CYTTA Restates Q4, Narrows Loss Amidst Revenue Decline

TL;DR

**CYCA's restatement reveals a company barely generating revenue and still bleeding cash, making it a high-risk bet despite a slightly smaller loss.**

AI Summary

CYTTA CORP. (CYCA) filed a 10-Q/A to restate its financial statements for the three months ended December 31, 2024, primarily due to misstatements in assumptions for accounts receivable, deferred revenue, and revenue recognized. The restatement revealed a net loss of $724,119 for the three months ended December 31, 2024, an improvement from the $1,059,128 net loss reported in the same period of 2023. Revenue for the quarter was a mere $1,249, down from $2,411 in Q4 2023, indicating minimal operational sales. The company reported a gross loss of $17,210 for the quarter, compared to a gross profit of $2,411 in the prior year. Operating expenses decreased to $642,207 from $990,452 year-over-year, driven by a significant reduction in 'general and administrative - other' expenses from $777,244 to $420,469. Despite the reduced loss, CYCA's accumulated deficit grew to $37,592,011 as of December 31, 2024, and it maintains a working capital deficit of $1,037,245, raising substantial doubt about its ability to continue as a going concern.

Why It Matters

This restatement highlights significant accounting issues at CYTTA CORP., which can erode investor confidence and signal potential internal control weaknesses. For investors, the minimal revenue of $1,249 and a persistent working capital deficit of $1,037,245 indicate that the company is far from achieving sustainable operations, despite a reduced net loss. Employees and customers might face uncertainty regarding the company's long-term viability given the 'going concern' warning. In a competitive landscape for video compression and incident management software, CYCA's inability to generate substantial revenue from its CyttaCOMMS and CyttaCARES products, launched in Q4 2024, suggests a struggle to gain market traction against established players.

Risk Assessment

Risk Level: high — The company explicitly states a 'going concern' doubt due to an accumulated deficit of $37,592,011 and a working capital deficit of $1,037,245 as of December 31, 2024. Furthermore, revenue for the quarter was only $1,249, indicating a severe lack of operational cash flow to sustain its business without external financing.

Analyst Insight

Investors should exercise extreme caution and avoid CYCA given the 'going concern' warning, minimal revenue of $1,249, and persistent deficits. The company's reliance on future equity and/or debt financing to fund operations, as stated in Note 2, presents significant dilution risk for existing shareholders.

Financial Highlights

debt To Equity

N/A

revenue

$1,249

operating Margin

N/A

total Assets

$1,558,373

total Debt

$2,519,936

net Income

$(724,119)

eps

N/A

gross Margin

-1377.9%

cash Position

$1,008,186

revenue Growth

-48.2%

Revenue Breakdown

Key Numbers

• $1.2K — Revenue (for the three months ended December 31, 2024, a 48% decrease from $2,411 in 2023)
• $(724.1K) — Net Loss (for the three months ended December 31, 2024, an improvement from $(1.06M) in 2023)
• $(17.2K) — Gross Profit (loss) (for the three months ended December 31, 2024, compared to $2,411 gross profit in 2023)
• $37.6M — Accumulated Deficit (as of December 31, 2024, indicating significant historical losses)
• $(1.04M) — Working Capital Deficit (as of December 31, 2024, highlighting liquidity issues)
• $1.01M — Cash at End of Period (as of December 31, 2024, down from $1.44M at September 30, 2024)
• 470.2M — Shares Outstanding (as of February 14, 2025, indicating potential for significant dilution)
• $642.2K — Total Operating Expenses (for the three months ended December 31, 2024, a decrease from $990.5K in 2023)
• $18.5K — Cost of Revenues (for the three months ended December 31, 2024, up from $0 in 2023, contributing to gross loss)
• $750K — Uninsured Cash Balance (amount in excess of FDIC insurance as of December 31, 2024)

Key Players & Entities

• CYTTA CORP. (company) — registrant filing 10-Q/A
• SEC (regulator) — Securities and Exchange Commission
• Reticulate Micro, Inc. (company) — licensee of CyttaCOMP technology
• Sarbane Oxley Act of 2002 (regulator) — act requiring certifications from officers
• $724,119 (dollar_amount) — net loss for three months ended Dec 31, 2024
• $1,059,128 (dollar_amount) — net loss for three months ended Dec 31, 2023
• $1,249 (dollar_amount) — revenue for three months ended Dec 31, 2024
• $37,592,011 (dollar_amount) — accumulated deficit as of Dec 31, 2024
• $1,037,245 (dollar_amount) — working capital deficit as of Dec 31, 2024
• Nevada (company) — state of incorporation for Cytta Corp.

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company has a substantial accumulated deficit of $37,592,011 as of December 31, 2024, and a working capital deficit of $1,037,245. This raises substantial doubt about its ability to continue as a going concern.
• Declining Revenue and Gross Loss [high — financial]: Revenue for the three months ended December 31, 2024, was $1,249, a significant decrease from $2,411 in the prior year. The company reported a gross loss of $17,210 for the quarter, compared to a gross profit of $2,411 in 2023, indicating operational challenges.
• Restatement of Financials [medium — operational]: The company restated its financial statements for the three months ended December 31, 2024, due to misstatements in assumptions for accounts receivable, deferred revenue, and revenue recognized. This indicates potential weaknesses in internal controls and financial reporting processes.
• Decreasing Cash Position [medium — financial]: Cash at the end of the period was $1,008,186 as of December 31, 2024, down from $1,439,835 as of September 30, 2024. This continued decline in cash reserves exacerbates liquidity concerns.
• High Convertible Notes Payable [medium — financial]: The company has $1,438,950 in convertible notes payable, which represent a significant liability. The terms of these notes could lead to further dilution for existing shareholders upon conversion.
• Significant Shareholder Dilution Potential [medium — financial]: With 470.2 million shares outstanding as of February 14, 2025, and the presence of convertible notes, there is a substantial risk of further dilution for existing shareholders.

Industry Context

CYTTA CORP. operates in the disruptive technologies sector, focusing on imagineering and developing software solutions for incident management, real-time video compression, and emergency response systems. The company highlights its CyttaCOMMS (SaaS-based), CyttaCARES (for educational institutions), and CyttaCOMP ISTAR technologies. The market for real-time communication and surveillance technologies is competitive, with a growing demand for efficient solutions in low-bandwidth environments and for emergency response.

Regulatory Implications

The restatement of financial statements due to misstatements in accounting assumptions suggests potential weaknesses in internal controls and financial reporting. Investors should monitor for any further SEC scrutiny or regulatory actions related to these accounting issues. The company's status as a going concern also implies potential regulatory oversight regarding its financial stability.

What Investors Should Do

1. Monitor cash burn and revenue generation closely.
2. Assess the viability of the company's technology and market adoption.
3. Evaluate the impact of convertible notes and potential dilution.
4. Consider the going concern warning.

Key Dates

• 2024-12-31: Three months ended December 31, 2024 — Restated financial results show a net loss of $724,119 on $1,249 revenue, with a gross loss of $17,210. Operating expenses decreased year-over-year.
• 2024-09-30: Balance Sheet Date — Cash balance was $1,439,835, and total assets were $2,175,191.
• 2025-02-14: Shares Outstanding Date — 470.2 million shares outstanding, indicating potential for significant dilution.

Glossary

Restated

Financial statements that have been corrected or revised due to errors or misstatements found in previously issued statements. (CYTTA CORP. restated its financials for the three months ended December 31, 2024, indicating past inaccuracies in reporting.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income or other gains. (CYTTA CORP. has a significant accumulated deficit of $37,592,011, highlighting its history of unprofitability.)

Working capital deficit

A situation where a company's current liabilities exceed its current assets, indicating potential short-term liquidity problems. (CYTTA CORP. has a working capital deficit of $1,037,245, raising concerns about its ability to meet its short-term obligations.)

Going concern

An assumption that a company will continue to operate for the foreseeable future, typically at least the next 12 months. (The company's financial condition raises substantial doubt about its ability to continue as a going concern.)

Gross Profit (loss)

Revenue minus the cost of revenues. A negative number indicates a gross loss. (CYTTA CORP. reported a gross loss of $17,210 for the quarter, indicating that the cost of generating its revenue exceeded the revenue itself.)

Convertible notes payable

Debt instruments that can be converted into a predetermined amount of equity (stock) in the issuing company. (CYTTA CORP. has $1,438,950 in convertible notes payable, which could lead to future share dilution.)

SaaS

Software as a Service. A software licensing and delivery model where software is licensed on a subscription basis and is centrally hosted. (CYTTA CORP. describes its CyttaCOMMS and CyttaCARES products as SaaS-based.)

Year-Over-Year Comparison

CYTTA CORP.'s restated financials for the three months ended December 31, 2024, show a net loss of $724,119, an improvement from the $1,059,128 net loss in the prior year's period. However, revenue significantly declined by 48.2% to $1,249 from $2,411. The company also shifted from a gross profit of $2,411 to a gross loss of $17,210 due to cost of revenues. While operating expenses decreased by 35.1% to $642,207 from $990,452, driven by lower G&A - other expenses, the overall financial health remains precarious, evidenced by a growing accumulated deficit and a working capital deficit, raising going concern issues.

Key Financial Figures

• $0.001 — Section 12(g) of the Act: Common Stock, $0.001 par value Indicate by check mark whet

Filing Documents

• cyca_10qa.htm (10-Q/A) — 784KB
• cyca_ex311.htm (EX-31.1) — 10KB
• cyca_ex312.htm (EX-31.2) — 12KB
• cyca_ex321.htm (EX-32.1) — 4KB
• 0001477932-25-007261.txt ( ) — 4878KB
• cyca-20241231.xsd (EX-101.SCH) — 58KB
• cyca-20241231_lab.xml (EX-101.LAB) — 301KB
• cyca-20241231_cal.xml (EX-101.CAL) — 39KB
• cyca-20241231_pre.xml (EX-101.PRE) — 285KB
• cyca-20241231_def.xml (EX-101.DEF) — 203KB
• cyca_10qa_htm.xml (XML) — 700KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION ITEM 1

Financial Statements (Unaudited)

Financial Statements (Unaudited) Balance Sheets as of December 31, 2024 (unaudited) (as restated), and September 30, 2024 4 5 6 7 Notes to Interim Unaudited Financial Statements 8 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 ITEM 4.

Controls and Procedures

Controls and Procedures 26

OTHER INFORMATION

PART II. OTHER INFORMATION ITEM 1.

Legal Proceedings

Legal Proceedings 28 ITEM 1A.

Risk Factors

Risk Factors 28 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 28 ITEM 3. Defaults Upon Senior Securities 28 ITEM 4. Mine Safety Disclosures 28 ITEM 5. Other Information 28 ITEM 6. Exhibits 29 3 Table of Contents CYTTA CORP BALANCE SHEETS December 31, September 30, 2024 2024 ASSETS (Unaudited) (As Restated) Current Assets Cash $ 1,008,186 $ 1,439,835 Prepaid expenses – related party 421,334 421,334 Prepaid expenses - other 53,171 122,712 Total Current Assets 1,482,691 1,983,881 Prepaid expenses – related party, non-current 35,109 140,443 Property and equipment, net 40,573 50,867 TOTAL ASSETS $ 1,558,373 $ 2,175,191 LIABILITIES AND STOCKHOLDERS' DEFICIT Liabilities Current Liabilities Accounts payable and accrued expenses $ 651,897 $ 524,251 Related party liabilities 393,997 413,093 Dividend payable 33,427 33,427 Deferred revenue 1,665 2,914 Convertible notes payable 1,438,950 1,438,950 Total Current Liabilities and Total Liabilities 2,519,936 2,412,635 COMMITMENTS AND CONTINGENCIES - - Stockholders' Deficit Preferred stock par value $ 0.001 ; ( 100,000,000 shares authorized) Series C Preferred Stock par value $ 0.001 ; ( 12,000,000 shares authorized and 600,000 shares issued and outstanding) 600 600 Series D Preferred Stock par value $ 0.001 ; ( 10,000,000 shares authorized and 50,000 shares issued and outstanding) 50 50 Series E Preferred Stock par value $ 0.001 ; ( 13,650,000 shares authorized and - 0 - issued and outstanding) - - Series F Preferred Stock par value $ 0.001 ; ( 59,270,000 shares authorized and - 0 - issued and outstanding) - - Common stock par value $ 0.001 ; ( 600,000,000 shares authorized and 469,877,826 shares issued and outstanding) 469,879 469,879 Additional paid in capital 36,159,919 36,159,919 Accumulated deficit ( 37,592,011 ) ( 36,867,892 ) Total Stockholder

Notes to Financial Statements

Notes to Financial Statements December 31, 2024 (Unaudited) NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Cytta Corp., ("Cytta" or the "Company") was incorporated on May 30, 2006, under the laws of the State of Nevada. It is located in Las Vegas, Nevada. Cytta is in the business of imagineering, developing and securing disruptive technologies. The Company's proprietary CyttaCOMMS incident management software system offers real-time integration of video and audio streams, enabling improved collaboration and providing ongoing, relevant, actionable intelligence. Their innovative new product, CyttaCARES, is a game-changer in ensuring the safety and well-being of individuals in educational institutions and beyond. Cytta's CyttaCOMP ISTAR (Intelligence, Surveillance, Target Acquisition and Reconnaissance) technology delivers real-time compression of video streams with ultra-low latency, even in low bandwidth environments in conjunction with their compression Licensee Reticulate Micro, Inc. Cytta's proprietary SUPR Intelligence, Surveillance and Reconnaissance (ISR) technology designated CyttaCOMP, is now licensed to Reticulate Micro, Inc. CyttaCOMP, is at the core of our products and is the most potent software compression codec commercially available. CyttaCOMP is explicitly designed for realtime streaming of HD, 4K, and higher resolution video while requiring only limited bandwidth and minimal computational resources. Cytta's CyttaCOMMS (formerly IGAN Incident Command System (ICS) system) seamlessly streams and integrates all available video and audio sources during emergencies, enabling sharing of multiple video and audio inputs. The CyttaCOMMS product was introduced into the market in the last quarter of 2024. The CyttaCOMMS online software platform is fully SaaS based with no hardware components. The CyttaCOMMS introduces immediate real-time video and audio situational awareness, which is valuable for police, firefighters, first responders, emergency

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