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EX-32.1 - CYBERLOQ TECHNOLOGIES, INC.ex32-1.htm
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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 September 30, 2020

 

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.)
     
871 Venetia Bay Blvd, #202, Venice, FL   34285
(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 Pink

 

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.

Yes [  ] No [X]

 

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 [X]

 

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 [X] 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 [X] 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 [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.

 

Large accelerated filer [  ] Accelerated filer [  ]
   
Non-accelerated filer [X] Smaller reporting company [X]
   
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 [X]

 

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 74,004,155 shares of the Issuer’s common stock issued and outstanding and held by approximately 115 shareholders, seven 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 30,000 shares of the Issuer’s preferred stock issued and outstanding.

 

 

 

   

 

 

CyberloQ Technologies, Inc.

 

FORM 10-Q

 

For The Fiscal Quarter Ended September 30, 2020

 

TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION  
   
Item 1. 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. 6
Item 4. Controls and Procedures. 6
   
PART II — OTHER INFORMATION
   
Item 1. Legal Proceedings. 7
Item 1A. Risk Factors. 7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 7
Item 3. Defaults Upon Senior Securities. 8
Item 4. Other Information. 8
Item 5. Exhibits. 8
   
SIGNATURES 9

 

 2 

 

 

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.

 

 3 

 

 

Item 1. FINANCIAL STATEMENTS

 

CyberloQ Technologies, Inc.

CONSOLIDATED CONDENSED BALANCE SHEETS

 

   September 30, 2020   December 31, 2019 
   (unaudited)     
ASSETS          
Current assets          
Cash  $84,995   $636 
Accounts Receivable, net   300    40,300 
Deposit   700    - 
Total Current Assets   85,995    40,936 
           
Fixed Assets          
Software and Computer Equipment, Net   352,404    444,410 
Total Fixed Assets   352,404    444,410 
           
Total Assets  $438,399   $485,346 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current Liabilities          
Accounts Payable and Accrued Expenses  $104,159   $65,315 
Accrued interest   1,092    - 
Customer Prepayments   -    14,589 
Note Payable – Stockholders   35,000    35,000 
Note Payable – Related Party   125,000    30,000 
Total Current Liabilities   265,251    144,904 
           
Long Term Liabilities          
Loan Payable   35,600    - 
Total Long Term Liabilities   35,600    - 
           
Total Liabilities  $300,851   $144,904 
           
Commitments and Contingencies   -    - 
           
Stockholders’ Equity          
Common stock: $0.001 par value,100,000,000 shares authorized; 73,884,515 and 68,130,515 shares issued and outstanding, respectively  $73,885   $68,131 
           
Preferred Stock $0.001 per value - 30,000 shares authorized; issued and outstanding, respectively   30    30 
           
Shares to be Issued: 1,683,076 and 3,633,333 common shares respectively   140,140    342,000 
Stock Subscription Receivable   -    (35,000)
Additional Paid in Capital  $4,642,284   $4,148,372 
Accumulated Deficit   (4,718,791)   (4,183,091)
Total Stockholders’ Equity   137,548    340,442 
           
Total Liabilities and Stockholders’ Equity  $438,399   $485,346 

 

See accompanying notes to financial statements

 

 F-1 

 

 

CyberloQ Technologies, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

 

   For the
Three Months Ended
September 30,
   For the
Nine Months Ended
September 30,
 
   2020   2019   2020   2019 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Revenue                    
Service Revenue  $3,807   $22,814   $19,916   $95,699 
Total Revenue   3,807    22,814    19,916    95,699 
                     
Operational Expense                    
Sales Commissions   -    18,763    2,011    28,704 
Professional Fees   14,795    9,711    43,164    53,393 
Research   -    -    2,100    6,193 
Stock Compensation   28,140    -    36,140    18,570 
Officer’s Compensation   67,500    68,796    202,500    203,796 
Travel and Entertainment   1,705    2,480    1,784    27,535 
Rent   1,917    150    2,307    450 
Depreciation   31,338    30,669    92,006    91,350 
Computer and Internet   1,696    5,096    6,376    14,870 
Office Supplies and Expenses   646    1,119    4,134    4,489 
Other Operating Expenses   2,408    1,235    5,000    11,349 
Bad Debt   40,000    -    40,000    - 
Total Operating Expenses   190,145    138,019    437,522    460,699 
                     
Loss from Operations   (186,338)   (115,205)   (417,606)   (365,000)
                     
Other Income (Expense)                    
Interest   (1,092)   (15)   (1,092)   (115)
SBA grant   -    -    3,000    - 
Loss on extinguishment of debt   (120,000)        (120,000)     
Total Other Income (Expenses)   (121,092)   (15)   (118,092)   (115)
                     
Provision for Income Taxes   -    -    -    - 
                     
Net Loss  $(307,430)  $(115,220)   (535,698)   (365,115)
                     
Loss per common share-Basic and diluted  $(0.00)  $(0.00)   (0.01)   (0.01)
                     
Weighted Average Number of Common Shares Outstanding Basic and diluted   73,884,515    67,647,182    71,061,182    67,016,626 

 

See accompanying notes to financial statements

 

 F-2 

 

 

CyberloQ Technologies, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (unaudited)

From January 1, 2019 to September 30, 2020

 

   Common (Issued)   Common
(Unissued)
   Preferred Stock   Add’l
Paid-In
   Accum.     
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Total 
Balance as of December 31, 2018   65,830,515   $65,832        $198,000    30,000   $30   $3,884,101   $(3,661,711)  $486,252 
                                              
Proceeds from Issuance of Common Stock   200,000    200    -    -    -    -    19,800    -    20,000 
                                              
Warrants Issued for Services   -    -    -    -    -    -    9,285    -    9,285 
                                              
Stock Subscriptions                  75,000    -    -         -    75,000 
                                              
Net loss for quarter ended March 31, 2019   -    -    -    -    -    -    -    (142,984)   (142,984)
                                              
Balance as of March 31, 2019   66.060,515   $66,032        $273,000    30,000   $30   $3,913,186   $(3,804,695)  $447,553 
                                              
Proceeds from Issuance of Common Stock   1,250,000    1,250    -    -    -    -    123,750    -    125,000 
                                              
Warrants Issued for Services   -    -    -    -    -    -    9,285    -    9,285 
                                              
Common stock issued for officer’s fees   300,000    30         (6,000)   -    -    47,700    -    42,000 
                                              
Stock subscriptions                  25,000                        25,000 
                                              
Net loss for quarter ended June 30, 2019   -    -    -    -    -    -    -    (106,910)   (106,910)
                                              
Balance as of June 30, 2019   67,580,515   $67,582    -   $292,000    30,000   $30   $4,093,921   $(3,911,605)  $541,928 
                                              
Proceeds from Issuance of Common Stock   550,000    50    -    -    -    -    54,450    -    55,000 
                                              
Stock Subscriptions   -    -    -    15,000    -    -    -    -    15,000 
                                              
Net loss for quarter ended September 30, 2019   -    -    -    -    -    -    -    (115,221)   (115,221)
                                              
Balance as of September 30, 2019   68,130,515   $68,132    -   $307,000    30,000   $30   $4,148,371   $(4,026,826)  $(496,707)
                                              
Net loss for quarter ended December 31, 2019   -    -    -    -    -    -    -    (156,265)   (156,265)
                                              
Balance as of December 31, 2019   68,130,515   $68,132    -   $307,000    30,000   $30   $4,148,371   $(4,183,091)  $340,442 
                                              
Proceeds from Issuance of Common Stock   1,024,000    1,024                        65,642    -    66,666 
                                              
Common Stock issued for Services   80,000    80                        7,920    -    8,000 
                                              
Stock subscriptions                  60,000                   -    60,000 
                                              
Net loss for the quarter ended March 31, 2020   -    -    -    -    -    -    -    (122,398)   (122,398)
                                              
Balance as of March 31, 2020   69,234,515   $69,236    -   $367,000    30,000   $30   $4,221,933   $(4,305,489)  $352,710 
                                              
Common stock issued for subscription   2,650,000    2,650         (265,000)             262,350         - 
                                              
Net loss for the quarter ended June 30,
2020
                                      (105,872)   (105,872)
                                              
Balance as of June 30, 2020   71,884,515   $71,886    -   $102,000    30,000   $30   $4,484,283   $(4,411,361)  $246,838 
                                              
Common stock issued for note payable   2,000,000    2,000                        158,000         160,000 
                                              
Common stock for cash                  10,000                        10,000 
                                              
Common stock for officer’s fees                  28,140                        28,140 
                                              
Net loss for the quarter ended September 30, 2020                                      (307,430)   (307,430)
                                              
Balance as of September 30, 2020   73,884,515   $73,886    -   $140,140    30,000   $30   $4,642,283   $(4,718,791)  $137,548 

 

See accompanying notes to financial statements

 

 F-3 

 

 

CyberloQ Technologies, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

 

   2020   2019 
   (unaudited)   (unaudited) 
OPERATING ACTIVITIES          
Net loss  $(535,698)  $(365,115)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   92,006    91,350 
Stock Compensation   36,140    18,570 
Loss on extinguishment of debt   120,000    - 
Bad debt   40,000    - 
Change in Operating Assets and Liabilities:          
Decrease (increase) in accounts receivable   -    (41,000)
Decrease (increase) in deposit and prepaids   (700)   - 
Increase (decrease) in accounts payable and accrued expenses   38,842    17,520 
Increase (decrease) in accrued interest   1,092    - 
Increase (decrease) in deposits   -    10,000 
Increase (decrease) in customer prepayments   (14,589)   (18,747)
Net Cash Used in Operating Activities   (222,907)   (287,422)
           
INVESTING ACTIVITIES          
Software   -    (15,750)
Net cash provided by (used) in investing activities   -    (15,750)
           
FINANCING ACTIVITIES          
Proceeds from Common Stock Issuance   66,666    200,000 
Proceeds from Common Stock to be Issued   

70,000

    115,000 
Repayment of Note Principal   (36,500)   (10,000)
Proceeds from Note Payable   207,100    - 
Net Cash Provided by Financing Activities   307,266    305,000 
           
Net Increase (Decrease) in Cash and Equivalents   84,359    1,828 
Cash and Equivalents at Beginning of the Period   636    21,009 
Cash and Equivalents at End of the Period  $84,995   $22,837 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
Interest Paid  $-   $(200)
Income Taxes Paid  $-   $- 
           
NON-CASH DISCLOSURES          
Common stock issued for payment of accrued expense  $-   $- 
Common stock issued for retirement of debt  $40,000   $- 

 

See accompanying notes to financial statements

 

 F-4 

 

 

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.

 

On June 15, 2017, the Company created a private limited company in the United Kingdom named CyberloQ Technologies LTD. CyberloQ Technologies LTD is a wholly-owned subsidiary of the Company, and any business that the Company has in the United Kingdom will be transacted through CyberloQ Technologies LTD. However, to date CyberloQ Technologies LTD has not had any operating activity or generated any revenue for the Company.

 

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, 2019, as filed with the U.S. Securities and Exchange Commission.

 

 F-5 

 

 

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.

 

Reclassification

 

Certain reclassifications have been made to conform previously reported data to the current presentation. These reclassifications have no effect on our net income (loss) or financial position as previously reported.

 

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.

 

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 September 30, 2020, and December 31, 2019, 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.

 

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. During the nine months ended September 30, 2020 and 2019, we expensed $0 and $6,193, respectively, for expenditures on research and development. None was paid to related parties.

 

 F-6 

 

 

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 September 30, 2020, and December 31, 2019, the Company had not experienced impairment losses on its long-lived assets.

 

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.

 

 F-7 

 

 

As of September 30, 2020, the Company had $0 in contract assets and contract liabilities. As of December 31, 2019, the Company has $0 in contract assets, and a contract liability of $14,589 to perform on contracts. The contract liability will be reduced by $2,083 per month as the Company provides a non-exclusive, non-transferable license to use the CyberloQ Vault Services for the customer’s internal purposes and earns and recognizes related revenue.

 

   Contract Asset   Contract Liability 
December 31, 2019  $           0   $14,589 
Less revenue earned and recognized   -    (14,589)
September 30, 2020  $0   $- 

 

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 esimated amount of cash collections with respect to accounts receivable could change. As of September 30, 2020, the Company has deemed $40,000 uncollectible.

 

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.

 

In February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” now known as ASC Topic 825-10 “Financial Instruments.” ASC Topic 825-10 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. FASB ASC 825-10 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company has adopted FASB ASC 825-10. The Company chose not to elect the option to measure the fair value of eligible financial assets and liabilities.

 

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.

 

 F-8 

 

 

Advertising

 

Advertising costs are expensed as incurred. Advertising expense for the nine-months ended September 30, 2020 and 2019 were $1,025 and $4,769, 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.

 

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 September 30, 2020 and December 31, 2019, the Company has 250,000 and 1,125,000 warrants, respectively, that can be exercised and could be dilutive to the existing number of shares issued and outstanding. However, due to the Company’s periods of losses, the basic weighted average is equal to the diluted weighted average shares outstanding.

 

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. Black Scholes assumptions were calculated using stock price at grant date between $0.29 to $0.149; exercise prices between $0.15 to $0.20: life expectancy between ½ year to 5 years; and volatility ranging from 163% to 68%.

 

 F-9 

 

 

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 June, 2020, the Company entered into a 12-month lease for office space at a rate of $426 per month, and paid a deposit of $500. In September 2020, the Company moved to a different suite, the lease was amended to a rate of $639 per month, beginning on October 1, 2020. The Company paid an additional deposit of $200.

 

NOTE 2 – FIXED ASSETS

 

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

 

   September 30, 2020   December 31, 2019 
Software and computer equipment  $736,500   $736,509 
Less: accumulated depreciation   (384,096)   (292,090)
Property and equipment, net  $352,404   $444,410 

 

Depreciation expense was $92,006 and $91,350 for the nine months ended September 30, 2020 and 2019, respectively.

 

NOTE 3 – GOING CONCERN

 

The Company has incurred losses since Inception resulting in an accumulated deficit of $4,718,791 as of September 30, 2020 that includes a loss of $535,698 for the nine months ended September 30, 2020. 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 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

The Company has 100,000,000 shares of $.001 par value common stock authorized as of September 30, 2020 and December 31, 2019.

 

 F-10 

 

 

During the quarter ended September 30, 2020, the Company issued 2,000,000 shares of common stock in satisfaction of a promissory note in the amount of $40,000 to a related party, resulting in a loss on extinguishment of debt of $120,000 See Note 7. Additionally, the Company received $10,000 for ”shares to be issued”, of which the terms have not been set as of September 30, 2020. Also, the company recorded “shares to be issued” to Officers in the amount of $28,140 in conjunction with their service agreements.

 

At September 30, 2020, the “shares to be issued” is comprised of 600,000 shares issuable to Officers of the Company valued at $70,140; 923,076 shares issuable in the amount of $60,000; and the shares issuable for $10,000 for which the terms have not been set as of period end.

 

The Company had an agreement to issue 3,333,333 common shares for $300,000, or $0.09 per share. The Company has collected $265,000 towards that agreement, and had previously disclosed the full amount and the related 3,333,333 common shares as “to be issued”. In June 2020, the Company amended the stock subscription agreement and issued 2,650,000 shares in exchange for the $265,000 that had previously been collected.

 

During the first quarter of 2020, the Company received $60,000 for 923,076 shares of common stock that are recorded as “Shares to be Issued” Also, during the quarter ended March 31, 2020, the Company received $66,666 in payment for 1,024,000 shares of common stock and issued 80,000 shares of common stock for services valued at $8,000 and received $60,000 for a stock subscription for 923,076 shares of common stock.

 

Also during 2019, the Company received $200,000 in payment for 2,000,000 shares of common stock. In addition, during 2019, the Company issued 300,000 shares to Officers in conjunction with their service agreements which were recorded as “shares to be issued” in the balance sheet.

 

There were 68,130,515 shares of common stock issued and outstanding as of December 31, 2019. Additionally, there were 300,000 shares to officers for the current year portion of their service agreements, valued at $42,000.

 

Preferred Stock

 

The Company did not have any preferred stock prior to 2017. In April of 2017, the Company amended its articles of incorporation to create a new class of stock designated Series A Super Voting Preferred Stock consisting of thirty-thousand (30,000) shares at par value of $0.001 per share. Certain rights, preferences, privileges and restrictions were established for the Series A Preferred Stock as follows: (a) the amount to be represented in stated capital at all times for each share of Series A Preferred Stock shall be its par value of $0.001 per share; (b) except as otherwise required by law, holders of shares of Series A Preferred Stock shall vote together with the common stock as a single class and the holders of Series A Preferred Stock shall be entitled to five-thousand (5,000) votes per share of Series A Preferred Stock; and (c) in the event of any liquidation, dissolution or winding-up of the Company, either voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of assets of the Corporation to the holders of the common stock, the original purchase price paid for the Series A Preferred Stock. All 30,000 shares of the Series A Super Voting Preferred Stock were issued in 2017.

 

NOTE 5 – SBA EIDL Loan

 

On June 9, 2020, the Company received an Economic Injury Disaster Loan from the Small Business Administration in the amount of $35,600. The loan has a term of thirty years and an interest rate of 3.75% per annum. Payments in the amount of $174 monthly will begin twelve months from the date of the note.

 

On April 30, 2020 the Company received a grant from the Small Business Administration in the amount of $3,000.

 

NOTE 6 – COMMITMENTS

 

In June 2020, the Company entered into a 12-month lease for office space at 871 Venetia Bay Blvd Suite #202 Venice, FL 34285. The monthly rent is $426 per month. The Company paid a deposit of $500 and the first month rent of $426 for July in June 2020. All conditions have been met and paid by the Company. In September 2020, the lease was amended as the Company moved to Suite #228. The amended monthly rent is $639 per month. The Company paid an additional deposit of $200 for the new suite.

 

In 2015, in conjunction with a proposed TurnScor Card platform, the Company signed Investor Royalty and Warrant Agreements with four parties. In exchange for the funds contributed by the four parties, the Company agreed to:

 

1. Pay the investors monthly residuals of 2.0% to 5% per month on the gross revenue after expenses generated by the Company’s primary platform in conjunction with the Company’s TurnScor Card;

 

 F-11 

 

 

2. Pay the investors a residual in perpetuity on 2% to 5% of all TurnScor Card sub-platform revenue generated; and
   
3. Issue warrants to investors all of which have either been exercised or expired, except for one individual that has one unexercised warrant to purchase 250,000 shares of common stock at $0.20 per share that expires in November of 2020.

 

The Company does not plan to proceed with the TurnScor Card at this time.

 

An agreement with a shareholder and director of the Company stating that the executive will be entitled to a two-and-a half-percent (2.5%) commission of the gross revenue recorded by the Company for any customer contracts that are closed by the Company at the time of and during the duration of the agreement. These commissions are payable quarterly upon receipt of customer revenues.

 

An agreement with two sales managers granting each manager a 1% commission on the gross revenue of the Company. These commissions are payable quarterly upon receipt of customer revenues.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Issuance of Warrants/Options

 

All warrants and options are fully vested and exercisable.

 

The following is a summary of the warrants issued in connection with common stock:

 

       Weighted Avg Price   Weighted Avg Life 
January 1, 2019   1,125,000   $0.19    0.90 
Granted   -           
Exercised   -           
Forfeited   (875,000)          
December 31, 2019   250,000   $0.20    0.92 
Granted   -           
Exercised   -           
Forfeited   -           
September 30, 2020   250,000   $0.20    0.17 

 

The following is a summary of the options issued in connection with common stock:

 

In 2016 and 2017, a director of the Company was issued two warrants to acquire a total of 1,250,000 shares of common stock. One warrant to acquire 625,000 shares of common stock expired on June 19, 2018, and the other warrant to acquire 625,000 shares of common stock expired on June 28, 2019. Both warrants were exercisable at $0.20 per share. The Company revalued the warrants based on information that caused a recalculation of the 1,250,000 warrants value from the $51,592 as disclosed in the December 31, 2017 footnote to the corrected amount $96,643. This re-valuation had no material impact on 2017, given that the majority of expense was recorded in 2018 and 2019.

 

 F-12 

 

 

The following is a summary of the options issued in connection with common stock:

 

       Weighted Avg Price   Weighted Avg Life 
January 1, 2019   1,200,000   $0.15    4.38 
Granted   -           
Exercised   -           
Forfeited   (1,200,000)          
December 31, 2019   -           
Granted   -           
Exercised   -           
Forfeited   -           
September 30, 2020   -           

 

Related Parties and Stockholders Notes Payable

 

The following is a summary of related party notes payable:

 

   For the Periods Ended 
   September 30, 2020   December 31, 2019 
Notes payable – Related Parties  $125,000   $30,000 
Notes payable – Stockholders  $35,000   $35,000 

 

Notes Payable - Stockholders

 

On December 29, 2014, the Company entered into a partially-convertible promissory note with a stockholder in the amount of $35,000. In January of 2015, the shareholder partially-exercised its conversion option, and in May of 2016 the shareholder exercised the remainder of its conversion option. In December 2017, the remaining unpaid principal and interest due on the note was settled in full for a $50,000 note and the Company recognized $151,324 in gain on settlement of debt. The $50,000 note has a current principle balance of $35,000, a stated interest rate of 0%, required payments of $5,000 on or before June 10, 2019, $5,000 on or before August 10, 2019 and the remainder due by the extended due date of September 15, 2019. As of September 30, 2020, the payments due have not been extended, and the Company plans to repay the notes in 2020.

 

Notes Payable - Related Parties

 

On November 7, 2019, the Company received a promissory note from a director in the amount of $30,000, with an interest rate of 0%. The loan was repaid in February 2020. On March 24, 2020, the Company received a loan from a director in the amount of $40,000, with an interest rate of 0%. The maturity date for the loan is June 30, 2020. On July 7, 2020, 2,000,000 shares of stock were issued to retire the loan resulting in a loss on extinguishment of debt of $120,000.

 

On August 8, 2020, the Company received a promissory note from a director in the amount of $25,000, with an interest rate of 0% and a maturity date of September 10, 2020. On September 9, 2020, the promissory note was amended to increase the interest rate to 12.5% and amend the final maturity date to August 1, 2021. Beginning March 1, 2021, the Company is required to make six equal monthly principal payments plus accrued interest.

 

On September 9, 2020, the Company received a promissory note from a director in the amount of $100,000, with an interest rate of 12.5%. The maturity date for the loan is August 1, 2021. Beginning March 1, 2021, the Company is required to make monthly payments in the amount of $18,750, ending on August 1, 2021.

 

NOTE 8 – SUBSEQUENT EVENTS

 

Subsequent to September 30, 2020, the Company issued 160,000 for shares to be issued in which the terms had not been set at quarter end.

 

The Company is not aware of any other subsequent events through the date of this filing that require disclosure or recognition in these financial statements.

 

 F-13 

 

 

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

 

The following discussion is intended to assist you in understanding our business and the results of our operations. It should be read in conjunction with the Condensed Financial Statements and the related notes that appear elsewhere in this report as well as our Report on Form 10K filed with the Securities and Exchange Commission for the period ending December 31, 2019. Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements”. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

Company History

 

CyberloQ Technologies Inc. (“CLOQ”, ‘We” or the “Company”) was incorporated in Nevada on February 25, 2008 as Advanced Credit Technologies, Inc. On November 20, 2019, the Company changed its name from Advanced Credit Technologies, Inc. to CyberloQ Technologies, Inc. The Company has never been the subject of any bankruptcy, receivership or similar proceeding. The Company has never been involved in any material reclassification, merger, or consolidation.

 

On June 15, 2017, the Company created a private limited company in the United Kingdom named CyberloQ Technologies LTD. CyberloQ Technologies LTD is a wholly-owned subsidiary of the Company, and any business that the Company has in the United Kingdom will be transacted through CyberloQ Technologies LTD. However, to date CyberloQ Technologies LTD has had no activity, operational or otherwise.

 

Current Overview of the Company

 

CyberloQ Technologies Inc. is a development-stage technology company focused on fraud prevention and credit management. 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 Company also has a product named CyberloQ Vault which 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 breach. This service uses cloud-based encryption and a secure web portal to send/receive confidential data. Both the sender and receiver must have authenticated their position within the prescribed geo-coordinates as well as authenticate their mobile devices prior to sending/receiving any data, rendering a hack or breach utterly useless since the encrypted data is unusable without the CyberloQ authentication component.

 

 4 

 

 

Moreover, the Company is able to develop secure databases for clients by developing and attaching a private blockchain to the SQL database and further securing the database through use of the Company’s CyberloQ technology. The blockchain being developed by the Company is a private blockchain and is an invitation-only network governed by a single entity. Entrants to the network require permission to read, write or audit the blockchain.

 

Finally, 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.

 

The Company currently has three officers — its President, Vice-President and Chief Technology Officer. The Company does not have other employees of the Company at this time.

 

Liquidity, Capital Resources and Material Changes in Financial Condition

 

As of September 30, 2020, the Company’s assets were $438,399 compared to $485,346 in assets as of December 31, 2019. The change in the Company’s financial condition can be attributed to $92,006 in depreciation expense which reduced the Company’s fixed assets from $444,410 to $352,404 along with an increase in current assets from $40,936 to $125,995. Additionally, a previously recorded receivable in the amount of $40,000 was written off during the quarter.

 

As of September 30, 2020, the Company’s liabilities were $300,851 compared to $144,904 in liabilities as of December 31, 2019. This change in the Company’s financial condition was due to an increase of $38,844 in accounts payable and accrued expenses, along with a decrease of $14,589 in customer prepayments, and an increase in Note payable from related parties from $30,000 to $125,000. Additionally, the Company received an Economic Injury Disaster Loan payment in the amount of $35,600 that was recorded as a Long-Term Loan payable.

 

Net cash used in operating activities for the nine month period ending September 30, 2020 was $222,907 compared to $287,422 for 2019. Cash provided by or used by operating activities is driven by our net loss and adjusted by non-cash items as well as changes in operating assets and liabilities. Non-cash adjustments for the nine months ended September 30, 2020 include depreciation of $92,006, stock compensation of $36,140,loss on extinguishment of debt of $120,000 and bad debt of $40,000.

 

Net cash used by investing activities was $0 for the nine months ended September 30, 2020 as compared to $15,750 for 2019.

 

Net cash provided by financing activities was $307,266 for the nine months ended September 30, 2020 as compared to $305,000 for 2019.

 

The Company had gross revenue of $3,807 and $19,916 for the three and nine months ended September 30, 2020 compared to gross revenue of $22,814 and 95,699 for the three and nine months ended September 30, 2019, and is currently reliant on its ability to raise additional capital to continue execution of its business plan to move the Company forward towards profitability. The Company does not anticipate any significant decrease in its operating expenses for the remainder of 2020. Unless the Company begins to generate operational revenue, it will be reliant on its ability to raise additional capital in order to continue its operations.

 

Results of Operations for the Three and nine Months Ended September 30, 2020 and 2019

 

Company revenue was $3,807 and $19,916 in the three and nine months ended September 30, 2020 as compared to $22,814 and $95,699 for the three and nine months ended September 30, 2019, and the Company’s operating expenses were $190,145 and $437,522 for the three and nine months ended September 30, 2020 as compared to $138,019 and 460,699 for the three and nine months ended September 30, 2019.

 

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The decrease in operating expenses for the three and nine months ended September 30, 2020 as compared to September 30, 2019 was due to a decrease in all but two expense categories, stock compensation expense and bad debt expense. The Company experienced changes in expense categories as noted below.

 

Professional fees were $14,795 and $43,164 for the three and nine months ended September 30, 2020, compared to $9,711 and $53,393 for the three and nine months ended September 30, 2019. This decrease in professional fees was due to decreased audit fees during the quarter.

 

Research expenses were $0 and $2,100 for the three and nine months ended September 30, 2020, compared to $0 and $6,193 for the three and nine months ended September 30, 2019. This decrease in research was due to costs incurred in 2019 associated with updates to the Company’s website.

 

Stock compensation expenses were $28,140 and $36,140 for the three and nine months ended September 30, 2020, compared to $0 and $18,570 for the three and nine months ended September 30, 2019.

 

Travel and entertainment expenses were $1,705 and $1,784 for the three and nine months ended September 30, 2020, compared to $2,480 and $27,535 for the three and nine months ended September 30, 2019. This decrease in travel and entertainment expenses was due to decreased business travel during 2020.

 

Computer and internet expenses were $1,696 and $6,376 for the three and nine months ended September 30, 2020 as compared to $5,096 and $14,870 for the three and nine months ended September 30, 2019. This decrease was due to lower hosting costs associated with the Company’s private blockchain product.

 

Office supplies and expenses were $646 and $4,134 for the three and nine months ended September 30, 2020, compared to $1,119 and $4,489 for the three and nine months ended September 30, 2019.

 

Other operating expenses were $2,408 and $5,000 for the three and nine months ended September 30, 2020 as compared to $1,235 and 11,349 for the three and nine months ended September 30, 2019. This decrease was due to lower advertising costs.

 

Additionally, there was a bad debt recognized on accounts receivable in the amount of $40,000. The expense was recognized at September 30, 2020, when it was deemed by the Company that the outstanding amount from Diabetic Help Centers was no longer recoverable.

 

As a result of the foregoing, the Company experienced a net loss from operations of $186,338 and $417,606 in the three and nine months ended September 30, 2020 compared to a net loss from operations of $115,205 and $365,000 in the three and nine months ended September 30, 2019.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

The Company qualifies as a smaller reporting company as defined by §229.10(f)(1) and therefore is not required to provide the information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2020 in accordance with Committee of Sponsoring Organizations of the Treadway Commission’s 2013 Integrated Framework. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. In addition, due to its current size, the Company currently does not have sufficient staff to maintain appropriate segregation of duties, as it pertains to application and oversight of internal control processes. Material weaknesses have previously been identified, including lack of segregation of duties and lack of formal written policies and procedures surrounding financial close and reporting. However, the Company anticipates that as it grows and formalizes its internal control processes and procedures, it will add sufficient staff to perform internal control processes, as well as adequately provided oversight to ensure processes are working as designed. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II

 

OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is not currently a party to any legal proceedings or any administrative proceedings.

 

In addition, the Company’s officers and directors have not been convicted in any criminal proceedings nor have they been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of securities or banking activities.

 

Item 1A. Risk Factors

 

The Company qualifies as a smaller reporting company as defined by §229.10(f)(1) and therefore is not required to provide the information required by this Item. However, the Company does acknowledge that there are risks associated with the business of the Company.

 

We will be competing with a variety of companies, many of which have significantly greater financial, technical, marketing and other resources than us. If we fail to attract and retain a large base of customers for our products, or if our competitors establish a more prominent market position relative to ours, this will inhibit our ability to grow and successfully execute our business plan. For example, Wells Fargo has introduced an “on/off” feature for their customers, Discover Card has “Freeze It” functionality, and Ondot Systems has already been operating in the mobile card security space for quite some time. However, the Company believes that the multi-purpose functionality of CyberloQ, along with its multi-purpose applications will give the Company a distinct advantage by comparison. CyberloQ can be used in the banking system to protect debit/credit cards, in the Health Care industry to protect PII (Personal Identifying Information) now that medical records are kept digitally, and can protect corporate data bases in any industry from outside intrusion via geo-fencing. The Company believes that these distinct features, along with the ability to “White Label” the technology for marketing partners, give the Company a distinction in the marketplace. However, there can be no assurance that we will be able to successfully compete with other companies in the marketplace.

 

In addition, the Company could incur increased costs, decreased revenue, or suffer reputational damage in the event of a cyber-attack. The Company’s business involves the collection, storage, processing and transmission of customers’ personal data, including financial information. In the event that the Company’s security measures are breached due to human error, malfeasance, system errors or vulnerabilities, or other irregularities, such breach could adversely affect our business through possible interruption of the Company’s operations, improper disclosure of data, damage to the Company’s reputation, and/or legal exposure.

 

Finally, management has evaluated whether or not COVID-19 has had any material impact on the Company. The Company is a technology-based company with personnel already working remotely prior to COVID-19. Therefore, the Company has not been impacted by any stay-at-home orders or travel restrictions. Likewise, the Company has continued to have access to capital and funding sources, and COVID-19 has had no material effect on the demand for the Company’s services. Consequently, to date COVID-19 has not impacted the Company’s financial condition or the results of its operations, and the Company does not anticipate that there be any material impact in the future.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Prior to the quarter ended June 30, 2020, the Company had an agreement to issue 3,333,333 common shares for $300,000 by March 31, 2019. As of March 31, 2020, the Company had only collected $265,000 towards that agreement, and disclosed related 3,333,333 common shares as “To be Issued” pending fulfillment of the entire amount due under the subscription agreement. During the quarter ended June 30, 2020, the parties amended the subscription agreement and to reflect that the Company would issue 2,650,000 common shares for the $265,000 paid to that point in time and issued the 2,650,000 shares due pursuant to the amended subscription agreement.

 

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All of the shares described above were issued by the Company in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 4(2). All of the purchasers of the unregistered securities were all known to us and our management, through pre-existing business relationships, as long standing business associates, friends, and employees. All purchasers were provided access to all public material information, which they requested, and all information necessary to verify such information and were afforded access to our management in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to us. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The Company is not in default on any financing arrangements at this time.

 

ITEM 4. OTHER INFORMATION

 

There exists no information required to be disclosed by us in a report on Form 8-K during the three-months ended September 30, 2020, but not reported.

 

ITEM 5. EXHIBITS

 

Exhibits have been filed separately with the United States Securities and Exchange Commission in connection with the quarterly report on Form 10-Q or have been incorporated into the report by reference.

 

Exhibit   Description
     
3.1(i)   Articles of Incorporation*
3.2(i)   Amended Articles of Incorporation dated May 4, 2010*
3.3(i)   Amended Articles of Incorporation dated May 5, 2017**
3.4(i)   Amended Articles of Incorporation dated November 20, 2019***
3.4(ii)   By-Laws****
14.1   Code of Ethics****
14.2   Related-Party Transactions Policy****
14.3   Anti-Corruption Policy****
16.1   Letter re Change in Certifying Accountant *****
31.1   Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer & Principal Financial Officer.******
32.1   Section 1350 Certification of the Principal Executive Officer & Principal Financial Officer.******
101.1   Interactive data files pursuant to Rule 405 of Regulation S-T.*******

 

*   Incorporated by reference through the Registration Statement on form S-1 filed with the Commission on October 26, 2010. (101141203)
**   Incorporated by reference through the Quarterly Report on form 10-Q filed with the Commission on May 11, 2017. (17832815)
***   Incorporated by reference through the Current Report on form 8-K filed with the Commission on November 1, 2019.
****   Incorporated by reference through the Current Report on form 8-K filed with the Commission on November 6, 2017.
*****   Incorporated by reference through the Current Report on form 8-K filed with the Commission on May 19, 2017.
******   Filed herewith. In addition, in accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.
*******   Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  CYBERLOQ TECHNOLOGIES, INC.
     
  By: /s/ Christopher Jackson
    Christopher Jackson
Date: November 13, 2020   President, Secretary, Treasurer and Director
    Principal Executive Officer
    Principal Financial Officer

 

Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons in the capacities and on the dates indicated.

 

  CYBERLOQ TECHNOLOGIES, INC.
     
  By:  /s/ Frederick Andreini
Date: November 13, 2020   Frederick Andreini, Director
     
  By: /s/ Mark Carten
Date: November 13, 2020   Mark Carten, Director
     
  By: /s/ Enrico Giordano
Date: November 13, 2020   Enrico Giordano, Director
     
  By: /s/ Leon Hurst
Date: November 13, 2020   Leon Hurst, Director
     
  By: /s/ Christopher Jackson
Date: November 13, 2020   Christopher Jackson, Director
     
  By: /s/ Rex Schuette
Date: November 13, 2020   Rex Schuette, Director

 

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