Liquidity, Capital Resources and Material Changes in Financial Condition

As of December 31, 2022, total assets were $341,118 compared to $264,503 in assets as of December 31, 2021. The Company's fixed assets increased from $0 to $283,240 due to the capitalization of the CyberloQ Platform, while the Company's prepaid expense decreased from $210,208 to $53,811 due to the Company's continued amortization of the prior issuance of 1,250,000 shares of stock to consultants that are being amortized over the one-year length of the contracts on a straight-line basis. In addition, the Company's cash assets were $4,067 as of December 31, 2022 as opposed to $54,295 as of December 31, 2021.

As of December 31, 2022, liabilities were $324,132 compared to $299,530 in liabilities as of December 31, 2021. This increase the Company's liabilities was due to increases in accounts payable and accrued expenses of $12,762, and convertible debt of $60,000 and accrued interest of $21,317 partially offset by a decrease of loans from stockholders of $10,000 and long term note payable of $2,100.

Net cash used in operating activities for 2022 was $371,963 compared to net cash used in operating activities for 2021 of $664,596. Cash provided by or used by operating activities is driven by our net loss, which was approximately $108,600 less than 2021, and adjusted by non-cash items as well as changes in operating assets and liabilities. Non-cash adjustments for 2022 include stock compensation of $350,643 and loss on settlement of debt of $195,216.

Net cash used by investing activities for 2022 was $283,240 and was due to the Company capitalizing development costs for the CyberloQ platform.

Net cash provided by financing activities was $604,975 for 2022 as compared to $692,150 for 2021. Specifically, proceeds from common stock issuance were $422,075 for 2022 as compared to $490,200 for 2021, and proceeds from common stock to be issued was $50,000 for 2022 as compared to $193,000 for 2021. Conversely, proceeds from notes payable were $125,000 for 2022 compared to $22,500 for 2021.

The Company had operating revenue of $2,671 in 2022 and is currently reliant on its ability to raise additional capital and/or debt 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 2023. Unless the Company begins to generate operation revenue, it will be reliant on its ability to raise additional debt and/or capital in order to continue its operations.

Results of Operations for the Years Ended December 31, 2022 and 2021

The Company experienced a net loss of $979,048 for 2022 compared to net loss of $1,087,712 for 2021.





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There was no material change in the Company's service revenue. Service revenue was $2,671 for 2022 in comparison to $197 for 2021.

This decrease in the Company's net loss was primarily due to decreases in research and development expenses and offers' compensation expense and professional fees.

Research and development expenses were $0 in 2022, compared to $180,063 in 2021. This decrease in research expenses was due to the Company beginning to capitalize the cost of development of the CyberloQ platform.

Officers' compensation expense was $207,000 in 2022 as compared to $370,400 in 2021. This decrease was due to the Company only having two officers instead of three for the majority of 2022.

Professional fees were $424,503 in 2022, compared to $468,449 in 2021. This decrease in professional fees was due to decreased consulting services and accounting services.

The foregoing drivers of the decrease in the Company's net loss for 2022 were partially offset by an increase in the Company's computer an internet expense.

Computer and internet expenses were $24,796 in 2022 as compared to $10,859 in 2021. This increase was due to additional hosting costs associated with the Company's private blockchain product.

For 2022, there were no material changes in office expenses and supplies, rent expense, travel and entertainment, office supplies and other operating expenses as compared to 2021.

In summary, total revenue was $2,671 for 2022, and the Company is currently reliant on its ability to raise additional debt and/or capital to continue execution of its business plan to move forward towards profitability. Whether or not there are any material changes in operational revenues or expenses in 2023 will be highly-dependent upon the Company's ability to enter into material revenue contracts with customers.

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