U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For the Period ended June 30, 2007
Commission File Number 333-139699
CYTTA CORP.
(Name of small business issuer in its charter)
Nevada 98-0505761
(State of incorporation) (IRS Employer
ID Number)
710 West 16th Avenue
Vancouver, British Columbia, Canada, V5Z 1S7
604-760-4440
(Address and telephone number of principal executive offices)
Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No _____
Check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes X No ______
There were 3,000,000 shares of Common Stock outstanding as of June 30, 2007.
Transitional Small Business Disclosure Format: [ ] Yes [X] No
ITEM 1. FINANCIAL STATEMENTS
The un-audited quarterly financial statements for the period ended June 30, 2007, prepared by the company, immediately follow.
Cytta Corp.
(A Development Stage Company)
Interim Balance Sheet
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
Cytta Corp.
(A Development Stage Company)
Interim Statements of Operations
Unaudited
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
Cytta Corp.
(A Development Stage Company)
Interim Statement of Stockholders' Equity
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
Cytta Corp.
(A Development Stage Company)
Interim Statements of Cash Flows
Unaudited
- The Accompanying Notes Are An Integral Part Of These Financial Statements -
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
Cytta Corp., (A Development Stage Company) was incorporated on May 30, 2006 under the laws of the State of Nevada. It is located in Vancouver, British Columbia, Canada.
The Company is a development stage company that intends to develop and operate a website where trades/contractors can offer their services. To date, the Company's activities have been limited to its formation and the raising of equity capital. The Company's SB-2 registration was declared effective on January 10, 2007.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
a. Basis of Presentation
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles applicable to development stage enterprises.
b. Fiscal Periods
The Company's fiscal year end is September 30.
c. Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
d. 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.
e. Fair Value of Financial Instruments and Derivative Financial Instruments
The Company has adopted Statement of Financial Accounting Standards ("SFAS") Number 119, "Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments." The carrying amount of accrued liabilities approximates its fair value because of the short maturity of this item. Certain fair value estimates may be subject to and involve, uncertainties and matters of significant judgement, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments in the management of its foreign exchange, commodity price or interest rate market risks.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
f. Fair Value of Financial Instruments and Derivative Financial Instruments
The Company has adopted Statement of Financial Accounting Standards ("SFAS") Number 119, "Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments." The carrying amount of accrued liabilities approximates its fair value because of the short maturity of this item. Certain fair value estimates may be subject to and involve, uncertainties and matters of significant judgement, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments in the management of its foreign exchange, commodity price or interest rate market risks.
g. Segmented Reporting
SFAS Number 131, "Disclosure About Segments of an Enterprise and Related Information", changed the way public companies report information about segments of their business in their quarterly reports issued to shareholders. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenues and its major customers. The company presently operates only in Canada.
h. Federal Income Taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with SFAS Number 109, "Accounting for Income Taxes", which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. 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 Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.
i. Earnings (Loss) per Share
The Company has adopted Financial Accounting Standards Board ("FASB") Statement Number 128, "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.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
j. Foreign Currency Transactions
The Company's functional currency is the Canadian Dollar. The Company's reporting currency is the U.S. Dollar. All transactions initiated in Canadian Dollars are translated to U.S. Dollars in accordance with SFAS No. 52 as follows:
(i) Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
(ii) Equity at historical rates; and
(iii) Revenue and expense items at the average rate of exchange prevailing during the period.
Exchange gains and losses arising from such translations are deferred until realization and are included as a separate component of shareholders' equity as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized.
No significant realized exchange gains or losses were recorded from inception (May 30, 2006) to June 30, 2007.
k. Derivative Financial Instruments
The Company was not a party to any derivative financial instruments during the reported fiscal period.
l. Stock-Based Compensation
The Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment", which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS 123(R), stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees' requisite service period (generally the vesting period of the equity grant). The Company accounts for share-based payments to non-employees, in accordance with SFAS 123 (as originally issued) and 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"
m. Comprehensive Income (Loss)
SFAS No. 130, "Reporting Comprehensive Income", establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. From inception (May 30, 2006) to June 30, 2007, the Company had no items of other comprehensive income. Therefore, net loss equals comprehensive loss from inception (May 30, 2006) to June 30, 2007.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 2 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n. Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial Statements." Revenue will consist of plant sales income and will be recognized only when all of the following criteria have been met:
(i) Persuasive evidence for an agreement exists;
(ii) Delivery has occurred;
(iii) The fee is fixed or determinable; and
(iv) Revenue is reasonably assured.
NOTE 3. INCOME TAXES
The Company has incurred operating losses of $11,353, which if utilized, will begin to expire in 2026. Future tax benefits, which may arise as a result of these loses, have not been recognized in these financial statements, and have been off set by a valuation allowance.
Details of future income tax assets are as follows:
June 30, 2007 | ||
Cumulative Net Operating Loss (from inception to June 30, 2007) | $ | 11,353 |
Statutory Tax Rate - (combined federal and state tax rate) | 34% | |
Deferred Tax Asset | 3,860 | |
Valuation Allowance | (3,860) | |
Net Deferred Tax Asset | $ | - |
The potential future tax benefits of these losses have not been recognized in these financial statements due to uncertainty of their realization. When the future utilization of some portion of the carry forwards is determined not to be "more likely than not," a valuation allowance is provided to reduce the recorded tax benefits from such assets.
NOTE 4. CAPITAL STOCK
a) Authorized Stock:
The Company has authorized 100,000,000 common shares 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 stockholder of the corporation is sought.
The Company has also authorized 100,000,000 preferred shares with a par value of $0.001 per share.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 4. CAPITAL STOCK (continued)
b) Share Issuance:
Since the inception of the Company (May 30, 2006) to September 30, 2006, the Company issued 1,000,000 common shares at $0.005 per share and 2,000,000 common shares at $0.01 per share for total proceeds of $25,000 being $3,000 for par value shares and $22,000 for additional paid in capital. These shares were issued to directors and officers of the Company.
Prior to June 30, 2007, the Company was in the process of selling shares under a SB-2 Registration Statement. In this regard, the Company has received subscriptions for 2,575,000 shares from independent investors for total amounts of $51,500 being $2,575 for par value shares and $48,925 for additional paid in capital. Since these funds are to be returned to the subscribers if the minimum of 3,000,000 shares are not sold (for proceeds of $60,000), the $51,500 is therefore classified as a liability (share subscriptions received in advance) in the Company's records.
There are no preferred shares outstanding. The Company has issued no authorized preferred shares.
The Company has no stock option plan, warrants or other dilutive securities.
NOTE 5. RELATED PARTY TRANSACTIONS
As of June 30, 2007, the Company was obligated to a director, who is also an officer and a shareholder, for a non-interest bearing demand loan with a balance of $2,275. The Company plans to pay the loan back as cash flows become available.
NOTE 6. GOING CONCERN
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 June 30, 2007, the Company has a loss from operations of $8,321, an accumulated deficit of $11,353 and working capital of $13,647 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 year ending September 30, 2007.
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.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 6. GOING CONCERN (continued)
In response to these problems, management has planned the following actions:
The Company's SB-2 Registration Statement filed with the United States Securities Exchange Commission to offer up to 6,000,000 common shares at $0.02 per share for gross proceeds of up to $120,000 was declared effective on January 10, 2007.
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. NEW ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements that are listed below did and/or are not currently expected to have a material effect on the Company's financial statements.
FASB Statements:
In December 2004, the FASB issued Financial Accounting Standards No 123 (revised 2004) (SFAS 123R), "Share-Based Payment." SFAS 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS 123R requires compensation expense, measured as the fair value at the grant date, related to share-based payment transactions to be recognized in the financial statements over the period that an
employee provides service in exchange for the award. SFAS 123R is effective in fiscal periods that begin after December 15, 2005.
In December 2004, FASB issued Financial Accounting Standards No. 153, "Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for Non-Monetary Transactions (SFAS 153)." This statement amends APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. Under SFAS 153, if a non-monetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss. SFAS 153 is effective in fiscal periods that begin after June 15, 2005.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3." This statement changes the requirements for the accounting for and reporting of a change in accounting principle. Previously, Opinion 20 required that most voluntary changes in accounting principle be recognized by including in net income of the period of change the cumulative effect of changing to a new principle. This statement requires retrospective application to prior periods' financial statements of changes in accounting principle, when practicable.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 7. NEW ACCOUNTING PRONOUNCEMENTS (Continued)
In February 2006, FASB issued Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140. This Statement amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, "Application of Statement 133 to Beneficial Interests in Securitized Financial Assets." SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006.
In March 2006, FASB issued Financial Accounting Standards No. 156, "Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140." This Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS 156 is effective in the first fiscal year that begins after September 15, 2006.
In September 2006, FASB issued Financial Accounting Standards No. 157, "Fair Value Measurements." This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. SFAS 157 is effective in the first fiscal year that begins after November 15, 2007.
In September 2006, FASB issued Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)." This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS 158 is effective. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the first fiscal year ending after December 15, 2006.
CYTTA CORP.
(A Development Stage Company)
Notes to Interim Financial Statements
June 30, 2007
NOTE 7. NEW ACCOUNTING PRONOUNCEMENTS (Continued)
In February 2007, FASB issued Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities--Including an amendment of FASB Statement No. 115." This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board's long-term measurement objectives for accounting for financial instruments. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007.
NOTE 8. SUBSEQUENT EVENT
Subsequent to June 30 2007, the Company received $9,500.00 for 475,000 shares in connection to its current public offering. The Company closed its offering on July 6, 2007 and will not sell any additional shares. The Company sold 3,050,000 shares under the Prospectus, raising a total of $61,000.00
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
We are still in our development stage and have generated no revenues to date.
We incurred operating expenses of $2,467 for the three months and $8,321 for the nine months ended June 30, 2007. These expenses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business and the preparation and filing of our SB-2 Registration Statement and required periodic reports.
Our net loss from inception through June 30, 2007 was $11,353.
Cash provided by financing activities for the period from inception (May 30, 2006) through June 30, 2007, was $25,000, these activities consisted of:
On June 30, 2006, 1,000,000 shares of common stock sold to Chad Rutherford, an officer and director of the company, in exchange for $5,000, or $0.005 per share.
On September 29, 2006 an additional 1,000,000 shares were issued to him for $10,000, or $0.01 per share.
On September 30, 2006, 1,000,000 shares of common stock were issued to Brad Prystupa, an officer and director of the company in exchange for $10,000, or $.01 per share.
The company received $45,000 for share subscriptions in advance pursuant to our public offering during the quarter ended June 30, 2007.
Liquidity and Capital Resources
Our current cash balance is $67,888, of which 51,500 is being held in a separate bank account pending the closure of the Company's stock offering. In order to achieve our business plan goals, we needed the funding from the offering of registered shares pursuant to our SB-2 Registration Statement filed with the SEC under file number 333-139699 which became effective on January 10, 2007.
To June 30, 2007, we had received share subscriptions totaling 2,575,000 shares, or $51,500 pursuant to the public offering. Subsequent to June 30 2007, the Company received $9,500 for 475,000 shares. The Company closed its offering on July 6, 2007, and will not sell any additional shares. The Company sold 3,050,000 shares under the Prospectus, raising a total of $61,000.
We are a development stage company and have generated no revenue to date.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Plan of Operation
Our plan is to develop a web-based advertising service to provide contractors with opportunity to grow their businesses and get a premium price for providing outstanding service and quality of craftsmanship. In addition, consumers will have the ability to hire or choose a contractor with the aid of reviewing information available from other customers that have used a contractor's services.
We will start operations by developing the website, using independent service providers. We consider the $61,000 raised in our offering sufficient to hire a developer and begin development of the website.
We have provided the chart below that demonstrates how we intend to use the proceeds from our offering.
We estimate the amount raised in our offering will provide enough capital to purchase one computer server and marketing services to begin searching for contractors to advertise on the site.
Here's how we intend to allocate the capital raised from the offering:
Expenditure Item |
|
Computer Servers | 5,000 |
Web Development | 15,000 |
Advertising and Promotion | 20,000 |
Professional Fees | 15,000 |
Office and Miscellaneous Expenses | 5,000 |
Total | $60,000 |
During the first full year of operation, we will concentrate on finding the required investment capital, apply to get our common stock listed for trading, develop the websites (www.cytta.com and www.greattradespeople.com), locate advertisers, and market the services offered by our customers.
It has taken the first six months of 2007 to complete our offering, and we now plan to begin development of the website and advertise for and source customers to purchase advertising. We anticipate that development of the website will take approximately three months, and sourcing customers will begin upon completion of the website. As such, we anticipate being able to generate revenues from advertising in the last two months of 2007.
Once we have completed development of the website, we will begin to source contractors. We will advertise for them through trade magazines and source other industry related websites and approach them to engage in co-marketing agreements. Once we achieve a minimum of 10 contractors in a local market, we will release the website as a live interactive platform. We will work on two geographical markets at one time.
In the event that the $61,000 that we raised from the offering is insufficient to fund our plan of operation, we will attempt to proceed by self-financing through loans from the officers and directors. While the officers and directors have generally indicated a willingness to provide services and financial contributions if necessary, there are presently no agreements, arrangements, commitments, or specific understandings, either verbally or in writing, between the officers and directors and Cytta Corp.
During the first year of operations, our officers and directors are providing their labor at no charge. We do not anticipate hiring any staff during the first 12 months of operation. The difference between having the ability to sustain our cash flow requirements over the next twelve months and the need for additional outside funding will depend on how fast we can generate sales revenue.
Critical Accounting Policies
The un-audited financial statements as of June 30, 2007 included herein have been prepared without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with general accepted accounting procedures have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that these financial statements be read in conjunction with our September 30, 2006 audited financial statements and notes thereto, which can be found in our Form SB-2 Registration Statement on the SEC website at www.sec.gov under our SEC File Number 333-139699.
a. Basis of Presentation
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles applicable to development stage enterprises.
b. Fiscal Periods
The Company's fiscal year end is September 30.
c. Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
d. 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.
e. Fair Value of Financial Instruments and Derivative Financial Instruments
The Company has adopted Statement of Financial Accounting Standards ("SFAS") Number 119, "Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments." The carrying amount of accrued liabilities approximates its fair value because of the short maturity of this item. Certain fair value estimates may be subject to and involve, uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments in the management of its foreign exchange, commodity price or interest rate market risks.
f. Segmented Reporting
SFAS Number 131, "Disclosure About Segments of an Enterprise and Related Information", changed the way public companies report information about segments of their business in their quarterly reports issued to shareholders. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenues and its major customers. The company presently operates only in Canada.
g. Federal Income Taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with SFAS Number 109, "Accounting for Income Taxes", which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. 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 Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.
h. Earnings (Loss) per Share
The Company has adopted Financial Accounting Standards Board ("FASB") Statement Number 128, "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.
i. Foreign Currency Transactions
The Company's functional currency is the Canadian Dollar. The Company's reporting currency is the U.S. Dollar. All transactions initiated in Canadian Dollars are translated to U.S. Dollars in accordance with SFAS No. 52 as follows:
(iv) Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
(v) Equity at historical rates; and
(vi) Revenue and expense items at the average rate of exchange prevailing during the period.
Exchange gains and losses arising from such translations are deferred until realization and are included as a separate component of shareholders' equity as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized.
No significant realized exchange gains or losses were recorded from inception (May 30, 2006) to June 30, 2007.
j. Derivative Financial Instruments
The Company was not a party to any derivative financial instruments during the reported fiscal period.
k. Stock-Based Compensation
The Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment", which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS 123(R), stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees' requisite service period (generally the vesting period of the equity grant). The Company accounts for share-based payments to non-employees, in accordance with SFAS 123 (as originally issued) and 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"
l. Comprehensive Income (Loss)
SFAS No. 130, "Reporting Comprehensive Income", establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. From inception (May 30, 2006) to June 30, 2007, the Company had no items of other comprehensive income. Therefore, net loss equals comprehensive loss from inception (May 30, 2006) to June 30, 2007.
m. Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial Statements." Revenue will consist of plant sales income and will be recognized only when all of the following criteria have been met:
(v)Persuasive evidence for an agreement exists;
(vi)Delivery has occurred;
(vii)The fee is fixed or determinable; and
(viii)Revenue is reasonably assured.
Forward Looking Statements
Some of the statements contained in this Form 10-QSB that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-QSB, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.
All written forward-looking statements made in connection with this Form 10-QSB that are attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
The safe harbors of forward-looking statements provided by the Securities Litigation Reform Act of 1995 are unavailable to issuers not subject to the reporting requirements set forth under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. As we have not registered our securities pursuant to Section 12 of the Exchange Act, such safe harbors set forth under the Reform Act are unavailable to us.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have no identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
The following exhibits are included with this quarterly filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Form SB-2 Registration Statement, filed under SEC File Number 333-139699, at the SEC website at www.sec.gov:
Exhibit No. Description
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Principal Executive Officer and Chief Financial Officer
32.1 Sec. 906 Certification of Principal Executive Officer and Chief Financial Officer
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
August 17, 2007 Cytta Corp.
/s/ Chad Rutherford
__________________________
By: Chad Rutherford
President and Chief Executive Officer
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.
August 17, 2007 Cytta Corp.
/s/ Chad Rutherford
__________________________
By: Chad Rutherford
President, Chief Executive Officer, Treasurer, Chief Financial Officer, and Principal Accounting Officer
August 17, 2007 /s/ Brad Prystupa
__________________________
By: Brad Prystupa
Secretary & Director