Goodman Networks, in San Antonio, Texas. From 2005 to 2007, Mr. Cook served as the president of RCI Consulting in San Antonio, Texas. From 2006 to 2007, he served as the chief financial officer of Conner Steel Products, Ltd, in San Angelo, Texas, an oil and gas equipment manufacturer, where he was responsible for accounting and finance, planning, budgeting, cash management and mergers and acquisitions. From 2002 to 2005, he served as the president and chief executive officer of Amerivision Communications, Inc., a telecom provider, Oklahoma City, Oklahoma. Mr. Cook has also been the chief executive officer of US Intelco Holdings, Inc. (now Verisign), a telecom service company, in Olympia, Washington; the president and chief executive officer of Sevis Systems, a software development company, in San Antonio, Texas; president, chief financial officer, and chief operating officer of Interstellar Telecom in New Braunfels, Texas; vice president, general manager and vice president of business development & government relations for ICG Communications in San Antonio, Texas; and vice president of revenue and chief operating officer of SM Telecorp, a telecom provider, in San Marcos, Texas. Mr. Cook has also served on numerous boards of directors, including; chairman of Sevis Systems (from 1998 to 2020); director of Tecomate Holdings (from 2015 to 2020); director of Interstellar Telecom (from 2001 to 2002); chairman of US Intelco Holdings (from 1990 to 1995); vice chairman of IT Networks (from 1992 to 1995); director of the National Exchange Carrier Association (from 1987 to 1992); chairman of the Texas Exchange Carrier Association (from 1990 to 1992); and director of Alamo City Technologies (from 1990 to 1991). He was also an advisory board member of Zyant Technology (from 2004 to 2005). Mr. Cook received a Bachelor of Business Administration in accounting and finance from Angelo State University in 1974, a Master of Business Administration in management from Angelo State University in 1976, and a Master of Business Administration in accounting from Angelo State University in 1976.
Christopher Stuart has been a director of Wytec since December 2021. He began his career in the construction industry at Buquet & Leblanc in 1977, where he went on to become an owner of the company in 1986 until 2003. In 2003, Mr. Stuart founded Stuart & Company, a contracting firm, of which he was the chief executive officer until 2018. In 2007, he co-founded Louisiana Rooming Contractor, which he sold to his business partner in 2017. Since 2018, Mr. Stuart has been a consultant in the construction industry in Louisiana and in 2019, he founded Eagle Rock Investments, L.L.C. Mr. Stuart earned his Bachelor of Science degree in construction engineering from Louisiana State University in 1974. In 1975, he received his second lieutenant commission in the U.S. Army. Mr. Stuart served two years active duty and 12 years active reserve in the U.S. Army and in 1989 was honorably discharged as a Captain.
Dr. Samuel Khoury has been a director of Wytec since December 2021. He specializes in the valuations of advanced and novel technologies in several industries and has been the president of Inavisis, Inc., a company he also founded, since 1999. Inavisis is a company that leverages intellectual property. From 1998 to 1999, he was the president of Consor, a consulting firm specializing in valuation of trademarks and technology. From 1982 to 1998, Dr. Khoury was an intellectual asset manager at the Dow Chemical Company. Dr. Khoury received a Master of Business Administration from University of Wisconsin, Milwaukee in 1985, a doctorate in polymer chemistry from Worcester Polytechnic Institute, Massachusetts in 1982, a Master of Science in chemistry from Fort Hays State University in 1977, and a Bachelor of Science in Chemistry from American University of Beirut, Lebanon in 1975.
No officer or director is required to make any specific amount or percentage of his business time available to us. Each of our officers intends to devote such amount of his or her time to our affairs as is required or deemed appropriate by us.
Election of Directors and Officers
Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified.
| 29 |
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our directors, executive officers, promoters or control persons have:
| · | had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; | |
| · | been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses; | |
| · | been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; | |
| · | been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated; and | |
| · | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Limitation of Liability and Indemnification of Officers and Directors
Under Nevada General Corporation Law and our articles of incorporation, our directors will have no personal liability to us or our stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his “duty of care.” This provision does not apply to the directors’ (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (iii) approval of any transaction from which a director derives an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director’s duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director’s duties, of a risk of serious injury to the corporation or its shareholders, (v) acts or omissions that constituted an unexcused pattern of inattention that amounts to an abdication of the director’s duty to the corporation or its shareholders, or (vi) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for negligence in the performance of duties, including gross negligence.
The effect of this provision in our articles of incorporation is to eliminate the rights of Wytec and our stockholders (through stockholder’s derivative suits on behalf of Wytec) to recover monetary damages against a director for breach of his fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i) through (vi) above. This provision does not limit nor eliminate the rights of Wytec or any stockholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director’s duty of care. In addition, our Articles of Incorporation provide that if Nevada law is amended to authorize the future elimination or limitation of the liability of a director, then the liability of the directors will be eliminated or limited to the fullest extent permitted by the law, as amended. Nevada General Corporation Law grants corporations the right to indemnify their directors, officers, employees and agents in accordance with applicable law. Our bylaws provide for indemnification of such persons to the full extent allowable under applicable law. These provisions will not alter the liability of the directors under federal securities laws.
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We intend to enter into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our bylaws. These agreements, among other things, indemnify our directors and officers for certain expenses (including attorneys’ fees), judgments, fines, and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of Wytec, arising out of such person’s services as a director or officer of Wytec, any subsidiary of Wytec or any other company or enterprise to which the person provides services at the request of Wytec. We believe that these provisions and agreements are necessary to attract and retain qualified directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Wytec pursuant to the foregoing provisions, Wytec has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Board Committees
The board of directors (the “Board”) has analyzed the independence of each director and has concluded that currently three directors, Christopher Stuart, Dr. Sam Khoury, and Robert Cook, are considered independent directors in accordance with the director independence standards of the Financial Industry Regulatory Authority (“FINRA”) the NYSE Amex Equities or the NASDAQ Capital Market.
The Board has three standing committees: Audit, Compensation, and Corporate Governance/Nominating. The membership of each of the committees of the Board is comprised of independent directors, with each of the committees having a chairman, each of whom is an independent director. Our non-management members of the Board will meet in executive session at each regular Board meeting. The charter of each committee will be available on our website at www.wytecintl.com.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsible for the day-to-day management of the risks we face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
Our Board has discretion to determine whether to separate or combine the roles of chairman of the Board and chief executive officer. Mr. Gray has served in both roles since 2011, and our Board continues to believe that his combined role is most advantageous to the Company and its stockholders.
In addition to Mr. Gray’s leadership, the Board maintains effective independent oversight through a number of governance practices, including, establishing the right “tone at the top” and full and open communication between executive management and the Board. Mr. Gray communicates frequently with members of the Board to discuss strategy and challenges facing our company. Each quarter, the Board receives presentations from senior management on matters involving our key areas of operations.
Audit Committee
We have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Audit Committee’s responsibilities include, among other things: (i) selecting and retaining an independent registered public accounting firm to act as our independent auditors, setting the compensation for our independent auditors, overseeing the work done by our independent auditors and terminating our independent auditors, if necessary, (ii) periodically evaluating the qualifications, performance and independence of our independent auditors, (iii) pre-approving all auditing and permitted non-audit services to be provided by our independent auditors, (iv) reviewing with management and our independent auditors our annual audited financial statements and our quarterly reports prior to filing such reports with the Securities and Exchange Commission, or the SEC, including the results of our independent auditors’ review of our quarterly financial statements, and (v) reviewing with management and our independent auditors significant financial reporting issues and judgments made in connection with the preparation of our financial statements. The Audit Committee also prepares the Audit Committee report that is required to be included in our annual proxy statement pursuant to the rules of the SEC. Our Audit Committee consists of three members. The chairman of the Audit Committee is Robert Cook and Christopher Stuart and Dr. Samuel Khoury are members of the Audit Committee.
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Compensation Committee
We have a separately designated Compensation Committee. The purpose of the Compensation Committee is to discharge the Board’s responsibilities relating to compensation of our directors and executive officers. The Compensation Committee has responsibility for, among other things, (i) recommending to the Board for approval the overall compensation philosophy for our company and periodically reviewing the overall compensation philosophy for all employees to ensure it is appropriate and does not incentivize unnecessary and excessive risk taking, (ii) reviewing annually and making recommendations to the Board for approval, as necessary or appropriate, with respect to our compensation plans, (iii) based on an annual review, determining and approving, or at the discretion of the Compensation Committee, recommending to the Board for determination and approval, the compensation and other terms of employment of each of our officers, (iv) reviewing and making recommendations to the Board with respect to the compensation of directors, (v) overseeing our regulatory compliance with respect to compensation matters, (vi) reviewing and discussing with management, prior to the filing of our annual proxy statement or annual report on Form 10-K, our disclosure relating to executive compensation, including our Compensation Discussion and Analysis and executive and director compensation tables as required by SEC rules, and (vii) preparing an annual report regarding executive compensation for inclusion in our annual proxy statement or our annual report on Form 10-K. The Compensation Committee has the power to form one or more subcommittees, each of which may take such actions as may be delegated by the Compensation Committee.
We have adopted a compensation committee charter, which grants the Compensation Committee authority to select, retain, compensate, oversee and terminate any compensation consultant to be used to assist in the evaluation of director, chief executive officer, officer and our other compensation and benefit plans and to approve the compensation consultant’s fees and other retention terms. The Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of any internal or external legal, accounting or other advisors and consultants retained by the Compensation Committee. The Compensation Committee may also select or retain advice and assistance from an internal or external legal, accounting or other advisor as the Compensation Committee determines to be necessary or advisable in connection with the discharge of its duties and responsibilities and will have the direct responsibility to appoint, compensate and oversee any such advisor.
Our Compensation Committee currently consists of two members. The chairman of the Compensation Committee is Christopher Stuart and Dr. Samuel Khoury is a member of the Compensation Committee. The Board has determined that all of the members are “independent” under Nasdaq Listing Rule 5602(a)(2).
Corporate Governance/Nominating Committee
The Corporate Governance/Nominating Committee has responsibility for assisting the Board in, among other things, (i) effecting Board organization, membership and function, including identifying qualified board nominees, (ii) effecting the organization, membership and function of the committees of the Board, including the composition of the committees of the Board and recommending qualified candidates for the committees of the Board, (iii) evaluating and providing successor planning for the chief executive officer and our other executive officers, (iv) identifying and evaluating candidates for director in accordance with certain general and specific criteria, (v) developing and recommending to the Board Corporate Governance Guidelines and any changes thereto, setting forth the corporate governance principles applicable to us, and overseeing compliance with the our Corporate Governance Guidelines, and (vi) reviewing potential conflicts of interest involving directors and determining whether such directors may vote on issues as to which there may be a conflict. The Corporate Governance/Nominating Committee is responsible for identifying and evaluating candidates for director. Potential nominees are identified by the Board based on the criteria, skills and qualifications that are deemed appropriate by the Corporate Governance/Nominating Committee. The Corporate Governance/Nominating Committee believes that candidates for director should have certain minimum qualifications, including high character and integrity, an inquiring mind and vision, willingness to ask hard questions, ability to work well with others, freedom from conflicts of interest, willingness to devote sufficient time to the Company’s affairs, diligence in fulfilling his or her responsibilities and the capacity and desire to represent the best interests of the Company and our stockholders as a whole and not primarily a special interest group or constituency. While our nominating criteria does not prescribe specific diversity standards, the Corporate Governance/Nominating Committee and its independent members seek to identify nominees that have a variety of perspectives, professional experience, education, difference in viewpoints and skills, and personal qualities that will result in a well-rounded Board. We have adopted a corporate governance/nominating committee charter which following the consummation of this offering will be posted on our investor website.
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The Corporate Governance/Nominating Committee currently consists of two members. Dr. Samuel Khoury is the chairman of the Corporate Governance/Nominating Committee and Christopher Stuart is a member of the Corporate Governance/Nominating Committee. The Board has determined that all of the members are “independent” under Nasdaq Listing Rule 5605(a)(2).
The Board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for board membership. Rather, the Board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the Board’s current expectations with respect to each such criterion and decide regarding whether a candidate should be recommended to the stockholders for election as a director. During 2023, the Company received no recommendation for directors from its stockholders.
Report of the Audit Committee
Our Board’s Audit Committee has reviewed and discussed our audited financial statements for the fiscal year ended December 31, 2024 with senior management. The Audit Committee has also discussed with Horne LLP our independent auditor, the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board (“PCAOB”) and received the written disclosures and the letter from Horne LLP required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Board’s Audit Committee concerning independence and have discussed with the independent registered public accounting firm its independence.
| THE FULL BOARD OF DIRECTORS | THE AUDIT COMMITTEE |
| William H. Gray | Robert Cook, Chairman |
| Erica Perez | Christopher Stuart |
| Robert Cook | Dr. Samuel Khoury |
| Christopher Stuart | |
| Dr. Samuel Khoury |
Notwithstanding anything to the contrary set forth in any of our previous or future filings under the United States Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that might incorporate this report in future filings with the SEC, in whole or in part, the foregoing report shall not be deemed to be incorporated by reference into any such filing.
Code of Conduct
We have adopted a code of conduct that applies to all of our directors, officers, and employees. The text of the code of conduct has been posted on our internet website and can be viewed at www.wytecintl.com. Any waiver of the provisions of the code of conduct for executive officers and directors may be made only by the Audit Committee and, in the case of a waiver for members of the Audit Committee, by the Board. Any such waivers will be promptly disclosed to our shareholders.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish copies to the Company. Based solely on the review of the Changes of Beneficial Ownership disclosures on Forms 3, 4 and 5 filed with the SEC, the following persons filed the following number of transactions on Section 16 beneficial ownership disclosure reports late:
| · | Mr. William H. Gray filed Form 4 late with respect to 24 transactions | |
| · | Mr. Robert Cook filed Form 3 late and filed Form 4 late with respect to three transactions. | |
| · | Mr. Christopher Stuart filed Form 3 late and filed Form 4 late with respect to 36 transactions. | |
| · | Dr. Samuel Khoury filed Form 3 late and filed Form 4 late with respect to six transactions. | |
| · | Ms. Erica Perez filed Form 3 late and filed Form 4 late with respect to ten transactions. |
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Insider Trading Policy
We have
Item 11. Executive Compensation.
Compensation Discussion and Analysis
The following Compensation Discussion and Analysis describes the material elements of compensation for the executive officers identified in the Summary Compensation Table (“Named Executive Officers”), and executive officers that we may hire in the future.
Processes and Procedures for Compensation Decisions
Our compensation committee is responsible for the executive compensation programs for our executive officers and reports to the Board on its discussions, decisions, and other actions. Our chief executive officer makes recommendations to our compensation committee, attends committee meetings, and is involved in the determination of compensation for the respective executive officers that report to him, except that our chief executive officer does not make recommendations as to his own compensation. Additionally, our chief executive officer makes recommendations to our compensation committee regarding short- and long-term compensation for all executive officers (other than himself) based on our results, an individual executive officer’s contribution toward these results, and performance toward individual goal achievement. Our compensation committee then reviews the recommendations and other data and makes decisions as to total compensation for each executive officer other than the chief executive officer, as well as each individual compensation component. Our compensation committee makes recommendations to the Board regarding compensation for our chief executive officer. The independent members of the Board make the final decisions regarding executive compensation for our chief executive officer.
The compensation committee is authorized to retain the services of one or more executive compensation advisors, as it sees fit, in connection with the establishment of our compensation programs and related policies.
Compensation Program Objectives and Rewards
Our compensation philosophy is based on the premise of attracting, retaining, and motivating exceptional leaders, setting high goals, working toward the common objectives of meeting the expectations of customers and stockholders, and rewarding outstanding performance. Following this philosophy, in determining executive compensation, we consider all relevant factors, such as the competition for talent, our desire to link pay with performance in the future, the use of equity to align executive interests with those of our stockholders, individual contributions, teamwork and performance, and each executive’s total compensation package. We strive to accomplish these objectives by compensating all executives with total compensation packages consisting of a combination of competitive base salary and, once we grow more and increase our staff, incentive compensation. Because of our small size and staff to date, we have not yet adopted a management equity incentive plan, nor have we yet used equity incentives as part of our management compensation policy.
While we have not hired at the executive level significantly since inception because our business has not grown sufficiently to justify increasing staff, we expect to grow and hire in the future. The majority of our Named Executive Officers have been with us for many years and their compensation has basically been static, based primarily on levels at which we can afford to retain them, and their responsibilities and individual contributions. To date, we have not applied a formal compensation program to determine the compensation of the Named Executives. In the future, as we and our management team expand, we expect that our compensation committee will adopt a management equity incentive plan that will apply the compensation philosophy and policies described in this section.
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The primary purpose of the compensation and benefits described below is to attract, retain and motivate highly talented individuals when we do hire, who will engage in the behaviors necessary to enable us to succeed in our mission while upholding our values in a highly competitive marketplace. Different elements are designed to engender different behaviors, and the actual incentive amounts which may be awarded to each Named Executive Officer are subject to the annual review of the Board. The following is a brief description of the key elements of our planned executive compensation structure.
| · | Base salary and benefits are designed to attract and retain employees over time. | |
| · | Incentive compensation awards are designed to focus employees on the business objectives for a particular year. | |
| · | Equity incentive awards, such as stock options and non-vested stock, focus executives’ efforts on the behaviors within the recipients’ control that they believe are designed to ensure our long-term success as reflected in increases to our stock prices over a period of several years, growth in our profitability and other elements. | |
| · | Severance and change in control plans are designed to facilitate a company’s ability to attract and retain executives as it competes for talented employees in a marketplace where such protections are commonly offered. We currently have not given separation benefits to any of our Name Executive Officers. |
Benchmarking
We have not yet adopted benchmarking but may do so in the future. When making compensation decisions, our board of directors may compare each element of compensation paid to our Named Executive Officers against a report showing comparable compensation metrics from a group that includes both publicly traded and privately-held companies. Our Board believes that while such peer group benchmarks are a point of reference for measurement, they are not necessarily a determining factor in setting executive compensation as each executive officer’s compensation relative to the benchmark varies based on scope of responsibility and time in the position. We have not yet formally established our peer group for this purpose.
The Elements of Wytec’s Compensation Program
Base Salary
Executive officer base salaries are based on job responsibilities and individual contribution. Our Board reviews the base salaries of our executive officers, including our Named Executive Officers, considering factors such as corporate progress toward achieving objectives (without reference to any specific performance-related targets) and individual performance experience and expertise. None of our Named Executive Officers have employment agreements with us. Additional factors reviewed by the Board in determining appropriate base salary levels and raises include subjective factors related to corporate and individual performance.
Incentive Compensation Awards
Although our executive officers have been paid bonuses on a case-by-case basis, our Board has not yet established a formal compensation policy for the determination of bonuses. If our revenue grows and bonuses become affordable and justifiable, we expect to use the following parameters in justifying and quantifying bonuses for our Named Executive Officers and other officers of Wytec: (1) the growth in our revenue, (2) the growth in our earnings before interest, taxes, depreciation and amortization, as adjusted (“EBITDA”), and (3) our stock price. Our Board has not adopted specific performance goals and target bonus amounts for any of its fiscal years, but may do so in the future.
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Equity Incentive Awards
Our Board has not yet adopted a management equity incentive plan and no stock options or other equity incentive awards have yet been made to any of our Named Executives or other officers or employees of Wytec other than a limited number of stock issuances made to two Named Executives and seven other employees of Wytec in December 2019 and December 2020 and warrant issuances made to one Named Executive in 2018 and to one Named Executive in October 2023 and July 2024 which were not issued pursuant to a formal plan. As stated previously, in the future we plan to adopt a formal management equity incentive plan pursuant to which we plan to grant stock options and make restricted stock awards to members of management, which would not be assignable during the executive’s life, except for certain gifts to family members or trusts that benefit family members. These equity incentive awards, we believe, would motivate our employees to work to improve our business and stock price performance, thereby further linking the interests of our senior management and our stockholders. The Board will consider several factors in determining whether awards are granted to an executive officer, including those previously described, as well as the executive’s position, his or her performance and responsibilities, and the number of options or other awards, if any, currently held by the officer and their vesting schedule. Our policy will prohibit backdating options or granting them retroactively.
Benefits and Prerequisites
At this stage of our business, we have limited benefits and no prerequisites for our employees other than health, dental, and life insurance, sick pay, and vacation benefits that are generally comparable to those offered by other small private and public companies or as may be required by applicable state employment laws. We recently established a 401(k) Plan for our Named Executive Officers and other employees. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ($23,000 for calendar year 2024). We do not match employee contributions.
Separation and Change in Control Arrangements
We do not have any employment agreements with our Named Executive Officers or any other executive officer or employee of Wytec. None of them are eligible for specific benefits or payments if their employment or engagement terminates in a separation or if there is a change of control.
Our Anticipated Compensation Program
We are currently in the process of determining the compensation programs we anticipate implementing for our senior executives, including our Named Executive Officers.
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Executive Officer Compensation
The following table summarizes compensation paid or accrued by us for the years ended December 31, 2023 and December 31, 2024 for services rendered in all capacities by our chief executive officer and our other most highly compensated executive officers during the fiscal years ended December 31, 2024 and December 31, 2023.
| Name and Principal Position (1) | Year | Salary | Bonus | Stock Awards(2) | Option/ Warrant Awards ($)(2) | Non-Equity Incentive Plan Compensation | Non-Qualified Deferred Compensation Earnings | All Other Compensation |
Total | |||||||||||||||||||||||
| William H, Gray, | 2023 | $ | 275,000 | $ | 1,000 | $ | 910,802 | – | $ | – | $ | – | $ | – | $ | 1,186,802 | ||||||||||||||||
| Chief Executive Officer, President and, interim Chief Financial Officer (3)(4) | 2024 | $ | 306,250 | (5) | $ | – | $ | 56,250 | 47,262 | $ | – | $ | – | $ | – | $ | 409,762 | |||||||||||||||
| Erica Perez, | 2023 | $ | 97,000 | $ | 1,000 | $ | 171,807 | 60,196 | $ | – | $ | – | $ | – | $ | 330,003 | ||||||||||||||||
| Corporate Secretary (6)(7) | 2024 | $ | 97,000 | $ | 1,000 | $ | 56,250 | 19,457 | $ | – | $ | – | $ | – | $ | 173,707 | ||||||||||||||||
| Robert Sanchez, | 2023 | $ | – | $ | – | $ | – | – | $ | – | $ | – | $ | 73,800 | (8) | $ | 73,800 | |||||||||||||||
| interim Chief Technology Officer | 2024 | $ | – | $ | – | $ | – | – | $ | – | $ | – | $ | 143,599 | (8) | $ | 143,599 | |||||||||||||||
| Karen Stegall, | 2023 | $ | 75,000 | $ | 1,000 | $ | – | – | $ | – | $ | – | $ | – | $ | 76,000 | ||||||||||||||||
| Former interim Chief Financial Officer (9) | 2024 | $ | 59,155 | $ | – | $ | – | – | $ | – | $ | – | $ | – | $ | 59,155 | ||||||||||||||||
| (1) | All current officers serve at will without employment contracts. |
| (2) | This represents the fair value of the award as of the grant date in accordance with FASB ASC Topic 718. |
| (3) | Mr. Gray stepped down as the interim chief financial officer of Wytec on January 7, 2022. Mr. Gray resumed responsibilities as interim chief financial officer of Wytec on November 5, 2024. |
| (4) | Mr. Gray received 178,410 shares of the Company’s common stock for his services as a director of the Company from November 8, 2011 to September 30, 2023 and 1,673 shares of Company’s common stock for his services as a director of the Company from October 1, 2023 to December 31, 2023. Mr. Gray received 11,250 shares of the Company’s common stock for his services as a director of the Company during the first three quarters of 2024. This table does not include 3,750 shares of the Company’s common stock Mr. Gray received in January 2025 for his services as a director of the Company during the fourth quarter of 2024. |
| (5) | In October 2024, Mr. Gray’s salary was increased from $275,000 to $425,000 per year. |
| (6) | Ms. Perez received 30,611 shares of the Company’s common stock for her services as a director of the Company from September 15, 2021 to September 30, 2023 and 1,673 shares of Company’s common stock for her services as a director of the Company from October 1, 2023 to December 31, 2023. Ms. Perez received 11,250 shares of the Company’s common stock for her services as a director of the Company during the first three quarters of 2024. This table does not include 3,750 shares of the Company’s common stock Ms. Perez received in January 2025 for her services as a director of the Company during the fourth quarter of 2024. |
| (7) | In consideration for her services as the director of operations of the Company, in October 2023 Ms. Perez received 25,000 common stock purchase warrants with an exercise price of $5.00 per share exercisable on a cash or cashless basis until October 11, 2026 and in July 2024 she received an additional 25,000 common stock purchase warrants with exercise price of $5.00 exercisable on a cash or cashless basis until December 31, 2025. |
| (8) | Other compensation for Mr. Sanchez consists of consulting fees. As of December 31, 2024, unpaid consulting fees payable to Mr. Sanchez were $81,000. |
| (9) | Ms. Stegall resigned from the Company on November 5, 2024. |
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Employment Agreements
We have not entered into any employment agreements with our executive officers to date, and do not intend to enter into employment agreements with them at this time.
Policies and Practices Related to the Timing of Equity Grants
The Company
does not have any formal policy that requires the Company to grant, or avoid granting, equity-based compensation to its executive officers
at certain times.
During the year ended December 31, 2024, there were no equity grants made to our executive officers during any period beginning four business days before the filing of a periodic report or current report disclosing material non-public information and ending one business day after the filing or furnishing of such report with the Securities and Exchange Commission.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the total outstanding incentive equity awards as of December 31, 2024, for each named executive officer:
| Name | Number of Securities Underlying Unexercised Options/Warrants - Number Exercisable |
Number of Underlying Unexercised Securities Options/Warrants - Number Unexercisable |
Option/Warrant exercise ($) |
Option/Warrant expiration date | ||||||
| William H. Gray, Chief Executive Officer and President | 2,000,000 (1) | — | $ | 1.00 | December 31, 2025 | |||||
| Erica Perez, Corporate Secretary | 25,000 (2) | — | $ | 5.00 | October 11, 2026 | |||||
| Erica Perez, Corporate Secretary | 25,000 (3) | — | $ | 5.00 | December 31, 2025 | |||||
_____________
| (1) | On September 21, 2028, Mr. Gray received 2,000,000 common stock purchase warrants with an exercise price of $1.00 per share exercisable on a cash or cashless basis until December 31, 2025. |
| (2) | On October 11, 2023, Ms. Perez received 25,000 common stock purchase warrants with an exercise price of $5.00 per share exercisable on a cash or cashless basis until October 11, 2026. |
| (3) | On July 2, 2024, Ms. Perez received 25,000 common stock purchase warrants with an exercise price of $5.00 per share exercisable on a cash or cashless basis until December 31, 2025. |
Option Exercises and Stock Vested
None of our executive officers exercised any stock options or acquired stock through vesting of an equity award during the fiscal year ended December 31, 2024.
Employee Benefit Plans
We have not yet, but may in the future, establish a management equity incentive plan pursuant to which stock options and restricted stock awards may be authorized and granted to the executive officers, directors, employees, and key consultants of Wytec. In the event we establish the equity incentive plan, we expect to authorize approximately 10,000,000 shares or more for future issuance.
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Director Compensation
In November 2023, the Board adopted a compensation plan for the directors of the Company pursuant to which each quarter, commencing for the fourth quarter of 2023, each director will receive $18,750 of shares of the Company’s common stock in consideration for such director’s valuable services as a director of the Company (i) based on the most recent valuation report received by the Company for its common stock if the Company’s common stock is not quoted on the NASDAQ Capital Market or equivalent or higher public securities trading market (each a “Trading Market”) during the applicable quarter or (ii) based on the average closing price that is quoted on a Trading Market (if more than one, the one with the then highest trading volume) during the applicable quarter if the Company’s common stock is quoted on a Trading Market at any time during applicable quarter.
The following table sets forth the compensation our non-executive directors received for their respective services rendered to us as directors during the year ended December 31, 2024 and 2023.
| Name | Year | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||||||
| Christopher Stuart (2) | 2023 | $ | – | $ | 150,204 | $ | – | $ | – | $ | 150,204 | |||||||||||
| 2024 | $ | – | $ | 56,250 | $ | – | $ | – | $ | 56,250 | ||||||||||||
| Sam Khoury (3) | 2023 | $ | – | $ | 150,204 | $ | – | $ | – | $ | 150,204 | |||||||||||
| 2024 | $ | – | $ | 56,250 | $ | – | $ | – | $ | 56,250 | ||||||||||||
| Robert Cook (4) | 2023 | $ | – | $ | – | $ | – | $ | – | $ | – | |||||||||||
| 2024 | $ | – | $ | 56,250 | $ | – | $ | – | $ | 56,250 | ||||||||||||
_____________
| (1) | This represents the fair value of the award as of the grant date in accordance with FASB ASC Topic 718. |
| (2) | Mr. Stuart received 26,291 shares of the Company’s common stock for his services as a director of the Company from December 31, 2021 to September 30, 2023, 1,673 shares of Company’s common stock for his services as a director of the Company from October 1, 2023 to December 31, 2023, and 11,250 shares of Company’s stock for his services as a director of the Company from January 1, 2024 to September 30, 2024. This table does not include 3,750 shares of the Company’s common stock Mr. Stuart received in January 2025 for his services as a director of the Company during the fourth quarter of 2024. |
| (3) | Dr. Khoury received 26,291 shares of the Company’s common stock for his services as a director of the Company from December 31, 2021 to September 30, 2023, 1,673 shares of Company’s common stock for his services as a director of the Company from October 1, 2023 to December 31, 2023, and 11,250 shares of Company’s stock for his services as a director of the Company from January 1, 2024 to September 30, 2024. This table does not include 3,750 shares of the Company’s common stock Dr, Khoury received in January 2025 for his services as a director of the Company during the fourth quarter of 2024. |
| (4) | Mr. Cook received 11,250 shares of Company’s stock for his services as a director of the Company from January 1, 2024 to September 30, 2024. This table does not include 3,750 shares of the Company’s common stock Mr. Cook received in January 2025 for his services as a director of the Company during the fourth quarter of 2024. |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on March 20, 2025, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers. The percentage of beneficial ownership for the following table is based on 16,750,730 shares of common stock outstanding as of March 20, 2025.
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Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the stockholder has a right to acquire within 60 days after March 20, 2025, through the exercise of any option, warrant, or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.
| Name of Officer, Director or Shareholder (1) | Number of Common Shares | Percent Beneficially Owned (2) | ||||||
| William Gray, Chairman, Chief Executive Officer, President, and interim Chief Financial Officer (3) | 5,209,197 | 27.78% | ||||||
| Erica Perez, Secretary and Director (4) | 101,694 | * | ||||||
| Mark J. Richardson, Former Director (5) | 0 | 0 | ||||||
| Gary Stein, Former Director (6) | 0 | 0 | ||||||
| Robert Cook, Director (7) | 15,000 | * | ||||||
| Christopher Stuart, Director (8) | 892,187 | 5.27% | ||||||
| Sam Khoury, Director | 42,964 | * | ||||||
| Robert Sanchez, interim Chief Technology Officer | 0 | 0 | ||||||
| Karen Stegall, Former interim Chief Financial Officer | 0 | 0 | ||||||
| All Officers and Directors as a Group (9 persons) | 6,261,042 | 33.09% | ||||||
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*Beneficial ownership of less than one percent.
| (1) | As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). The address of each person is in the care of the Company. |
| (2) | Figures are rounded to the nearest hundredth of a percent. |
| (3) | Includes 2,000,000 common stock purchase warrants owned by Mr. Gray which are exercisable at an exercise price of $1.00 per share until December 31, 2025. |
| (4) | Includes 25,000 common stock purchase warrants owned by Ms. Perez which are exercisable at an exercise price of $5.00 per share until October 11, 2026 and 25,000 common stock purchase warrants owned by Ms. Perez which are exercisable at an exercise price of $5.00 per share until December 31, 2025. |
| (5) | Mr. Richardson resigned as a director of Wytec, effective November 6, 2023. |
| (6) | Mr. Stein resigned as a director of Wytec, effective December 29, 2023. |
| (7) | Mr. Cook was appointed as a director of Wytec, effective January 4, 2024. |
| (8) | Includes 288,423 shares of common stock owned by Eagle Rock Investments, L.L.C., a limited liability company of which Mr. Stuart owns a majority of the outstanding equity (“ERI”). Includes 17,500 common stock purchase warrants owned by Mr. Stuart which are exercisable on a cash or cashless basis at an exercise price of $5.00 per share until December 31, 2025; 85,784 common stock purchase warrants owned by Mr. Stuart which are exercisable at any time until December 31, 2025 at an exercise price per share of $5.00 per share, provided, that ten (10) days after the common stock of the Company commences trading on a public securities trading market , the amount per share payable to exercise the warrants will thereafter be the greater of (i) $5.00 or (ii) 85% of the average closing price that is quoted on said trading market (if more than one, the one with the then highest trading volume), during the ten (10) consecutive trading days immediately prior to the exercise date (the “Adjustable Strike Price”); 20,640 common stock purchase warrants owned by Mr. Stuart which are exercisable at any time until December 31, 2025 at an exercise price per share of equal to the greater of $5.00 or the Adjustable Strike Price; and 45,936 common stock purchase warrants owned by ERI which are exercisable at any time until December 31, 2025 at an exercise price per share of $5.00 per share. |
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
The Board has analyzed the independence of each director and has concluded that currently three directors, Christopher Stuart, Dr. Sam Khoury, and Gary Stein, are considered independent directors in accordance with the director independence standards of the Financial Industry Regulatory Authority (“FINRA”) the NYSE Amex Equities or the NASDAQ Capital Market.
The Company has an accounts payable balance owed to Richardson & Associates in the amount of $253,771 as of December 31, 2024, and $253,771 as of December 31, 2023. The Company incurred expense of $-0- and $15,287 with Richardson & Associates as of the year ended December 31, 2024 and 2023, respectively. Mark Richardson is the owner of Richardson & Associates and he was a director of Wytec International, Inc. from September 2019 to November 2023.
In 2021, ERI loaned the Company a total of $250,000 and made a line of credit in the amount of $250,000 available to the Company until December 31, 2022. In June 2022, ERI loaned the Company an additional $50,000 pursuant an unsecured promissory note. In October 2022, we entered into the ERI Agreement with ERI, pursuant to which ERI exchanged the two above referenced promissory notes ($300,000 principal and $20,242 accrued but unpaid interest) for a convertible promissory note in the principal amount of $320,242. The line of credit also expired with no amounts drawn upon it. The New ERI Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of 71,233 shares and 71,233 warrants. In May 2024, ERI exercised 35,617 warrants in accordance with the Company’s offer to existing warrant holders described in Note I for a total of 35,617 shares and the expiration date and exercise price of the remaining 35,616 warrants were adjusted to December 31, 2025 and $5.00 per share, respectively.
In August 2023, ERI purchased $100,000 of 2023 Notes. This 2023 Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of 20,640 shares and 20,640 2023 Warrants. In May 2024, ERI exercised 10,320 2023 Warrants in accordance with the Company’s offer to existing warrant holders described in Note I for a total of 10,320 shares and the expiration date and exercise price of the remaining 10,320 2023 Warrants were adjusted to December 31, 2025 and $5.00 per share, respectively.
In January 2022, the Company issued 40,000 warrants to purchase up to 40,000 shares of Wytec’s common stock on a cash or cashless basis to ERI in consideration for making the $250,000 line of credit available to Wytec. The expiration date of these warrants was extended to January 31, 2024 and in January 2024, these warrants were exercised on a cashless basis for a total of 22,159 shares.
In February 2020, Mr. Christopher Stuart, a director of the Company, purchased 12.5 units, each unit consisting of $50,000 7% promissory notes and five thousand common stock purchase warrants pursuant to a prior private placement made by the Company. The expiration date of the warrants was extended to January 31, 2024, and in January 2024, these warrants were exercised on a cashless basis for a total of 34,623 shares. The accrued interest on the 7% promissory note was credited to ERI and converted into units every six months at the conversion rate of $5.00 per unit, each unit consisting of one share of common stock and one common stock purchase warrant, pursuant to the Company’s prior private placement of units or a total of 13,125 units through August 31, 2021. In December 2021, ERI exercised 8,750 of these common stock purchase warrants at an exercise price of $5.00 per share or a total $43,750 for 8,750 shares of the Company’s common stock. The expiration date of the remaining 4,375 common stock purchase warrants was extended to January 31, 2024, and in January 2024 ERI exercised these warrants on a cashless basis for a total of 2,424 shares. The note, as amended, contains a feature that allows the Company to extend the maturity date up to six months up to nine times, in the Company’s sole discretion. The Company has exercised eight extensions extending the maturity date of the note to August 13, 2025.
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In February 2022, Mr. Stuart purchased for $175,000 the unit, consisting of a $175,000 7% promissory note with a maturity date of August 31, 2023 and 17,500 common stock purchase warrants exercisable on a cash or cashless basis until December 31, 2024 at an exercise price of $5.00 per share, offered by the Company in its private placement pursuant to Rule 506(b) of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended, commenced by the Company in February 2022. In December 2024, the Company extended the expiration date of the 17,500 warrants from December 31, 2024 to December 31, 2025 in consideration for allowing the Company to extend the maturity date of the $625,000 Note, as amended, by nine additional six month periods instead of seven additional six month periods. In April 2022, Mr. Stuart loaned the Company $100,000 pursuant to an unsecured promissory note and, in September 2022, Mr. Stuart loaned the Company an additional $100,000 pursuant to an unsecured promissory note. In October 2022, we entered into the Stuart Agreement with Mr. Stuart pursuant to which Mr. Stuart exchanged the three above referenced promissory notes ($375,000 principal and $10,658 accrued but unpaid interest) for a convertible promissory note in the principal amount of $385,658. See NOTE E - DEBT for a description of the Stuart Agreement. This New Stuart Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of 85,784 shares and 85,784 warrants. In December 2024, the Company extended the expiration date of the 85,784 warrants from December 31, 2024 to December 31, 2025 in consideration for allowing the Company to extend the maturity date of the $625,000 Note, as amended, by nine additional six month periods instead of seven additional six month periods.
In November and December 2022, we borrowed a total of $150,000 from Mr. Stuart pursuant to unsecured convertible promissory notes, as amended in December 2023, to allow us to extend the maturity date of the notes by up to three additional six month periods instead of two additional six month periods as set forth in the original notes in consideration for permitting the optional conversion of the notes and possible issuance of warrants as below described. The notes bear simple interest at a rate of 7% per annum and initially matured on June 30, 2023. The Company exercised one extension for each note extending the maturity date of the notes to December 31, 2023. In accordance with the December 2023 amendments, Mr. Stuart has the option to elect at any time until the maturity date to convert all or any portion of the outstanding principal and accrued interest on these promissory notes into shares of our common stock at a rate equal to $5.00 per share and immediately upon the conversion, Mr. Stuart will be issued a number of new warrants from Wytec equal to the dollar amount of the conversion divided by $5.00. The warrants will be exercisable on a cash or cashless until December 31, 2023 at an exercise price equal to the greater of (i) five dollars ($5.00) or (ii) eighty-five percent (85%) of the 10-day moving average of Wytec’s public trading price if Wytec’s securities are trading on a public securities trading market. These notes, along with associated accrued interest, were converted into shares of common stock and common stock purchase warrants during the year ended December 31, 2023 for a total of 32,107 shares and 32,107 warrants. The expiration date of these warrants was extended to January 31, 2024 and in January 2024, these warrants were exercised on a cashless basis for a total of 17,786 shares.
In August 2023, Mr. Stuart purchased $100,000 of 2023 Notes. This 2023 Note, along with associated accrued interest, was converted into shares of common stock and common stock purchase warrant during the year ended December 31, 2023 for a total of 20,640 shares and 20,640 warrants. In December 2024, the Company extended the expiration date of the 20,640 warrants from December 31, 2024 to December 31, 2025 in consideration for allowing the Company to extend the maturity date of the $625,000 Note, as amended, by nine additional six month periods instead of seven additional six month periods.
In January 2024, a total of 7,500 warrants acquired by ERI in 2021 were exercised on a cashless basis by ERI for a total of 4,155 shares.
In August 2024, Mr. Stuart purchased $50,000 of 2024 Notes.
In the fourth quarter of 2024, Mr. Stuart purchased $50,000 of 2024 Notes.
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In October 2021, the president of the Company loaned the Company $10,000 pursuant to an unsecured promissory note initially due on October 21, 2022. The note bears simple interest at a rate of 5% per annum. The note was amended in October 2022 to extend the maturity date to October 21, 2023 and in November 2023 to extend the maturity date to October 21, 2024. The maturity date of the note, as amended, may be extended by an additional six months in the sole discretion of the Company up to two times. The Company has exercised one extension extending the maturity date of the note to April 21, 2025.
In September 2022, the president of the Company loaned the Company $25,000 pursuant to an unsecured promissory note initially due on March 30, 2023. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to two times. The Company has exercised both extensions extending the maturity date of the note to March 30, 2024. This note, along with associated accrued interest, was paid back during the year ended December 31, 2023.
In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the president of the Company to December 31, 2025.
In October 2022, the president of the Company entered into an agreement with the Company, as amended in November 2022 and in July 2024, to exchange 1,000 shares of the Company’s Series C Preferred Stock owned by him for 3,000,000 shares of the Company’s common stock. In August 2024, 3,000,000 shares of common stock were issued to the president of the Company in exchange for the 1,000 shares of Series C Preferred Stock owed by him.
In January 2023, the president of the Company loaned $25,000 to the Company pursuant to an unsecured promissory note initially due on March 31, 2024. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to two times. The Company has exercised both extensions extending the maturity date of the note to March 31, 2025.
In October 2024, the president of the Company loaned the Company $10,000 pursuant to an unsecured promissory note initially due on October 28, 2025. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to four times.
In December 2024, the president of the Company loaned the Company $10,000 pursuant to an unsecured promissory note initially due on December 9, 2025. The note bears simple interest at a rate of 7% per annum. The maturity date of the note may be extended by an additional six months in the sole discretion of the Company up to four times.
The Company has an accounts payable balance owed to Mr. Robert Cook in the amount of $7,100 as of December 31, 2024 for prior consulting services.
Item 14. Principal Accounting Fees and Services.
Audit Fees
The aggregate fees billed for professional services rendered by HORNE LLP for the audit of our annual financial statements and review of the financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $150,000 for the year ended December 31, 2024 and $150,000 for the year ended December 31, 2023.
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Audit-Related Fees
Fees billed for audit-related services rendered by HORNE LLP were $0 for 2024 and $11,900 for 2023.
Tax Fees
No fees were billed for tax services rendered by HORNE LLP for 2024 or 2023.
All Other Fees
No other fees were billed.
Pre-Approval Policies and Procedures of Audit and Non-Audit Services of Independent Registered Public Accounting Firm
The policy of our Audit Committee is to pre-approve, typically at the beginning of our fiscal year, all audit and non-audit services, other than de minimis non-audit services, to be provided by an independent registered public accounting firm. These services may include, among others, audit services, audit-related services, tax services, and other services and such services are generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. As part of the Audit Committee’s review, the Audit Committee will evaluate other known potential engagements of the independent auditor, including the scope of work proposed to be performed and the proposed fees, and approve or reject each service, taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent auditor’s independence from management. At Audit Committee meetings throughout the year, the auditor and management may present subsequent services for approval. Typically, these would be services such as due diligence for an acquisition, that would not have been known at the beginning of the year.
The Audit Committee has considered the provision of non-audit services provided by our independent registered public accounting firm to be compatible with maintaining their independence. All audit and permissible non-audit services provided by our independent registered public accounting firm were approved by our Audit Committee.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
| (a) | The following documents are filed as a part of this report on Form 10-K: |
| 1. | The financial statements listed in the “Index to Financial Statements” at page F-1 are filed as part of this report. | |
| 2. | Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | |
| 3. | Exhibits included or incorporated herein: See index to Exhibits. |
| (b) | Exhibits |
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__________________
| (1) | Incorporated by reference from the original filing of the Registration Statement on January 10, 2017. |
| (2) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated September 21, 2018. |
| (3) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated January 4, 2021. |
| (4) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, dated January 3, 2024. |
| (5) | Incorporated by reference to the Form 10-K filed with the Securities and Exchange Commission on June 25, 2021. |
| (6) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on October 13, 2022. |
| (7) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on November 28, 2023. |
| (8) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on December 6, 2023. |
| (9) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on February 5, 2024. |
| (10) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on July 9, 2024. |
| (11) | Incorporated by reference to the Form 10-Q filed with the Securities and Exchange Commission, filed on November 18, 2022. |
| (12) | Incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission, filed on August 1, 2024. |
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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 the report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WYTEC INTERNATIONAL, INC. | |||
| Date: March 31, 2025 | By: | /s/ William H. Gray | |
| William H. Gray, Chief Executive Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ William H. Gray | Chief Executive Officer, President, | March 31, 2025 | ||
| William H. Gray | interim Chief Financial Officer, and Chairman (Principal Executive Officer and Principal Financial and Accounting Officer) |
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