UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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
[ ] 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
CYTTA CORP.
(Exact name of Registrant as specified in its charter)
Nevada 98-0505761
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
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Suite 101- 6490 West Desert Inn Road, Las Vegas Nevada 89146
(Address of principal executive offices)
(702) 307-1680
(Registrant's telephone number, including area code)
(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. Yes [X] No [ ]
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 (ss.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). Yes [ ] No [X]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(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). Yes [ ] No [X]
As of August 15th, 2011, there were 1,328,078,203 shares of the issuer's common
stock, par value $0.00001, outstanding.
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.
2
Cytta Corp.
(A Development Stage Company)
Consolidated Balance Sheets
June 30, September 30,
2011 2010
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 214,593 $ 19,927
Inventory 5,440 --
Investment in joint venture 25,000 --
Prepaid fees and services -- 51,935
------------ ------------
Total Current Assets 245,033 71,862
------------ ------------
PROPERTY AND EQUIPMENT, net 7,262 --
------------ ------------
TOTAL ASSETS $ 252,295 $ 71,862
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 8,739 $ 9,272
Due to related parties 191,531 53,026
------------ ------------
TOTAL LIABILITIES 200,270 62,298
------------ ------------
STOCKHOLDERS' DEFICIT
Authorized:
100,000,000 preferred shares, $0.001 par value
1,900,000,000 common shares, $0.00001 par value
Issued and outstanding shares:
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
Deficit accumulated during the development stage (1,341,475) (490,936)
------------ ------------
Noncontrolling interest in joint venture 10,000 --
------------ ------------
Total Stockholders' Equity 52,025 9,564
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 252,295 $ 71,862
============ ============
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3
Cytta Corp.
(A Development Stage Company)
Consolidated Statements of Operations
Cumulative from
For the Three Months Ended For the Nine Months Ended Inception on
June 30, June 30, May 30, 2006 to
-------------------------------- -------------------------------- June 30,
2011 2010 2011 2010 2011
-------------- -------------- -------------- -------------- --------------
REVENUES $ 2,000 $ -- $ 2,000 $ -- $ 2,000
Cost of Goods Sold 1,360 -- 1,360 -- 1,360
-------------- -------------- -------------- -------------- --------------
Gross Margin 640 -- 640 -- 640
OPERATING EXPENSES
Professional fees 32,653 16,605 113,356 31,927 249,863
Management fees 113,028 45,000 362,504 52,662 501,389
General and administrative 26,670 8,747 49,500 10,420 148,463
Impairment of licensing agreement -- -- 325,000 -- 441,581
-------------- -------------- -------------- -------------- --------------
Total Operating Expenses 172,351 70,352 850,360 95,009 1,341,296
-------------- -------------- -------------- -------------- --------------
NET LOSS FROM OPERATIONS (171,711) (70,352) (849,720) (95,009) (1,340,656)
OTHER INCOME (EXPENSE)
Interest income 84 -- 217 -- 217
Interest expense (325) (234) (1,036) (381) (1,036)
-------------- -------------- -------------- -------------- --------------
Total Other Income (Expense) (241) (234) (819) (381) (819)
NET LOSS BEFORE TAXES (171,952) (70,586) (850,539) (95,390) (1,341,475)
-------------- -------------- -------------- -------------- --------------
Provision for income taxes -- -- -- -- --
-------------- -------------- -------------- -------------- --------------
NET LOSS $ (171,952) $ (70,586) $ (850,539) $ (95,390) $ (1,341,475)
============== ============== ============== ============== ==============
PER SHARE DATA:
Basic and diluted income (loss)
per common share $ (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
============== ============== ============== ==============
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4
Cytta Corp.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Cumulative from
For the Nine Months Ended Inception on
June 30, May 30, 2006 to
------------------------------- June 30,
2011 2010 2011
------------ ------------ ------------
OPERATING ACTIVITIES
Net income (loss) $ (850,539) $ (95,391) $ (1,341,475)
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization -- -- 3,419
Impairment of licensing agreement 325,000 -- 441,581
Issuance of common stock for services and expenses -- -- 187,570
Operating expenses paid on behalf of the Company
by a related party 198,500 16,660 253,892
Changes in Operating Assets and Liabilities:
Accounts payable and accrued laibilities (534) (283) 15,188
Inventory (5,440) -- (5,440)
Prepaid fees and services 51,935 73,662 --
------------ ------------ ------------
Net cash from operating activities (281,078) (5,352) (445,265)
------------ ------------ ------------
INVESTING ACTIVITIES
Investment in joint venture (25,000) -- (25,000)
Purchase of property and equipment (7,262) -- (7,262)
------------ ------------ ------------
Net cash from investing activities (32,262) -- (32,262)
------------ ------------ ------------
FINANCING ACTIVITIES
Common stock issued for cash -- -- 161,000
Proceeds from stock subscriptions payable 568,000 -- 568,000
Advances from related parties 103,100 7,700 126,214
Repayment of advances from related parties (163,094) -- (163,094)
------------ ------------ ------------
Net cash from financing activities 508,006 7,700 692,120
------------ ------------ ------------
NET CHANGE IN CASH 194,666 2,348 214,593
CASH AT BEGINNING OF PERIOD 19,927 136 --
------------ ------------ ------------
CASH AT END OF PERIOD $ 214,593 $ 2,484 $ 214,593
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest $ -- $ -- $ --
Cash paid for income taxes $ -- $ -- $ --
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for fees and services $ -- $ 180,000 $ 31,930
Common stock issued for debt -- 31,930 31,930
Common stock issued for licensing agreements $ 325,000 $ -- $ 445,000
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5
Cytta Corp.
(A Development Stage Company)
Condensed Notes to Consolidated Financial Statements
June 30, 2011 and September 30, 2010
NOTE 1 - 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.
NOTE 2 - 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 February 18, 2011. 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.
6
Cytta Corp.
(A Development Stage Company)
Condensed Notes to Consolidated Financial Statements
June 30, 2011 and September 30, 2010
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
* 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.
* 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.
* Accounting Standards Update 2010-11Derivatives and Hedging (Topic
815): Scope Exception Related to Embedded Credit Derivatives.
Effective July 1, 2010.
* Accounting Standards Update 2010-09 Subsequent Events (topic 855):
Amendments to Certain Recognition and Disclosure Requirements.
Effective July 1, 2010.
* Accounting Standards Update 2010-06 Fair Value Measurements and
Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements. Effective July 1, 2010.
* Accounting Standards Update 2010-05 Compensation-Stock Compensation
(Topic718): Escrowed share arrangements and the Presumption of
Compensation (SEC Update). Effective July 1, 2010.
* Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for
Various Topics-Technical Corrections to SEC Paragraphs. Effective July
1, 2010.
NOTE 3 - 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 fully impaired as of December 31, 2010 and recognized $325,000 of
impairment expense during the nine month period ended June 30, 2010.
NOTE 4 - 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.
7
Cytta Corp.
(A Development Stage Company)
Condensed Notes to Consolidated Financial Statements
June 30, 2011 and September 30, 2010
NOTE 4 - JOINT VENTURE (CONTINUED)
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).
NOTE 5 - 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 6 - 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 7 - 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.
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.
8
Cytta Corp.
(A Development Stage Company)
Condensed Notes to Consolidated Financial Statements
June 30, 2011 and September 30, 2010
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 6 - 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:
Weighted
Average
Warrants 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
=========== ======
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Summary of warrants outstanding and exercisable as of June 30, 2011 is as
follows:
Outstanding Exercisable
Exercise Number of Remaining Number of
Price Shares Life Shares
----- ------ ---- ------
$ 0.01 269,500,000 0.67 269,500,000
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NOTE 8 - SUBSEQUENT EVENTS
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
$1,341,296 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 $252,295 $ 71,862
Total Liabilities $200,270 $ 62,298
Shareholder Equity (Deficit) $ 52,025 $ 9,564
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Net cash used by operating activities since inception (May 30, 2006) through
June 30, 2011 was $445,265.
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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.
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
11
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.
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
24th, 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
12
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
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 are a development stage company and 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 $191,531 in 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 a going
concern, 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.
13
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 not 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.
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.
14
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: August 19, 2011
By: /s/ Stephen Spalding
----------------------------------------------
Stephen Spalding
CEO, Principal Executive and Financial Officer
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15
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