0001420368false--12-31Q320230.001275000000273145612349956138150001.001.00500000500000006400000640006400012800000815000.10.100014203682023-01-012023-09-300001420368srt:ChiefExecutiveOfficerMemberus-gaap:SubsequentEventMember2024-04-012024-04-300001420368us-gaap:SubsequentEventMemberdlti:OntarioCorporationMember2023-12-282024-01-010001420368dlti:DLTResolutionCorpMemberus-gaap:SubsequentEventMember2024-04-012024-04-090001420368us-gaap:SubsequentEventMember2024-03-110001420368us-gaap:SubsequentEventMemberdlti:SeriesBConvertiblePreferredSharesMember2023-12-012023-12-2100014203682023-08-012023-08-150001420368us-gaap:SubsequentEventMember2023-12-012023-12-210001420368us-gaap:AccountsReceivableMember2023-01-012023-09-300001420368us-gaap:RevenueFromContractWithCustomerMember2023-01-012023-09-300001420368us-gaap:RevenueFromContractWithCustomerMember2022-01-012022-09-300001420368us-gaap:AccountsReceivableMember2022-01-012022-12-3100014203682020-04-240001420368dlti:AugustOneTwentySeventeenMemberdlti:UnrelatedPartyMember2023-01-012023-09-300001420368dlti:AugustOneTwentySeventeenMemberdlti:UnrelatedPartyMember2023-09-300001420368dlti:NonCompeteMember2022-12-310001420368dlti:NonCompeteMember2023-09-300001420368dlti:DomainAndTradeNameMember2022-12-310001420368dlti:DomainAndTradeNameMember2023-09-300001420368us-gaap:CustomerRelationshipsMember2022-12-310001420368us-gaap:CustomerRelationshipsMember2023-09-300001420368us-gaap:DevelopedTechnologyRightsMember2022-12-310001420368us-gaap:DevelopedTechnologyRightsMember2023-09-3000014203682023-03-150001420368dlti:SeriesAConvertiblePreferredStockMember2023-09-300001420368dlti:SeriesAConvertiblePreferredStockMember2022-12-310001420368us-gaap:ConvertibleDebtMemberdlti:SeriesAConvertiblePreferredStockMember2023-09-300001420368us-gaap:ConvertibleDebtMemberdlti:SeriesAConvertiblePreferredStockMember2022-12-310001420368us-gaap:NoncontrollingInterestMember2023-09-300001420368us-gaap:RetainedEarningsMember2023-09-300001420368us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001420368us-gaap:TreasuryStockCommonMember2023-09-300001420368us-gaap:AdditionalPaidInCapitalMember2023-09-300001420368dlti:CommonStockSubscribedMember2023-09-300001420368us-gaap:CommonStockMember2023-09-300001420368dlti:PreferredStockSeriesBMember2023-09-300001420368us-gaap:NoncontrollingInterestMember2023-01-012023-09-300001420368us-gaap:RetainedEarningsMember2023-01-012023-09-300001420368us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001420368us-gaap:TreasuryStockCommonMember2023-01-012023-09-300001420368us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001420368dlti:CommonStockSubscribedMember2023-01-012023-09-300001420368us-gaap:CommonStockMember2023-01-012023-09-300001420368dlti:PreferredStockSeriesBMember2023-01-012023-09-300001420368us-gaap:NoncontrollingInterestMember2022-12-310001420368us-gaap:RetainedEarningsMember2022-12-310001420368us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001420368us-gaap:TreasuryStockCommonMember2022-12-310001420368us-gaap:AdditionalPaidInCapitalMember2022-12-310001420368dlti:CommonStockSubscribedMember2022-12-310001420368us-gaap:CommonStockMember2022-12-310001420368dlti:PreferredStockSeriesBMember2022-12-3100014203682022-09-300001420368us-gaap:NoncontrollingInterestMember2022-09-300001420368us-gaap:RetainedEarningsMember2022-09-300001420368us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001420368us-gaap:TreasuryStockCommonMember2022-09-300001420368us-gaap:AdditionalPaidInCapitalMember2022-09-300001420368dlti:CommonStockSubscribedMember2022-09-300001420368us-gaap:CommonStockMember2022-09-300001420368dlti:PreferredStockSeriesBMember2022-09-300001420368us-gaap:NoncontrollingInterestMember2022-01-012022-09-300001420368us-gaap:RetainedEarningsMember2022-01-012022-09-300001420368us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001420368us-gaap:TreasuryStockCommonMember2022-01-012022-09-300001420368us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001420368dlti:CommonStockSubscribedMember2022-01-012022-09-300001420368us-gaap:CommonStockMember2022-01-012022-09-300001420368dlti:PreferredStockSeriesBMember2022-01-012022-09-3000014203682021-12-310001420368us-gaap:NoncontrollingInterestMember2021-12-310001420368us-gaap:RetainedEarningsMember2021-12-310001420368us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001420368us-gaap:TreasuryStockCommonMember2021-12-310001420368us-gaap:AdditionalPaidInCapitalMember2021-12-310001420368dlti:CommonStockSubscribedMember2021-12-310001420368us-gaap:CommonStockMember2021-12-310001420368dlti:PreferredStockSeriesBMember2021-12-3100014203682022-01-012022-09-3000014203682022-07-012022-09-3000014203682023-07-012023-09-300001420368dlti:SeriesBConvertiblePreferredStocksMember2023-09-300001420368dlti:SeriesAConvertiblePreferredStocksMember2023-09-300001420368dlti:SeriesBConvertiblePreferredStocksMember2022-12-310001420368dlti:SeriesAConvertiblePreferredStocksMember2022-12-310001420368us-gaap:PreferredClassBMember2022-12-310001420368us-gaap:PreferredClassBMember2023-09-300001420368us-gaap:PreferredClassAMember2022-12-310001420368us-gaap:PreferredClassAMember2023-09-3000014203682022-12-3100014203682023-09-3000014203682024-07-16iso4217:USDxbrli:sharesiso4217:USDxbrli:sharesxbrli:pure

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-148546

DLT RESOLUTION, INC

(Exact name of registrant as specified in its charter)

Nevada		20-8248213
(State of Incorporation)		(I.R.S. Employer Identification No.)

5940 S. Rainbow Blvd., Ste 400-32132, Las Vegas, NV		89118
(Address of principal executive offices)		(Zip Code)

(702) 796-6363

(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ 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 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 ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer	☐	Non‑accelerated filer	☐
Accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of July 16, 2024, 44,203,211 shares of the registrant’s Common Stock, $0.001 par value, were issued and outstanding.

TABLE OF CONTENTS

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2023

		Page
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Comprehensive Loss	5

	Condensed Consolidated Statements of Changes in Stockholders’ Deficit	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

Item 4.	Controls and Procedures	16

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

Table of Contents

Item 1: Financial Statements.

DLT RESOLUTION, INC

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2023			December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	194		$	11,885
Accounts receivable, net of allowance for doubtful accounts of $34,925 at September 30, 2023 and $0 at December 31, 2022		20,013			57,631
Other receivable		192,410			-
Total current assets		212,617			69,516

Intangible assets, net of accumulated amortization		93,349			139,848
Assets from discontinued operations		-			116,352
Total assets	$	305,966		$	325,716

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	144,172		$	211,218
Accounts payable, related party		15,887			15,000
Interest payable, related party		61,697			56,210
Related party payables		28,986			57,817
Notes payables, related party		81,500			81,500
Notes payable, current portion		29,553			29,560
Liabilities from discontinued operations		-			746,365

Total current liabilities		361,795			1,197,670

Notes payable, net of current portion		5,000			5,000
Total liabilities		366,795			1,202,670

Stockholders’ deficit
Series A convertible preferred stock, $1.00 par value; 5,000,000 shares authorized; 0 issued and outstanding at September 30, 2023 and December 31, 2022		-			-
Series B convertible preferred stock, $1.00 par value; 500,000 shares authorized; 64,000 issued and outstanding at September 30, 2023 and December 31, 2022		64,000			64,000
Common stock, $0.001 par value; 275,000,000 shares authorized; 27,314,561 issued; 23,499,561 outstanding at September 30, 2023 and December 31, 2022		27,315			27,315
Common stock subscribed		206,410			14,000
Additional paid-in capital		6,946,198			6,946,198
Other comprehensive income		363,097			555,810
Treasury stock, 3,815,000 shares as of September 30, 2023 and December 31, 2022, at cost		(5,300	)		(5,300	)
Accumulated deficit		(7,662,549	)		(8,478,977	)
Total stockholders’ deficit		(60,829	)		(876,954	)

Total liabilities and stockholders’ deficit	$	305,966		$	325,716

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DLT RESOLUTION, INC.

Unaudited Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022

Revenues	$	34,113		$	61,474		$	107,023		$	168,048
Cost of revenue and operating expenses
Cost of revenue		30,628			40,109			64,066			115,368
General and administrative		4,404			17,926			29,814			171,678
Depreciation and amortization		14,779			16,052			46,467			48,773
Total operating expenses		49,811			74,087			140,347			335,819
Loss from operations		(15,698	)		(12,613	)		(33,324	)		(167,771	)

Other income (expense)
Foreign exchange gain (loss)		9,802			8			9,681			22
Gain on disposition of assets		35,149			—			845,557			—
Interest expense		(1,829	)		(1,829	)		(5,486	)		(10,723	)
Total other income (expense)		43,122			(1,821	)		849,752			(10,701	)

Income (loss) from continuing operations		27,424			(14,434	)		816,428			(178,472	)

Income (loss) from discontinued operations		—			(4,993	)		—			(964,902	)

Net income (loss)	$	27,424		$	(19,427	)		816,428			(1,143,374	)

Net (loss) income per share-basic and diluted	$	0.00		$	(0.00	)		0.03			(0.04	)

Average number of shares of common stock outstanding		27,314,561			27,314,561			27,314,561			27,006,353

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DLT RESOLUTION, INC.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022
Net (loss) income	$	27,424		$	(19,427	)	$	816,428		$	(1,143,374	)

Other comprehensive income (loss)
Foreign currency translation adjustment		(37,070	)		325,970			(192,713	)		808,321
Total other comprehensive income (loss)		(37,070	)		325,970			(192,713	)		808,321

Comprehensive (loss) income	$	(9,646	)	$	306,543		$	623,715		$	(335,053	)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DLT RESOLUTION, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit

Nine Months Ended September 30, 2023

	Series B Preferred Stock				Common Stock				Common Stock		Additional Paid-in		Treasury			Other Comprehensive			Accumulated			Non-Controlling
	Shares		Amount		Shares		Amount		Subscribed		Capital		Stock			Income			Deficit			Interest		Total
Balance, January 1, 2023		64,000	$	64,000		27,314,561	$	27,315	$	14,000	$	6,946,198	$	(5,300	)	$	555,810		$	(8,478,977	)		-	$	(876,954	)

Foreign currency translation adjustment		-		-		-		-		-		-		-			(192,713	)		-			-		(192,713	)

Sales of common stock subscriptions		-		-		-		-		192,410		-		-			-			-			-		192,410

Net income		-		-		-		-		-		-					-			816,428			-		816,428

Balance, September 30, 2023		64,000	$	64,000		27,314,561	$	27,315	$	206,410	$	6,946,198	$	(5,300	)	$	363,097		$	(7,662,549	)		-	$	(60,829	)

Nine Months Ended September 30, 2022

	Series B Preferred Stock				Common Stock				Common Stock		Additional Paid-in		Treasury			Other Comprehensive			Accumulated			Non-Controlling
	Shares		Amount		Shares		Amount		Subscribed		Capital		Stock			Income			Deficit			Interest		Total
Balance, January 1, 2022		64,000	$	64,000		26,926,287	$	26,926	$	14,000	$	6,762,010	$	(5,300	)	$	(182,345	)	$	(6,548,815	)		-	$	130,476

Sales of Common Stock		-		-		388,274		389		-		184,188		-			-			-			-		184,577

Loss on investment in Union Strategies Inc.																				(818,982	)				(818,982	)

Foreign currency translation adjustment		-		-		-		-		-		-		-			808,321			-			-		808,321

Net loss		-		-		-		-		-		-		-			-			(1,143,374	)				(1,143,374	)

Balance, September 30, 2022		64,000	$	64,000		27,314,561	$	27,315	$	14,000	$	6,946,198	$	(5,300	)	$	625,976		$	(8,511,171	)		-	$	(838,982	)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DLT RESOLUTION, INC.
Unaudited Condensed Consolidated Statements of Cash Flows

	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022

Cash flows from operating activities
Income (loss) from continuing operations	$	816,428		$	(178,472	)
Adjustments to reconcile net loss to net cash used in operating activities
Gain on disposition of assets		(845,557	)		-
Depreciation and amortization expense		46,467			48,773
Bad debt expense		-			34,925
Changes in operating assets and liabilities
Accounts receivable		(67,821	)		(55,209	)
Interest payable, related party		5,486			7,315
Accounts payable and accrued liabilities		7,190			18,180
Accounts payable, related parties		23,507			(76,521	)
Net cash used in operating activities		(14,300	)		(201,009	)

Net cash used in investing activities		-			-

Cash flows from financing activities
Proceeds from sales of common stock		-			184,577
Net cash provided by financing activities		-			184,577

Net change in cash		(14,300	)		(16,432	)
Effect of exchange rate on cash		2,609			(3,936	)
Cash at beginning of period		11,885			29,782
Cash at end of period	$	194		$	9,414

Supplemental cash flow information
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non-cash financing activities:
Common share subscription receivable	$	192,410		$	-
See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

DLT RESOLUTION, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Note 1 – Organization and Significant Accounting Policies

The Company was organized on January 17, 2007 (Date of Inception) under the laws of the State of Nevada, as DBL Senior Care, Inc. and subsequently changed its name to DLT Resolution Inc. on December 4, 2017.

DLT Resolution Inc. (“DLT”, the “Company”, “we” and “our”) operates in blockchain applications and telecommunications in Canada and the United States. The Company operates a Health Information Exchange providing the ability to request and retrieve medical information and records while meeting all of today’s security & compliance demands for HIPAA, PIPEDA and PHIPA.

In April 2023, the Company acquired DLT Telecom, Inc., a newly formed Canadian corporation, for a nominal amount. The Company uses DLT Telecom, Inc. as the successor entity for its operations that were conducted by DLT Resolution Corp.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flow from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plans in regards to this matter include raising additional equity financing and borrowing funds under a private credit facility and/or other credit sources.

Interim Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and in conformity with the instructions to Form 10-Q and Article 8 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these condensed consolidated financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with US GAAP and SEC regulations for interim financial statements. The results for the nine months ended September 30, 2023 are not necessarily indicative of the results that we will have for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K as filed with the SEC on March 13, 2023.

Revenue Recognition

The Company follows ASC 606 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue upon the transfer of promised services to customers in amounts that reflect the consideration to which the Company expects to be entitled the transfer of services. The Company considers revenue earned when all the following criteria are met: (i) the contract with the customer has been identified, (ii) the performance obligations have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to the performance obligations, and (v) the performance obligations have been satisfied. The Company primarily generates revenues through the sale of products through its website and at industry tradeshows.

Table of Contents

Use of Estimates

The preparation of financial statements in conformity with 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Income taxes

Income taxes are provided for using the liability method of accounting in accordance with FASB ASC Topic 740 (formally SFAS No. 109 “Accounting for Income Taxes”). A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

At September 30, 2023, there were no uncertain tax positions that require accrual.

Net Income (Loss) Per Share

Net loss per share is calculated in accordance with FASB ASC topic 260. Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period, assuming conversion or exercise of all potentially dilutive securities outstanding during each reporting period presented. Potentially dilutive securities are not presented or used in the computation of diluted loss per share on the statement of operations for periods when the Company incurs net losses, as their effect would be anti-dilutive.

As of September 30, 2023 and December 31, 2022, the Company had 0 shares of Series A Convertible Preferred Stock issued and outstanding, which were previously convertible into 12,800 shares of the Company’s Common Stock.

Foreign Currency Translation

The functional currency of the Company’s subsidiaries in Canada is the Canadian Dollar. The subsidiaries’ assets and liabilities have been translated to U.S. dollars using exchange rates of 0.755744 and 0.738989 in effect at the balance sheet dates of September 30, 2023, and December 31, 2022, respectively. Unaudited condensed consolidated statements of operations amounts have been translated using the weighted average exchange rates of 0.724603 for the nine months ended September 30, 2023, and 0.775500 for the nine months ended September 30, 2022. Resulting gains or losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Foreign currency transaction gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in other income (expense). Foreign currency transaction gains (losses) recognized for the nine-month periods ended September 30, 2023 and 2022 were $9,681 and $22, respectively.

Fair Value of Financial Instruments

Fair value of certain of the Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

Table of Contents

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

Note 2 – Discontinued Operations

The Company suspended the operations of Union Strategies, Inc. (“USI”) in 2022 and recognizes its activities as discontinued operations within the accompanying unaudited condensed consolidated financial statements. All assets are written off and included in the loss from discontinued operations. In 2023, the Company sold its 100% ownership of USI to a third party for a nominal payment and the acquirer assumed all of USI’s liabilities on a nonrecourse basis.

On March 15, 2023, the Company sold its 100% ownership of DLT Data Services Inc. to a third party for a nominal purchase price and has recognized its activities as discontinued operations within the accompanying unaudited condensed consolidated financial statements.

Table of Contents

Note 3 – Intangible Assets

We amortize identifiable intangible assets on a straight-line basis over their estimated useful lives. As of September 30, 2023 and December, 2022, identifiable intangibles were as follows:

	September 30, 2023			December 31, 2022

Developed technology	$	299,224		$	299,291
Customer relationships		96,047			96,069
Domain and trade name		3,694			3,695
Non-compete		34,725			34,732
Accumulated amortization		(340,341	)		(293,939	)
Total intangible assets, net	$	93,349		$	139,848

Expected future amortization expense related to identifiable intangibles based on our carrying amount as of September 30, 2023 for the following five years is as follows (in thousands):

For the Twelve Months ended September 30,
2024	$	62,000
2025		31,349
	$	93,349

Note 4 – Notes Payable

On August 1, 2017, the Company issued a non-interest bearing $5,000 note payable due on July 1, 2019 to a third party in exchange for Company Common Stock held by the third party. As of September 30, 2023, the note is unpaid.

Note 5 – Stockholders’ Deficit

Common stock subscribed

During the nine months ended September 30, 2023, the Company sold subscriptions to purchase 4,878,503 shares for $192,410. The Company sold a subscription to purchase 14,000 shares of its Common Stock for $14,000 on April 24, 2020. To date, the shares have not been issued to the purchaser.

Table of Contents

Note 6 – Related Party Transactions

In connection with the sales of stock subscriptions, the Company directed the proceeds to be deposited into DLT International, Inc., a Company controlled by the Company’s Chief Executive Officer, for the purposes of safekeeping. The funds were used subsequent to September 30, 2023 to pay the Company’s operating expenses. In January 2024, DLT International, Inc. became a wholly-owned subsidiary of the Company.

The Company paid $23,949 and $0 for the services of the Company’s directors or executives during the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023 and, the Company had an outstanding payable to related parties of $28,986 compared to $57,817 at December 31, 2022. The obligations are unsecured, non-interest bearing, due on demand and payable in Canadian dollars.

The Company has a note payable to a related party as settlement for consulting services. The note carries interest of 9% compounded annually and is due on demand. As of September 30, 2023 and December 31, 2023, $81,500 of principal and $61,697 and $56,210, of accrued interest was due, respectively.

Note 7 – Concentrations

During the nine-month periods ended September 30, 2023 and September 30, 2022, no single customer accounted for more than 10% of total revenue for the respective periods. As of September 30, 2023 and December 31, 2022, no customer had an outstanding accounts receivable balance that was 10% of our total accounts receivable at that time.

Note 8 – Commitments and Contingencies

A Canadian subsidiary of the Company incurs employer payroll taxes and withholds payroll taxes from employee compensation and is required to remit the funds to Canadian government authorities on a timely basis. The subsidiary has not remitted the payroll taxes and carries the obligation as a current liability. The subsidiary intends to remit the funds as soon as it has the financial ability. The government authorities may assess penalties and interest on the subsidiary and has garnished amounts from the DLT Resolution Corp. bank account. No provision on the balance sheet is carried for the possible assessment of penalties and interest. Management estimates that the amount of a potential assessment would not be material to the financial statements as of September 30, 2023 and the nine months then ended.

The Company charges and collects Canadian federal and provincial sales taxes known as harmonized sales tax or HST and is required to remit the funds to Canadian government authorities on a timely basis. The subsidiary has not remitted the HST taxes and carries the obligation as a current liability. The subsidiary intends to remit the funds as soon as it has the financial ability. The government authorities may assess penalties and interest on the subsidiary. No provision on the balance sheet is carried for the possible assessment. Management estimates that the amount of a potential assessment would not be material to the financial statements as of September 30, 2023 and the nine months then ended.

Note 9 – Subsequent events

On December 21, 2023, the Company issued 2,166,667 shares of Common Stock in exchange for 64,000 shares Series B convertible Preferred Stock.

On January 1, 2024, the Company acquired 100% ownership of DLTI International Inc., an Ontario corporation that was owned by the Company’s Chief Executive Officer, for nominal consideration.

The Company issued 5,000,000 shares of Common Stock for services in connection with an employment agreement with the Company’s Chief Executive Officer and 2,500,000 shares in connection with a consulting agreement.

On March 11, 2024, the Company entered into a purchase agreement with Global Motor Trade LLC, Global Motor Trade International LLC, SJ Auto Trade LLC, WEC International LLC. and the beneficial owners of each entity, collectively referred to as GMTI. GMTI, based in the United States, specializes in international wholesale distribution and sale of vehicles, vehicle parts and equipment, and machinery and equipment, with a primary focus on United States, Canada, Mexico, Southeast Asia, China, Europe, Dubai, and Africa. The Company paid the purchase price by issuing 6,013,900 shares of Common Stock valued at the current market value at that time and any pledge to transfer new shares issued to the Company’s Chief Executive Officer up through May 31, 2024, or by closing.

On March 13, 2024, the Company appointed Charles Brofman as Director, General Counsel and Secretary.

On April 9, 2024, the Company sold its 100% ownership of DLT Resolution Corp. to a third party for a nominal purchase price and the acquirer assumed all DLT Resolution Corp’s liabilities on a nonrecourse basis.

In April 2024, the Company issued 5,000,000 shares of its Common Stock as compensation for services performed by the Company’s chief executive officer.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation. Shareholders’ Equity General.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, and projections about DLT Resolutions’ industry, management’s beliefs, and certain assumptions made by management. Forward-looking statements include our expectations regarding product, services, and maintenance revenue, annual savings associated with the organizational changes effected in prior years, and short- and long-term cash needs. In some cases, words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “estimates,” variations of these words, and similar expressions are intended to identify forward-looking statements. The statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any forward-looking statements. Risks and uncertainties of our business include those set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 13, 2023, under “Item 1A. Risk Factors” as well as additional risks described in this Form 10-Q. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the Securities and Exchange Commission, particularly the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

Overview

Recent Developments

In 2022, the Company suspended the operations of USI and has recognized its activities as discontinued operations within the financial statements for 2022 and 2021. In 2023, the Company sold its 100% ownership of USI to a third party for a nominal payment and the acquirer assumed all of USI’s liabilities on a nonrecourse basis. In connection with the sale, the Company received 2,000,000 shares of its Common Stock held by an individual who sold USI shares to the Company in January 2020. Following the receipt of the 2,000,000 shares, the Company has 24,926,287 shares outstanding.

In April 2023, the Company formed DLT Telecom, Inc., a Canadian corporation. The Company is using DLT Telecom, Inc. as the successor entity for its operations that were conducted by DLT Resolution Corp.

Table of Contents

The Company issued 2,500,000 shares of Common Stock for services in connection with an employment agreement dated November 1, 2023.

On December 21, 2023, the Company issued 2,166,667 shares of Common Stock in exchange for 64,000 shares Series B convertible Preferred Stock.

On January 1, 2024, the Company acquired 100% ownership of DLTI International Inc., an Ontario corporation that was owned by the Company’s Chief Executive Officer, for nominal consideration.

On March 13, 2024, the Company appointed Charles Brofman as Director, General Counsel and Secretary.

In April 2024, the Company issued 5,000,000 shares of its Common Stock as compensation for services performed by the Company’s Chief Executive Officer and 2,500,000 shares of its Common Stock as compensation for services performed by a consultant.

Revenues

Revenues for the three months ended September 30, 2023 and 2022 were $34,113 and $61,474, respectively. The decrease resulted primarily from our operating company having fewer customers and less revenue per customer in the three months ended September 30, 2023.

Revenues for the nine months ended September 30, 2023 and 2022 were $107,023 and $168,048, respectively. The decrease resulted primarily from our operating company having fewer customers and less revenue per customer in the nine months ended September 30, 2023.

Cost of Revenue

Cost of revenue for the three months ended September 30, 2023 and 2022 were $30,628 and $40,109, respectively. The dollar decrease resulted primarily from the reduction in revenue and costs corresponding to that reduced revenue.

Cost of revenue for the nine months ended September 30, 2023 and 2022 were $64,066 and $115,368, respectively. The dollar decrease resulted primarily from the reduction in revenue and costs corresponding to that reduced revenue.

General and Administrative

General and administrative expense was $4,404 and $17,926 for the three months ended September 30, 2023 and 2022, respectively. The decrease is primarily due to a $72,336 decrease in professional fees.

General and administrative expense was $29,814 and $171,678 for the nine months ended September 30, 2023 and 2022, respectively. The decrease is primarily due to a $75,252 decrease in professional fees.

Depreciation and Amortization

Depreciation and amortization expense was $14,779 and $16,052 for the three months September 30, 2023 and 2022, respectively.

Depreciation and amortization expense was $46,647 and $48,773 for the nine months September 30, 2023 and 2022, respectively.

Other Expense

The Company had net other income of $43,122 and net other expense of $1,821 for the three months ended September 30, 2023 and 2022.

The Company had net other income of $849,752 for the nine months ended September 30, 2023 and other expense of $10,701 for the nine months ended September 30, 2022. In the nine months ended September 30, 2023, the Company sold Union Strategies, Inc. and DLT Data Services Inc. and recognized a $845,557 gain on the sales.

Discontinued Operations

The Company had a loss from discontinued operations of $0 and $4,993 for the three-month periods ended September 30, 2023 and 2022, respectively. USI and DLT Data did not operate in 2024 and incurred no losses.

The Company had a loss from discontinued operations of $0 and $964,902 for the nine-month periods ended September 30, 2023 and 2022, respectively. USI and DLT Data did not operate in 2024 and incurred no losses.

Table of Contents

Net income (loss)

The Company had net income of $27,424 for the three-month period ended September 30, 2023 and a net loss of $19,427 for the three-month period ended September 30, 2022. The decrease in the net loss is primarily due to decreases in professional fees and the loss from discontinued operations.

The Company had net income of $816,428 for the nine months ended September 30, 2023, and a net loss of $1,143,374 for the nine months ended September 30, 2022. The decrease in net loss in the current year primarily resulted from the $845,557 gain from sales of Union Strategies, Inc. and DLT Resolution Corp. loss and a $0 loss from discontinued operations in the nine months ended September 30, 2023, as compared to $964,902 for the nine months ended September 30, 2022.

Liquidity and Capital Resources

As of September 30, 2023, we had total current assets of $212,617 and current liabilities of $361,795 creating a working capital deficit of $149,178. As of December 31, 2022, we had $11,885 of cash on hand and total liabilities of $1,202,670. We must secure additional funds to continue our business.

Net cash used in operating activities was $14,300 during the nine months ended September 30, 2023, compared to net cash used of $201,009 for the same period in 2022 with the decrease primarily attributed to the decrease in the loss from continuing operations for the comparable nine-month periods.

No cash was used in investing activities during the nine-month periods ended September 30, 2023 and 2022.

During the nine months ended September 30, 2023, the Company provided no cash from financing activities. During the nine months ended September 30, 2022, the Company generated $184,577 of cash from financing activities by selling shares of Common Stock.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flow from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management’s plans in regards to this matter include raising additional equity financing and borrowing funds under a private credit facility and/or other credit sources.

Off-Balance Sheet Arrangements

We have no 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 stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Table of Contents

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Management of DLT Resolution Inc. is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.

At the end of the period covered by this report, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was carried out under the supervision and with the participation of our Principal Executive Officer, Principal Financial and Accounting Officer. Based on his evaluation of our disclosure controls and procedures, he concluded that during the period covered by this report, such disclosure controls and procedures were not effective to detect the inappropriate application of US GAAP standards. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that may be considered to be “material weaknesses.”

The Company will continue to create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by accounting personnel. In addition, the Company will enhance and test our year-end financial close process. Additionally, the Company’s management will increase its review of our disclosure controls and procedures. Finally, we plan to designate individuals responsible for identifying reportable developments. We believe these actions will remediate the material weakness by focusing additional attention and resources in our internal accounting functions. However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.

Table of Contents

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2023. In assessing the effectiveness of our internal control over financial reporting as of December 31, 2022, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on its assessment, management concluded that our internal control over financial reporting as of September 30, 2023 was not effective in the specific areas described in the “Disclosure Controls and Procedures” section above and as specifically described in the paragraphs below.

As of September 30, 2023, the Principal Executive Officer/Principal Financial Officer identified the following specific material weaknesses in the Company’s internal controls over its financial reporting processes:

·	Policies and Procedures for the Financial Close and Reporting Process — Currently there are no policies or procedures that clearly define the roles in the financial close and reporting process. The various roles and responsibilities related to this process should be defined, documented, updated and communicated. Failure to have such policies and procedures in place amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

·	Representative with Financial Expertise — For the nine months ending September 30, 2023, the Company did not have a representative with the requisite knowledge and expertise to review the financial statements and disclosures at a sufficient level to monitor the financial statements and disclosures of the Company. Failure to have a representative with such knowledge and expertise amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

·	Adequacy of Accounting Systems at Meeting Company Needs — The accounting system in place at the time of the assessment lacks the ability to provide high quality financial statements from within the system, and there were no procedures in place or built into the system to ensure that all relevant information is secure, identified, captured, processed, and reported within the accounting system. Failure to have an adequate accounting system with procedures to ensure the information is secure and accurately recorded and reported amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

·	Segregation of Duties — Management has identified a significant general lack of definition and segregation of duties throughout the financial reporting processes. Due to the pervasive nature of this issue, the lack of adequate definition and segregation of duties amounts to a material weakness to the Company’s internal controls over its financial reporting processes.

In light of the foregoing, once we have the adequate funds, management plans to develop the following additional procedures to help address these material weaknesses:

·	The Company will create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by accounting personnel. In addition, we plan to enhance and test our month-end and year-end financial close process. Additionally, our audit committee will increase its review of our disclosure controls and procedures. We also intend to develop and implement policies and procedures for the financial close and reporting process, such as identifying the roles, responsibilities, methodologies, and review/approval process. We believe these actions will remediate the material weaknesses by focusing additional attention and resources in our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

There have been no changes in our internal control over financial reporting that occurred during the nine months ended September 30, 2023 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not required under Regulation S-K for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Table of Contents

Item 6. Exhibits.

The following exhibits are attached hereto:

Exhibit No.		Description of Exhibit

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended, filed herewith.
31.2		Certification of Principal Accounting Officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended, filed herewith.
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
101		Interactive data files pursuant to Rule 405 of Regulation S-T

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DLT Resolution, Inc.

By:	/s/ Drew Reid	/s/ Drew Reid
	Drew Reid	Drew Reid
	President and Chief Executive Officer	Chief Financial Officer, Secretary and Treasurer
	(Principal Executive Officer)	(Principal Financial Officer)

	July 16, 2024	July 16, 2024

DLT Resolution Inc. 10-Q