SECURETECH INNOVATIONS, INC. Our independent registered public accounting firm has issued a going concern
opinion in their audit report dated
The following discussion should be read in conjunction with our financial
statements and the notes thereto and the other information included in this
Quarterly Report as filed with the
Business Overview
Corporate Structure
The following diagram illustrates our corporate structure as of
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Top Kontrol
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Top Kontrol is the world's most advanced anti-theft and anti-carjacking system currently available. Unlike our competitors' products that only protect a vehicle from unattended theft, Top Kontrol takes vehicle security and passenger safety to the next level - prioritizing the driver's and passengers' safety. Top Kontrol is presently the only automobile security and personal safety system able to thwart an active carjacking attempt without any action by the driver.
Key Advantages of Top Kontrol:
ü Anti-theft circuits actively prevent automobile theft and carjacking ü Automatically prevents theft although keys are in ignition and engine is
idling
ü Active and passive prevention of carjacking ü Does not interfere with the vehicle's other systems ü Compatible with most makes and models of cars and trucks ü Manual engine kill switch ü Key-based system prevents thieves from hacking wirelessly transmitted security
codes
ü Does not draw battery power - system works even with a disabled car battery
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Retail Package Top Retail Package Bottom
For additional information on Top Kontrol or view product demonstration videos, please visit the Top Kontrol website at www.topkontrol.com or the Top Kontrol YouTube Channel, respectively.
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Industry: Automobile Theft in America
Automobile theft in America continues to rise on an annual basis. Top Kontrol keeps your car safe when you are not there. Top Kontrol prevents car thieves from stealing your car when parked and unattended. Below is some recent data showcasing America's auto theft crisis:
873,080 Number of US cars stolen in 2020$7.4 Billion Value of cars stolen in the US in 2020
11.8% Increase in US car thefts over 2019
36 Seconds How often a car is stolen in the US
Note: 2020 is the most recent year the FBI released automobile theft statistics for the US. The next calendar year they may release comprehensive data will be 2022.
Industry: Carjackings Skyrocketing
Carjackings more than doubled during 2020, followed by an even sharper rise in carjackings to new record highs in 2021. Top Kontrol is presently the only known automobile safety device that can thwart an active carjacking attempt without any action by the driver. Below are some highlighted major US cities that experienced record levels of carjackings in 2021:
Increase in Carjackings
2021
US City
343% Washington, DC
222% Minneapolis, MN
133% Chicago, IL
121% New Orleans, LA
115% Oakland, CA
Competition
We believe that our targeted industry is sufficiently large enough that we will be able to compete successfully against our competitors with our existing and future products. However, it is essential to note that the underlying product technology is constantly evolving and expanding with new competitors continuously innovating better products that could eventually outperform our then-offered products or, worse, possibly render them obsolete.
Manufacturing
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Piranha Blockchain
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• Build secure low-cost green energy data centers • Offer advanced cybersecurity products to secure and protect client data,
identity, and digital assets from theft and ransom • Develop blockchain and cryptocurrency systems and platforms for mining,
storage, and trading exchanges
Piranha intends to generate revenue through four potential sources:
• Individual one-time product sales of cybersecurity hardware and applications • Recurring monthly revenue from cybersecurity subscriptions and hosting
services
• Cryptocurrency mining
• Transaction fees from cryptocurrency exchange trades and conversions into and
from fiat currencies
Piranha will pursue growth in this business expansion through a combination of internally developed products and technologies and strategic acquisitions.
Government Regulation
Our products are designed to meet all known existing or proposed governmental regulations. We believe that we currently meet current standards for approvals by government regulatory agencies for our products and services.
Top Kontrol was issued a
Compliance with Environmental Laws
We believe there are no material issues or costs associated with our compliance
with environmental laws. We did not incur environmental expenses in fiscal
periods ended
Intellectual Property Rights and Proprietary Information
We operate in an industry where innovation, investment in new ideas, and protection of resulting intellectual property rights are essential drivers of success. We rely on various intellectual property protections for our products and technologies, including patent, trademark and trade secret laws, and contractual obligations. We pursue a policy of vigorously enforcing our intellectual property rights.
Patents that have been issued and/or licensed to
·On
In addition to such factors as innovation, technological expertise, and experienced personnel, we believe robust product offerings that we continue to upgrade and enhance will keep us competitive. We will seek patent protection on significant technological improvements that we make. We have an ongoing policy of filing patent applications to seek legal protections
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for our products and technologies' novel features. Before filing and granting patents, our policy is to disclose critical elements to patent counsel and maintain these features as trade secrets before product introduction. Patent applications may not result in issued patents covering all-important claims and could be denied in their entirety.
We also file for trade name and trademark protection when appropriate. We are
the owner of federally registered trademarks, including SECURETECH INNOVATIONS®
and TOP KONTROL®. Additionally,
Our policy is to enter into nondisclosure agreements with each employee, consultant, or third party to whom any of our proprietary information may be disclosed. These agreements prohibit disclosing our confidential information to others during and after employment or working relationships.
Employees
As of
Results of Operations
Comparison of the Three Months Ended
The following table sets forth the results of our operations for the three
months ended
Three months ended September 30,
2022 2021
Sales $ 8,525 $ 6,677
Cost of goods sold (2,275) (2,098)
Gross profit 6,250 4,579
Operating expenses (128,425) (34,503)
Loss from operations (122,175) (34,503)
Other income 425 -
Net loss $ (121,750) $ (34,503)
Sales
Sales for the three months ended
Cost of Goods Sold
Our cost of goods sold consists primarily of purchasing components and circuitry
from various vendors then utilizing third-party contract manufacturing
facilities to produce our products, with final assembly conducted at our
Gross Profit
Gross profit for the three months ended
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Operating Expenses
Our operating expenses for the fiscal period consisted of general and
administrative expenses. Total operating expenses were
Loss From Operations
As a result of the foregoing, our loss from operations was (
Other Income
Our other income is comprised of bank interest received on cash deposits and
cashback rewards generated from a bank credit card. During the three months that
ended
Net Loss
The result was that our net loss was (
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Comparison of the Nine Months Ended
The following table sets forth the results of our operations for the nine months
ended
Nine months ended September 30,
2022 2021
Sales $ 25,678 $ 27,209
Cost of goods sold (6,965) (7,604)
Gross profit 18,713 19,605
Operating expenses (303,615) (88,167)
Loss from operations (284,902) (68,562)
Other income 1,640 -
Net loss $ (283,262) $ (68,562)
Sales
Sales for the nine months ended
Cost of Goods Sold
Our cost of goods sold consists primarily of purchasing components and circuitry
from various vendors then utilizing third-party contract manufacturing
facilities to produce our products, with final assembly conducted at our
Gross Profit
Gross profit for the nine months ended
Operating Expenses
Nine months ended September 30,
2022 2021Operating expenses:
General and administrative $ 294,663 $ 88,090 Research and development 8,952 77 Operating expenses $ 303,615 $ 88,167
Our operating expenses for the fiscal period consisted of two components:
general and administrative expenses and research and development expenses. Total
operating expenses were
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Loss From Operations
As a result of the foregoing, our loss from operations was (
Other Income
Our other income is comprised of bank interest received on cash deposits and
cashback rewards generated from a bank credit card. During the nine months that
ended
Net Loss
The result was that our net loss was (
Total Stockholders' Equity.
Our stockholders' equity was
Liquidity and Capital Resources
Our principal demands for liquidity are related to our efforts to generate sales, manufacture inventory, and expenditures related to sales, regulatory compliance, and general corporate purposes. We intend to meet our liquidity demands, including capital expenditures related to the manufacture of inventory and the expansion of our business, primarily through cash flow provided by operations and sales of our securities.
As of
We rely primarily on internally generated cash flow and available working capital to support operations and growth. Although we believe that our current cash and anticipated cash receipts from sales of Top Kontrol will be sufficient to meet our planned working capital requirements and capital expenditures over the next 12 months, we are constantly exploring additional sources of new capital. Without limiting our available options, future financings will most likely be through the sale of additional shares of our common stock. We may also include warrants, options, and/or rights in conjunction with any future issuances of our common stock. However, we can give no assurance that future financing will be available to us and, if available to us, in amounts or on terms acceptable to us.
We had net working capital of
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The following is a summary of cash provided by or used in each of the indicated
types of activities during the nine months ended
Nine Months Ended September 30,
2022 2021
Cash provided by (used in):
Operating activities ($233,168 ) ($60,665 )
Investing activities ($4,535 ) $-0 -
Financing activities $127,004 $222,250 Net cash used in operating activities was (
Net cash used in investing activities was (
Net cash provided by financing activities was
Ongoing and Future Capital Funding Efforts
As of
Impact of the COVID-19 (Coronavirus) Pandemic
In
Because we began manufacturing and selling Top Kontrol during the fiscal year
ended
• Raw material and component supply chains • Product sales • Training and educating prospective Top Kontrol Certified Technicians • Marketing and advertising efficiencies
Uncertainties regarding the economic impact of COVID-19 are likely to result in
sustained market turmoil through the fiscal year ending
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resulting from the prolonged repercussions of the COVID-19 pandemic into the
fiscal year ending
Going Concern Consideration
Our independent registered public accounting firm has issued a going concern
opinion in their audit report dated
Off-Balance Sheet Operations
As of
Contractual Obligations
As of
Critical Accounting Policies Use of Estimates
The accompanying financial statements of
Cash and Cash Equivalents
For purposes of the statement of cash flows,
Fair Value of Financial Instruments
ASC 820, "Fair Value Measurements" and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level Description
Level 1 Applies to assets or liabilities for which there are quoted prices in
active markets for identical assets or liabilities.
Level 2 Applies to assets or liabilities for which there are inputs other than
quoted prices that are observable for the asset or liability such as
quoted prices for similar assets or liabilities in active markets;
quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or
model-derived valuations in which significant inputs are observable or
can be derived principally from, or corroborated by, observable market
data.
Level 3 Applies to assets or liabilities for which there are unobservable inputs
to the valuation methodology that are significant to the measurement of
the fair value of the assets or liabilities.
Inventory and Cost of Sales
Inventories are stated at the lower of cost or realizable value, using the weighted average cost method. When an impairment indicator suggests that the carrying amounts of inventories might not be recoverable, Management reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss
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is recorded if the net realizable value is less than the carrying value. Impairment indicators considered for these purposes are, among others, obsolescence, decrease in market prices, damage, and a firm commitment to sell.
Net Loss per Share Calculation
Basic net loss per common share is computed by dividing the net loss
attributable to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share is calculated
similarly to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive.
Revenue Recognition
Effective
Top Kontrol requires installation by a Certified Top Kontrol Technician. To
become a Certified Top Kontrol Technician, an automotive technician must
complete a one-day hands-on course hosted by
Because of this professional installation requirement,
Revenue is recognized when performance obligations under the terms of a contract
with our customers are satisfied. Revenue is recorded net of marketing
allowances, volume discounts, and other forms of variable consideration.
Generally, this occurs with the transfer of control of our product to the
customer and payment has been received.
Revenue Recognition; ASC 606 Five-Step Model
Under ASC 606,
Revenue Recognition;
Customers are allowed to return goods that are defective (warranty returns). In some instances, customers may be allowed to return a limited number of units for periodic stock adjustment returns. Such stock adjustment returns would be limited to no more than 5% of their total units sold.
As is standard in the industry, we only will accept returns from active customers. If a customer ceases doing business with us, we have no further obligation to accept additional product returns from that customer.
Income Taxes
SecureTech accounts for income taxes pursuant to FASB ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
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Changes in circumstances, such as
Election to Use Extended Transitional Period Under Jumpstart Our Business Startups Act ("JOBS Act")
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
Recent Accounting Pronouncements
There are various updates recently issued, most of which represented technical
corrections to the accounting literature or application to specific industries
and are not expected to have a material impact on
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