10-K: CyberloQ Technologies Reports Increased Assets and Convertible Debt in 2023 Annual Filing

CyberloQ Technologies' annual report reveals a significant increase in total assets and liabilities, driven by the capitalization of its CyberloQ platform and convertible debt financing.

Summary

• CyberloQ Technologies reported total assets of $1,458,565 as of December 31, 2023, a substantial increase from $341,118 the previous year.
• The company's fixed assets rose to $1,096,827 due to the capitalization of the CyberloQ platform and website development costs.
• Cash assets also saw a significant jump, reaching $307,174 by the end of 2023, compared to just $4,067 in 2022.
• Liabilities increased to $1,021,359, up from $324,132 in 2022, primarily due to a rise in convertible debt to $572,095.
• The company's net loss for 2023 was $1,026,530, slightly higher than the $979,048 loss in 2022, mainly due to increased amortization of debt discount and interest expense.
• Operating revenue was $15,993 in 2023, a modest increase from $2,671 in 2022.
• The company is currently reliant on its ability to raise additional capital or debt to continue operations and move towards profitability.
• Net cash used in operating activities was $340,780 for 2023, compared to $371,963 in 2022.
• Net cash used in investing activities was $805,363 in 2023, primarily for the development of the CyberloQ platform and website.
• Net cash provided by financing activities was $1,449,250 in 2023, mainly from convertible debt and common stock issuance.

Sentiment

Score: 4

Explanation: The document shows a company with promising technology but significant financial challenges. The increase in assets is offset by a larger increase in liabilities and a continued net loss. The reliance on debt financing and the need for further capital raises are concerning.

Positives

• The company experienced a significant increase in total assets, indicating growth in its balance sheet.
• The capitalization of the CyberloQ platform and website development suggests investment in core technologies.
• The increase in cash assets provides the company with more financial flexibility.
• Operating revenue increased, although modestly, indicating some market traction.
• The company is actively working towards SOC 2 certification, demonstrating a commitment to security.

Negatives

• The company experienced a net loss of $1,026,530 in 2023, indicating ongoing financial challenges.
• The increase in liabilities, particularly convertible debt, raises concerns about financial leverage.
• The company is heavily reliant on raising additional capital or debt to continue operations.
• The company's operating revenue is still very low compared to its expenses.
• The company has a history of losses and negative operating cash flows.

Risks

• The company faces significant competition from larger companies with greater resources.
• The company's reliance on additional capital or debt raises concerns about its long-term financial stability.
• The company could incur increased costs, decreased revenue, or suffer reputational damage in the event of a cyber-attack.
• The company's disclosure controls and procedures were deemed not effective as of December 31, 2023.
• The company has a limited operating history and a history of losses.

Future Outlook

The company anticipates that it will be dependent on additional investment capital to fund operating expenses and is reliant on its ability to raise additional debt and/or capital to continue execution of its business plan to move forward towards profitability. The company does not anticipate any significant decrease in its operating expenses for 2024.

Management Comments

• 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.
• 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.
• 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 established players like Wells Fargo, Discover Card, and Ondot Systems. The company is attempting to differentiate itself through its multi-purpose functionality and white-labeling capabilities.

Comparison to Industry Standards

• CyberloQ's focus on multi-factor authentication aligns with industry trends in cybersecurity, where MFA is becoming a standard practice.
• The company's development of a secure data vault is similar to other secure communication platforms, but the geo-fencing and device authentication adds a unique layer of security.
• The company's reliance on convertible debt for funding is common among early-stage tech companies, but the high level of debt raises concerns about financial risk.
• Compared to established players like Wells Fargo and Discover, CyberloQ is a much smaller company with limited resources and revenue, making it a higher-risk investment.
• The company's pursuit of SOC 2 certification is a positive step, as it demonstrates a commitment to meeting industry standards for data security and compliance.

Legal Proceedings

• The litigation of Mark Carten v. Cyberloq Technologies, Inc. has been dismissed without prejudice and is no longer pending.

Related Party Transactions

• The company has several notes payable to stockholders and related parties.
• The company has entered into multiple convertible promissory notes with stockholders.
• The company has a loan modification agreement with a director.

Stakeholder Impact

• Shareholders face the risk of further dilution due to potential capital raises.
• Employees are impacted by the company's financial instability and reliance on external funding.
• Customers may be affected by the company's ability to maintain and improve its technology.
• Creditors face the risk of non-payment due to the company's financial challenges.

Next Steps

• The company intends to continue developing and marketing its CyberloQ and TurnScor platforms.
• The company plans to pursue strategic partnerships to increase the scalability of its platform.
• The company expects to achieve SOC 2 certification in late 2024.
• The company will need to secure additional funding to continue operations and move towards profitability.

Key Dates

Keywords

CyberloQ, Multi-Factor Authentication, Fraud Prevention, Credit Management, Convertible Debt, Software Development, Financial Reporting, SOC 2, TurnScor, Cybersecurity