UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

CYTTA CORP.

(Exact name of Registrant as specified in its charter)

 

Nevada

 

7389

 

98-0505761

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code)

 

(I.R.S. Employer

Identification No.)

 

5450 W Sahara Avenue, Suite 300A

Las Vegas, NV 89146

Telephone: (702) 900-7022

(Address and Telephone Number of Registrant’s Principal

Executive Offices and Principal Place of Business)

 

NPC World Services Inc.

5450 W Sahara Avenue, Suite 300

Las Vegas, NV 89146

Telephone: (702) 866-2500

(Name, Address, and Telephone Number for Agent of Service)

 

Copies to:

BRUNSON CHANDLER & JONES, PLLC

Walker Center

175 S. Main Street, Suite 1410

Salt Lake City, UT 84111

Attn: Lance Brunson, Esq.

Telephone: (801) 303-5737

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: ☒

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

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

 

Large accelerated filer

Accelerated Filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY OR SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED _______________, 2022

 

CYTTA CORP.

73,470,000 Shares

 

This prospectus relates to the offer for sale of up to 73,470,000 shares of our common stock by certain existing holders of the securities, referred to as “Selling Security Holders” throughout this document. The total number of shares registered in this prospectus is 73,470,000 shares of common stock. We will not receive any of the proceeds of this offering.

 

Our common stock is quoted on the OTC Link LLC alternative trading system (“OTC Link”), operated by OTC Markets Group, Inc., under the symbol “CYCA”. As of July 22, 2022, the last reported sale price for our common stock was $0.1605 per share. Prior to this offering, there has been a limited market for our securities. While our common stock is quoted on the OTC Link, there has been negligible trading volume of our common stock. Therefore, purchasers of our shares registered hereunder may be unable to sell their securities, because there may not be a public market for our securities. As a result, you may find it more difficult to dispose of, or obtain accurate quotes for, our common stock. Any purchasers of our securities should be in a financial position to bear the risks of losing their entire investment.

 

The Selling Security Holders identified in this prospectus may offer their shares of common stock from time to time through public or private transactions at prevailing market prices or at privately negotiated prices. No underwriting arrangements have been entered into by any of the Selling Security Holders. The Selling Security Holders and any intermediaries through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) with respect to the securities offered, and any profits realized or commissions received may be deemed underwriting compensation. For more information regarding the Selling Security Holders, see the section titled “Selling Security Holders” herein.

 

This offering is highly speculative, and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” beginning on page 5.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

The Date of This Prospectus is: ___________________

 

 
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Table of Contents

 

TABLE OF CONTENTS

 

PROSPECTUS SUMMARY

 

 

4

 

RISK FACTORS

 

 

5

 

FORWARD LOOKING STATEMENTS

 

 

13

 

USE OF PROCEEDS

 

 

13

 

DIVIDEND POLICY

 

 

13

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

 

13

 

DILUTION

 

 

14

 

SELLING SECURITY HOLDERS

 

 

14

 

BUSINESS AND RECENT DEVELOPMENTS

 

 

26

 

DESCRIPTION OF PROPERTY

 

 

36

 

MANAGEMENT

 

 

36

 

EXECUTIVE COMPENSATION

 

 

38

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

 

39

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

 

41

 

DESCRIPTION OF SECURITIES

 

 

43

 

SHARES ELIGIBLE FOR FUTURE SALE

 

 

44

 

PLAN OF DISTRIBUTION

 

 

45

 

LEGAL PROCEEDINGS

 

 

46

 

INTERESTS OF NAMED EXPERTS AND COUNSEL

 

 

46

 

TRANSFER AGENT

 

 

46

 

AVAILABLE INFORMATION

 

 

47

 

FINANCIAL STATEMENTS

 

 

F-1

 

 

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. The Selling Security Holders are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

 

 
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PROSPECTUS SUMMARY

 

This summary highlights some information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including “Risk Factors” and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus.

 

ABOUT OUR COMPANY

 

Overview

 

Cytta Corp. (“Cytta”) was founded in 2006, and since 2014, Cytta has focused on developing and marketing video compression-based software and hardware products, using technology based upon the SUPR (Superior Utilization of Processing Resources) video compression codec/algorithm. Cytta currently develops, markets, and distributes proprietary video streaming products and services that improve how video is streamed, consumed, transferred, and stored in enterprise environments.

 

Cytta’s primary business focus is the development of video streaming products and services that utilize our SUPR compression codec/algorithm and our related industry experience. We design and develop innovative and effective video compression-based software, and hardware products utilizing our software and video-streaming technological knowledge. We also offer a combination of technical and consulting services, proprietary software products, hardware products utilizing our software and system integration team to meet the needs of customers. Cytta places extreme value on satisfying our customers’ needs with innovative well-engineered, high-quality products and service solutions.

 

Company Information

 

Our products and services include advanced video streaming systems, video/audio collaboration software, and integrated hardware systems utilizing both on-premise deployments or cloud-based deployments, that are delivered widely through a variety of flexible and interoperable technology deployment models. These models include software deployments, combined software/hardware deployments, utilizing either on-premises deployments, or cloud-based deployments. We have created advanced video compression systems, video/audio collaboration software, and integrated hardware systems to solve streaming problems in various markets.

 

The Company’s access to the SUPR Compression codec/algorithm enabled it to utilize the video streaming capabilities of this proprietary technology to develop new software and hardware technology, methodologies, and products. Our advanced video compression systems, video/audio collaboration software, and integrated hardware systems solve streaming problems in various markets. These products are being developed, sold, licensed, and serviced by Cytta today. Our access to this streaming technology has also created access to a network of people in the video streaming industry or those that utilize critical video streaming services that generate sales leads and ultimately revenue for Cytta.

 

Further company information, including a description of the Company’s products and customers, is found on page 26.

 

Use of Certain Defined Terms

 

Except as otherwise indicated by the context, references in this report to:

 

“Cytta,” “Cytta Corp.,” “we,” “us,” or “our,” “registrant,” “Successor” and the “Company” are references to the business of Cytta Corp.

“Securities Act” refers to the Securities Act of 1933, as amended, and “Exchange Act” refers to the Securities Exchange Act of 1934, as amended.

 

 
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Commission’s Position on Indemnification for Securities Act Liabilities

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions of its Articles of Incorporation, Bylaws, and the relevant provisions of Chapter 78 of the Nevada Revised Statutes governing corporations, the registrant has been advised 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. In event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer of controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

Where You Can Find Us

 

Our corporate headquarters are located at 5450 W Sahara Avenue, Suite 300A, Las Vegas, Nevada, 89146. Our telephone number is (702) 900-7022.

 

RISK FACTORS

 

The following risk factors should be considered carefully in addition to the other information contained in this report. This report contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our customers’ or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements, to differ. “Risk Factors,” “Management’s Discussion and Analysis” and “Business,” as well as other sections in this report, discuss some of the factors that could contribute to these differences.

 

The forward-looking statements made in this report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

 

An investment in our common stock is highly speculative and involves a high degree of risk. Therefore, you should consider all of the risk factors discussed below, as well as the other information contained in this document. You should not invest in our common stock unless you can afford to lose your entire investment and you are not dependent on the funds you are investing.

 

Going Concern.

 

The Company sustained losses of $2,593,537 and $1,266,844 for the years ended September 30, 2021 and 2020, respectively, and $2,690,116 and $1,526,010 for the six months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the Company had an accumulated deficit of $25,465,021, and we generated nominal revenues during the six months ended March 31, 2022. These conditions raise substantial doubt that we will be able to continue operations as a going concern. Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. Our business strategy may not be successful in addressing these issues. If we cannot continue as a going concern, our stockholders may lose their entire investment.

 

 
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Our growth plan is based upon Management’s projection of what may happen in the future, and such predictions may not occur.

 

Our growth plan is based upon Management’s projections of estimated available cash flow, expenses, revenue, revenue over profit, earnings before interest, taxes and depreciation, sales cycle time and other measures of projected economic performance. These projections are made in Management’s view of what may happen in the future, and are not based upon historical projections. Projections or predictions of future events may not occur and actual results may differ materially from those expressed in or implied by such forward-looking statements.

 

Our lack of operating/sales history makes it difficult to evaluate our future prospects.

 

The Company was formed on May 30, 2006. Since July 2009, substantially all of the Company’s efforts have been devoted to designing and developing its technologies and products. The Company has currently generated limited sales revenue from the sale of its products. Accordingly, the Company has a limited operating history, which makes it difficult to evaluate the Company’s business and future prospects. An investor should consider and evaluate the Company’s prospects in light of the risks and uncertainties frequently encountered by companies introducing new products in intensely competitive markets.

 

Investors may lose their entire investment if we fail to implement our business plan.

 

Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. These risks include, without limitation, competition, the absence of ongoing revenue streams, a competitive market environment, and lack of brand recognition. If we fail to implement and create a base of operations for our proposed business, we may be forced to cease operations, in which case investors may lose their entire investment.

 

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

 

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and OTC Link rules, and regulations governing our technologies and data protection are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Also, while there is limited regulation of our business at the state and federal level, any change to such regulation could adversely affect our business. Also, our clients are often tightly regulated governments or government agencies, and their ability to pay us or our ability to provide services may be impacted by changes in regulations and laws applying to them, which restrict the types of vendors they contract with. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our business may be materially impacted and our reputation may be harmed.

 

We will require additional financing to accomplish our business strategy.

 

We require substantial working capital to fund our business development plans, and we expect to experience significant negative cash flow from operations for at least the next six (6) months. We currently estimate that current available capital will be sufficient to meet our anticipated capital needs through September 30, 2021. Depending upon sales volume generated by our business during that time, we also anticipate the possibility of having to raise additional funds in order to achieve our plans and accomplish our immediate and longer-term business strategy. These additional funds likely will be raised through the issuance of Company’s securities in debt and/or equity financings. If we are unable to raise these additional funds on terms acceptable to us, we will be required to limit our expenditures for continuing our product development activities and expanding our sales and marketing operations, reduce our work force, or find alternatives to fund our business on terms that are not as favorable to the Company. Any such actions would impair our product development and expansion plans, reduce potential revenues, increase operating losses, and adversely affect the value of the Company.

 

 
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Our success depends on the reception by market for our technology products.

 

Our ability to generate revenues will depend significantly on our ability to attract a sufficient number of users of the Company’s IGAN ICS and SUPR ISR video-compression products. If we are unable to successfully market our products to our target markets and gain a sufficient number of users, any future revenues will be significantly impacted. In addition, any factors adversely affecting the demand for, or market acceptance of, our products could materially reduce our revenues and result in adverse market perceptions of our Company and its products.

 

We face significant competition.

 

We believe that our success will depend heavily upon achieving market acceptance of our IGAN ICS and SUPR ISR compression products before our competitors introduce more advanced competing products. Current and new competitors, however, may be able to develop and introduce better or more desirable products in advance of us or at a lower cost. In addition, some of our current and potential competitors have longer and/or more established operating histories, greater industry experience, greater name recognition, established customer bases, and significantly greater financial, technical, marketing and other resources than we do. To be competitive, we must respond promptly and effectively to the challenges of technological change, evolving standards and regulations, and our competitors’ innovations by continually working to improve the design of our products, enhancing our products, as well as improving and increasing our marketing and distribution channels. Increased competition could result in a decrease in the desirability of our products, a decrease in the use of our products by customers, loss of market share and brand recognition, and a reduction in the projected revenues from our products. We cannot assure you that we will be able to compete successfully against current and future competitors. Competitive pressures faced by us could have a material adverse effect on our business, operating results and financial condition.

 

If we do not build brand awareness and brand loyalty, our business may suffer.

 

Due in part to the substantial resources available to many of our competitors, our opportunity to achieve and maintain a significant market share may be limited. The importance of brand recognition will increase as competition in our market increases. Successfully promoting and positioning of our brand will depend largely on the effectiveness of our marketing efforts, our ability to offer reliable and desirable products at competitive rates, and customer perceptions of the value of our products. If our planned marketing efforts are ineffective or if customer perceptions change, we may need to increase our financial commitment to creating and maintaining brand awareness and loyalty among customers, which could divert financial and management resources from other aspects of our business or cause our operating expenses to increase disproportionately to our revenues. This would cause our business and operating results to suffer.

 

Our success depends in large part on the continuing efforts of a few individuals and our ability to attract, retain and motivate new personnel to expand our operations.

 

We depend substantially on the continued services and performance of our existing management team, and we do not currently have formal employment agreements with them, and there is no guarantee that they will continue to be employed by us in the future. The loss of services of any of our non-long term current management team could hurt our business and our financial condition, and results of operations could suffer. Our success also will depend on our ability to attract, hire, train, retain and motivate other skilled technical, managerial, sales and marketing, and business development personnel. Competition for such personnel is intense. If we fail to successfully attract, assimilate and retain a sufficient number of qualified technical, managerial, sales and marketing, business development and administrative personnel, our ability to manage, maintain and expand our business could suffer.

 

Supply limitations may adversely affect our operations.

 

Our business strategy depends, to a significant extent, on the availability of relatively stable prices for costs of creative and technical contract workers used in the design, update and creation of our products. As a small company, we may not have much leverage in dealing with these third parties with respect to timeliness of delivery, costs, or quality or quantity of supplies or services. Our inability to acquire quality supplies or services in sufficient quantity and/or on a timely and/or cost-effective basis could materially adversely affect our financial performance.

 

 
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If we fail to protect our proprietary rights, our business will suffer.

 

Our success depends in significant part on our ability to develop and introduce innovative and competitive products. Our ability to compete and to achieve and maintain profitability depends significantly on our ability to protect our product designs through obtaining and enforcing patent rights, obtaining trademark and copyright protection, maintaining our trade secrets, and operating without infringing the intellectual property rights of others.

 

We also rely on trade secret protection for our confidential and proprietary information. The Company protects its trade secrets through access control as well as confidentiality and non-disclosure agreements with its employees, consultants and advisors. These agreements, however, may be breached, and the Company may not have adequate remedies for such a breach. In addition, the Company’s trade secrets may otherwise become known or be independently developed by competitors. Accordingly, it is uncertain whether the Company’s reliance on trade secret protection will be adequate to safeguard its confidential and proprietary information.

 

Our ability to obtain and defend our patent position and to maintain our trade secrets will have a significant effect on the success of the Company. Although we intend to pursue patent protection and to aggressively enforce any issued patent against infringement by third parties, our ability to do so is dependent on our financial condition. Such efforts usually are both time consuming and consume significant financial resources. If third parties either challenge the Company’s patents, claim ownership of any Company intellectual property (including but not limited to design patents), proceed to make competitive products using the Company’s patents or other intellectual property, or in any other way impinge on the Company’s proprietary rights, substantial Company resources, in both time and money, are likely to be consumed. If any infringement claims against the Company are resolved unfavorably to the Company, we could be (a) enjoined from manufacturing or selling our products, (b) required to pay damages, (c) required to develop new designs, and/or (d) required to acquire licenses to intellectual property that are the subject of the infringement claims. These licenses, if required, may not be available on acceptable or commercially reasonable terms, or at all. As a result, intellectual property claims, whether initiated by us against third parties or asserted against us by others, could have a material adverse effect on our business, financial condition and operating results.

 

A small group of Company officers and directors hold a majority of the control of the Company.

 

As of June 25, 2021, the Company’s executive officers and directors beneficially owned approximately 43% of the Company’s outstanding common stock. Additionally, we have issued 50,000 shares of Series D Preferred Stock to our CEO and member of the Board of Directors, Gary Campbell, which shares entitle Mr. Campbell to two-thirds of the total votes of all outstanding capital stock of the Company. By virtue of such stock ownership, our CEO is able to control the election of the members of the Company’s Board of Directors and to generally exercise control over the affairs of the Company. Such concentration of ownership could also have the effect of delaying, deterring or preventing a change in control of the Company that might otherwise be beneficial to stockholders. There can be no assurance that conflicts of interest will not arise with respect to such directors or that such conflicts will be resolved in a manner favorable to the Company.

 

Our officers and directors may have conflicts of interest.

 

Our officers and directors will devote such time as they deem necessary to the business and affairs of the Company. In most companies, there are certain inherent conflicts between the officers and directors and the investors which cannot be fully mitigated. Our directors and officers have interests in other businesses, and/or provide consulting or other services for their individual benefit and account. Because the officers and directors will engage in operations independent of the Company, some of these activities may conflict with those of the Company. The officers and directors thus may be placed in the position where their decisions could favor their own operations or other operations with which they are associated over those of the Company. The officers and directors of the Company are free to engage generally in business for their own account in addition to any participation arising out of the Company’s activities.

 

 
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Our ability to protect our intellectual property is crucial to our operations.

 

Our success will depend in significant part on our ability to maintain intellectual property and maintain protection for our products and processes in order to preserve our trade secrets and proprietary technology and establish brand identity and to operate without infringing upon the patents, trademarks or proprietary rights of third parties in the United States and other countries. It is also possible that others could successfully sue the Company for violating their rights in such types of technology. In either case, such litigation can be expensive and time-consuming, and can be used by well-funded adversaries as a strategy for depleting the resources of a small enterprise such as ours. It is also possible that our competitors will develop products using a technology that would provide the same end results, without violating our intellectual property rights. Failure to obtain or subsequent loss of our intellectual property protection could seriously harm our business.

 

Our products could become obsolete.

 

Technological obsolescence of our technologies and products is always a possibility. There is no assurance that our competitors will not succeed in developing related products using similar processes and marketing strategies, or that they will not develop technologies and products that are more effective than any which we are developing or will develop. Our ability to compete will depend on the continued timely enhancement and development of technologies and products. There is no assurance that we will be able to keep pace with technological developments or that our products will not become obsolete.

 

Our initial product introductions could result in increased costs in the future.

 

Because we are still in the initial phase of introducing our initial SUPR and IGAN products to the market, we do not know whether there will be design defects or problems with programming, which we are not currently aware of but which could be identified by our customers, which problems could delay future sales, or result in product redesign, recall or repair, and, ultimately, loss of market share, and any of which could have a material adverse effect on our financial performance.

 

Difficult economic conditions could harm our business.

 

The coronavirus pandemic and consequent societal disruptions resulting therefrom could continue to adversely impact our operations, supply chains and distribution systems and demand for our products and services. Global, national, and local economic conditions continue to be challenging in the aftermath of the COVID-19 pandemic. Although the economy appears to be recovering in some areas of the USA and in some countries, it is not possible for us to predict the extent and timing of any improvement in economic conditions which would lead to greater demand for our software. A continued economic downturn could adversely impact our business in the future by causing a decline in demand for our software as our life science customers seek to cut costs, particularly if the economic conditions are prolonged or worsen. In addition, such poor economic conditions may adversely impact our access to capital, which is needed for us continue operations as we have relatively low levels of working capital.

 

Our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems.

 

Our business is highly dependent on maintaining effective information systems as well as the integrity and timeliness of the data we use to serve our customers, support them and operate our business. Because of the large amount of data that we collect and manage, it is possible that hardware or software failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain significant inaccuracies. If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our participants and providers and hinder our ability to provide services, retain and attract participants, manage our participant risk profiles, establish reserves, report financial results timely and accurately and maintain regulatory compliance, among other things.

 

 
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Our information technology strategy and execution are critical to our continued success. We must continue to invest in long-term solutions that will enable us to anticipate participant needs and expectations, enhance the participant experience, act as a differentiator in the market and protect against cybersecurity risks and threats. Our success is dependent, in large part, on maintaining the effectiveness of existing technology systems and continuing to deliver technology systems that support our business processes in a cost-efficient and resource-efficient manner, including through maintaining relationships with third-party providers of technology. Increasing regulatory and legislative changes will place additional demands on our information technology infrastructure that could have a direct impact on resources available for other projects tied to our strategic initiatives. In addition, recent trends toward greater participant engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices. Connectivity among technologies is becoming increasingly important. Our failure to effectively invest in and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems could adversely affect our results of operations, financial position and cash flow.

 

Our common shares will be subject to the “Penny Stock” Rules of the SEC, and the trading market in our securities will be limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

We will be subject to the penny stock rules adopted by the Securities and Exchange Commission (“SEC”) that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our stockholders to sell their securities.

 

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $200,000 individually, or $300,000 together with his or her spouse, is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

 

 

·

Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

 

·

Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

 

·

Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks;

 

·

Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

 

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our stockholders will, in all likelihood, find it difficult to sell their securities.

 

 
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There has been no independent valuation of the stock, which means that the stock may be worth less than the purchase price.

 

The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on the historic trading prices for our shares. The historic trading prices of our common stock are highly volatile and are not indicative of financial operating results. Similarly, there is no relation to the market value, book value, or any other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price, and the shares may never obtain a value equal to or greater than the offering price. Please review the financial and other information contained in this prospectus with qualified persons to determine the suitability of our shares as an investment before purchasing any shares in this offering.

 

Investors may never receive cash distributions, which could result in an investor receiving little or no return on his or her investment.

 

Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.

 

We have issued Series D Preferred Stock, whose holders have rights superior to investors in our Common Stock.

 

We have issued 50,000 shares of Series D Preferred Stock to our CEO and member of the Board of Directors, Gary Campbell. While each share of Series D Preferred Stock is convertible into one share of fully paid and non-assessable Common Stock, the Series D Preferred Stock is super-voting preferred 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 Company capital stock eligible to vote on all matters submitted to a vote of the stockholders of the Company, meaning that the holders of the Series D Preferred Stock have two-thirds of the total votes associated with the capital stock of the Company.

 

Even if a market develops for our shares, our shares may be thinly traded with wide share price fluctuations, low share prices and minimal liquidity.

 

If an established market for our shares develops, the share price may be volatile with wide fluctuations in response to several factors, including potential investors’ anticipated feeling regarding our results of operations; increased competition; and our ability or inability to generate future revenues. In addition, our share price may be affected by factors that are unrelated or disproportionate to our operating performance. Our share price might be affected by general economic, political, and market conditions, such as recessions, interest rates, commodity prices, or international currency fluctuations. Additionally, stocks traded on the OTC Link are usually thinly traded, highly volatile and not followed by analysts. These factors, which are not under our control, may have a material effect on our share price.

 

We could potentially need to sell shares in the future, which would result in a dilution to our existing shareholders.

 

We may seek additional funds through the sale of our common stock. This will result in a dilution effect to our shareholders whereby their percentage ownership interest in Cytta is reduced. The magnitude of this dilution effect will be determined by the number of shares we will have to issue in the future to obtain the funds required. The sale of additional stock to new shareholders will reduce the ownership position of the current shareholders. The price of each share outstanding common share may decrease in the event we sell additional shares.

 

Since our securities are subject to penny stock rules, you may have difficulty reselling your shares.

 

Our shares are “penny stocks” and are covered by Section 15(d) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers including: disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder’s ability to dispose of his stock.

 

 
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Current and future legal action would cause our costs to increase.

 

On November 24, 2020, Lee Skoblow (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 also contended that in fact the Plaintiff owed money to Cytta having breached an earlier services agreement, of limited scope and duration, and other obligations owed to Cytta, and was liable for defaming Cytta in various communications he had sent to certain persons or entities prior to his demand being asserted. Management has been contesting the matter vigorously. A bench trial took place during June 2022, the parties have filed written closing arguments, and are awaiting the court’s determination.

 

Other than the above, there are presently no legal actions pending against the Company or to which it or any of its property are subject, nor to its knowledge are any such proceedings contemplated. However, the above legal proceeding and any other legal action in the future will result costs of defense that would be variable and would be expected to increase as compared to historic legal expenses incurred by the Company. Additionally, the Company anticipates a general increase in legal counsel cost going forward due to the increased compliance costs of running a public company and the legal work that may be necessary for implementing the Company’s business plan of expansion.

 

In the event of an investor’s life crisis, the Board may not buy back shares from the investor.

 

If crisis occurs, such as death of investor spouse or family member, at the request of the investor, Board of Directors may meet to discuss the possibility of buying back shares from investor, but is not required to do so.

 

All of these risks are uncertain, and there may be other risks that we have not identified.

 

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized, nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all such risk factors before making an investment decision with respect to our Common Stock.

 

You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC could be automatically suspended under certain circumstances.

 

Unless we file a registration statement on Form 8-A, which we have no obligation to file, we will not be a fully reporting company but will only comply with the limited reporting requirements of Exchange Act requiring us to file periodic reports (i.e., annual, quarterly and material events) with the SEC which will be immediately available to the public for inspection and copying. We would not be required to furnish proxy statements to security holders, and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act. Previously, a company with more than 500 shareholders of record and $10 million in assets had to register under the Exchange Act. However, the JOBS Act raises the minimum shareholder threshold from 500 to either 2,000 persons or 500 persons who are not “accredited investors,” excluding securities received by employees pursuant to employee stock incentive plans for purposes of calculating the shareholder threshold. This means that unless we file a Form 8-A, access to information regarding our business and operations will likely be limited.

 

We are currently subject to limited reporting requirements as we had a prior registration statement on Form S-1 become effective during our fiscal year ending September 30, 2022, and as a result, we became subject to the limited reporting requirements of the Exchange Act identified above (i.e., the requirement to file periodic reports with the SEC). Except during the fiscal year that that prior registration statement became effective (i.e., the current fiscal year ending September 30, 2022), or during the fiscal year that we have another registration statement become effective (including the effectiveness of the registration statement of which this prospectus is a part), even these limited reporting obligations would be automatically suspended under Section 15(d) of the Exchange Act if we have less than 500 shareholders and do not file a registration statement on Form 8-A (which we have no obligation to file). We would then no longer be obligated to file periodic reports with the SEC and your access to our business information would then be even more limited.

 

 
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EARNINGS TO FIXED CHARGES

 

In accordance with §229.10(f) and §229.503(d) of Regulation S-K promulgated under the Securities Act, a registrant, such as ourselves, that qualifies as a smaller reporting company need not comply with this item.

 

FORWARD LOOKING STATEMENTS

 

Information included or incorporated by reference in this prospectus may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “should,” ”expect,” ”anticipate,” ”estimate,” ”believe,” ”intend” or “project” or the negative of these words or other variations on these words or comparable terminology.

 

This prospectus contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our technology, (c) our manufacturing, (d) the regulation to which we are subject, (e) anticipated trends in our industry and (f) our needs for working capital. These statements may be found under “Management’s Discussion and Analysis or Plan of Operations” and “Business,” as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur.

 

Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in the prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus.

 

USE OF PROCEEDS

 

Each of the Selling Security Holders will receive all of the net proceeds from the sale of shares by that shareholder. We will not receive any of the net proceeds from the sale of the shares. The Selling Security Holders will pay any underwriting discounts and commissions and expenses incurred by the Selling Security Holders for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling Security Holders in offering or selling their shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including without limitation blue sky registration and filing fees, and fees and expenses of our legal counsel and accountants.

 

DIVIDEND POLICY

 

We have never declared dividends or paid cash dividends on our common stock, and our board of directors does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Market Information

 

While there is no established public trading market for our common stock, our common stock is quoted on the OTC Link alternative trading system operated by OTC Markets Group, Inc., at the “OTCQB” level under the symbol “CYCA”.

 

The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

 

The range of high and low closing bid quotations for the Company's common stock during each quarter of the calendar years ended September 30, 2021, and 2020, and the interim quarters through June 30, 2022, is shown below, as quoted by http://finance.yahoo.com. Prices are inter-dealer quotations, without retail mark-up, markdown or commissions and may not represent actual transactions.

 

Stock Quotations

 

Quarter Ended

 

High

 

 

Low

 

December 31, 2019

 

 

0.035

 

 

 

0.012

 

March 31, 2020

 

 

0.031

 

 

 

0.016

 

June 30, 2020

 

 

0.048

 

 

 

0.02

 

September 30, 2020

 

 

0.17

 

 

 

0.037

 

December 31, 2020

 

 

0.097

 

 

 

0.07

 

March 31, 2021

 

 

0.179

 

 

 

0.047

 

June 30, 2021

 

 

0.243

 

 

 

0.1260

 

September 30, 2021

 

 

0.17

 

 

 

0.08

 

December 31, 2021

 

 

0.53

 

 

 

0.115

 

March 31, 2022

 

 

0.35

 

 

 

0.201

 

June 30, 2022

 

 

0.28

 

 

 

0.105

 

 

 
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Holders of Our Common Stock

 

As of July 22, 2022, we had approximately 249 shareholders of record of our common stock and 378,315,718 shares of common stock issued and outstanding.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We have not adopted or approved an equity compensation plans, and there are no shares authorized for issuance under any such plans.

 

DILUTION

 

We are not selling any shares in this offering. All of the shares sold in this offering will be held by the Selling Security Holders at the time of the sale, so that no dilution will result from the sale of the shares.

 

SELLING SECURITY HOLDERS

 

The following table sets forth the shares beneficially owned, as of July 22, 2022, by the Selling Security Holders prior to the offering contemplated by this prospectus, the number of shares each Selling Security Holder is offering by this prospectus, and the number of shares which each would own beneficially if all such offered shares are sold. The Selling Security Holders can offer all, some or none of their shares of common stock, and thus we have no way of determining the number of shares of common stock each Selling Security Holder will hold after this offering. Therefore, the fourth and fifth columns assume that each Selling Security Holder will sell all shares of common stock covered by this prospectus.

 

Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

 

None of the Selling Security Holders is a registered broker-dealer or an affiliate of a registered broker-dealer. Other than the 2,000,000 shares of common stock owned by Venture Equity, LLC (“Venture Equity”), each of the Selling Security Holders acquired their shares for cash pursuant to the Company’s two private placements, the first conducted in March 2021-May 2021, and the second conducted in November 2021 at $0.05/share, solely for investment and not with a view to or for resale or distribution of such securities. Venture Equity acquired their shares pursuant to consultant agreements for services.

 

 
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The percentages below are calculated based on 378,315,718 shares of our common stock issued and outstanding as of July 22, 2022. Additionally, as of that date, we have 50,000 shares of Series D Preferred Stock issued and outstanding that is convertible into 50,000 shares of our common stock.

 

Name of Selling Security Holder

 

Number of shares of common stock owned prior to the offering

 

 

Maximum Number of shares of common stock to be sold in the offering

 

 

Number and Percentage of shares of common stock owned after the offering (1)

 

 

 

 

 

 

 

 

 

Number

 

 

%

 

Alfonso Massaro

 

 

1,600,000

 

 

 

1,600,000

 

 

 

-

 

 

 

0.0%

Amandeep Dhillon

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Barry J Friedman

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Benzion Sapir

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Billy Anders

 

 

2,200,000

 

 

 

2,200,000

 

 

 

-

 

 

 

0.0%

Billy Anders, Susan Wolford

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Bret Shupack

 

 

1,500,000

 

 

 

1,500,000

 

 

 

-

 

 

 

0.0%

Brian H Doench

 

 

5,000,000

 

 

 

5,000,000

 

 

 

-

 

 

 

0.0%

Bruce Beebe

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Carbeau LLC (2)

 

 

4,500,000

 

 

 

3,000,000

 

 

 

1,500,000

 

 

 

0.4%

Charles JF Boulet

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Cory D. Tarpenning

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Craig A Keebler

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Dave Matteson, Deborah Daniels JTWROS

 

 

100,000

 

 

 

100,000

 

 

 

-

 

 

 

0.0%

David Damm

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

David Rosencrantz

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Dhirendra Saxena

 

 

2,000,000

 

 

 

2,000,000

 

 

 

-

 

 

 

0.0%

Donald Shifrin

 

 

2,400,000

 

 

 

400,000

 

 

 

2,000,000

 

 

 

0.5%

Douglas Pat Cerretti

 

 

1,500,000

 

 

 

500,000

 

 

 

1,000,000

 

 

 

0.3%

Dylan & Samantha Dreiling

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Elain & Edward Epstein, JT

 

 

3,000,000

 

 

 

1,000,000

 

 

 

2,000,000

 

 

 

0.5%

Equity Trust Company Custodian FBO George Hudachek IRA (3)

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Etzion Genauer

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Eugene Sickles

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Friendship Circle (4)

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Gary Ulrich LLC (5)

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

George Hudachek

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Gerhard and Christina Formella

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Guy W. Gottier

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Harlan Smith

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Harold T. Ashcraft, Kelly C. Ashcraft

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Jack E. Mattingly

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

James Lacher

 

 

800,000

 

 

 

800,000

 

 

 

-

 

 

 

0.0%

James P Follese

 

 

450,000

 

 

 

450,000

 

 

 

-

 

 

 

0.0%

James Scheffel

 

 

6,000,000

 

 

 

6,000,000

 

 

 

-

 

 

 

0.0%

 

 
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Table of Contents

 

Jeff Darden

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Jeremy& Cynthia Newman

 

 

1,120,000

 

 

 

1,120,000

 

 

 

-

 

 

 

0.0%

John Morbeck

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

John Purinton Jr

 

 

600,000

 

 

 

600,000

 

 

 

-

 

 

 

0.0%

Jonathan Jacobs

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Knight Family Trust (6)

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Larry D Hines

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Lawrence J. Koler

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

M. J. McCahill Trust (7)

 

 

2,000,000

 

 

 

2,000,000

 

 

 

-

 

 

 

0.0%

Mark and Kendra Manduzzi

 

 

800,000

 

 

 

800,000

 

 

 

-

 

 

 

0.0%

Martin Campbell

 

 

2,495,107

 

 

 

500,000

 

 

 

1,995,107

 

 

 

0.5%

Martin Goldberg

 

 

600,000

 

 

 

600,000

 

 

 

-

 

 

 

0.0%

Michael D White, Barbara White JTWROS

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Michael J Ilyankoff

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Michael M Wiitala and Anita J Wiitala, Trustees of the Wiitala Family Trust (8)

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Milton Ozaki

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Neil Ross

 

 

100,000

 

 

 

100,000

 

 

 

-

 

 

 

0.0%

Orchid Echivarre

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Peter Rettman

 

 

7,450,000

 

 

 

700,000

 

 

 

6,750,000

 

 

 

1.8%

Richard J Cote

 

 

600,000

 

 

 

600,000

 

 

 

-

 

 

 

0.0%

Robert L Elwood

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Roberto Enrique Quan

 

 

1,400,000

 

 

 

1,400,000

 

 

 

-

 

 

 

0.0%

Roland Wheeler

 

 

1,408,700

 

 

 

500,000

 

 

 

908,700

 

 

 

0.2%

Ronald Anderson Family Trust (9)

 

 

600,000

 

 

 

600,000

 

 

 

-

 

 

 

0.0%

Roxy Schultz

 

 

500,000

 

 

 

500,000

 

 

 

-

 

 

 

0.0%

Russell Martz

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Scott Mitchell

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Spencer Cantor

 

 

200,000

 

 

 

200,000

 

 

 

-

 

 

 

0.0%

Stacey Underwood

 

 

100,000

 

 

 

100,000

 

 

 

-

 

 

 

0.0%

Stefan-Cristian Rezeanu

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

Stephen Craft

 

 

100,000

 

 

 

100,000

 

 

 

-

 

 

 

0.0%

Steven Gordon

 

 

200,000

 

 

 

200,000

 

 

 

-

 

 

 

0.0%

Subodh Rai

 

 

400,000

 

 

 

400,000

 

 

 

-

 

 

 

0.0%

The Eastridge Revocable Trust of 2004 (10)

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

The Sunshine Trust and Rain Asset Management Irrevocable Trust (11)

 

 

10,000,000

 

 

 

10,000,000

 

 

 

-

 

 

 

0.0%

Ultimate Investment Group, LLC (12)

 

 

1,000,000

 

 

 

1,000,000

 

 

 

-

 

 

 

0.0%

Zahara Trust (13)

 

 

2,000,000

 

 

 

2,000,000

 

 

 

-

 

 

 

0.0%

Zon Innovations LLC (14)

 

 

800,000

 

 

 

800,000

 

 

 

-

 

 

 

0.0%

Venture Equity LLC (15)

 

 

2,000,000

 

 

 

2,000,000

 

 

 

-

 

 

 

0.0%

Total

 

 

89,623,807

 

 

 

73,470,000

 

 

 

16,153,807

 

 

 

4.7%

  

 
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Table of Contents

 

(1)

Assumes all of the shares of common stock offered in this prospectus are sold and no other shares of common stock are sold or issued during this offering period. Based on 378,315,718 shares of common stock issued and outstanding as of July 22, 2022.

(2)

The Company believes that Howard Schrub is the beneficial owner of these shares.

(3)

The Company believes that George Hudachek is the beneficial owner of these shares.

(4)

The Company believes that Elazar Bogomilsky is the beneficial owner of these shares.

(5)

The Company believes that Gary Ulrich is the beneficial owner of these shares.

(6)

The Company believes that Greg Knight is the beneficial owner of these shares.

(7)

The Company believes that Michael McCahill is the beneficial owner of these shares.

(8)

The Company believes that Michael Wiitala is the beneficial owner of these shares.

(9)

The Company believes that Greg Anderson is the beneficial owner of these shares.

(10)

The Company believes that Harold Eastridge is the beneficial owner of these shares.

(11)

The Company believes that Peter Schultz is the beneficial owner of these shares.

(12)

The Company believes that Jens Brynteson is the beneficial owner of these shares.

(13)

The Company believes that GenePalmer is the beneficial owner of these shares.

(14)

The Company believes that James McMurty is the beneficial owner of these shares.

(15)

The Company believes that Barry Hollander is the beneficial owner of these shares.

 

 
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We may require the Selling Security Holders to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus, or the related registration statement, untrue in any material respect, or that requires the changing of statements in these documents in order to make statements in those documents not misleading. We will file a post-effective amendment to this registration statement to reflect any material changes to this prospectus.

 

Our common stock is not traded on any exchange and is currently quoted for trading on the OTC Link at the “OTCQB” level. The Selling Security Holders will be offering the shares of common stock being covered by this prospectus from time to time in the open market, through privately negotiated transactions, or via a combination of these methods, at market prices prevailing at the time of sale or at negotiated prices.

 

The shares may be sold or distributed from time to time by the selling security holders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: (a) ordinary brokerage transactions and transactions in which the broker solicits purchasers; (b) privately negotiated transactions; (c) market sales (both long and short to the extent permitted under the federal securities laws); (d) at the market to or through market makers or into an existing market for the shares; (e) through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); and (f) a combination of any of the aforementioned methods of sale.

 

In the event of the transfer by any of the selling security holders of its common shares to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling security holder who has transferred his, her or its shares.

 

In effecting sales, brokers and dealers engaged by the selling security holders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from a selling security holder or, if any of the broker-dealers act as an agent for the purchaser of such shares, from a purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Broker-dealers may agree with a selling security holder to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling security holder if such broker-dealer is unable to sell the shares on behalf of the selling security holder. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above.

 

Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such resales, the broker-dealer may pay to or receive from the purchasers of the shares commissions as described above.

 

The selling security holders and any broker-dealers or agents that participate with the selling security holders in the sale of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

 

 
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From time to time, any of the selling security holders may pledge shares of common stock pursuant to the margin provisions of customer agreements with brokers. Upon a default by a selling security holder, their broker may offer and sell the pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling security holders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any of the selling security holders defaults under any customer agreement with brokers.

 

To the extent required under the Securities Act, a post-effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.

 

We and the selling security holders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5, and, insofar as a selling security holder is a distribution participant, that holder may be a distribution participant under Regulation M. All of the foregoing may affect the marketability of the common stock.

 

All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling security holders, the purchasers participating in such transaction, or both.

 

Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.

 

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.

 

 
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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.

 

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, as well as our audited financial statement and the related notes, that appear elsewhere in this prospectus.

 

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.

 

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.

 

 
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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.

 

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.

 

 
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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.

 

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.

  

Results of Operations for the years ended September 30, 2021 and 2020:

 

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of sales revenue for the periods indicated:

 

 

 

2021

 

 

%

 

 

2020

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$94,626

 

 

 

100.0

 

 

$48,531

 

 

 

100.0

 

COGS

 

$41,872

 

 

 

44.3

 

 

$24,037

 

 

 

49.6

 

Gross Profit

 

$52,754

 

 

 

55.7

 

 

$24,476

 

 

 

50.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

$2,625,302

 

 

 

2,774.4

 

 

$1,289,826

 

 

 

2,658.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

$(2,572,548 )

 

 

-2,718.7

 

 

$(1,265,350 )

 

 

-2,608.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(2,593,537 )

 

 

-2,740.8

 

 

$(1,266,844 )

 

 

-2,611.3

 

 

Revenues consist of hardware imbedded with our proprietary software, integration consulting services, tech support and product maintenance billed to the customer. Revenues increased for the year ended September 30, 2021 by $46,113 from the year ended September 30, 2020, due to additional customer sales. Gross profit increased due to the increase in sales for the year ending September 30, 2021. Operating expenses increased by $1,335,476 for the year ended September 30, 2021, over 2020 as shown in the table below:

 

 

 

September 30,

 

 

 

Description

 

2021

 

 

2020

 

 

Increase

 

Stock based expenses

 

$1,365,667

 

 

$701,641

 

 

$664,026

 

Professional fees

 

 

196,317

 

 

 

24,825

 

 

 

171,492

 

Consulting expenses (excluding stock expenses)

 

 

166,823

 

 

 

18,007

 

 

 

148,816

 

Related party expenses (excluding stock expenses)

 

 

492,579

 

 

 

371,760

 

 

 

120,819

 

Depreciation expense

 

 

40,866

 

 

 

6,472

 

 

 

34,394

 

Equipment and demo expenses

 

 

69,035

 

 

 

8,779

 

 

 

60,256

 

General and Administrative officers

 

 

113,285

 

 

 

39,579

 

 

 

73,706

 

Auto, Travel and Meals and Entertainment

 

 

70,142

 

 

 

47,894

 

 

 

22,248

 

Rent expense

 

 

16,732

 

 

 

16,146

 

 

 

586

 

Bad debt expense

 

 

20,040

 

 

 

8,000

 

 

 

12,040

 

Other operating expenses

 

 

73,816

 

 

 

46,723

 

 

 

27,093

 

Total Operating expenses

 

$2,625,302

 

 

$1,289,826

 

 

$1,335,476

 

 

 
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The following tables set forth key components of our balance sheet as of September 30, 2021 and 2020.

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Current Assets

 

$1,102,449

 

 

$1,441,288

 

 

 

 

 

 

 

 

 

 

Property and Equipment

 

$170,605

 

 

$143,058

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$1,273,054

 

 

$1,584,346

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

$406,810

 

 

$584,440

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

$406,810

 

 

$584,440

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

$866,244

 

 

$999,906

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

$1,273,054

 

 

$1,584,346

 

 

Liquidity and Capital Resources

 

As of September 30, 2021, we had limited operating capital. Our current capital and our other existing resources will not be sufficient to provide the working capital needed for our current business Additional capital will be required to meet our obligations, and 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 additional capital to fund operations. This “going concern” could impair our ability to finance our operations through the sale of debt or equity securities. Since September 30, 2021, the Company has raised $2,963,750 from the sale of 59,270,000 shares of Series F Preferred Stock.

 

For the year ended September 30, 2021, we primarily funded our business operations with $682,500 of proceeds received pursuant to the sale of 13,650,000 shares of Series E Preferred Stock at $.05 per share and $25,000 from the sale of 1,000,000 shares of common stock at $0.025 per share.

 

As of September 30, 2021, we had cash of $173,196 as compared to $847,646 at September 30, 2020. As of September 30, 2021, we had current assets of $1,102,449 and current liabilities of $406,810, which resulted in working capital of $695,639. The current liabilities are comprised of accounts payable, 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.

 

Operating Activities

 

For the year ended September 30, 2021, net cash used in operating activities was $1,313,536 compared to $233,952 for the year ended September 30, 2020. For the year ended September 30, 2021, our net cash used in operating activities was primarily attributable to the net loss of $2,593,537, adjusted by stock-based compensation of $1,365,667 and depreciation of $40,866. Net changes of $126,533 in operating assets and liabilities increased the cash used in operating activities.

 

For the year ended September 30, 2020, net cash used in operating activities of $233,952 was primarily attributable to the net loss of $1,266,844, adjusted for non-cash expenses of stock- based expenses of $701,641 and depreciation of $6,472, and net changes of $324,779 in operating assets and liabilities.

 

 
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For the year ended September 30, 2021, the net cash used in investing activities was $68,414, compared to $133,456 for the year ended September 30, 2020. The expenditures were for the purchases of office furniture and equipment, including the purchase of and customization of a vehicle.

 

Financing Activities

 

For the year ended September 30, 2021, net cash provided by financing activities was $707,500, compared to $1,198,000 for the year ended September 30, 2020. During the year ended September 30, 2021, we received $682,500 of proceeds received pursuant to the sale of 13,650,000 shares of Series E Preferred Stock at $0.05 per share and $25,000 from the sale of 1,000,000 shares of common stock at $0.025 per share.

 

For the year ended September 30, 2020, net cash provided for financing activities was $1,198,000 and was comprised of the $975,000 from the sale of 44,600,000 shares of common stock at $0.025 per share and the Company receiving $223,000 for stock to be issued.

 

The Company anticipates that its cash needs for the next twelve months for working capital and capital expenditures will be approximately $1,200,000. As of September 30, 2021, the Company had $173,196. Since September 30, 2021, the Company has raised $2,963,750 from the sale of 59,270,000 shares of Series F Preferred Stock. 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 4 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. Inventory as September 30, 2021, and 2020, was $78,765 and $34,199, 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

 

 
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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.

 

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.

 

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.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

 

 
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BUSINESS AND RECENT DEVELOPMENTS

 

About Cytta

 

Cytta Corp. was founded in 2006. Since 2014, Cytta has developed and marketed video compression-based software and hardware products, using technology based upon the SUPR (Superior Utilization of Processing Resources) video compression codec/algorithm. Cytta currently develops, markets, and distributes proprietary video streaming products and services that improve how video is streamed, consumed, transferred, and stored, in enterprise environments.

 

Our products and services include advanced video streaming systems, video/audio collaboration software, and integrated hardware systems utilizing both on premise deployments or cloud-based deployments, that are delivered widely through a variety of flexible and interoperable technology deployment models. These models include software deployments, combined software/hardware deployments, utilizing either on-premises deployments, or cloud-based deployments. We have created advanced video compression systems, video/audio collaboration software, and integrated hardware systems that solve streaming problems in various markets.

 

Accordingly, we offer choice and flexibility to our customers and facilitate the product, service and deployment combinations that we believe best suit our customers’ needs. Our customers include businesses of many sizes, government agencies, military, first responders, utilities, environmental technology entities and emergency management organizations. We market and sell to all entities directly through our direct sales force and indirectly through our sales partner network.

 

Cytta also offers services to assist our customers and partners to maximize the performance of their Cytta purchases. Providing choice and flexibility to Cytta customers as to when and how they deploy Cytta software, hardware and services solutions is an important element of our corporate strategy. We believe that offering customers broad, comprehensive, flexible, and interoperable deployment models for Cytta products and solutions is important to our growth strategy and better addresses customer needs relative to our competitors, many of whom provide fewer offerings, more restrictive deployment models and less flexibility for a customer’s transition to advanced video streaming environments.

 

Our investments in, and innovation with respect to, Cytta products and services that we offer through our software, hardware and services offerings are another important element of our corporate strategy. We have a deep understanding as to how compression applications and streaming technologies interact and function with one another. We focus our development efforts on improving the performance, security, operation, integration and cost-effectiveness of our offerings relative to our competitors. Cytta attempts to make it easier, in our view, for organizations to deploy, use, manage and maintain our product offerings. Additionally, we also attempt to incorporate emerging technologies within our offerings to enable leaner business processes, automation and innovation.

 

After an initial purchase of Cytta products and services, our customers can continue to benefit from our research and development efforts and deep streaming expertise by electing to purchase and renew Cytta support offerings for their license and hardware deployments. These offerings may include product enhancements that we periodically deliver to our products, and by renewing their services contracts with us.

 

The Company’s access to the SUPR Compression codec/algorithm enabled it to utilize the video streaming capabilities of this proprietary technology to develop new software and hardware technology, methodologies, and products. Our advanced video compression systems, video/audio collaboration software, and integrated hardware systems solve streaming problems in various markets. These products are being developed, sold, licensed, and serviced by Cytta today. Our access to this streaming technology has also created access to a network of people in the video streaming industry or those that utilize critical video streaming services, that have generated sales leads and ultimately revenue for Cytta.

 

The original SUPR compression codec/algorithm and related industry knowhow and experience was acquired from Michael Collins, our current Chief Technology Officer, in 2013. Our current SUPR software codec/algorithm video compression technology is wholly owned by Cytta and is sold and licensed to customers, in all product configurations free of any encumbrances or limitations (other than normal software security requirements).

 

Cytta’s primary business focus is the development of video streaming products and services that utilize our SUPR compression codec/algorithm and our related industry experience. We design and develop innovative and effective video compression-based software and hardware products utilizing our software and video streaming technological knowledge. We also offer a combination of technical and consulting services, proprietary software products, hardware products utilizing our software and a system integration team to meet the needs of customers. Cytta places extreme value on satisfying our customers’ needs with innovative well engineered, high-quality products and service solutions.

 

Cytta employs independent contractors to perform all business, technology and management functions within the company consisting of, inter alia, businessmen, accountants, lawyers, software designers, programmers, technical writers, automation engineers and scientists. Our technical independent contractors work with management in developing and deploying custom and off-the-shelf software and hardware streaming and imaging systems for clients.

 

 
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CYTTA PRODUCTS

 

SUPR (Superior Utilization of Processing Resources) Product

 

Cytta’s proprietary, secure video compression technology offers, what we believe is, superior streaming in HD/4K/8K as compared to common open standard codec/algorithms. SUPR is an entirely unique, ground-up design that is a patented software codec/algorithm for video compression, which operates differently from MPEG-based codec/algorithms (H.264, H.265, VP9). SUPR performs exceptionally well in bandwidth-challenged environments where other video compression solutions cannot operate or do so poorly.

 

SUPR delivers video streaming for airborne ISR (Intelligence, Surveillance, and Reconnaissance) applications including environments where video streams are transmitted beyond line-of-sight. By utilizing a SUPR-enabled encoder onboard an aircraft, video can be securely streamed in high-definition to a SUPR-enabled decoder. Compared to MPEG-based video compression solutions, SUPR offers the following technological advantages:

 

 

·

Clear and superior imagery in lower bandwidths

 

 

 

 

·

Lossless video stream

 

 

 

 

·

Lower video latency

 

 

 

 

·

Proprietary video stream

 

 

 

 

·

Fewer instances of blocking artifacts and pixilation issues as compared to MPEG-based codec/algorithms (H.264, H.265, VP9) and alternatives

 

 

 

 

·

Processor operates more efficiently (SUPR utilizes only 2% of calculations per pixel vs. MPEG-based codec/algorithms (H.264, H.265, VP9)

 

 

 

 

·

Computer runs cooler during compression due to less processor-intense operation

 

IGAN (Incident Global Area Network) Product

 

The IGAN (Incident Global Area Network) ICS (Incident Command System) system is designed to deliver communications composed of multiple streams of voice and video delivered with low latency and viewable by multiple parties over one unified secure communication system. IGAN seamlessly streams all relevant video and audio into a single web (or mobile app) interface. It is designed to work as a common interface for daily operations or can scale up to support hundreds of participants from separate organizations during an emergency. IGAN connects people-to-people, people-to-groups, and facilitates conferences independent of device or location. IGAN offers a distributed and easily customized solution for integrating disparate communications systems in multiple locations into a seamless and rapidly re-configurable solution.

 

IGAN’s distributed platform architecture allows individual communications systems to be located anywhere that a network connection can be established, and the interconnection of these systems can be controlled from any location or multiple locations. The robust platform is fully redundant such that if a site is lost, a backup is immediately established. IGAN is an IP-software multi-channel / multi-access communications and tactical conferencing solution for professional and mission critical applications. The solution is highly scalable to multiple users, and supports multiple channels and conferences.

 

IGAN is a secure, advanced ICS (Incident Command System) offering low latency, multidirectional communications, integrating multiple video and voice devices including video cameras, smartphones, tablets, computers, and 2-way radios. IGAN is a tool for video collaboration when requiring the integration of video feeds from sUAS (Small Unmanned Aerial Systems) unmanned drone operations. IGAN is designed to upload a video feed in real-time. It then allows remote participants to not only see low latency remote aerial video, but to guide flight video instruction such as video zoom on a target or areas of inspection.

 

 
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The IGAN ICS system resides in Cytta’s secure cloud or can be privately hosted on a customer’s server. The IGAN hosting architecture is offered two ways:

 

 

·

Cytta Cloud; where we manage (but do not store) daily operations.

 

 

 

 

·

Customer Hosted; where we provide clients with a stand-alone server fully integrated with IGAN software, or we can install on an existing server within the client’s network. IGAN can also be installed in a mobile command vehicle making it a completely mobile solution for remote incident communications.

 

IGAN operating through Cytta’s secure cloud offers secure FIPS (Federal Information Processing Standard) 140-2 and is CJIS (criminal justice information services) compliant.

 

IGAN offers the following technical advantages:

 

 

·

Creates a unified communications system for sharing video and voice using advanced compression and SIP (Session Initiation Protocol) technologies.

 

 

 

 

·

No client application program is required. Utilizes a web browser to join an IGAN session.

 

 

 

 

·

Multiple device flexibility in that any video device, 2-way radio, etc. can be added

 

 

 

 

·

Offers secure FIPS 140-2 and CJIS compliance

 

CYTTA PRODUCT LINES

 

The video compression and streaming product lines are comprised of three main types of products, each aimed at the different phases of selling to and supporting the customer.

 

Custom Software Development

 

Custom software development is a type of professional service product. Using software development and product management staff, solutions are created that are either based on a packaged system (and therefore are extensions of an existing product), or are new workflow systems that are intended to work stand alone or possibly in conjunction with other packaged products. Custom software is also developed to add future support to a customer’s system that is not being addressed via standard product upgrades or follow-on product development. Recent examples include adding specific configuration files to a customer’s SUPR software hardware product. Our custom software solutions are compatible with packaged systems, which is accomplished through the use of the common underlying software platform.

 

Software Maintenance Plans (SMPs)

 

Our products follow industry norms for high-end software systems. SMPs (Software Maintenance Plans) are comprised of service promises and software upgrades such as the following:

 

 

·

Phone, e-mail and back-office technical support

 

 

 

 

·

Onsite troubleshooting

 

 

 

 

·

Software maintenance releases

 

 

 

 

·

Software upgrades

 

Integrated Portable Hardware/Software Systems

 

Our combined products are designed and built to create complete and integrated systems that are marketed to provide complete portable solutions to client requirements. Our integrated hardware/software products bring advantages to HD, 4K and 4K+ wireless live video streaming and a centralized video/audio interaction system to a variety of industries.

 

 
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TARGET CUSTOMER BASE

 

Our current customers fall within these areas of video communications technology market:

 

 

·

First Responders

 

 

 

 

·

Emergency Management

 

 

 

 

·

Utilities

 

 

 

 

·

Environmental

 

 

 

 

·

Military and Security

 

FIRST RESPONDERS

 

Cytta products provide unified communications for first responders and provide a comprehensive Incident Command System (ICS) allowing remote visibility and multidirectional communications. Our SUPR software solution is designed to integrate seamlessly with our IGAN streaming solution and is utilized where streaming higher resolution is required. However, the IGAN also streams from other video and compressed video sources not utilizing SUPR. Our IGAN solution empowers near real-time communications in a single platform that creates an ability to place experts on-site, allowing stakeholders to preemptively act to guide front line staff during tactical responses, and for use as a training overwatch tool.

 

As a comprehensive Incident Command System (ICS), IGAN allows first responders to establish a near real-time unified communications platform where multiple feeds of video and voice enabled devices are merged into one single unified communications dashboard. Connected audio/video devices can securely connect and interact over the highly secure IGAN platform including Drone video, Smartphones, Bodycams, Dashcams, 2-way radios, Laptops and Bomb robots.

 

Law Enforcement

 

IGAN is designed for team communications during law enforcement activities. IGAN places eyes-on-site, which allows remote participants to view and participate as if on-scene. These advantages include sharing drone video, providing first-on-scene video/audio from an incident, observing surveillance activity, private voice communications, and/or inter-departmental communications.

 

Fire Departments

 

IGAN represents a new capability in unified communications for fire department operations. It introduces the ability to provide remote guidance to incidents, share drone video, mapping data for buildings and/or terrain. It also allows teams to tactically respond to calls with necessary personnel and specialized vehicles, which promotes improved efficiencies and enhances public safety.

 

EMS (Emergency Medical Services)

 

The ability to provide near real-time ambulance video has long been a goal for Emergency Medical Services professionals. The ability to share near real time HD and 4K+ video with the hospital and better prepare for critical patient care is a solution that potentially saves lives.

 

Mental Health Support

 

The effective response and treatment of the mentally challenged has become a recurrent and sensitive topic. Historically, a first responder, who may not be well trained for these mentally challenged individuals and stressful incidents, makes the initial contact. As a remote solution, IGAN provides an efficient and cost-effective tool for placing mental health experts on site via our remote communications system. A care worker located elsewhere can participate in the on-scene video/audio conversation remotely.

 

EMERGENCY MANAGEMENT

 

When disaster strikes and networks are down, IGAN provides a multi-agency communications tool through a command vehicle as a local access network or satellite uplink. Cytta products provide multi-agency secure ad-hoc networking. Cytta SUPR and IGAN products provide the ability to coordinate and respond to natural disasters and catastrophes. Existing solutions are primarily focused on the integration of voice and two-way Land-Mobile-Radio (LMR) systems. The use of IGAN allows for various multi-agency participants along with the inclusion of multiple streams of real-time video/audio. When time is a critical element, being able to unify local and remote personnel creates a more efficient tool that affords better coordination.

 

 
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Disaster Management

 

While there is no way to be completely prepared for a disaster, it does help to be prepared to return to normal as quickly as possible. Disaster response and site communications with today’s tools require a method to include video and audio collaboration agnostic of the communications technology deployed. The IGAN platform accelerates the ability to see and communicate with each team member, to identify priorities, direct responses, and organize cleanup.

 

State & Federal (FEMA - Federal Emergency Management Agency)

 

FEMA is part of a larger team of Federal agencies, SLTT (state, local, tribal, and territorial) governments, and non-governmental stakeholders (collectively the “Emergency Management Community”) that share responsibility for emergency management and National preparedness. FEMA’s role is to coordinate with the Emergency Management Community. FEMA is responsible for working within the Emergency Management Community to encourage proactive risk assessment, preparedness activities, and mitigation investments. FEMA is not currently a customer of Cytta; however, Cytta’s IGAN is designed for utilization by the Emergency Management Community coordinated by FEMA.

 

Getting the right people with the right tools to the right place is a major challenge in any crisis. Often the lack of telecom infrastructure introduces a greater challenge to crisis management. As a field-deployable system, IGAN can operate as a mobile server. By integrating an IGAN server into customers’ mobile command operations, they can form a private communications hub independent of the Internet. IGAN creates an entirely secure, FIPS 140-2 and CJIS compliant system that allows rapid inter-agency unified comms (voice, video, and data).

 

UTILITIES & CRITICAL INFRASTRUCTURE

 

Power, Oil & Gas, Water, and Critical Infrastructure entities utilize IGAN for auditing, maintenance, and response with near real-time live communications to personnel on site. Cytta provides utility companies with the ability to stream high resolution low latency video from their high-precision, remote sensing technologies (drones/sUAS).

 

Cytta’s SUPR technology allows the integration of low latency streaming of high-resolution video. Cytta’s IGAN platform allows management personnel to virtually participate from anywhere and view their utility/infrastructure assets in near real time. Cytta products assist with streamlining audits, decisions, resource planning, and operational priorities. By participating remotely on our near real-time video communications platform, utility managers can see what is happening in the field and provide guidance or direction from their remote location.

 

Power

 

Our technology assists power utilities in reviewing and managing critical infrastructure. Cytta’s IGAN and SUPR create the ability to identify potential power transmission problems and liabilities.

 

Water

 

Drones are introducing efficiencies and helping decrease costs in the management of many bodies of water. An operator can now stream high-resolution video and identify potential problems while sharing those images in near-real-time with decision makers in a Headquarters observation facility. SUPR and IGAN are efficient solutions for utility evaluation and communications systems. Evaluating rivers, lakes, oceans pipelines, sewage, drainage channels, and other critical water infrastructure can enhance environmental activities while improving operational responses.

 

Oil & Gas

 

Oil and Gas producers have multiple responsibilities, from detecting leaks to meeting environmental regulations, maintaining site security and system integrity. IGAN and SUPR deliver the ability for remote response to evaluate these issues protecting the environment, while saving time and costs of getting personnel on site. A person viewing high resolution video remotely (via drone, smartphone, or thermal imaging camera – transmitted over cellular or satellite) allows near real-time identification of problems, issues, and solutions.

 

ENVIRONMENTAL

 

Working to protect resources requires visibility into remote areas allowing for an improved response. The use of drones and remote sensors in the environmental service industries is evolving rapidly. Their utilization creates the need for near real-time multidirectional communications with high resolution that is becoming a service element. Onsite video (IGAN) and the utilization of high-resolution sensors (SUPR) allows more rapid evaluation and response to waste violations, surveillance, illegal dumping, and an evaluation of the impact that each of these has on natural resources.

 

Monitoring & Tracking

 

The ability to monitor and track leaks, spillage, or flood waters in near real-time is a new concept and can dictate the difference between environmental catastrophe or quick resolution and repair. IGAN can place eyes on areas under observation by allowing for a more rapid response from the appropriate authority or engineering resource, while SUPR allows the application of near real-time high resolution data examination.

 

 
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Regulation Management

 

In order to coordinate a response to individuals who violate perimeters, impact wildlife or natural resources, and violate environmental safeguards, it’s important to be able to identify violations and get support in the dispatch of authorities. By implementing an IGAN with SUPR video monitoring capabilities, field personnel can communicate and share relevant video back to headquarters.

 

MILITARY & SECURITY

 

Cytta’s technology enables high-definition (HD/4K) streaming in non-line-of-sight environments where it was previously difficult. Cytta’s proprietary SUPR Stream video codec/algorithm offers improved results over traditional MPEG-based technologies [H.264/H.265 (HEVC)]. A SUPR enabled encoder at the video camera side, improves the ability to stream HD, 4K and higher resolution videos over low bandwidths.

 

Military

 

A key element to mission success is the dependence upon ISR (Intelligence, Surveillance, and Reconnaissance) video for mission critical decisions and operational decision-making. Our SUPR hardware/software system is available in a 0.5-LB package and improves ISR capabilities. SUPR improves the capability to stream high-definition (HD/4k/4K+) in non-line-of-sight environments at ultra-low bandwidths.

 

Additionally, Cytta’s IGAN Incident Command system allows for secure collaboration between forward and base operations. Communicating over a secure communications link utilizing voice and video is offered by Cytta’s IGAN.

 

Security & Protection

 

The transmission of HD/4K/4K+ video in remote or temporary locations is improved by the use of SUPR.

 

Customer Focus

 

One of Cytta’s primary goals is to meet the requirements and expectations of our customers. Our success depends upon this.

 

Customer feedback is gathered by Cytta’s Support, Sales & Marketing, and Product Management groups. Input is also gathered from partner companies’ support and deployment organizations. These groups are accountable for collecting customer inputs from a variety of sources including direct contact with the customer.

 

Cytta’s Product Management group spends time at customer locations observing their experiences, synthesizing information, and using it to improve the Company’s products. These experiences are reviewed in technical engineering design meetings and appropriate changes subsequently flow through all areas of the Company.

 

Government Approval of Principal Products or Services

 

The Arms Export Control Act requires that all manufacturers and exporters of defense articles (including technical data) as defined on the United States Munitions List (ITAR part 121) and furnishers of defense services are required to register with the Directorate of Defense Trade Controls (DDTC). It is primarily a means to provide the U.S. Government with necessary information on who is involved in certain ITAR controlled activities and does not confer any export or temporary import rights or privileges. Registration is generally a precondition for the issuance of any license or other approval and use of certain exemptions. Cytta’s ITAR registration expires April 30, 2022. Cytta is now positioned to receive ITAR-controlled technical data from U.S. Government Department of Defense entities seeking affordable commercial off-the-shelf video surveillance solutions. In order to ensure compliance to export regulations, Cytta has in place a written Export Compliance and Management System.

 

Effect of Existing Governmental Regulation on our Business

 

There is no one regulation of this specific type of business other than the normal business restrictions that apply to all businesses. We are, however, subject to export control regulations which affect the export of technical data, defense services, software, and items. In order to alleviate any possible risk of an erroneous export classification and in order to satisfy an open inquiry from Airbus Advanced Development Group in the United Kingdom, Cytta has a pending Commodity Classification Automated Tracking System (CCATS) with the United States Bureau of Industry and Security (BIS). The CCATS was submitted on March 29, 2021. The CCATS response will provide the formal export classification of the SUPR product.

 

Cytta is also in the process of upgrading its cloud service to provide ITAR-compliant cybersecurity in order to achieve Cybersecurity Maturity Model Certification (CMMC) Level 1. CMMC is the verification mechanism to ensure that Defense Industrial Base (DIB) companies implement appropriate cybersecurity practices and processes to protect Federal Contract Information (FCI) and Controlled Unclassified Information (CUI) within their unclassified networks.

 

 
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Number of Total Employees and Part-Time Employees

 

We currently employ ten (10) independent contractors in the United States to conduct our operations.

 

INDUSTRY SUMMARY

 

The core industry in which Cytta operates is the data (video/audio) compression industry. Data compression is the process of encoding, restructuring or otherwise modifying data in order to reduce its size. Fundamentally, it involves re-encoding information using fewer bits than the original representation.

 

Compression is done by a program that uses functions or an codec/algorithm to effectively discover how to reduce the size of the data. For example, an codec/algorithm might represent a string of bits with a smaller string of bits by using a ‘reference dictionary’ for conversion between them. Another example involves a formula that inserts a reference or pointer to a string of data that the program has already seen. A good example of this often occurs with image compression. When a sequence of colors, like ‘blue, red, red, blue’ is found throughout the image, the formula can turn this data string into a single bit, while still maintaining the underlying information. SUPR is such a codec/algorithm.

 

For data/video transmission, compression can be run on the content or on the entire transmission. When information is sent or received via the internet, larger files, either on their own or with others, or as part of an archive file, may be transmitted in one of many compressed formats.

 

Lossy vs Lossless Video/Image Compression

 

Video/Image Compression is often broken down into two major forms, “lossy” and “lossless”. When choosing between the two methods, it is important to understand their strengths and weaknesses:

 

 

·

Lossless Compression: Removes bits by locating and removing statistical redundancies. Because of this technique, no information is actually removed. Lossless compression will often have a smaller compression ratio, with the benefit of not losing any data in the file. This is often particularly important when needing to maintain absolute quality, as with database information or professional media files.

 

 

 

 

·

Lossy Compression: Lowers size by deleting unnecessary information and reducing the complexity of existing information. Lossy compression can achieve much higher compression ratios at the cost of possible degradation of file quality.

 

Data (Video/Audio) Compression Uses

 

Many businesses today rely on data compression in some major way; especially as the functional quality of data increases, storage capacity concerns must be resolved. Data compression is one of the major tools that helps with this. These file types are frequently compressed:

 

 

·

Audio Compression: Implemented as audio codec/algorithms, compression of audio files is necessary to guarantee bandwidth and storage limits are not exceeded. Audio compression can be either lossy or lossless.

 

 

 

 

·

Video Compression: Videos may or may not combine image compression with audio compression depending upon utilization. There are usually separate codec/algorithms for each aspect of a video, which are often wrapped together as a single compression codec/algorithm. Because of the high data rate required for uncompressed video, most video files are usually compressed before transmission.

 

 
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Why Data (Video/Audio) Compression is Important

 

The main advantages of compression are reductions in storage hardware, data transmission time, and communication bandwidth. This can result in significant cost savings. Compressed files require significantly less storage capacity than uncompressed files, meaning a significant decrease in expenses for storage. A compressed file also requires less time for transfer while consuming less network bandwidth. This can also help with costs and also increases productivity.

 

The main disadvantage of data compression is the increased use of computing resources to apply compression to the relevant data. Because of this, compression vendors prioritize speed and resource efficiency optimizations in order to minimize the impact of intensive compression tasks.

 

Compression or file compression utility programs are utilized by enterprises for the high volume of data required for video transmission. Data compression, which enables faster file transfer with minimum data loss, is utilized extensively. a. The prevalence of high-speed connectivity, utilizing communication networking technologies, has increased the need for data compression software.

 

ISR (INTELLIGENCE, SURVEILLANCE, AND RECONNAISSANCE) MARKETPLACE

 

The airborne intelligence, surveillance, and reconnaissance (ISR) sector is a segment of the defense industry. The US Department of Defense (DoD)—and defense ministries elsewhere utilize ISR collection. Many ISR missions are currently carried out by large expensive drones that are vulnerable in certain operating environments.

 

In response, several new technologies and platforms are emerging to meet the evolving collection requirements of the military. These new technology, platform, and procurement options offer increased ISR capabilities.

 

To maintain continuous coverage over a given ISR target, the military creates operational “orbits” that use drones to collect multiple forms of ISR, including electronic signals (SIGINT), images (IMINT), and full-motion video (FMV). This is where SUPR adds very useful capability.

 

Another major area of technological innovation is in the collection capabilities of ISR platforms, particularly in how they analyze, exploit, and disseminate intelligence. For example, cloud-based systems (provided they are adequately secure) can increase access to data from disparate sources, enabling better information sharing and collaboration among multiple stakeholders.

 

Additionally, artificial intelligence (AI) can make the analysis of information far more effective, efficient, and accurate, synthesizing vast quantities of raw data into actionable intelligence at a scale that no human analyst could achieve. Given that increases in collection capabilities are leading to a corresponding increase in the amount of data captured, AI is becoming critical in enabling the military to sift through the raw data and effectively exploit sensitive information. Similarly, machine learning can refine the processing of raw data over time, increasing a force’s ability to distinguish critical signals from noise. The higher the quality or resolution of the video collected, the better the AI performs. Established firms and those seeking to enter the market in the military airborne Intelligence, Surveillance & Reconnaissance (ISR) technologies market include: Lockheed Martin Corporation, Airbus SE, The Boeing Company, General Electric, General Dynamics, Northrop Grumman Corporation, BAE Systems, Thales Group SA, Leonardo S.p.A., and Textron, Inc. Technologies (see Military Airborne Intelligence, Surveillance & Reconnaissance (ISR) Technologies Market Report 2021-2031 Summary, published January 2021, available at https://www.globenewswire.com/news-release/2021/04/13/2209007/0/en/Military-Airborne-Intelligence-Surveillance-Reconnaissance-ISR-Technologies-Market-Report-2021-2031.html (which website is not incorporated by reference herein)).

 

The Crucial ISR Market Drivers

 

The growing importance of airborne ISR services is leading to increased market demand. The rising demand for the UAV systems is a crucial demand driving factor for the airborne ISR market. Manned ISR aircraft are no longer a trend in the defense sector. Unmanned-aerial vehicles are the current trend of the market. The UAVs is fully equipped with an engine, autopilot, ISR platforms and sensors.

 

Aerial vehicles offer better information to the decision maker. The growing investment of these UAV’s improves demand for airborne ISR. Airborne ISR is a useful technology that can detect any trespasses. Also, it can effectively gather the information of the intruder.

 

ISR Market Growth Opportunities

 

Airborne ISR is composed of multiple sophisticated technologies including compression. Technological advancements create growth opportunities for the market.

 

 
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The ISR Market Restraints

 

The ISR airborne technology needs to address the current threats and the solutions to act effectively on them. Therefore, there is a need to increase the compression, data storage, accessibility, analyzation and communication of this information.

 

ISR Competitive Landscape

 

There are multiple competitors in the airborne ISR market. There are major key players with effective market strategies. The key players in the market include, Airbus (UK and France), Boeing (US), BAE Systems (UK), Elbit Systems Ltd (Israel), FLIR Systems Inc (US), Northrop Grumman (US), General Dynamics (US), Thales (France), Raytheon (US), UTC Aerospace Systems (US)

 

ICS- INCIDENT COMMAND SYSTEM MARKETPLACE

 

Incident Command Systems (ICS) are a standardized approach to the command, control, and coordination of on-scene incident management, providing a common hierarchy within which personnel from multiple organizations can be effective. ICS is the combination of procedures, personnel, facilities, equipment, and communications operating within a common organizational structure, designed to aid in the management of on-scene resources during incidents. Cytta’s IGAN system is a portable hardware/software system designed to provide unified command as the connection nexus for ICS.

 

ICS is used for all kinds of incidents and is applicable to small, as well as large and complex, incidents, including planned events. ICS is a standardized approach to the command, control, and coordination of on-scene incident management that provides a common hierarchy within which personnel from multiple organizations can be effective.

 

ICS specifies an organizational structure for incident management that integrates and coordinates a combination of procedures, personnel, equipment, facilities, and communications. Using ICS for every incident helps hone and maintain skills needed to coordinate efforts effectively. ICS is used by all levels of government as well as by many Non-Governmental Organizations (NGOs) and private sector organizations. ICS applies across disciplines and enables incident managers from different organizations to work together. This system includes five major functional areas, staffed as needed, for a given incident: Command, Operations, Planning, Logistics, and Finance/Administration.

 

ICS has since been incorporated as part of the National Incident Management System (NIMS) of the U.S. Department of Homeland Security. NIMS is a comprehensive national approach to incident management that is applicable at all jurisdictional levels and across functional disciplines where federal funding is involved. The Incident Command System (ICS) is a standardized approach to the command, control, and coordination of emergency response providing a common hierarchy within which responders from multiple agencies can be effective.

 

Electric utilities began adopting ICS in earnest on the East Coast following Superstorm Sandy in 2012. FEMA outlined four key action items the agency planned to achieve following Sandy. Two of the items addressed the need to achieve a unity of effort by local communities and the federal government in responding to storms and disasters.

 

ICS is especially useful when interdisciplinary crews from multiple geographic areas converge for storm mitigation. Using ICS incident responders — utility, fire department or police — can share a common language and protocols to tackle the emergency as a united team.

 

ICS Unified Command

 

When no one jurisdiction, agency or organization has primary authority and/or the resources to manage an incident on its own, ‘Unified Command” may be established. In Unified Command, there is no one “commander.” Instead, the Unified Command manages the incident by jointly approved objectives. A Unified Command allows these participating organizations to set aside issues such as overlapping and competing authorities, jurisdictional boundaries, and resource ownership to focus on setting clear priorities and objectives for the incident. The resulting unity of effort allows the Unified Command to allocate resources regardless of ownership or location. Cytta’s IGAN is to tool to make Unified Command more efficient.

 

At its core, ICS is meant to enable the effective and efficient management of incidents, irrespective of jurisdiction, kind, complexity, or size. The system codifies emergency management best practices into a unified approach to incident response, integrating a combination of facilities, equipment, personnel, procedures, and communications, which then all operate under a common organizational structure. IGAN provides the communication nexus.

 

 
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General Competitive Strengths within the Industry

 

When a customer chooses Cytta, they choose a team of experienced individuals who possess expertise in the field of video streaming and utilization of our proprietary compression technologies. We pride ourselves on being solution providers as well as being product developers.

 

Cytta’s current client list includes various military organizations, several police departments, and industry clients.

 

We also distinguish ourselves by being able to adapt quickly to our customers’ specific environment and requirements. We achieve this adaptability by not being tied to our own specific products but rather by creating product variations necessary to solve the exact needs of our clients.

 

PRIMARY BUSINESS STRATEGY

 

Core Strategic Vision

 

Cytta’s core strategic vision is to make SUPR and IGAN industry standards for initially managing ISR and ICS information and data integration.

 

We combine our domain knowledge with software/hardware capability in order to create our products.

 

Quality Objectives

 

Our quality objectives are to:

 

 

·

Create products that meet our customers’ requirements and are delivered on time within cost budget.

 

 

 

 

·

Educate our customers on the high quality and reliability of our systems.

 

 

 

 

·

Promote our high standards and professionalism to our customers.

 

Sales Model

 

Cytta’s sales model is process-orientated and is designed to penetrate vertical opportunities emerging in the ISR, and ICS markets as these opportunities mature from basic research to the introduction of our market specific products.

 

As a partner-centric organization, we are committed to properly ensuring Cytta clients are well-served by Cytta and our channel partners. That is why our mission is to work together to understand the larger client marketplace and deliver a customer-first and industry-relevant experience that is tailored to our initial reference consumer base. As part of our initial sales process, we leverage channel partners to identify suitable reference clients that have demonstrated an immediate and urgent need for our innovative technologies, with the capability of operating as reference point for all other entities in their respective industry.

 

Cytta follows a six-phase gated process on all sales to its customers. These sales initially involve a demonstration of the Cytta technologies either through the internet or on premises. This leads to a sale of the license and software/hardware followed by a sale of ongoing services associated with the use of the licensed software/hardware. The Phase 0 and 1 of this process are sales processes.

 

Phase 0 of the process converts a lead into a potential customer by identifying a customer need that Cytta’s software/hardware and services could fill.

 

Phase 1 is a product demonstration that demonstrates to the customer and Cytta that the software/hardware and services do indeed provide a timely and cost-effective solution to their need.

 

Phase 2 results in a product and services determination to achieve a detailed implementation plan and specification requirements for the project.

 

Phase 3 results in a software/hardware license sale and delivery along with additional services.

 

Phase 4 results in software maintenance and upgrades.

 

Phase 5 is a systematic annual review with the customer of our products and services to ensure longevity and ongoing customer satisfaction.

 

 
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Principal Executive Offices

 

Our corporate headquarters are located at 5450 W Sahara Avenue, Suite 300A, Las Vegas, Nevada, 89146. Our telephone number is (702) 900-7022.

 

DESCRIPTION OF PROPERTY

 

The Company manages all operations from within approximately 500 square feet of leased space located in an office building in Las Vegas, Nevada.

 

MANAGEMENT

 

The directors and executive officers of the Company are:

 

Name

 

Age

 

 Position

Gary Campbell

 

68

 

CEO, CFO, Secretary and Director

Erik Stephansen

 

58

 

President and Director

Michael Collins

 

52

 

Chief Visionary Officer/CTO

Michael Chermak

 

63

 

Chief Administrative Officer

 

Gary Campbell, CEO, CFO, Secretary and Director

 

Mr. Campbell, age 68, was President, Secretary and Director of Cytta from 2010 to 2013. In 2013, Mr. Campbell became CEO and CFO, as well as Secretary and Director, a status he maintains today. Since joining Cytta, Mr. Campbell has led the development of Cytta’s video compression and remote patient monitoring technology. Mr. Campbell has over 30 years’ experience in leadership roles in the technology industry. Mr. Campbell has degrees in both Commerce and Law from the University of British Columbia, Canada.

 

We believe that Mr. Campbell’s legal and business expertise and background experience, along with his direct experience as our CEO, gives him valuable insight into coordinating the oversight of the Company and makes him a valuable member of our Board of Directors.

 

Erik Stephansen, President and Director

 

Mr. Stephansen, age 58, joined Cytta as President and Director in 2013. Mr. Stephansen assists with the development and integration of Cytta technologies. Mr. Stephansen is also currently CEO and President of LAM Aviation, a FAA technology partner developing Angle-of-Attack and Loss of Control prevention wing systems.

 

Previously, Mr. Stephansen worked in Private Equity advising buyers on technology integration. Mr. Stephansen is a Business Economics graduate of University of California, Santa Barbara, with specialized studies from UC Berkeley and advanced engineering Certificates from Stanford University.

 

We believe that Mr. Stephansen’s business, economics, and technology industry experience, along with his service as our President and as CEO of LAM Aviation, make him a valuable member of our Board of Directors.

 

Michael Collins, Chief Technology Officer

 

Mr. Collins, age 52, currently leads the Cytta SUPR ISR and IGAN ICS design and implementation team. Mr. Collins works directly with the technical team responsible for all updates and revisions to the products and the underlying algorithms. Mr. Collins has over 20 years of experience in developing, designing, integrating and operating digital imaging, network and telecommunications technologies. Mr. Collins also has extensive film and imaging experience including working in the entertainment industry in video and digital image production. From March of 2016 through June of 2018, Mr. Collins was Technical Field Supervisor and Business Development Manager for All Mobile Video, LLC, and in June of 2018, Mr. Collins joined the Company as Director Digital Media, and in June of 2019, Mr. Collins became the Company’s Chief Technology Officer. Mr. Collins also served for many years as an active volunteer fireman, and emergency medical technician (EMT), volunteering as part of the US First Responder network.

 

Michael Chermak, Chief Administrative Officer

 

Mr. Chermak, age 63, has 30 years of experience in leadership roles in the healthcare industry. He has served as the Chief Administrative Officer of Cytta Corp. since April 2020. Previously, he was a director and officer of Ozop Surgical Corp (OTCQB:OZSC) from June 2016 to April 2020.

 

He worked in China for over 6 years and was the former Chairman and CEO of Bridgetech Holdings International (OTC: BGTH), which focused on introducing Western medicine into China. He has served on the Board of Directors and as an Audit Committee member of Beijing Origin Seed (NASDAQ: SEED). Mr. Chermak graduated from the University of New Mexico, Anderson School of Management.

 

 
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None of our directors qualify as “independent” as that term is defined under the applicable rules and regulations of the SEC, meaning that our directors may have business interests in the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. We believe that the members of our executive team are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material income to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors. Further, we are not a “listed company” under SEC rules and thus we are not required to have a compensation committee or a nominating committee.

 

We do not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. Our board of directors believes that, given the early stages of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. We do not currently have any specific or minimum criteria for the election of nominees to our board of directors and we do not have any specific process or procedure for evaluating such nominees. Our board of directors assesses all candidates, whether submitted by management or shareholders, and makes recommendations for election or appointment.

 

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our Chief Executive Officer at the address appearing on the face page of this Prospectus.

 

Term of Office

 

Our directors are appointed to hold office until removed from office or until his successor has been elected and qualified in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. 

 

All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’ fees and reimburse Directors for expenses related to their activities.

 

None of our Officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past ten (10) years.

 

Audit Committee

 

We do not have an audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Section 407 of the Sarbanes-Oxley Act of 2002 and Item 407(d) of Regulation S-K is beyond our limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in our financial statements at this stage of our development.

 

Certain Legal Proceedings

 

No director, nominee for director, or executive officer has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten (10) years.

 

 
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Compliance with Section 16(A) Of the Exchange Act.

 

We intend to file a Form 8-A registration statement under Section 12 of the Securities Exchange Act of 1934, as amended, in the future. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. 

 

Code of Ethics

 

The Board of Directors has established a written code of ethics that applies to the Company’s officers. A copy of the Code of Ethics is filed as Exhibit 14.1.

 

EXECUTIVE COMPENSATION

 

The following table sets forth information regarding compensation earned in or with respect to our fiscal years ended September 30, 2021 and 2020:

 

 

(i)

our principal executive officer or other individual serving in a similar capacity during the fiscal years ended September 30, 2021, and 2020;

 

 

(ii)

our two most highly compensated executive officers other than our principal executive officers who were serving as executive officers at September 30, 2021, and 2020, whose compensation exceed $100,000; and

 

 

(iii)

up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at September 30, 2021 and 2020.

 

Name & Principal Position

 

Year

 

Salary

($)

 

 

Bonus

($)

 

 

Stock

Awards

($)

 

 

Option

Awards

($)

 

 

Nonequity

Incentive

Plan

Compensation

($)

 

 

All

Other

Compensation

($)

 

 

Total

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gary Campbell

 

2021

 

 

156,000

(1)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

156,000

 

Chief Executive Officer

 

2020

 

 

5,750

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

288,000

(2)

 

 

293,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael Collins

 

2021

 

 

156,000

(3) 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

156,000

 

Chief Technology Officer

 

2020

 

 

58,010

 

 

 

-

 

 

 

500,000

(4) 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

558,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael Chermak

 

2021

 

 

120,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

120,000

 

Chief Administration Officer

 

2020

 

 

20,000

 

 

 

-

 

 

 

312,500

(5)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

332,500

 

____________

(1)

In 2021, the Company incurred management fees to Mr. Campbell at the rate of $12,000 per month from October 1, 2020, through May 31, 2021, and $15,000 per month beginning June 1, 2021.

 

 

(2)

In 2020, the Company accrued $140,000, $120,000 and $28,000 to companies controlled by Mr. Campbell for management fees, public relation services and office rent and administration expenses, respectively. These accrued amounts were subsequently

satisfied by the issuance of shares of common stock (see Certain Relationships and Related Transactions below).

 

(3)

In 2021, the Company incurred management fees to Mr. Collins based on $12,000 per month from October 1, 2020 through May 31, 2021, and $15,000 per month beginning June 1, 2021.

 

 

(4)

On August 15, 2020, the Company issued 20,000,000 shares of common stock to the Company’s CTO for the use of technology. The shares were valued at $0.025 per share based upon the price the Company sold shares in the most recently completed private placement at such time. The Company recorded stock-based compensation of $500,000 for the year ended September 30, 2020, for this issuance.

 

 

(5)

On April 1, 2020, the Company entered into an agreement with Makena Investment Advisors, LLC (“Makena”). Makena is controlled by Mr. Chermak. Pursuant to the agreement, the Company issued Makena 12,500,000 shares of common stock and agreed to compensate Makena $10,000 per month beginning in August 2020. The shares were valued at $312,500 based on the market price of the common stock on the date of the agreement.

 

 
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Employment Agreements

 

The Company has no formal employment agreements with its officers and directors; however, the Company orally agreed to compensate Mr. Campbell and Mr. Collins $12,000 each per month, effective August 1, 2020. On June 1, 2021, this amount was increased to $15,000 per month.

 

On April 1, 2020, the Company entered into an agreement with Makena Investment Advisors, LLC (“Makena”). Makena is controlled by Mr. Chermak. Pursuant to the agreement, the Company issued Makena 12,500,000 shares of common stock and agreed to compensate Makena $10,000 per month beginning in August 2020.

 

Compensation of Directors

 

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity during the last three years.

 

Option Grants

 

There were no options to purchase shares of our Common Stock issued and outstanding as of September 30, 2021, and 2020.

 

Outstanding Equity Awards At 2021 Fiscal Year-End

 

There were no outstanding equity awards for the years ended September 30, 2021, and 2020.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information with respect to the beneficial ownership of our Common Stock as of July 22, 2022, for:

 

 

·

each of our executive officers and directors;

 

 

 

 

·

all of our executive officers and directors as a group; and

 

 

 

 

·

any other beneficial owner of more than 5% of our outstanding Common Stock.

 

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include ordinary shares issuable upon the exercise of stock options that are immediately exercisable or exercisable within 60 days. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated, the address of each individual identified is care of the Company.

 

Title of Class

 

Name and Address

of Beneficial Owner

 

Amount and Nature

of Beneficial Owner

 

 

Percent of

Class (1)

 

Common Stock

 

Gary Campbell

 

 

62,184,875

(2)

 

 

16.4%

Common Stock

 

Michael Collins

 

 

30,100,000

 

 

 

8.0%

Common Stock

 

Erik Stephansen

 

 

7,770,081

 

 

 

2.1%

Common Stock

 

Michael Chermak

 

 

12,500,000

(3)

 

 

3.3%

Series D Preferred Stock (4)

 

Gary Campbell

 

 

50,000

 

 

 

100.0%

 

 
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 _________________

(1)

Based on 378,315,718 shares of common stock issued and outstanding as of July 22, 2022.

 

 

(2)

Includes 25,100,000 shares of common stock issued in the name of Lando Technologies, Inc. (“Lando”), 19,800,000 shares of common stock issued in the name of Unified Assets, Inc. (“Unified”), 5,668,208 shares of common stock issued in the name of TEKM Services, Inc. (“TEKM”), 166,667 shares of common stock issued in the name of Unified Financial, Inc. (“Financial”), 1,500,000 shares of common stock issued in the name Cytta Foundation (“CF”) and 50,000 shares of Series D Preferred Stock that are convertible into 50,000 shares of common stock, issued in the name of Financial. Lando, Unified, TEKM, CF and Financial are all controlled by Gary Campbell.

 

 

(3)

Includes 12,500,000 shares of common stock issued to Makena Investment Advisors, LLC, a limited liability corporation managed by Michael Chermak.

 

 

(4)

Includes 50,000 shares issued to Financial. The Series D Preferred Stock is convertible into 50,000 shares of common stock and has voting rights equal to two (2) times the number of other shares of the Company eligible to vote. Gary Campbell has voting control over shares issued to Financial.

 

 
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Related Party agreements and fees

 

For the years ended September 30, 2021, and 2020, the Company recorded expenses to related parties in the following amounts:

 

 

 

Years ended September 30,

 

 

 

2021

 

 

2020

 

CEO-Management fees

 

$156,000

 

 

$205,750

 

Chief Technology Officer (CTO), includes $500,000 stock-based compensation (2020)

 

 

156,000

 

 

 

558,010

 

Chief Administration Officer (CAO) (1)

 

 

276,252

 

 

 

20,000

 

Public relations

 

 

-

 

 

 

60,000

 

Office rent and expenses

 

 

60,579

 

 

 

28,000

 

Total

 

$648,831

 

 

$871,760

 

 

(1)

On April 1, 2020, the Company entered into an agreement with Makena Investment Advisors, LLC (“Makena”). Makena is controlled by Mr. Chermak, the Company’s CAO. Pursuant to the agreement, the Company issued Makena 12,500,000 shares of common stock and agreed to compensate Makena $10,000 per month beginning in August 2020. For the years ended September 30, 2021, and 2020, the Company incurred $120,000 and $20,000, respectively, for the cash compensation. The shares were valued at $312,500 based on the market price of the common stock on the date of the agreement and are being expensed over the two- year term of the agreement. Accordingly, $156,250 of stock-based compensation expense is included for the year ended September 30, 2021, in the above table for the CAO.

 

During the year ended September 30, 2020, the Company issued 50,000 shares of Series D Preferred Stock to a Company controlled by our CEO in satisfaction of $1,347,894 of capital stock to be issued. As of September 30, 2020, included in capital stock to be issued was $432,000 due to related parties. On November 12, 2020, the Company issued 17,280,000 shares of restricted common stock for payment of the $432,000 in capital stock to be issued.

 

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

 

 

 

Six months ended

March 31,

 

Description

 

2022

 

 

2021

 

CEO-Management fees

 

$203,000

 

 

$72,000

 

Chief Technology Officer (CTO)

 

 

203,000

 

 

 

72,000

 

Chief Administration Officer

 

 

165,000

 

 

 

60,000

 

Stock based compensation

 

 

78,126

 

 

 

78,126

 

Office rent and expenses

 

 

29,020

 

 

 

20,835

 

Total

 

$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 six months ended March 31, 2022, and the company recorded expenses of $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 six months ended March 31, 2021, the Company expensed $72,000, respectively to the CEO and CTO, and $75,000 to its CAO. Amortization of stock-based compensation expense of $78,126 was recorded for the 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, and 2021, the Company expensed $4,163 and $20,835, respectively, to rent expense pursuant to this sublease. On June 1, 2021, the Company agreed to pay an additional $3,500 per month to the CTO for additional space, and for the six months ended March 31, 2022, $21,000, is included in rent expense.

 

 
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DESCRIPTION OF SECURITIES

 

General

 

Our authorized capital stock consists of 500,000,000 shares of common stock, $0.001 par value per share, and 100,000,000 shares of preferred stock, $0.001 par value per share, 10,000,000 of which authorized preferred shares have been designated as Series D Preferred Stock and 13,650,000 have been designated as Series E Preferred Stock.

 

Common Stock

 

As of July 22, 2022, 378,315,78 shares of common stock are issued and outstanding. Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote.

 

Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. The presence, in person or by proxy, of shareholders holding at least fifty-one (51%) percent of the shares entitled to vote shall be necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation.

 

Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or corporate wind up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.

 

Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

 

Preferred Stock

 

The Company is authorized to issue 100,000,000 shares of preferred stock, $0.001 par value per share, 10,000,000 of which authorized preferred shares have been designated as Series D Preferred Stock, and 13,650,000 of which authorized preferred shares have been designated as Series E Preferred Stock. As of July 22, 2022, there were 50,000 shares of Series D Preferred Stock issued and outstanding.

 

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.

 

Series E Preferred Stock

 

Each share of Series E Preferred Stock is convertible into one share of fully paid and non-assessable Common Stock, and each holder is entitled to one vote for each share of Series E Preferred Stock held.

 

Warrants

 

None.

 

Options

 

None.

 

 
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Registration Expenses

 

All fees and expenses incident to the registrations will be paid by us whether or not any securities are sold pursuant to a registration statement.

 

SHARES ELIGIBLE FOR FUTURE SALE

 

As of July 22, 2022, we had outstanding 378,315,718 shares of common stock.

 

Shares Covered by this Prospectus

 

All of the 73,470,000 shares of Common Stock being registered in this offering may be sold without restriction under the Securities Act.

 

Rule 144

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Rule 144 allows for the public resale of restricted and control securities if a number of conditions are met. Meeting the conditions includes holding the shares for a certain period of time, having adequate current information, looking into a trading volume formula, and filing a notice of the proposed sale with the SEC.

 

In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale, (ii) we are subject to the Exchange Act periodic reporting requirements and have filed all required reports for a least 90 days before the sale, and (iii) we are not a shell company (a company having no or nominal operations and either (1) no or nominal assets, (2) assets consisting solely of cash and cash equivalents, or (3) assets consisting of any amount of cash and cash equivalents and nominal other assets), and have complied with the shell company requirements in Rule 144(i). As we were previously a shell company, under Rule 144(i), Rule 144 would be unavailable until one year following the date we cease to be a shell company and file Form 10 information with the SEC ceasing to be a shell company, provided that we are then subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that we were required to file such reports and materials), other than Form 8-K reports.

 

Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

 

1% of the number of shares of our common stock then outstanding, which would equal approximately 3,783,157 shares, based on the number of shares of our common stock outstanding as of July 22, 2022 (378,315,718 shares); or

The average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

 

At the expiration of the one-year holding period (following filing Form 10 information with SEC regarding the Company’s cessation as a shell company and provided the other requirements of Rule 144(i) are met), a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of shares of our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remain subject to the volume restrictions described above.

 

Sales under the Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

 

 
44

Table of Contents

 

PLAN OF DISTRIBUTION

 

The Selling Security Holders will sell the shares from time to time through independent brokerage firms in the over-the-counter market or in private transactions at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The Selling Security Holders may use any one or more of the following methods when selling shares:

 

 

·

ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;

 

·

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

·

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

·

an exchange distribution in accordance with the rules of the applicable exchange;

 

·

privately negotiated transactions;

 

·

to cover short sales made after the date that this prospectus is declared effective by the Commission;

 

·

broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at the stipulated price per share;

 

·

a combination of any such methods of sale; and

 

·

any other method permitted pursuant to applicable law.

 

The Selling Security Holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the Selling Security Holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Security Holders, or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser, in amounts to be negotiated. The Selling Security Holders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

 

The Selling Security Holders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of our common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling security holders to include the pledgee, transferee or other successors in interest as selling security holders under this prospectus.

 

Upon our being notified in writing by a Selling Security Holder that any material arrangement has been entered into with a broker-dealer for the sale of our common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Security Holder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of our common stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon our being notified in writing by a Selling Security Holder that a donee or pledgee intends to sell more than 500 shares of our common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

 

The Selling Security Holders also may transfer the shares of our common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The Selling Security Holders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Security Holder and/or the purchasers. Each Selling Security Holder has represented and warranted to us that it acquired the securities subject to this prospectus in the ordinary course of such Selling Security Holder’s business and, at the time of its purchase of such securities such Selling Security Holder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

 

 
45

Table of Contents

 

We have advised each Selling Security Holder that it may not use shares registered on this prospectus to cover short sales of our common stock made prior to the date on which this prospectus shall have been declared effective by the Commission. If a Selling Security Holder uses this prospectus for any sale of our common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Security Holders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Security Holders in connection with resales of their respective shares under this prospectus.

 

We are required to pay all fees and expenses incident to the registration of the shares, but we will not receive any proceeds from the sale of our common stock. We have agreed to indemnify the Selling Security Holders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

LEGAL PROCEEDINGS

 

On November 24, 2020, Lee Skoblow (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 breached an agreement pursuant to which the Plaintiff was to provide services to Cytta and was to be paid compensation in cash and stock, and seeking monetary damages in an amount in excess of $15,000, the precise amount to be proven at trial, and for declaratory relief stating that Cytta should issue 1,000,000 shares of Cytta’s common stock to the Plaintiff. 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 the Plaintiff having breached an earlier services agreement, of limited scope and duration, and other obligations owed to Cytta, and was liable for defaming Cytta in various communications he had sent to certain persons or entities prior to his demand being asserted. Management has been contesting the matter vigorously. A bench trial took place during June 2022, the parties have filed written closing arguments, and are awaiting the court’s determination.

 

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

 

INTERESTS OF NAMED EXPERTS AND COUNSEL

 

Except as disclosed herein, no expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

The financial statements of Cytta Corp. as of September 30, 2021, and 2020, have been included herein in reliance on the report of Prager Metis CPA’s LLC, an independent registered public accounting firm, given on the authority of those firms as experts in auditing and accounting. The legal opinion rendered by Brunson Chandler & Jones, PLLC, regarding our common stock to be registered on Form S-1 is as set forth in its opinion letter included in this prospectus. The address of Brunson Chandler & Jones, PLLC, is Walker Center, 175 S. Main Street, Suite 1410, Salt Lake City, Utah, 84111.

 

TRANSFER AGENT

 

The transfer agent and registrar for our Common Stock is Securities Transfer Corporation. It is located at 2901 N. Dallas Parkway, Suite 380, Plano, Texas, 75093. Its phone number is (469) 633-0101. Its website is www.stctransfer.com.

 

 
46

Table of Contents

 

AVAILABLE INFORMATION

 

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedule thereto, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information regarding our common stock and our company, please review the registration statement, including exhibits, schedules and reports filed as a part thereof. Statements in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement set forth the material terms of such contract or other document but are not necessarily complete, and in each instance, reference is made to the copy of such document filed as an exhibit to the registration statement.

 

We will also be subject to the informational requirements of the Exchange Act upon the registration statement’s effectiveness, which requires us to file reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information along with the registration statement, including the exhibits and schedules thereto, may be inspected at public reference facilities of the SEC at 100 F Street N.E, Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at prescribed rates. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC’s Internet website at http://www.sec.gov.

 

 
47

Table of Contents

 

CYTTA CORP.

 

INDEX TO FINANCIAL STATEMENTS

 

 

 

 

Page

 

Audited Financial Statements

 

 

 

 

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

 

F-2

 

 

 

 

 

 

Balance Sheets as of September 30, 2021 and 2020

 

 

F-3

 

 

 

 

 

 

Statements of Operations for the Years Ended September 30, 2021 and 2020

 

 

F-4

 

 

 

 

 

 

Statement of Stockholder’s Equity for the Years Ended September 30, 2021 and 2020

 

 

F-5

 

 

 

 

 

 

Statements of Cash Flows for the Years Ended September 30, 2021 and 2020

 

 

F-6

 

 

 

 

 

Notes to Financial Statements

 

 

F-7

 

 

 

 

 

 

Unaudited Financial Statements

 

 

 

 

 

 

 

 

 

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

 

 

F-14

 

 

 

 

 

 

Condensed Statements of Operations for the Six Months Ended March 31, 2022 and 2021 (unaudited)

 

 

F-15

 

 

 

 

 

 

Condensed Statement of Stockholder’s Equity for the Nine Months Ended March 31, 2022 and 2021 (unaudited)

 

 

F-16

 

 

 

 

 

 

Condensed Statements of Cash Flows for the Nine Months Ended March 31, 2022 and 2021 (unaudited)

 

 

F-18

 

 

 

 

 

 

Notes to Condensed Financial Statements (unaudited)

 

 

F-19

 

 

 
F-1

Table of Contents

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

Cytta Corp.

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying balance sheets of Cytta Corp. (the Company) as of September 30, 2021 and 2020, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as September 30, 2021 and 2020, 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 described in Note 2 to the consolidated financial statements, As of September 30, 2021 the Company had an accumulated deficit of $22,774,905 and has also generated losses since inception. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the accompanying financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Prager Metis CPA’s LLC

 

 

 

We have served as the Company’s auditor since 2020

 

 

Hackensack, New Jersey

January 12, 2022

   

F-2

Table of Contents

 

Cytta Corp. 

Balance Sheets 

  

 

 

September 30,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$173,196

 

 

$847,646

 

Accounts Receivables

 

 

27,694

 

 

 

-

 

Inventory

 

 

78,765

 

 

 

34,199

 

Prepaid Expenses

 

 

772,394

 

 

 

559,443

 

Vendor deposits

 

 

50,400

 

 

 

-

 

 Total Current Assets

 

 

 1,102,449

 

 

 

 1,441,288

 

 

 

 

 

 

 

 

 

 

Property and Equipment

 

 

170,605

 

 

 

143,058

 

TOTAL ASSETS

 

$1,273,054

 

 

$1,584,346

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

46,055

 

 

 

47,210

 

Accounts payable related parties

 

 

12,551

 

 

 

-

 

Dividend payable

 

 

21,033

 

 

 

-

 

Customer deposits

 

 

-

 

 

 

50,480

 

Deferred revenue

 

 

3,588

 

 

 

-

 

Stock to be issued

 

 

323,583

 

 

 

486,750

 

Total current liabilities

 

 

406,810

 

 

 

584,440

 

 

 

 

 

 

 

 

 

 

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 13,650,000 and -0- issued and outstanding September 30, 2021 and 2020)

 

 

13,650

 

 

 

-

 

Common stock:

 

 

 

 

 

 

 

 

(500,000,000 shares authorized par value $0.001; 296,236,627 and

 

 

 

 

 

 

 

 

and 289,147,675 shares issued and outstanding September 30, 2021, and 2020)

 

 

296,237

 

 

 

289,148

 

Additional paid-in capital

 

 

23,330,612

 

 

 

20,891,476

 

Accumulated Deficit

 

 

(22,774,905

)

 

 

(20,181,368)
Total Stockholders' Equity

 

 

866,244

 

 

 

999,906

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$1,273,054

 

 

$1,584,346

 

 

The accompanying notes are an integral part of these statements

 

F-3

Table of Contents

 

Cytta Corp. 

Statements of Operations

 

 

 

For the Year Ended

September 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Revenues

 

$94,626

 

 

$48,513

 

Cost of goods sold

 

 

41,872

 

 

 

24,037

 

Gross Profit

 

 

52,754

 

 

 

24,476

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Related party

 

 

648,831

 

 

 

871,760

 

General and administrative, other

 

 

1,976,471

 

 

 

418,066

 

Total Operating Expenses

 

 

2,625,302

 

 

 

1,289,826

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(2,572,548)

 

 

(1,265,350)

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

Interest expense

 

 

20,989

 

 

 

1,494

 

Total Other Expenses

 

 

20,989

 

 

 

1,494

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(2,593,537)

 

 

(1,266,844)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(2,593,537)

 

$(1,266,844)

 

 

 

 

 

 

 

 

 

Loss per share, basic and fully diluted

 

$(0.01)

 

$(0.01)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic and diluted

 

 

294,491,512

 

 

 

206,980,736

 

 

The accompanying notes are an integral part of these statements

 

F-4

Table of Contents

  

Cytta Corp. 

Statement of Changes in Stockholders' Equity 

The Year Ended September 30, 2021

    

 

 

Series C

Preferred Stock

 

 

Series D

Preferred Stock

 

 

Series E

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

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)

 

 

999,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16,750,000

 

 

 

16,750

 

 

 

1,283,625

 

 

 

-

 

 

 

1,300,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for stock payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17,280,000

 

 

 

17,280

 

 

 

414,720

 

 

 

-

 

 

 

432,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,000,000

 

 

 

1,000

 

 

 

24,000

 

 

 

-

 

 

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for accounts payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

106,952

 

 

 

107

 

 

 

19,893

 

 

 

-

 

 

 

20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series E Preferred Stock sold for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,650,000

 

 

 

13,650

 

 

 

-

 

 

 

-

 

 

 

668,850

 

 

 

-

 

 

 

682,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock cancelled

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(28,048,000 )

 

 

(28,048 )

 

 

28,048

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year ended September 30, 2021

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,593,537)

 

 

(2,593,537)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances September 30, 2021

 

 

600,000

 

 

$600

 

 

 

50,000

 

 

$50

 

 

 

13,650,000

 

 

$13,650

 

 

 

296,236,627

 

 

$296,237

 

 

$23,330,612

 

 

$(22,774,905)

 

$866,244

 

     

Cytta Corp. 

Statement of Changes in Stockholders' Equity 

The Year Ended September 30, 2020

    

 

 

Series C

Preferred Stock

 

 

Series D

 Preferred Stock

 

 

Series E

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance September 30, 2019

 

 

600,000

 

 

$600

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

185,547,675

 

 

 

185,548

 

 

$17,083,482

 

 

 

(18,914,524 )

 

 

(1,644,895)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital stock issued for cash

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

44,600,000

 

 

 

44,600

 

 

 

930,400

 

 

 

-

 

 

 

975,000