UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 – Q /A
Amendment No. 2
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ________________
Commission file number: 333-139669
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CYTTA CORP. | ||
(Exact name of Registrant as specified in its charter) | ||
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Nevada |
| 98-0505761 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
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Suite 101- 6490 West Desert Inn Road, Las Vegas Nevada 89146 | ||
(Address of principal executive offices) | ||
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(702) 307-1680 | ||
(Registrant’s telephone number, including area code) | ||
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(Former name, former address and former fiscal year, if changed since last report) | ||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Nox
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
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Large accelerated filero |
| Accelerated filero |
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Non-accelerated filero |
| Smaller reporting companyx |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Nox
As of August 1 5 th, 2011, there were 1,328,078,203 shares of the issuer’s common stock, par value $0.00001, outstanding.
2
EXPLANATORY NOTE
We are filing this Amendment No. 2 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report on Form 10-Q for the nine months ended June 30th, 2011 as originally filed with the Securities and Exchange Commission on August 19th, 2011 (the “Original Form 10-Q”) and refilled on Form 10-Q/A to include Interactive Data on September 28th, 2011: (i) Item 1 of Part I “Financial Information,” (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (iii) Item 4 of Part I, “Controls and Procedures,” and (iv) Item 6 of Part II, “Exhibits”, and we have also updated the signature page, the certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, 31.2, 32.1 and 32.2, and our financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibits 101. No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, our Original Form 10-Q. This report on Form 10-Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.
We have determined that our previously reported results for the nine months ended June 30th, 2011 required to be restated. The Company originally determined the carrying value of the MVNO License to be less than the fair value of the asset. As such, in accordance with ASC 350-30-35, the Company determined the asset was fully impaired and was written down to zero as of December 31, 2010. The Company subsequently concluded this determination was incorrect and in accordance with ASC 350-30-35 the Company has determined the asset impairment calculations resulted in a write down to $12,960 as of December 31, 2010.The condensed consolidated statement of operations for the nine months ended June 30th, 2011 included in this Form 10-Q/A have been restated to reflect the revised MVNO License asset impairment and write down to $12,960. This adjustment does not affect our condensed consolidated statement of cash flows, or operating cash flows, although certain adjustments have been made in our total retained earnings as described in Note 1 of the notes to our condensed consolidated financial statements included in this filing. We have made necessary conforming changes in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” resulting from the correction of this error.
3
PART I – FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's September 30, 2010 Form 10-K filed with the SEC on January 13, 2011. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
4
Cytta Corp.
Consolidated Balance Sheets
| June 30, 2011 |
| September 30, 2010 | ||||
| (Unaudited) |
| (Audited) | ||||
| Restated |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents | $ 214,593 |
| $ 19,927 | ||||
Inventory | $ 5,440 |
| - | ||||
Investment in joint venture | $ 25,000 |
| - | ||||
Prepaid fees and services | - |
| 51,935 | ||||
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Total Current Assets | 245,033 |
| 71,862 | ||||
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OTHER ASSETS |
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MVNO License | 12,960 |
| - | ||||
Property, Plant, and Equipment, net | 7,262 |
| - | ||||
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Total Other Assets | 20,222 |
| - | ||||
TOTAL ASSETS | $ 265,255 |
| $ 71,862 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities | $ 8,739 |
| $ 9,272 | ||||
Due to related parties | 191,531 |
| 53,026 | ||||
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TOTAL LIABILITIES | 200,270 |
| 62,298 | ||||
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STOCKHOLDERS' DEFICIT |
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Authorized: |
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100,000,000 preferred shares, $0.001 par value; 1,900,000,000 common shares, $0.00001 par value |
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Issued and outstanding shares: |
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1,328,078,203 and 1,078,078,203 common shares | 12,721 |
| 10,221 | ||||
Additional paid-in capital | 802,219 |
| 489,719 | ||||
Subscriptions payable | 568,000 |
| - | ||||
Common shares pending cancellation | 560 |
| 560 | ||||
Retained deficit | (1,328,515) |
| (490,936) | ||||
Noncontrolling interest in joint venture | 10,000 |
| - | ||||
Total Stockholders' Equity | 64,985 |
| 9,564 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 265,255 |
| 71,862 | ||||
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6
Cytta Corp.
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended |
| For the Nine Months Ended | ||||
| June 30, |
| June 30, | ||||
| 2011 |
| 2010 |
| 2011 |
| 2010 |
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| RESTATED |
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REVENUES | $ 2,000 |
| $ - | $ 2,000 |
| $ - | |
Cost of Goods Sold | 1,360 |
| - |
| 1,360 |
| - |
Gross Margin | 640 |
| - |
| 640 |
| - |
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OPERATING EXPENSES |
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Professional fees | 32,653 |
| 16,605 |
| 113,356 |
| 31,927 |
Management fees | 113,028 |
| 45,000 |
| 362,504 |
| 52,662 |
General and administrative | 26,670 |
| 8,747 |
| 49,500 |
| 10,420 |
Impairment of licensing agreement | - |
| - |
| 312,040 |
| - |
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Total Operating Expenses | 172,351 |
| 70,352 |
| 837,400 |
| 95,009 |
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NET LOSS FROM OPERATIONS | (171,711) |
| (70,352) |
| (836,760) |
| (95,009) |
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OTHER INCOME (EXPENSE) |
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Interest income | 84 |
| - |
| 217 |
| - |
Interest expense | (325) |
| (234) |
| (1036) |
| (381) |
Total Other Income (Expense) | (241) |
| (234) |
| (819) |
| (381) |
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NET LOSS BEFORE TAXES | (171,952) |
| (70,586) |
| (837,579) |
| (95,390) |
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Provision for income taxes | - |
| - |
| - |
| - |
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NET LOSS | $ (171,952) |
| $ (70,586) |
| $ (837,579) |
| $ (95,390) |
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PER SHARE DATA: |
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Basic and diluted income (loss) per common shares | 0.00 |
| 0.00 |
| 0.00 |
| 0.00 |
Weighted average number of common shares outstanding | 1,328,078,203 |
| 1,014,616,666 |
| 1,291,448,166 |
| 809,044,872 |
7
Cytta Corp.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended June 30, | ||
| 2011 |
| 2010 |
| RESTATED |
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OPERATING ACTIVITIES |
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Net income (loss) | $ (837,579) |
| $ (95,391) |
Adjustments to reconcile net income (loss) to net cash from operating activities: |
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Depreciation and amortization | - |
| - |
Impairment of licensing agreement | 312,040 |
| - |
Issuance of common stock for services and expenses | - |
| - |
Operating expenses paid on behalf of the Company by a related party | 198,500 |
| 16,660 |
Changes in Operating Assets and Liabilities: |
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Accounts payable and accrued liabilities | (534) |
| (283) |
Inventory | (5,440) |
| - |
Prepaid fees and services | 51,935 |
| 73,662 |
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Net cash from operating activities | (281,078) |
| (5352) |
INVESTING ACTIVITIES |
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Investment in joint venture | (25,000) |
| - |
Purchase of property and equipment | (7262) |
| - |
Net cash from investing activities | (32,262) |
| - |
FINANCING ACTIVITIES |
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Common stock issued for cash | - |
| - |
Proceeds from stock subscriptions payable | 568,000 |
| - |
Advances from related parties | 103,100 |
| 7,700 |
Repayment of advances from related parties | (163,094) |
| - |
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Net cash from financing activities | 508,006 |
| 7,700 |
NET CHANGE IN CASH | 194,666 |
| 2,348 |
CASH AT BEGINNING OF PERIOD | 19,927 |
| 136 |
CASH AT END OF PERIOD | $ 214,593 |
| $ 2,484 |
SUPPLEMENTAL CASH FLOW DISCLOSURES |
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Cash paid for interest | $ - |
| $ - |
Cash paid for income taxes | $ - |
| $ - |
NON-CASH INVESTING AND FINANCING ACTIVITIES |
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Common stock issued for fees and services | $ - |
| $ 180,000 |
Common stock issued for debt | - |
| 31,930 |
Common stock issued for licensing agreements | $ 325,000 |
| $ - |
8
9
CYTTA CORP.
Condensed Notes to Restated Consolidated Financial Statements
June 30, 2011 and September 30, 2010
NOTE 1 – RESTATED CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2011, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2010 audited financial statements. The results of operations for the period ended June 30, 2011 is not necessarily indicative of the operating results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
Below is a listing of the most recent accounting pronouncements issued since the September 31, 2009 audited financial statements of the Company were released and through May 25, 2012. The Company has evaluated these pronouncements and does not expect their adoption to have a material impact on the Company’s financial position, or statements.
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Accounting Standards Update 2010-17 Revenue Recognition- Milestone Method (Topic 605): Milestone Method of Revenue Recognition – a consensus of the FASB emerging issues task force. Effective for fiscal years on or after June 15, 2010.
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Accounting Standards Update 2010-12 Income Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts (SEC Update). Effective July 1, 2010.
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Accounting Standards Update 2010-11Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives. Effective July 1, 2010.
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Accounting Standards Update 2010-09 Subsequent Events (topic 855): Amendments to Certain Recognition and Disclosure Requirements. Effective July 1, 2010.
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Accounting Standards Update 2010-06 Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. Effective July 1, 2010.
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Accounting Standards Update 2010-05 Compensation-Stock Compensation (Topic718): Escrowed share arrangements and the Presumption of Compensation (SEC Update). Effective July 1, 2010.
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Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various Topics-Technical Corrections to SEC Paragraphs. Effective July 1, 2010.
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NOTE 4 – ACQUISITION OF LICENSING AGREEMENT
On November 10th, 2010, the Company entered into an MVNO Mobile Virtual Network Operator Agreement (herein "MVNO Agreement") with Vonify Inc of Toronto, Canada and Georgetown, Grand Cayman Island, BWI (herein "Vonify") and MVNO Mobile Virtual Network Operator Corp (herein "MVNO") of New Westminster, Canada for a license to provide all the "Services" of the Vonify Network to third parties, in the medical marketplace in the USA. The Vonify Network includes those integrated mobile switching facilities, servers, cell sites, telecom and internet connections, billing systems, validation systems, gateways, landline switches and other related facilities used to provide the Services. The Services to be marketed by Cytta are defined as wireless telecommunications services for the Global System for Mobile (GSM) communications. In exchange for the MVNO Agreement, Cytta issued 250,000,000 shares of the Company's common stock to Vonify on November 10, 2010. This transaction will result in Vonify becoming a greater than 10% shareholder of the Company. In connection with the transaction, a controlling shareholder of Vonify became a Director of the Company.
Subsequent to the transaction, the Company determined the carrying value of the licensing agreement to be less than the fair value of the asset. As such, in accordance with ASC 350-30-35 the Company has determined the value of the asset to be impaired as of December 31, 2010 and recognized $312,040 of impairment expense during the nine month period ended June 30, 2010.
NOTE 5 – JOINT VENTURE
On June 24, 2011, the Company entered into a joint venture agreement with Promia, Inc., (“Promia”) to utilize Promia’s proprietary information security technologies to create security enabled software and hardware solutions for the Company. Under the terms of the joint venture agreement, the Company has agreed to install and market the Promia security technology on all systems they deploy in the United States and abroad and Promia has agreed to create the hardware and software development necessary to integrate their technology with the Company’s mobile network applications.
To fulfill the objectives, the Company and Promia agreed to form a Joint Venture LLC named Cytta Connects, LLC (“JV”), wherein 60 percent of the JV is owned by the Company and 40 percent of the JV is owed by Promia. Under the terms of the agreement, initial funding for the JV was to be $250,000 to be provided by the Company. As of June 30, 2011 the Company has funded $25,000 as an Investment in Joint Venture and has been accounted for in accordance with ASC 810 (see Note 5).
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NOTE 6 – NONCONTROLLING INTEREST
On June 24, 2011, the Company entered into a joint venture Agreement with Promia, Inc., (“Promia”) to utilize Promia’s proprietary information security technologies to create security enabled software and hardware solutions for the Company. See Note 4 for description of Joint Venture.
Per the terms of the agreement, the JV is 60 percent is owned by the Company and 40 percent by Promia. According to ASC 810, the Company is required to consolidate the all the assets, liabilities and operations of the JV and record a noncontrolling interest for the portion of net assets controlled by Promia within stockholders’ equity. As of June 24th, 2011, the Company recorded a noncontrolling interest of $10,000 or 40% of the net assets of $25,000 as a noncontrolling interest to Promia. As of June 30, 2011, the JV did not have any operations or expenses.
NOTE 7 – RELATED PARTY NOTES PAYABLE
As of June 30, 2011 and September 30, 2010 the Company owed various related parties $191,531 and $53,026, respectively. The notes are unsecured, bear no interest and are due on demand.
NOTE 8 – STOCKHOLDERS’ EQUITY
Common Stock Issuances
During the period ended June 30, 2011, the Company’s Board of Directors resolved to issue 250,000,000 shares of common stock in a non-monetary transaction to acquire a licensing agreement at $0.0013 per share.
Common Stock Subscriptions
During the period ended June 30, 2011, the Company received $301,000 from related parties and $221,000 from related parties and $80,000 from unrelated third parties in exchange for 267,251,516 shares of common stock and no less than 2,100,000 convertible preferred shares to be issued at a future date. These amounts have been recorded as stock subscriptions in the Company’s financial statements. As of the date of this report, the Company has not satisfied its subscriptions obligation through the issuance of shares of stock.
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On March 31, 2011, the Company provided an offering to potential investors of a maximum of 10 units at $25,000 per unit or $0.001 per share. Each unit consist of 25,000,000 shares of common stock and 25,000,000 warrants to purchase the Company’s common stock at $0.01 per share. The warrants are exercisable at any time from their initial issue date until March 30, 2012.
During the period ended June 30, 2011, the Company sold 10.98 units and received $267,000 in cash which has been thus been recorded as a stock subscription payable until upon such time that the Company issues the shares of common stock.
Common Stock Subscriptions-continued
Each warrant is exercisable are exercisable at any time from their initial issue date until March 30, 2012 at an exercise price of $0.01 per shares. The warrants were valued using the Black-Scholes Option Pricing model using the following assumptions: 1 year or less term, $0.09-$0.19 stock price, $0.01 exercise price, 180-221% volatility, 0.22-0.80% risk free rate. The Company has allocated $51,865 of the total $267,000 proceeds to the value of the warrants.
NOTE 9 – WARRANTS
During the period ended June 30, 2011, the Company issued 269,500,000 warrants in conjunction with the stock offering noted in Note 5. The warrants are exercisable at $0.01 per share and expire on March 30, 2012.
Summary information regarding common stock warrants issued and outstanding as of June 30, 2011 is as follows:
| Warrants | Weighted Average Share Price |
Outstanding at September 30, 2010 | - | $ - |
Granted | 269,500,000 | 0.01 |
Exercised | - | - |
Expired | - | - |
Outstanding at June 30, 2011 | 269,500,000 | $ 0.01 |
Summary of warrants outstanding and exercisable as of June 30, 2011 is as follows:
Exercise Price | Outstanding Number of Shares | Remaining Life | Exercisable Number of Shares |
$ 0.01 | 269,500,000 | 0.67 | 269,500,000 |
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NOTE 10 – RESTATEMENT
The Company has restated its financial statements as of and for the nine months ended June 30, 2011. The financial statements have been restated to reflect the adjusted impairment of the MVNO License Agreement.
a.)
Balance Sheet
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| As of June 30, 2011 | |
| As Reported | Adjustment | Restated |
ASSETS |
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Cash and cash equivalents | $ 214,593 | $ - | $ 214,593 |
Inventory | $ 5,440 | - | $ 5,440 |
Investment in joint venture | $ 25,000 | - | $ 25,000 |
MVNO License | - | 12,960 | 12,960 |
Property and Equipment, net | 7,262 | - | 7,262 |
TOTAL ASSETS | 252,295 | 12,960 | 265,255 |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Accounts payable and accrued liabilities | 8,739 | - | 8,739 |
Due to related parties | 191,531 | - | 191,531 |
TOTAL LIABILITIES | 200,270 | - | 200,270 |
STOCKHOLDERS' EQUITY |
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Common stock | 12,721 | - | 12,721 |
Additional paid-in capital | 802,219 | - | 802,219 |
Subscriptions payable | 568,000 | - | 568,000 |
Common shares pending cancellation | 560 | - | 560 |
Deficit accumulated during the development stage | (1,341,475) | 12,960 | (1,328,515) |
Noncontrolling interest in joint venture | 10,000 | - | 10,000 |
TOTAL STOCKHOLDERS' EQUITY | 52,025 | 12,960 | 64,985 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 252,295 | 12,960 | 265,255 |
15
b.)
Statement of Operations
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| For the Nine Months Ended |
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| June 30, 2011 |
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| As Reported | Adjusted | Restated |
REVENUES | $ 2,000 | $ - | $ 2,000 |
Cost of Goods Sold | 1,360 | - | 1,360 |
Gross Margin | 640 | - | 640 |
OPERATING EXPENSES |
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Professional fees | 113,356 | - | 113,356 |
Management fees | 362,504 | - | 362,504 |
General and administrative | 49,500 | - | 49,500 |
Impairment of licensing agreement | 325,000 | (12,960) | 312,040 |
Total Operating Expenses | 850,360 | (12,960) | 837,400 |
NET LOSS FROM OPERATIONS | (850,360) | 12,960 | (837,400) |
OTHER INCOME (EXPENSE) |
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Interest income | 217 | - | 217 |
Interest expense | (1,036) | - | (1,036) |
Total Other Income (Expense) | (819) | - | (819) |
NET LOSS BEFORE TAXES | (850,539) | 12,960 | (837,579) |
Provision for income taxes | - | - | - |
NET LOSS | (850,539) | 12,960 | (837,579) |
NOTE 11 – SUBSEQUENT EVENTS
Effective as of August 18, 2011, the Company entered into an exclusive worldwide licensing agreement for Cytta to market all of Promia’s systems and units.
In accordance with ASC 855-10 the Company has evaluated all material subsequent events from the balance sheet date through the date of this report. There have been no other reportable subsequent events.
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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business – Risk Factors” section in our Annual Report on Form 10-K for the year ended September 30, 2010. You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Cytta,” “we,” “us,” or “our” are to Cytta Corp.
Results of Operations
We are a development stage corporation. We have generated $2,000 in revenues from our business operations since inception (May 30, 2006) and have incurred $1,328,515 in expenses through June 30, 2011.
The following table provides selected financial data about our company as of June 30, 2011 and September 30th, 2010, respectively.
Balance Sheet Data | June 30, 2011 | September 30, 2010 |
Cash and cash equivalents | $214,593 | $19,927 |
Total Assets | $265,255 | $71,862 |
Total Liabilities | $200,270 | $62,298 |
Shareholder Equity (Deficit) | $64,985 | $9,564 |
17
Net cash used by operating activities since inception (May 30, 2006) through June 30, 2011 was $ 281,078.
Plan of Operation
On June 18th, 2009, the Company entered into a Licensing Agreement with Lifespan, Inc. Through a series of transactions and business developments commencing in 2002 Lifespan had acquired the expertise and licenses to manufacture, distribute and market various technology based internet access and computing products and services, consisting of internet access devices, related software and hardware and a series of medical peripherals designed and adapted to provide remote non-diagnostic monitoring of home based and remote patients.
Under the terms of the Agreement with Cytta, Lifespan granted the Company the exclusive license to manufacture, sell, distribute, operate, sub-license and market these internet access devices, products and services in the United States. The Company has been utilizing the License to develop a model for the internet access devices which can incorporate the numerous technology advances which are currently available and is currently pursuing this avenue. In exchange for the license, Lifespan has received 120,000,000 shares of the Company’s common stock, plus a license fee equal to one half of one percent (.5%) of the net revenue derived from the sale and use of their products and services. This transaction is more fully described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 19, 2009.
On November 10th, 2010, the Company entered into an MVNO Mobile Virtual Network Operator Agreement (herein “MVNO Agreement”) with Vonify Inc of Toronto, Canada and Georgetown, Grand Cayman Island, BWI (herein “Vonify”) and MVNO Mobile Virtual Network Operator Corp (herein “MVNO”) of New Westminster, Canada for a license to provide all the “Services” of the Vonify Network to third parties, initially in the medical marketplace in the USA.
The Vonify Network includes those integrated mobile switching facilities, servers, cell sites, telecom and internet connections, billing systems, validation systems, gateways, landline switches and other related facilities used to provide the Services. The Services to be marketed by Cytta are defined as wireless telecommunications services for the Global System for Mobile (GSM) communications.
In exchange for the MVNO Agreement, Cytta issued 250,000,000 shares of the Company’s common stock to Vonify Inc. This transaction resulted in Vonify Inc. becoming a greater than 10% shareholder of the Company. Mr. William Becker, a Director of the Company, is a controlling shareholder of Vonify Inc. This transaction is more fully described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 29, 2010.
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Since the acquisition of the Lifespan technology, and the rights to utilize the Vonify cellular network through the MVNO Agreement, the Company developed a remote medical monitoring model designed to deliver seamless, near real-time, medical data transmission from home to Insurer. The Company’s system was designed to seamlessly collect the data generated by the home based medical monitoring devices (such as blood pressure, scale, blood glucose, pulse oxygen etc), utilizing Bluetooth connectivity. This medical data is seamlessly sent from the medical device to the Company’s Medical Smartphone, which is also located in the home. The Company’s Medical Smartphone, contains proprietary programming, consisting of a “Firmware Client”, which when installed on the Cytta Medical Smartphone, automatically receives the medical data and utilizes the Company’s wireless telecommunication services, to transmit the data through the cellular network to the Online Cytta Data repository. From the Online Cytta Data repository the data can be automatically transmitted to the electronic medical monitoring systems (EMR’s) of the major Medical Groups (such as Insurance Companies, Disease Management Companies, Health Delivery Organizations, Health Plans, Home Health Agencies, Managed Care Organizations, Medical Groups and IPAs) who have placed the systems in the homes of their clients requiring remote monitoring. These Medical Groups contract with Cytta and are responsible for placing the system in the homes of their clients who require monitoring.
The Company has now finalized the testing of the Vonify network in the US utilizing Vonify SIM cards installed on Nexus One and My Touch HTC android smartphones deployed in various parts of the US. After comprehensive testing, the Cytta network was found to be fully functional and compliant in regards to voice, data and SMS connectivity. The network is suitable in all aspects for utilization by Cytta for the movement of medical information gathered from Bluetooth enabled remote medical monitoring devices. The Cytta Medical smartphones are also fully functional voice, data and SMS cell phones.
The Company plans on incorporating medical monitoring devices to measure of Blood Pressure, Glucose Values, Weight, PT/INR, ECG Rhythms, Respiration, Temperature, Pulse, and Oxygen Saturation into the Cytta Ecosystem.
The Company and its development partners have now completed the development of the proprietary Firmware Client and have installed the technology on several Nexus One and HTC My Touch android smartphones. The testing of the combination Smartphone and Firmware Client, which has collectively been described as the Cytta Medical Smartphone, with the blood pressure, weight scale, pulse/oximetry and blood glucose devices has been completed and are all functioning seamlessly.
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The Company and its partners are now completing the development of the ‘Online Data Presentation Screens” to represent the data captured by the system for its potential clients. Upon completion of the Online Data Presentation Screens and acquisition and programming of a supply of suitable android smartphones, the Company will begin installing the complete Cytta Ecosystems in several test locations in the US, with potential Medical Group clients wishing to utilize and or participate in the Company’s “medical monitoring ecosystem’. Upon conclusion of testing, the Company will begin its deployment of its systems and commence operations as a Medical Health Service Provider (MHSP).
The Company’s integrated and completely autonomous system provides numerous advantages over current systems, as well as a pricing structure designed to generate a positive return on investment (ROI) for the Medical Groups utilizing the system. To this end the Company is currently demonstrating the system to numerous potential device manufacturing partners and Medical Group clients wishing to utilize and or participate in the Company’s “medical monitoring ecosystem”.
In an effort to respond to numerous data security concerns related to the transmission of information through a mobile communications network, on June 24thth, 2011, the Company entered into a Joint Venture and Value Added Reseller Agreement (herein the “Agreement”) with Promia, Inc of San Francisco, Ca (herein “Promia”) to utilize Promia’s software and hardware development services and technologies to create robust and security enabled software and hardware solutions for the Cytta Medical Ecosystem and the Cytta mobile network. This transaction is more fully described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2011
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Cytta currently has minimal operating costs and expenses at the present time due to our relatively new business activities. However we anticipate significantly increasing our activities as a result of the MVNO Agreement. We have entered into certain management and consulting contracts with our senior Officers and non affiliated consultants who will be providing business services to the Company in the health care arena. Additionally, we will be required to raise significant capital over the next twelve months, in connection with our operations resulting from our marketing Agreements. We do not currently engage in any product research and development however the Company’s Joint Venture Agreement and marketing Agreements may cause us to engage in research and development in the foreseeable future. We have no present plans to purchase or sell any plant or significant equipment although we will have to acquire some equipment related to the marketing Agreements. We also have no immediate plans to add employees, other than the current management and consultants, although we may do so in the future as a result of the operations related to the marketing Agreements.
Liquidity and Capital Resources
Our cash and cash equivalents balance as of June 30 , 2011 was $ 214,593 ..
We currently have limited marketing operations.
We do not have sufficient funds on hand to pursue our business objectives for the near future or to commence full scale operations without seeking additional funding. We currently do not have a specific plan of how we will obtain such funding.
Loans to the Company
We have been receiving loans from shareholders of the company to pay general operating costs. As of June 30 , 2011, we had $ 191,531in loans outstanding.
We have minimal operating costs and expenses at the present time due to our limited business activities. Currently our operating activities in the healthcare arena are conducted by our senior Officers and engaged consultants. We will, however, be required to raise additional capital over the next twelve months to meet our current administrative expenses and to develop our operations. This financing may take the form of additional sales of our equity or debt securities to, or loans from, stockholders, or from our officers and directors or other individuals. There is no assurance that additional financing will be available from these or other sources, or, if available, that it will be on terms favorable to us.
Going Concern
Our auditors have included an explanatory paragraph in their report on our financial statements relating to the uncertainty of our business as agoingconcern, due to our limited operating history, our lack of historical profitability, and our limited funds. We believe that we will be able to raise the required funds for operations and to achieve our business plan.
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Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have not formed any special purpose entities with the exception of the Cytta Connect LLC joint venture .. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4T.
CONTROLS AND PROCEDURES
Evaluation of Our Disclosure Controls
Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, Stephen Spalding, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30 , 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.
ITEM 1A.
RISK FACTORS
Not applicable.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
The following exhibits are included as part of this report:
Exhibit No. Description
31.1 / 31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial Officer
32.1 / 32.2 Rule 1350 Certification of Principal Executive and Financial Officer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CYTTA CORP.
Dated: May 28th , 2011
By:/s/ Gary Campbell
Gary Campbell
President , Principal Executive and Financial Officer
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