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SCTH Securetech Innovations

Filed: 30 Apr 21, 9:08am

 

Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended: March 31, 2021

 

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________

 

Commission File Number: 000-55927

 

TFP-P-Securetech-M-L-Securetech Logo (primary) (February 2020).jpg 

 

              SecureTech Innovations, Inc.                  

 (Exact name of registrant as specified in its charter)

 

                   Wyoming                    

(State or other jurisdiction of

incorporation or organization)

             82-0972782              

(I.R.S. Employer

Identification Number)

 

           2355 Highway 36 West, Suite 400, Roseville, MN  55113           

 (Address of principal executive offices)

 

                             Tel: (651) 317-8990                       

 (Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

N/A

 

N/A

 

N/A

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

SCTH

 

OTC Pink Exchange


 

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or Section 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 ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x      No ¨

 

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

 

Large Accelerated Filer ¨

Accelerated Filer ¨

Non-Accelerated Filer x

Smaller Reporting Company x

 

Emerging Growth Company x

 

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 Act).

Yes ¨      No x

 

The number of shares outstanding of the Registrant’s common stock, $0.001 par value, as of April 27, 2021, was 170,587,300.


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TABLE OF CONTENTS

 

 

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements4 

BALANCE SHEETS4 

STATEMENTS OF OPERATIONS5 

STATEMENT OF STOCKHOLDERS’ EQUITY6 

STATEMENTS OF CASH FLOWS7 

NOTES TO FINANCIAL STATEMENTS8 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations14 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk23 

Item 4.  Controls and Procedures23 

 

PART II

Item 1.  Legal Proceedings24 

Item 1A.  Risk Factors25 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds25 

Item 3.  Default Upon Senior Securities25 

Item 4.  Mine Safety Disclosures25 

Item 5.  Other Information25 

Item 6.  Exhibits25 

SIGNATURES26 

 

Forward-Looking Statements

 

This report contains “forward-looking statements,” as such term is used within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our liquidity, expectations regarding the impact of the COVID-19 (Coronavirus) worldwide pandemic on our business, overall sales results, expectations regarding the length of pandemic’s business disruption. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by such forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in any forward-looking statements include the failure to receive material orders, our ability to successfully market and sell the products we develop, the effects of the COVID-19 pandemic, including general and overall levels of consumer, business, and economic confidence, the duration of the COVID-19 pandemic and its general severity, the pace of recovery following the COVID-19 pandemic, the effects on our supply chains, potential import and export tariffs or other restrictions that may be placed on our products by governments and regulatory agencies, and possible pricing pressure from market competition. Further information on our risk factors is contained in our filings with the SEC, including our Form 10-K for the fiscal year ended December 31, 2020. Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law.

 

As used in this Quarterly Report, the terms “we,” “us,” “our,” “SecureTech,” “Registrant,” and “Issuer” mean SecureTech Innovations, Inc. unless the context clearly requires otherwise.


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PART I – FINANCIAL INFORMATION

 

 

Item 1.  Financial Statements

 

SECURETECH INNOVATIONS, INC.

BALANCE SHEETS

 

ASSETS

 

 

 

March 31,

2021

(unaudited)

 

 

December 31,

2020

Current assets:

 

 

 

 

 

Cash and equivalents

$

82,584

$

89,804

 

Inventories

 

46,021

 

48,993

 

Total current assets

 

128,605

 

138,797

 

 

 

 

 

Total assets:

$

128,605

$

138,797

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

1,219

$

1,335

 

Sales tax payable

 

816

 

1,495

 

Total current liabilities

 

2,035

 

2,830

 

 

 

 

 

 

 

Total liabilities

 

2,035

 

2,830

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, $0.001 par value, 50,000,000 shares authorized

 

-

 

-

 

Common stock, $0.001 par value, 500,000,000 shares authorized;

    170,442,300 and 170,442,300 shares issued and outstanding,
    respectively

 

 

 

170,442

 

 

 

170,442

 

Additional paid-in capital

 

312,543

 

312,543

 

Accumulated deficit

 

(356,415)

 

(347,018)

 

 

 

 

 

 

 

Total stockholders’ equity

 

126,570

 

135,967

 

 

 

 

 

Total liabilities and stockholders’ equity

$

128,605

$

138,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to the financial statements are an integral part of these statements.


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SECURETECH INNOVATIONS, INC.

STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

 

For the three months ended March 31,

 

 

 

 

2021

 

 

2020

 

 

 

 

 

 

Revenues:

 

 

 

 

 

Sales

$

11,050

$

-

 

Cost of goods sold

 

2,972

 

-

 

Gross profit

 

8,078

 

-

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

General and administrative

$

17,475

 

19,113

 

Total operating expenses

 

17,475

 

19,113

 

 

 

 

 

 

(Loss) from operations

 

(9,397)

 

(19,113)

 

 

 

 

 

 

Provision for income taxes

 

-

 

-

 

 

 

 

 

 

Net (loss)

$

(9,397)

$

(19,113)

 

 

 

 

 

 

Loss per share,

   basic and diluted

 

$

 

(0.00)

 

$

 

(0.00)

 

 

 

 

 

 

Weighted average number of common shares
    outstanding, basic and diluted

 

 

170,442,300

 

 

170,003,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to the financial statements are an integral part of these statements.


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SECURETECH INNOVATIONS, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY

For the period from December 31, 2019 to March 31, 2021

(unaudited)

 

 

 

 

 

Additional

 

 

 

Common Stock

Paid In

Accumulated

 

 

Shares

Amount

Capital

Deficit

Total

Balance, December 31, 2019

170,003,000

$170,003

$247,088

($282,577)

$134,514

Issuance of common shares for cash

439,300

439

65,455

-

65,894

Net loss

-

-

-

(64,441)

(64,441)

Balance, December 31, 2020

170,442,300

$170,442

$312,543

($347,018)

$135,967

Net loss

-

-

-

(9,397)

(9,397)

Balance, March 31, 2021

170,442,300

$170,442

$312,543

($356,415)

$126,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to the consolidated financial statements are an integral part of these statements.


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SECURETECH INNOVATIONS, INC.

STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

 

For the three months ended March 31,

 

 

 

2021

 

 

2020

Cash flows from operating activities:

 

 

 

 

 

Net (loss)

$

(9,397)

$

(19,113)

 

Adjustments to reconcile net (loss) to net cash used in operating activities:

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Decrease (Increase) in inventories

 

2,972

 

(120)

 

 

(Increase) in deposits

 

-

 

(6,906)

 

 

Increase (decrease) in accounts payable

 

(116)

 

-

 

 

Increase (decrease) in sales tax payable

 

(679)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

(7,220)

 

(26,139)

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(7,220)

 

(26,139)

 

 

 

 

 

 

 

Cash – beginning of period

 

89,804

 

133,069

 

 

 

 

 

 

 

Cash – end of period

$

82,584

$

106,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to the financial statements are an integral part of these statements.


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SECURETECH INNOVATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

March 31

(unaudited)

 

 

NOTE 1 – Summary of Significant Accounting Policies

 

Organization

 

SecureTech Innovations, Inc. (“Company” or “SecureTech”) was incorporated under the laws of the State of Wyoming on March 2, 2017, under the name SecureTech, Inc. The Company amended its Articles of Incorporation on December 20, 2017, to change its name to SecureTech Innovations, Inc.

 

SecureTech is an emerging growth company focused on developing and marketing personal and automobile security and safety devices and technologies. Through a licensed patent, SecureTech has created its initial product, Top Kontrol. Top Kontrol is unlike any other product on the market – it prioritizes the driver and passengers' safety. Not only does Top Kontrol protect your vehicle from unattended theft like other car alarms, but it is the only anti-theft and personal safety device able to thwart an active carjacking attempt without any action by the driver.

 

Through its advanced design and use of a licensed patent, Top Kontrol can tell the difference between an authorized driver and an unauthorized thief or carjacker using strategically placed sensors in the automobile and a unique FOB device hidden on the authorized driver’s person. Regardless of whether someone tries to steal your vehicle while it is innocently idling unattended in the parking lot or take it by force at gunpoint, Top Kontrol will only allow the unauthorized driver to drive for 15-20 seconds before automatically turning the engine off and preventing any attempt to restart the engine. This prevents the thief from stealing your car and/or allows the driver sufficient time to run to safety after being threatened at gunpoint. SecureTech is not aware of any other product on the market that solves the carjacking problem in the manner of Top Kontrol.

 

Because Top Kontrol is wired into the automobile’s ignition and lighting systems, it must be installed and serviced by a Top Kontrol Certified Technician.

 

Unaudited Interim Financial Information

 

The unaudited condensed interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

The balance sheet as of December 31, 2020 has been derived from audited financial statements.

 

Operating results for the three months ended March 31, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021. These condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 filed with the Company’s Annual Report on Form 10-K with the Securities and Exchange Commission on March 18, 2021.

 

Impact of the COVID-19 (Coronavirus) Pandemic

 

In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S. government-imposed travel restrictions on travel between the United States, Europe, and many other countries worldwide. The COVID-19 pandemic has significantly negatively affected the global economy, significantly disrupted global supply chains, and created a significant disruption of the financial and retail markets, including a substantial disruption and dampening in consumer demand for the automotive industry, including specialty equipment manufacturers such as ourselves.

 

Because we began manufacturing and selling Top Kontrol during the fiscal year ended December 31, 2020, we cannot determine, compare, or estimate with any degree of accuracy to what extent the pandemic may be hindering our sales efforts. While we believe this pandemic has had, and continues to have, a material impact on our business growth and launching Top


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Kontrol, we do not have enough operating history to accurately evaluate or quantify the extent this pandemic may have impacted the following areas of our business:

 

 

Raw material and component supply chains

 

Product sales

 

Training and educating prospective Top Kontrol Certified Technicians

 

Marketing and advertising efficiencies

 

In addition to the preceding, we believe that sales continue to be negatively impacted by the ongoing COVID-19 pandemic. We have encountered numerous delays in establishing a group training and certification program necessary to educate and authorize automobile technicians to safely and professionally install and repair our Top Kontrol product. It is simply not safe for groups of people to gather within the confines of small interior areas, which are typical of most automobile repair bays where we would typically perform this type of hands-on training.

 

Having a limited number of Top Kontrol Certified Technicians available to install Top Kontrol is significantly restricting the number of customer installations being performed, which is subsequently influencing retail customers to delay purchases until they can have it readily installed in their vehicle.

 

However, because we did not commence marketing and selling Top Kontrol before this pandemic, we have no historical perspective to quantify or speculate on the extent COVID-19 is having on our sales and overall financial condition.

 

Uncertainties regarding the economic impact of COVID-19 are likely to result in sustained market turmoil while businesses remain shuttered (or operating at diminished capacity). Many prospective customers remain home under government “lockdown” mandates, guidelines, and a general fear of leaving the safety of their homes, which may also negatively impact our business, financial condition, and cash flows for an unknown length of time.

 

Uncertainties regarding the economic impact of COVID-19 are likely to result in sustained market turmoil while businesses remain shuttered (or operating at diminished capacity). Many prospective customers remain home under government “lockdown” mandates, guidelines, and a general fear of leaving the safety of their homes, which may also negatively impact our business, financial condition, and cash flows for an unknown length of time.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) for financial information and in accordance with the Securities and Exchange Commission’s (“SEC”) Regulation S-X. They reflect all adjustments which are, in the opinion of the Company’s management, necessary for a fair presentation of the financial position and operating results as of and for the fiscal period ended March 31, 2021.

 

Use of Estimates

 

The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from these estimates.

 

The worldwide spread of COVID-19 has resulted in a global slowdown of economic activity, which is likely to decrease demand for a broad variety of goods and services while also disrupting supply chains, sales channels, marketing activities, and general business operations for an unknown period of time until the disease is contained at local, regional, and worldwide levels. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments, or adjust the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained and is recognized in the financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to our financial statements.


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Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. As of March 31, 2021, the Company had no cash equivalents.

 

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, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss 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 shares is computed similar 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. SecureTech excludes all potentially dilutive securities from its diluted net loss per share computation since their effect would be anti-dilutive because SecureTech recorded a loss for the three months ended March 31, 2021.

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers.

 

The Company’s primary source of revenue is from the sale of our Top Kontrol product. We began selling Top Kontrol in late April 2020.

 

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 the Company. Failure to have Top Kontrol installed by a Certified Top Kontrol Technician voids the product’s limited liability warranty.

 

Because of this professional installation requirement, the Company sells its products to and through Authorized Dealers and Certified Top Kontrol Technicians. In the instances where the Company sells directly to the end-user, product installation must be performed by authorized Company personnel.

 

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


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with the transfer of control of our product to the customer and payment has been received. The Company does not offer terms or credit to any of its customers.

 

Revenue Recognition; ASC 606 Five-Step Model

 

Under ASC 606, the Company recognizes revenue from the sale of service contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

 

Revenue Recognition; General Right of Return

 

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

 

The Company 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.

 

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

 

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

 

Fiscal Year

 

The Company elected December 31st for its fiscal year-end.

 

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 a have a material impact on the Company’s financial position, results of operations or cash flows.

 

NOTE 2 – GOING CONCERN

 

The accompanying consolidated 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 shown in the accompanying financial statements during the fiscal period ended March 31, 2021, the Company has not established a source of revenues sufficient to cover its operating costs, and as such, has incurred an operating loss since its inception. Further, as of March 31, 2021, the Company had an accumulated deficit of ($356,415). These and other factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional sources of financing. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.


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NOTE 3 – INVENTORIES

 

Inventory is 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, the Company reviews such carrying amounts and estimates the net realizable value based on the most reliable evidence available at that time. An impairment loss 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. The following table summarizes the Company’s inventories as of March 31, 2021 and December 31, 2020:

 

 

 

March 31,

2021

 

December 31, 2020

Inventories:

 

 

 

 

 

Raw materials and work-in-progress

$

1,971

$

1,971

 

Finished goods

 

44,050

 

47,022

 

Gross inventories

 

46,021

 

48,993

 

Inventory valuation reserves

 

-

 

-

 

Inventories, net

$

46,021

$

48,993

 

NOTE 4 – STOCKHOLDERS’ EQUITY

 

Preferred stock

 

The Company has authorized 50,000,000 shares of preferred stock, $0.001 par value. The Company’s Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms.

 

As of March 31, 2021, the Company had no classes and -0- shares of preferred stock issued and outstanding.

 

Common stock

 

The Company has authorized 500,000,000 shares of common stock, with a par value of $0.001 per share.

 

As of March 31, 2021, the Company had 170,442,300 shares of common stock issued and outstanding.

 

NOTE 5 – WARRANTS

 

The following table summarizes information with respect to outstanding warrants to purchase shares of the Company’s common stock as of March 31, 2021.

 

Exercise

Price

 

Number

Outstanding

 

Expiration

Date

 

 

 

 

 

 

$

0.20

 

439,300

 

June 30, 2021

$

0.30

 

439,300

 

December 31, 2021

$

0.40

 

439,300

 

June 30, 2022

$

0.50

 

439,300

 

December 31, 2022

 

 

 

1,757,200

 

 


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A summary of the warrant activity for the fiscal period ended March 31, 2021 is as follows:

 

 

 

 

 

 

 

 

Warrants

 

 

 

 

 

Weighted-Average

Exercise Price

 

Weighted-Average

Remaining

Contractual Term

(Years)

 

 

 

 

 

Aggregate

Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

Outstanding at January 1, 2021

 

1,757,200

 

$

0.35

 

1.0

 

$

-

Issued

 

-

 

$

-

 

-

 

$

-

Exercised

 

-

 

$

-

 

-

 

$

-

Expired

 

-

 

$

-

 

-

 

$

-

Outstanding at March 31, 2021

 

1,757,200

 

 

 

 

 

 

 

 

 

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock price of $0.15 (based on the most recent cash sale price) as of March 31, 2021, which would have been received by the warrant holders had those warrant holders exercised their options as of that date.

 

NOTE 6 – RELATED PARTY FOUNDER’S SHARE ISSUANCES

 

On March 2, 2017, the Company issued an aggregate of 175,000,000 shares of its common stock, $0.001 par value, as Founder’s Shares with $-0- value.

 

Of these original Founder’s Shares 80,000,000 were issued to the Company’s officers, 75,000,000 to an entity controlled by one of the Company’s directors, and 20,000,000 to outside consultants who assisted with the Company’s formation and early organization.

 

NOTE 7 – CONTINGENCY/LEGAL

 

As of March 31, 2021, and during the preceding ten years, no director, person nominated to become a director or executive officer, or promoter of the Company has been involved in any legal proceeding that would require disclosure hereunder.

 

From time to time, the Company may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to the Company’s business. The Company currently is not party to any claim or litigation the outcome of which, if determined adversely to the Company, would individually or in the aggregate be reasonably expected to have a material adverse effect on the Company’s business.

 

NOTE 8 – SUBSEQUENT EVENTS

 

Series C Private Placement and Issuance of Common Stock

 

Subsequent to the fiscal period ended March 31, 2021, the Company filed a Form D with the SEC on April 14, 2021 to undertake a private placement offering of up to 1,000,000 shares of its common stock, $0.001 par value, at a purchase price of $0.25 per Share (“Series C Private Placement Offering”). As of April 27, 2021, the Company has raised an aggregate of $36,250 from this offering and sold a total of 145,000 shares of its common stock to six investors. Proceeds from the Series C Private Placement Offering will be used as general working capital.

 

As of April 27, 2021, the Company had 170,587,300 shares of its common stock issued and outstanding, inclusive of all shares sold to date pursuant to this Series C Private Placement Offering.

 

The Company continues to offer shares of its common stock to investors through the Series C Private Placement Offering.

 

 

No other material events or transactions have occurred during this subsequent event reporting period which required recognition or disclosure in the financial statements.


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

 

Our independent registered public accounting firm has issued a going concern opinion in their audit report dated March 18, 2021, which can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 18, 2021. This means that our auditors believe there is substantial doubt that we can continue as an ongoing business for the next 12 months.

 

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 SEC on Form 10-Q.

 

Limited Operating History; Need for Additional Capital

 

There is limited historical financial information about us upon which to base an evaluation of our performance. We are an emerging growth business with limited operating history. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in marketing costs, increases in administrative expenditures associated with daily operations, increases in accounting and audit fees, and increases in legal fees related to filings and regulatory compliance.

 

As of March 31, 2021, we had incurred ($356,415) in losses since our inception on March 2, 2017. We have not achieved profitability and expect to continue to incur net losses into subsequent fiscal periods. We expect to incur significant operating expenses and, as a result, will need to generate significant revenues to achieve profitability, which may never occur. Even if we do achieve profitability, we may be unable to sustain or increase profitability on an ongoing basis, which could cause us to go out of business.

 

To become profitable and competitive, we must successfully sell our current product, Top Kontrol, and continue to innovate and develop new similar personal and automobile security and safety devices and technologies that will be accepted by the marketplace. We anticipate relying on equity sales of our common stock to continue to fund our business operations until we can generate sufficient revenues to cover our operating expenses, which may never happen. Issuances of additional shares will result in dilution to our then existing stockholders. There is no assurance that we will be able to make any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities. We may also rely on loans from our management or other significant shareholders. However, there are no assurances that management or any of our significant shareholders will provide us with any additional funds in the future.

 

We are continually exploring new financing sources to meet our need for additional cash, including raising funds through sales of our equity securities and loans. We cannot provide any assurances that our efforts to secure additional financing will be successful. We have no guarantee that future funding will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Further, future equity financing could result in additional and substantial dilution to existing shareholders.

 

Business Overview

 

SecureTech is an emerging growth company focused on developing and marketing personal and automobile security and safety devices and technologies. SecureTech first product, Top Kontrol, is currently being sold in the United States.

 

Products

 

Top Kontrol Logo with (R).jpg 

 

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


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level – it prioritizes the driver 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.

 

Top Kontrol knows the difference between the authorized driver and an unauthorized thief or carjacker through its advanced patented design. This is achieved using strategically placed sensors in the vehicle and a unique FOB device hidden on the authorized driver’s person. Regardless of whether someone tries to steal your vehicle while it is innocently idling unattended in a parking lot or attempt to take it by force at gunpoint, Top Kontrol will only allow the unauthorized driver to drive for 15-20 seconds before automatically turning the engine off and preventing any restart attempts. This prevents the thief from stealing your car and allows the occupants sufficient time to run for safety in the event of an armed carjacking. SecureTech is not aware of any other product on the market that offers a cost-effective solution to the skyrocketing carjacking problem.

 

Because Top Kontrol is wired into the automobile’s ignition and lighting systems, it must be installed and serviced by a Top Kontrol Certified Technician.

 

Key Advantages of Top Kontrol:

 

 

Anti-theft circuits actively prevent automobile theft and carjacking

 

Automatically prevents theft although keys are in ignition and engine is idling

 

Active and passive prevention of carjacking

 

Does not interfere with vehicle’s other systems

 

Compatible with most makes and models of cars and trucks

 

Manual engine kill switch

 

Key-based system prevents thieves from hacking wirelessly transmitted security codes

 

Does not draw battery power – system works even with a disabled car battery

 

SecureTech-P-TK-PP-TK100-Box-Top-(web)-(1-14-20).jpg 

 

SecureTech-P-TK-PP-TK100-Box-Bottom-(web)-(1-14-20).jpg 

Retail Package Top

 

Retail Package Bottom

 

For additional information on our Top Kontrol product, please visit our product website www.topkontrol.com.

 

Industry: Carjackings Skyrocketing

 

Carjackings more than doubled during 2020. 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 just a few reports about this growing problem without any long-term solutions:


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·Minneapolis, MN police report carjackings up more than 537% in 2020 (source: ABC, December 12, 2020); 

·Chicago, IL police report carjackings up more than 134% in 2020 (source: ABC7, December 4, 2020); 

·Jackson, MS police report carjackings up more than 120% in 2020 (source: WLBT, December 24, 2020); 

·New Orleans, LA police report carjackings up more than 153% in 2020 (source: 4WWL, December 9, 2020); and 

·Washington, DC police report carjacking up more than 141% in 2020 (source: WUSA, December 27, 2020). 

 

Corporate History

 

SecureTech was incorporated under the State of Wyoming's laws on March 2, 2017, under the name SecureTech, Inc. The Company amended its Articles of Incorporation on December 20, 2017, to change its name to SecureTech Innovations, Inc.

 

Competition

 

SecureTech faces formidable competition in every aspect of its business. Our company's success or failure will depend largely upon management's ability to develop competitive products and successfully market them to attract enough new customers, enabling us to generate sufficient revenues to become profitable.

 

SecureTech competes against better-established competitors with substantially greater financial resources and longer operating histories. Our competitors’ resources and market presence may provide them with significant advantages in marketing, purchasing, and negotiating leverage. Some of our better-known competitors include Viper (www.viper.com) and LoJack Corporation (www.lojack.com). Below is a table providing a comparative overview of how Top Kontrol stacks up to the competitors’ product offerings:

 

FEATURES

TOP KONTROL

VIPER1

LOJACK2

Electronic/engine Immobilizers

 

Kill Switch

 

 

Light and Siren

 

Electronic Tracking System

 

 

Carjacking Security Features

 

 

Automatic Secured for preventing carjacking

 

 

Automatic Secured features to prevent theft even if keys are left in the ignition and/or engine idling

 

 

Key-based system to prevent interception of wirelessly transmitted security codes

 

 

Does not require a 24/7 power feed

 

 

MSRP

$449

$499+

$695+

 

(1)Viper 5806 car alarm model. 

(2)LoJack® Stolen Vehicle Recovery System. 

 

In addition to the competitors listed above, we are competing with other lesser-known competitors as well as competitors presently not known to us or, possibly, not even formed yet.

 

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 always evolving and expanding with new competitors continuously innovating better products that could eventually outperform our then offered products or, worse, possibly render them obsolete.


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Manufacturing

 

SecureTech presently uses US-based contract manufacturers to manufacture its products with final assembly performed at SecureTech’s Minnesota headquarters. SecureTech does not have any long-term or exclusivity agreements with any contract manufacturer and is free to change or negotiate with new contract manufacturers at its sole discretion.

 

Additionally, Management has been exploring the feasibility of establishing a warehouse and manufacturing facility in Florida once the ongoing COVID-19 pandemic has passed. Our goal with this location would be to facilitate international sales and exports while reducing overall manufacturing and shipping expenses.

 

SecureTech’s products proudly carry the “Made in the USA” designation.

 

Government Regulation

 

Our products are designed to meet all known existing or proposed governmental regulations. We believe that we currently meet existing standards for approvals by government regulatory agencies for our principal products.

 

Top Kontrol was issued a Federal Communications Commission (FCC) Declaration of Conformity certification in March 2020.

 

Compliance with Environmental Laws

 

We believe there are no material issues or material costs associated with our compliance with environmental laws. We did not incur environmental expenses in fiscal periods ended December 31, 2020 and 2019, nor do we anticipate environmental expenses in the foreseeable future.

 

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 SecureTech and their dates of issuance are:

 

·On May 7, 2013, Shongkawh, LLC, a related party controlled by our President and CEO, was issued US Patent No. 8,436,721 entitled “Automobile Theft Protection and Disablement System,” by the US Patent & Trademark Office (“USPTO”). This patent expires on March 19, 2030. SecureTech has the exclusive license for the use of this patent through its expiration date. 

 

In addition to such factors as innovation, technological expertise, and experienced personnel, we believe robust product offerings that are continually upgraded and enhanced 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 protection for our products and technologies' novel features. Prior to the filing and granting of patents, our policy is to disclose key features 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®.

 

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, both during and after employment or working relationship.

 

Employees

 

As of March 31, 2021, we had no full-time or part-time employees; we have three non-paid founding executive officers, all based in our Roseville, Minnesota office.

 

During the fiscal year ending December 31, 2021, our founding executive team intends to transition into working for SecureTech full-time. Additionally, we are currently building a sales team and are actively in the hiring process to staff it with


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qualified full-time sales personnel. However, the COVID-19 pandemic hinders this process somewhat and makes it more challenging to meet and interview prospective job applicants formally.

 

Results of Operations

 

Comparison of Three Months Ended March 31, 2021 and 2020

 

The following table sets forth the results of our operations for the three months ended March 31, 2021 and 2020.

 

 

 

Three months ended March 31,

 

 

 

2021

 

 

2020

Sales

$

11,050

$

-

Cost of goods sold

 

(2,972)

 

-

Gross profit

 

8,078

 

-

Operating expenses

 

(17,475)

 

(19,113)

Loss from operations

 

(9,397)

 

(19,113)

Net loss

$

(9,397)

$

(19,113)

 

Sales

 

Sales for the three months ended March 31, 2021 were $11,050, compared to $-0- for the same period of 2020. All sales were attributable to Top Kontrol.

 

Sales for the three months ended March 31, 2021 were negatively impacted by the continuing COVID-19 pandemic. In particular, we have encountered numerous delays in establishing a group training and certification program necessary to educate and authorize automobile technicians to safely and properly install and repair our Top Kontrol product. It is simply not safe for groups of people to gather within the confines of small interior areas, which are typical of most automobile repair bays where we would typically perform this type of hands-on training.

 

We were hosting modified COVID-19 aware classes in September 2020 and October 2020, but then it became too cold to continue this revised program. The revised training and certification program was held outdoors in open parking lots. Participants observed personal COVID-19 safety measures, including sanitizing hands, wearing masks, and maintaining social distancing protocols.

 

As of March 31, 2021, we were only conducting indoor training sessions in one-on-one situations to minimize the risks related to COVID-19. We hope to resume our outdoor training classes once again in the spring when the snow melts and the weather becomes more conducive to our purposes.

 

Having a limited number of Top Kontrol Certified Technicians available to install Top Kontrol is significantly restricting the number of customer installations being performed, which is subsequently influencing retail customers to delay purchases until they can have it readily installed in their vehicle.

 

However, because we did not commence marketing and selling Top Kontrol before this pandemic, we have no historical perspective to quantify or speculate on the extent COVID-19 is having on our sales and overall financial condition.

 

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 Minnesota headquarters. Cost of goods sold for the three months ended March 31, 2021 was $2,972, compared to $-0- for the same period of 2020. Cost of goods sold, as a percentage of overall sales, was 26.9% during the three months ended March 31, 2021.

 

Gross Profit

 

Gross profit for the three months ended March 31, 2021 was $8,078, compared to $-0- for the same period of 2020. Our gross profit margin was 72.1% during the three months ended March 31, 2021.


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Operating Expenses

 

 

 

Three months ended March 31,

 

 

 

2021

 

 

2020

Operating expenses:

 

 

 

 

 

General and administrative

$

17,475

$

19,113

 

Operating expenses

$

17,475

$

19,113

 

Our operating expenses for the period consisted of one component: general and administrative expenses. Total operating expenses were $17,475 in the three months ended March 31, 2021, compared to $19,113 in the same period of 2020, representing a decrease in operating expenses of ($1,638), or (8.6%), during the three months ended March 31, 2021. The reduction in operating expenses was the result of no travel expenses in the fiscal period due to the ongoing COVID-19 pandemic.

 

Loss From Operations

 

As a result of the foregoing, our loss from operations was ($9,397) during the three months ended March 31, 2021, compared with ($19,113) for the same period of 2020. This ($9,716), or (50.8%), decrease in our loss from operations is the result of increased Top Kontrol sales.

 

Net Loss

 

As a result of the foregoing, our net loss was ($9,397) during the three months ended March 31, 2021, compared with ($19,113) for the same period of 2020. This ($9,716), or (50.8%), decrease in our net loss is the result of increased Top Kontrol sales.

 

Total Stockholders’ Equity.

 

Our stockholders’ equity was $126,570 as of March 31, 2021.

 

Liquidity and Capital Resources

 

Our principal demands for liquidity are related to our efforts to generate sales and produce inventory, and for 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.

 

We rely primarily on internally generated cash flow and available working capital to support operations and growth. As of March 31, 2021, we did not have any credit facilities. 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 always 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 $126,570 as of March 31, 2021, a decrease of ($9,397), or (6.9%), from net working capital of $135,967 as of December 31, 2020. The ratio of current assets to current liabilities was 63.2-to-1 on March 31, 2021.


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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 three months ended March 31, 2021 and 2020:

 

 

Three Months Ended March 31,

 

2021

 

2020

Cash provided by (used in):

 

 

 

 

Operating activities

($7,220)

 

($26,139)

 

Net cash used in operating activities for the three months ended March 31, 2021 was ($7,220), a decrease of ($18,919) from cash used in operating activities of ($26,139) during the same period of 2020. The decrease in cash used in operating activities was primarily attributable to improved Top Kontrol sales.

 

Impact of the COVID-19 (Coronavirus) Pandemic

 

In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S. government-imposed travel restrictions on travel between the United States, Europe, and many other countries worldwide. The COVID-19 pandemic has significantly negatively affected the global economy, significantly disrupted global supply chains, and created a significant disruption of the financial and retail markets, including a substantial disruption and dampening in consumer demand for the automotive industry, including specialty equipment manufacturers such as ourselves.

 

Because we began manufacturing and selling Top Kontrol during the fiscal year ended December 31, 2020, we cannot determine, compare, or estimate with any degree of accuracy to what extent the pandemic may be hindering our sales efforts. While we believe this pandemic has had, and continues to have, a material impact on our business growth and launching Top Kontrol, we do not have enough operating history to accurately evaluate or quantify the extent this pandemic may have impacted the following areas of our business:

 

 

Raw material and component supply chains

 

Product sales

 

Training and educating prospective Top Kontrol Certified Technicians

 

Marketing and advertising efficiencies

 

In addition to the preceding, we believe that sales continue to be negatively impacted by the ongoing COVID-19 pandemic. We have encountered numerous delays in establishing a group training and certification program necessary to educate and authorize automobile technicians to safely and professionally install and repair our Top Kontrol product. It is simply not safe for groups of people to gather within the confines of small interior areas, which are typical of most automobile repair bays where we would typically perform this type of hands-on training.

 

Having a limited number of Top Kontrol Certified Technicians available to install Top Kontrol is significantly restricting the number of customer installations being performed, which is subsequently influencing retail customers to delay purchases until they can have it readily installed in their vehicle.

 

However, because we did not commence marketing and selling Top Kontrol before this pandemic, we have no historical perspective to quantify or speculate on the extent COVID-19 is having on our sales and overall financial condition.

 

Uncertainties regarding the economic impact of COVID-19 are likely to result in sustained market turmoil while businesses remain shuttered (or operating at diminished capacity). Many prospective customers remain home under government “lockdown” mandates, guidelines, and a general fear of leaving the safety of their homes, which may also negatively impact our business, financial condition, and cash flows for an unknown length of time.

 

Uncertainties regarding the economic impact of COVID-19 are likely to result in sustained market turmoil while businesses remain shuttered (or operating at diminished capacity). Many prospective customers remain home under government “lockdown” mandates, guidelines, and a general fear of leaving the safety of their homes, which may also negatively impact our business, financial condition, and cash flows for an unknown length of time.


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Going Concern Consideration

 

Our independent registered public accounting firm has issued a going concern opinion in their audit report dated March 18, 2021, which can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 18, 2021. This means that our auditors believe there is substantial doubt that we can continue as an ongoing business for the next 12 months.

 

Off-Balance Sheet Operations

 

As of March 31, 2021, we had no off-balance sheet activities or operations.

 

Critical Accounting Policies

 

Use of Estimates

 

The accompanying financial statements of SecureTech have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from these estimates.

 

The worldwide spread of COVID-19 has resulted in a global slowdown of economic activity which is likely to decrease demand for a broad variety of goods and services, while also disrupting supply chains, sales channels, marketing activities, and general business operations for an unknown period of time until the disease is contained at local, regional, and worldwide levels. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain, and as of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments, or adjust the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained, and are recognized in the financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, SecureTech considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. As of March 31, 2021 and December 31, 2020, SecureTech had no cash equivalents.

 

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.


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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 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 shares is computed 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. SecureTech excludes all potentially dilutive securities from its diluted net loss per share computation since their effect would be anti-dilutive because SecureTech recorded a loss for the three months ended March 31, 2021.

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers.

 

SecureTech’s primary source of revenue is from the sale of our Top Kontrol product. We began selling Top Kontrol in late April 2020.

 

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 SecureTech. Failure to have Top Kontrol installed by a Certified Top Kontrol Technician voids the product’s limited liability warranty.

 

Because of this professional installation requirement, SecureTech generally sells its products to and through Certified Top Kontrol Technicians. In the instances where SecureTech sells directly to the end-user, product installation is performed by authorized SecureTech personnel.

 

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. SecureTech does not offer terms or credit to any of its customers.

 

Revenue Recognition; ASC 606 Five-Step Model

 

Under ASC 606, SecureTech recognizes revenue from the sale of service contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

 

Revenue Recognition; General Right of Return

 

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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SecureTech maintains a valuation allowance with respect to deferred tax assets. SecureTech establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration SecureTech’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

 

Changes in circumstances, such as SecureTech generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

 

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, that 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 a have a material impact on SecureTech’s financial position, results of operations or cash flows.

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable since we are a smaller reporting company.

 

Item 4.  Controls and Procedures

 

Disclosure Controls and Procedures

 

For the period covered by this report we conducted an evaluation under the supervision and with the participation of our principal executive officer and principal financial officer we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act).

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

Based on Management’s assessment, we have concluded that, as of March 31, 2021, our disclosure controls and procedures were not effective in timely alerting Management to the material information relating to us required to be included in our annual and interim filings with the SEC.


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Management has concluded that our disclosure controls and procedures had the following material weaknesses:

 

 

We were unable to maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency has not resulted in any audit adjustments to our interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties;

 

 

 

 

SecureTech lacks sufficient resources to perform the internal audit function and does not have an Audit Committee;

 

 

 

 

We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert to SecureTech. The Board of Directors is comprised of three (3) members; two of whom also serve as executive officers. As a result, there is a lack of independent oversight of the management team, lack of independent review of our operating and financial results, and lack of independent review of disclosures made by SecureTech; and

 

 

 

 

Documentation of all proper accounting procedures is not yet complete.

 

These weaknesses have existed since SecureTech’s inception on March 2, 2017 and, as of March 31, 2021, have not been remedied.

 

To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned material weaknesses, including, but not limited to, the following:

 

 

Consider the engagement of outside consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures;

 

 

 

 

Hire additional qualified financial personnel, including a Chief Financial Officer, on a full-time basis;

 

 

 

 

Expand our current board of directors to include additional independent individuals willing to perform directorial functions; and

 

 

 

 

Increase our workforce to accommodate growing sales and higher volumes.

 

Since the recited remedial actions will require that we hire or engage additional personnel, these material weaknesses may not be overcome in the near-term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the limited advice of outside professionals and consultants.

 

Changes in Controls and Procedures

 

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

During the past ten years, no director, person nominated to become a director or executive officer, or promoter of SecureTech has been involved in any legal proceeding that would require disclosure hereunder.

 

From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to our business. We currently are not a party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business.


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Item 1A.  Risk Factors

 

Not applicable since we are a smaller reporting company.

 

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

 

None.

 

Item 3.  Default Upon Senior Securities

 

None.

 

Item 4.  Mine Safety Disclosures

 

Not Applicable.

 

Item 5.  Other Information

 

None.

 

Item 6.  Exhibits

 

 

 

 

 

 

 

Incorporated by Reference

Exhibit

Number

 

 

Exhibit Description

 

Filed

Herewith

 

 

Form

 

 

File No.

 

 

Exhibit

 

Filing

Date

 

 

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Articles of Incorporation

 

 

 

 

S-1

 

333-223078

 

 

3.1

 

 

2/16/2018

3.2

 

Bylaws

 

 

 

S-1

 

333-223078

 

 

3.2

 

 

2/16/2018

3.3

 

Amendment to Articles of Incorporation dated December 20, 2017

 

 

 

 

 

 

 

S-1

 

 

 

333-223078

 

 

 

 

3.3

 

 

 

 

2/16/2018

10.1

 

Patent License Agreement between SecureTech, Inc. and Shongkawh, LLC dated March 2, 2017

 

 

 

 

 

 

 

 

 

 

 

S-1

 

 

 

 

 

333-223078

 

 

 

 

 

10.1

 

 

 

 

 

2/16/2018


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SIGNATURES

 

 

Pursuant to the requirements 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.

 

 

SECURETECH INNOVATIONS, INC. 

 

 

 

 

Dated: April 30, 2021

By:

/s/ Kao Lee

 

 

President, Chief Executive Officer,

Principal Executive Officer, and Director

 

 

Dated: April 30, 2021

By:

/s/ Anthony Vang

 

 

Treasurer, Secretary,

Principal Financial Officer,

Principal Accounting Officer, and Director


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