10-Q: CyberloQ Technologies Reports First Quarter 2024 Results, Revenue Increases but Losses Persist

CyberloQ Technologies saw a revenue increase in Q1 2024 compared to Q1 2023, but also experienced a larger net loss.

Summary

• CyberloQ Technologies reported a net loss of $537,239 for the three months ended March 31, 2024, compared to a net loss of $156,513 for the same period in 2023.
• The company's revenue increased to $15,000 in Q1 2024, up from $993 in Q1 2023, primarily due to a new agreement with QRails, Inc.
• Operating expenses rose to $211,035 in Q1 2024 from $97,707 in Q1 2023, driven by increased officer compensation and professional fees.
• The company's cash position decreased from $307,174 at the end of 2023 to $127,148 by the end of Q1 2024.
• Total assets decreased slightly from $1,458,565 to $1,410,170, while total liabilities increased from $1,021,359 to $1,321,203.
• The company capitalized $91,264 in software development costs for the CyberloQ platform and $1,200 for website development during the quarter.
• The company issued 2,000,000 shares of common stock for $100,000 and 850,000 shares for services valued at $79,000 during the quarter.
• The company continues to rely on raising additional capital to fund operations and move towards profitability.

Sentiment

Score: 3

Explanation: The document shows a company with increasing revenue but also increasing losses and a decreasing cash balance. The company is reliant on raising capital and has a history of losses, which is concerning. The sentiment is negative due to the financial challenges and the need for significant improvements to achieve profitability.

Positives

• The company's revenue increased significantly due to the agreement with QRails, Inc.
• The company is continuing to develop its CyberloQ platform and website, capitalizing $91,264 and $1,200 respectively.
• The company successfully raised $100,000 through the sale of common stock.

Negatives

• The company's net loss increased substantially compared to the same period last year.
• Operating expenses more than doubled, primarily due to increased officer compensation and professional fees.
• The company's cash reserves decreased significantly during the quarter.
• The company is still reliant on raising additional capital to continue operations.

Risks

• The company has a history of losses and negative operating cash flows, raising concerns about its ability to continue as a going concern.
• The company faces competition from larger companies with greater resources.
• The company's business involves the collection and storage of sensitive customer data, making it vulnerable to cyber-attacks.
• The company is dependent on raising additional capital to fund operations and move towards profitability.
• The company's disclosure controls and procedures were deemed not effective as of March 31, 2024.

Future Outlook

The company anticipates that it will be dependent on additional investment capital to fund operating expenses in the near future and is working to position itself to raise additional funds through the capital markets. The company does not anticipate any significant decrease in its operating expenses for the remainder of 2024.

Management Comments

• Management believes that the multi-purpose functionality of CyberloQ, along with its multi-purpose applications will give the Company a distinct advantage by comparison.
• Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses.

Industry Context

The company operates in the competitive fraud prevention and credit management technology sector, facing competition from established players like Wells Fargo, Discover Card, and Ondot Systems. The company is attempting to differentiate itself through the multi-purpose functionality of its CyberloQ platform and its ability to be white-labeled.

Comparison to Industry Standards

• CyberloQ's revenue of $15,000 for the quarter is very low compared to established players in the fintech space, such as Ondot Systems, which has raised over $100 million in funding and serves numerous financial institutions.
• The company's net loss of $537,239 is significant for a company of its size and indicates a need for substantial revenue growth or cost reduction to achieve profitability.
• The company's reliance on convertible debt and equity financing is common for early-stage tech companies, but the high level of debt and the associated amortization of debt discount are concerning.
• The company's capitalization of software development costs is standard practice, but the recoverability of these costs will depend on the successful commercialization of the CyberloQ platform.
• Compared to companies like Wells Fargo and Discover, which have integrated some security features into their existing platforms, CyberloQ is attempting to offer a more comprehensive and versatile solution, but it is still in the early stages of market adoption.

Legal Proceedings

• The company is not currently a party to any legal proceedings, nor is the Company a party to any administrative proceedings.
• The litigation related to the Separation and Release of Claims Agreement was dismissed without prejudice.

Related Party Transactions

• The company has notes payable to stockholders totaling $35,000.
• The company has convertible debt to stockholders totaling $865,149, net of beneficial conversion feature.
• The company has notes payable to related parties totaling $150,000.

Stakeholder Impact

• Shareholders are impacted by the increased net loss and the need for additional capital raises.
• Employees are impacted by the company's financial performance and its ability to continue operations.
• Customers may be impacted by the company's ability to deliver its products and services if financial challenges persist.
• Creditors are impacted by the company's increasing liabilities and reliance on debt financing.

Next Steps

• The company intends to position itself to raise additional funds through the capital markets.
• The company plans to continue the development of its CyberloQ platform and website.
• The company will continue to seek strategic partnerships to increase the scalability of its platform.

Key Dates

Keywords

CyberloQ, fraud prevention, credit management, software platform, multi-factor authentication, financial results, convertible debt, capital raise, technology, SaaS