UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended: March 31, 2022

 

OR

 

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from ___________ to____________

 

Commission File Number: 333-257458

 

CYTTA CORP.

(Exact name of registrant as specified in its charter)

  

Nevada

 

98-0505761

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

5450 W Sahara Ave Suite 300A

Las Vegas NV 89146

(Address of principal executive offices) (zip code)

 

855-511-4426

(Registrant’s telephone number, including area code)

 

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

None

 

N/A

 

N/A

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

(Do not check if a smaller reporting company)

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No

 

As of May 16, 2022, there were 377,065,718 shares outstanding of the registrant’s common stock, $0.001 par value per share.

 

 

 

 

 

CYTTA CORP.

 

INDEX

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

ITEM 1

Financial Statements (Unaudited)

 

 

 

Condensed Balance Sheets as of March 31, 2022, and September 30, 2021 (Unaudited)

3

 

 

Condensed Statement of Operations for the three and six months ended March 31, 2022, and 2021 (Unaudited)

4

 

 

Condensed Statement of Changes in Stockholders’ Deficit for the three and six months ended March 31, 2022, and 2021 (Unaudited)

5

 

 

Condensed Statement of Cash Flows for the six months ended March 31, 2022, and 2021 (Unaudited)

7

 

 

Notes to Interim Unaudited Condensed Financial Statements

8

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

22

 

ITEM 4.

Controls and Procedures

22

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

ITEM 1.

Legal Proceedings

24

 

ITEM 1A.

Risk Factors

24

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

 

ITEM 3.

Defaults Upon Senior Securities

25

 

ITEM 4.

Mine Safety Disclosures

25

 

ITEM 5.

Other Information

25

 

ITEM 6.

Exhibits

26

 

 
2

Table of Contents

 

Cytta Corp. 

Condensed Balance Sheets 

(Unaudited)

 

 

 

March 31,

 

 

September 30,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$2,140,497

 

 

$173,196

 

Accounts Receivable

 

 

-

 

 

 

27,694

 

Inventory

 

 

-

 

 

 

78,765

 

Prepaid Expenses

 

 

411,732

 

 

 

772,394

 

Vendor deposits

 

 

-

 

 

 

50,400

 

Total Current Assets

 

 

2,552,229

 

 

 

1,102,449

 

 

 

 

 

 

 

 

 

 

Property and Equipment

 

 

146,798

 

 

 

170,605

 

TOTAL ASSETS

 

$2,699,027

 

 

$1,273,054

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$52,403

 

 

$46,054

 

Accounts payable related parties

 

 

135,927

 

 

 

12,551

 

Dividend payable

 

 

33,427

 

 

 

21,033

 

Deferred revenue

 

 

1,716

 

 

 

3,588

 

Stock to be issued

 

 

54,750

 

 

 

323,583

 

Total current liabilities

 

 

278,223

 

 

 

406,809

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Preferred stock 100,000,000 shares authorized, $0.001 par value

 

 

 

 

 

 

 

 

Series C Preferred Stock par value $0.001; (600,000 issued and outstanding)

 

 

600

 

 

 

600

 

Series D Preferred Stock par value $0.001; (10,000,000 shares authorized and 50,000 issued and outstanding)

 

 

50

 

 

 

50

 

Series E Preferred Stock par value $0.001; (13,650,000 shares authorized and -0- and 13,650,000 issued and outstanding March 31, 2022, and September 30, 2021)

 

 

-

 

 

 

13,650

 

Series F Preferred Stock par value $0.001; (59,270,000 shares authorized and -0- and -0- issued and outstanding March 31, 2022, and September 30, 2021)

 

 

-

 

 

 

-

 

Common stock:

 

 

 

 

 

 

 

 

(500,000,000 shares authorized par value $0.001; 376,815,718 and 296,236,627 shares issued and outstanding March 31, 2022, and September 30, 2021)

 

 

376,816

 

 

 

296,237

 

Additional paid-in capital

 

 

27,508,359

 

 

 

23,330,613

 

Accumulated Deficit

 

 

(25,465,021)

 

 

(22,774,905)

Total Stockholders' Equity

 

 

2,420,804

 

 

 

866,245

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$2,699,027

 

 

$1,273,054

 

 

The accompanying notes are an integral part of these statements

 

 
3

Table of Contents

 

Cytta Corp.

Condensed Statements of Operations

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

For the Six Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$936

 

 

$-

 

 

$1,873

 

 

$70,520

 

Cost of goods sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,277

 

Gross Profit

 

 

936

 

 

 

-

 

 

 

1,873

 

 

 

45,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related party

 

 

212,864

 

 

 

153,564

 

 

 

678,146

 

 

 

302,961

 

General and administrative, other

 

 

1,312,004

 

 

 

400,239

 

 

 

1,965,708

 

 

 

769,005

 

Total Operating Expenses

 

 

1,524,868

 

 

 

553,803

 

 

 

2,643,854

 

 

 

1,071,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,523,932)

 

 

(553,803)

 

 

(2,641,981)

 

 

(1,026,723)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,078

 

 

 

(342)

 

 

48,135

 

 

 

-

 

Interest income

 

 

 

 

 

 

-

 

 

 

-

 

 

 

259

 

Total Other Expenses

 

 

2,078

 

 

 

(342)

 

 

48,135

 

 

 

259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(1,526,010)

 

 

(554,145)

 

 

(2,690,116)

 

 

(1,026,464)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(1,526,010)

 

$(554,145)

 

$(2,690,116)

 

$(1,026,464)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share, basic and fully diluted

 

$-

 

 

$-

 

 

$(0.01)

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding Basic and diluted

 

 

376,366,281

 

 

 

292,301,898

 

 

 

338,298,054

 

 

 

293,846,505

 

 

The accompanying notes are an integral part of these statements

 

 
4

Table of Contents

 

Cytta Corp. 

Condensed Statement of Changes in Stockholders' Equity 

The Three and Six Months Ended March 31, 2022 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

 

 

Series C Preferred Stock

 

 

Series D Preferred Stock

 

 

Series E Preferred Stock

 

 

Series F Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance September 30, 2021

 

 

600,000

 

 

$600

 

 

 

50,000

 

 

$50

 

 

 

13,650,000

 

 

$13,650

 

 

 

-

 

 

$-

 

 

 

296,236,627

 

 

$296,237

 

 

$23,330,613

 

 

$(22,774,905)

 

 

866,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,250,000

 

 

 

6,250

 

 

 

852,850

 

 

 

-

 

 

 

859,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series F Preferred Stock issued for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

59,270,000

 

 

 

59,270

 

 

 

-

 

 

 

-

 

 

 

2,904,230

 

 

 

-

 

 

 

2,963,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for accounts payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

909,091

 

 

 

909

 

 

 

299,091

 

 

 

-

 

 

 

300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock issued for conversion of Series E Preferred Stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13,650,000)

 

 

(13,650)

 

 

-

 

 

 

-

 

 

 

13,650,000

 

 

 

13,650

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock issued for conversion of Series E Preferred Stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(59,270,000)

 

 

(59,270)

 

 

59,270,000

 

 

 

59,270

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended December 31, 2021

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,164,106)

 

 

(1,164,106)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances December 31, 2021

 

 

600,000

 

 

 

600

 

 

 

50,000

 

 

 

50

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

376,315,718

 

 

 

376,316

 

 

 

27,386,784

 

 

 

(23,939,011)

 

 

3,824,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

500,000

 

 

 

500

 

 

 

121,575

 

 

 

-

 

 

 

122,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended March 31, 2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,526,010)

 

 

(1,526,010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2022

 

 

600,000

 

 

$600

 

 

 

50,000

 

 

$50

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

376,815,718

 

 

$376,816

 

 

$27,508,359

 

 

$(25,465,021)

 

$2,420,804

 

 

 
5

Table of Contents

 

Cytta Corp. 

Condensed Statement of Changes in Stockholders' Equity 

The Three and Six Months Ended March 31, 2021

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

 

 

Series C Preferred Stock

 

 

Series D Preferred Stock

 

 

Series E Preferred Stock

 

 

Preferred Stock to be issued

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance September 30, 2020

 

 

600,000

 

 

$600

 

 

 

50,000

 

 

$50

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

289,147,675

 

 

 

289,148

 

 

$20,891,476

 

 

 

(20,181,368)

 

 

999,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock issued for stock to be issued

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17,280,000

 

 

 

17,280

 

 

 

414,720

 

 

 

-

 

 

 

432,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,500,000

 

 

 

13,500

 

 

 

931,500

 

 

 

-

 

 

 

945,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock cancelled

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(28,048,000)

 

 

(28,048)

 

 

28,048

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the three months ended December 31, 2020

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(472,319)

 

 

(472,319)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2020

 

 

600,000

 

 

 

600

 

 

 

50,000

 

 

 

50

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

291,879,675

 

 

 

291,880

 

 

 

22,265,744

 

 

 

(20,653,687)

 

 

1,904,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,000,000

 

 

 

1,000

 

 

 

24,000

 

 

 

-

 

 

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital stock to be issued for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

360,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

360,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the three months ended March 31, 2021

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(554,145)

 

 

(554,145)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2021

 

 

600,000

 

 

$600

 

 

 

50,000

 

 

$50

 

 

 

-

 

 

$-

 

 

 

-

 

 

$360,000

 

 

 

292,879,675

 

 

$292,880

 

 

$22,289,744

 

 

$(21,207,832)

 

$1,735,441

 

 

 The accompanying notes are an integral part of these statements

 

 
6

Table of Contents

 

Cytta Corp. 

Condensed Statements of Cash Flows 

(Unaudited)

 

 

 

For the Six Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(2,690,116)

 

$(1,026,464)
Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expenses for services

 

 

1,367,468

 

 

 

469,375

 

Depreciation expense

 

 

23,808

 

 

 

17,910

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

 

 

Inventory

 

 

78,765

 

 

 

(29,790)
Accounts Receivable

 

 

27,694

 

 

 

(20,040)
Prepaid expenses

 

 

5,537

 

 

 

(9,748)
Vendor deposits

 

 

50,400

 

 

 

-

 

Accounts payable and accrued liabilities

 

 

6,348

 

 

 

(32,232)
Accounts payable-related party

 

 

123,376

 

 

 

-

 

Dividend payable

 

 

12,394

 

 

 

-

 

Deferred revenue

 

 

(1,872)

 

 

-

 

Customer deposits

 

 

-

 

 

 

(50,480)
Net cash used in operating activities

 

 

(996,199)

 

 

(681,469)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

-

 

 

 

(34,249)
Net cash used in investing activities

 

 

-

 

 

 

(34,249)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of Series F Preferred Stock

 

 

2,963,500

 

 

 

360,000

 

Proceeds from issuance of common stock

 

 

-

 

 

 

25,000

 

Net cash provided by financing activities

 

 

2,963,500

 

 

 

385,000

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

 

1,967,301

 

 

 

(330,718)
CASH AT BEGINNING OF PERIOD

 

 

173,196

 

 

 

847,646

 

CASH AT END OF PERIOD

 

$2,140,497

 

 

$516,928

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW DISCLOSURES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$-

 

Cash paid for income taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

$588,592

 

 

$945,000

 

Common stock issued for accounts payable

 

$300,000

 

 

$-

 

 

The accompanying notes are an integral part of these statements

 

 
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Cytta Corp.

Notes to Condensed Financial Statements

March 31, 2022

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Cytta Corp., (“Cytta” or the “Company”) was incorporated on May 30, 2006 under the laws of the State of Nevada. It is located in Las Vegas, Nevada. Cytta is in the business of imagineering, developing and securing disruptive technologies.

 

NOTE 2 - GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2022, the Company had an accumulated deficit of $25,465,021 and has also generated losses since inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern.

 

In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

 

The Company develops and distributes proprietary technology that radically shifts how video is streamed, consumed, transferred and stored.  Our proprietary SUPR Stream is the technology at the core of our products, designed specifically for streaming and storing HD, 4K, and higher resolution video. The IGAN (Incident Global Area Network) Incident Command System (ICS) seamlessly streams and stores all relevant video and audio during emergency situations. This creates real-time situational awareness for police, firefighters, first responders, EMS, and their command centers. Our products work in size, weight, and power-constrained (SWaP) operating environments, and evolved through use in the military by meeting the need to stream multiple HD, 4K, and 4K+ video feeds with ultra-low latency, bandwidth, and power consumption. The Company is taking this streaming, storage, and transfer technology to enterprises that would like to send more high-quality videos with fewer resources. All of our products are manufactured in the USA.

 

The Company intends to fund operations through equity financing arrangements, which may not be sufficient to fund its capital expenditures, working capital and other cash requirements for the foreseeable future. During the six months ended March 31, 2022, the Company sold 59,270,000 shares of Series F Preferred stock at $0.05 per share and received proceeds of $2,963,500.

 

 
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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended March 31, 2022, are not necessarily indicative of the operating results for the full fiscal year or any future period.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits. The Company has no cash equivalents at March 31, 2022, and September 30, 2021.

 

Prepaid expenses

 

The Company considers expenses or services paid for prior to the period the expense is completed to be recorded as a prepaid expense. Included in this account is the value of common stock issued to consultants. Such issuances are pursuant to consulting agreements that can have a one-to-two-year term. The Company amortized the value of the stock issued over the term of the agreement. The activity for the six months ended March 31, 2022 and 2021 is summarized as:

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Balance beginning of period

 

$772,394

 

 

$539,443

 

Value of common stock issued

 

 

894,841

 

 

 

945,000

 

Amortization of stock-based compensation

 

 

(1,249,967 )

 

 

(469,375 )

Other prepaid expense activity

 

 

(5,536 )

 

 

29,750

 

 

 

$411,732

 

 

$1,044,818

 

 

 
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Inventory

 

Inventories are valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs include finished goods and component parts. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, including known trends, market conditions, currency exchange rates and other such issues. Inventory as of March 31, 2022, and September 30, 2021, was $-0- and $78,765, respectively.

 

Property and equipment

 

Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets.

 

The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:

 

 

Vehicles and equipment

5 years

 

Software

3 years

 

Fair value of financial instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

 

Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

 

Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments.

 

 
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Revenue recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. Under ASC 606, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. Other than The Company has no outstanding contracts with any of its’ customers. The Company recognizes revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shipping terms.

 

Stock-based compensation

 

The Company accounts for its stock based compensation under the recognition and measurement principles of the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment” (“SFAS No. 123R”)(ASC 718) using the modified prospective method for transactions in which the Company obtains employee services in share-based payment transactions and the Financial Accounting Standards Board Emerging Issues Task Force Issue No. 96-18 “Accounting For Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling Goods Or Services” (“EITF No. 96-18”) for share-based payment transactions with parties other than employees provided in SFAS No. 123(R) (ASC 718). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur.

 

Income taxes

 

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” (“SFAS No. 109”) (ASC 740). Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

 

Cash flows reporting

 

The Company follows the provisions of ASC 230 for cash flows reporting and accordingly classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230 to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.

 

 
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Reporting segments

 

ASC 280 establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances.  Currently, ASC 280 has no effect on the Company’s financial statements as substantially all of the Company’s operations are conducted in one industry segment.

 

Concentrations of Credit Risk

 

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

 

Earnings (Loss) Per Share of Common Stock

 

The Company has adopted ASC 260-10-20, “Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

 

Recent Accounting Pronouncements

 

Other than the above there have no recent accounting pronouncements or changes in accounting pronouncements during the period ended March 31, 2022, that are of significance or potential significance to the Company.

 

NOTE 4 - PROPERTY AND EQUIPMENT

 

The following table represents the Company’s property and equipment as of March 31, 2022, and September 30, 2021:

 

 

 

March 31, 2022

 

 

September 30, 2021

 

Property and equipment

 

$230,900

 

 

$230,900

 

Accumulated depreciation

 

 

(84,102 )

 

 

(60,295)

Property and equipment, Net

 

$146,798

 

 

$170,605

 

 

Depreciation expense was $23,807 and $17,910 for the six months ended March 31, 2022, respectively.

 

 
12

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NOTE 5 - RELATED PARTY TRANSACTIONS

 

Related Party agreements and fees

 

For the three and six months ended March 31, 2022, and 2021, the Company recorded expenses to related parties in the following amounts:

 

 

 

Three months ended March 31,

 

 

Six months ended March 31,

 

Description

 

2022

 

 

2021

 

 

2022

 

 

2021

 

CEO-Management fees

 

$58,000

 

 

$36,000

 

 

$203,000

 

 

$72,000

 

Chief Technology Officer (CTO)

 

 

58,000

 

 

 

36,000

 

 

 

203,000

 

 

 

72,000

 

Chief Administration Officer (CAO)

 

 

45,000

 

 

 

30,000

 

 

 

165,000

 

 

 

60,000

 

Stock-based compensation expense, officers

 

 

39,063

 

 

 

39,063

 

 

 

78,126

 

 

 

78,126

 

Office rent and expenses

 

 

12,801

 

 

 

12,501

 

 

 

29,020

 

 

 

20,835

 

Total

 

$212,864

 

 

$153,564

 

 

$678,146

 

 

$302,961

 

 

Effective June 1, 2021, the Company increased the monthly fee paid to its’ CEO and CTO, from $12,000 to $15,000, respectively. On January 1, 2022, the Company increased the monthly fee to $18,000 for the CEO and CTO, respectively, and on February 1, 2022, the monthly fee for the CEO and CTO was increased to $20,000. For the three and six months ended March 31, 2022, and the company recorded expenses of $58,000 and $103,000, respectively, each for the CEO and CTO. Of the CEO expenses, $30,000 is included in accounts payable, related parties on the balance sheet included herein. For the six months ended March 31, 2022, the Company also recorded bonus expenses of $100,000, $100,000 and $90,000 for the CEO, CTO and CAO, respectively. The CEO’s bonus is included in accounts payable, related party on the balance sheet included herein. For the three and six months ended March 31, 2021, the Company expensed $36,000 and $72,000, respectively to the CEO and CTO, and $30,000 and $60,000 to its CAO, respectively. Amortization of stock-based compensation expense of $39,063 and $78,126 was recorded for the three and six months ended March 31, 2022, and 2021, respectively.

 

On October 25, 2020, the Company entered into a sublease with its CTO, whereby the Company agreed to an annual lease payment of $50,000. For the six months ended March 31, 2022, the Company expensed $4,163 and for the three and six months ended March 31, 2021, $12,501 and $20,835, respectively, to rent expense pursuant to this sublease. On June 1, 2021, agreed to pay an additional $3,500 per month to the CTO for additional space, and for the three and six months ended March 31, 2022, $10,500 and $21,000, respectively is included in rent expense.

 

Accounts payable, related parties

 

As of March 31, 2022, and September 30, 2021, the Company owes $135,927 and $12,551, respectively to related parties as follows:

 

 

 

March 31, 2022

 

 

September 30, 2021

 

Management fees, Chief Executive Officer (CEO)

 

$30,000

 

 

$-

 

Bonus, CEO

 

 

100,000

 

 

 

-

 

Accounts payable, CTO

 

 

5,927

 

 

 

12,551

 

Total

 

$135,927

 

 

$12,551

 

 

 
13

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NOTE 6 - CAPITAL STOCK

 

Common Stock

 

The Company has authorized 500,000,000 common shares, par value $0.001. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.  As of March 31, 2022, and September 30, 2021, there were 376,815,718 and 296,236,627, respectively, common shares issued and outstanding.

 

During the six months ended March 31, 2022, the following shares of common stock were issued:

 

 

·

13,650,000 shares of common stock issued for the conversion of 13,650,000 shares of Series E Preferred Stock.

 

 

 

 

·

59,270,000 shares of common stock were issued for the conversion of 59,270,000 shares of Series F Preferred Stock.

 

 

 

 

·

6,750,000 shares of common issued for services. The Company valued the shares at $981,175, based on the price of the common stock on the date the Company agreed to issue the shares.

 

 

 

 

·

909,091 shares issued for payment of accounts payable. The amount of shares issued were based upon the share price of the Company’s common stock on the date the Company agreed to issue the common stock.

 

Preferred Stock

 

The Company has 100,000,000 shares authorized as preferred stock, par value $0.001 (the “Preferred Stock”), which such Preferred Stock shall be issuable in such series, and with such designations, rights and preferences as the Board of Directors may determine from time to time.

 

Series D Preferred Stock

 

On September 30, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s Series D Preferred Stock. Under the terms of the Amendment to Certificate of Designation of Series D Preferred Stock, 50,000 shares of the Company’s preferred shares are designated as Series D Preferred Stock. Each share of Series D Preferred Stock is convertible into one share of fully paid and non-assessable Common Stock. For so long as any shares of the Series D Preferred Stock remain issued and outstanding, the Holders thereof, voting separately as a class, shall have the right to vote on all shareholder matters equal to two times the sum of all the number of shares of other classes of Corporation capital stock eligible to vote on all matters submitted to a vote of the stockholders of the Corporation. On September 30, 2020, the Company issued 50,000 shares of Series D Preferred Stock to a Company controlled by the Company’s CEO, in satisfaction of $1,347,894 of capital stock to be issued.  As of March 31, 2022, and September 30, 2021, there were 50,000 shares of Series D Preferred Stock issued and outstanding.

 

 
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Series E Preferred Stock

 

On June 2, 2021, the Company filed a Certificate of Designation with the State of Nevada. Under the terms of the Certificate of Designation 13,650,000 (as amended on June 10, 2021) were designated as Series E Preferred Stock. Each share of Series E Preferred Stock is convertible into one share of fully paid and non-assessable Common Stock. For so long as any shares of the Series E Preferred Stock remain issued and outstanding, the Holders thereof, voting separately as a class, shall have the right to vote one share on all matters submitted to a vote of the stockholders of the Corporation. As of September 30, 2021, there were 13,650,000 shares of Series E Preferred Stock issued and outstanding. During the six months ended March 31, 2022, the Company converted the 13,650,000 shares of Series E Preferred Stock to 13,650,000 shares of common stock. As of March 31, 2022, there were no shares of Series E Preferred stock issued and outstanding.

 

Series F Preferred Stock

 

On November 24, 2021, the Company filed a Certificate of Designation with the State of Nevada. Under the terms of the Certificate of Designation 59,270,000 were designated as Series F Preferred Stock. Each share of Series F Preferred Stock is convertible into one share of fully paid and non-assessable Common Stock at any time by the holder. For so long as any shares of the Series F Preferred Stock remain issued and outstanding, the Holders thereof, voting separately as a class, shall have the right to vote one share on all matters submitted to a vote of the stockholders of the Corporation. The Series F Preferred Stock automatically converts to common stock after the shares of common stock closing market price is at least $0.20 for twenty (20) consecutive trading days. During the six months ended March 31, 2022, the Company sold 59,270,000 shares of Series F Preferred Stock at $0.05 per share and received proceeds of $2,963,750. During the six months ended March 31, 2022, the Company converted the 59,270,000 shares of Series F Preferred Stock to 59,270,000 shares of common stock. As of March 31, 2022, there were no shares of Series F Preferred Stock issued and outstanding.

 

Capital stock to be issued

 

As of September 30, 2021, the Company had $323,583 of capital stock to be issued. During the six months ended March 31, 2022, 4,000,000 shares of common stock was issued, which reduced the capital stock to be issued by $268,833. As of March 31, 2022, the Company has $54,750 of capital stock to be issued, which is included in the liability section of the unaudited condensed balance sheet presented herein.

 

NOTE 7 - COMMITMENTS AND CONTINGENCIES

 

On November 24, 2020, a plaintiff (the “Plaintiff”) filed a complaint in the State District Court for Clark County, Nevada, naming Cytta as a Defendant. The Plaintiff contends that the Company had breached an agreement. On or about January 15, 2021, the Defendant filed an Answer and Counterclaim in the litigation and  contended that in fact the Plaintiff owed money to Cytta for having breached an earlier services agreement, of limited scope and duration, and was liable for defaming Cytta in various communications he had sent to certain persons or entities. Management has been contesting the matter vigorously. A bench trial is currently expected to take place during the first half of 2022.

 

 
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NOTE 8 - INCOME TAXES

 

The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for the realization of deferred tax assets. Based upon the historical and anticipated future income, management has determined that the deferred tax assets meet the more-likely-than-not threshold for realizability. Accordingly, no valuation allowance has been recorded against the Company’s deferred tax assets as of June 30, 2021.

 

NOTE 9 - DEFERRED REVENUE

 

During the year ended September 30, 2021, the Company received $3,744 form a customer for a payment of a one- year subscription agreement. The subscription period is from August 2021 through July 2022, and accordingly the Company will recognize the revenue over such period. For the three and six months ended March 31, 2022, the Company recognized $936 and $1,873 of revenue. The remaining deferred revenue of $1,716 is recognized as deferred revenue on the condensed balance sheet included herein.

 

NOTE 10 - SUBSEQUENT EVENTS

 

On April 11, 2022, the Company issued 250,000 shares of restricted common stock to a consultant.

 

The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates.

 

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q.

 

THE COMPANY

 

Cytta Corp., (“Cytta” or the “Company”) was incorporated on May 30, 2006 under the laws of the State of Nevada. It is located in Las Vegas, Nevada. Cytta is in the business of imagineering, developing and securing disruptive technologies.

 

Results of Operations for the three and six months ended March 31, 2022 and 2021:

 

Revenue

 

Revenues of $936 and $1,873 for the three and six months ended March 31, 2022, respectively, were from deferred revenue on subscription agreements being recognized. Revenues of $70,520 for the six months ended March 31, 2021, consist of hardware imbedded with our proprietary software, integration consulting services, tech support and product maintenance billed to the customer.  

 

 
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Cost of goods sold

 

Cost of goods sold was $25,277 for the six months ended March 31, 2021.

 

Operating expenses were $1,524,868 and $2,643,854 for the three and six months ended March 31, 2022, respectively, compared to $553,803 and $1,071,966, respectively, for the three and six months ended March 31, 2021.

  

 

 

Three months ended March 31,

 

 

Six months ended March 31,

 

Description

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Related party expenses (excluding stock-based expenses)

 

$173,801

 

 

$114,501

 

 

$600,020

 

 

$224,835

 

Stock based expenses

 

 

872,419

 

 

 

225,156

 

 

 

1,289,341

 

 

 

391,249

 

Stock based compensation, officers

 

 

39,063

 

 

 

39,063

 

 

 

78,126

 

 

 

78,126

 

Professional fees

 

 

94,623

 

 

 

54,060

 

 

 

205,919

 

 

 

120,679

 

Consulting expenses

 

 

47,250

 

 

 

24,150

 

 

 

65,700

 

 

 

47,817

 

Depreciation expense

 

 

11,904

 

 

 

9,920

 

 

 

23,808

 

 

 

17,910

 

Equipment and demo expenses

 

 

150,963

 

 

 

30,840

 

 

 

159,944

 

 

 

54,412

 

General and Administrative, officers

 

 

14,918

 

 

 

22,190

 

 

 

18,588

 

 

 

54,373

 

Auto, travel and entertainment

 

 

25,868

 

 

 

16,684

 

 

 

54,428

 

 

 

31,078

 

Rent expense

 

 

4,582

 

 

 

4,122

 

 

 

8,729

 

 

 

8,194

 

Investor relations

 

 

23,792

 

 

 

-

 

 

 

37,746

 

 

 

-

 

Other operating expenses

 

 

65,685

 

 

 

13,117

 

 

 

101,505

 

 

 

43,293

 

Total

 

$1,525,868

 

 

$553,803

 

 

$2,643,854

 

 

$1,071,966

 

 

Stock-based expenses increased in the current periods compared to the prior periods substantially as a result of $784,919 and $1,171,842 related to the amortization of stock-based compensation for the three and six months ended March 31, 2022, as well as the expense of $87,500 and $117,500 for shares issued and expensed for the three and six months ended March 31, 2022.

 

For the three and six months ended March 31, 2022, and 2021, the Company recorded expenses to related parties in the following amounts:

 

 

 

Three months ended March 31,

 

 

Six months ended March 31,

 

Description

 

2022

 

 

2021

 

 

2022

 

 

2021

 

CEO-Management fees

 

$58,000

 

 

$36,000

 

 

$203,000

 

 

$72,000

 

Chief Technology Officer (CTO)

 

 

58,000

 

 

 

36,000

 

 

 

203,000

 

 

 

72,000

 

Chief Administration Officer (CAO)

 

 

45,000

 

 

 

30,000

 

 

 

165,000

 

 

 

60,000

 

Office rent and expenses

 

 

12,801

 

 

 

12,501

 

 

 

29,020

 

 

 

20,835

 

Total

 

$173,801

 

 

$114,501

 

 

$600,020

 

 

$224,835

 

 

During the three and six months ended March 31, 2022, equipment and demo expenses increased as a result of the Company utilizing existing inventory to be sent out for demo purposes.

 

 
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The following tables set forth key components of our balance sheet as of March 31, 2022 and September 30, 2021.

 

 

 

March 31, 2022

 

 

September 30, 2021

 

 

 

 

 

 

 

 

Current Assets

 

$2,552,229

 

 

$1,102,449

 

 

 

 

 

 

 

 

 

 

Property and Equipment

 

$146,798

 

 

$170,605

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$2,699,027

 

 

$1,273,054

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

$278,223

 

 

$406,089

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

$278,223

 

 

$406,089

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

$2,420,804

 

 

$866,245

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$2,699,027

 

 

$1,273,054

 

 

Liquidity and Capital Resources

 

Our current capital and our other existing resources will be sufficient to provide the working capital needed for our current business Additional capital will be required to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our business development and financial results. These conditions raise substantial doubt about our ability to continue as a going concern as well as our recurring losses from operations and the need to raise addition. This “going concern” could impair our ability to finance our operations through the sale of debt or equity securities. During the six months ended March 31, 2022, the Company has raised $2,963,500 from the sale of 59,270,000 shares of Series F Preferred Stock.

 

As of March 31, 2022, we had cash of $2,140,497 compared to $173,196 at September 30, 2021. As of March 31, 2022, we had current assets of $2,552,229 and current liabilities of $278,223, which resulted in working capital of $2,274,006. The current liabilities are comprised of accounts payable, accounts payable-related parties, accrued expenses, dividends payable and stock to be issued.

 

In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

 

 
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Operating Activities

 

For the six months ended March 31, 2022, net cash used in operating activities was $996,199 compared to $681,469 for the six months ended March 31, 2021. For the six months ended March 31, 2022, our net cash used in operating activities was primarily attributable to the net loss of $2,690,116, adjusted by stock-based compensation of $1,367,468 and depreciation of $23,808. Net changes of $302,642 in operating assets and liabilities decreased the cash used in operating activities.

 

For the six months ended March 31, 2021, net cash used in operating activities of $681,469 was primarily attributable to the net loss of $1,026,464, adjusted for non-cash expenses of stock- based expenses of $469,375 and depreciation of $17.910, and net changes of $142,290 in operating assets and liabilities.

 

Investing Activities

 

For the six months ended March 31, 2022, there was no cash used in investing activities and net cash used in investing activities was $34,249 for the six months ended March 31, 2021. The expenditures were for the purchases of office furniture and equipment.

 

Financing Activities

 

For the six months ended March 31, 2022, net cash provided by financing activities was $2,963,500, compared to $385,000 for the six months ended March 31, 2021. During the six months ended March 31, 2022, we received $2,963,500 of proceeds received pursuant to the sale of 59,270,000 shares of Series F Preferred Stock at $0.05 per share. For the six months ended March 31, 2021, the Company received $360,000 from the sale of preferred stock and $25,000 from the sale of 1,000,000 shares of common stock at $0.025 per share.

 

As of March 31, 2022, the Company had $2,140,497 in cash on hand.  Management believes the working capital is sufficient to meet its’ ongoing commitments for the next year and to begin executing on its’ business plan.

 

Critical Accounting Policies

 

Our significant accounting policies are summarized in Note 3 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our results of operations, financial position or liquidity for the periods presented in this report.

 

Inventory

 

Inventories are valued at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Inventory costs include finished goods and component parts. In evaluating the net realizable value of inventory, management also considers, if applicable, other factors, including known trends, market conditions, currency exchange rates and other such issues.

 

 
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Property and Equipment

 

Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets.

 

The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:

 

 

Vehicles and equipment

5 years

 

Software

3 years

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. Under ASC 606, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. Other than The Company has no outstanding contracts with any of its’ customers. The Company recognizes revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shipping terms.

 

Stock-Based Compensation

 

The Company accounts for its stock based compensation under the recognition and measurement principles of the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment” (“SFAS No. 123R”)(ASC 718) using the modified prospective method for transactions in which the Company obtains employee services in share-based payment transactions and the Financial Accounting Standards Board Emerging Issues Task Force Issue No. 96-18 “Accounting For Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling Goods Or Services” (“EITF No. 96-18”) for share-based payment transactions with parties other than employees provided in SFAS No. 123(R) (ASC 718). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur.

 

Earnings (Loss) Per Share

 

The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share.” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

 

 
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Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not Applicable.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 31, 2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective for the reasons discussed below.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2022, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

 

 

1.

We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.

 

 

 

 

2.

We did not maintain appropriate cash controls – As of March 31, 2022, the Company has not maintained sufficient internal controls over financial reporting for cash, including failure to segregate cash handling and accounting functions, and did not require dual signatures on the Company’s bank accounts.

 

 
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Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

 

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

 

Changes in Internal Controls over Financial Reporting

 

There has been no change in our internal control over financial reporting occurred during the three months ended March 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II. OTHER INFORMATION

 

Item 1. LEGAL PROCEEDINGS

 

On November 24, 2020, a plaintiff (the “Plaintiff”) filed a complaint in the State District Court for Clark County, Nevada, naming Cytta as a Defendant. The Plaintiff contends that the Company had breached an agreement. On or about January 15, 2021, the Defendant filed an Answer and Counterclaim in the litigation and  contended that in fact the Plaintiff owed money to Cytta for having breached an earlier services agreement, of limited scope and duration, and was liable for defaming Cytta in various communications he had sent to certain persons or entities. Management has been contesting the matter vigorously. A bench trial is currently expected to take place during the first half of 2022.

 

Other than the above, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. RISK FACTORS

 

Not applicable for smaller reporting companies.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

The following represents all shares issued during the quarter ended December 31, 2021:

 

On March 22, 2022, the Company issued 250,000 shares of restricted common stock to a third-party investor, in exchange for consulting services provided to the Company. The shares were valued at $0.1432 per share, the market price on the date the Company agreed to issue the shares.

 

On March 22, 2022, the Company issued 250,000 shares of restricted common stock to an existing Company shareholder, in exchange for consulting services provided to the Company. The shares were valued at $0.35 per share, the market price on the date the Company agreed to issue the shares.

 

The Company issued the foregoing securities in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506(b) promulgated thereunder, as there was no general solicitation to the investors and the transactions did not involve a public offering.

 

 
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Item 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

Item 4. MINE SAFETY DISCLOSURE

 

Not applicable.

 

Item 5. OTHER INFORMATION

 

 

(a)

None.

 

(b)

During the quarter ended March 31, 2022, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 

 
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Item 6. EXHIBITS

 

The following documents are filed as part of this report:

 

Exhibit No.

 

Description

3.1

 

Articles of Incorporation of Cytta Corp.*

3.2

 

Bylaws of the Company *

3.3

 

Amendment to Articles of Incorporation Amending Authorized Common and Preferred Stock *

3.4

 

Amended and Restated Certificate of Designation of Series D Preferred Stock *

3.5

 

Amended and Restated Certificate of Designation of Series E Preferred Stock *

3.6

 

Certificate of Designation of Series F Preferred Stock**

10.1

 

Agreement by and between Cytta Corp and Makena Investment Advisors, LLC dated April 1, 2020 *

10.2

 

Sublease Agreement by and between Cytta Corp and Michael Collins dated October 25, 2020 *

10.3

 

Agreement by and between Cytta Corp and Peter Rettman dated August 27, 2020 *

10.4

 

Share Issuance agreement by and between Cytta Corp and United Financial Inc., dated September 30, 2020 *

10.5

 

Technology Access Agreement by and between Cytta Corp and Michael Collins dated July 19, 2018 *

14.1

 

Code of Ethics *

31.1

 

Certification of Chief Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***

31.2

 

Certification of Chief Financial Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***

32.1

 

Certification of Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63***

101.INS

 

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).***

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document.***

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.***

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.***

101.LAB

 

Inline XBRL Taxonomy Extension Labels Linkbase Document.***

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document.***

104

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

 

* Incorporated by reference to the same exhibit to the registration statement filed by the Company on June 28, 2021.

** Incorporated by reference to exhibit 4.1 to the Current Report on Form 8-K filed by the Company on November 26, 2021.

*** Filed herewith

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: May 16, 2022

 

/s/ Gary Campbell

 

Gary Campbell

 

Chief Executive Officer

 

(principal executive officer)

 

(principal financial and accounting officer)

 

 

 

 
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