UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30,
2020
OR
☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission file number
333-148546
|
DLT RESOLUTION, INC
|
|
(Exact name of
registrant as specified in its charter)
|
|
Nevada
|
|
20-8248213
|
|
(State of
Incorporation)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
5940 S. Rainbow
Blvd., Ste 400-32132, Las Vegas, NV
|
|
89118
|
|
(Address of principal
executive offices)
|
|
(Zip Code)
|
(702)
796-6363
(Registrant’s telephone
number, including area code)
Indicate by check mark if the registrant is a well‑known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes
☐ No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes
☐ No ☒
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 ☐ No ☒
Indicate by check mark whether the registrant has submitted
electronically, every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). Yes
☐ No ☒
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, 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
|
☐
|
Non‑accelerated filer
|
☐
|
|
Accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
|
(Do not check if a
smaller reporting company)
|
|
Emerging growth
company
|
☒
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b‑2 of the Exchange Act). Yes
☐ No ☒
As of August 10, 2020, 25,926,287 shares of the registrant’s
Common Stock, $0.001 par value, were issued and 22,667,537 were
outstanding.
TABLE OF CONTENTS
FORM
10-Q
QUARTER ENDED
JUNE 30, 2020
Item 1: Financial
Statements
|
DLT RESOLUTION,
INC
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
June
30,
2020
|
|
|
December
31,
2019
|
|
|
ASSETS
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
37,864 |
|
|
$ |
13,140 |
|
|
Accounts receivable, net of
allowance for doubtful accounts of $44,730 at June 30, 2020 and $0
at December 31, 2019
|
|
|
305,047 |
|
|
|
34,631 |
|
|
Total current assets
|
|
|
342,911 |
|
|
|
47,771 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net of accumulated depreciation
|
|
|
81,660 |
|
|
|
- |
|
|
Operating lease – right of
use asset
|
|
|
10,456 |
|
|
|
- |
|
|
Intangible assets, net of
accumulated amortization
|
|
|
4,126,427 |
|
|
|
376,460 |
|
|
Goodwill
|
|
|
- |
|
|
|
165,022 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
4,561,454 |
|
|
$ |
589,253 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
$ |
- |
|
|
$ |
16,782 |
|
|
Accounts payable and
accrued liabilities
|
|
|
537,514 |
|
|
|
99,201 |
|
|
Related party
payables
|
|
|
35,866 |
|
|
|
35,880 |
|
|
Interest payable, related
party
|
|
|
37,878 |
|
|
|
34,190 |
|
|
Note payable, related
party
|
|
|
81,500 |
|
|
|
81,500 |
|
|
Notes payable, current
portion
|
|
|
5,000 |
|
|
|
- |
|
|
Lease obligation –
operating lease
|
|
|
6,102 |
|
|
|
- |
|
|
Total current
liabilities
|
|
|
703,680 |
|
|
|
267,553 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, net of
current portion
|
|
|
88,146 |
|
|
|
5,000 |
|
|
Other long term
liability
|
|
|
2,400,000 |
|
|
|
685,000 |
|
|
Lease obligation –
operating lease, net of current portion
|
|
|
3,814 |
|
|
|
- |
|
|
Total liabilities
|
|
|
3,195,820 |
|
|
|
957,553 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
(deficit)
|
|
|
|
|
|
|
|
|
|
Series A convertible
preferred stock, $1.00 par value; 5,000,000 shares authorized; 0
and 25,000 issued and outstanding at June 30, 2020 and December 31,
2019
|
|
|
- |
|
|
|
- |
|
|
Series B convertible
preferred stock, $1.00 par value; 500,000 shares authorized; 64,000
and 64,000 issued and outstanding at June 30, 2020 and December 31,
2019
|
|
|
64,000 |
|
|
|
64,000 |
|
|
Common stock, $0.001 par
value; 275,000,000 shares authorized; 25,926,287 and 24,395,037
issued; 22,698,787 and 21,167,537 outstanding at June 30, 2020 and
December 31, 2019
|
|
|
25,926 |
|
|
|
24,395 |
|
|
Common stock subscribed
|
|
|
14,000
|
|
|
|
-
|
|
|
Additional paid-in
capital
|
|
|
6,641,734 |
|
|
|
4,218,265 |
|
|
Other comprehensive
income
|
|
|
(333,758 |
) |
|
|
(34,430 |
) |
|
Treasury stock, 3,815,000
shares as of June 30, 2020 and December 31, 2019, at cost
|
|
|
(5,300 |
) |
|
|
(5,300 |
) |
|
Accumulated deficit
|
|
|
(5,040,968 |
) |
|
|
(4,653,230 |
) |
|
Total stockholders’ equity
(deficit)
|
|
|
1,365,634 |
|
|
|
(368,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’
equity (deficit)
|
|
$ |
4,561,454 |
|
|
$ |
589,253 |
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
to condensed consolidated financial statements.
|
|
DLT RESOLUTION,
INC.
|
|
|
Condensed Consolidated
Statements of Operations
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June 30,
|
|
|
Six
months ended June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
Revenue
|
|
$ |
549,453 |
|
|
$ |
113,358 |
|
|
$ |
977,800 |
|
|
$ |
235,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
and operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
263,828 |
|
|
|
38,738 |
|
|
|
502,514 |
|
|
|
72,412 |
|
|
General
and administrative
|
|
|
172,643 |
|
|
|
86,213 |
|
|
|
368,888 |
|
|
|
120,010 |
|
|
Depreciation and amortization
|
|
|
151,765 |
|
|
|
86,213 |
|
|
|
267,033 |
|
|
|
51,212 |
|
|
Professional fees
|
|
|
31,850 |
|
|
|
31,850 |
|
|
|
64,421 |
|
|
|
64,421 |
|
|
Goodwill
impairment loss
|
|
|
(4,768 |
) |
|
|
- |
|
|
|
154,419 |
|
|
|
- |
|
|
Total operating
expenses
|
|
|
614,804 |
|
|
|
350,976 |
|
|
|
1,364,629 |
|
|
|
359,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(65,351 |
) |
|
|
(43,443 |
) |
|
|
(386,829 |
) |
|
|
(72,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) on stock based liability
|
|
|
- |
|
|
|
31,133 |
|
|
|
- |
|
|
|
(495,438 |
) |
|
Foreign
exchange gain/(loss)
|
|
|
(3 |
) |
|
|
(17 |
) |
|
|
(3 |
) |
|
|
5,349 |
|
|
Loss on
investment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(331,787 |
) |
|
Interest expense
|
|
|
(11,482 |
) |
|
|
(1,823 |
) |
|
|
(18,906 |
) |
|
|
(3,627 |
) |
|
Total other
income (expense)
|
|
|
(11,485 |
) |
|
|
29,293 |
|
|
|
(18,909 |
) |
|
|
(825,503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ |
(76,836 |
) |
|
$ |
(14,150 |
) |
|
$ |
(405,738 |
) |
|
$ |
(898,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
common share – net loss
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.04 |
) |
|
Diluted loss
per common share – net loss
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.04 |
) |
|
Weighted
average basic shares outstanding
|
|
|
25,926,287 |
|
|
|
19,263,408 |
|
|
|
25,676,802 |
|
|
|
20,594,092 |
|
|
Weighted
average diluted shares outstanding
|
|
|
25,926,287 |
|
|
|
19,263,408 |
|
|
|
25,676,802 |
|
|
|
20,594,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
to condensed consolidated financial statements.
|
|
DLT RESOLUTION,
INC.
|
|
Consolidated Statements of
Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
Net loss
|
|
$ |
(76,836 |
) |
|
$ |
(14,150 |
) |
|
$ |
(405,738 |
) |
|
$ |
(898,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
adjusted value of other long-term liability
|
|
|
(230,000 |
) |
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
Foreign
currency translation adjustment
|
|
|
(84,001 |
) |
|
|
(15,189 |
) |
|
|
(299,352 |
) |
|
|
(15,187 |
) |
|
Total other
comprehensive loss
|
|
|
(314,001 |
) |
|
|
(15,189 |
) |
|
|
(299,328 |
) |
|
|
(15,187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$ |
(390,837 |
) |
|
$ |
(29,339 |
) |
|
$ |
(705,066 |
) |
|
$ |
(882,604 |
) |
|
See accompanying notes
to condensed consolidated financial statements.
|
DLT RESOLUTION,
INC
Condensed
Consolidated Statements of Changes in Stockholders’
Deficit
|
Six
Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Preferred Stock
|
|
|
Common Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Treasury
|
|
|
Other
Comprehensive
|
|
|
Accumulated
|
|
|
Non-Controlling
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Subscribed
|
|
|
Capital
|
|
|
Stock
|
|
|
income
|
|
|
Deficit
|
|
|
Interest
|
|
|
Total
|
|
|
Balance, December 31, 2019
|
|
|
64,000 |
|
|
$ |
64,000 |
|
|
|
24,395,037 |
|
|
$ |
24,395 |
|
|
$ |
- |
|
|
$ |
4,218,265 |
|
|
$ |
(5,300 |
) |
|
$ |
(34,430 |
) |
|
$ |
(4,635,230 |
) |
|
|
- |
|
|
|
(368,300 |
) |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
Issuance of
common stock for cash proceeds
|
|
|
- |
|
|
|
- |
|
|
|
31,250 |
|
|
|
31 |
|
|
|
- |
|
|
|
24,969 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Issuance of
common stock for acquisitions
|
|
|
- |
|
|
|
- |
|
|
|
1,500,000 |
|
|
|
1,500 |
|
|
|
- |
|
|
|
2,398,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
subscription
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(299,352 |
) |
|
|
- |
|
|
|
- |
|
|
|
(299,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
adjusted value of other long-term liability
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(405,738 |
) |
|
|
- |
|
|
|
(405,738 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
|
|
64,000 |
|
|
$ |
64,000 |
|
|
|
25,926,287 |
|
|
$ |
25,926 |
|
|
$ |
14,000 |
|
|
$ |
6,641,734 |
|
|
$ |
(5,300 |
) |
|
$ |
(333,758 |
) |
|
$ |
(5,040,968 |
) |
|
|
- |
|
|
$ |
1,365,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2018
|
|
|
64,000 |
|
|
$ |
64,000 |
|
|
|
24,982,537 |
|
|
$ |
24,983 |
|
|
$
|
- |
|
|
$ |
4,192,678 |
|
|
$ |
(37,688 |
) |
|
$ |
(5,300 |
) |
|
$ |
(3,595,912 |
) |
|
$ |
94,087 |
|
|
$ |
736,848 |
|
|
Foreign currency translation
adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,587 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,587 |
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(898,191 |
) |
|
|
(94,087 |
) |
|
|
(992,278 |
) |
|
Balance, June 30, 2019
|
|
|
64,000 |
|
|
$ |
64,000 |
|
|
|
24,982,537 |
|
|
$ |
24,983 |
|
|
$ |
- |
|
|
$ |
4,192,678 |
|
|
$ |
(22,102 |
) |
|
$ |
(5,300 |
) |
|
$ |
(4,494,103 |
) |
|
$ |
- |
|
|
$ |
(239,843 |
) |
See accompanying notes
to condensed consolidated financial statements.
|
DLT RESOLUTION,
INC
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Six
Months
Ended
June
30,
2020
|
|
|
Six
Months
Ended
June
30,
2019
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(405,738 |
) |
|
$ |
(898,191 |
) |
|
Adjustments to reconcile
net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
Loss on investment
|
|
|
|
|
|
|
331,787 |
|
|
Loss on stock based
liability
|
|
|
- |
|
|
|
495,438 |
|
|
Loss related items
|
|
|
- |
|
|
|
(50,581 |
) |
|
Depreciation and
amortization expense
|
|
|
267,034 |
|
|
|
51,212 |
|
|
Goodwill impairment
loss
|
|
|
154,419 |
|
|
|
- |
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(113,666 |
) |
|
|
(33,436 |
) |
|
Lease obligation
|
|
|
(3,233 |
) |
|
|
- |
|
|
Interest payable, related
party
|
|
|
3,688 |
|
|
|
3,628 |
|
|
Accounts payable and
accrued liabilities
|
|
|
70,296 |
|
|
|
14,471 |
|
|
Accounts payable, related
party
|
|
|
- |
|
|
|
(25,000 |
) |
|
Net cash used in operating activities
|
|
|
(27,199 |
) |
|
|
(110,672 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(749 |
) |
|
|
- |
|
|
Net cash used in investing activities
|
|
|
(749 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
|
Proceeds from notes
payable
|
|
|
86,631 |
|
|
|
- |
|
|
Repayment of bank
overdrafts
|
|
|
(48,538 |
) |
|
|
- |
|
|
Proceeds from sale of
common stock
|
|
|
25,000 |
|
|
|
- |
|
|
Proceeds from sale of common
stock subscription
|
|
|
14,000
|
|
|
|
-
|
|
|
Proceeds from (repayments
to) related parties
|
|
|
(25,772 |
) |
|
|
136,407 |
|
|
Net cash provided by financing activities
|
|
|
51,321 |
|
|
|
136,407 |
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
23,373 |
|
|
|
25,735 |
|
|
Effect of exchange rate on
cash
|
|
|
1,351 |
|
|
|
4,744 |
|
|
Cash at beginning of
period
|
|
|
13,140 |
|
|
|
12,908 |
|
|
Cash at end of period
|
|
$ |
37,864 |
|
|
$ |
43,387 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information
|
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income
taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing
activities
|
|
|
|
|
|
|
|
|
|
Other long term liability
entered into for acquisition of Union Strategies, Inc.
|
|
$ |
1,370,000 |
|
|
$ |
- |
|
|
Common shares issued for
acquisition of Union Strategies, Inc.
|
|
$ |
2,400,000 |
|
|
$ |
- |
|
|
Net of Union Strategies,
Inc. assets acquired and liabilities assumed
|
|
$ |
4,000,000 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
to condensed consolidated financial statements.
|
DLT RESOLUTION,
INC.
Notes to Unaudited
Condensed Consolidated Financial Statements
June 30,
2020
Note 1 –
Organization and Significant Accounting Policies
DLT Resolution Inc.
(“DLT, the “Company”, “we” and “our”) operates in three high-tech
industry segments: Blockchain Applications; Telecommunications; and
Data Services which includes Image Capture, Data Collection, Data
Phone Center Services, and Payment Processing. The Company offers
secure data management, Information Technology (IT) and other
telecommunications services in Canada and the United States. The
Company operates a Health Information Exchange providing the
ability to request and retrieve medical information and records
while meeting all of today’s Security & Compliance demands for
HIPAA, PIPEDA and PHIPA. Through our acquisition of Union
Strategies, Inc. (“USI”), the Company operates a business focused
on designing, installing and maintaining telephony, data, video,
storage, and LAN/WAN networks. USI’s clients encompass K-12 and
higher education institutions, trades industry organizations, and
local government entities having memberships ranging from 100 to
10,000 people that utilize products and services that USI provides
by deploying a variety of technologies to keep client networks up
and running efficiently.
The Company had an
accumulated deficit of $4,653,230 and a working capital deficit of
$219,782 as of December 31, 2019. These matters raise substantial
doubt about the Company’s ability to continue as a going concern.
Continuation of the Company’s existence depends upon its ability to
obtain additional capital. Management’s plans in regards to this
matter include raising additional equity financing and borrowing
funds under a private credit facility and/or other credit sources.
These unaudited condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
The accompanying
unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“US GAAP”) and in
conformity with the instructions to Form 10-Q and Article 8 of
Regulation S-X and the related rules and regulations of the
Securities and Exchange Commission (“SEC”). Accordingly, certain
information and note disclosures normally included in financial
statements prepared in accordance with US GAAP have been condensed
or omitted pursuant to such rules and regulations. However, we
believe that the disclosures included in these condensed
consolidated financial statements are adequate to make the
information presented not misleading. The unaudited condensed
consolidated financial statements included in this document have
been prepared on the same basis as the annual consolidated
financial statements, and in our opinion reflect all adjustments,
which include normal recurring adjustments necessary for a fair
presentation in accordance with US GAAP and SEC regulations for
interim financial statements. The results for the three months
ended June 30, 2020 are not necessarily indicative of the results
that we will have for any subsequent period.
Interim Condensed
Consolidated Financial Statements
The accompanying
unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“US GAAP”) and in
conformity with the instructions to Form 10-Q and Article 8 of
Regulation S-X and the related rules and regulations of the
Securities and Exchange Commission (“SEC”). Accordingly, certain
information and note disclosures normally included in financial
statements prepared in accordance with US GAAP have been condensed
or omitted pursuant to such rules and regulations. However, we
believe that the disclosures included in these condensed
consolidated financial statements are adequate to make the
information presented not misleading. The unaudited condensed
consolidated financial statements included in this document have
been prepared on the same basis as the annual consolidated
financial statements, and in our opinion reflect all adjustments,
which include normal recurring adjustments necessary for a fair
presentation in accordance with US GAAP and SEC regulations for
interim financial statements. The results for the three and six
months ended June 30, 2020 are not necessarily indicative of the
results that we will have for any subsequent period. These
unaudited condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial
statements and the notes to those statements for the year ended
December 31, 2019 included in our Annual Report on Form 10-K as
filed with the SEC on April 30, 2020.
Use of
Estimates
The preparation of
financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Income taxes
Income taxes are
provided for using the liability method of accounting in accordance
with FASB ASC Topic 740 (formally SFAS No. 109 “Accounting for
Income Taxes”). A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax basis. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effect of changes in tax laws
and rates on the date of enactment.
At June 30, 2020, there
were no uncertain tax positions that require accrual.
Revenue
Recognition
The Company follows ASC
606 of the FASB Accounting Standards Codification for revenue
recognition. The Company recognizes revenue upon the transfer of
promised services to customers in amounts that reflect the
consideration to which the Company expects to be entitled the
transfer of services. The Company considers revenue earned when all
the following criteria are met: (i) the contract with the customer
has been identified, (ii) the performance obligations have been
identified, (iii) the transaction price has been determined, (iv)
the transaction price has been allocated to the performance
obligations, and (v) the performance obligations have been
satisfied. The Company primarily generates revenues through the
sale of products through its website and at industry
tradeshows.
Net Income (Loss)
Per Share
Net loss per share is
calculated in accordance with FASB ASC topic 260. Basic earnings
(loss) per share is computed by dividing net income, or loss, by
the weighted average number of shares of common stock outstanding
for the period. Diluted earnings (loss) per share is computed by
dividing net income, or loss, by the weighted average number of
shares of common stock outstanding for the period, assuming
conversion or exercise of all potentially dilutive securities
outstanding during each reporting period presented. Potentially
dilutive securities are not presented or used in the computation of
diluted loss per share on the statement of operations for periods
when the Company incurs net losses, as their effect would be
anti-dilutive.
As of June 30, 2020 and
2019, the Company had 64,000 shares of Series B Convertible
Preferred Stock issued and outstanding, which were convertible into
12,800 shares of the Company’s common stock. As of June 30, 2020,
the Company expects to issue an additional 1,500,000 restricted
common shares of stock from recent acquisitions. See Note 2.
Foreign Currency
Translation
The functional currency
of the Company’s subsidiaries in Canada is the Canadian Dollar. The
subsidiaries’ assets and liabilities have been translated to U.S.
dollars using exchange rates of 0.734538 and 0.771486 in effect at
the balance sheet dates of June 30, 2020 and December 31, 2019,
respectively. Unaudited condensed consolidated statements of
operations amounts have been translated using the annual weighted
average exchange rates of 0.721915 for the six months ended June
30, 2020 and 0.749703 for the three months ended June 30, 2019.
Resulting gains or losses from translating foreign currency
financial statements are recorded as other comprehensive income
(loss). Foreign currency transaction gains and losses resulting
from exchange rate fluctuations on transactions denominated in a
currency other than the local currency are included in other income
(expense). Foreign currency transaction gains recognized for the
three-month periods ended June 30, 2020 and 2019 were $0 and
$5,366, respectively.
Fair Value of
Financial Instruments
Fair value of certain
of the Company’s financial instruments including cash, prepaid
expenses, accounts payable, accrued expenses, notes payable, and
other accrued liabilities approximate cost because of their short
maturities. The Company measures and reports fair value in
accordance with ASC 820, “Fair Value Measurements and Disclosure”
defines fair value, establishes a framework for measuring fair
value in accordance with generally accepted accounting principles
and expands disclosures about fair value investments.
Fair value, as defined
in ASC 820, is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value of an
asset should reflect its highest and best use by market
participants, principal (or most advantageous) markets, and an
in-use or an in-exchange valuation premise. The fair value of a
liability should reflect the risk of non-performance, which
includes, among other things, the Company’s credit risk.
Valuation techniques
are generally classified into three categories: the market
approach; the income approach; and the cost approach. The selection
and application of one or more of the techniques may require
significant judgment and are primarily dependent upon the
characteristics of the asset or liability, and the quality and
availability of inputs. Valuation techniques used to measure fair
value under ASC 820 must maximize the use of observable inputs and
minimize the use of unobservable inputs. ASC 820 also provides fair
value hierarchy for inputs and resulting measurement as
follows:
Level 1: Quoted prices
(unadjusted) in active markets that are accessible at the
measurement date for identical assets or liabilities.
Level 2: Quoted prices
for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are
not active; inputs other than quoted prices that are observable for
the asset or liability; and inputs that are derived principally
from or corroborated by observable market data for substantially
the full term of the assets or liabilities; and
Level 3: Unobservable
inputs for the asset or liability that are supported by little or
no market activity, and that are significant to the fair
values.
Fair value measurements
are required to be disclosed by the Level within the fair value
hierarchy in which the fair value measurements in their entirety
fall. Fair value measurements using significant unobservable inputs
(in Level 3 measurements) are subject to expanded disclosure
requirements including a reconciliation of the beginning and ending
balances, separately presenting changes during the period
attributable to the following: (i) total gains or losses for the
period (realized and unrealized), segregating those gains or losses
included in earnings, and a description of where those gains or
losses included in earning are reported in the statement of
income.
Recently Adopted
Accounting Pronouncements
In June 2016, the FASB
issued ASU 2016-13, Financial Instruments – Credit Losses (Topic
326) — Measurement of Credit Losses on Financial Instruments (ASU
2016-13). ASU 2016-13 requires entities to establish an allowance
for credit losses for most financial assets. Prior US GAAP was
based on an incurred loss methodology for recognizing credit losses
on financial assets measured at amortized cost and available-for
sale debt securities. The update is effective for fiscal years
beginning after December 15, 2019, including interim periods within
those fiscal years. Early adoption is permitted for fiscal years
beginning after December 31, 2018. The amendments in this ASU did
not have a material impact on our condensed consolidated financial
statements.
In August 2018, the
FASB issued ASU 2018-13, Fair Value Measurement (ASC 820) —
Disclosure Framework-Changes to the Disclosure Requirements for
Fair Value Measurement. ASU 2018-13 removes certain disclosures,
modifies certain disclosures and adds additional disclosures. ASU
2018-13 is effective for annual periods, including interim periods
within those annual periods, beginning after December 15, 2019.
Early adoption is permitted. The amendments in this ASU did not
have a material impact on our condensed consolidated financial
statements.
Recent Accounting
Pronouncements
In December 2019, the
FASB issued ASU 2019-12, Income Taxes (ASC 740) — Simplifying the
Accounting for Income Taxes. ASU 2019-12 which modifies ASC 740 to
simplify the accounting for income taxes. The ASU removes certain
exceptions for recognizing deferred taxes for investments,
performing intraperiod allocation and calculating income taxes in
interim periods. The ASU also adds guidance to reduce complexity in
certain areas, including recognizing deferred taxes for tax
goodwill and allocating taxes to members of a consolidated group.
ASU 2019-12 is effective for annual periods, including interim
periods within those annual periods, beginning after December 15,
2020. We have not yet completed the full assessment of the impact
on our condensed consolidated financial statements or related
disclosures.
In March 2020, The FASB
issued ASU 2020-03, Codification Improvements to Financial
Instruments – Issue 4: Cross-Reference to Line of-Credit or
Revolving-Debt Arrangements Guidance in Subtopic 470-50.
Stakeholders the ASU requests that paragraphs 470-50-40-17 through
40-18, which describe the accounting for fees between debtor and
creditor and third-party costs directly related to exchanges or
modifications of debt instruments, reference paragraph 470-50-40-21
for line-of-credit or revolving-debt arrangements. We have not yet
completed the full assessment of the impact on our condensed
consolidated financial statements or related disclosures.
Note 2
– Acquisitions
Acquisition of
1922861 Ontario Inc.
On April 12, 2018, the
Company entered into and closed the transactions contemplated by
the definitive asset purchase agreement and plan of re-organization
by and among the Company, 1922861 Ontario Inc. a corporation
organized under the laws of Ontario (“1922861 Ontario
Inc.”), the stockholders of 1922861 Ontario Inc. and other
parties signatory thereto to acquire all the operating assets of
1922861 Ontario Inc. for 500,000 restricted common shares of DLT
Resolution valued at $212,520, and a payment of CAD $19,200 to
1922861 Ontario’s supplier. On September 21, 2018 the 1922861
Ontario Inc. acquisition reached the first milestone and received
another 500,000 restricted commons shares of DLT Resolution valued
at $205,295. The acquisition is considered a business combination
for accounting purposes under ASC 805, and resulted in the
integration of 1922861 Ontario Inc.’s operating assets and
processes into the Company’s Canadian subsidiary DLT Resolution
Corp.
In addition to the
consideration on closing, an additional 500,000 restricted shares
of Company Common Stock may potentially be issued upon the acquired
base generating CAD $500,000 in cumulated gross sales with a 10%
pre-tax profit. The Company has allotted 24 months to achieve this
milestone. There is full acceleration to allow for full vesting as
quickly as the cumulative sales milestones are reached.
The Company applied the
acquisition method to the business combination and valued each of
the assets acquired (cash, accounts receivable, equipment, customer
relationships, software, domain names and non-compete agreements)
and liabilities assumed (accounts payable and related party
payable) at fair value as of the acquisition date. The carrying
values of cash, accounts receivable, accounts payable and related
party payable were deemed to be fair value as of the acquisition
date. The Company determined the fair value of the equipment to be
historical net book value. The preliminary allocation of the
purchase price was based on estimates of the fair value of the
assets and liabilities assumed based on provisional amounts.
However, the allocation of excess purchase and the amounts
allocated to intangible assets are now as per valuation of assets
and liabilities performed by independent valuer. Under the purchase
agreement, the Company issued 1,000,000 shares of Common Stock
valued at $417,815 and committed to issue an additional 500,000
shares of Common Stock at certain milestones, which was determined
to have a fair value of $685,000 with mark to market pricing of DLT
stock price as of December 31, 2019 using its $1.37 closing price
on that date and $800,000 as of June 30, 2020 using its $1.60
closing price as of that date. The obligation to issue the 500,000
shares of Company Common Stock is shown as an “other long-term
liabilities” on the face of the balance sheet and was valued at
$800,000 and $685,000 as of June 30, 2020 and December 31, 2019,
respectively. The following table shows the estimated fair values
of the assets acquired and liabilities assumed at the date of
acquisition:
|
ASSETS ACQUIRED
|
|
|
|
|
Accounts receivable
|
|
$ |
18,663 |
|
|
Customer list
|
|
|
103,255 |
|
|
Developed technology
|
|
|
321,679 |
|
|
Domain and trade name
|
|
|
3,971 |
|
|
Non-compete
|
|
|
37,330 |
|
|
Goodwill
|
|
|
169,896 |
|
|
TOTAL ASSETS ACQUIRED
|
|
$ |
654,794 |
|
|
|
|
|
|
|
|
LIABILITIES ASSUMED
|
|
|
|
|
|
Accounts payable
|
|
|
22,197 |
|
|
HST payable
|
|
|
2,147 |
|
|
TOTAL LIABILITIES ASSUMED
|
|
|
24,344 |
|
|
|
|
|
|
|
|
NET ASSETS ACQUIRED
|
|
$ |
630,450 |
|
Acquisition of Union
Strategies Inc.
On January 30, 2020,
the Company entered into transactions contemplated by the
definitive share for share exchange agreement and plan of
re-organization (the “Purchase Agreement”) by and among the
Company, Union Strategies. Inc. (“USI”), the stockholders of USI
and other parties signatory thereto to acquire all the issued and
outstanding capital stock of USI for 1,500,000 shares of the
Company’s restricted Common Stock (the “Closing Shares”). The
acquisition resulted in USI becoming a wholly-owned subsidiary of
the Company.
In the event that USI’s
gross revenue for 2020 exceeds CAD $3,100,000 and it generates a
minimum $75,000 in EBITDA (the “Performance Targets”), the Company
agreed to issue an additional 1,000,000 shares of restricted
Company Common Stock (“the Contingent Shares”) as additional
purchase price consideration, which the Company estimates is
probable that the Performance Targets will be achieved. Based on
the $1.60 closing share price of the Company’s Common Stock on
January 30, 2020, the Closing Shares are valued at $2,400,000 and
the Contingent Shares are valued at $1,600,000, for a total
purchase price consideration of $4,000,000.
The Company applied the
acquisition method to the business combination and valued each of
the assets acquired and liabilities assumed at fair value as of the
acquisition date. The carrying values of accounts receivable,
property and equipment, right to use asset, accounts payable, HST
payable, accrued liabilities and lease obligation were deemed to be
fair value as of the acquisition date. The preliminary allocation
of the purchase price is based on estimates of the fair value of
the assets and liabilities assumed based on provisional amounts.
However, the estimates of the fair value of the assets acquired and
liabilities assumed are subject to revision based on the results of
their valuation performed by an independent valuer. The obligation
to issue the Contingent Shares is subject mark to market pricing of
DLT stock price and is included in “other long-term liabilities” on
the face of the balance sheet and valued at $1,600,000 based on the
$1.60 closing share price of DLT Common Stock on June 30, 2020.
The following table
shows the estimated fair values of USI’s assets acquired and
liabilities assumed at the January 30, 2020 date of
acquisition:
|
ASSETS ACQUIRED
|
|
|
|
|
Accounts receivable, net
|
|
$ |
163,138 |
|
|
Property and equipment,
net
|
|
|
91,506 |
|
|
Right to use asset,
net
|
|
|
14,001 |
|
|
Customer list
|
|
|
2,073,740 |
|
|
Developed technology
|
|
|
2,073,740 |
|
|
TOTAL ASSETS ACQUIRED
|
|
$ |
4,416,126 |
|
|
|
|
|
|
|
|
LIABILITIES ASSUMED
|
|
|
|
|
|
Accounts payable, HST
payable and accrued liabilities
|
|
|
402,582 |
|
|
Lease obligation
|
|
|
13,544 |
|
|
TOTAL LIABILITIES ASSUMED
|
|
|
416,126 |
|
|
|
|
|
|
|
|
NET ASSETS ACQUIRED
|
|
$ |
4,000,000 |
|
Pro
Forma
The following table
presents the unaudited pro forma results of the Company for the
years ended December 31, 2019 and 2018 as if the acquisitions of
USI and the combined 1922861 Ontario Inc. and DLT Resolution Corp.
occurred on January 1, 2018. The pro forma results include
estimates and assumptions which management believes are necessary.
However, pro forma results do not include an anticipated cost
savings or their effects of the planned integration of USI and
1922861 Ontario Inc. and are not necessarily indicative of the
result that would have occurred if the business combination had
been in effect on the dates indicated, or which may result in the
future. The unaudited pro forma revenue and net loss for USI was
approximately $2,730,000 and $175,000, respectively, for 2019. The
unaudited pro forma revenue and net income for USI was
approximately $2,700,000 and $88,000, respectively, for 2018. The
unaudited pro forma revenue and net loss for the combined 1922861
Ontario Inc. and DLT Resolution Corp. was approximately $953,000
and $374,000, respectively, for the year ended December 31, 2018.
The pro forma information includes adjustments for the amortization
of intangible assets.
|
|
|
Year ended
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
3,193,000 |
|
|
$ |
3,653,000 |
|
|
Net loss
|
|
|
(1,730,000 |
) |
|
|
(802,000 |
) |
USI and 1922861 Ontario
Inc. did not have any material, nonrecurring pro forma adjustments
directly attributable to the business combination included in the
reported pro forma revenue and net losses.
Note 3 –
Goodwill and Intangible Assets
Due to a sustained
decline in the market capitalization of our common stock during the
first quarter of 2020, we performed an interim goodwill impairment
test. Management considered that, along with other possible factors
affecting the assessment of the Company’s reporting unit for the
purposes of performing a goodwill impairment assessment, including
management assumptions about expected future revenue forecasts and
discount rates, changes in the overall economy, trends in the stock
price, estimated control premium, other operating conditions, and
the effect of changes in estimates and assumptions that could
materially affect the determination of fair value and goodwill. As
a result of the significant decline in the current market
capitalization despite any of the other positive factors
contemplated and relatively little change in our ongoing business
operations, the outcome of this goodwill impairment test resulted
in a charge for the impairment of goodwill of $159,187 recorded in
the unaudited condensed consolidated financial statements for the
three months ended June 30, 2020.
We amortize
identifiable intangible assets on a straight-line basis over their
estimated useful lives. As of June 30, 2020 and December 31, 2019,
identifiable intangibles were as follows:
|
|
|
June
30,
2020
|
|
|
December
31,
2019
|
|
|
|
|
|
|
|
|
|
|
Developed technology
|
|
$ |
2,310,755 |
|
|
$ |
312,452 |
|
|
Customer relationships
|
|
|
2,108,757 |
|
|
|
100,293 |
|
|
Website
|
|
|
119,000 |
|
|
|
119,000 |
|
|
Domain and trade name
|
|
|
3,673 |
|
|
|
3,857 |
|
|
Non-compete
|
|
|
34,523 |
|
|
|
36,260 |
|
|
Accumulated amortization
|
|
|
(450,281 |
) |
|
|
(195,402 |
) |
|
Total intangible assets,
net
|
|
$ |
4,126,427 |
|
|
$ |
376,460 |
|
Expected future
amortization expense related to identifiable intangibles based on
our carrying amount as of June 30, 2020 for the following five
years is as follows (in thousands):
|
For the Twelve Months ended June 30,
|
|
|
|
|
2021
|
|
$ |
581,581 |
|
|
2022
|
|
|
564,803 |
|
|
2023
|
|
|
564,803 |
|
|
2024
|
|
|
564,803 |
|
|
2025
|
|
|
564,803 |
|
|
Thereafter
|
|
|
1,300,235 |
|
|
|
|
$ |
4,126,427 |
|
Note 4 – Notes
Payable
On August 1, 2017, the
Company issued a non-interest bearing $5,000 note payable due on
July 1, 2019 to a third party in exchange for Company Common Stock
held by the third party. As of June 30, 2020, the note is
unpaid.
The Government of
Canada launched CEBA to assist businesses during the current
challenges by providing interest-free unsecured loans. During the
three months ended June 30, 2020, the Company’s three Canadian
subsidiaries each received CAD 40,000 CEBA loans. The loans bear
zero interest and may be repaid any time after October 1, 2020 and
if repaid on or before December 31, 2022, CEBA will forgive CAD
10,000 in loan principal. Should a CEBA loan be unpaid as of
December 31, 2022, the loan converts to a three-year term loan
having a 5% annual fixed rate of interest. As of June 30, 2020, the
Company has a total of $88,146 (CAD 120,000) in outstanding CEBA
loans.
Note 5 – Other
Long-term Liabilities
Other long-term
liabilities consist of the Company’s obligations to issue shares of
its Common Stock pursuant to recent acquisitions. See Note 2. As of
June 30, 2020, total other long-term liabilities $2,400,000
consisted of $800,000 for shares issuable for the Acquisition of
1922861 Ontario Inc. and $1,600,000 for the shares issuable for the
acquisition of USI. As of December 31, 2019, total other long-term
liabilities consisted of $685,000 for shares issuable for the
Acquisition of 1922861 Ontario Inc. The liabilities are subject to
mark to market accounting based on the market price of DLT shares
of Common Stock and will be extinguished once the shares are
issued.
Note 6 –
Stockholders’ Equity
Common Stock
On January 13, 2020,
the Company issued 31,250 shares of restricted Company Common Stock
to a third party individual in a stock subscription agreement for
$25,000 in cash.
The Company issued
1,500,000 shares of restricted Common Stock pursuant to the
Purchase Agreement to acquire USI. See Note 2.
Common stock
subscribed
The Company
sold a subscription to purchase 14,000 shares of its Common Stock
for $14,000 on April 24, 2020. To date, the shares have not been
issued to the purchaser.
Series A Convertible
Preferred Stock
The Company is
authorized to issue 5,000,000 shares of Series A Convertible
Preferred Stock. The Series A Convertible Preferred Stock can be
converted to common shares at the option of the holder at a rate of
$0.10 per share. There were no shares of series A convertible
preferred stock issued and outstanding as of June 30, 2020 and
December 31, 2019.
Series B Convertible
Preferred Stock
The Company is
authorized to issue 500,000 shares of Series B Convertible
Preferred Stock. The Series B Convertible Preferred Stock can be
converted to common shares at the option of the holder at a rate of
$0.20 per share. There were 64,000 shares of series B convertible
preferred stock issued and outstanding as of June 30, 2020 and
December 31, 2019.
Note 7 -
Related Party Transactions
No compensation was
incurred for the services of the Company’s directors or executives
during the periods ended June 30, 2020 and 2019.
As of June 30, 2020 and
December 31, 2019, the Company had outstanding amounts payable to a
related party payables of $20,866 and $20,880. The obligations are
unsecured, non-interest bearing, due on demand and payable in
Canadian dollars, with the change in the liability from December
31, 2019 to June 30, 2020 attributable to the change in the
exchange rate for U.S. and Canadian dollars.
During the six months
ended June 30, 2019, the Company also made payments for services
rendered by related parties totaling $25,000, resulting in balances
owed for such services of $15,000 as of June 30, 2020 and
December 31, 2019.
The Company has a note
payable to a related party as settlement for consulting services.
The note carries interest of 9% compounded annually and is due on
demand. As of June 30, 2020 and December 31, 2019, $81,500 of
principal and $37,878 and $34,190 of accrued interest was due,
respectively.
Note 8 –
Concentrations
During the three-month
and six-month periods ended June 30, 2020 and 2019, no single
customer accounted for more than 10% of our total revenue for the
respective periods. As of June 30, 2020, two customers had
outstanding accounts receivable balances that were 19% and 16%,
respectively, of our total accounts receivable at that time. As of
December 31, 2019, no single customer had an outstanding accounts
receivable balance that exceeded 10% of our total accounts
receivable at that time.
Note 9 –
Commitments and Contingencies
Litigation
On March 29, 2019, DLT
Resolution Corp. and DLT Resolution Inc. was served with a
Statement of Claimants 300-306 Town Centre Boulevard Limited
Partnership/Court File No. CV-19-00617228-000 (Toronto) for unpaid
rent and lost revenue related to the premises. In this action, the
Plaintiff has claimed damages against the Defendants DLT Resolution
Corp. and DLT Resolution Inc. in the amount of $567,385.13 for an
alleged breach of lease. The Plaintiff has claimed damages against
the Defendant DLT Resolution Inc. in the amount of $567,385.13 for
allegedly wrongfully inducing a breach of lease and tortious
interference with contractual relations. The Plaintiff has further
claimed damages against the Defendant DLT Resolution Inc. in the
amount of $567,385.13 for allegedly oppressive conduct under the
Ontario Business Corporations Act. The Plaintiff has further
claimed compensation for its legal costs and for pre-judgment
interest. The Company filed a statement of Defense citing, amongst
other things, that it has never entered into any agreement with the
landlord, nor guaranteed any such liability. The Defendants DLT
Resolution Corp. and DLT Resolution Inc. intend to contest the
claim vigorously. There is no intention to make a settlement offer
nor have instructions been received to make a settlement offer at
this juncture. Since the statement of defense was delivered on 16
May 2019, the Company had no further communication from counsel for
the Plaintiff nor have any steps been taken to move the litigation
forward. Although there can be no assurance of the Company’s
ability to dismiss the claim, management feels the claim is without
merit and is confident it will receive a ruling in its favor.
Leases
Commitment
Under Topic 842,
operating lease expense is generally recognized evenly over the
term of the lease. USI has an operating lease for its Edmonton,
Canada facility that started in March 2019 and terminates in
February 2022. There was no sublease rental income for the
three-month periods ended June 30, 2020 and 2019. USI paid
approximately $2,179 and $4,401 against the Lease obligation in the
three and six months ended June 30, 2020.
USI’s lease agreement
does not provide an implicit borrowing rate; therefore, an internal
incremental borrowing rate is determined based on information
available at lease commencement date for purposes of determining
the present value of lease payments.
ROU lease asset and
lease liability for the operating lease is recorded in the balance
sheet as follows:
|
|
|
As
of
|
|
|
|
|
June
30,
2020
|
|
|
Operating lease - right
of use asset
|
|
$ |
10,456 |
|
|
|
|
|
|
|
|
Lease obligations —
operating leases, current portion
|
|
$ |
6,102 |
|
|
Lease obligations —
operating leases, net of current portion
|
|
|
3,814 |
|
|
Total lease
liability
|
|
$ |
9,916 |
|
|
|
|
|
|
|
|
Weighted average
remaining lease term (in years)
|
|
|
1.7 |
|
|
Weighted average
discount rate
|
|
|
7.75 |
% |
Future lease payments
included in the measurement of lease liabilities on the unaudited
balance sheet as of June 30, 2020, for the following five fiscal
years and thereafter were as follows:
|
|
|
For the
year
ending
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
|
2020
|
|
$ |
3,526 |
|
|
2021
|
|
|
7,052 |
|
|
2022
|
|
|
1,175 |
|
|
Total future minimum
lease payments
|
|
|
11,753 |
|
|
Present value
adjustment
|
|
|
1,837 |
|
|
Total
|
|
$ |
9,916 |
|
Other
Commitments
As permitted under
Canadian Corporations Business Act, USI agrees to indemnify
officers and directors for certain events or occurrences while the
officer or director is, or was, serving at USI’s request in this
capacity. The term of the indemnification period is indefinite.
There is no limit on the amount of future payments USI could be
required to make under these indemnification agreements; however,
USI maintains insurance policy coverage that may enable USI to
recover a portion of any amounts paid. As a result of USI’s
insurance policy coverage, management believes the estimated fair
value of these indemnifications is minimal. Accordingly, USI did
not record any indemnification liabilities as of June 30, 2020 and
December 31, 2019.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operation. Shareholders’ Equity General
SPECIAL NOTE
ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly
Report on Form 10-Q contains forward-looking statements that have
been made pursuant to the provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on current expectations, estimates, and projections about DLT
Resolutions’ industry, management’s beliefs, and certain
assumptions made by management. Forward-looking statements include
our expectations regarding product, services, and maintenance
revenue, annual savings associated with the organizational changes
effected in prior years, and short- and long-term cash needs. In
some cases, words such as “anticipates,” “expects,” “intends,”
“plans,” “believes,” “estimates,” variations of these words, and
similar expressions are intended to identify forward-looking
statements. In addition, statements about the potential effects of
the COVID-19 pandemic on the Company’s businesses, results of
operations and financial condition may constitute forward-looking
statements. The statements are not guarantees of future performance
and are subject to certain risks, uncertainties, and assumptions
that are difficult to predict; therefore, actual results may differ
materially from those expressed or forecasted in any
forward-looking statements. Risks and uncertainties of our business
include those set forth in our Annual Report on Form 10-K for the
year ended December 31, 2019, as filed with the SEC on April 30,
2020, under “Item 1A. Risk Factors” as well as additional risks
described in this Form 10-Q. Unless required by law, we undertake
no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events, or
otherwise. However, readers should carefully review the risk
factors set forth in other reports or documents we file from time
to time with the Securities and Exchange Commission, particularly
the Quarterly Reports on Form 10-Q and any Current Reports on Form
8-K.
Overview
DLT Resolution Inc.
(“DLT, the “Company”, “we” and “our”) operates in three high-tech
industry segments: Blockchain Applications; Telecommunications; and
Data Services which includes Image Capture, Data Collection, Data
Phone Center Services, and Payment Processing. The Company offers
secure data management, Information Technology (IT) and other
telecommunications services in Canada and the United States. The
Company operates a Health Information Exchange providing the
ability to request and retrieve medical information and records
while meeting all of today’s Security & Compliance demands for
HIPAA, PIPEDA and PHIPA. Through our acquisition of Union
Strategies, Inc. (“USI”), the Company operates a business focused
on designing, installing and maintaining telephony, data, video,
storage, and LAN/WAN networks. USI’s clients encompass K-12 and
higher education institutions, trades industry organizations, and
local government entities having memberships ranging from 100 to
10,000 people that utilize products and services that USI provides
by deploying a variety of technologies to keep client networks up
and running efficiently.
Recent
Developments
On January 30, 2020,
the Company acquired all the issued and outstanding capital stock
of USI for 1,500,000 shares of the Company’s restricted Common
Stock with the potential issuance of an additional 1,000,000 shares
should USI achieve financial performance targets (See Note 2). The
acquisition, valued at $4,000,000 resulted in USI becoming a wholly
owned subsidiary of the Company. USI was organized on October 24,
2011 under the Ontario Business Corporations Act of 1990 and is
located in Woodbridge, Ontario, Canada. USI is focused on
designing, installing and maintaining telephony, data, video,
storage, and LAN/WAN networks. USI has clients encompassing K-12
and higher education institutions, trades industry organizations,
and local government entities having memberships ranging from 100
to 10,000 people that utilize products and services that USI
provides by deploying a variety of technologies to keep client
networks up and running efficiently.
Results of
Operations
Revenues
Revenues for the three
months ended June 30, 2020 and 2019 were $549,453 and $113,358,
respectively. The increase resulted primarily from the inclusion of
USI’s $464,552 revenue in the current quarter following its
acquisition on January 30, 2020.
Revenues for the six
months ended June 30, 2020 and 2019 were $977,800 and $235,367,
respectively. The increase resulted primarily from the inclusion of
USI’s $790,123 revenue from the acquisition on January 30, 2020 to
June 30, 2020.
Cost of
Revenue
Cost of revenue for the
three months ended June 30, 2020 and 2019 were $263,828 and
$38,738, respectively. The increase resulted primarily from the
inclusion of USI’s $224,396 cost of revenue in the current quarter
following its acquisition on January 30, 2020.
Cost of revenue for the
six months ended June 30, 2020 and 2019 were $502,514 and $72412,
respectively. The increase resulted primarily from the inclusion of
USI’s $424,172 in cost of revenue from the acquisition on January
30, 2020 to June 30, 2020.
General and
Administrative
General and
administrative expense, excluding professional fees, was $172,643
and $60,656 for the three months ended June 30, 2020 and 2019,
respectively. The increase resulted primarily from the inclusion of
USI’s $123,274 in general and administrative expense in the current
quarter following its acquisition on January 30, 2020.
General and
administrative expense, excluding professional fees, was $368,888
and $120,010 for the six months ended June 30, 2020 and 2019,
respectively. The increase resulted primarily from the inclusion of
USI’s $231,007 in general and administrative expense from the
acquisition on January 30, 2020 to June 30, 2020.
Professional
Fees
Professional fees were
$31,336 and $31,850 for the three months ended June 30, 2020 and
2019, respectively. Professional fees decreased despite the
inclusion of USI’s $7,172 in professional fees in the current
quarter following its acquisition on January 30, 2020.
Professional fees were
$71,775 and $64,421 for the three months ended June 30, 2020 and
2019, respectively. The increase resulted primarily from the
inclusion of USI’s $16,622 in professional fees from the
acquisition on January 30, 2020 to June 30, 2020.
Depreciation and
Amortization
Depreciation and
amortization expense was $151,765 and $25,557 for the three months
ended June 30, 2020 and 2019, respectively. The increase resulted
primarily from the inclusion of USI’s $127,209 in depreciation and
amortization expense in the current quarter following its
acquisition on January 30, 2020.that relates to USI’s intangible
assets and property, plant and equipment.
Depreciation and
amortization expense was $267,033 and $51,212 for the three months
ended June 30, 2020 and 2019, respectively. The increase resulted
primarily from the inclusion of USI’s $216,986 in depreciation and
amortization expense from the acquisition on January 30, 2020 to
June 30, 2020 that relates to USI’s intangible assets and property,
plant and equipment.
Goodwill
Impairment Loss
Due to a sustained
decline in the market capitalization of our common stock during the
first quarter of 2020, we performed an interim goodwill impairment
test. Management considered that, along with other possible factors
affecting the assessment of the Company’s reporting unit for the
purposes of performing a goodwill impairment assessment, including
management assumptions about expected future revenue forecasts and
discount rates, changes in the overall economy, trends in the stock
price, estimated control premium, other operating conditions, and
the effect of changes in estimates and assumptions that could
materially affect the determination of fair value and goodwill. As
a result of the significant decline in the current market
capitalization despite any of the other positive factors
contemplated and relatively little change in our ongoing business
operations, the outcome of this goodwill impairment test resulted
in a charge for the impairment of goodwill of $154,419 in the six
months ended June 30, 2020.
Other
Expense
The Company had net
other expense of $11,485 for the three months ended June 30, 2020
and other income of $29,293 for the three months ended June 30,
2019. The change is due to a $31,133 gain from revaluing a stock
based liability that existed in the quarter ended June 30, 2019,
but had been extinguished later in 2019.
The Company had net
other expense of $18,809 and $825,503 for the six months ended June
30, 2020 and 2019, respectively. The large change is due to the
2019 disposition of the investment in A.J.D. Data Services and the
2019 loss from a change in the stock based liability that existed
at that time.
Net
Loss
The Company had a net
loss of $76,836 and $14,150 for the three months ended June 30,
2020 and 2019. The increase in net loss in the current year
primarily resulted from the increase in amortization expense from
intangible assets purchased in the USI acquisition.
The Company had a net
loss of $405,738 and $898,191 for the six months ended June 30,
2020 and 2019. The decrease in net loss in the current year
primarily resulted from the decrease in other expense, which was
partially offset by the increase in amortization expense from
intangible assets purchased in the USI acquisition.
Liquidity and
Capital Resources
As of June 30, 2020, we
had total current assets of $342,911 and current liabilities of
$780,904 creating a working capital deficit of $437,993. As of
December 31, 2019, we had $13,140 of cash, total current assets of
$47,771 and current liabilities of $267,553 creating a working
capital deficit of $219,782.
Net cash used in
operating activities was $27,199 during the six months ended June
30, 2020 compared to $112,979 for the same period in 2019.
Net cash used in
investing activities was $749 during the six months ended June 30,
2020 compared to $0 for the same period in 2019.
During the six months
ended June 30, 2020, the Company generated $51,321 cash from
financing activities. During the six months ended June 30, 2019,
the Company generated $146,407 of cash from financing activities
that was the proceeds of advances from related parties, net of
repayments.
Going
Concern
We had an accumulated
deficit of $4,653,230 and a working capital deficit of $219,782 as
of December 31, 2019. These matters raise substantial doubt about
our ability to continue as a going concern. Continuation of our
existence depends upon our ability to obtain additional capital.
Our plans in regards to this matter include raising additional
equity financing and borrowing funds under a private credit
facility and/or other credit sources. Issuances of additional
shares will dilute the ownership of our existing shareholders.
There is no assurance that we will achieve any additional sales of
our equity securities or arrange for debt or other financing to
fund our planned operations.
Our unaudited condensed
consolidated financial statements are prepared in accordance with
generally accepted accounting principles applicable to a going
concern. This contemplates the realization of assets and the
liquidation of liabilities in the normal course of business.
Currently, we have limited cash, and an accumulated deficit of
$4,653,230. These factors raise substantial doubt about our ability
to continue as a going concern. We will be dependent upon the
raising of additional capital through placement of our common stock
in order to implement its business plan, or merge with an operating
company. There can be no assurance that we will be successful in
either situation in order to continue as a going concern. Our
officers and directors have demonstrated a willingness to advance
funds to us to be used to pay certain of our operating costs.
Off-Balance
Sheet Arrangements
We have no off-balance
sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is
material to stockholders.
Item 3. Quantitative and
Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and
Procedures.
Disclosure Controls
and Procedures
Management of DLT
Resolution Inc. is responsible for maintaining disclosure controls
and procedures that are designed to ensure that information
required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 (the “Exchange
Act”) is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission’s
rules and forms.
In addition, the
disclosure controls and procedures must ensure that such
information is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required financial and other required disclosures.
At the end of the
period covered by this report, an evaluation of the effectiveness
of our disclosure controls and procedures (as defined in Rules
13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934
(the “Exchange Act”)) was carried out under the supervision and
with the participation of our Principal Executive Officer,
Principal Financial and Accounting Officer. Based on his evaluation
of our disclosure controls and procedures, he concluded that during
the period covered by this report, such disclosure controls and
procedures were not effective to detect the inappropriate
application of US GAAP standards. This was due to deficiencies that
existed in the design or operation of our internal control over
financial reporting that adversely affected our disclosure controls
and that may be considered to be “material weaknesses.”
The Company will
continue to create and refine a structure in which critical
accounting policies and estimates are identified, and together with
other complex areas, are subject to multiple reviews by accounting
personnel. In addition, the Company will enhance and test our
year-end financial close process. Additionally, the Company’s
management will increase its review of our disclosure controls and
procedures. Finally, we plan to designate individuals responsible
for identifying reportable developments. We believe these actions
will remediate the material weakness by focusing additional
attention and resources in our internal accounting functions.
However, the material weakness will not be considered remediated
until the applicable remedial controls operate for a sufficient
period of time and management has concluded, through testing, that
these controls are operating effectively.
Changes in Internal
Control over Financial Reporting
Our management is
responsible for establishing and maintaining adequate internal
control over our financial reporting. Internal control over
financial reporting is a process designed to provide reasonable
assurance to our management and board of directors regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. generally
accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that (i) pertain
to the maintenance of records that in reasonable detail accurately
and fairly reflect our transactions; (ii) provide reasonable
assurance that transactions are recorded as necessary for
preparation of our financial statements; (iii) provide reasonable
assurance that receipts and expenditures of company assets are made
in accordance with management authorization; and (iv) provide
reasonable assurance that unauthorized acquisition, use or
disposition of company assets that could have a material effect on
our financial statements would be prevented or detected on a timely
basis.
Because of its inherent
limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because changes in
conditions may occur or the degree of compliance with the policies
or procedures may deteriorate.
Management assessed the
effectiveness of our internal control over financial reporting as
of December 31, 2017. In assessing the effectiveness of our
internal control over financial reporting as of December 31, 2018,
our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (2013
framework). Based on its assessment, management concluded that our
internal control over financial reporting as of December 31, 2018
was not effective in the specific areas described in the
“Disclosure Controls and Procedures” section above and as
specifically described in the paragraphs below.
As of December 31,
2019, the Principal Executive Officer/Principal Financial Officer
identified the following specific material weaknesses in the
Company’s internal controls over its financial reporting
processes:
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Policies and Procedures
for the Financial Close and Reporting Process — Currently there are
no policies or procedures that clearly define the roles in the
financial close and reporting process. The various roles and
responsibilities related to this process should be defined,
documented, updated and communicated. Failure to have such policies
and procedures in place amounts to a material weakness to the
Company’s internal controls over its financial reporting
processes.
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Representative with
Financial Expertise — For the year ending December 31, 2018, the
Company did not have a representative with the requisite knowledge
and expertise to review the financial statements and disclosures at
a sufficient level to monitor the financial statements and
disclosures of the Company. Failure to have a representative with
such knowledge and expertise amounts to a material weakness to the
Company’s internal controls over its financial reporting
processes.
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Adequacy of Accounting
Systems at Meeting Company Needs — The accounting system in place
at the time of the assessment lacks the ability to provide high
quality financial statements from within the system, and there were
no procedures in place or built into the system to ensure that all
relevant information is secure, identified, captured, processed,
and reported within the accounting system. Failure to have an
adequate accounting system with procedures to ensure the
information is secure and accurately recorded and reported amounts
to a material weakness to the Company’s internal controls over its
financial reporting processes.
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Segregation of Duties —
Management has identified a significant general lack of definition
and segregation of duties throughout the financial reporting
processes. Due to the pervasive nature of this issue, the lack of
adequate definition and segregation of duties amounts to a material
weakness to the Company’s internal controls over its financial
reporting processes.
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In light of the
foregoing, once we have the adequate funds, management plans to
develop the following additional procedures to help address these
material weaknesses:
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The Company will create
and refine a structure in which critical accounting policies and
estimates are identified, and together with other complex areas,
are subject to multiple reviews by accounting personnel. In
addition, we plan to enhance and test our month-end and year-end
financial close process. Additionally, our audit committee will
increase its review of our disclosure controls and procedures. We
also intend to develop and implement policies and procedures for
the financial close and reporting process, such as identifying the
roles, responsibilities, methodologies, and review/approval
process. We believe these actions will remediate the material
weaknesses by focusing additional attention and resources in our
internal accounting functions. However, the material weaknesses
will not be considered remediated until the applicable remedial
controls operate for a sufficient period of time and management has
concluded, through testing, that these controls are operating
effectively.
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There have been no
changes in our internal control over financial reporting that
occurred during the three months ended June 30, 2020 that have
materially affected, or are reasonable likely to materially affect,
our internal control over financial reporting.
PART II - OTHER
INFORMATION
Item 1. Legal
Proceedings.
On March 29, 2019, DLT
Resolution Corp. and DLT Resolution Inc. was served with a
Statement of Claimants 300-306 Town Centre Boulevard Limited
Partnership/Court File No. CV-19-00617228-000 (Toronto) for unpaid
rent and lost revenue related to the premises. In this action, the
Plaintiff has claimed damages against the Defendants DLT Resolution
Corp. and DLT Resolution Inc. in the amount of $567,385.13 for an
alleged breach of lease. The Plaintiff has claimed damages against
the Defendant DLT Resolution Inc. in the amount of $567,385.13 for
allegedly wrongfully inducing a breach of lease and tortious
interference with contractual relations. The Plaintiff has further
claimed damages against the Defendant DLT Resolution Inc. in the
amount of $567,385.13 for allegedly oppressive conduct under the
Ontario Business Corporations Act. The Plaintiff has further
claimed compensation for its legal costs and for pre-judgment
interest. The Company filed a statement of Defense citing, amongst
other things, that it has never entered into any agreement with the
landlord, nor guaranteed any such liability. The Defendants DLT
Resolution Corp. and DLT Resolution Inc. intend to contest the
claim vigorously. There is no intention to make a settlement offer
nor have instructions been received to make a settlement offer at
this juncture. Since the statement of defense was delivered on 16
May 2019, the Company had no further communication from counsel for
the Plaintiff nor have any steps been taken to move the litigation
forward. Although there can be no assurance of the Company’s
ability to dismiss the claim, management feels the claim is without
merit and is confident it will receive a ruling in its favor. There
are legal fees in the amount of $5,287.24 that is yet to be paid
with regards to this settlement which have been accrued and are in
the accounts payable as of December 31, 2019. The bill will be paid
within the month.
Item 1. Risk
Factors.
A pandemic,
epidemic, or outbreak of infectious disease such as the current
coronavirus (COVID-19) pandemic could have an adverse effect on our
business, operating results or financial
condition.
Our business could be
adversely impacted by the effects of a pandemic, epidemic, or
outbreak of an infectious disease, such as the recent and ongoing
COVID-19 outbreak in various parts of the world in which we
operate, which has now been declared a global pandemic by the World
Health Organization. This outbreak could adversely impact our
operations, the operations of our customers and the global economy.
Disruptions to our business could include restrictions on our
ability to travel and distribute our products, suspension or
government-mandated shutdown of operations by us or our customers,
or the delay of projects in impacted areas. Travel restrictions or
operational problems where we or our customers operate may cause a
reduction in the demand for our services. For example, the governor
of both Nevada (where our corporate headquarters is located) and
Canadian governmental bodies (where several of our executive
officers are based) have issued stay-at-home orders which urge
residents to work from home and mandate the closures of businesses
that are considered non-essential. Any of these events could
negatively impact our business, operating results or financial
condition.
The
COVID-19 Pandemic is having an adverse effect on our
business.
The ongoing COVID-19
pandemic crisis has already caused several instances where meetings
and other interactions relevant to our business progress have been
postponed or delayed. Our customers are wireless carriers who have,
in many instances, begun adopting policies that limit the
accessibility of their campuses to external personnel. In addition,
government-mandated stay-at-home orders have recently been issued
in many of the jurisdictions where we or our customers do business,
which will prevent us from conducting in-person meetings with
customers while those orders are in effect. Although most of these
government mandates are effective for limited periods of time, they
may be extended indefinitely depending on ongoing developments
related to COVID-19. At the time of this filing, this sporadic lack
of access has resulted in only slight delays that are not
quantitatively detrimental to operating results, but as the
situation and its response continue, this could change. If this
current situation continues or extends, because of either our
customers’ policies and practices or government-mandated
stay-at-home orders, restrictions on travel or gatherings of
people, our results will be negatively impacted.
Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds.
On January 13, 2020,
the Company issued 31,250 shares of restricted Company Common Stock
to a third party individual in a stock subscription agreement for
$25,000 in cash.
The Company issued
1,500,000 shares of restricted Company Common Stock to the former
shareholders of USI in exchange for all of USI’s issued and
outstanding common shares (see Note 2).
Item 3. Defaults Upon
Senior Securities.
None.
Item 4. Mine Safety
Disclosures.
None
Item 5. Other
Information.
None.
Item 6.
Exhibits.
The following exhibits
are attached hereto:
SIGNATURES
In accordance with the
requirements of the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
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DLT Resolution, Inc.
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By:
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/s/ John Wilkes
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/s/ John Wilkes
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John Wilkes
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John Wilkes
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President and Chief Executive Officer
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Chief Financial Officer, Secretary and
Treasurer
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(Principal Executive Officer)
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(Principal Financial Officer)
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August 10, 2020
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August 10, 2020
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