Attached files
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Fiscal Year Ended: September 30, 2010
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 333-139699
CYTTA CORP.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0505761
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
905 Ventura Way, Mill Valley, CA 94941
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (702) 307-1680
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. Yes [X] 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 Exchange Act during the past 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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 the "large accelerated filer," "accelerated filer,"
"non-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)
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 January 12, 2011, there were 1,078,078,203 shares of the registrant's
common stock, par value $0.00001, issued and outstanding. Of these, 758,078,203
shares are held by non-affiliates of the registrant. The market value of
securities held by non-affiliates was $682,270 on January 12, 2011.
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable
TABLE OF CONTENTS
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION ................. 3
PART I
ITEM 1. BUSINESS .......................................................... 3
ITEM 1A. RISK FACTORS ...................................................... 5
ITEM 1B. UNRESOLVED STAFF COMMENTS ......................................... 5
ITEM 2. PROPERTIES ........................................................ 5
ITEM 3. LEGAL PROCEEDINGS ................................................. 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............... 5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ................. 6
ITEM 6. SELECTED FINANCIAL DATA ........................................... 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ......................................... 7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA ........................ 9
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE .......................................... 9
ITEM 9AT. CONTROLS AND PROCEDURES ........................................... 9
ITEM 9B. OTHER INFORMATION ................................................. 11
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE ........... 11
ITEM 11. EXECUTIVE COMPENSATION ............................................ 13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS ................................... 14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE ...................................................... 15
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES ............................ 15
PART IV ..................................................................... 16
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES ........................ 16
2
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
EXCEPT FOR HISTORICAL INFORMATION, THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS. 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 IN THE SECTIONS "BUSINESS" AND
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS." YOU SHOULD CAREFULLY REVIEW THE RISKS DESCRIBED IN THIS ANNUAL
REPORT AND IN OTHER DOCUMENTS WE FILE FROM TIME TO TIME WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"). 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-K TO THE "COMPANY," "CYTTA," "WE," "US" OR "OUR"
"REGISTRANT"ARE TO CYTTA CORP.
PART I
ITEM 1. BUSINESS
BUSINESS DEVELOPMENT
Cytta Corp. was incorporated in the State of Nevada on May 30, 2006, and our
fiscal year-end is September 30th. The company's administrative offices are
located at 905 Ventura Way, Mill Valley, CA 94991, and the telephone number is
(702) 307 1680.
Cytta Corp. has no revenues or operations, and has only limited cash on hand. We
have sustained losses since inception and rely solely upon the sale of
securities and loans from our corporate officers and directors for funding.
Cytta has never declared bankruptcy, been in receivership, or involved in any
kind of legal proceeding. Cytta, its directors, officers, affiliates and
promoters have not and do not intend to enter into negotiations or discussions
with representatives or owners of any other businesses or companies regarding
the possibility of an acquisition or merger.
BUSINESS OF ISSUER
Cytta was originally formed to be a web based service provider in which general
contractors in local areas can market their services and users of their services
can search for contractors in their area and post remarks regarding timeliness,
quality, and any other positive or negative feedback regarding their experience
or quality of craftsmanship with that particular contractor.
The Company decided in December 2008 to redirect our business focus and we
merged with Ophthalmic International, Inc. ("OI), a Nevada corporation. We
entered into an Agreement of Share Exchange and Plan of Reorganization and
consummated a share exchange (the "Share Exchange") with OI. The closing of the
transaction took place on December 9, 2008, and resulted in the acquisition of
OI. Pursuant to the terms of the Share Exchange Agreement, we acquired all of
the outstanding capital stock of OI from the five OI shareholders for an
aggregate of 56,000,000 shares, or 69.8% of the Company's common stock. As a
result of the Share Exchange Agreement, the OI shareholders transferred all
their interest in OI to the Company and, as a result, OI became our wholly owned
subsidiary. As a further condition of the Share Exchange Agreement, the current
officers and directors of the Company resigned and G. Richard Smith was
appointed the sole officer and director of the Company. On May 8, 2009, Cytta
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entered into an agreement (the "Agreement"), dated May 8, 2009, with OI, its
wholly-owned subsidiary, pursuant to which we reversed the transaction of
December 9, 2008, in which we acquired OI in exchange for 56,000,000 shares of
Registrant's restricted common stock being issued to the shareholders of OI. At
the closing of the Agreement, on May 13, 2009, the shareholders of the
56,000,000 shares of Registrant's common stock returned those shares to us in
exchange for us delivering to them their pro-rata shares of outstanding OI
common stock. At the close of the Agreement, G. Richard Smith, resigned from all
of his positions after appointing Mr. Robert Gosine as the sole Director and
Principal Executive Officer. Mr. Gosine had been a Director and Principal
Executive Officer of the Registrant prior to December 9, 2008. These
transactions are more fully described in our Current Reports on Form 8-K filed
with the Securities and Exchange Commission on December 12, 2008, May 12, 2009,
and May 20, 2009, respectively.
On June 9, 2009, Mr. Stephen Spalding was appointed the sole Director and
Principal Executive Officer when Mr Gosine resigned from all of his positions.
On June 9, 2009, the Company determined that it wished to enter the home based
remote medical monitoring sector. 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 (6,000,000 pre-split) 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 the 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, 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 is required to issue 250,000,000 shares of the Company's common
stock to Vonify. This transaction will result in Vonify becoming a greater than
10% shareholder of the Company. Mr. William Becker, a Director of the Company,
is a controlling shareholder of Vonify. 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 MVNO Agreement, the
Company has been developing and delineating a remote medical monitoring model
designed to deliver seamless, near real-time, medical data transmission, through
blue tooth connectivity, utilizing the Company's wireless telecommunication
services, to major medical payor/provider's back end electronic medical
monitoring systems (EMR's), with a pricing structure sufficient to generate a
positive return on investment (ROI) for the clients. To this end the Company is
currently in discussions with potential partners and/or clients wishing to
utilize and or participate in the `Company's `medical monitoring ecosystem'.
PATENTS, TRADEMARKS AND LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS
We presently utilize no patents, licenses, franchises, concessions, royalty
agreements or labor contracts in connection with our business with the exception
of the license from Lifespan Inc. and Vonify Inc. described above.
4
RESEARCH AND DEVELOPMENT
During the fiscal years ended September 30, 2010 and 2009, we made no
expenditures on research and development.
EMPLOYEES
As of January 12, 2011, the Company has no employees.
REPORTS TO SECURITY HOLDERS
The Company is not required to provide annual reports to security holders.
We are subject to the reporting requirements of the Securities and Exchange
Commission ("SEC") and we file reports including, but not limited to, Annual
Reports of Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, and Proxy Statements on Schedule 14.
The public may read and copy any materials we file with the SEC at the SEC's
Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. The public
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC and the address of that site is
www.sec.gov.
ITEM 1A. RISK FACTORS
Because we are a "smaller reporting company" as that term is defined by the SEC,
we are not required to present risk factors at this time.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Cytta's principal place of business and corporate offices are located at 905
Ventura Way, Mill Valley, CA 94941 and the telephone number is (702) 307-1680.
The office is the principle business of Stephen Spalding and the Company does
not pay any rent. The Company intends to find another office space to rent in
the near future.
Cytta does not currently have any investments or interests in any real estate,
nor do we have investments or an interest in any real estate mortgages or
securities of persons engaged in real estate activities
ITEM 3. LEGAL PROCEEDINGS
No legal or governmental proceedings are presently pending or, to our knowledge,
threatened, to which we are a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Since September 10, 2007, our Common Stock has been listed for quotation on the
Over-the-Counter Bulletin Board, originally under the symbol "CYTA". Our current
symbol changed to "CYCA" in connection with our most recent forward stock split.
The following table sets forth the high and low closing bid prices for our
Common Stock for the fiscal quarters indicated as reported on the OTCBB by the
NASDAQ Composite Feed or other qualified interdealer quotation medium. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
Quarter Ended High Bid Low Bid
------------- -------- -------
September 30, 2010 $0.0023 $0.0013
June 30, 2010 $0.0042 $0.0015
March 31, 2010 $0.0049 $0.0004
December 31, 2010 $0.0018 $0.0004
August 11 through September 30, 2009* $0.0012 $0.001
July 1 through August 11, 2009 $0.079 $0.02
June 30, 2009 $0.03 $0.02
March 31, 2009 $2.20 $2.20
December 4 through December 31, 2008** $3.05 $3.05
October 1 through December 4, 2008 $0.25 $0.25
September 30, 2008 $0.25 $0.25
June 30, 2008 $0.25 $0.25
March 31, 2008 $0.25 $0.25
December 31, 2007 $0.25 $0.25
----------
* After a 20 for 1 forward stock split.
** After a 4 for 1 forward stock split.
HOLDERS
Of the 1,078,078,203 shares of common stock outstanding as of January 12, 2011,
held by 112 shareholders of record, 200,000,000 shares are owned by our officers
and directors.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
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We have not declared any dividends, and we do not plan to declare any dividend
in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
During the fiscal year ended September 30th, 2010, the Company sold securities
that were not registered under the Securities Act of 1933 as follows:
During 2010, the Company issued 57,692,307 of its $0.00001 par value common
stock for cash at $0.0013 per share for a total of $75,000 in reliance upon the
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended. The Company did not engage in any general solicitation or
advertising. The Company issued the stock certificates and affixed the
appropriate legends to the restricted stock.
During 2010, the Company issued 358,985,896 shares of its $0.00001 par value
common stock for services and debt valued at $219,430 in reliance upon the
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended. The Company did not engage in any general solicitation or
advertising. The Company issued the stock certificates and affixed the
appropriate legends to the restricted stock.
None of the transactions involved any underwriters or underwriting discounts.
All of the purchasers were deemed to be sophisticated financially and with
regard to an investment in our securities.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any equity compensation plans and accordingly we have no
securities authorized for issuance under any such plans.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion highlights the principal factors that have affected our
financial condition and results of operations as well as our liquidity and
capital resources for the periods described. This discussion contains
forward-looking statements. Please see "Forward-Looking Statements" for a
discussion of the uncertainties, risks and assumptions associated with these
forward-looking statements.
The following discussion and analysis of the Company's financial condition and
results of operations are based on the preparation of our financial statements
in accordance with U.S. generally accepted accounting principles. You should
read the discussion and analysis together with such financial statements and the
related notes thereto.
RESULTS OF OPERATIONS
We are a development stage corporation. We have generated no revenues from our
business operations since inception (May 30, 2006) and have incurred $490,936 in
expenses through September 30, 2010.
The following table provides selected financial data about our company for the
fiscal year ended September 30, 2010 and 2009, respectively.
Balance Sheet Data September 30, 2010 September 30, 2009
------------------ ------------------ ------------------
Cash and cash equivalents $ 19,927 $ 136
Total assets $ 71,862 $ 136
Total liabilities $ 62,298 $ 27,440
Shareholders' equity (deficit) $ 9,564 $(27,304)
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Our cash in the bank at September 30, 2010 was $19,927. Net cash provided by
financing activities since inception (May 30, 2006) through September 30, 2010
was $184,114, being $161,000 raised from the sale of our common stock and
$23,114 from loans from related parties.
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 plans to utilize 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
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.
Since the acquisition of the Lifespan Technology, and the MVNO Agreement, the
Company has been developing and delineating a remote medical monitoring model
designed to deliver seamless, near real-time, medical data transmission, through
blue tooth connectivity, utilizing the Company's wireless telecommunication
services, to major medical payor/providers back end electronic medical
monitoring systems (EMR's) with a pricing structure sufficient to generate a
positive return on investment (ROI) for the clients. To this end the Company is
currently in discussions with potential partners and/or clients wishing to
utilize and or participate in the model or the `Company's `medical monitoring
ecosystem'.
We have minimal operating costs and expenses at the present time due to our
limited business activities. However we anticipate significantly increasing our
activities as a result of the license and MVNO acquisitions. Accordingly, we
will be required to raise significant capital over the next twelve months, in
connection with the roll out of our medical ecosystem model. We do not currently
engage in any product research and development however the Company's license and
MVNO 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 may have to acquire some equipment related to the license
and MVNO transaction. We also have no immediate plans to add employees although
we may do so in the future as a result of the License and MVNO acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents balance as of September 30, 2010 was $19,927.
We are a development stage company and currently have no operations.
We do not have sufficient funds on hand to pursue our business objectives for
the near future or to commence operations without seeking additional funding. We
currently do not have a specific plan of how we will obtain such funding.
8
LOANS TO THE COMPANY
We have been receiving loans from related parties of the company to pay general
operating costs. As of September 30, 2010, we owed such related parties a total
of $53,026. These loans do not incur interest and are due on demand.
We have minimal operating costs and expenses at the present time due to our
limited business activities. 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. 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.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Our audited financial statements are included beginning immediately following
the signature page to this report. See Item 15 for a list of the financial
statements included herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On March 11, 2010, the Board of Directors of the Registrant dismissed Seale and
Beers, CPAs (the "Former Accountant") as the Registrant's independent registered
public accountants, and the Board of Directors approved the engagement of
Sadler, Gibb and Associates (the "New Accountant") to serve as the Registrant's
independent registered public accountants for fiscal year 2010. The New
Accountant was engaged on March 12th, 2010.
The Former Accountant was engaged by the Registrant on August 11, 2009. The
report of the Former Accountant on the Company's financial statements for the
year ended September 30, 2009, and the quarter ended December 31, 2009, did not
contain an adverse opinion or a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles, except that
such reports on our financial statements contained an explanatory paragraph with
respect to uncertainty as to the Company's ability to continue as a going
concern.
During the period of the Former Accountant's engagement and through the date of
this Annual Report on Form 10-K, there have been no disagreements with the
Former Accountant (as defined in Item 304(a)(1)(iv) of Regulation S-K) on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of the Former Accountant, would have caused them to make reference
thereto in their report on financial statements for any period.
During the period of the Former Accountant's engagement for the year ended
September 30, 2009 there were no reportable events as defined in Item
304(a)(1)(iv) of Regulation S-K.
ITEM 9A(T). CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our senior management,
including our chief executive officer Stephen Spalding and chief financial
officer, Gary Campbell, we conducted an evaluation of the effectiveness of the
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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 September 30, 2010 (the "Evaluation Date").
Based on this evaluation, our chief executive officer and chief financial
officer concluded as of the Evaluation Date that our disclosure controls and
procedures were effective such that the information relating to us, including
our consolidated subsidiaries, 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.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Therefore, even
those systems determined to be effective can provide only reasonable assurance
of achieving their control objectives. In evaluating the effectiveness of our
internal control over financial reporting, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in INTERNAL CONTROL--INTEGRATED FRAMEWORK. Based on this evaluation, our
officers concluded that, during the period covered by this annual report, our
internal controls over financial reporting were not operating effectively.
Management did not identify any material weaknesses in our internal control over
financial reporting as of September 30, 2010; however, it has identified the
following deficiencies that, when aggregated, may possibly be viewed as a
material weakness in our internal control over financial reporting as of that
date:
1. We do not have an audit committee. While we are not currently
obligated to have an audit committee, including a member who is an
"audit committee financial expert," as defined in Item 407 of
Regulation S-K, under applicable regulations or listing standards;
however, it is management's view that such a committee is an important
internal control over financial reporting, the lack of which may
result in ineffective oversight in the establishment and monitoring of
internal controls and procedures.
2. We did not maintain proper segregation of duties for the preparation
of our financial statements. We currently only have one officer
overseeing all transactions. This has resulted in several deficiencies
including the lack of control over preparation of financial
statements, and proper application of accounting policies.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission (the "SEC") that permit us to provide only management's report in
this annual report
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the year ended September 30, 2010 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
OFFICERS' CERTIFICATIONS
Appearing as exhibits to this Annual Report are "Certifications" of our Chief
Executive Officer and Chief Financial Officer. The Certifications are required
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Section 302
Certifications"). This section of the Annual Report contains information
concerning the Controls Evaluation referred to in the Section 302 Certification.
This information should be read in conjunction with the Section 302
Certifications for a more complete understanding of the topics presented.
10
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The following table sets forth certain information, as of January 12, 2010 with
respect to our directors and executive officers.
Directors serve until the next annual meeting of the stockholders; until their
successors are elected or appointed and qualified, or until their prior
resignation or removal. Officers serve for such terms as determined by our board
of directors. Each officer holds office until such officer's successor is
elected or appointed and qualified or until such officer's earlier resignation
or removal. No family relationships exist between any of our present directors
and officers.
Date of Election or
Name Positions Held Age Appointment as Director
---- -------------- --- -----------------------
Stephen Spalding Chief Executive Officer, and Director 61 June 9, 2009
Gary Campbell President, Chief Financial Officer,
Treasurer, Secretary and Director 57 March 12, 2010
Karl Harz Vice President and Director 60 March 19, 2010
William Becker Director 81 November 15, 2010
Michael Scott Director 52 November 15, 2010
The following is a brief account of the business experience during the past five
years or more of our director and executive officer.
STEPHEN SPALDING
Mr. Spalding, 61, is formerly a consultant with Grant Thorton. Mr. Spalding is
also formerly CEO, Vigilant Privacy Corporation, a private Nevada corporation,
from 2003 to 2008 where he procured the firm's angel round of financing and lead
the organization while the company's product was transformed from a desktop
product to an enterprise security solution. Prior to that, he was a Partner,
Deloitte & Touche LLP, from 1997 - 2003, responsible for their IDI Practice
(Implementation, Development and Integration) Division. He was formerly a
partner at KPMG Peat Marwick LLP from 1995 - 1997, involved in Strategic
Services, Enabling Technology Practice. Mr. Spalding is currently Assistant
Professor, San Francisco State University, Business Systems Management and
Control, Course Number 507 (Senior/Graduate Level), present. He has an MBA, in
Quantitative Analysis, University of Arizona, 1974. He also has a B.S., Finance
and Management, Eastern Illinois University, 1973, a B.S., Physics (solid
state), Eastern Illinois University, 1969 and a B.S., Mathematics, Eastern
Illinois University, 1969.
GARY CAMPBELL
Mr. Campbell age 57, brings to the Company three decades of public company
experience wherein he has assisted in the formation, operation and financing of
several public companies and established ongoing contacts within the US and
International telecommunications, medical and financial community. Mr. Campbell
began his career as a broadcasting and telecommunications attorney in Canada,
where he oversaw a myriad of legal and regulatory affairs. Later Mr. Campbell
11
was the Vice President and a Director of Telemac Cellular Corporation a company
involved in the development of cellular accounting data systems and technology,
which lead to the development of the Tracfone an early stage MVNO. Mr. Campbell
then became the fou CEO of Cancall Cellular Communications Inc. a major provider
of cellular rental services utilizing advanced technology, which eventually
became the national cellular rental administrator for AT&T. Following this Mr.
Campbell became CEO of ScreenPhone Inc. a company partnered with Samsung in the
development of screen based software and applications for Samsung's Anyweb
internet appliance, and through ScreenMD, an affiliated Company, developed and
implemented a first generation comprehensive remote medical monitoring system
for the Anyweb device. Following this Mr. Campbell was CEO of Rocketinfo Inc. a
company that provided intelligent software tools that index, categorize and
extract key concepts and data from current news and business information as well
as a public search engine that offered the most robust capabilities in the
industry for scanning and retrieving topical news and business information. Mr.
Campbell has degrees in both Commerce and Law.
KARL HARZ
Mr. Harz, 60, has an extensive background in sales, administration and finance
including public company financing and administration, and conventional and
private real estate funding. Mr. Harz has been passionately involved with the
home healthcare industry and specifically the use of internet access devices to
transmit and store medical information through home based peripherals for many
years. Mr. Harz has previously been instrumental in the development and
management of several major corporations including Transitional Housing Inc., a
contract that was awarded through the Department of Justice: Province Service
Corporation, a servicing arm of the mortgage companies; and presently,
Alternative Funding Sources, Inc. Mr. Harz has managed and coordinated several
major sales organizations with an emphasis on Real Estate properties, Trust Deed
investments, Limited Partnership interests, and Public and Private Corporate
Security products. Mr. Harz has maintained a California Real Estate Broker's
License and has had a Series 22 and 63 licenses, a Life and Disability license
and Variable Annuity License. He attended Farleigh Dickinson University in
Teaneck, N.J., and graduated with a Bachelor of Science in Marketing and a
Masters in Business Administration.
WILLIAM W. BECKER
William W. Becker, 81, is the principal owner of Hartford Holding Ltd an
investment corporation which owns interests in real estate, oil and gas and
telecommunication entities. Mr. Becker's illustrious career has seen him found
and develop a number of extremely successful companies in telecommunications,
cable television, oil and gas, real estate development, and other industries.
Mr. Becker was an initial investor and founder of ICG (then known as IntelCom
Group Inc), a telecommunications carrier, which was originally listed in Canada.
Mr. Becker was the Chairman of the Board and CEO from 1987 to 1995. Mr. Becker
was instrumental in the creation and development of ICG which was ultimately
listed on the American Stock Exchange, (now NYSE AMEX Equities), where it became
a multibillion dollar company. Mr. Becker currently resides on Grand Cayman
Island, BWI.
MICHAEL SCOTT
Michael Scott, 52, is the current President and CEO of Vonify Inc. a private
Canadian company operating a full feature USA domestic mobile network
(voice/data/text) and providing our customers with domestic and international
services with an advanced international roaming solutions. Mr. Scott is an
electrical engineer and has worked in the telecommunications arena for over 28
years, since graduating with distinction from Concordia University of Montreal,
Canada. Mr. Scott has also previously held positions at senior management levels
with various telecommunications companies in the USA and Canada. Mr. Scott
currently resides in Toronto, Canada.
BOARD OF DIRECTORS
Our Board of Directors may designate from among its members an executive
committee and one or more other committees. No such committees have been
appointed to date, due in part to the fact that we presently determining our
business model. Accordingly, we do not have an audit committee or an audit
committee financial expert. We are presently not required to have an audit
12
committee financial expert and do not believe we otherwise need one at this time
due to our lack of material business operations. Similarly, we do not have a
nominating committee or a committee performing similar functions. Our Chief
Financial Officer and Director Gary Campbell, serves the functions of an audit
committee and a nominating committee. We have not implemented procedures by
which our security holders may recommend board nominees to us but expect to do
so in the future, when and if we engage in material business operations.
SHAREHOLDER COMMUNICATIONS
Currently, we do not have a policy with regard to the consideration of any
director candidates recommended by security holders. To date, no security
holders have made any such recommendations.
CODE OF ETHICS
We have adopted a corporate code of ethics. We believe our code of ethics is
reasonably designed to deter wrong doing and promote honest and ethical conduct;
provide full, fair, accurate, timely and understandable disclosure in public
reports; comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code. A copy of the
code of ethics is attached as Exhibit 14.1, to our 10-KSB filed on December 27,
2007 with the Securities and Exchange Commission. We will also provide to any
person, without charge and upon request, a copy of the code of ethics. Any such
request must be made in writing to us at, 905 Ventura Way, Mill Valley, CA
94941.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Our common stock is not registered pursuant to Section 12 of the Exchange Act.
Accordingly, our officers, directors and principal shareholders are not subject
to the beneficial ownership reporting requirements of Section 16(a) of the
Exchange Act
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the total compensation
paid or accrued by us during the last two fiscal years ended September 30, 2010
to (i) all individuals that served as our principal executive officer or acted
in a similar capacity for us at any time during the fiscal year ended September
30, 2010; (ii) all individuals that served as our principal financial officer or
acted in a similar capacity for us at any time during the fiscal year ended
September 30, 2010; and (iii) all individuals that served as executive officers
of ours at any time during the fiscal year ended September 30, 2010 that
received annual compensation during the fiscal year ended September 30, 2010 in
excess of $100,000.
EXECUTIVE OFFICER COMPENSATION TABLE
Non-Equity Non-Qualified
Incentive Deferred
Name and Stock Option Plan Compensation All Other
Principal Salary Bonus Awards Awards Compensation Earnings Compensation Total
Position Year (US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$)
-------- ---- ----- ----- ----- ----- ----- ----- ----- -----
Stephen 2010 0 0 60,000 0 0 0 0 60,000
Spalding (1), 2009 0 0 0 0 0 0 0 0
CEO 2008 0 0 0 0 0 0 0 0
Gary Campbell 2010 0 0 30,000 0 0 0 30,000 60,000
(4),President,
CFO, Treasurer,
Secretary
Karl Harz, 2010 0 0 30,000 0 0 0 30,000 60,000
Vice President
13
Robert 2009 10,000 0 0 0 0 0 0 10,000
Gosine(2), 2008 0 0 0 0 0 0 0 0
President, CEO
and CFO
Richard Smith 2009 0 0 0 0 0 0 0 0
(3), CEO and 2008 0 0 0 0 0 0 0 0
CFO
----------
(1) Mr. Spalding was appointed as our President and Chief Executive Officer
effective as of June 9, 2009.
(2) Mr. Gosine was our President and Chief Executive Officer from May 8, 2009
to June 9, 2009. He also previously served as our President and Chief
Executive officer from September 9, 2008 to December 9, 2008.
(3) Mr. Smith was our President and Chief Executive Officer from December 9,
2008 to May 8, 2009.
(4) Mr. Campbell was appointed President and Secretary effective March 12, 2010
and CFO and Treasurer November 15th, 2010
We have stock based consulting agreements with our officers. We do not
contemplate entering into any employment agreements until such time as we begin
profitable operations.
The compensation discussed herein addresses all compensation awarded to, earned
by, or paid to our named executive officers.
There are no other stock option plans, retirement, pension, or profit sharing
plans for the benefit of our officers and directors other than as described
herein.
COMPENSATION OF DIRECTORS
During the fiscal years ended September 30, 2010 and 2009, there were no
arrangements between us and our directors that resulted in our making any
payments to our directors for any services provided to us by them as directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial
ownership of our common stock known by us as of January 12, 2011 by
* each person or entity known by us to be the beneficial owner of more
than 5% of our common stock,
* each of our directors,
* each of our executive officers, and
* all of our directors and executive officers as a group.
The percentages in the table have been calculated on the basis of treating as
outstanding for a particular person, all shares of our common stock outstanding
on such date and all shares of our common stock issuable to such holder in the
event of exercise of outstanding options, warrants, rights or conversion
privileges owned by such person at said date which are exercisable within 60
days of such date. Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of our common stock
owned by them, except to the extent such power may be shared with a spouse.
14
Name and Address Amount and Nature of Percent of
of Beneficial Owner Title of Class Beneficial Ownership Class (1)
------------------- -------------- -------------------- ---------
Stephen Spalding Common Stock 100,000,000 9.27%
905 Ventura Way
Mill Valley, CA 94941
Gary Campbell Common Stock 50,000,000 (2) 4.63%
39-6th Street
New Westminster, BC V3L2Z1
Karl Harz Common Stock 50,000,000 4.63%
40318 Barington Dr.
Palm Desert, Ca 92211
All executive officers and Common Stock 200,000,000 18.55%
directors as a group (1)
Lifespan, Inc. Common Stock 120,000,000 11.13%
PO Box 30211
Las Vegas, NV 89173
Chad Grunewald Common Stock 57,692,307 5.35%
1839 Spruce Court,
White Bear Lake, MN 55110
----------
(1) Percentage based upon 1,078,078,203 shares of common stock outstanding as
of January 12, 2010.
(2) Held indirectly through a Company in which the Officer has a beneficial
interest.
CHANGES IN CONTROL
Not Applicable.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Not Applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
RELATED TRANSACTIONS
As of September 30, 2010, the Company was obligated to related parties, for
non-interest bearing demand loans with a balance of $13,726.
DIRECTOR INDEPENDENCE
We are not currently subject to listing requirements of any national securities
exchange or inter-dealer quotation system which has requirements that a majority
of the board of directors be "independent" and, as a result, we are not at this
time required to (and we do not) have our Board of Directors comprised of a
majority of "Independent Directors."
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed to us by our principal accountant for services
rendered during the fiscal years ended September 30, 2010 and 2009 are set forth
in the table below:
15
Fiscal year ended Fiscal year ended
Fee Category September 30, 2010 September 30, 2009
------------ ------------------ ------------------
Audit fees (1) $ 5,500 $12,500
Audit-related fees (2) $ 0 $ 0
Tax fees (3) $ 0 $ 0
All other fees (4) $ 0 $ 0
Total fees $ 5,500 $12,500
----------
(1) Audit fees consists of fees incurred for professional services rendered for
the audit of financial statements, for reviews of our interim financial
statements included in our quarterly reports on Form 10-Q and for services
that are normally provided in connection with statutory or regulatory
filings or engagements.
(2) Audit-related fees consists of fees billed for professional services that
are reasonably related to the performance of the audit or review of our
financial statements, but are not reported under "Audit fees."
(3) Tax fees consists of fees billed for professional services relating to tax
compliance, tax planning, and tax advice.
(4) All other fees consists of fees billed for all other services.
AUDIT COMMITTEE'S PRE-APPROVAL PRACTICE.
We do not have an audit committee. Our board of directors performs the function
of an audit committee. Section 10A(i) of the Securities Exchange Act of 1934, as
amended, prohibits our auditors from performing audit services for us as well as
any services not considered to be audit services unless such services are
pre-approved by our audit committee or, in cases where no such committee exists,
by our board of directors (in lieu of an audit committee) or unless the services
meet certain de minimis standards.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS
The following Exhibits are being filed with this report on Form 10-K:
Exhibit SEC Report
No. Reference Number Description
--- ---------------- -----------
3.1 3.1 Articles of Incorporation of Registrant as filed
with the Nevada Secretary of State on May 30,
2006 (1)
3.2 3.1 Amendment to the Articles of Incorporation of
Registrant as filed with the Nevada Secretary of
State on July 1, 2009 (2)
3.2 3.2 By-Laws of Registrant (1)
14.1 14.1 Code of Ethics (2)
21 * List of Subsidiaries
31.1/31.2 * Certification of Principal Executive Officer and
Principal Financial Officer, pursuant to SEC
Rules 13a-14(a) and 15d-14(a), adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
32.1/32.2 * Certification of Chief Executive Officer and
Chief Financial Officer, pursuant to 18 U.S.C.
Section 1350, adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002**
16
----------
* Filed herewith.
** This certification is being furnished and shall not be deemed "filed" with
the SEC for purposes of Section 18 of the Exchange Act, or otherwise
subject to the liability of that section, and shall not be deemed to be
incorporated by reference into any filing under the Securities Act or the
Exchange Act, except to the extent that the Registrant specifically
incorporates it by reference.
(1) Filed with the Securities and Exchange Commission on December 28, 2006 as
an exhibit, numbered as indicated above, to the Registrant's registration
statement on the Registrant's Registration Statement on Form SB-2 (file no.
333-139699), which exhibit is incorporated herein by reference.
(2) Filed with the SEC on July 6, 2009 as an exhibit, numbered as indicated
above, to the Registrant's Current Report on Form 8-K (SEC File No.
333-139699), which exhibit is incorporated herein by reference.
(3) Filed with the Securities and Exchange Commission on December 27, 2007 as
an exhibit, numbered as indicated above, to the Registrant's Annual Report
on Form 10-KSB (file no. 333-139699), which exhibit is incorporated herein
by reference.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
CYTTA CORP.
Dated: January 12, 2011 By: /s/ Stephen Spalding
------------------------------------
Stephen Spalding,
Chief Executive Officer and Director
Dated: January 12, 2011 By: /s/ Gary Campbell
------------------------------------
Gary Campbell,
Chief Financial Officer and Director
Dated: January 12, 2011 By: /s/ Karl Harz
------------------------------------
Karl Harz, Director
Dated: January 12, 2011 By: /s/ William Becker
------------------------------------
William Becker, Director
Dated: January 12, 2011 By: /s/ Michael Scott
------------------------------------
Michael Scott, Director
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Stephen Spalding CEO, Director January 12, 2011
---------------------------
Stephen Spalding
/s/ Gary Campbell President, CFO Director January 12, 2011
---------------------------
Gary Campbell
/s/ Karl Harz Director January 12, 2011
---------------------------
Karl Harz
/s/ William Becker Director January 12, 2011
---------------------------
William Becker
/s/ Michael Scott Director January 12, 2011
---------------------------
Michael Scott
18
CYTTA CORP.
AUDIT REPORT OF INDEPENDENT ACCOUNTANTS
AND
FINANCIAL STATEMENTS
SEPTEMBER 30, 2010 AND 2009
F-1
CYTTA CORP.
TABLE OF CONTENTS
PAGE
----
Audit Report of Independent Accountants.................................... F-3
Balance Sheets - September 30, 2010 and 2009............................... F-5
Statements of Operations for the years ended September 30, 2010 and 2009
and from inception on May 30, 2006 through September 30, 2010.............. F-6
Statements of Stockholder's Equity (Deficit) from inception on
May 30, 2006 through September 30, 2010.................................... F-7
Statements of Cash Flows for the years ended September 30, 2010 and 2009
and from inception on May 30, 2006 through September 30, 2010.............. F-9
Notes to Financial Statements.............................................. F-10
F-2
SADLER, GIBB & ASSOCIATES, L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
REGISTERED WITH THE PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Cytta Corp.
(A Development Stage Company)
We have audited the accompanying balance sheet of Cytta Corp. as of September
30, 2010, and the related statements of operations, stockholders' equity
(deficit) and cash flows for the year then ended and for the period from
inception on May 30, 2006 through September 30, 2010. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. The
financial statements of Cytta Corp. as of September, 2009, were audited by other
auditors whose report dated January 11, 2010, expressed an unqualified opinion
on those statements.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Cytta Corp. as of September 30,
2010, and the results of their operations and their cash flows for the year then
ended and for the period from inception on May 30, 2006 through September 30,
2010, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company had a net loss of $257,562 for the year ended
September 30, 2010 and accumulated losses of $490,936 as of September 30, 2010,
which raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
----------------------------------
Salt Lake City, UT
January 12, 2011
F-3
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Cytta Corp.
(A Development Stage Company)
We have audited the accompanying balance sheets of Cytta Corp. (A Development
Stage Company) as of September 30, 2009, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the year ended
September 30, 2009 and since inception on May 30, 2006 through September 30,
2009. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conduct our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cytta Corp. (A Development
Stage Company) as of September 30, 2009, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the year ended
September 30, 2009 and since inception on May 30, 2006 through September 30,
2009, in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has had a loss from operations of $172,745, an
accumulated deficit of $233,374, working capital deficiency of $27,304 and has
earned no revenues since inception, which raises substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 6. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Seale and Beers, CPAs
-----------------------------------
Seale and Beers, CPAs
Las Vegas, Nevada
January 11, 2010
50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107
Phone: (888) 727-8251 Fax: (888) 782-2351
F-4
Cytta Corp.
(A Development Stage Company)
Balance Sheets
September 30, September 30,
2010 2009
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,927 $ 136
--------- ---------
Total Current Assets 19,927 136
--------- ---------
OTHER ASSETS
Prepaid fees and services 51,935 --
--------- ---------
Total Other Assets 51,935 --
--------- ---------
TOTAL ASSETS $ 71,862 $ 136
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 9,272 $ 18,052
Due to related parties 53,026 9,388
--------- ---------
TOTAL LIABILITIES 62,298 27,440
--------- ---------
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:
1,078,078,203 and 661,400,000 common shares 10,221 6,054
Additional paid-in capital 489,719 199,456
Common shares pending cancellation 560 560
Deficit accumulated during the development stage (490,936) (233,374)
--------- ---------
Total Stockholders' Deficit 9,564 (27,304)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 71,862 $ 136
========= =========
F-5
Cytta Corp.
(A Development Stage Company)
Statements of Operations
Cumulative from
For the Years Ended Inception on
September 30, May 30, 2006 to
------------------------------------- September 30,
2010 2009 2010
------------- ------------- -------------
REVENUES $ -- $ -- $ --
OPERATING EXPENSES
Professional fees 57,018 40,449 136,507
Management fees 138,885 -- 138,885
General and administrative 61,659 15,715 98,963
Impairment of licensing agreement -- 116,581 116,581
------------- ------------- -------------
Total Operating Expenses 257,562 172,745 490,936
------------- ------------- -------------
NET LOSS FROM OPERATIONS (257,562) (172,745) (490,936)
OTHER INCOME (EXPENSE) -- -- --
NET LOSS BEFORE TAXES (257,562) (172,745) (490,936)
------------- ------------- -------------
Provision for income taxes -- -- --
------------- ------------- -------------
NET LOSS $ (257,562) $ (172,745) $ (490,936)
============= ============= =============
PER SHARE DATA:
Basic and diluted income
(loss) per common share $ (0.00) $ (0.00)
------------- -------------
Weighted average number of
common shares outstanding 868,858,120 519,132,418
------------- -------------
F-6
Cytta Corp.
(A Development Stage Company)
Statements of Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During the Total
---------------------------------- Paid-in Development Stockholders'
Shares Amount Segregated Capital Stage Deficit
------ ------ ---------- ------- ----- -------
Inception - May 30, 2006 -- $ -- $ -- $ -- $ -- $ --
Common shares issued to a
founder at $0.0000625 cash
per share, June 30, 2006 80,000,000 800 -- 4,200 -- 5,000
Common shares issued to a
founder at $0.000125 cash per
share, September 30, 2006 160,000,000 1,600 -- 18,400 -- 20,000
(Loss) for the period -- -- -- -- (3,032) (3,032)
----------- ------- ------ --------- ---------- ----------
Balance - September 30, 2006 240,000,000 2,400 -- 22,600 (3,032) 21,968
Common shares issued for
cash at $0.0000625 per
share, July 11, 2007 244,000,000 2,440 -- 58,560 -- 61,000
(Loss) for the year -- -- -- -- (23,315) (23,315)
----------- ------- ------ --------- ---------- ----------
Balance - September 30, 2007 484,000,000 4,840 -- 81,160 (26,347) 59,653
(Loss) for the year -- -- -- -- (34,282) (34,282)
----------- ------- ------ --------- ---------- ----------
Balance - September 30, 2008 484,000,000 4,840 -- 81,160 (60,629) 25,371
Common shares issued for
consulting services at $0.00005
per share, January 15, 2009 400,000 4 -- 16 -- 20
Common shares issued for
consulting services at $0.00005
per share, March 09, 2009 1,000,000 10 -- 40 -- 50
56,000,000 Common shares
segregated pending
cancellation, May 8, 2009 56,000,000 -- 560 (560) -- --
Common shares issued for
licensing agreement at $0.001
per share, June 18, 2009 120,000,000 1,200 -- 118,800 -- 120,000
(Loss) for the year -- -- -- -- (172,745) (172,745)
----------- ------- ------ --------- ---------- ----------
Balance - September 30, 2009 661,400,000 $ 6,054 $ 560 $ 199,456 $ (233,374) $ (27,304)
F-7
CYTTA CORP.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
(Deficit)
Accumulated
Common Stock Additional During the Total
---------------------------------- Paid-in Development Stockholders'
Shares Amount Segregated Capital Stage Deficit
------ ------ ---------- ------- ----- -------
Balance - September 30, 2009 661,400,000 $ 6,054 $ 560 $ 199,456 $ (233,374) $ (27,304)
Common shares issued for
services at $0.0006 per
share on March 1, 2010 100,000,000 1,000 -- 59,000 -- 60,000
Common shares issued for
services at $0.0006 per
share on March 12, 2010 200,000,000 2,000 -- 118,000 -- 120,000
Common shares issued for debt
at $0.0006 per share,
March 12, 2010 53,216,666 532 -- 31,398 -- 31,930
Common shares issued for cash
at $0.0013 per share,
August 16, 2010 57,692,307 577 -- 74,423 -- 75,000
Common shares issued for
services at $0.0013
per share, August 16, 2010 5,769,230 58 -- 7,442 -- 7,500
(Loss) for the year -- -- -- -- (257,562) (257,562)
------------- -------- ------- --------- ---------- ----------
Balance - September 30, 2010 1,078,078,203 $ 10,221 $ 560 $ 489,719 $ (490,936) $ 9,564
============= ======== ======= ========= ========== ==========
F-8
Cytta Corp.
(A Development Stage Company)
Statements of Cash Flows
Cumulative from
For the Years Ended Inception on
September 30, May 30, 2006 to
----------------------------- September 30,
2010 2009 2010
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(257,562) $(172,745) $(490,936)
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization -- 3,419 3,419
Impairment of licensing agreement -- 116,581 116,581
Issuance of common stock for services and expenses 187,500 70 187,570
Operating expenses paid on behalf of the Company
by a related party 55,392 -- 55,392
Changes in Operating Assets and Liabilities:
Accounts payable and accrued laibilities (2,330) 8,887 15,722
Prepaid fees and services (51,935) -- (51,935)
Net cash from operating activities (68,935) (43,788) (164,187)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 75,000 -- 161,000
Advances from related parties 13,726 9,388 23,114
--------- --------- ---------
Net cash from financing activities 88,726 9,388 184,114
--------- --------- ---------
NET CHANGE IN CASH 19,791 (34,400) 19,927
CASH AT BEGINNING OF PERIOD 136 34,536 --
--------- --------- ---------
CASH AT END OF PERIOD $ 19,927 $ 136 $ 19,927
========= ========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest $ -- $ -- $ --
Cash paid for income taxes $ -- $ -- $ --
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for debt $ 31,930 $ -- $ 31,930
Common stock issued for licensing agreement $ -- $ 120,000 $ 120,000
F-9
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Cytta Corp., (the "Company") was incorporated on May 30, 2006 under the laws of
the State of Nevada. It is located in Mill Valley, California. The accounting
and reporting policies of the Company conform to accounting principles generally
accepted in the United States of America, and the Company's fiscal year end is
September 30. Currently, the Company is a development stage company that intends
to manufacture, distribute and market various telephony based internet access
and computing products and services. To date, the Company's activities have been
limited to its formation and the raising of equity capital.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying audited consolidated financial statements and related notes
have been prepared in accordance with accounting principles generally accepted
in the United States of America ("U.S. GAAP") and with the rules and regulations
of the United States Securities and Exchange Commission ("SEC") to Form 10-K.
DEVELOPMENT STAGE COMPANY
The Company is considered to be in the development stage as defined in ASC
915-10-05 "Development Stage Entity".
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
Company's periodic filings with the Securities and Exchange Commission include,
where applicable, disclosures of estimates, assumptions, uncertainties and
markets that could affect the financial statements and future operations of the
Company.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in banks, money market funds, and
certificates of term deposits with maturities of less than three months from
inception, which are readily convertible to known amounts of cash and which, in
the opinion of management, are subject to an insignificant risk of loss in
value. The Company had $19,927 and $136 in cash and cash equivalents at
September 30, 2010 and 2009 respectively.
F-10
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
START-UP COSTS
In accordance with ASC 720-15-20, "Start-up Activities", the Company expenses
all costs incurred in connection with the start-up and organization of the
Company.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company follows the provisions of ASC 360 for its long-lived assets. The
Company's long-lived assets, which include test equipment and purchased
intellectual property rights, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing
the projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful lives
against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those assets. Fair value is
generally determined using the asset's expected future discounted cash flows or
market value, if readily determinable. If long-lived assets are determined to be
recoverable, but the newly determined remaining estimated useful lives are
shorter than originally estimated, the net book values of the long-lived assets
are depreciated over the newly determined remaining estimated useful lives. The
Company determined that purchased intellectual property rights were deemed to be
fully impaired and written-off during the year ended September 30, 2009.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows ASC 825 in accounting for its financial instruments. The
fair value of a financial instrument is the amount at which the instrument could
be exchanged in a current transaction between willing parties. The carrying
amounts of financial assets and liabilities, such as accrued expenses,
approximate their fair values because of the short maturity of these
instruments. The Company's notes payable approximate the fair value of such
instruments based upon management's best estimate of interest rates that would
be available to the Company for similar financial arrangement at September 30,
2010 and 2009.
RISKS AND UNCERTAINTIES
The Company operates in the technology industry which is subject to significant
risks and uncertainties, including financial, operational, technological, and
other risks associated with operating a technology business, including the
potential risk of business failure.
F-11
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company follows the guidance of ASC 605 for revenue recognition. The Company
will recognize revenues when it is realized or realizable and earned less
estimated future doubtful accounts. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured. The Company has
earned no revenues since inception.
STOCK-BASED COMPENSATION
The Company accounted for its stock based compensation under the recognition and
measurement principles of the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123 (revised 2004) "Share-Based Payment"
("SFAS No. 123R")(ASC 718) using the modified prospective method for
transactions in which the Company obtains employee services in share-based
payment transactions and the Financial Accounting Standards Board Emerging
Issues Task Force Issue No. 96-18 "Accounting For Equity Instruments That Are
Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling
Goods Or Services" ("EITF No. 96-18") for share-based payment transactions with
parties other than employees provided in SFAS No. 123(R) (ASC 718). All
transactions in which goods or services are the consideration received for the
issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. The measurement date used to determine
the fair value of the equity instrument issued is the earlier of the date on
which the third-party performance is complete or the date on which it is
probable that performance will occur.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("SFAS No. 109") (ASC 740).
Deferred income tax assets and liabilities are determined based upon differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance to the extent management concludes it is more likely than
not that the assets will not be realized. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in the statements of operations in the period that includes
the enactment date.
F-12
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH FLOWS REPORTING
The Company follows the provisions of ASC 230 for cash flows reporting and
accordingly classifies cash receipts and payments according to whether they stem
from operating, investing, or financing activities and provides definitions of
each category, and uses the indirect or reconciliation method ("Indirect
method") as defined by ASC 230 to report net cash flow from operating activities
by adjusting net income to reconcile it to net cash flow from operating
activities by removing the effects of (a) all deferrals of past operating cash
receipts and payments and all accruals of expected future operating cash
receipts and payments and (b) all items that are included in net income that do
not affect operating cash receipts and payments.
REPORTING SEGMENTS
ASC 280 establishes standards for the way that public enterprises report
information about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim financial
statements regarding products and services, geographic areas and major
customers. ASC 280 defines operating segments as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performances. Currently, ASC 280 has no effect on the
Company's consolidated financial statements as substantially all of the
Company's operations are conducted in one industry segment.
CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to concentrations of credit
risk primarily consist of its cash and cash equivalents and related party
payables it will likely incur in the near future. The Company places its cash
and cash equivalents with financial institutions of high credit worthiness. At
times, its cash and cash equivalents with a particular financial institution may
exceed any applicable government insurance limits. The Company's management
plans to assess the financial strength and credit worthiness of any parties to
which it extends funds, and as such, it believes that any associated credit risk
exposures are limited
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
The Company has adopted ASC 260-10-20, "Earnings per Share," ("EPS") which
requires presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. In the
accompanying financial statements, basic earnings (loss) per share is computed
by dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the period.
The Company has no potentially dilutive securities, such as options or warrants,
currently issued and outstanding.
F-13
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers
and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This
Accounting Standards Update amends the FASB Accounting Standards Codification
for Statement 166.
In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting
for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance
or Other Financing. This Accounting Standards Update amends the FASB Accounting
Standard Codification for EITF 09-1.
In October 2009, the FASB issued Accounting Standards Update 2009-14, Software
(Topic 985): Certain Revenue Arrangements That Include Software Elements. This
update changed the accounting model for revenue arrangements that include both
tangible products and software elements. Effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010. Early adoption is permitted.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue
Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update
addressed the accounting for multiple-deliverable arrangements to enable vendors
to account for products or services (deliverables) separately rather than a
combined unit and will be separated in more circumstances that under existing US
GAAP. This amendment has eliminated that residual method of allocation.
Effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early adoption is
permitted.
In June 2009, the FASB established the Accounting Standards Codification
("Codification" or "ASC") as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in accordance with generally accepted
accounting principles in the United States ("GAAP"). Rules and interpretive
releases of the Securities and Exchange Commission ("SEC") issued under
authority of federal securities laws are also sources of GAAP for SEC
registrants. Existing GAAP was not intended to be changed as a result of the
Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and presented.
In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair
Value Measurements and Disclosures (Topic 820): Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent). This update
provides amendments to Topic 820 for the fair value measurement of investments
in certain entities that calculate net asset value per share (or its
equivalent). It is effective for interim and annual periods ending after
December 15, 2009. Early application is permitted in financial statements for
earlier interim and annual periods that have not been issued.
F-14
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues
Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share
Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF
09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and
disclosure of share-lending arrangements that are classified as equity in the
financial statements of the share lender. An example of a share-lending
arrangement is an agreement between the Company (share lender) and an investment
bank (share borrower) which allows the investment bank to use the loaned shares
to enter into equity derivative contracts with investors. EITF 09-1 is effective
for fiscal years that beginning on or after December 15, 2009 and requires
retrospective application for all arrangements outstanding as of the beginning
of fiscal years beginning on or after December 15, 2009. Share-lending
arrangements that have been terminated as a result of counterparty default prior
to December 15, 2009, but for which the entity has not reached a final
settlement as of December 15, 2009 are within the scope. Effective for
share-lending arrangements entered into on or after the beginning of the first
reporting period that begins on or after June 15, 2009.
Statement of Financial Accounting Standards ("SFAS") No. 165 (ASC Topic 855),
"Subsequent Events," SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of
Financial Assets-an Amendment of FASB Statement No. 140" , SFAS No. 167 (ASC
Topic 810), "Amendments to FASB Interpretation No. 46(R)," and SFAS No. 168 (ASC
Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles- a replacement of FASB Statement No.
162 were recently issued. SFAS No. 165, 166, 167, and 168 have no current
applicability to the Company or their effect on the financial statements would
not have been significant.
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which
amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC
Topic 605), Multiple Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC
Topic 985), Certain Revenue Arrangements that include Software Elements, and
various other ASU's No. 2009-2 through ASU No. 2009-15 which contain technical
corrections to existing guidance or affect guidance to specialized industries or
entities were recently issued. These updates have no current applicability to
the Company or their effect on the financial statements would not have been
significant.
The Company has reviewed the above pronouncements and does not expect any of the
provisions to have a material effect on the financial position, results of
operations or cash flows of the Company.
F-15
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 3 - CAPITAL STOCK
AUTHORIZED STOCK
At inception, the Company had authorized 100,000,000 common shares and
100,000,000 preferred shares, both with a par value of $0.001 per share. Each
common share entitles the holder to one vote, in person or proxy, on any matter
on which action of the stockholders of the corporation is sought.
Effective July 1, 2009, the Company increased the number of authorized shares to
2,000,000,000 shares, of which 1,900,000,000 shares are designated as common
stock with a par value of $0.00001 per share, and 100,000,000 shares are
designated as preferred stock with a par value of $0.001 per share.
SHARE ISSUANCES
On November 18, 2008, the Company effected a 4 for 1 forward split, of its
common stock, under which each stockholder of record, received 4 new shares of
the Corporation's stock for every one share outstanding.
On June 19, 2009, the Company effected a 20 for 1 forward split, of its common
stock, under which each stockholder of record on July 10, 2009, received 20 new
shares of the Corporation's stock for every one share outstanding.
Since its inception, the Company has issued outstanding shares of its common
stock as follows, retroactively adjusted to give effect to the cumulative 80 for
1 forward splits:
F-16
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 3 - CAPITAL STOCK (CONTINUED)
SHARE ISSUANCES (CONTINUED)
Price Per
Date Description Shares Share Amount
---- ----------- ------ ----- ------
June 30, 2006 Stock issued for cash 80,000,000 $0.0001 $ 5,000
September 29, 2006 Stock issued for cash 160,000,000 0.0001 20,000
July 11, 2007 Stock issued for cash 244,000,000 0.0003 61,000
January 15, 2009 Stock issued for services 400,000 0.0001 20
March 9, 2009 Stock issued for services 1,000,000 0.0001 50
June 18, 2009 Stock issued for license agreement 120,000,000 0.0010 120,000
March 1, 2010 Stock issued for prepaid services 100,000,000 0.0006 60,000
March 12, 2010 Stock issued for prepaid services 200,000,000 0.0006 120,000
March 12, 2010 Stock issued for debt 53,216,666 0.0006 31,930
August 16, 2010 Stock issued for cash 57,692,307 0.0013 75,000
August 16, 2010 Stock issued for services 5,769,230 0.0013 7,500
------------- --------
Cumulative Totals 1,022,078,203 $500,500
============= ========
In addition to the above issued shares, 56,000,000 shares are pending
cancellation. These shares were issued and subsequently cancelled when the
merger with Ophthalmic International, Inc. was rescinded. However, the physical
certificate was lost and thus it is being disclosed separately in our share
capital. The shares have legally been cancelled as to our transfer agent.
Management has placed a stop with our transfer agent and will not permit these
shares to be negotiated, but are still outstanding until the physical
certificate can be surrender or reissued.
There are no preferred shares outstanding. The Company has no stock option plan,
warrants or other dilutive securities.
NOTE 4 - INCOME TAXES
The Company provides for income taxes under ASC 740, Accounting for Income
Taxes. ASC 740 requires the use of an asset and liability approach in accounting
for income taxes. Deferred tax assets and liabilities are recorded based on the
differences between the financial statement and tax bases of assets and
liabilities and the tax rates in effect when these differences are expected to
reverse. ASC 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized.
F-17
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
The Company is subject to income taxes under the laws of United States of
America. The provision for income taxes differs from the amounts which would be
provided by applying the statutory federal income tax rate of 39% to the net
loss before provision for income taxes for the following reasons:
September 30, September 30,
2010 2009
-------- --------
Income tax expense (benefit) at statutory rate $(90,147) $(60,461)
Stock based expenses 65,625 25
Valuation allowance 24,522 60,436
-------- --------
Income tax expense per books $ -- $ --
======== ========
Net deferred tax assets consist of the following components as of:
NOL Carryover $ 171,828 $ 81,681
Valuation allowance (171,828) (81,681)
--------- ---------
Net deferred tax asset $ -- $ --
========= =========
Due to the change in ownership provisions of the Income Tax laws of the United
States, net operating loss carry forwards of approximately $171,828 for federal
income tax reporting purposes are subject to annual limitations. Should a change
in ownership occur net operating loss carry forwards may be limited as to use in
future years.
NOTE 5 - DUE TO RELATED PARTIES
As of September 30, 2010 and 2009, the Company was obligated to related parties
for a non-interest bearing demand loans with balances totaling of $53,026 and
$9,388. During the year ended September 30, 2010 the Company became obligated to
the related party in the amount of $25,480. The Company issued 42,466,666 shares
of its $0.00001 par value common stock in full settlement of this obligation.
F-18
Cytta Corp.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2010 and 2009
NOTE 6 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the liquidation of liabilities in the normal course of business. As
at September 30, 2010, the Company had a loss from operations of $257,562, an
accumulated deficit of $490,936, and has earned no revenues since inception. The
Company intends to fund operations through equity financing arrangements, which
may be insufficient to fund its capital expenditures, working capital and other
cash requirements for the foreseeable future.
The ability of the Company to emerge from the development stage is dependent
upon, among other things, obtaining additional financing to continue operations,
and development of its business plan.
In response to these problems, management intends to raise additional funds
through public or private placement offerings. These factors, among others,
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
NOTE 7 - SUBSEQUENT EVENTS
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 is required to issue 250,000,000 shares of the Company's common
stock to Vonify. This transaction will result in Vonify becoming a greater than
10% shareholder of the Company. Mr. William Becker, a Director of the Company,
is a controlling shareholder of Vonify.
In accordance with ASC 855-10, Company management reviewed all material events
through the date of this report and there are no additional subsequent events to
report.
F-1