CLOQ CyberloQ Technologies Inc (QB)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2023

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

Commission File Number: 333-170132

 

CYBERLOQ TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation)

 

333-170132		26-2118480
(Commission File Number)		(IRS Employer Identification No.)

 

4837 Swift Road Suite 210-1 Sarasota FL		34231
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code (612)961-4536

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CLOQ		OTC QB

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ☒ No ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this form 10-K.

Yes ☒ 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.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	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 ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

Yes ☐ No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

As of the date of this filing, there were 120,439,754 shares of the Issuer’s common stock issued and outstanding and held by approximately 139 shareholders, six of which are deemed affiliates within the meaning of Rule 12b-2 under the Exchange Act. 

 

As of the date of this filing, there were 20,000 shares of the Issuer’s preferred stock issued and outstanding.

 

 

 

CyberloQ Technologies, Inc.

 

FORM 10-Q

 

For The Fiscal Quarter Ended June 30, 2023

 

TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION	3
Item 1. Consolidated Condensed Financial Statements.	F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	7
Item 4. Controls and Procedures.	7
PART II — OTHER INFORMATION	8
Item 1. Legal Proceedings.	8
Item 1A. Risk Factors.	8
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	8
Item 3. Defaults Upon Senior Securities.	9
Item 4. Other Information.	9
Item 5. Exhibits.	9
SIGNATURES	10

 

 

PART I

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This quarterly report on Form 10-Q and the documents incorporated by reference herein contain forward-looking statements that are not statements of historical fact and may involve a number of risks and uncertainties. These statements related to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements.

 

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this quarterly report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Annual Report to conform these statements to actual results.

 

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

 

	●	General economic and industry conditions;
	●	Out history of losses, deficits and negative operating cash flows;
	●	Our limited operating history;
	●	Industry competition;
	●	Environmental and governmental regulation;
	●	Protection and defense of our intellectual property rights;
	●	Reliance on, and the ability to attract, key personnel;
	●	Other factors including those discussed in “Risk Factors” in this quarterly report on Form 10-Q and our incorporated documents.

 

You should keep in mind that any forward-looking statement made by us in this quarterly report or elsewhere speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this annual report after the date of filing, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this annual report or elsewhere might not occur.

 

In this quarterly report on Form 10-Q, the terms “CLOQ,” “Company,” “we,” “us” and “our” refer to CyberloQ Technologies, Inc. and its wholly-owned subsidiary CyberloQ Technologies, LTD.

 

 

Item 1. FINANCIAL STATEMENTS

 

CyberloQ Technologies, Inc.

CONSOLIDATED CONDENSED BALANCE SHEETS

 

		June 30, 2023				December 31, 2022
		(unaudited)
ASSETS
Current Assets
Cash		$	23,359			$	4,067
Deposits and prepaids			79,397				53,811
Total Current Assets			102,756				57,878
Fixed Assets
Cyberloq platform			589,931				283,240
Total Fixed Assets			589,931				283,240
Total Assets		$	692,687			$	341,118
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses		$	24,666			$	56,322
Accrued interest			77,202				47,737
Note Payable – Stockholders			35,000				35,000
Note Payable – Related Party			150,000				150,000
Convertible debt – Stockholders, net			159,873				2,623
Loan payable - SBA			2,088				2,088
Total Current Liabilities			448,829				293,770
Long Term Liabilities
SBA Loan Payable			30,362				30,362
Total Long Term Liabilities			30,362				30,362
Total Liabilities			479,191				324,132
Commitments and Contingencies			-				-
Stockholders’ Equity
Common stock: $0.001 par value,200,000,000 shares authorized; 120,939,754 and 119,089,754 shares issued and outstanding, respectively			120,940				119,090
Preferred Stock $0.001 per value - 30,000 shares authorized; 20,000 issued and outstanding			20				20
Treasury stock			(50,000	)			(50,000	)
Shares to be Issued: 2,450,000 and 2,450,000 common shares respectively			149,186				149,186
Additional Paid in Capital			7,596,712				7,031,812
Accumulated Deficit			(7,603,362	)			(7,233,122	)
Total Stockholders’ Equity			213,496				16,986
Total Liabilities and Stockholders’ Equity		$	692,687			$	341,118

 

See accompanying notes to financial statements

 

 

CyberloQ Technologies, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

 

		2023				2022				2023				2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenue
Service Revenue		$	-			$	1,104			$	993			$	1,404
Total Revenue			-				1,104				993				1,404
Operational Expense
Professional Fees			18,489				133,643				52,308				340,397
Officer’s Compensation			45,000				45,000				90,000				105,000
Travel and Entertainment			2,157				691				2,713				751
Rent			2,449				2,332				4,747				4,521
Computer and Internet			4,782				7,187				8,330				11,637
Office Supplies and Expenses			4,232				695				5,377				2,274
Other Operating Expenses			16,359				1,001				27,700				2,185
Total Operating Expenses			93,468				190,549				191,175				466,765
Loss from Operations			(93,468	)			(189,445	)			(190,182	)			(465,361	)
Other Income (Expense)
Interest			(18,311	)			(8,361	)			(30,307	)			(17,282	)
Amortization of debt discount			(101,948	)			(50,000	)			(149,750	)			(50,000	)
Loss on settlement of debt			-				(105,000	)			-				(105,000	)
Loss on settlement with officer			-				-				-				(18,086	)
Total Other Income (Expenses)			(120,259	)			(163,361	)			(180,057	)			(190,368	)
Provision for Income Taxes			-				-				-				-
Net Loss		$	(213,727	)		$	(352,806	)		$	(370,239	)		$	(655,729	)
Loss per common share-Basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.01
Weighted Average Number of Common Shares Outstanding Basic and diluted			120,773,087				86,536,549				120,939,754				83,403,216

 

See accompanying notes to financial statements

 

 

CyberloQ Technologies, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)

From January 1, 2022 to June 30, 2023

 

		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Stock				Redeemed				Deficit				Total
		Common (Issued)								Common (Unissued)								Preferred Stock								Add’l Paid-In				Treasury				Common Stock to be				Accum.
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Stock				Redeemed				Deficit				Total
Balance December 31, 2021			82,754,515				82,756				-				392,900				30,000				30				5,743,361				-				-				(6,254,074	)			(35,027	)
Common stock issued for cash			1,150,000				1,150				-				60,000				-				-				36,350												-				97,500
Common stock issued for services			1,298,701				1,298				-				-				-				-				98,702												-				100,000
Common stock to be issued			6,000,000				6,000				-				(100,000	)			-				-				144,000												-				50,000
Common stock issued for officer’s fees			300,000				300				-				(92,400	)			-				-				92,100												-				-
Stock redeemed for officers’ settlement															-																(50,000	)			(490,000	)			-				(540,000	)
Preferred stock redeemed for officers settlement																			(10,000	)			(10	)																			(10	)
Net loss for quarter ending March 31, 2022			-				-				-				-				-				-				-								-				(302,921	)			(302,921	)
Balance March 31, 2022			91,503,216			$	91,504				-				260,500			$	20,000			$	20			$	6,114,513			$	(50,000	)		$	(490,000	)		$	(6,556,995	)		$	(630,458	)
Common stock issued for cash			4,161,538				4,161				-				(113,000	)			-				-				163,814				-				-				-				54,975
Common stock issued for debt			2,000,000				2,000				-				-				-				-				138,000				-				-				-				140,000
Common stock to be issued			-				-				-				52,186				-				-				-				-				-				-				52,186
Retirement of convertible debt			-				-				-				-				-				-				50,000				-				-				-				50,000
Net loss for quarter ending June 30, 2022			-				-				-				-				-				-				-				-				-				(352,806	)			(352,806	)
Balance, June 30, 2022			97,664,754			$	97,665				-			$	199,686				20,000			$	20			$	6,466,327			$	(50,000	)		$	(490,000	)		$	(6,909,801	)		$	(686,103	)
Common stock issued for cash			12,225,000				12,225				-				(62,500	)			-				-				260,275				-				-				-				210,000
Common stock to be issued			-				-				-				50,000				-				-				-				-				-				-				50,000
Common stock issued for officer’s fees			-				-				-				12,000				-				-				-				-				-				-				12,000
Common stock redeemed for officers’ settlement			-				-				-				-				-				-				-				-				490,000				-				490,000
Net loss for quarter ending September 30, 2022			-				-				-				-				-				-				-				-				-				(117,829	)			(117,829	)
Balance, September 30, 2022			109,889,754			$	109,890				-			$	199,186				20,000			$	20			$	6,726,602			$	(50,000	)		$	-			$	(7,027,630	)		$	(41,932	)
Common stock issued for cash			5,200,000				5,200				-				(50,000	)			-				-				54,400				-				-				-				9,600
Common stock issued for services			1,100,000				1,100				-				-				-				-				48,710				-				-				-				49,810
Common stock issued for convertible debt			2,900,000				2,900				-				-				-				-				142,100				-				-				-				145,000
Beneficial conversion feature of convertible debt			-				-				-				-				-				-				60,000				-				-				-				60,000
Net loss for quarter ending December 31, 2022			-				-				-				-				-				-				-				-				-				(205,492	)			(205,492	)
Balance, December 31, 2022			119,089,754			$	119,090				-			$	149,186				20,000			$	20			$	7,031,812			$	(50,000	)		$	-			$	(7,233,122	)			16,986
Common stock issued for cash			1,100,000				1,100				-				-				-				-				42,900				-				-				-				44,000
Beneficial conversion feature of convertible debt			-				-				-				-				-				-				222,500				-				-				-				222,500
Net loss for quarter ending March 31, 2023			-				-				-				-				-				-				-				-				-				(156,513	)			(156,513	)
Balance, March 31, 2023			120,189,754			$	120,190				-			$	149,186				20,000-			$	20			$	7,297,212			$	(50,000	)		$	-			$	(7,389,638	)		$	126,973
Balance			120,189,754			$	120,190				-			$	149,186				20,000-			$	20			$	7,297,212			$	(50,000	)		$	-			$	(7,389,638	)		$	126,973
Common stock issued for cash			750,000				750				-				-				-				-				24,500				-				-				-				25,250
Beneficial conversion feature of convertible debt			-				-				-				-				-				-				275,000				-				-				-				275,000
Net loss for period ended June 30, 2023																																							(213,727	)			(213,727	)
Net loss																																							(213,727	)			(213,727	)
Balance, June 30, 2023			120,939,754			$	120,940				-			$	149,186				-			$	20			$	7,596,712				(50,000	)			-			$	(7,603,362	)		$	213,496
Balance			120,939,754			$	120,940				-			$	149,186				-			$	20			$	7,596,712				(50,000	)			-			$	(7,603,362	)		$	213,496

 

See accompanying notes to financial statements

 

 

CyberloQ Technologies, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the Six months Ended June 30,

 

		2023				2022
		(unaudited)				(unaudited)
OPERATING ACTIVITIES
Net loss		$	(370,239	)		$	(655,729	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount			149,750				50,000
Stock Compensation			-				289,375
Loss on settlement with officer and director			-				18,086
Loss on settlement of debt			-				105,000
Change in Operating Assets and Liabilities:
Decrease (increase) in deposits and prepaids			(25,586	)			1,051
Increase (decrease) in accounts payable and accrued expenses			(31,657	)			313
Increase (decrease) in accrued interest			29,465				14,782
Net Cash Used in Operating Activities			(248,267	)			(177,122	)
INVESTING ACTIVITIES
Software			(306,691	)			(136,610	)
Net cash provided by (used) in investing activities			(306,691	)			(136,610	)
FINANCING ACTIVITIES
Proceeds from sale of common stock issuance			69,250				202,475
Proceeds from sale of common stock to be issued
Repayment of note principal			-				(1,225	)
Proceeds from note payable			-				125,000
Proceeds from convertible debt			505,000				-
Repurchase of common stock			-				(50,000	)
Net Cash Provided by Financing Activities			574,250				276,250
Net Increase (Decrease) in Cash and Equivalents			19,292				(37,482	)
Cash and Equivalents at Beginning of the Period			4,067				54,295
Cash and Equivalents at End of the Period		$	23,359			$	16,813
SUPPLEMENTAL CASH FLOW INFORMATION
Interest Paid		$	668			$	-
Income Taxes Paid		$	-			$	-
NON-CASH DISCLOSURES
Beneficial conversion feature		$	497,500			$	-
Common stock issued for prepaid expense		$	-			$	100,000
Common stock to be redeemed		$	-			$	490,000
Common stock issued for note payable		$	-			$	35,000
Common stock to be issued for note payable		$	-			$	52,186

 

See accompanying notes to financial statements

 

 

CyberloQ Technologies, Inc.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Nature of Business

 

CyberloQ Technologies Inc. (“CLOQ”, ‘We” or the “Company”) is a development-stage technology company focused on fraud prevention and credit management. The Company was originally incorporated as Advanced Credit Technologies, Inc. in the State of Nevada on February 25, 2008. On November 20, 2019, the Company changed its name from Advanced Credit Technologies, Inc. to CyberloQ Technologies, Inc.

 

The Company offers a proprietary software platform branded as CyberloQ®. While previously the Company licensed CyberloQ, in the third quarter of 2017, the Company acquired the CyberloQ technology and is now the exclusive owner of CyberloQ.

 

CyberloQ is a banking fraud prevention technology that is offered to institutional clients in order to combat fraudulent transactions and unauthorized access to customer accounts. Through the use of a customer’s smart-phone, CyberloQ uses a multi-factor authentication system to control access to a bank card, transaction type or amount, website, database or digital service. The mobile applications for CyberloQ have been built, and have been successfully integrated into the banking ecosystem.

 

The CyberloQ Vault is a “cloud based’ security protocol that allows clients the ability to send/receive secure data without having to use traditional e-mail which is prone to a breach. This CyberloQ service uses cloud-based encryption and a secure web portal to send/receive confidential data, the sender and receiver both must have authenticated their position within the prescribed geo coordinates as well as authenticate their mobile devices prior to sending/receiving any data. Thus, rendering a hack or breach utterly useless for the encrypted data is unusable without the CyberloQ authentication component.

 

In addition to CyberloQ, the Company offers a web-based proprietary software platform under the brand name Turnscor® which allows customers to monitor and manage their credit from the privacy of their own homes. Although individuals can sign-up for Turnscor on their own, the Company also intends to market Turnscor to certain institutional clients, where appropriate, in conjunction with CyberloQ as a value-added benefit to offer their customers.

 

Basis of Presentation

 

The financial statements of the Company have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America and the rules of the Securities and Exchange Commission. All amounts are presented in U.S. dollars. The Company has adopted a December 31 fiscal year end.

 

Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with a reading of the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission.

 

Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled operating subsidiaries. All intercompany accounts and transactions have been eliminated.

 

Use of Estimates

 

In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the year reported. Actual results may differ from these estimates. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

F-5

 

 

Cash and Cash Equivalents

 

Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. As of June 30, 2023, and December 31, 2022, the Company had no deposits in excess of federally-insured limits.

 

Research and Development, Software Development Costs, and Internal Use Software Development Costs

 

Software development costs are accounted for in accordance with ASC Topic No. 985. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. For products where proven technology exists, this may occur very early in the development cycle. Factors we consider in determining when technological feasibility has been established include (i) whether a proven technology exists; (ii) the quality and experience levels of the individuals developing the software; (iii) whether the software is similar to previously developed software which has used the same or similar technology; and (iv) whether the software is being developed with a proven underlying engine. Technological feasibility is evaluated on a product-by-product basis. Capitalized costs for those products that are canceled or abandoned are charged immediately to cost of sales. The recoverability of capitalized software development costs is evaluated on the expected performance of the specific products for which the costs relate.

 

During the six months ended June 30, 2023 and 2022, we capitalized $306,691 and $136,610, respectively, of development costs for the CyberloQ platform and we expensed zero and zero, respectively, for expenditures on research and development. None was paid to related parties.

 

Internal use software development costs are accounted for in accordance with ASC Topic No. 350 which requires the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality.

 

In accounting for website software development costs, we have adopted the provisions of ASC Topic No. 350. ASC Topic No. 350 provides that certain planning and training costs incurred in the development of website software be expensed as incurred, while application development stage costs are to be capitalized.

 

Fixed Assets, Intangibles and Long-Lived Assets

 

The Company records its fixed assets at historical cost. The Company expenses maintenance and repairs as incurred. Upon disposition of fixed assets, the gross cost and accumulated depreciation are written off and the difference between the proceeds and the net book value is recorded as a gain or loss on sale of assets. The Company depreciates its fixed assets over their respective estimated useful lives ranging from three to fifteen years.

 

The Company follows FASB ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. As of December 31, 2020, the Company wrote-off the book value of the Cyberloq technology software fixed asset and recorded software impairment expense of $321,725. Even though the software asset was written-off as impaired as of December 31, 2020, the software asset continued to be functionable but required updating the software programming code to current technology standards. During 2021, the Company developed and implemented a business plan to fully update the Cyberloq Secure Solution and feasibility of the software to meet the demands of the market. As of January 1, 2022, the Company’s began capitalizing software costs which totaled $589,931 as of June 30, 2023.

 

F-6

 

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09 or ASC 606). The adoption of ASC 606 resulted in changes to the Company’s accounting policies for revenue recognition previously recognized under ASC 605 (Legacy GAAP), as detailed below. However, since the Company had not earned any revenue prior to adopting ASC 606, this policy change had no effect on any financial statements from prior periods, thus no adjustments have been made to any prior periods related to the adoption of ASC 606.

 

Revenue Recognition Policy

 

Under ASC 606, the Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. To achieve the core principle of ASC 606, the Company performs the following steps:

 

	1)	Identify the contract(s) with a customer;
	2)	Identify the performance obligations in the contract;
	3)	Determine the transaction price;
	4)	Allocate the transaction price to the performance obligations in the contract; and
	5)	Recognize revenue when (or as) we satisfy a performance obligation.

 

The Company derives its revenue from development, customization and user fees for the CyberloQ banking fraud technology products, including CyberloQ Vault, and from licensing fees for the TurnScor product.

 

The revenue derived from the CyberloQ banking fraud technology products are comprised of two components. First, there is a development and customization fee paid to the Company to integrate CyberloQ with the banking institution or program manager’s ecosystem in order to add the CyberloQ authentication to the bank’s payment cards, website or digital service. This fee is customarily paid in multiple payments based upon the Company reaching certain milestones as set forth in the scope of work for each customer. Since completion of a milestone is subject to each customer’s approval, there are significant judgments involved in the determination of timing and satisfaction of performance obligations and the payments are recognized as revenue upon the completion of each milestone. Second, revenue from user fees are accrued monthly based over the number of individual card users each month.

 

The revenue derived from CyberloQ Vault is also comprised of two components. First, there is a development and customization fee paid to the Company to build a customized cloud-based encryption and a secure web portal to send/receive confidential data. This fee is customarily paid in multiple payments based upon the Company reaching certain milestones as set forth in the scope of work for each customer. Since completion of a milestone is subject to each customer’s approval, there are significant judgments involved in the determination of timing and satisfaction of performance obligations and the payments are recognized as revenue over the completion of each milestone. Second, revenue from a monthly user fee is accrued monthly based upon the number of individual users of the product each month.

 

License fees generated by the nonexclusive licensing of the Company’s TurnScor product are accrued monthly.

 

As of June 30, 2023, and December 31, 2022, the Company had $0 in contract assets and contract liabilities.

 

Accounts Receivable

 

The Company extends credit to customers in the normal course of business. The allowance for doubtful accounts represents the Company’s best estimate of the amount of profitable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on specific customer information, historical write-off experience and current industry and economic data. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Management believes that there are no concentrations of credit risk for which an allowance has not been established. Although management believes that the allowance is adequate, it is possible that the estimated amount of cash collections with respect to accounts receivable could change.

 

F-7

 

 

Fair Value Measurements

 

For certain financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.

 

The Company has adopted FASB ASC 820-10, “Fair Value Measurements and Disclosures.” FASB ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

●	Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
●	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●	Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with FASB ASC 815.

 

Segment Reporting

 

FASB ASC 280, “Segment Reporting” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment.

 

Advertising

 

Advertising costs are expensed as incurred. Advertising expense for the three-months ended June 30, 2023 and 2022 were $0 and $0, respectively.

 

Income Taxes

 

Deferred income taxes are provided using the liability method (in accordance with ASC 740) whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. 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 effects of the changes in tax laws and rates of the date of enactment.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations. The Company is not aware of uncertain tax positions.

 

F-8

 

 

Earnings (Loss) Per Share

 

Earnings per share is calculated in accordance with the FASB ASC 260-10, “Earnings Per Share.” Basic earnings (loss) per share is based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

 

At June 30, 2023 and December 31, 2022, the Company has no warrants or options outstanding, and had 28,250,000 and 3,000,000 convertible debt shares irrespectively that could have been exercised and could have been dilutive to the existing number of shares issued and outstanding. The convertible debt shares were not included in the weighted average shares outstanding as they were anti-dilutive.

 

The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.

 

Stock Based Compensation

 

The Company adopted FASB ASC Topic 718 – Compensation – Stock Compensation (formerly SFAS 123R), which establishes the use of the fair value-based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. For stock-based compensation, the Company recognizes an expense in accordance with FASB ASC Topic 718 and values the equity securities based on the fair value of the security on the date of grant. Stock option and warrant awards are valued using the Black-Scholes option-pricing model, which according to ASC 820-10 is a level 3 value on the hierarchy.

 

Leases

 

FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and, (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases. The standard became effective for calendar years beginning after December 15, 2018.

 

The Company has made an accounting policy election not to recognize right of use assets and lease liabilities that arise from short term leases for any class of asset.

 

In May, 2022, the Company signed an addendum to the 12-month lease above to extend it for an additional year at a rate of $719 per month.

 

NOTE 2 – FIXED ASSETS

 

Software and computer equipment, recorded at cost, consisted of the following:

 SCHEDULE OF SOFTWARE AND COMPUTER EQUIPMENT

		June 30, 2023				December 31, 2022
Cyberloq platform		$	589,931			$	283,240
Software and computer equipment			-				-
Fixed asset, gross			-				-
Less: accumulated amortization			-				-
Impairment expense			-				-
Fixed assets, net		$	589,931			$	283,240

 

Amortization expense was $0 and $0 for the six months ended June 30, 2023 and 2022, respectively.

 

F-9

 

 

NOTE 3 – GOING CONCERN

 

The Company has incurred losses since Inception resulting in an accumulated deficit of $7,603,362 as of June 30, 2023 that includes a loss of $370,239 for the six months ended June 30, 2023. Further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued.

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

 

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

 

NOTE 4 – SETTLEMENT AGREEMENT

 

On February 28, 2022, the Company signed a Separation and Release of Claims Agreement with an employee, officer and director of the Company. The terms of the agreement are as follows:

 

	●	The employee resigned from the Company’s Board of Directors
	●	The employee resigned his position as an officer of the Company, and his employment agreement was terminated
	●	The employee assigned and transferred 10,000 shares of preferred stock to be canceled and extinguished by the Company. A loss of $10 was recorded
	●	The Company will pay the $50,000 as a severance payment. This was paid on the date of the agreement and a loss of $18,076 was recorded
	●	The Company and the employee entered into a Common Stock Redemption Agreement by which the Company will purchase 5,400,000 shares of the Company’s common stock owned by the employee at $0.10 per share for a total of $540,000. The Company repurchased 500,000 for $50,000 at the date of the agreement and recorded a settlement liability of $