Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

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

The following is management's discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward -looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates.

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q.

THE COMPANY

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.

Results of Operations for the three and six months ended March 31, 2025, and 2024:

Revenues for the three and six months ended March 31, 2025, were $1,249 and $2,498, respectively, compared to $-0- and $2,411, respectively, for the three and six months ended March 31, 2024, and were from deferred revenue on subscription agreements being recognized.

Revenues consist of our proprietary software, integration consulting services, tech support and product maintenance billed to the customer.

Operating expenses were $562,035 and $1,204,241 for the three and six months ended March 31, 2025, compared to $905,710 and $1,896,162 for the three and six months ended March 31, 2024. The decreases of $343,675 and $691,921 for the three and six months ended March 31, 2025, compared to the three and six months ended March 31, 2024, are as shown in the table below:

		Three months ended March 31,								Six months ended March 31,
Description		2025				2024				2025				2024
Related party expenses (excluding stock-based compensation)		$	97,955			$	90,000			$	195,910			$	180,000
Stock based compensation			93,628				265,692				228,856				742,000
Stock based compensation, officers			123,383				126,834				247,167				250,042
Professional fees			70,700				61,500				121,349				106,501
Consulting expenses (excluding stock-based compensation)			-				55,000				-				222,000
Depreciation expense			9,161				10,508				19,455				21,084
Software and demo expenses			7,046				187,174				17,694				187,460
General and Administrative, officers			3,146				3,187				1,219				5,805
Auto, travel and entertainment			8,996				14,643				31,157				21,889
Rent expense			13,528				6,372				22,623				13,182
Transfer agent and filing fees			7,277				7,926				14,493				16,610
Investor relations			103,400				57,560				248,667				89,481
Gain on debt extinguishment			(864	)			(8,789	)			(864	)			(4,834	)
Other operating expenses			24,678				28,103				56,514				44,942
Total		$	562,034			$	905,710			$	1,204,241			$	1,896,162

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Related party expenses (excluding stock expenses) increased for the three and six months ended March 31, 2025, compared to the three and six months ended March 31, 2024, as follows:

		Three months ended March 31,								Six months ended March 31,
Description		2025				2024				2025				2024
Management fees, Chief Executive Officer (CEO)		$	45,000			$	45,000			$	90,000			$	90,000
Management fees, Chief Operation Officer (COO)			45,000				45,000				90,000				90,000
Office rent and expenses			7,955				-				15,910				-
Total		$	97,955			$	90,000			$	195,910			$	180,000

Effective January 1, 2023, the monthly fee for the CEO was $15,000 and effective September 1, 2023, the monthly fee for the President and COO was $15,000. Beginning in April 2024, the Company agreed to rent office space for the COO at $2,575 per month plus incidental expenses, on a month to month basis, accordingly, $7,955 and $15,910 is included in related party expenses for the three and six months ended March 31, 2025, respectively.

Stock-based compensation expenses decreased in the current periods compared to the prior periods. For the three and six months ended March 31, 2025, stock-based expenses include the compensation of $93,628 and $228,856 related to common stock all previously issued (amortization of prepaids) or to be issued (accrued), pursuant to the terms of each consultant's contracts. For the three and six months ended March 31, 2024, stock-based expenses , were related to shares issued to consultants of $-0- and $169,200, respectively and the amortization of common stock (pursuant to the terms of each consultant's contracts), options and warrants of $265,692 and $572,800, respectively.

Stock based compensation - officers was comprised pursuant to the agreement with the COO (SGG) to issue 250,000 common shares per month. For the three and six months ended March 31, 2025, the Company recorded expenses of $18,050 and $36,500, respectively. For the three and six months ended March 31, 2024, the Company recorded an expense of $21,500 and $39,375 related to the 250,000 shares per month. Additionally, the Company granted an option to SGG (a related party) to purchase 10,000,000 shares of the Company's common stock at $0.02 per share with an expiry date of July 1, 2025 (the "CYCA Option"). The CYCA option vests at the rate of 25% beginning on the first six-month anniversary of the agreement, as well as a warrant to purchase 250,000 shares of the Reticulate Micro common stock the Company owns (the "RM Warrant"). The RM Warrant has an exercise price of $1.00 per share and an expiry date of July 1, 2025. The Company valued the CYCA Option at $639,543 based on the Black-Scholes option pricing method and will be amortized through the term of the agreement, and accordingly, $53,295 and $106,590, is included in stock-based compensation expense-related party for the three and six months ended March 31, 2025, and 2024, respectively. The Company valued the RM Warrant at $624,458 based on the Black-Scholes option pricing method and will be amortized through the term of the agreement, and accordingly, $52,038 and $104,076, is included in stock-based compensation expense-related party for the three and six months ended March 31, 2025, and 2024, respectively.

Professional fees remained fairly constant for the three and six months ended March 31, 2025, compared to the three and six months ended March 31, 2024.

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Consulting expenses (excluding stock expenses) decreased during the three and six months ended March 31, 2025, compared to the three and six months ended March 31, 2024, as certain consultants engaged in the prior periods were not engaged in the current periods.

Investor relations fees increased for the three and six months ended March 31, 2025, compared to the three and six months ended March 31, 2024. The increases were primarily a result of the Company attending trade shows and conferences to expose the Company to potential investors.

Other expense, net, for the three and six months ended March 31, 2025, was $860,681 and $925,383, respectively, compared to $82,831 and $153,918 for the three and six months ended March 31, 2024, respectively. The increase was a result of the issuance of 230,095 shares of RM stock in settlement of $330,000, of principal and $54,820 of accrued interest on convertible notes, where the Company recognized a loss of $787,637 for the three and six months ended March 31, 2025.

		Three months ended March 31,								Six months ended March 31,
Description		2025				2024				2025				2024
Interest expense		$	73,044			$	82,954			$	137,746			$	154,241
Loss on RM shares issued for debt conversions			787,637				-				787,637				-
Unrealized gain on fair value change of marketable securities			(7,661,898	)			-				(7,661,898	)			-
Interest income			-				(123	)			-				(323	)
Total Other Expense (Income)		$	(6,801,217	)		$	82,831			$	(6,736,515	)		$	153,918

The following tables set forth key components of our balance sheet as of March 31, 2025, and September 30, 2024.

		March 31, 2025				September 30, 2024
Current Assets		$	7,492,228			$	1,983,881
Long term assets		$	34,412			$	191,310
Total Assets		$	7,526,640			$	2,175,191
Current and Total Liabilities		$	1,352,688			$	2,412,635
Stockholders' Equity (Deficit)		$	6,173,952			$	(237,444	)
Total Liabilities and Stockholders' Equity (Deficit)		$	7,526,640			$	2,175,191

Liquidity and Capital Resources

As of March 31, 2025, we had limited operating capital. Our current capital and our other existing resources will not be sufficient to provide the working capital needed for our current business. Additional capital will be required to meet our obligations, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our business development and financial results. These conditions raise substantial doubt about our ability to continue as a going concern as well as our recurring losses from operations and the need to raise additional capital to fund operations. This "going concern" could impair our ability to finance our operations through the sale of debt or equity securities.

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The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2025, the Company had an accumulated deficit of $31,370,211 and limited revenue. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. The Company intends to fund operations through equity and/or debt financing arrangements, which may not be sufficient to fund its capital expenditures, working capital and other cash requirements for the foreseeable future.

As of March 31, 2025, we had cash of $629,061 compared to $1,439,835 at September 30, 2024. As of March 31, 2025, we had current assets of $7,492,228 and current liabilities of $1,352,687, which resulted in working capital of $6,139,540. The current liabilities are comprised of accounts payable and accrued expenses, related party liabilities, convertible notes payable, and deferred revenue.

Operating Activities

For the six months ended March 31, 2025, net cash used in operating activities was $807,774 compared to $790,660 for the six months ended March 31, 2024. For the six months ended March 31, 2025, our net cash used in operating activities was primarily attributable to net income of $5,497,681, adjusted by the unrealized gain on the fair value change of marketable securities of $7,661,898, the loss on issuance of RM stock in settlement of debt conversions of $787,637, stock-based compensation of $476,203, and depreciation of $19,455. Net changes of $74,191 in operating assets and liabilities increased the cash used in operating activities.

For the six months ended March 31, 2024, our net cash used in operating activities was primarily attributable to the net loss of $2,047,669 and gain on debt extinguishment of $4,834, adjusted by stock-based compensation of $992,042, amortization of note discounts of $30,706, and amortization and depreciation of $21,084. Net changes of $218,011 in operating assets and liabilities decreased the cash used in operating activities.

Investing Activities

For the six months ended March 31, 2025, the Company purchased $3,000 of property and equipment. For the six months ended March 31, 2024, there was no cash provided by or used in investing activities.

Financing Activities

For the six months ended March 31, 2025, there were no financing activities.

For the six months ended March 31, 2024, the Company received $557,500 in exchange for the issuance of various convertible promissory notes.

Critical Accounting Policies

Our significant accounting policies are summarized in Note 3 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. The SEC requested that all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our management believes that given current facts and circumstances, there are no material estimates or assumptions with levels of subjectivity and judgement necessary to be considered critical accounting policies.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.